IGNITE LIMITED — Annual Report 2007

Aug 27, 2007

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ASX Preliminary Final Report

Period ended 30 June 2007

Lodged with the ASX under Listing Rule 4.3A 28 August 2007

Highlights

• Earnings Before Interest and Tax – up 18% to $19.9 million

• Revenue – up 10% to $298 million

• Net Profit After Tax – up 16% to $13.6 million

• Operating Cash Flow – positive $14.4 million

• Basic Earnings per share of 26 cents per share

• Final Dividend – 10.0 cents per share taking full year dividend to 19 cents per share fully franked

Content

Commentary on results for year ended 30 June 2007 compared to year ended 30 June 2006

Results for announcement to the market

Audited financial report (attachment)

CANDLE AUSTRALIA LIMITED_ABN 43 002 724 334_2007 FULL YEAR RESULTS 1

Financial performance

Candle Australia Limited, Australia’s leading white collar employment services company, announces 18% growth in earnings before interest and tax (EBIT) to $19.9 million.

Net profit after tax (NPAT) grew 16% to $13.6 million for the year ended June 2007.

Net profit was ahead of that announced as guidance on 15[th] August 2007 and is the company’s 24th consecutive year of profit.

The profit increase was achieved on a 10% increase in revenues to $298 million, a sales and profit record for the group.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was also a record at $21.6 million, an increase of 16% on the corresponding period.

Basic Earnings Per Share (EPS) increased by 1.8 cents, or 7% on the previous year to a total of 26 cents per share, also a record for the group.

The Candle Board has declared a fully franked final dividend of 10c per share, taking the full year dividend to 19c per share, representing a payout ratio of 75%.

With an expectation of further acquisitions by the group, the Board has decided not to declare a special dividend at this time.

Operating cash flow was $14.4 million with positive net cash at balance date of $0.1 million.

Zero net debt

The company finalised three acquisitions in the financial year. In addition, the company paid the deposit for the Asian business of E. L Consult in March. Despite this, as at 30 June 2007, the company had repaid all debt and had no borrowings.

Management comments on record result

“This is another outstanding result for the group. Over the past 5 years, the company has achieved a compound annual growth rate (CAGR) in Net Profit after Tax of 35%. Looking at earnings per share, the CAGR has been 26%”, says Robert Collins, the outgoing Managing Director.

“At last year’s annual general meeting, we informed shareholders of our plans to focus on organic growth, internal systems improvements and business operating structure during the year. Not only have we achieved very good organic growth and created a solid platform for future growth, we have enhanced our balanced scorecard reporting and management information systems under ‘project refresh’. Adding back the one off expense associated with project refresh, the EBIT growth would have been 19.5% to $20.15 million”, he added.

“We also streamlined our operating structure during the year, consolidating several businesses under the Alliance brand. Not only did we retain customers and staff, we now have a stronger more geographically spread business to penetrate the accounting, office support, banking and finance markets”.

Succession planning was also a key focus for the year, with Paul Barbaro and Jane Bianchini being appointed as joint Chief Operating Officers. In July 2007, the Board appointed Diana Eilert as CEO to succeed Robert Collins. Diana has a strong track record in management and the Board regards Diana as ideally qualified to build on the Robert’s excellent achievements who, after over 6 years, steps down as Managing Director effective 28[th] August 2007.

CANDLE AUSTRALIA LIMITED_ABN 43 002 724 334_2007 FULL YEAR RESULTS 2

Success of acquisition and diversification strategy

While most of the attention in 2007 was on organic expansion and establishment of the foundations for future accelerated growth, the company completed the acquisition of the Asian businesses of E. L Consult. With offices in Hong Kong, China, Malaysia and Singapore, and now branded Lloyd Morgan, this initiative not only leverages relationships with existing clients in Australasia but also brings new and exciting opportunities for further expansion in the region. Over time, we would expect that most brands will be represented in the region.

In addition, there was sound profit growth in New Zealand and this trend is expected to continue in the year ahead.

Strong climate for ICT, accounting, banking, finance, executive and records management recruitment services

“Candle has always been a major supplier of resources to the ICT market. In what was its best year since the high demand years of 1998/9, the ICT business enjoyed solid organic expansion. Now with the addition of the ICT services business JAV IT Group, Candle via both the ICT brand and JAV IT is expected to continue to grow its client base and income over the next 12 months.

Similarly, the banking, finance and related markets are expected to experience increasing demand for talent and Candle’s Alliance and Lloyd Morgan brands are well positioned to benefit from this trend. In addition, there is increased attention on good governance and the records and management business of our One Umbrella division is also experiencing strong demand”.

Diana Eilert, the incoming Managing Director expects continued growth

“Candle remains a very strong business with a proven business model that has operated during both ebb and flow markets. With its experienced management team and stable workforce, Candle is in a very sound position to take advantage of opportunities that lie ahead. It has benchmark productivity, no net debt and an operating model that generates profit growth ahead of revenue growth; we are confident of our ability to continue to grow in the years to come,” says Diana Eilert.

Dividend Reinvestment Plan (DRP)

The DRP shall apply to the final dividend according to the rules of the Plan. The last date for receipt of election notices (the record date) is 7 September 2007. The company’s shares will go “ex div” on 3 September 2007. Details of the Plan including the application form are available at www.candle.com.au or by request to the company.

Annual General Meeting

The AGM will be held at 3pm on Thursday 29 November 2007, at Room II, Level 3, The Establishment, 252 George Street, Sydney 2000.

CANDLE AUSTRALIA LIMITED_ABN 43 002 724 334_2007 FULL YEAR RESULTS 3

About Candle Australia Limited

Candle Australia Limited (ASX: CND) is a specialist in the employment services market providing recruitment, contractor and staff services in information and communications technology, banking, finance, commercial accounting, library, records and senior management markets to government and corporations across the Asia Pacific region.

Established over twenty four years ago and listed on the Australian Stock Exchange in 1997, Candle Australia has a reputation for high quality delivery and remains one of the largest, longest standing and best performing recruitment suppliers in region.

Candle Australia Limited now operates through six divisions consisting of a number of quality brands: the information, communications and technology division represented by Candle ICT, the banking and finance, accounting and office support division represented by Alliance, the library and records management division represented by The One Umbrella; and the executive division represented by Lloyd Morgan. In addition, post June 30, 2007, the company announced the addition of the JAV IT Group, a company specialising in IT support services and Realty Check, a pre-employment screening service.

Candle Australia employs over 450 staff through a network of offices located in Sydney, Melbourne, Brisbane, Perth, Adelaide Canberra, Auckland, Wellington, Hong Kong, Singapore, Malaysia and China.

For further information

Robert Collins - Tel: 0418 105 765 or Diana Eilert – Managing Director - Tel: 02 9250 8100

Mark Langan, Chief Financial Officer - Tel: 02 9250 8131

For a copy of the Full Year Report, visit our website www.candle.com.au

CANDLE AUSTRALIA LIMITED_ABN 43 002 724 334_2007 FULL YEAR RESULTS 4

Results for announcement to the market

This announcement is to be read in conjunction with the attached audited financial report

Year ended 30 June 2007

Previous corresponding period is year ended 30 June 2006

					$’000
Revenuefrom ordinary activities	Up	10%		To	297,906
Profit / (loss)from ordinary activities after tax attributable to members	Up	16%		To	13,551
Net profit / (loss)for the period attributable to members	Up	16%		To	13,551
Earningsper security					Cents
Basic EPS (cents per share)	Up	7%		To	26.0
Diluted EPS (cents per share)	Up	7%		To	24.0
Operating cash flow	Up	218%		to	$ 14.4 million
Net tangible assets per security	Up	33%		to	40.0 cents
Dividends	Amount per security			Franked amount per security
Final dividend	$0.10			100%
Interim dividend	$0.09			100%
Record datefor determining entitlement to final dividend				7 September 2007
Ex-dividend date				3 September 2007
Payment dateof final dividend				14 September 2007

CANDLE AUSTRALIA LIMITED_ABN 43 002 724 334_2007 FULL YEAR RESULTS 5

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

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AUDITED FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2007

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Your directors present their report on Candle Australia Limited (the “Company”) and its controlled entities (the “consolidated entity”) for the financial year ended 30 June 2007.

Directors

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

Geoffrey J Moles Executive Chairman Robert J Collins Managing Director Lawrence J Gibbs Non-executive Director Peter D Bunting Non-executive Director Penelope Morris Non-executive Director

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated above.

Principal activities

The principal activities of the consolidated entity during the financial year were the delivery of recruitment services through four specialist brands providing technical, executive and office support personnel within Australia, New Zealand and Asia.

There were no significant changes in the nature of the consolidated entity’s principal activities during the financial year.

Operating results

The consolidated profit of the consolidated entity after providing for income tax for the financial year amounted to $13,551,000 (2006: $11,707,000).

Dividends paid or recommended

Dividends paid to members during the financial year were as follows:

Dividends paid to members during the financial year were as follows:
Fully franked final dividend of 9.0 cents per share and a fully franked special dividend of 2.0 cents per share was paid on 15 September 2006: Fully franked interim dividend of 9.0 cents per share was paid on 16 March 2007	2007 $000 2006 $000
	5,608 3,730 4,753 3,942

On 28 August 2007 the directors resolved to declare a fully franked final dividend of 10.0 cents per share to be paid on 14 September 2007 amounting to $5,344,000.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Review of operations

Profit from ordinary activities after tax was $13,551,000 up by 16% on 10% higher revenues compared to the prior year. In addition to the positive contribution from the current year acquisitions, there has been significant growth within the existing businesses. Further information is included in the executive chairman’s and managing director’s review sections of the annual report.

Financial position

The net assets of the consolidated entity have increased by $12,884,000 from 30 June 2006. This increase has been the result of the following:

• continuation of the company’s acquisition strategy with the acquisition of the Asian operations of E L Consult; and

• strong profit growth from the business and from recent acquisitions.

Overall the consolidated entity is in a sound position with un-drawn financing facilities and the potential to raise further capital as and when required. The directors believe the consolidated entity is in a financial position to continue to grow both organically and through acquisition.

Significant changes in state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial year, other than the acquisition of the businesses referred to above.

Future developments

The likely developments in the operations of the consolidated entity and the expected results of those operations in financial years subsequent to the year ended 30 June 2007 are included in greater detail in the executive chairman’s and managing director’s review section of the annual report.

These developments, together with the current strategy of continuous productivity improvement, are expected to assist in the achievement of the Company’s long term goals.

