==> picture [269 x 267] intentionally omitted <==

AnnuAl RepoRt ~~2008~~ C h a n g i n g G e a r s

Clarius Group Limited

Clarius Group Limited	Clarius Group Limited
~~2008~~ ANNuAL REPORT
Clarius Group	3
Managing Director’s Report	7
Corporate Governance Statement	11
Directors’ Report	17
Financial Statements	33
Additional Information	76
Corporate Directory	78

The Annual General Meeting of Clarius Group Limited will be held at 3 p.m. on Tuesday, 28 October 2008, at Level 3, The Establishment, 252 George Street, Sydney.

A separate Notice of Meeting and Proxy Form are included with this report.

Clarius Group is a company limited by shares, incorporated and domiciled in Australia.

==> picture [395 x 729] intentionally omitted <==

2 CND Annual Report 2008

==> picture [540 x 268] intentionally omitted <==

----- Start of picture text -----

Beijing
Shanghai
Shenzhen
Hong Kong
Kuala Lumpur
Singapore
Brisbane
Perth
Auckland
Sydney
Adelaide Canberra
Wellington
Clarius Group is represented Melbourne
throughout the Asia Pacific region
by a network of over 30 offices
----- End of picture text -----

Specialist White-Collar Recruitment for Permanent, Contract & Temporary Staff

Accounting, Business Support and Financial Services

Information and Communications Technology

Executive Search

Engineering and Technical Personnel

Library and Records Management

Aligned Services

IT Services

Pre-Employment Screening

CND Annual Report 2008 3

Strong Financial Results

The 2007-08 financial year was Clarius Group’s 25th consecutive year of profit

The Group announced a result of $12.1 million (pre one-off costs) or $11.3 million. Net Profit after Tax. This was on a revenue of $321 million

A fully franked full-year dividend of 16c per share was paid for year ended 30 June 2008

Basic Earnings per Share (EPS) for the 2007-08 Financial Year was 20.3 cents per share

4 CND Annual Report 2008

Changing Gears

Clarius Group is following a clear strategy as a specialist recruiter and contractor for professionals in high growth, high-margin sectors

Our focus on organic growth in our chosen markets and our investment in our people and systems is laying the foundation for a robust and postive future

The Executive Leadership Team has been strengthened by outstanding appointments and we are now well placed to lead the business into the next phase of growth

Project Future Force, a groundbreaking project aimed at creating a strong salesforce, is underway and is already producing powerful results

CND Annual Report 2008 5

==> picture [395 x 729] intentionally omitted <==

==> picture [260 x 268] intentionally omitted <==

Managing Director’s Report

Dear Fellow Shareholders

The Clarius Group focuses on IT services, contracting and recruitment in Asia Pacific. With tremendous value in our heritage brands of Candle ICT, Alliance and The One Umbrella we have been able to achieve strong revenue and profit growth through ‘bolt on’ acquisitions during the past 5 years.

After being appointed as Managing Director on 28 August 2007, I completed a high-level strategic assessment. It became clear that the 5-year formula had run its course. The business had been able to leverage its strength as a listed Company to finance the acquisition of unlisted companies, but the ‘heritage businesses’ (Candle ICT, Alliance and The One Umbrella) were losing market share and, in some cases losing revenue. Separately our Lloyd Morgan Australia business had recently lost its business head and a number of senior consultants, with a consequent profit downturn. It was clear that refocus and investment were required to reignite growth of the Group and this has been my primary focus since my appointment.

We have undertaken a series of initiatives, under the banner of ‘Project Futureforce’. These are detailed later in this report, and we anticipate will lead to a return to organic growth over the medium term.

In the short term our business will reflect the uncertain economic conditions. However, we are using this period as an opportunity to refocus the business, build stronger, deeper customer relationships, and increase our efficiency. This should deliver growth over the medium and longer term.

Strong Financial Performance

Clarius Group financial performance continues to be strong. Our EBIT for the full year was $17.8 million, or $18.9 million before one-off costs. The result was reduction in prior year EBIT of $2.0 million, or $0.9 million after one-off expenses. Net profit after tax (NPAT) declined to $11.3 million or $12.1 million after one-offs adjustments.

We increased revenue by 8% to $321 million, largely driven by acquisitions. Heritage businesses experienced a small decline largely influenced by one major client exiting our Candle ICT business.

The Clarius Board declared a fully franked final dividend of 7c per share, taking the full year dividend to 16c per share fully franked. This represents a payout ratio of 80% of reported NPAT or 75% of NPAT excluding the impact of one-off costs. The Board has also announced that the Dividend Reinvestment Plan will operate with a 5% discount for the final dividend.

Operating cash flow was slightly negative, -$0.33 million over the course of the year as the Group absorbed working capital requirements for two acquisitions JAV IT and SouthTech. In addition we received a significant late payment of $3.1 million from a large multinational customer. Adjusting for the late payment, the underlying cash flow was positive $6.9 million for the six months ended 30 June 2008.

Challenges we Faced over the Past Year

During the past few years our underlying organic growth rate has been low, and it has been the leverage available through acquisitions which enabled Clarius to deliver good growth. Whilst acquisitions will continue to be an avenue to growth, they cannot be the sole driver. We have great brands and a strong reputation in contracting and recruitment services. The key to longer term success will be to return our heritage businesses to solid levels of organic growth as the core driver of our profitability, with complementary acquisitions to provide the secondary driver.

We entered the 2008 year with 3 major short-term challenges, as well as a need to refocus and invest in organic growth. The 3 short-term challenges were

Contractor run-off, largely due to the loss of a major client in Candle ICT during the year. Full impact was reflected in the six months ended June 2008.
Major staff loss in Lloyd Morgan Australia in May 2007, which led to a significant downturn in activity and financial loss during the six months ended December 2007
Back office operations that were largely manual with acquisitions that had yet to be migrated to common financial or recruitment systems

I am delighted to report we have made significant progress on these 3 operational issues

During the six months ended 30 June 2008 we focused on growing contractor numbers and were able to stem the outflow, ending the six months with slightly higher contractor numbers.
In October I hired a new head of the Lloyd Morgan Australia business – Greg Smith. Greg has been able to return Lloyd Morgan to profit in the second half of the financial year. This was achieved by focusing the team on performance, hiring experienced account managers to supplement the capable team already in place and eliminating costs.
Our new Chief Financial Officer (‘CFO’) and Head of Shared Services, David Marshall, joined the Group in December 2007. Through his IT and finance teams, David has led the migration of our systems to common systems, processes and reporting. This was completed at the end of June 2008.

Whilst the processing and reporting now occurs largely on common platforms, there is now an opportunity to automate the back office to achieve customer service, cash flow and productivity savings.

In addition to these operational achievements, the business has also significantly strengthened the management team. Apart from the new CFO – David Marshall – and a new Head of Lloyd Morgan – Greg Smith – both of whom have already led improvements in the operational performance of the business, subsequent to the close of the financial year, David Stewart, the new CEO of Candle ICT has been appointed together with the new CEO of JAV IT Group, Murray Parker.

8 CND Annual Report 2008

We are ‘Changing Gears’ to Maximise Long-Term Growth

The major challenge Clarius currently faces is that of shifting to a culture of sustainable, substantial organic growth. Whilst we will continue to pursue acquisitions opportunistically the change in market valuations means that the majority of acquisition opportunities are no longer attractive or accretive for shareholders.

In February 2008, we embarked on ‘Project Futureforce’, a project that aims to create a salesforce and business model that is robust and replicable and drives profitable growth. Whilst the investment is significant, the cost is largely in people and training. This investment can be ‘wound up or down’ should the economic environment change. The project is on track, with our new training programmes commencing on 1 July 2008. New business models and reward and recognition schemes have been designed, and piloting is commencing, with full rollout in Candle ICT during the 6 months ended December 2008.

A second area of focus is on more effective cash flow management. The project entails a small technology investment that will automate contractor payments. From this we expect to achieve further customer cash flow and productivity benefits, mostly in the six months ended 30 June 2009.

Outlook

At a time of great economic uncertainty we are taking the opportunity to re-focus the business, to build stronger and deeper customer relationships, and to lift the performance of our individual businesses. There are also some small technology investments required.

The strength of our brands, particularly the Candle ICT business, and our focus on white collar businesses in growth sectors will place us in a good position relative to our competitors.

However, business confidence is a key indicator of hiring intentions. According to Dun and Bradstreet, business hiring intentions are at the lowest point since June 1991, and we expect this will result in a short downturn in demand for contracting and recruitment services. We will likely see dampened demand whilst business confidence remains low.

With overarching shortage for labour – particularly in our target sectors – Clarius Group should see long-term demand for our services strengthen. We believe the investments we are making in driving organic growth, and our move into Asia and ‘value add’ services, such as JAV IT, will position us well for the upturn.