After balance date events

On 12 July Candle Australia Limited entered into an agreement to acquire the IT services business and assets of the JAV IT Group. A deposit of $4 million was paid on 15 August 2007. The total purchase price subject to future performance will be approximately $8 million.

On 17 July 2007 Candle Australia Limited entered into an agreement to acquire all of the issued shares in Reality Check Pty Limited. The total purchase price subject to future performance will be approximately $1million.

On 28 August 2007 the Company resolved to pay a fully franked final dividend of 10.0 cents per share on 14 September 2007.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

On 19 July Diana Eilert was appointed as Chief Executive Officer to replace Robert Collins who will stand down on 28 August.

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in subsequent financial years.

Environmental issues

The consolidated entity’s operations are regulated by the relevant Commonwealth and State legislation. The nature of the Company’s business does not give rise to any significant environmental issues.

Information on directors

Geoffrey J Moles

Executive Chairman

Geoffrey Moles has over thirty five years commercial experience in information technology (IT) and recruitment at senior management levels. In 1984, he established Candle Computer Services Pty Ltd which became Candle Australia Limited when listed on the ASX in 1997. Prior to Candle Geoff worked in the IT industry with Burroughs Limited and Datec Pty Limited (now DMR), one of Australia’s leading systems integration companies.

He is chairman of the Board Remuneration and Nominations Committee.

Robert J Collins

Managing Director

Robert Collins is currently managing director of Candle Australia Limited. He was, until 30 June 2005, on the Board of Commissioners at the Health Insurance Commission, which administers government programs including Medicare and the PBS System. Previously, he was CEO of FreeOnLine Holdings Limited, prior to which he was also CEO of Icon Recruitment Pty Limited and Ajilon Australia Pty Limited, companies owned by the worldwide Adecco Group. He was managing director of Information Builders Pty Limited, the local subsidiary of the worldwide Information Builders Inc.

Robert is a Fellow of the Australian Institute of Management and Australian Institute of Company Directors and was founding president of the Information Technology Contracting and Recruiting Association. He holds a Bachelor of Science degree from Monash University.

Lawrence J Gibbs

Non-Executive Director

Lawrence Gibbs is currently managing director of BG Capital Corporation Limited, an independent investment banking firm. Lawrence was previously executive director and head of investment banking at Burdett Buckeridge & Young Limited, a well known Australian stockbroking and investment banking firm. He has 32 years experience in the financial services industry, including senior executive positions in funds management, corporate advisory, investment banking and stockbroking. Lawrence is a director of private investment companies. Lawrence holds a Bachelor of Economics degree.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

He is also a member of the Board Audit, Risk and Compliance Committee and the Board Remuneration and Nominations Committee.

Peter D Bunting

Non-Executive Director

Peter Bunting LLB FCA, worked for 30 years in the accounting profession with 16 years as a partner in Deloittes. From 2000 to 2005 he was chairman of the Health Insurance Commission, a major Federal Government agency, delivering health programs including Medicare and the PBS. He is a director of several unlisted companies.

Peter is chairman of the Board Audit, Risk and Compliance Committee and is a member of the Board Remuneration and Nominations Committee.

Penelope Morris

Non-Executive Director

Penny Morris AM has been a professional company director since 1994 serving on a diverse range of public company and government enterprise boards. She is currently a director of Aristocrat Leisure Limited, Mirvac Limited, the NSW Institute of Teachers and the Bowel Cancer & Digestive Research Institute Australia. Prior to this period, Penny held senior executive positions with Lend Lease in Sydney, and the Commonwealth Government in Canberra. Penny has a Bachelor of Architecture (Hons.), a Masters of Environmental Science and Diplomas of Company Directorship and International Company Directorship.

Penny is also a member of the Board Audit, Risk and Compliance Committee.

Director’s interests in shares and options

At the date of this report, the particulars of shares and options in which each director has a relevant interest either directly or indirectly are:

Geoffrey J Moles

• 1,796,825 ordinary shares

Robert J Collins

• 1,393,500 ordinary shares and options to acquire a further 1,800,000 ordinary shares.

Lawrence J Gibbs

• 45,275 ordinary shares

Peter D Bunting

• 7,500 ordinary shares

Company Secretary

Nicholas Geddes FCA FCIS was appointed company secretary on the 18 November 1996. Mr Geddes is the principal of Australian Company Secretaries, a company secretarial practice that he formed in 1993. Nicholas is a member of the National Council of Chartered

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Secretaries Australia and Chairman of the NSW branch of that Institute. His previous experience, as a chartered accountant and company secretary, includes investment banking and development and venture capital in Europe, Africa, the Middle East and Asia. Nicholas is a Fellow of the Institute of Company Secretaries in Australia and a Fellow of the Institute of Chartered Accountants in England and Wales.

Remuneration report

The remuneration report is set out under the following headings:

• (a) Non-Executive Director remuneration

• (b) Principles used to determine the nature and amount of executive remuneration

• (c) Details of remuneration

• (d) Employment contracts

• (e) Share-based payments

The information provided under these headings includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited.

(a) Non-Executive Director remuneration

The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Remuneration and Nominations Committee determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the consolidated entity. Non-executive directors do not receive options.

(b) Principles used to determine the nature and amount of executive remuneration

Executive Remuneration Policy

The Executive Remuneration Policy, setting the terms and conditions for the chief executive and other senior executives (excluding the executive chairman), was developed by the Board Remuneration and Nominations Committee and approved by the Board after seeking professional advice from independent external consultants. All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits, options and performance incentives. The Remuneration and Nominations Committee reviews executive remuneration annually by reference to the consolidated entity’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

The Executive Remuneration Policy has been designed to align executive and shareholder interests and objectives. The Board believes the Executive Remuneration Policy to be appropriate and effective in attracting and retaining skilled executives to run and manage the business.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

The performance of executives is measured against criteria agreed annually with each executive and the criteria are based predominantly on the forecast growth of the consolidated entity’s profits and shareholder value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can recommend changes to the committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract skilled executives and reward them for performance that results in long-term growth in shareholder wealth.

Executives are also entitled to participate in the employee share option arrangements.

The non-executive directors and executives are entitled to a superannuation guarantee contribution required by the Government and do not receive any other retirement benefits.

All remuneration paid to executives is valued at cost to the Company and expensed. Options are valued using the American Call Option Pricing methodology.

Performance based remuneration

As part of the chief executive and senior executives’ remuneration package there is a performance-based component, related to key performance indicators (KPIs). The intention of this program is to facilitate congruence of goals between executives and those of the business and shareholders. The KPIs are set annually, with a degree of consultation with executives to ensure their commitment. The measures are specifically tailored to the areas of each executives involvement and over which they have control.

The KPIs target areas the Board believes hold greater potential for the consolidated entity’s expansion and profitability, covering financial and non-financial as well as short-term and longterm goals. The level set for each KPI is based on budgeted figures for the consolidated entity and respective industry standards.

Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Remuneration and Nominations Committee in light of the desired and actual outcomes, and their efficiency is assessed in relation to the consolidated entity’s goals and shareholder wealth, before the KPIs are set for the following year.

In determining whether or not a KPI has been achieved, the Company bases the assessment on audited figures, however, where the KPI involves comparison of the consolidated entity or a division within the consolidated entity to the market, independent reports are obtained from organisations such as Standard & Poors.

Options issued as part of remuneration

Options are issued to the Managing Director and senior executives as part of their remuneration. The options are not issued based on performance criteria alone, as they are also issued to encourage staff retention within the consolidated entity. The key goal is to increase congruence of goals between executives, staff, directors and shareholders.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

(c) Details of directors’ and key management personnel remuneration

The remuneration of each director is as follows:

Parent Entity	Parent Entity	Short-term employee benefits Salary Directors’ Fees Bonus	Short-term employee benefits Salary Directors’ Fees Bonus	Short-term employee benefits Salary Directors’ Fees Bonus	Post- employment benefits Super- annuation	Post- employment benefits Super- annuation	Total remuneration paid	Total remuneration paid	Share based payments Annualised value
Geoffrey J Moles 2007 2006 Robert J Collins 2007 2006 Lawrence J Gibbs 2007 2006 Peter D Bunting 2007 2006 Penelope Morris 2007 2006		$ $ $			$		$		$
		128,214 209,305 - - - - 490,984 466,985 - - 235,699 185,000 - - 49,403 45,871 - - - 58,040 - - 47,194 - - 51,349 - - 40,546 -			9,219 12,139 15,858 12,139 4,446 4,129 5,223 4,247 - -		137,433 221,444 742,541 664,124 53,849 50,000 63,263 51,441 51,349 40,546		- - 28,757 79,054 - - - - - -
	The remuneration of key management personnel of above is as follows:				the consolidated entity not			included Share based payments Annualised value $ 19,632 12,148 45,799 7,537 37,498 - 37,498 -
	Consolidated		Short-term employee benefits Salary Bonus	Post- employment benefits Super- annuation		Total remuneration paid		Share based payments Annualised value
	Mark A Langan 2007 2006 Kym L Quick 2007 2006 Jane A Bianchini 2007 2006 Paul A Barbaro 2007 2006		$ $	$		$		$
			194,479 187,738 27,500 25,000 216,999 199,998 50,000 40,000 207,861 27,714 219,998 - 204,064 - 150,000 -	14,148 12,139 11,821 12,139 14,995 2,494 13,138 -		236,127 224,877 278,820 252,137 442,854 30,208 367,202 -		19,632 12,148 45,799 7,537 37,498 - 37,498 -

Paul A Barbaro was appointed on 29 August 2006. Jane A Bianchini was appointed on 15 May 2006.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

The relative proportions of the remuneration that are linked to performance and those that are fixed are as follows:

		Short term	incentives	Share
		Fixed	Performance	based
Directors		remuneration	based bonus	payments
Geoffrey J Moles	2007	100%		-
	2006	100%	-
Robert J Collins	2007	66%	31%	4%
	2006	64%	25%	11%
Lawrence J Gibbs	2007	100%	-	-
	2006	100%	-	-
Peter D Bunting	2007	100%	-	-
	2006	100%	-	-
Penelope Morris	2007	100%	-	-
	2006	100%	-	-
Key management	personnel
Mark A Langan	2007	76%	11%	8%
	2006	79%	11%	5%
Kym L Quick	2007	67%	15%	14%
	2006	77%	15%	3%
Jane A Bianchini	2007	43%	46%	8%
	2006	92%	-	-
Paul A Barbaro	2007	50%	37%	9%
	2006	-	-	-

The basis of the performance based bonus is described in note (b) above. As the overall performance of the consolidated group exceeded the targets and KPIs within the financial year, 100% of the available bonus was achieved (2006: 100%).