CND Annual Report 2008 9

==> picture [395 x 729] intentionally omitted <==

==> picture [260 x 268] intentionally omitted <==

Corporate Governance Statement

This statement sets out the material governance principles and processes of the Clarius Group Limited Group. The Board of Directors (‘the Board’) of Clarius Group Limited (‘the Group’) supports the ASX Principles of Good Corporate Governance and Good Practice Recommendations released by the ASX Corporate Governance Council. The Directors have resolved to consider and apply these Recommendations unless it is determined that, in the circumstances of the Group, there is a sound reason in the interests of shareholders not to do so.

The role of the Board is to represent the shareholders and to promote and protect the interests of the Group. Through its governance of the Group the Board guides and monitors the business and affairs of the Group on behalf of the shareholders.

The responsibilities and accountabilities of the Board have been framed in a Board Charter which reflects its governance principles. During the year the Board met 13 times. Meetings are held at 11 regular intervals throughout the year supplemented by additional meetings as required in the conduct of the Board’s responsibilities.

Structure of the Board

The Board comprises five Directors. The Board considers this number appropriate in the present circumstances of the Group. The Board Charter requires that there be a majority of Directors who are independent and non-executive. Three of the five Directors in office are independent and non-executive.

Directors in Office at the Date of this Statement

Name	Position	Date of appointment
Mr Geoffrey J Moles	Chairman	1 March 1984
Mr Lawrence J Gibbs	Non-Executive Director	29 August 2001
Mr Peter D Bunting	Non-Executive Director	6 July 2004
Ms Penelope Morris	Non-Executive Director	23 August 2005
Ms Diana Eilert	Managing Director	28 August 2007

On 28 August 2007, Ms Diana Eilert was appointed a Director succeeding Mr Robert Collins as Managing Director who resigned on that date.

Biographical details showing the relevant skills, experience and expertise held by each Director are included in the Directors’ Report on pages 18-19.

The Board considers the appointment or retirement of Directors annually under succession plan principles having regard to the size of the Group and to the appropriate skills and experience of Directors. Skills and experience regarded as important include experience as Chief Executive; recruitment and broader service industry experience; experience in financial markets, including acquisitions; financial experience; and broad experience in governance and risk management, including ASX-listed companies.

The Chairman carries out a formal review of performance with each Director, which also involves an opportunity for the Chairman and each Director to provide feedback relevant to the ongoing value of the Board as a whole. The Chairman reports to the Board on the outcomes of this review.

Independence

The Board has established a policy on Directors’ independence. An ‘independent Non-Executive Director’ is independent of management, free of any significant business or other relationships that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independent judgement, and otherwise meets the criteria for independence set out in the Best Practice Recommendations published by the ASX Corporate Governance Council.

Directors are considered to be independent if they meet the following criteria:

they are not a substantial (5% or greater) shareholder of the Group or an officer of a substantial shareholder of the Group;
they have not been employed in an executive capacity in the last three years by the Group or a subsidiary of the Group;
they have not been employed as a principal of a material professional advisor to the Group during the past three years;

12 CND Annual Report 2008

they are not a material supplier or customer of the Parent Entity, or any subsidiary of the Group;
they have no material contractual relationship with the Group (other than as a Director); and
they are free from any interest, business or personal, which could, or could reasonably, be perceived to materially interfere with the Director’s ability to act in the best interests of the Group.

In determining whether or not a material relationship exists with a third party such as a supplier, professional advisor or customer, the Board considers that relationship to be material if it meets the following criteria:

the customer accounts for more than 5% of the Group’s consolidated gross revenue per annum;
the Group accounts for more than 5% of the supplier’s consolidated revenue;
the total value of any contract or relationship between the Group and the Director (other than as a Director of the Group) exceeds $200,000.

In accordance with the policy on Directors’ independence, Mr Geoffrey Moles, Chairman of Clarius Group Limited, is considered not to be independent. The Board has addressed the issue of independence of the Chairman. It is the Board’s view that it is presently in the best interests of shareholders that Mr Geoffrey Moles be Chairman on the basis of his depth of experience (since 1984) in the development of the Group’s business, his knowledge of the Group, and his industry knowledge.

Mr Lawrence Gibbs is associated with BG Capital Corporation Limited, an investment banking firm that was previously retained to provide professional services to the Group. The services were in the normal course of business for the Group and the service fees were not material in amount for BG Capital Corporation Limited. Having regard to the nature, scope and value of the services the Board concluded and continues to believe that Mr Gibbs retains independence of character and judgement.

Each Director has the right to seek independent professional advice at the Group’s expense. The Board’s prior consent to obtaining such advice is required. The Director concerned does not participate in the Board’s consideration of its consent.

The Chairman

The Chairman’s responsibilities are expressly identified in the Board’s Charter. The Chairman, Mr Geoffrey Moles, is responsible for ensuring that the Board receives timely, clear and relevant information to facilitate the efficient organisation and conduct of the Board’s duties in regard to strategic direction, in regard to governance and in regard to monitoring the performance of management. He is also responsible for ensuring that procedures to assess the performance of the Board and Directors are operating; facilitating Board discussion and the effective contribution of all Directors; and overseeing representations to and communications with the shareholders.

Board Committees

The Board has two formally constituted committees, the Board Audit, Risk and Compliance Committee, and the Board Remuneration and Nominations Committee.

The Board Audit, Risk and Compliance Committee operates under a charter approved by the Board. Its objectives are to assist the Board in safeguarding integrity in financial reporting; making timely and balanced disclosure to shareholders, and potential shareholders in accordance with the principles of continuous disclosure; and recognising and managing risk. It comprises a minimum of three Directors all of whom are independent Non-Executive Directors.

The members of the Committee during the year were:

Mr Peter D Bunting (Chairman)
Mr Lawrence J Gibbs
Ms Penelope Morris

Qualifications of Committee members are set out on pages 18-19 of the Directors’ Report.

The Committee, which is accountable to the Board, is required by its Charter to meet at least four times per year and has done so. Details of the number of meetings of the Committee held during the year, and the attendees at those meetings, are set out on page 29 of the Directors’ Report.

The responsibilities of the Board Audit, Risk and Compliance Committee are delegated by the Board and include:

monitoring the integrity of statutory reporting and reviewing, with recommendations, the policies and disclosures inherent in the half-year and full-year accounts;
reviewing and approving financial policies and procedures so as to ensure the effectiveness of financial management and reporting; the completeness of compliance obligations; and adherence with continuous disclosure requirements;
monitoring and appropriately advising the Board in relation to related party transactions;
monitoring and assessing the Group’s internal control frameworks and risk management strategies and processes, including recommending insurance strategy;
overseeing the scope, cost and performance of external audit; and directing the strategies and scope of internal audit;
recommending the appointment of external auditors and monitoring the independence of external auditors.

Risk Management

Risk management and compliance is addressed by the Risk Committee that comprises managers from the all principal areas of the business who are charged with identifying risk and developing and implementing risk management and amelioration strategies. The Risk Committee reports to the Board Audit, Risk and Compliance Committee. The Board has reserved consideration of strategic risk to itself.

CND Annual Report 2008 13

The Board Remuneration and Nominations Committee operates under a Charter approved by the Board. The Committee’s objective is to assist the Board in the consideration of personnel and remuneration issues within the Group. The Committee comprises a minimum of three Directors, a majority of whom are, and are to be, NonExecutive Directors:

The members of the Committee during the year were:

Mr Geoffrey J Moles (Chairman)
Mr Peter D Bunting
Mr Lawrence J Gibbs
Ms Penny Morris joined the Committee on 25th March 2008

The Committee, which is accountable to the Board, is required by its Charter to meet at least twice per year and has done so. Details of the number of meetings of the Committee held during the year, and the attendees at those meetings, are set out on page 29 of the Directors’ Report.

The responsibilities of the Board Remuneration and Nominations Committee are delegated by the Board and include:

recommending the structure and constituency of the Board such that it has the effective composition, size and commitment to properly discharge its responsibilities and duties;
ensuring appropriate Board succession planning, including identification, induction and training of new Directors as required;
performance assessment in relation to the Board and individual Directors;
assisting the Chairman in relation to the efficacy of Board
processes;

External Auditors

The Group’s policy is to appoint external auditors who are independent and who demonstrate that independence.

An analysis of fees paid to the external auditors, including a breakdown of fees for non-audit services, is provided in the Directors’ Report and in notes to the Financial Statements. It is the policy of the external auditors to provide an annual declaration of their independence to the Board and to explain the basis upon which non-audit services do not impair their independence.

The external auditor will attend the Annual General Meeting and will be available to answer shareholder questions about the conduct of the audit and preparation, and the content of the Audit Report.