(d) Employment contracts

Remuneration and other terms of employment for the managing director and other key management personnel are formalised in contracts of employment. Each of these agreements provide for the remuneration terms including the provision of performancerelated cash bonuses and other benefits. There are no specified lengths of service included within the contract. The managing director’s contract may be terminated by either party with six months notice. All other contracts with key management personnel may be terminated by either party with between two weeks and two months notice.

(e) Share-based payments

Non Cash Benefits include the annualised value of the options granted over unissued ordinary shares during the financial year valued using the American call option pricing model. Options vest over four financial years and only on the satisfaction of a performance hurdle.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Option holdings

Balance 1/7/2006 Granted Exercised Other Change Directors Geoffrey J Moles - - - - Robert J Collins 2,400,000 - 600,000 - Lawrence J Gibbs - - - - Peter D Bunting - - - - Penelope Morris - - - - Key Management Personnel Mark A Langan 530,000 100,000 286,666 - Kym L Quick 271,000 500,000 - - Jane A Bianchini - 500,000 - - Paul A Barbaro - 500,000 - - Total 3,201,000 1,600,000 886,666 -	Balance 1/7/2006 Granted Exercised Other **Change **	Balance 30/6/2007 Vested 30/6/2007
		- - 1,800,000 600,000 - - - - - - 343,334 10,000 771,000 127,666 500,000 - 500,000 -
	3,201,000 1,600,000 886,666 -	3,914,334 737,666

Options that were granted over unissued ordinary shares pursuant to the rules of the Share Option Plan, during the financial year by the Company to key management personnel as part of their remuneration are as follows:

• 100,000 options at an exercise price of $3.30 expiring on 28 September 2010 were granted to Mark A Langan. The total value at the grant date was $22,333 and the options will vest over four years. Fair value of the options at grant date was 38 cents each.

• 500,000 options at an exercise price of $3.30 expiring on 28 September 2010 were granted to Kym L Quick. The total value at grant date was $111,666 and the options will vest over four years. Fair value of the options at grant date was 38 cents each.

• 500,000 options at an exercise price of $3.30 expiring on 28 September 2010 were granted to Jane A Bianchini. The total value at grant date was $111,666 and the options will vest over four years. Fair value of the options at grant date was 38 cents each.

• 200,000 options at an exercise price of $3.30 expiring on 28 September 2010 and 300,000 options at an exercise price of $3.30 expiring on 24 April 2011 were granted to Paul A Barbaro. The total value at grant date was $111,666 and the options will vest over four years. Fair value of the options at grant date was 38 cents and 44 cents respectively.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Shareholdings

Directors Geoffrey J Moles Robert J Collins Lawrence J Gibbs Peter D Bunting Penelope Morris Key Management Personnel Mark A Langan Kym L Quick Jane A Bianchini Paul A Barbaro Total	Balance 1/7/2006 Received as Remuneration Options Exercised Other Change Balance 30/6/2007
	2,757,212 - - (960,387) 1,796,825 793,500 - 600,000 - 1,393,500 42,681 - - 2,594 45,275 7,500 - - - 7,500 - - - - - - - 286,666 (286,666) - - - - - - 2,500 - - 153 2,653 - - - - -
	3,603,393 - 886,666 (1,244,306) 3,245,753

Shares issued on exercise of options during the year

Directors Robert J Collins Key Management Personnel Mark A Langan Kym L Quick Jane A Bianchini Paul A Barbaro	No. of Shares Issued Amount Paid per Share $ Amount Unpaid per share $
	600,000 1.00 - 200,000 20,000 66,666 0.76 1.61 2.08 - - - - - - - - - - - -

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

Meetings of directors

During the financial year, thirteen meetings of directors were held. Attendances were:

Director Geoffrey J Moles Robert J Collins Lawrence J Gibbs Peter D Bunting Penelope Morris	Number of meetings held while a Director Number of meetings attended
	13 13 13 13 13 13 13 13 13 13

Board Audit Risk and Compliance Committee meetings

During the financial year, five Committee meetings were held. Attendances were:

Director Lawrence J Gibbs Peter D Bunting Penelope Morris	Number of meetings held while a member Number of meetings attended
	5 5 5 5 5 5

Board Remuneration and Nominations Committee meetings

During the financial year, three Committee meetings were held. Attendances were:

Director Geoffrey J Moles Lawrence J Gibbs Peter D Bunting	Number of meetings held while a member Number of meetings attended
	3 3 3 3 3 3

Indemnifying officers or auditor

The Company has not, during or since the end of the financial year, in respect of any person who is or has been an officer or auditor of the Company or a related body corporate:

• indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings; or

• paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the costs of expenses to defend legal proceedings;

with the exception of the following:

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

• during the year the Company paid a premium to insure the directors listed in this report against liabilities for the costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of directors of the Company. The terms of the policy prohibit disclosure of the premium paid; and

• the Company has entered into deeds of indemnity, insurance and access with each of the directors and the company secretary. These were approved by shareholders at the 2001 annual general meeting. The indemnity will only indemnify a director to the extent permitted by the law and the Company’s constitution.

Directors’ benefits

No director has received or become entitled to receive, during or since the end of the financial year, a benefit because of a contract made by the Company, controlled entity or a related body corporate with a director, a firm of which a director is a member or an entity in which a director has a substantial financial interest other than as disclosed in note 7 of the financial statements.

This statement excludes a benefit included in the aggregate amount of emoluments received or due and receivable by directors and shown in the Company’s financial statements, or the fixed salary of a full-time employee of the Company, controlled entity or a related body corporate.

Proceedings on behalf of the Company

No person has applied for leave of Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceeding to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The Board of Directors, in accordance with the advice from the Board Audit Risk and Compliance Committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• the nature and scope of all non-audit services are reviewed and approved by the Board Audit Risk and Compliance Committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

• the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia’s Professional Statement F1: Professional Independence.

12

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 DIRECTORS’ REPORT

The following fees for non-audit services were paid to the external auditors during the year ended 30 June 2007:

Taxation services Business services Total	$
	11,81 4 5,227
	17,04 1

Auditor’s independence

The lead auditor’s independence declaration for the year ended 30 June 2007 has been received and can be found on page 14 of the directors’ report.

Rounding of amounts

The Company has applied the relief available to it in ASIC Class Order 98/100, and, accordingly, amounts in the financial statements and the directors’ report have been rounded to the nearest thousand dollars.

Signed in accordance with a resolution of the Board of Directors

...................................................................

Geoffrey J Moles – Executive Chairman

...................................................................

Robert J Collins – Managing Director

Dated at Sydney this 28th day of August 2007.

13

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of Candle Australia Limited and controlled entities for the year ended 30 June 2007, I declare that, to the best of my knowledge and belief, there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• (b) no contraventions of any applicable code of professional conduct in relations to the audit.

This declaration is in respect of Candle Australia Limited and the entities it controlled during the period.

...................................................................

WHK Horwath

...................................................................

B Hatchman

Dated at Sydney this 28th day of August 2007.

14

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Revenues from continuing operations On hired labour costs Employee benefits expense Depreciation and amortisation expense Operating rental expense Borrowing costs expense Other expenses Profit before income tax Income tax expense Profit for the year attributable to the members of Candle Australia Limited Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	3 4 4 5, 30 9, 30 9, 30	297,906 270,328 251,848 221,018 (225,055) (207,348) (197,962) (178,866) (38,379) (33,357) (25,725) (21,854) (1,648) (1,766) (1,022) (1,152) (2,543) (2,162) (1,424) (1,332) (426) (95) (402) (101) (10,232) (8,520) (9,380) (5,983)
		19,623 17,080 15,933 11,730 (6,072) (5,373) (4,778) (3,868)
		13,551 11,707 11,155 7,862
		26.0 24.2 24.0 22.4

The above income statements should be read in conjunction with the accompanying notes.

15

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

BALANCE SHEET AS AT 30 JUNE 2007

CURRENT ASSETS Cash assets and cash equivalents Trade and other receivables Deferred tax assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other Receivables Property, plant and equipment Other financial assets Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Bank overdraft Current tax liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Trade and other Payables Deferred tax liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained profits TOTAL EQUITY	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	11 12 13 12 14 15 17 18 10 19 20 18 19 20 21 22, 30 23, 30	2,948 4,087 782 1,713 50,753 49,085 50,198 41,564 2,376 2,231 1,860 1,608
		56,077 55,403 52,840 44,885
		- - 5,190 4,758 2,723 3,249 1,679 1,967 - - 25,234 30,762 62,477 56,711 23,618 23,523
		65,200 59,960 55,721 61,010
		121,277 115,363 108,561 105,895
		29,409 38,809 25,522 34,909 2,847 - 2,847 - 1,448 1,797 749 1,778 2,002 1,953 1,079 796
		35,706 42,559 30,197 37,483
		24 22 - - 10 - - - 956 1,085 713 704
		990 1,107 713 704
		36,696 43,666 30,910 38,187
		84,581 71,697 77,651 67,708
		62,921 54,072 62,921 54,072 1,000 155 664 364 20,660 17,470 14,066 13,272
		84,581 71,697 77,651 67,708

The above balance sheets should be read in conjunction with the accompanying notes.