Statement by Managing Director and Chief Financial Officer

The Managing Director and the Chief Financial Officer have stated, in writing, to the Board that the Group’s financial statements for the year ended 30 June 2008 present a true and fair view in all material respects of the Group’s financial position and its operations for the year, and that they are in accordance in all material respects with all relevant accounting standards. The Managing Director and the Chief Financial Officer have further stated to the Board in writing that the Group’s records have been properly maintained under law; that the financial statements are underpinned by sound systems of risk management and internal controls which are operating effectively in all material respects; and that there are no post 30 June 2008 events which would materially impact the effectiveness of those systems.

recommending Chairman and Non-Executive Director remuneration;
recommending remuneration framework and levels for the

Ethical Standards

Managing Director and other senior management;
assisting the Chairman in relation to performance goals for, and assessment of, the Managing Director and senior management;
policies and procedures regarding the senior management team for recruitment, retention, remuneration, training and succession planning;

For details on the amount of remuneration, and all monetary and non-monetary components for each of the highest paid Executives who were not Directors during the year, and for all Directors, refer to pages 23-27 of the Directors’ Report. In relation to the payment of bonuses, options, and other incentive payments, discretion is exercised by the Board having regard to the overall performance of the Group and the performance of the individual during the period.

The Board has adopted a Code of Conduct applicable to all Directors and to all employees. The Code directs standards of behaviour and of interpersonal dealings. Within the letter and spirit of the Code, the Directors and all employees are expected to act lawfully, in a professional manner, and with the utmost integrity and objectivity in their dealings with clients, contractors, candidates and competitors, the community and each other, striving at all times to enhance the reputation and performance of the Group.

The Group has implemented a ‘tip-off’ or whistleblower policy empowering employees to report instances of workplace misconduct. The procedures are protective of the interests and concerns of employees who are genuinely exposed to such instances.

There is no scheme to provide retirement benefits to NonExecutive Directors, other than statutory superannuation.

14 CND Annual Report 2008

Occupational Health and Safety

The Group recognises the importance of occupational health and safety issues and is committed to the highest level of performance. The Risk Committee, constituted by senior management and monitored by the Board Audit, Risk and Compliance Committee, facilitates the systematic identification of issues relevant to all workers under the Group’s responsibility, and ensures effective management of them.

Transactions in Shares of the Group

Directors and employees of the Group are not permitted to undertake any transactions in relation to shares in the Group in the period between the end of the financial half or full year until the release of the financial information relating to that period. Directors and employees of the Group are further prohibited from undertaking transactions involving the Group’s shares at any time whilst in possession of information which is not in the public domain and which could reasonably lead to a change in the share price of the Group.

Shareholders

The Board aims to ensure that shareholders are informed of all major developments affecting the Group’s state of affairs.

Information is communicated to shareholders through the following channels:

ASX Corporate Governance Guidelines

The Company is compliant with all recommendations of the ASX Corporate Governance Council set out in the Principles of Good Corporate Governance and Best Practice Recommendations dated March 2003, save for the following:

Recommendation 2.2 – The Chairman should be an independent Director.

The Directors consider that Mr Geoffrey Moles, who is the founder of the business and was the Managing Director at the time of the IPO, has significant industry knowledge and knowledge of the Group businesses (since 1984) that is of significant benefit to the Board.

Recommendation 5.1 – Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance.

The Company does not have a formal written policy relating to continuous disclosure. The senior management team is closely knit and operates from one office. External communications, including ASX announcements, are prepared by management and approved by the Board prior to release. Senior management is fully conversant with the continuous disclosure requirements of ASX Listing Rule 3.1.

the Annual Report is distributed to all shareholders and includes relevant information about the operations of the Group during the year, changes in the state of affairs of the Group and details of future developments, in addition to other disclosures required by the Corporations Act 2001;
announcements are made to the Australian Stock Exchange in respect of annual and half-yearly results, and on other occasions when the Group becomes aware of information that might materially affect the price of its shares; and
the use of the website www.clarius.com.au to publish releases by the Group.

CND Annual Report 2008 15

==> picture [395 x 729] intentionally omitted <==

==> picture [260 x 268] intentionally omitted <==

Directors’ Report

==> picture [179 x 232] intentionally omitted <==

==> picture [180 x 232] intentionally omitted <==

==> picture [239 x 232] intentionally omitted <==

Geoffrey J Moles

Non-Executive Chairman

Geoffrey Moles has over thirty six 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 it listed on the ASX in 1997 before changing its name to Clarius Group Limited in 2007. 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.

Diana J Eilert

Managing Director – appointed 28 August 2007

Diana Eilert was appointed as Managing Director with Clarius Group Limited on 28 August 2007. Prior to joining the Company, Diana was a Group Executive with Suncorp, responsible for People, Technology, Marketing and Joint Ventures for the entire Suncorp Group. She joined Suncorp in 2003 and ran Suncorp’s entire General Insurance – a business with 3500 employees, $2.6 billion in revenues and $677 million NPBT - until mid-2006.

Diana worked in financial services for over 20 years, commencing her career with NRMA and AAMI before joining Citibank in 1986 where she held a number of general management positions including Head of Citibank Direct. In addition she has worked in strategy consulting as a Principal with AT Kearney and a Partner with IBM. Diana holds a Bachelor of Science in Pure Maths (Syd) and a Master of Commerce in Finance and Marketing (UNSW).

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 over 30 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.

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

18 CND Annual Report 2008

==> picture [401 x 232] intentionally omitted <==

==> picture [198 x 232] intentionally omitted <==

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, then 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 AM

Non-Executive Director

Penny Morris 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, NSW Institute of Teachers and 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.

Robert J Collins

Managing Director – resigned effective 28 August 2007

Penny is also a member of the Board Audit, Risk and Compliance Committee and was appointed a member of the Board Remuneration and Nominations Committee on 25 March 2008.

CND Annual Report 2008 19

Your Directors present their report on Clarius Group, formerly known as Candle Australia Limited, (the ‘Company’) and its controlled entities (the ‘Consolidated Entity’) for the financial year ended 30 June 2008.

Operating Results

The consolidated profit of the Consolidated Entity after providing for income tax for the financial year amounted to $11,333,000 (2007: $13,405,000).

Directors

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

Geoffrey J Moles	Non-Executive Chairman
Robert J Collins	Managing Director	Resigned effective
		28 August 2007
Diana J Eilert	Managing Director	Appointed 28
		August 2007
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

Clarius Group (ASX: CND) is a specialist in the employment services market providing recruitment, contractor and staff services across the Asia Pacific region.

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

Clarius Group operates through a number of quality specialist brands:

Recruitment

Alliance Accounting, Business Support and Financial Services
Candle ICT Information and Communications Technology
Lloyd Morgan Executive Recruitment
SouthTech Engineering
The One Umbrella Library and Records Management

Aligned Services

Dividends Paid or Recommended

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

2008 $000 Fully franked final dividend of 10.0 cents per share was 5,361 paid on 14 September 2007: Fully franked interim dividend of 9.0 cents per share was 5,084 paid on 14 March 2008

On 26 August 2008 the Directors resolved to declare a fully franked final dividend of 7.0 cents per share to be paid on 30 September 2008 amounting to $4,018,293.

Review of Operations

Earnings before Interest and Taxation (EBIT) was $17.8 million for the year, or $18.9 million before one-off costs. The result was in line with previous guidance. The result was a reduction in prior year EBIT of $2.0 million, or $0.9 million after one-offs.

In line with this, Net Profit after Tax (NPAT) was $11.3 million or $12.1 million after one-offs.

Revenue increased by eight percent to $321million, largely due to acquisition activity.

The Clarius Board has declared a fully franked final dividend of 7c per share, taking the full year dividend to 16c per share fully franked, representing a payout ratio of 80% of reported NPAT or 75% of NPAT without the impact of one-off costs. The Board has also announced that the Dividend Reinvestment Plan will operate with a 5% discount for the final dividend.

Operating cash flow was slightly negative -$0.33 million over the course of the year as the Group absorbed working capital requirements for two acquisitions JAV IT and SouthTech, and received a significant late payment of $3.1 million from a large multinational customer. Adjusting for the late payment, the second half operating cashflow was $6.9 million positive.

JAV IT Managed IT Services and Professional IT
Reality Check Pre-Employment Screening

Clarius Group employs over 450 staff through a network of offices located in Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra in Australia; Auckland and Wellington in New Zealand; Hong Kong, Beijing, Shanghai, Shenzhen in China; Kuala Lumpur in Malaysia; and Singapore.

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

Financial Position

The net assets of the Consolidated Entity have increased by $8,500,000 from 30 June 2007. This increase has been the result of the continuation of the Company’s acquisition strategy with the acquisition of the SouthTech, JAV IT and Reality Check.

20 CND Annual Report 2008

Overall the Consolidated Entity is in a sound position with undrawn 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 opportunistic acquisitions when they arise.

Peter D Bunting 7,500 ordinary shares

Penelope Morris 40,000 ordinary shares

Company Secretary

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 2008, are included in greater detail in the Non-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

No 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 Consolidated Entity’s business does not give rise to any significant environmental issues.

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 1,325,324 ordinary shares

Nicholas Geddes FCA FCIS was appointed Company Secretary on 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 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:

Non-Executive Director remuneration
Principles used to determine the nature and amount of executive remuneration
Details of Directors’ and key management personnel remuneration
Employment contracts
Share-based payments

The information provided under these headings includes remuneration disclosures that are required under the Corporations Act 2001. These disclosures have been transferred from the financial report and have been audited.

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.

Diana J Eilert

200,000 ordinary shares and options to acquire a further 2,100,000 ordinary shares.

Lawrence J Gibbs 49,238 ordinary shares

CND Annual Report 2008 21

Principles Used to Determine the Nature and Amount of Executive Remuneration

Executive Remuneration Policy

The Executive Remuneration Policy, setting out the terms and conditions for the Chief Executive and other senior executives was developed by the Board Remuneration and Nominations Committee and approved by the Board after seeking professional advice from independent external consultants where required. 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.

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 financial 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.

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. Bonuses and incentives are 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 Board Remuneration and Nominations 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 the areas the Board believes hold the greatest potential for the Consolidated Entity’s expansion and profitability, covering financial and non-financial as well as short-term and long-term goals. The level set for each KPI is based on budgeted figures for the Consolidated Entity and respective industry standards.

22 CND Annual Report 2008

Details of Directors’ and Key Management Personnel Remuneration

The remuneration of each Director is as follows:

Parent Entity	Short-Term Employee Benefts Post- Employment Benefts Long-Term Benefts Share- Based Payments
	Salary $ Directors’ fees $ Other $ Short- Term Incentive $ Superannuation $ Long- Service Leave $ Termination Payments $ Annualised Value $ Total Remuneration Paid $(1)
Directors
Geoffrey J Moles
2008	- 100,000 - - 9,000 - - - 109,000
2007	128,214 - - - 9,219 - - - 137,433
Diana J Eilert(3)
2008	462,180 - 7,783 400,000 13,129 - - 90,350 973,442 (2)
2007	- - - - - - - - -
Robert J Collins(4)
2008	127,261 - - 210,669 3,282 - - 2,614 343,826
2007	490,984 - - 235,699 15,858 3,821 - 28,757 775,119
Lawrence J Gibbs
2008 - 55,240 - - 4,972 - - - 60,212
2007 - 49,403 - - 4,446 - - - 53,849
Peter D Bunting
2008 - 60,240 - - 5,422 - - - 65,662
2007 - 58,040 - - 5,223 - - - 63,263
Penelope Morris
2008 - 52,740 - - - - - - 52,740
2007 - 51,349 - - - - - - 51,349

(1) This table has been amended from that previously disclosed in the 28 August 2008 ASX Financial Report lodgement to reflect amounts accrued but not yet paid as at balance date. The previous disclosure reflected what was actually paid in the financial year.

(2) During the year the Board of Directors resolved to increase, for this year only, the short-term incentive of the Managing Director. The eligible amount has increased from $200,000 to $400,000.

(3) Diana J Eilert was appointed as CEO on 30 July 2007 and Managing Director on 28 August 2007

(4) Robert J Collins resigned effective 28 August 2007

CND Annual Report 2008 23

The remuneration of key management personnel of the Consolidated Entity not included above is as follows:

Consolidated	Short-Term Employee Benefts Post- Employment Benefts Long-Term Benefts Share- Based Payments
	Salary $ Other $ Short-Term Incentive $ Superannuation $ Long- Service Leave $ Termination Payments $ Annualised Value $ Total Remuneration Paid $(1)
Key Management Personnel
David A Marshall(3)
2008 161,507 4,670 96,600 8,641 - - 47,522 318,940 (2)
2007 - - - - - - - -
Mark A Langan(4)
2008 133,900 - - 9,577 - 214,693 - 358,170
2007 194,479 - 27,500 14,148 - - 19,632 255,759
Kym L Quick
2008 253,738 - 50,000 13,009 4,422 - 68,603 389,772
2007 216,999 - 50,000 11,821 7,589 - 45,799 332,208
Jane A Bianchini(5)
2008 306,891 7,783 - 13,129 - - 66,482 394,285
2007 207,861 - 219,998 14,995 - - 37,498 480,352
Paul A Barbaro
2008 306,881 6,341 120,000 13,129 - - 70,735 517,086
2007 204,064 - 150,000 13,138 - - 37,498 404,700
Gregory M Smith(6)
2008 134,076 - 50,000 9,501 - - - 193,577
2007 - - - - - - - -

(2) During the year the Board of Directors resolved to increase, for this year only, the short-term incentive of the Chief Financial Officer. The eligible amount has increased from $48,300 to 96,600.

(3) David A Marshall was appointed on 3 December 2007

(4) Mark A Langan resigned effective 29 February 2008

(5) Jane A Bianchini resigned effective 12 September 2008

(6) Gregory M Smith was appointed on 29 October 2007

24 CND Annual Report 2008

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

		Performance-Based
	Fixed Remuneration	Payments	Share-Based Payments
	%	%	%
Directors
Geoffrey J Moles
2008	100	-	-
2007	100	-	-
Diana J Eilert
2008	50	41	9
2007	-	-	-
Robert J Collins
2008	38	61	1
2007	66	30	4
Lawrence J Gibbs
2008	100	-	-
2007	100	-	-
Peter D Bunting
2008	100	-	-
2007	100	-	-
Penelope Morris
2008	100	-	-
2007	100	-	-
Key Management Personnel
David A Marshall
2008	55	30	15
2007	-	-	-
Mark A Langan
2008	100	-	-
2007	81	11	8
Kym L Quick
2008	69	13	18
2007	71	15	14
Jane A Bianchini
2008	83	-	17
2007	46	46	8
Paul A Barbaro
2008	63	23	14
2007	54	37	9
Gregory M Smith
2008	74	26	-
2007	-	-	-

CND Annual Report 2008 25

The basis of the performance-based short-term incentives is described above.

The remuneration of key management personnel and the returns to the Company’s shareholders are aligned through the remuneration policies implemented by the board as follows:

The KPIs assigned to key management personnel directly impact the amount of bonus payments made and potential salary increases. These KPIs are directly linked to the profitability of the Company and the achievement of its Company’s financial goals during the respective twelvemonth service period. Therefore, the level of remuneration of key management personnel is directly linked to the performance of the Company in each twelve-month period.

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 performance-related 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.

The vesting conditions relating to the Employee and Executive Option plans include a requirement for the Company’s share price to exceed the relevant ASX share price index for similar sized companies. Notwithstanding the fact that the Company’s share price is impacted by external factors and market movements that are outside the control of key management personnel, the extent of the benefit that key management personnel may derive from participation in the plan increases as the Company’s share price increases over the longer term.

Name and Position	Term of Agreement	Basis of Salary Payment	Notice Period
Diana J Eilert – Managing	On-going until terminated	Base salary, inclusive of superannuation,	Notice period of 6 months
Director (appointed as CEO on	by either party	for the 11 months ended 30 June 2008	by either party.
30 July 2007 and Managing		of $475,309, to be reviewed annually by
Director on 28 August 2007)		the Board Remuneration and Nominations
		Committee
Robert J Collins – Managing	Agreement terminated on	Base salary, inclusive of superannuation,
Director (resigned effective 28	resignation effective 28	for the 2 months ended 28 August 2007
August 2007)	August 2007	of $130,543
David A Marshall – Chief Financial	On-going until terminated	Base salary, inclusive of superannuation,	Notice period of 6 months
Offcer (appointed 3 December	by either party	for the 7 months ended 30 June 2008 of	by either party.
2007)		$170,148, to be reviewed annually by the
		Board Remuneration and Nominations
		Committee
Mark A Langan – Chief Financial	Agreement terminated on	Base salary, inclusive of superannuation,
Offcer (resigned effective 29	resignation effective 29	for the 8 months ended 29 February 2008
February 2008)	February 2008	of $143,477
Kym L Quick – Executive General	On-going until terminated	Base salary, inclusive of superannuation, for	Notice period of 2 months
Manager – People & Project	by either party	the year ended 30 June 2008 of $266,747,	by either party.
FutureForce		to be reviewed annually by the Board
		Remuneration and Nominations Committee
Jane A Bianchini – Executive	Agreement terminated on	Base salary, inclusive of superannuation, for
General Manager – Candle ICT	resignation effective 12	the year ended 30 June 2008 of $320,020,
(resigned	September 2008	to be reviewed annually by the Board
effective 12 September 2008)		Remuneration and Nominations Committee
Paul A Barbaro – Executive	On-going until terminated	Base salary, inclusive of superannuation, for	Notice period of 2 months
General Manager – Alliance	by either party	the year ended 30 June 2008 of $320,010,	by either party.
		to be reviewed annually by the Board
		Remuneration and Nominations Committee
Gregory M Smith – Executive	On-going until terminated	Base salary, inclusive of superannuation,	Notice period of 2 months
General Manager – Lloyd Morgan	by either party	for the 8 months ended 30 June 2008	by either party.
Australia (appointed 29 October		of $143,577, to be reviewed annually
2007)		by the Board Remuneration and
		Nominations Committee

26 CND Annual Report 2008

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.