16

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007

Total equity at the beginning of the financial year Exchange difference on translation of foreign operations Net income recognised directly in equity Profit for the year Total recognised income and expense for the year Dividends paid or provided for Shares issued during the year Share based payments Total equity at the end of the financial year Effect of amendment in previous year: Profit as reported in the 2006 financial report Amendment Restated profit	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	22 6 21 22 30	71,697 59,520 67,708 58,669
		545 (707) - -
		545 (707) - -
		13,551 11,707 11,155 7,862
		14,096 11,000 11,155 7,862
		(10,361) (7,672) (10,361) (7,672) 8,849 8,631 8,849 8,631 300 218 300 218
		84,581 71,697 77,651 67,708
		13,551 11,809 11,155 7,964 - (102) - (102) 13,551 11,707 11,155 7,862

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

17

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

Note CASH FLOWS OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest and other borrowing costs paid Income tax paid GST paid Net cash provided by operating activities 10 CASH FLOWS INVESTING ACTIVITIES Payment for purchase of business 29 Purchase of plant and equipment Proceeds from disposal of non-current assets Payments for software development and intangible assets Net cash (used in)/ provided by investing activities CASH FLOWS FINANCING ACTIVITIES Loan to vendor of business Loan from related party Repayment of loan from vendor of business Repayment of loan to vendor of business Dividends paid to shareholders Proceeds from the issue of shares Net cash (used in)/ provided by financing activities Net increase / (decrease) in cash held Cash at the beginning of the financial year Effect of exchange rates on cash holdings in foreign currencies Cash at the end of the financial year 11	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
		327,163 316,802 277,245 260,009 (286,201) (287,406) (243,572) (244,813) 80 262 33 573 (426) (95) (402) (101) (6,554) (5,444) (6,062) (3,868) (19,678) (17,520) (16,670) (8,233) 14,384 6,599 10,572 3,567 (11,255) (6,825) (8,152) (7,082) (603) (1,091) (451) (943) 27 - 27 - (458) (193) (380) (185) (12,289) (8,109) (8,956) (8,210) - (400) - (457) - 690 1,005 2,550 - (495) - - 205 - - - (8,288) (5,880) (8,288) (3,031) 1,889 4,492 1,889 1,642 (6,194) (1,593) (5,394) 704 (4,099) (3,103) (3,778) (3,939) 4,087 7,395 1,713 5,652 113 (205) - - 101 4,087 (2,065) 1,713

The above cash flow statements should be read in conjunction with the accompanying notes.

18

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial report is a general purpose financial report that has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS), Urgent Issues consolidated entity Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The financial report is compliant with the to the International Financial Reporting Standards (IFRS) in their entirety.

The financial report covers the consolidated entity of Candle Australia Limited and controlled entities and Candle Australia Limited as an individual entity. Candle Australia Limited is a listed public company, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

BASIS OF PREPARATION

Reporting basis and conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Candle Australia Limited as at 30 June 2007 and the results of all subsidiaries for the year ended 30 June 2007. Candle Australia Limited and its subsidiaries together are referred to in this financial report as the consolidated entity.

Subsidiaries are all those entities (including special purpose entities) over which the consolidated entity has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the consolidated entity controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

19

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

The purchase method of accounting is used to account for the acquisition of subsidiaries by the consolidated entity. Minority interest in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively. Investments in subsidiaries are accounted for at cost in the individual financial statements of Candle Australia Limited.

Intercompany transactions, balances and unrealised gains on transactions between the consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

(b) Revenue recognition

Contracting revenue is brought to account when the services are provided. Services provided but not yet billed are taken up as accrued revenue. Permanent recruitment revenue is brought to account on the following basis:

• (i) Executive positions – on signing of the contract of employment by each party

(ii) Administration positions – on start date of the employee Where the consolidated entity provides only payroll services to clients, only the fee derived is accounted for in revenue.

(c) Income tax

The charge for current income tax expense is based on profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by law.

20

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Tax consolidation legislation

Candle Australia Limited and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the Tax Consolidation Regime.

The head entity, Candle Australia Limited and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Candle Australia Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from the controlled entities in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the consolidated entity. Details about the tax funding agreement are disclosed in note 5.

(d) Employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries and annual leave which will be settled after one year, have been measured as the amounts expected to be paid when the liability is settled, plus related on-costs. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Contributions are made by the consolidated entity to employee superannuation funds and are charged as expenses when incurred.

Share based payments

Share options granted before 7 November 2002 and/or vested before 1 January

2005:

No expense is recognised in respect of these options.

Share options granted after 7 November 2002 and vested after 1 January 2005: The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using the American option call pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the share price at grant date and expected

21

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

At each balance sheet date, the entity revises its estimate of the number options that are expected to become exercisable. The employee benefits expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

(e) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to the consolidated entity are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are amortised over their estimated useful lives. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

(f) Intangible assets

(i) Candidate databases and logos

Candidate databases and logos represent the consolidated entity’s candidate databases that were acquired. These assets are recorded at their respective cost of acquisition, which were supported by independent valuations performed immediately prior to the respective acquisitions.

The candidate databases represent accumulated private and proprietary information regarding the technical resource base of the various businesses. They are amortised on a straight line basis over a period of two years from the date of acquisition.

The only candidate databases recorded in the balance sheet are those that were purchased. Therefore, the candidate databases for the ICT division in New South Wales and Australian Capital Territory, which were not purchased, have not been recorded.

The candidate databases are constantly updated as an integral part of the business and are the major basis for the generation of revenue and profit. All costs incurred in maintaining, upgrading and improving the candidate databases are expensed as incurred.

22

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(ii) Goodwill

Goodwill is recorded initially at the amount by which the purchase price for a business exceeds the fair value attributed to its net assets at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment losses.

(iii) Software development costs

Software development costs are capitalised where future benefits are expected to contribute to future period financial benefit through revenue generation and/or cost reduction. Otherwise such costs are expensed in the period in which they are incurred. Capitalised software development costs include external direct cost of materials and services, direct payroll and payroll related costs of every employee’s time spent on the project. These costs are amortised on the basis of the expected useful life of the software. Unamortised costs are reviewed at each balance date to determine the amount (if any) that is no longer recoverable. Any amount so identified is written off.

(g) Business combinations

The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price at the date of exchange. Transactions costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the net assets acquired is recorded as goodwill.

(h) Property, plant and equipment

Plant and equipment is brought to account at cost less, where applicable, any accumulated depreciation or amortisation. The carrying amount of property, plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets.

23

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to their present values in determining recoverable amounts.

The depreciable amount of all fixed assets, including capitalised leased assets is depreciated over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are amortised over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the consideration at the date of acquisition plus costs incidental to the acquisition.

The gain or loss on disposal of all fixed assets, is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal and is included in operating profit before income tax of the consolidated entity in the year of disposal.

The depreciation rates and methods used for each class of depreciable assets are:

Class of Asset	Rate	Method
Plant & Equipment	9% - 37.5%	Diminishing value
Leasehold Improvements	20% - 50%	Straight line

Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

(i) Foreign currency transactions and balances

(i) Functional and presentation currency - Items included in the financial statements of each of the entities that make up the consolidated entity are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is Candle Australia Limited’s functional and presentation currency.

24

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(ii) Transactions and balances – foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(iii) Candle Australia Limited group companies – the results and financial position of all the entities making up the consolidated entity (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• (b) income and expenses for each income statement are translated at average exchange rates unless this is not a reasonable approximation of the accumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions; and

• (c) all resulting exchange differences are recognised as a separate component of equity.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of a foreign entity and translated at the closing rate.

(j) Cash

For the purpose of the statement of cash flows, cash includes:

• (i) cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and

• (ii) investments in money market instruments with less than 14 days to maturity.

• (iii) bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(k) Rounding of accounts

The Company has applied the relief available under ASIC Class Order 98/100 and accordingly, amounts in the financial report and Directors’ report have been rounded to the nearest thousand dollars.

(l) Trade Receivables

Trade Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade

25

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will become insolvent, and default or delinquency in payments outside the trading terms are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the income statement in other expenses.

(m) Financial instruments

(i) Loans and receivables – are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the consolidated entity provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in the current assets, except for those with maturities greater than 12 months after balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the balance sheet.

(ii) Held-to-maturity investments – are non-derivative financial assets with fixed or determinable payments and fixed maturities that the consolidated entity’s management has the positive intention and ability to hold to maturity.

Loans and receivables and held-to-maturity investments, where applicable, are carried at amortised cost using the effective interest method.

(n) Provisions

Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

26

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(o) Dividends

A provision is recognised for dividends when they have been declared, determined or publicly recommended by the Directors on or before the end of the year but not distributed at balance date.

(p) Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

(q) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. The GST components of cashflows arising from investing or financing activities which are recoverable from or payable to the taxation authority are presented as operating cashflows.

(r) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(s) Earnings per share

(i) Basic earnings per share – is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share – adjusts the figures used in the determination of basic earnings per share to take into account the dilutive effect of outstanding employee options. The adjustment takes account of the weighted average income tax effect of interest and other associated financing costs.

(t) Critical accounting estimates and judgements

Estimates and judgements incorporated in the financial statements are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

27

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(i) Estimated impairment of goodwill

The consolidated entity tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy in note 1(f). 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 17 for details of these assumptions and the potential impact of changes in these assumptions.

(ii) Income taxes

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the Group provision for income taxes. The Group recognises liabilities for anticipated tax based on estimates of whether any additional taxes are due.

(u) Financial risk management

The consolidated entity’s activities expose it to a variety of financial risks:

(i) Credit risk

The Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales are made to customers with an appropriate credit history.

(ii) Liquidity risk

Due to the dynamic nature of the underlying business, the consolidated entity aims at maintaining flexibility in funding by ensuring sufficient cash and committed credit lines are available.

(iii) Cash flow and fair value interest rate risk

As the consolidated entity has no significant interest-bearing assets or liabilities, the income and operating cash flows are not materially exposed to changes in interest rates. The consolidated entity regularly reviews its financial position to ensure that there are no potential exposures.

(v) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when 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.

28

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(w) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Group’s and parent entity’s assessment of the impact of these new standards and interpretations is set out below:

(i) AASB 7 Financial Instruments: Disclosures and AASB 2005-10 Amendments to Australian Accounting standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]

AASB 7 and AASB 2005-10 are applicable to annual reporting periods beginning on or after 1 January 2007. The consolidated entity has not adopted the standards early. Application of the standards will not affect any of the amounts recognised in the financial statements, but may impact the type of information disclosed.

(ii) AASB-I 10 Interim financial reporting and impairment AASB-I 10 is applicable to reporting periods commencing on or after 1 November 2006. The Group has not incurred an impairment loss covered by this standard. Hence application of the interpretation will have no impact on the Group’s or the parent entity’s financial statements.

(iii) AASB 8 Operating Sgments replaces the presentation requirements of segment reporting periods beginning on or after 1 January 2009 and is not expected to have an impact on the financial results of the Company and the Group as the standard is only concerned with disclosures.