Option Holdings

	Balance			Lapsed/	Balance	Vested
	01/07/2007	Granted	Exercised	Forfeited	30/06/2008	30/06/2008
Directors
Geoffrey J Moles	-	-	-	-	-	-
Diana J Eilert	-	2,100,000	-	-	2,100,000	-
Robert J Collins	1,800,000	-	(1,800,000)	-	-	-
Lawrence J Gibbs	-	-	-	-	-	-
Peter D Bunting	-	-	-	-	-	-
Penelope Morris	-	-	-	-	-	-
Key Management	Personnel
David A Marshall	-	800,000	-	-	800,000	-
Mark A Langan	343,334	-	(143,334)	(200,000)	-	-
Kym L Quick	771,000	200,000	(41,000)	-	930,000	163,333
Jane A Bianchini	500,000	200,000	-	-	700,000	-
Paul A Barbaro	500,000	200,000	-	-	700,000	-
Gregory M Smith	-	-	-	-	-	-
Total	3,914,334	3,500,000	(1,984,334)	(200,000)	5,230,000	163,333

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:

2,100,000 options at an exercise price of $3.30 expiring on 29 November 2014 were granted to Diana J Eilert. The total fair value at the grant date was $568,011 and the options will vest over five years. Fair value of the options at grant date was 46.12 cents each.
800,000 options at an exercise price of $3.23 expiring on 1 November 2014 were granted to David A Marshall. The total fair value at the grant date was $265,386 and the options will vest over five years. Fair value of the options at grant date was 60.50 cents each.
200,000 options at an exercise price of $3.30 expiring on 27 September 2011 were granted to Kym L Quick. The total fair value at grant date was $59,670 and the options will vest over three years. Fair value of the options at grant date was 46.12 cents each.
200,000 options at an exercise price of $3.30 expiring on 27 September 2011 were granted to Jane A Bianchini. The total fair value at grant date was $59,670 and the options will vest over three years. Fair value of the options at grant date was 46.12 cents each.
200,000 options at an exercise price of $3.30 expiring on 27 September 2011 were granted to Paul A Barbaro. The total fair value at grant date was $59,670 and the options will vest over three years. Fair value of the options at grant date was 46.12 cents.

CND Annual Report 2008 27

Shareholdings

Shareholdings
	Balance	Received as		Options		Balance
	01/07/2007	Remuneration		Exercised	Movement	30/06/2008
Directors
Geoffrey J Moles	1,796,825		-	-	(471,501)	1,325,324
Diana J Eilert	-		-	-	200,000	200,000
Robert J Collins – resigned effective 28 August 2007	1,393,500		-	1,800,000	(3,193,500)	n/a
Lawrence J Gibbs	45,275		-	-	3,963	49,238
Peter D Bunting	7,500		-	-	-	7,500
Penelope Morris	-		-	-	40,000	40,000
Key Management Personnel
David A Marshall	-		-	-	-	-
Mark A Langan – resigned effective 29 February 2008	-		-	143,334	(143,334)	n/a
Kym L Quick	-		-	41,000	(41,000)	-
Jane A Bianchini	2,653		-	-	(2,653)	-
Paul A Barbaro	-		-	-	-	-
Gregory M Smith	-		-	-	5,000	5,000
Total	3,245,753		-	1,984,334	(3,603,025)	1,627,062

Shares Issued on Exercise of Options during the Year

			Amount
	Number of	Amount Paid	Unpaid Per
	Shares Issued	Per Share $	Share $
Directors
Diana J Eilert	-	-		-
Robert J Collins	1,800,000	$2.08		-
Key Management Personnel
David A Marshall	-	-		-
Mark A Langan	10,000	$1.61		-
	133,334	$2.08		-
Kym L Quick	20,000	$1.06		-
	21,000	$1.61		-
Jane A Bianchini	-	-		-
Paul A Barbaro	-	-		-
Gregory M Smith	-	-		-

28 CND Annual Report 2008

Meetings of Directors

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

	Number of Meetings	Number of Meetings
Director	Held(1)	Attended
Geoffrey J Moles	13	13
Diana J Eilert	11	11
Robert J Collins	2	2
Lawrence J Gibbs	13	10
Peter D Bunting	13	13
Penelope Morris	13	13

(1) The number of meetings held during the time the Director was a member of the Board.

Board Audit Risk and Compliance Committee Meetings

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

	Number of Meetings	Number of Meetings
Director	Held(2)	Attended
Lawrence J Gibbs	4	2
Peter D Bunting	4	4
Penelope Morris	4	4

(2) The number of meetings held during the time the Director was a member of the Board Audit Risk and Compliance Committee.

Board Remuneration and Nominations Committee Meetings

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

	Number of Meetings	Number of Meetings
Director	Held(3)	Attended
Geoffrey J Moles	5	5
Lawrence J Gibbs	5	5
Peter D Bunting	5	5
Penelope Morris	3	3

(3) The number of meetings held during the time the Director was a member of the Board Remuneration and Nominations Committee.

CND Annual Report 2008 29

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:

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 8 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.

The following fees for non-audit services were paid to the external auditors during the year ended 30 June 2008:

		Amount
		Paid $
	Taxation Services	17,170
	Business Services	26,650
	Total	43,820

30 CND Annual Report 2008

Auditor’s Independence

The lead auditor’s independence declaration for the year ended 30 June 2008 has been received and can be found on page 31 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.

Auditor’s Independence Declaration

As lead auditor for the audit of Clarius Group Limited and controlled entities for the year ended 30 June 2008, 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 Clarius Group Limited and the entities it controlled during the period.

Signed in accordance with a resolution of the Board of Directors

==> picture [172 x 29] intentionally omitted <==

Geoffrey J Moles Non-Executive Chairman

WHK Howath Sydney

==> picture [104 x 57] intentionally omitted <==

Diana J Eilert Managing Director

Dated at Sydney this 26th day of August 2008

David Sinclair

Dated at Sydney this 26th day of August 2008

CND Annual Report 2008 31

==> picture [395 x 729] intentionally omitted <==

==> picture [260 x 268] intentionally omitted <==

Financial Statements

Income Statement[(1)]

For the year ended 30 June 2008

Income Statement(1) For the year ended 30 June 2008
	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Revenues from continuing operations	4 321,429 297,906 236,044 251,848
On hired labour costs	(240,453) (225,055) (188,002) (197,962)
Employee benefts expense	(45,575) (38,379) (23,723) (25,725)
Depreciation and amortisation expense	5 (1,432) (1,648) (743) (1,022)
Operating rental expense	(3,445) (2,543) (1,410) (1,424)
Borrowing costs expense	5 (1,488) (426) (1,443) (402)
Other expenses	(12,650) (10,378) (11,146) (9,380)
Proft before income tax	16,386 19,477 9,577 15,933
Income tax expense	6 (5,053) (6,072) (3,411) (4,778)
Proft for the year attributable to the members of Clarius GroupLimited	11,333 13,405 6,166 11,155
	Cents Per Share 10 20.3 25. 7 10 19.0 23.8
Basic earnings per share
Diluted earnings per share

(1) The above Income Statement should be read in conjunction with the accompanying notes.

34 CND Annual Report 2008

Balance Sheet[(1)]

as at 30 June 2008

Balance Sheet(1) as at 30 June 2008
	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Current Assets
Cash assets and cash equivalents	12 3,484 2,948 532 782
Trade and other receivables	13 63,109 50,607 64,651 50,198
Deferred tax assets	14 2,855 2,376 1,760 1,860
Total Current Assets	69,448 55,931 66,943 52,840
Non-Current Assets Trade and other receivables	13 - - 10,782 5,190
Property, plant and equipment	15 2,441 2,723 964 1,679
Other fnancial assets	16 - - 19,074 25,234
Intangible assets	18 77,108 62,477 21,270 23,618
Total Non-Current Assets	79,549 65,200 52,090 55,721
Total Assets	148,997 121,131 119,033 108,561
Current Liabilities
Trade and other payables	19 36,210 29,409 21,410 25,522
Bank overdraft	11 2,085 2,847 1,562 2,847
Interest Bearing Liabilities	11 15,000 - 15,000 -
Current tax Liabilities	20 (396) 1,448 (3,042) 749
Provisions	21 1,936 2,002 873 1,079
Total Current Liabilities	54,835 35,706 35,803 30,197
Non-Current Liabilities
Trade and other payables	19 - 24 - -
Deferred tax liabilities	20 66 10 - -
Provisions	21 1,161 956 753 713
Total Non-Current Liabilities	1,227 990 753 713
Total Liabilities	56,062 36,696 36,556 30,910
Net Assets	92,935 84,435 82,477 77,651
Equity
Contributed equity	22 71,611 62,921 71,611 62,921
Reserves	23 (76) 1,000 1,081 664
Retained Profts	24 21,400 20,514 9,785 14,066
Total Equity	92,935 84,435 82,477 77,651

(1) The above Balance Sheet should be read in conjunction with the accompanying notes.