29

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

2. Segment Reporting a) Segments GEOGRAPHIC SEGMENTS Australia New Zealand Asia 2007 $000 2006 $000 2007 $000 2006 $000 2007 $000 2006 $000	2. Segment Reporting a) Segments GEOGRAPHIC SEGMENTS Australia New Zealand Asia 2007 $000 2006 $000 2007 $000 2006 $000 2007 $000 2006 $000	Consolidated 2007 $000 2006 $000
REVENUE External sales Other revenue Total segment revenue RESULT Segment result before tax and intercompany charges Intercompany charges Segment result before taxation Income tax expenses Net profit for the year Segment assets Segment liabilities Intercompany balances Net assets Acquisitions of non current segment assets Depreciation and amortisation	279,575 257,245 15,128 12,775 2,412 - 471 270 314 38 6 -	297,116 270,020 790 308
	280,046 257,515 15,442 12,813 2,418 -	297,906 270,328
	17,952 16,055 1,324 1,025 347 -	19,623 17,080
	485 510 (485) (510) - -	- -
	18,437 16,565 839 515 347 -	19,623 17,080
	100,147 103,443 8,134 6,974 7,668 - 31,401 37,605 1,491 1,115 3,804 - 5,238 4,945 (5,053) (4,945) (3,596) -	(6,072) (5,373)
		13,551 11,707
		121,277 110,417 36,696 38,720 - - 84,581 71,697
	709 1,230 19 85 2 - 1,564 1,690 57 76 27 -	730 1,315 1,648 1,766

b) Segment accounting policies - segment information is prepared in accordance with the accounting policies of the entity as disclosed in note 1 and accounting standard AASB 114: Segment Reporting . During the year, there were no changes in segment accounting policies that had a material effect on the segment information other than the inclusion of the geographic segment Asia as a result of the acquisition of the Asian operations of EL Consult.

(c) The consolidated entity derived income from the provision of contract and temporary personnel to and recruitment services for business and Government in Australia and New Zealand and Asia.

(d) The pricing of inter-segment transactions is the same as prices charged on transactions with parties outside the consolidated entity. Such transactions are eliminated on consolidation.

30

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

3. Revenue

3. Revenue
From continuing operations - sales revenue - interest received - unrealised gain on loan to controlled entity Other revenue - software royalties - Sale of fixed assets - dividend from wholly-owned subsidiary Total revenue 3(a)Interest revenue from: - wholly owned subsidiaries - other persons Total interest revenue 4. Expenses Profit before income tax includes the following specific expenses: Finance costs: - other persons - wholly owned subsidiaries Total borrowing costs & expenses Depreciation of non-current assets - plant and equipment Amortisation of non-current assets - leasehold improvements - capitalised computer software - candidate databases Total amortisation Total depreciation and amortisation expense Bad and doubtful debts - trade debtors Loss on sale of plant and equipment	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	3(a) Note	297,405 80 -	270,020 245,251 220,399 262 394 573 - 495 -
		297,485	270,282 246,140 220,972
		394 27 -	46 394 46 27 - - 5,287 -
		421 297,906	46 5,708 46 270,328 251,848 221,018
		- 80	- 361 389 262 33 184
		80	262 394 573
		Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000 426 95 402 90 - - - 11 426 95 402 101 888 789 593 471 242 215 144 139 260 294 246 294 258 468 39 248 760 977 430 681 1,648 1,766 1,022 1,152 (8) 10 (8) 10 - 78 - 24

31

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

5. Income tax expense

Current tax Deferred tax Deferred income tax expense included in income tax expense comprises: Decrease/ (Increase) in deferred tax assets (Decrease)/ Increase in deferred tax liabilities The prima facie tax on profit before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit before income tax at 30% - consolidated - parent entity Add tax effect of: - non-deductible amortisation - other non-allowable items - tax rate adjustment on wholly-owned foreign subsidiaries Less tax effect of: - non-taxable unrealised exchange loss / (gain) on loan to controlled entity Sundry items Total income tax expense	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	13 19	6,207 6,083 5,030 4,091 (135) (710) (252) (223)
		6,072 5,373 4,778 3,868
		(145) (658) (252) (171) 10 (52) - (52)
		(135) (710) (252) (223)
		5,887 5,155 - - - - 4,780 3,550
		5,887 5,155 4,780 3,550
		11 75 11 75 183 121 135 75 (10) 15 - - - - (148) 158 1 7 - 10
		6,072 5,373 4,778 3,868

32

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Tax consolidation legislation

Candle Australia Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. The accounting policy in relation to this legislation is set out in note 1(c).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity, Candle Australia Limited.

The entities have also entered into a tax compensation deed and a deed of tax sharing under which the wholly-owned entities fully compensate Candle Australia Limited for any current tax payable assumed and are compensated by Candle Australia Limited for any current tax receivable that is transferred to Candle Australia Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon the receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year.

6. Dividends

2006 final fully franked dividend at 9.0 cents per share and a special fully franked dividend of 2.0 cents per share (2005 final: 6.0) 2007 interim fully franked dividend at 9.0 cents per share (2006 interim: 8.0) Under-provision for prior year The balance of the franking account at period end adjusted for franking credits arising from payment of income tax payable and excludes payment of proposed dividends	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
		5,608 3,730 5,608 3,730 4,753 3,942 4,753 3,942 - -
		10,36 1 7,672 10,361 7,672
		13,46 5 13,530 9,708 10,807

33

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

7. Key management personnel disclosures

The names of the parent entity directors who have held office during the financial year are:

Geoffrey J Moles Executive Chairman Robert J Collins Managing Director Lawrence J Gibbs Non-Executive Director Peter D Bunting Non-Executive Director Penelope Morris Non-Executive Director

The names of the persons who had authority and responsibility for planning, directing and controlling the activities of the Group directly or indirectly who held office during the financial year are:

Jane A Bianchini	Joint Chief Operating Officer
Paul A Barbaro	Joint Chief Operating Officer
Mark A Langan	Chief Financial Officer
Kym L Quick	Group Business Operations Manager

The Company has taken advantage of the relief provided by the Corporations Amendment Regulations 2006 (no 4) and has transferred the detailed remuneration disclosures to the directors’ report. The relevant information can be found in the remuneration report on pages 5 to 10.

Option holdings

The number of options over ordinary shares in the Company held during the financial year by each director of Candle Australia Limited and other key management personnel of the consolidated entity, including their personally related parties, are set out below.

Share holdings

The number of shares in the Company held during the financial year by each director of Candle Australia Limited and other key management personnel of the consolidated entity, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

34

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Option holdings

Directors Geoffrey J Moles Robert J Collins Ian K Crow Lawrence J Gibbs Peter D Bunting Penelope Morris Key Management Jane A Bianchini Mark A Langan Kym L Quick Paul A Barbaro Total Prior year Directors Geoffrey J Moles Robert J Collins Ian K Crow Lawrence J Gibbs Peter D Bunting Penelope Morris Key Management Trevor A Taylor Mark A Langan Kym L Quick Jane A Bianchini Total	Balance 1/7/2006 Granted Exercised Other change Balance 30/6/2007 Vested 30/6/2007
	- - - - - - 2,400,000 - 600,000 - 1,800,000 600,000 - - - - - - - - - - - - - - - - - - - - - - - - Personnel - 500,000 - - 500,000 - 530,000 100,000 286,666 - 343,334 10,000 271,000 500,000 - - 771,000 127,666 - 500,000 - - 500,000 -
	3,201,000 1,600,000 886,666 - 3,914,334 737,666
	Balance 1/7/2005 Granted Exercised Other change Balance 30/6/2006 Vested 30/6/2006
	- - - - - - 1,333,334 1,800,000 733,334 - 2,400,000 - - - - - - - - - - - - - - - - - - - - - - - - - Personnel 763,334 350,000 163,334 (950,000) - - 299,000 300,000 69,000 - 530,000 220,000 131,000 200,000 100,000 - 271,000 110,667 - - - - - -
	2,526,668 2,650,000 1,065,668 (950,000) 3,201,000 330,667

Further information regarding the option plan is set out in note 26.

35

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Share holdings

	Balance	Received as	Options	Other	Balance
	1/7/2006	remuneration	exercised	**change **	30/6/2007
Directors
Geoffrey J Moles	2,757,21	-	-	(960,387)	1,796,825
	2
Robert Collins	793,500	-	600,000	-	1,393,500
Lawrence J Gibbs	42,681	-	-	2,594	45,275
Peter D Bunting	7,500	-	-	-	7,500
Penelope Morris	-	-	-	-	-
Key Management	Personnel
Jane A Bianchini	2,500	-	-	153	2,653
Mark A Langan	-	-	286,666	(286,666)	-
Kym L Quick	-	-	-	-	-
Paul A Barbaro	-	-	-	-	-
Total	3,603,39	-	886,666	(1,244,306	3,245,753
	3			)
Prior year
	Balance	Received as	Options	Other	Balance
	1/7/2005	remuneration	exercised	**change **	30/6/2006
Directors
Geoffrey J Moles	3,255,57	-	-	(498,363)	2,757,212
	5
Robert Collins	1,860,16	-	733,333	(1,800,000	793,500
	7			)
Lawrence J Gibbs	40,273	-	-	2,408	42,681
Peter D Bunting	7,500	-	-	-	7,500
Penelope Morris	-	-	-	-	-
Key Management	Personnel
Trevor A Taylor	93,333	-	163,334	(256,667)	-
Mark A Langan	65,973	-	69,000	(134,973)	-
Kym L Quick	-	-	60,000	(60,000)	-
Jane A Bianchini	-	-	-	2,500	2,500
Total	5,322,82	-	1,025,667	(2,745,095	3,603,393
	1			)

36

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Other transaction with directors

During the financial year corporate advisory services were provided by B G Capital Corporation Limited, a company associated with Lawrence Gibbs for $60,000 (2006: $60,000) on normal commercial terms.

8. Remuneration of auditors

During the year, the following fees were paid or were payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

Remuneration of the auditor of the parent entity for: - auditing or reviewing the financial report - taxation services - business services Remuneration of other auditors of subsidiaries for: - auditing or reviewing the financial report of subsidiaries	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
	158,196 126,937 115,412 96,000 11,814 14,485 10,000 14,485 5,227 598 1,454 598
	175,237 142,020 126,866 111,083
	24,410 15,721 - -

9. Earnings per share

9. Earnings per share
Basic earnings per share Diluted earnings per share	Consolidated 2007 2006 Cents Cents
	26.0 24.2 24.0 22.4

(a) Reconciliation of earnings used in calculating earnings per share

Net profit after tax used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share Interest earned on conversion of options Net profit used in calculating diluted earnings per share	$000 $000
	13,551 11,707
	695 500
	14,246 12,207

37

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(b) Weighted average number of shares used as the denominator

Weighted average number of ordinary shares outstanding during the year used in the calculation of basic EPS Adjustment for calculation of diluted earnings per share: Weighted average number of options Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	Number ‘000 Number ‘000
	52,193 48,360
	7,078 6,164
	59,271 54,524

(c) Classification of securities

Options granted to employees under the Employee Share Option Plan are considered to be potential ordinary securities and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings per share. Details relating to the options are set out in note 26.

10. Cash flow information

	Consolidated	Consolidated	Parent	Entity
	2007	2006	2007	2006
	$000	$000	$000	$000
(a) Reconciliation of profit after tax to net cash flow from		operating activities
Profit for the year	13,551	11,707	11,155	7,862
Non-cash flows in operating profit:
Depreciation and amortisation	1,648	1,766	1,023	1,152
Non-cash employee benefits expense –
share based payments	300	218	300	218
Charges to provisions	(119)	1,197	255	53
(Gain)/ Loss on disposal of plant and
equipment	(27)	78	(27)	24
Changes in assets and liabilities, net of
the effects of purchase and disposal of
subsidiaries:
(Increase) / Decrease in trade debtors
and accrued income	(1,660)	(13,175)	(1,799)	(8,487)
(Increase) / Decrease in prepayments
and accrued income	(171)	155	(115)	155
Increase / (Decrease) in trade creditors
and accruals	1,345	5,292	1,063	2,970
Movement in income taxes payable	(349)	71	(1,031)	(740)
Movement in deferred taxes	(134)	(710)	(252)	(222)
Unrealised foreign exchange movements
on loan	-	-	-	582
Net cash provided by operating activities	14,384	6,599	10,572	3,567

38

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(b) Non-cash financing and investing activities

Share issue – during the year the parent company issued shares as set out in note 21.

(c) Credit standby arrangements with banks

(c) Credit standby arrangements with banks
Bank bill credit facility Amount utilised Unused credit facility	15,000 12,600 15,000 12,600 - - - -
	15,000 12,600 15,000 12,600

The major facilities are summarised as follows:

(d) Overdraft facilities

Overdraft facility Amount utilised Unused overdraft facility Bank overdrafts	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	10,907 5,822 10,000 5,000 (2,847) - (2,847) -
	8,060 5,822 7,153 5,000

The current interest rate on the overdraft facility is 8.2%. Bank overdraft facilities are arranged with both Australian ($10,000,000) and New Zealand ($907,000) banks with the general terms and conditions being set out and agreed to on a regular basis. Interest rates are variable and subject to adjustment. Finance will be provided under all facilities provided the Company and the consolidated entity have not breached any borrowing requirements and the required financial ratios are met.

11. Cash and cash equivalents

Cash at bank and on hand Deposits at call	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000 2,248 3,140 782 1,713 700 947 - - 2,948 4,087 782 1,713

The deposits are bearing interest rates of 6.25% (2006: 5.45%). These deposits are at call.

39

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Reconciliation of cash

The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows:

Balances as above Bank overdrafts (note 10) 12. Trade and other receivables Current Trade receivables Allowance for doubtful debts Accrued income Amounts receivable from: - wholly-owned subsidiaries - related parties Prepayments Other debtors Non-current Amounts receivable from: - controlled entity *	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	2,948 4,087 782 1,713 (2,847) - (2,847) -
	101 4,087 (2,065) 1,713
	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000 32,501 37,696 26,401 31,223 (224) (221) (137) (153) 32,277 37,475 26,264 31,070 17,675 11,064 15,900 9,398 - - 7,625 905 42 205 - 427 256 294 179 332 85 115 12 50,753 49,085 50,198 41,564 - - 5,190 4,758

• The parent company has agreed not to call upon this loan to the detriment of the company or its creditors for at least one year.

40

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(a) Fair values

The fair value approximates to the carrying value of the non-current receivables.

(b) Interest rate risk

The trade and other receivables are non-interest bearing.

(c) Credit risk

Refer to the disclosure in note 1(l)

13. Deferred tax assets

The balance comprises temporary differences attributable to: Doubtful debts Employee benefits Provision for make good on leased premises Lease incentive Accruals Movements Balance at the beginning of the year Credited/ (charged) to the income statement Balance at the end of the year	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	63 68 41 46 412 418 334 302 57 41 20 20 185 252 40 65 1,659 1,452 1,424 1,175
	2,376 2,231 1,860 1,608
	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	2,231 1,573 1,608 1,437 145 658 252 171
	2,376 2,231 1,860 1,608

41

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

14. Property, plant and equipment

14. Property, plant and equipment
Plant and equipment, at cost Accumulated depreciation Leasehold improvements, at cost Accumulated amortisation Total property, plant and equipment	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	7,676 6,827 5,093 4,963 (5,837) (4,542) (3,799) (3,375)
	1,839 2,285 1,294 1,588
	3,512 3,147 2,400 2,134 (2,628) (2,183) (2,015) (1,755)
	884 964 385 379
	2,723 3,249 1,679 1,967

Movements in carrying amounts

Movements in carrying amounts
Consolidated: Balance at the beginning of the year Additions Disposals Depreciation expense Carrying amount at the end of year Parent entity: Balance at the beginning of year Additions Disposals Depreciation expense Carrying amount at the end of year	Plant and equipment $000 Leasehold improvements $000 Total $000
	2,285 964 3,249 442 162 604 - - - (888) (242) (1,130)
	1,839 884 2,723
	1,588 379 1,967 299 151 450 - - - (593) (145) (738)
	1,294 385 1,679

15. Other financial assets

5. Other financial assets
Investments comprise: Shares in: - controlled entities at cost	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	- - 25,234 30,762
	- - 25,234 30,762

42

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

16. Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1 (a):

Freeman Adams Pty Limited Candle IT & T Recruitment Pty Limited Alliance Recruitment Pty Limited Workskills Professionals Pty Limited Premier Personnel Pty Limited Vitruvian Solutions Pty Limited The One Umbrella Pty Ltd Candle Holdings Limited Candle New Zealand Limited Doughty Contractors Limited Candle IT & T Recruitment Limited Choice IT Pty Limited Lloyd Morgan Sydney Pty Limited Lloyd Morgan International Pty Limited Lloyd Morgan (Brisbane) Pty Limited Lloyd Morgan Limited Lloyd Morgan Hong Kong Limited Lloyd Morgan Singapore Pte Limited Lloyd Morgan Malaysia Sdn Bhd Executive Leasing China Limited

Country of Class of Equity holding incorporation shares 2007 2006*

% % Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 New Zealand Ordinary 100 100 New Zealand Ordinary 100 100 New Zealand Ordinary 100 100 New Zealand Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Australia Ordinary 100 100 Hong Kong Ordinary 100 - Hong Kong Ordinary 100 - Singapore Ordinary 100 - Malaysia Ordinary 100 - China Ordinary 89 -

• The proportion of ownership interest is equal to the proportion of voting power held.

17. Intangible Assets

Candidate databases Accumulated amortisation Capitalised software development costs Accumulated amortisation Goodwill at cost Other intangibles Total intangible assets	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	1,876 2,623 1,039 1,039 (1,874) (2,363) (1,037) (998)
	2 260 2 41
	2,276 2,115 2,191 2,065 (2,039) (1,821) (2,025) (1,779)
	237 294 166 286
	61,984 56,157 23,196 23,196
	254 - 254 -
	62,477 56,711 23,618 23,523

43

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(a) Movements in carrying amounts Consolidated Balance at the beginning of the year Additions Amortisation expense Exchange differences Adjustment to contingent purchase price Carrying amount at the end of the year Parent Entity Balance at the beginning of the year Additions Amortisation expense Carrying amount at the end of the year	Candidate databases Capitalised software costs Goodwill	Other intangibles Total
	260 294 56,157 - 203 6,670 (258) (260) - - - 432 - - (1,275)	- 56,711 254 7,127 - (518) - 432 (1,275)
	2 237 61,984	254 62,477
	41 286 23,196 - 126 - (39) (246) -	- 23,523 254 380 - (285)
	2 166 23,196	254 23,618

Other intangible represents product development costs and will be amortised over 3 years on implementation of the project.

Intangible assets, other than goodwill have finite useful lives. The current amortisation charges in respect of intangible assets are included under depreciation and amortisation expense per the income statement.

44

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Impairment tests

Goodwill is allocated to the consolidated entity’s cash-generating units, which are based on the consolidated entity’s individual brands.

Candle ICT Candle New Zealand Freeman Adams Alliance Recruitment The One Umbrella Parker Bridge Choice IT Lloyd Morgan International Lloyd Morgan Brisbane Lloyd Morgan Limited Total	2007 2006 $000 $000
	12,092 12,092 4,642 4,210 4,011 4,011 14,205 14,205 3,423 3,423 5,287 5,268 1,394 1,140 9,544 10,819 1,938 989 5,448 -
	61,984 56,157

Impairment tests are carried out to ensure that assets are carried at amounts that are not in excess of their recoverable amount. Recoverable amount is assessed on the basis of value in use. Value in use is calculated using the present value of the future cash flows expected to be derived from each cash generating unit. The discounted cash flow (DCF) projections are based on current performance and financial forecasts extrapolated over a ten year period. Current estimated terminal values are in the range of 2.5 – 4.5 times. The cash flows are discounted in the range of 11% - 15%. Management derives its forecasts and input variables to the DCF model based on past performance and its expectations for the future.

18. Trade and other payables

Current Trade creditors Amounts payable to: - controlled entities - vendors of acquired businesses Non-current Trade creditors	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	26,465 25,657 22,322 21,350 - - 3,076 449 2,944 13,152 124 13,110
	29,409 38,809 25,522 34,909
	24 22 - -

45

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

(a) Interest rate exposure

All trade and other payables are non-interest bearing.

(b) Fair value

The fair value approximates to the carrying value of the non-current payables.

(c) Financial guarantees

There are the following unsecured guarantees within the consolidated entity:

• (i) The parent entity has guaranteed the bank overdraft of Lloyd Morgan Hong Kong

• (ii) The Australian subsidiaries have guaranteed the bank overdraft of the parent entity

There are no deficiencies of assets existing in any of these companies.

No liability was recognised by the parent entity or the consolidated entity in relation to these guarantees as the fair value of the guarantees is immaterial.

19. Tax liabilities

Current Income tax Deferred tax liabilities The balance comprises temporary differences attributable to: Depreciation Movements Balance at the beginning of the year Charged/ (credited) to the income statement Balance at the end of the year	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
		1,448 1,797 749 1,778
		10 - - -
		10 - - -
		- 52 - 52 10 (52) - (52)
		10 - - -

46

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

20. Provisions

Current Dividend cheques not presented Employee benefits Lease incentive Non-current Employee benefits Make good on leased premises	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
		89 51 89 51 1,227 1,040 803 530 686 862 187 215
		2,002 1,953 1,079 796
		538 569 487 478 418 516 226 226
		956 1,085 713 704
		2,958 3,038 1,792 1,500

Dividend

This provision recognises dividends that were paid by cheque but not presented.