CND Annual Report 2008 35

Statement of Changes in Equity[(1)]

For the year ended 30 June 2008

Statement of Changes in Equity(1) For the year ended 30 June 2008
	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Total equity at the beginning of the fnancial year	84,435 71,697 77,651 67,708
Exchange difference on translation of foreign operations	23 (1,493) 545 - -
Net income recognised directly in equity	(1,493) 545 - -
Proft for the year	11,333 13,405 6,166 11,155
Total recognised income and expense for the year	9,840 13,950 6,166 11,155
Dividends paid or provided for	7 (10,447) (10,361) (10,447) (10,361)
Shares issued during the year	22 8,690 8,849 8,690 8,849
Share based payments	23 417 300 417 300
Total equity at the end of the fnancial year	92,935 84,435 82,477 77,651
Effect of amendment in previous year:
Proft as reported in the 2007 Financial Report	11,333 13,551 6,166 11,155
Amendment – Correction to 2007 Trade receivables balance	- (146) - -
Restated proft	11,333 13,405 6,166 11,155

(1) The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

36 CND Annual Report 2008

Cash Flow Statement[(1)]

For the year ended 30 June 2008

Cash Flow Statement(1) For the year ended 30 June 2008
		Consolidated Parent Entity
	Note	2008 $000	2007 $000 2008 $000 2007 $000
Cash Flows Operating Activities
Receipts from customers		342,502	327,163 262,066 277,245
Payments to suppliers and employees		(312,815)	(286,201) (238,197) (243,572)
Interest received		55	80 4 33
Interest and other borrowing costs paid		(1,488)	(426) (1,443) (402)
Income tax paid		(7,322)	(6,554) (7,102) (6,062)
GST paid		(21,263)	(19,678) (14,865) (16,670)
Net cashprovided byoperatingactivities	11	(331)	14,384 463 10,572
Cash Flows Investing Activities
Payment for purchase of business		(8,132)	(11,255) 1,710 (8,152)
Purchase of plant and equipment		(854)	(603) - (451)
Proceeds from disposal of non-current assets		-	27 131 27
Payments for software development and intangible assets		(177)	(458) 82 (380)
Net cash(used in)/provided byinvestingactivities	30	(9,163)	(12,289) 1,923 (8,956)
Cash Flows Financing Activities
Proceeds from borrowings		15,000	- 15,000 -
Loan from/(payment to) related party		(55)	- (12,478) 1,005
Repayment of loan from vendor of business		-	- - -
Repayment of loan to vendor of business		-	205 - -
Dividends paid to shareholders		(8,614)	(8,288) (8,614) (8,288)
Proceeds from the issue of shares		4,743	1,889 4,743 1,889
Net cash(used in)/provided		11,074	(6,194) (1,349) (5,394)
Net increase / (decrease) in cash held		1,580	(4,099) 1,036 (3,778)
Cash at the beginning of the fnancial year		101	4,087 (2,066) 1,713
Effect of exchange rates on cash holdings in foreign currencies		(282)	113 - -
Cash at the end of the fnancialyear	12	1,399	101 (1,030) (2,065)

(1) The above Cash Flow Statement should be read in conjunction with the accompanying notes.

CND Annual Report 2008 37

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 International Financial Reporting Standards (IFRS) in their entirety.

The financial report covers the Consolidated Entity of Clarius Group Limited and controlled entities and Clarius Group Limited as an individual entity. Clarius Group 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.

Intercompany transactions, balances and unrealised gains on transactions between entities comprising the Consolidated Entity 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

Basis of Preparation

Where the Consolidated Entity provides only payroll services to clients, only the fee derived is accounted for in revenue.

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

Clarius Group Limited as at 30 June 2008 and the results of all subsidiaries for the year ended 30 June 2008. Clarius Group 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.

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 Clarius Group Limited.

(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.

38 CND Annual Report 2008

Tax Consolidation Legislation

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

The head entity, Clarius Group 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, Clarius Group 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 6.

(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

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

The employee benefits expense recognised in the equity reserve is based on the revised number of options that have vested as at balance date. 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

Candidate databases 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.

(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 at each balance date 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.

CND Annual Report 2008 39

(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.

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 Leasehold Improvements	9% - 37.5% 20% - 50%	Diminishing Value 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 Clarius Group Limited’s functional and presentation currency.

(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) Clarius Group 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;

40 CND Annual Report 2008

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.

(m) Financial Instruments

(i) Loans and Receivables

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

(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.

Recoverability 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 receivables is established when there is objective evidence that the Consolidated Entity 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. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement.

Available for sale financial assets, comprising principally investments in subsidiaries, are non derivatives that are either designated in this category or not classified in any other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available for sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

(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.

(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.

CND Annual Report 2008 41

(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.

u) Financial Risk Management

The Consolidated Entity’s activities expose it to a variety of financial risks including:

(i) Market Risk

(ii) Credit Risk

(iii) Liquidity Risk

Refer to note 2 for objectives, policies and sensitivity analysis of financial risk.

(v) Segment Reporting

(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

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.

(i) Basic Earnings per Share

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

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

(i) Estimated Impairment of Goodwill

The Consolidated Entity tests at each balance date 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 18 for details of these assumptions.

(ii) Income Taxes

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

(w) New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The Consolidated Entity and parent entity’s assessment of the impact of these new standards and interpretations is set out below:

(i) AASB 8 Operating Segments

AASB 8 Operating Segments 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 Consolidated Entity or parent entity as the standard is only concerned with disclosures.

(ii) AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101

A revised AASB 101 was issued in September 2007 and is applicable for annual reporting periods beginning on or after 1 January 2009. It requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet, this one being as at the beginning of the comparative period. The Consolidated Entity intends to apply the revised standard from 1 July 2009.

42 CND Annual Report 2008

(iii) Revised AASB 123 Borrowing Costs and AASB 2007 – 6 Amendments to Australian Accounting Standards arising from AASB 123 [AASB1, AASB 101, AASB 107, AASB 111, AASB 116, AASB 138 and interpretations 1 & 12]

The revised AASB 123 is applicable to annual reporting periods commencing on or after 1 January 2009. It has removed the option to expense borrowing costs and, when adopted, will require the capitalisation of all borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset. There will be no impact on the financial report of the Consolidated Entity.

(iv) AASB-I 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

AASB-I 14 will be effective for annual reporting periods commencing on or after 1 January 2008. It provides guidance on the maximum amount that may be recognised as an asset in relation to a defined benefit plan and the impact of minimum funding requirements on such an asset. AASB-I 14 is not expected to have any impact on the Consolidated Entity’s financial statements as it does not have any defined benefit plans.

2. Financial Risk Management

The Board of the Company has a formally constituted Board Audit, Risk and Compliance Committee. This committee operates under a charter approved by the Board. Its objectives are to assist the Board in safeguarding integrity in financial reporting; making timely and balanced disclosure to shareholders and potential shareholders in accordance with the principles of continuous disclosure; and recognising and managing risk.

In meeting these objectives, the Committee is responsible for, among other matters, identifying, monitoring and assessing the Consolidated Entity’s internal control frameworks and risk management strategies and processes in relation to such specific risks associated with financial, economic, operational, compliance, intellectual capital, security and human capital.

In regard to financial risk, the Consolidated Entity has identified potential exposure to:

Market Risk (including foreign exchange risk and interest rate risk);
Credit Risk; and
Liquidity Risk

The Consolidated Entity uses a variety of methods to measure these financial risks including sensitivity analysis for market risks, ageing analysis and pre-trade credit assessment for credit risks and cashflow forecasting and debt covenant monitoring for liquidity risks.

The Consolidated Entity and the parent entity hold the following financial instruments:

The risks of the Consolidated Entity are periodically assessed and the Committee, with management, agree on risk mitigation strategies including monitoring and reporting.

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Financial Assets:
Cash and cash equivalents	12 3,484 2,948 532 782
Trade receivables	13 48,483 32,131 28,354 26,264
Accrued income	13 13,771 17,675 13,355 15,900
Loans to subsidiaries	13 - - 33,488 12,815
Other fnancial assets	16 - - 19,074 25,234
	65,738 52,754 94,803 80,995
Financial Liabilities:
Trade payables	19 36,210 29,433 21,410 25,522
Borrowings	11 17,085 2,847 16,562 2,847
	53,295 32,280 37,972 28,369

CND Annual Report 2008 43

(a) Market Risk

Foreign Exchange Risk

The Consolidated Entity and the parent entity operate internationally and are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the New Zealand dollar, the Chinese renminbi, Hong Kong dollar, Singapore dollar, Malaysian ringgit and occasionally the US dollar.

The primary foreign exchange risk arises from loans to foreign subsidiaries. The parent entity has made foreign denominated loans to foreign subsidiaries for the purpose of acquiring foreign operations in Asia and New Zealand. The value of the loans to the foreign subsidiaries vary with variations in currency rates. Exchange movements are recognised in the income statement when the loans or part thereof have been realised.