Employee benefits

This provision represents annual leave and long service leave entitlements.

Lease incentive

This provision represents the liability associated with rent free periods given under current operating contracts. Management has calculated this amount based on the current rental contracts.

Make-good

This amount represents the cost which will be paid on completion of current tenancy under the applicable rental contracts. The amount has been calculated based on an estimate of the costs to fulfil each individual rental contract requirements.

Movements in provisions

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

47

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Consolidated

Consolidated
Carrying amount at start of year Additional provision recognised Amounts utilised Carrying amount at end of year	Dividends Lease incentive Make- good Total $000 $000 $000 $000
	51 862 516 1,429 38 - - 38 - (176) (98) (274)
	89 686 418 1,193

Parent Entity

Parent Entity
Carrying amount at start of year Additional provision recognised Amounts utilised Carrying amount at end of year	Dividends Lease incentive Make- good Total $000 $000 $000 $000
	51 215 226 492 38 - - 38 - (28) - (28)
	89 187 226 502

21. Contributed equity

53,392,527 (2006: 49,773,938) fully paid ordinary shares Ordinary shares at the beginning of the year Shares issued during the year: Purchase consideration for acquisitions Dividend Reinvestment Plan Exercise of Employee Options Underwriting of the Dividend Re-investment Plan Less transaction costs At the end of the year	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	62,921 54,072 62,921 54,072
	54,072 45,441 54,072 45,441 4,925 2,345 4,925 2,345 2,035 1,792 2,035 1,792 1,889 1,643 1,889 1,643 - 2,880 - 2,880 - (29) - (29)
	62,921 54,072 62,921 54,072

Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders meetings each fully paid ordinary share is entitled to one vote.

48

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Ordinary shares At the beginning of the year Shares issued during year: Exercise of Employee Options Dividend Re-investment Plan Purchase consideration for acquisitions Underwritten Dividend Re- investment Plan At the end of the year	Consolidated Parent Entity 2007 2006 2007 2006 No. No. No. No.
	49,773,938 45,389,002 49,773,938 45,389,002 1,457,445 1,519,032 1,457,445 1,519,032 609,441 657,711 609,441 657,711 1,551,703 1,070,022 1,551,703 1,070,022 - 1,138,171 - 1,138,171
	53,392,527 49,773,938 53,392,527 49,773,938

Share options

Further information relating to the Company share option plan is set out in note 26. Details of options granted to directors and executive officers are set out in the director’s report. At the 30 June 2007 there were 7,130,929 (2006: 6,599,041) options outstanding.

22. Reserves

Note Share-based payments 22(a) Foreign currency translation 22(a) Total (a) Movements Share-based payments Movements during the year: At the beginning of the year Option expense 30 At the end of the year Foreign currency translation reserve Movements during the year At the beginning of the year Adjustment arising from the translation of foreign controlled entities’ financial statements At the end of the year	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000 664 364 664 364 336 (209) - -
	1,000 155 664 364
	364 146 364 146 300 218 300 218
	664 364 664 364
	(209) 498 - - 545 (707) - -
	336 (209) - -

49

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334 NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Nature and purpose of reserves

(i) Share-based payments

The share-based payments reserve is used to recognise the fair value of options issued but not exercised.

(ii) Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising on translation of foreign controlled entities. The reserve is recognised in the profit and loss when the net investment is disposed.

23. Retained profits

Retained profits at the beginning of the financial year Net profit for the year Dividends paid Retained profits at the end of the Financial year	Note	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	30 6	17,470 13,435 13,272 13,082 13,551 11,707 11,155 7,862 (10,361) (7,672) (10,361) (7,672)
		20,660 17,470 14,066 13,272

24. Capital commitments and leasing

Commitments for minimum lease payments in relation to non-cancellable operating leases payable are as follows:

- within one year - later that one year but not later than five years - later than five years	Consolidated Parent Entity 2007 2006 2007 2006 $000 $000 $000 $000
	3,055 2,192 1,447 1,007 4,378 3,863 1,321 1,444 - 56 - -
	7,433 6,111 2,769 2,451

Operating lease commitments refer to property leases for the 26 sites (2006: 21 sites) operating across Australia, New Zealand and Asia. In general leases are negotiated with fixed increases for the first three years and then a market review thereafter.

25. Contingent liabilities

There are no material contingent liabilities that need to be disclosed in the financial statements.

50

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

26. Share based payments

Set out below are summaries of options granted under the share based payment plan:

Consolidated and parent entity – 2007

Grant Date Date of Expiry Exercise Price	Balance at the start of year Granted during year No. No.	Exercised during year Forfeited/ lapsed during year Balance at end of year No. No. No.
30 Oct 02 30 Oct 06 $0.86 26 Feb 03 26 Feb 07 $0.76 1 July 03 1 July 09 $1.00 24 July 03 24 July 07 $1.06 30 June 04 30 June 08 $1.61 29 Nov 04 29 Nov 08 $2.05 1 July 05 1 July 09 $2.08 1 July 05 1 July 11 $2.08 23 Dec 05 23 Dec 09 $2.45 17 Mar 06 17 Mar 10 $2.97 28 Sept 07 28 Sept 10 $3.30 24 Apr 07 24 Apr 11 $3.30 28 June 07 28 June 11 $3.26 Weighted average exercise price	10,000 - 200,000 - 600,000 - 160,006 - 480,368 - 256,667 - 1,532,000 - 1,800,000 - 100,000 - 1,460,000 - - 2,745,000 - 300,000 - 200,000	10,000 - - 200,000 - - 600,000 - - 136,670 - 23,336 164,965 54,000 261,403 53,332 60,000 143,335 292,478 198,667 1,040,855 - - 1,800,000 - - 100,000 - 810,000 650,000 - 133,000 2,612,000 - - 300,000 - - 200,000
	6,599,041 3,245,000	1,457,445 1,255,667 7,130,929
	$2.08 $3.30	$1.30 $2.41 $2.75

Consolidated and parent entity – 2006

Grant Date Date of Expiry Exercise Price	Balance at the start of year Granted during year Exercised during year Forfeited/ lapsed during year Balance at end of year No. No. No. No. No.
9 Nov 01 9 Nov 05 $0.95 30 April 02 30 Apr 06 $1.07 1 July 02 1 July 06 $0.82 1 July 02 1 July 08 $0.85 30 Oct 02 30 Oct 06 $0.86 26 Feb 03 26 Feb 07 $0.76 1 July 03 1 July 09 $1.00 24 July 03 24 July 07 $1.06 1 Dec 03 2 Dec 07 $1.29 30 June 04 30 June 08 $1.61 29 Nov 04 29 Nov 08 $2.05 1 July 05 1 July 09 $2.08 1 July 05 1 July 11 $2.08 23 Dec 05 23 Dec 09 $2.45 17 Mar 05 17 Mar 10 $2.97 Total Weighted average exercise price	67,000 - 67,000 - - 16,000 - 16,000 - - 146,736 - 146,736 - - 133,334 - 133,334 - - 63,334 - 53,334 - 10,000 235,000 - 35,000 - 200,000 1,200,000 - 600,000 - 600,000 323,337 - 149,997 13,334 160,006 300,000 - 100,000 200,000 - 745,000 - 179,298 85,334 480,368 660,000 - 38,333 365,000 256,667 - 1,987,000 - 455,000 1,532,000 - 1,800,000 - - 1,800,000 - 100,000 - - 100,000 - 1,460,000 - - 1,460,000
	3,889,741 5,347,000 1,519,032 1,118,668 6,599,041
	$1.29 $2.33 $1.08 $1.88 $2.08

51

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

The weighted average share price at the date of exercise during the year ended 30 June 2007 was $3.39 (2006: $2.55)

The weighted average remaining contractual life of share options outstanding at the year end was 2.8 years (2006: 3.5 years).

Share option plan

A share option plan has been in place since the Company listed on the Australian Stock Exchange in 1997. The plan includes a performance hurdle for the exercise of options granted, whereby the Candle Australia Limited share price must outperform the relevant ASX Index on which the shares of Candle Australia Limited are listed.

The options hold no voting or dividend rights and are not transferable.

Fair value of options granted

The assessment of fair value of options is made at each grant date during the year. The range of fair values for options granted during the year was from $0.38 to $0.47 (2006: $0.20 to $0.26). The fair value at grant date is determined using, independently applied, the American option call pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield, and the risk free interest rate for the term of the option. The expected price volatility is based on the historic volatility adjusted for any expected changes to future volatility due to publicly available information.

27. Related party disclosures

• a) Parent entity

The ultimate parent entity and ultimate controlling party within the consolidated entity is Candle Australia Limited.

b) Subsidiaries

Interests in subsidiaries are set out in note 16.

c) Directors and key management personnel

Disclosures relating to director and key management personnel are set out in note 7.

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

d) Transactions with related parties

d) Transactions with related parties
Sales of services Recruitment services to related parties Purchases Recruitment services received from subsidiaries Tax consolidation legislation Current tax payable assumed from wholly owned tax consolidated entities Dividend revenue Subsidiaries e) Loans Loans to subsidiaries Loans to vendors of acquired business (secured) Loans from subsidiaries	Consolidated Parent Entity 2007 2006 2007 2006 $ $ $ $
	- - 295,940 20,098 - - 245,405 209,153 - - 595,668 787,171 - - - - - 12,815,325 5,970,787 - 204,605 - - - 3,076,181 754,864

No provision for doubtful debts has been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debts due from related parties.

f) Terms and conditions

All transactions were made on normal commercial terms and conditions, except that there are no fixed terms for the repayment of loans between parties.

28. Events subsequent to the reporting date

On 12 July Candle Australia Limited entered into an agreement to acquire the IT services business and assets of the JAV IT Group. A deposit of $4million was paid on 15 August 2007. The total purchase price subject to future performance will be approximately $8 million.

On 17 July 2007 Candle Australia Limited entered into an agreement to acquire all of the issued shares in Reality Check Pty Limited. The total purchase price subject to future performance will be approximately $1million.

53

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

On the 28 August 2007 the Company resolved to pay a fully franked final dividend of 10.0 cents per share on 14 September 2007.

On 19 July Diana Eilert was appointed as Chief Executive Officer to replace Robert Collins who will stand down on 28 August.

29. Acquisition of subsidiaries

On 30 April 2007, Lloyd Morgan Limited (a subsidiary company) gained effective control of the following recruitment businesses:

Entity name	Nature of acquisition
Lloyd Morgan Hong Kong Limited*	100% issued share capital
Executive Leasing Hong Kong Limited	Business assets
Executive Leasing Malaysia Sdn BHD	Business assets
Executive Leasing Singapore PTE Limited	Business assets

• Formerly known as Executive Leasing China Limited

Details of the purchase consideration, fair value of assets and liabilities acquired and goodwill are as follows:

Purchase consideration	$000
Cash paid Direct costs associated with the acquisition Issue of 210,562 ordinary shares at market price Balance of purchase price payable	2,352 265 684 2,291
	5,592

In the event that certain pre-determined targets are achieved by the subsidiary, contingent consideration becomes payable. At the date of this financial report, it is probable that some of these payments will be made, and hence have been brought to account as a component of goodwill. If it becomes probable that any element of the remaining consideration will be payable, it will be brought to account when the amount can be reliably measured.

Assets and liabilities acquired at acquisition

Assets and liabilities acquired at acquisition
date:	$000
Property, plant and equipment Total net assets acquired Goodwill on consolidation	144
	144
	5,448

The assets and liabilities arising from the acquisition are recognised at fair value which equals their carrying value at acquisition date. Goodwill is attributable to the future maintainable earnings of the acquired business.

54

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Profit relating to the Asian operations totalling $347,000 are included in the consolidated income statement for the year ended 30 June 2007.

30. Amendment of prior year share based payments expense

Revised compliance with AASB 2 requires the basis of the share option expense calculation for the prior year to be amended to recognise grant date. This amendment has the following effects on the financial statements for the prior year period, and is reflected as such in these financial statements. :

Income statement for the year ended 30 June 2006:

	$000
Employee benefits expense	102
Profit for theyear	(102)

Balance sheet as at 30 June 2006:

	$000
Share basedpayments reserve	248
Retainedprofits	(248)

There are no cash flow implications from this amendment.

Basic and diluted earnings per share for the prior year have also been restated. The amount of the amendment for both basic and diluted earnings per share was a reduction of 0.2 cents per share (restated EPS 24.2 cents per share; restated diluted EPS 22.4 cents per share).

55

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

DIRECTORS’ DECLARATION

The directors of the Company declare that:

1. The financial statements and notes, as set out on pages 19 to 55, are in accordance with the Corporations Act 2001 :

• (a) comply with Accounting Standards,,the Corporations Regulations 2001 and other madatory professional reporting requirements; and

• (b) give a true and fair view of the financial position as at 30 June 2007 and performance for the year ended on that date of the Company and the 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 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 become due and payable; and

4. The audited remuneration disclosures set out on pages 5 to 10 of the directors’ report comply with the Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Board of Directors.

...................................................................

Geoffrey J Moles – Executive Chairman

...................................................................

Robert J Collins – Managing Director

Dated at Sydney this 28th day of August 2007

56

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF CANDLE AUSTRALIA LIMITED

Report on the Financial Report

We have audited the financial report of Candle Australia Limited (the company) and Candle Australia Limited and Controlled Entities (the consolidated entity), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cashflow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors declaration for 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.

We have also audited remuneration disclosures contained in the directors’ report. As permitted by the Corporations Regulations 2001 , the company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”) , required by Accounting Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” on pages 5 to 10 of the directors’ report and not in the financial report..

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 control 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 the Accounting Standard AASB 101: Presentation of the Financial Statements, that compliance with the Australian equivalent to International Financial Reporting Standards (IFRS) ensures that the financial report, comprising the financial statements and notes, complies with IFRS.

The directors are also responsible for the remuneration disclosure contained in the directors’ report.

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. Our responsibility is also to express an opinion on the remuneration disclosures contained in the directors’ report based on our audit.

57

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF CANDLE AUSTRALIA LIMITED

Auditor’s Responsibility (continued)

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 the basis for our audit opinion.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report. Our audit did not involve an analysis of the prudence of business decisions made by directors or management. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Auditor’s Opinion

In our opinion:

• (a) the financial report of Candle Australia Limited and Candle Australia Limited and Controlled Entities is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.

58

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

INDEPENDENT AUDIT REPORT TO THE MEMBERS

OF CANDLE AUSTRALIA LIMITED

Auditors opinion on the remuneration disclosures contained in the directors’ report In our opinion the remuneration disclosures that are contained in pages 5 to 10 of the directors’ report comply with accounting standards AASB 124.

...................................................................

WHK Horwath

...................................................................

B Hatchman

Dated at Sydney this 28th day of August 2007

59

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

ADDITIONAL INFORMATION

The following information is required by the Australian Stock Exchange Limited.

1. Shareholding

• (a) There is only one class of equity securities, being ordinary shares.

• (b) Distribution of Shareholders Number

Category	Number of holders
1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	837 2,285 818 476 40
	4,456

• (c) The number of shareholdings held in less then marketable parcels is 108.

• (d) The names of the substantial shareholders listed in the holding Company’s register as at 8 August 2007 are:

Shareholder	Number of ordinary
	shares
Perpetual Trustees Australia Limited	3,217,390
Commonwealth Bank of Australia	3,899,771
SAS Trustee Corporation	2,174,530

• (e) The voting rights in respect of the ordinary shares are established by the Constitution, which reads as follows:

Clause 5.12: “one vote for every fully paid share”

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

(f) 20 largest shareholders as at 8 August 2007:

Shareholder’s Name	Number of ordinary fully paid shares held	% held of issued ordinary capital
RBC Dexia Investor Services Australia Nominees J P Morgan Nominees Australia Limited HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited National Nominees Limited Cogent Nominees Pty Limited Perman Investments Pty Ltd Citicorp Nominees Pty Limited Mr Robert Collins Citicorp Nominees Pty Limited Springhope Holdings Pty Limited Bond Street Custodian Limited Mr Ian Wallace & Mrs Josephine Edwards MFPH Superannuation Management Pty Limited Gracelite Pty Ltd Engoordina Pty Ltd JDV Limted Equity Trustees Limited Escrow Apps Pty Ltd ANZ Nominees Ltd	3,153,181 3,033,863 2,703,945 2,519,063 2,448,473 2,130,831 1,442,137 1,349,661 1,342,500 1,213,491 1,090,935 860,382 718,927 657,286 546,874 428,262 358,060 335,374 326,797 312,801 26,972,843	5.9 5.7 5.1 4.7 4.6 4.0 2.7 2.5 2.5 2.3 2.0 1.6 1.3 1.3 1.0 0.8 0.7 0.6 0.6 0.6
		50.5

(g) There is currently no On-Market Buy-Back

2. The name of the Company secretary is Mr Nicholas J V Geddes.

3. The address of the registered office is:

Level 5 Postal Address: 255 George Street GPO Box 4231 Sydney NSW 2000 Sydney, NSW 2001 Phone: (02) 9252 1933

4. The register of shares is held at the following address:

Registries Limited

Level 2 28 Margaret Street Sydney NSW 2000 Phone: (02) 9290 9600 Fax: (02) 9279 0664

5. Stock Exchange

The Company is listed on the Australian Stock Exchange under the code CND.

61

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

CORPORATE DIRECTORY

Board of Directors

Geoffrey J Moles - Executive Chairman Robert J Collins - Managing Director Lawrence J Gibbs – Non-executive Director Peter D Bunting – Non-executive Director Penelope Morris – Non-executive Director

Company Secretary and Registered Office

Nicholas J V Geddes Australian Company Secretaries Pty Limited Level 5 255 George Street Sydney, NSW 2000

Share Registry Registries Limited Level 2 28 Margaret Street Sydney, NSW 2000

Principal Places of Business Candle Australia Head Office / Candle ICT

Sydney Level 14, 1 York Street Sydney, NSW 2000

Melbourne Level 5 34 Queen Street Melbourne, VIC 3000

Brisbane 50 McDougall Street Milton, QLD 4065

Canberra Suite 2G, 65 Canberra Avenue Griffith, ACT 2603

Auditors

WHK Horwath Level 15 309 Kent Street Sydney, NSW 2000

Perth

Level 3, 191 St Georges Terrace Perth, WA 6000

Solicitors

RBHM Commercial Lawyers 5/53 Berry Street, North Sydney, NSW, 2060, Australia

Bankers

Westpac Banking Corporation 273 George Street Sydney, NSW 2000

Candle New Zealand Auckland Level 16, 1 Queen Street, Auckland

Wellington Level 10, 3-11 Hunter Street, Wellington

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CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

Alliance Recruitment

Adelaide

Level 2, 74 Pirie Street, Adelaide, SA 5000

Brisbane

Suite 14, 320 Adelaide Street, Brisbane, QLD 4000

Melbourne

Level 9, 50 Queen Street, Melbourne, VIC 3000

Mount Waverley

The Central, Building 2, Suite 32, 1 Ricketts Road, Mount Waverley VIC 3149

Perth Suite 4/1 Scarborough Beach Road North Perth WA 6006

Sydney Level 13, 55 Clarence St. Sydney NSW 2000

Level 3, 815 Pacific Highway Chatswood NSW 2067

Level 1, 45-47 Smart Street Fairfield NSW 1860

Suite 106, Level 1, 20-22 Macquarie Street Parramatta NSW 2150

Suite 28, Level 5, 33 MacMahon Street Hurstville NSW 2220

Lloyd Morgan

Melbourne

Level 14, 333 Collins Street, Melbourne, VIC 3000

Sydney Level 5, 1 York Street Sydney, NSW 2000

Brisbane

Level 14, 500 Queen Street, Brisbane, QLD 4000

Hong Kong 2403 World Trade Centre 280 Gloucester Road Causeway Bay Hong Kong

Singapore

10 Hoe Chiang Road 14-02 Keppel Towers Singapore 089315

China 2W Guomen Building No 1 Zuojiazhuang Chayang District Beijing PRC 10028

Nanjing West Road No 555, Room501 Shanghai PRC

1507 Office Tower, Shun Hing Square Di Wang Commercial Centre 5002 Shen Nan Dong Road Shenzhen PRC 518008

Malaysia

16-3 Jalan Sri Hartamas 8 (8/70A) Taman Sri Hartamas 50480 Kuala Lumpur

63

CANDLE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 43 002 724 334

The One Umbrella

Sydney

Level 9, 162 Goulburn Street Surry Hills NSW 2010

Brisbane

Suite 24. Level 2 149 Wickham Terrace Spring Hill QLD 4000

Canberra

Suite 2G, 65 Canberra Avenue Griffith ACT 2603

Melbourne Level 9, 50 Queen Street, Melbourne, VIC 3000

64