Occasionally a minority of trade receivables, particularly in the Asian subsidiaries are denominated in a currency that is not the individual entity’s functional currency. At balance date all trade receivables were held in the individual entity’s functional currency. The foreign exchange risk is measured using sensitivity analysis.

On consolidation, the value of net assets of foreign subsidiaries vary with exchange movements.

The following table represents balances held within the Consolidated Entity that are not held in an individual entity’s functional currency. Amounts are stated in Australian dollar equivalents converted at exchange rates at balance date.

	30 June 2008
	HKD $000 NZD $000 CNY $000 SNG $000 MYR $000
Trade Receivables	- - - - -
Loans to foreign subsidiaries from parent entity	6,245 3,058 - (13) -
Net loans between subsidiaries	453 - - - -
Net assets of foreign subsidiaries on consolidation	584 1,739 546 179 48
	7,282 4,797 546 166 48

Consolidated Entity Sensitivity

The following table represents the impact of changes in different currencies against the Australian dollar on the Consolidated Entity’s net profit after tax and equity reserve.

	30 June 2008
	Impact of 10% Increase of AUD against foreign currencies on consolidated balances
	HKD $000 NZD $000 CNY $000 SNG $000 MYR $000
Loans to foreign subsidiaries from parent entity(1)	(568) (278) - 1 -
Net assets of foreign subsidiaries on consolidation(1)	(53) (158) (50) (16) (4)
Net proft after tax on consolidation(2)	- - - - -

30 June 2008

	30 June 2008
	Impact of 10% (Decrease) of AUD against foreign currencies on consolidated balances
	HKD $000 NZD $000 CNY $000 SNG $000 MYR $000
Loans to foreign subsidiaries from parent entity(1)	694 340 - (1) -
Net assets of foreign subsidiaries on consolidation(1)	(65) 193 61 20 5
Net proft after tax on consolidation(2)	- - - - -

(1) This represents the unrealised currency amount that would be adjusted to the foreign currency exchange reserve at balance date.

(2) No impact on net profit after tax occurs in the individual entities with changes in foreign currency at balance date because all amounts are held in the entity’s functional currency. Foreign currency movements at balance date do not impact net profit after tax on consolidation because net profit of foreign subsidiaries are consolidated in the Consolidated Entity at the average exchange rate for the reporting period.

On consideration of the current exposure levels to foreign currency movements, management have chosen not to use foreign currency hedging instruments.

44 CND Annual Report 2008

Cash Flow and Fair Value Interest Rate Risk

The Consolidated Entity’s main interest rate risk arises from the parent entity borrowings followed by potential utilisation of overdraft facilities in the Hong Kong and New Zealand subsidiaries.

For the parent borrowing facilities, the policy is to utilise a combination of its commercial bill and overdraft facilities to minimise its interest costs whilst maintaining the flexibility to

accommodate short term working capital requirements that vary in particular with the on-hired labour funding cycle. By converting overdraft debt to commercial bill debt, interest rates effectively are converted from variable rates to fixed rates.

As at the reporting date, the Consolidated Entity had the following variable rate borrowings:

	30 June 2008 30 June 2007
	Note Weighted Average Interest Rate Balance $000 Weighted Average Interest Rate Balance $000
Bank Overdraft	11 8.3% 2,085 8.1% 2,847
Commercial Bill	11 7.2% 15,000 6.8% -

The following two tables demonstrate the impact on Net Profit after Tax if the average interest rate had either increased or decreased by 1% over the whole year ending 30 June 2008.

Consolidated EntitySensitivity	30 June 2008		30 June 2007
	1% Increase in	1% Decrease in	1% Increase in	1% Decrease in
	Average Interest	Average Interest	Average Interest	Average Interest
	Rate	Rate	Rate	Rate
	$000	$000	$000	$000
Impact on Net Proft After Tax	(135)	135	(38)	38
Parent EntitySensitivity	30 June 2008		30 June 2007
	1% Increase	1% Decrease in	1% Increase in	1% Decrease in
	in Interest Rate	Interest Rate	Interest Rate	Average Interest
	$000	$000	$000	Rate
				$000
Impact on Net Proft After Tax	(133)	133	(36)	36

Price Risk

The Consolidated Entity does not hold any investments in equities or commodities and is therefore not subject to price risk for any recognised financial assets.

CND Annual Report 2008 45

(b) Credit Risk

Credit risk is managed on a group basis. Credit risk arises from credit exposures to customers accounts receivable balances. Independent credit assessments are used for all new customers and only those with a “low risk of default” rating are accepted. If there is insufficient credit history to give an accurate rating, other factors such as assessment of financial position, nature of proposed transactions and Directors personal guarantees are considered. Compliance to credit limits are monitored internally by the Consolidated Entity’s finance executives and reports are submitted to the Board of Directors on a monthly basis for review.

The Consolidated Entity maintains standard credit terms in its terms and conditions. Some preferred supplier agreements dictate longer payment terms however the credit risk remains unaffected.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short term nature and relative compliance with credit terms. At balance date, examination of the consolidated trade debtors ledger reveals no reason for an impairment adjustment.

The following table demonstrates the Consolidated Entity’s aged receivables at balance date aged from their due dates.

Consolidated Entity Receivables

Consolidated Entity Receivables
Consolidated Entity Receivables	30 June 2008
	Current 30 Days $000 60 Days $000 90 Days $000 Total $000
	41,687 3,020 2,848 1,044 48,650
	86% 6% 6% 2% 100%

Parent Entity Receivables

Parent Entity Receivables	30 June 2008
	Current 30 Days $000 60 Days $000 90 Days $000 Total $000
	25,817 1,899 573 159 28,448
	91% 7% 2% 1% 100%

Management have reviewed all trade receivables that are currently held in the trade receivables ledger that are outside trade terms and are satisfied that adequate provisions have been made. Refer to note 13.

Compliance with debt covenants are monitored as part of the cash flow management process.

Refer to note 11 Cash Flow Information for a summary of credit facilities both available and utilised as at balance date.

(c) Liquidity Risk

The Consolidated Entity manages liquidity risk by continuously monitoring forecast and actual cash flows. Due to the nature of on-hired labour working capital requirements, the Group treasury function aims to maintain a balance of flexibility and cost effective cash flow funding.

46 CND Annual Report 2008

3. Segment Reporting

(a) Segments

(a) Segments
	Australia		New	Zealand		Asia	Consolidated
	2008	2007	2008	2007	2008	2007	2008	2007
Geographic Segments	$000	$000	$000	$000	$000	$000	$000	$000
Revenue
External sales	302,194	279,575	10,385	15,128	8,404	2,412	320,983	297,116
Other revenue	293	471	150	314	3	6	446	790
Total segment revenue	302,487	280,046	10,535	15,442	8,407	2,418	321,429	297,906
Result
Segment result before tax and
Intercompany charges	14,370	17,806	1,059	1,324	957	347	16,386	19,477
Intercompany charges	492	485	(492)	(485)	-	-	-	-
Segment result before taxation	14,862	18,291	567	839	957	347	16,386	19,477
Income tax expenses							(5,053)	(6,072)
Net proft for the year							11,333	13,405
Segment assets	133,767	100,001	6,339	8,134	8,891	7,668	148,997	121,131
Segment liabilities	53,194	31,401	1,556	1,491	1,312	3,804	56,062	36,696
Intercompany balances	9,180	8,649	(3,044)	(5,053)	(6,136)	(3,596)	-	-
Net assets							92,935	84,435
Acquisitions of non-current
segment assets	1,058	709	(75)	19	17	2	1,000	730
Depreciation and amortisation	1,326	1,564	43	57	63	27	1,432	1,648

(b) Segment Accounting Policies

Segment information is prepared in accordance with the accounting policies of the entity as disclosed in note 1(v) 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.

(d) Inter-Segment Transactions

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.

(c) Income

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.

CND Annual Report 2008 47

4. Revenue

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
From continuing operations:
Sales revenue	321,085 297,405 228,785 245,251
Interest received	4(a) 55 80 446 394
Unrealised gain on loan to controlled entity	- - - 495
	321,140 297,485 229,231 246,140

Other revenue:
Software royalties	289 394 290 394
Sale of fxed assets	- 27 - 27
Dividend from wholly-owned subsidiary	- - 6,523 5,287
	289 421 6,813 5,708
Total revenue	321,429 297,906 236,044 251,848

(a) Interest Revenue

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Interest revenue receivable from:
Wholly owned subsidiaries	- - 442 361
Other persons	55 80 4 33
Total interest revenue	55 80 446 394

48 CND Annual Report 2008

5. Expenses

Profit before income tax includes the following specific expenses:

Proft before income tax includes the following specifc expenses:
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Finance costs: Other persons	1,488 426 1,443 402
Total borrowing costs and expenses	1,488 426 1,443 402
Depreciation of non-current assets Plant and equipment	786 888 411 593
Amortisation of non-current assets
Leasehold improvements	350 242 174 144
Capitalised computer software	197 260 158 246
Candidate databases	99 258 - 39
Total amortisation	646 760 332 430
Total depreciation and amortisation expense	1,432 1,648 743 1,022
Bad and doubtful debts Trade debtors	(43) (8) (9) (8)

CND Annual Report 2008 49

6. Income Tax Expense

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Current tax Deferred tax	5,476 6,207 3,311 5,030 (423) (135) 100 (252)
	5,053 6,072 3,411 4,778
Deferred income tax expense included in income tax expense comprises:
Decrease / (Increase) in deferred tax assets	14 (479) (145) 100 (252)
(Decrease) / Increase in deferred tax liabilities	20 56 10 - -
	(423) (135) 100 (252)
The prima facie tax on proft before income tax is reconciled to the income tax as follows:
Prima facie tax payable on proft before income tax at 30%
Consolidated	4,916 5,887 - -
Parent entity	- - 2,873 4,780
	4,916 5,887 2,873 4,780
Add tax effect of:
Non-deductible amortisation	30 11 - 11
Other non-allowable items	164 183 160 135
Tax rate adjustment on wholly-owned subsidiaries	(57) (10) - -
Less tax effect of:
Non-taxable unrealised exchange loss / (gain) on loan to Controlled Entity	- - 378 (148)
Sundry items	- 1 - -
Total income tax expense	5,053 6,072 3,411 4,778

Tax Consolidation Legislation

Clarius Group 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, Clarius Group Limited.

entities fully compensate Clarius Group Limited for any current tax payable assumed and are compensated by Clarius Group Limited for any current tax receivable that is transferred to Clarius Group 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.

The entities have also entered into a tax compensation deed and a deed of tax sharing under which the wholly-owned

50 CND Annual Report 2008

7. Dividends

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
2007 fnal fully franked dividend at 10.0 cents per share (2006 fnal: 9.0 cents per share and a special dividend of 2.0 cents per share)	5,361 5,608 5,361 5,608
2008 interim fully franked dividend at 9.0 cents per share (2007 interim: 9.0 cents per share)	5,086 4,753 5,086 4,753
Under-provision for prior year	- - - -
	10,447 10,361 10,447 10,361
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	14,658 13,465 11,064 9,708

8. Key Management Personnel Disclosures

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

Geoffrey J Moles	Non-Executive Chairman
Diana J Eilert	Managing Director	Appointed 28 August 2007
Robert J Collins	Managing Director	Resigned effective 28 August 2007
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 Consolidated Entity directly or indirectly who held office during the financial year are:

David A Marshall	Chief Financial Offcer	Appointed 3 December 2007
Mark A Langan	Chief Financial Offcer	Resigned effective 29 February 2008
Kym L Quick	Executive General Manager – People & Project Future Force
Jane A Bianchini	Executive General Manager – Candle ICT	Resigned effective 12 September 2008
Paul A Barbaro	Executive General Manager – Alliance
Gregory M Smith	Executive General Manager – Lloyd Morgan Australia	Appointed 29 October 2007

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 21-27.

CND Annual Report 2008 51

Option Holdings

The number of options over ordinary shares in the company held during the financial year by each Director of Clarius Group Limited and other key management personnel of the Consolidated Entity, including their personally related parties, are set out below.

	Balance				Balance	Vested
	01/07/2007	Granted	Exercised	Other Change	30/06/2008	30/06/2008
Directors
Geoffrey J Moles	-	-	-	-	-	-
Diana J Eilert	-	2,100,000	-	-	2,100,000	-
Robert J Collins	1,800,000	-	(1,800,000)	-	-	-
Lawrence J Gibbs	-	-	-	-	-	-
Peter D Bunting	-	-	-	-	-	-
Penelope Morris	-	-	-	-	-	-
Key Management	Personnel
David A Marshall	-	800,000	-	-	800,000	-
Mark A Langan	343,334	-	(143,334)	(200,000)	-	-
Kym L Quick	771,000	200,000	(41,000)	-	930,000	163,333
Jane A Bianchini	500,000	200,000	-	-	700,000	-
Paul A Barbaro	500,000	200,000	-	-	700,000	-
Gregory M Smith	-	-	-	-	-	-
Total	3,914,334	3,500,000	(1,984,334)	(200,000)	5,230,000	163,333

Prior Year

Prior Year
	Balance				Balance	Vested
	01/07/2006	Granted	Exercised	Other Change	30/06/2007	30/06/2007
Directors
Geoffrey J Moles	-	-	-	-	-	-
Robert J Collins	2,400,000	-	(600,000)	-	1,800,000	600,000
Lawrence J Gibbs	-	-	-	-	-	-
Peter D Bunting	-	-	-	-	-	-
Penelope Morris	-	-	-	-	-	-
Key Management	Personnel
Mark A Langan	530,000	100,000	(286,666)	-	343,000	10,000
Kym L Quick	271,000	500,000	-	-	771,334	127,666
Jane A Bianchini	-	500,000	-	-	500,000	-
Paul A Barbaro	-	500,000	-	-	500,000	-
Total	3,201,000	1,600,000	(886,666)	-	3,914,334	737,666

Further information regarding the option plan is set out in note 27.

52 CND Annual Report 2008

Shareholdings

Shareholdings
	Balance	Received as	Options		Balance
	01/07/2007	Remuneration	Exercised	Other Movement	30/06/2008
Directors
Geoffrey J Moles	1,796,825	-	-	(821,700)	975,125
Diana J Eilert	-	-	-	200,000	200,000
Robert J Collins – resigned effective 28 August 2007	1,393,500	-	1,800,000	(3,193,500)	n/a
Lawrence J Gibbs	45,275	-	-	3,963	49,238
Peter D Bunting	7,500	-	-	-	7,500
Penelope Morris	-	-	-	40,000	40,000
Key Management Personnel
David A Marshall	-	-	-	-	-
Mark A Langan – resigned effective 29 February 2008	-	-	143,334	(143,334)	n/a
Kym L Quick	-	-	41,000	(41,000)	-
Jane A Bianchini – resigned effective 12 September 2008	2,653	-	-	(2,653)	-
Paul A Barbaro	-	-	-	-	-
Gregory M Smith	-	-	-	5,000	5,000
Total	3,245,753	-	1,984,334	(3,953,224)	1,276,863

Prior Year

Prior Year
	Balance	Received as	Options		Balance
	01/07/2006	Remuneration	Exercised	Other Movement	30/06/2007
Directors
Geoffrey J Moles	2,757,212	-	-	(960,387)	1,796,825
Robert J 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
Mark A Langan	-	-	286,666	(286,666)	-
Kym L Quick	-	-	-	-	-
Jane A Bianchini	2,500	-	-	153	2,653
Paul A Barbaro	-	-	-	-	-
Total	3,603,393	-	886,666	(1,244,306)	3,245,753

Other Transactions with Directors

There were no Other Transactions with Directors during the current financial year.

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

CND Annual Report 2008 53

9. 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:

	Consolidated Parent Entity
	2008 $ 2007 $ 2008 $ 2007 $
Remuneration of the auditor of the parent entity WHK Horwath Sydney for:
Auditing or reviewing the fnancial report	131,430 158,196 131,430 115,412
Taxation services	17,170 11,814 17,170 10,000
Business services	26,650 5,227 26,650 1,454
	175,250 175,237 175,250 126,866
Remuneration of other auditors unrelated to WHK Horwath Sydney of subsidiaries for: Auditing or reviewing the fnancial report of subsidiaries	97,799 24,410 - -

10. Earnings Per Share

	Consolidated 2008 cents 2007 cents
Basic earnings per share	20.3 25. 7
Diluted earnings per share	19.0 23.8

(a) Reconciliation of Earnings used in Calculating Earnings Per Share

	Consolidated
	2008 $000 2007 $000
Net proft after tax used in calculating basic earnings per share	11,333 13,405
Adjustments for calculation of diluted earnings per share: Interest earned on conversion of options	764 695
Netproft used in calculatingdiluted earningsper share	12,097 14,100

(b) Weighted Average Number of Shares used as the Denominator

	Consolidated
	2008 $000 2007 $000
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic EPS	55,870 52,193
Adjustment for calculation of diluted earnings per share: Weighted average number of options	7,827 7,078
Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share	63,697 59,271

54 CND Annual Report 2008

(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 27.

11. Cash Flow Information

(a) Reconciliation of Profit after Tax to Net Cash Flow from Operating Activities

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Proft for the year Non-cash fows in operating proft:	11,333 13,405 6,166 11,155
Depreciation and amortisation	1,432 1,648 743 1,023
Non-cash employee benefts expense – share based payments	417 300 417 300
Charges to provisions	100 (119) (205) 255
(Gain)/ Loss on disposal of plant and equipment	- (27) - (27)
Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries:
(Increase) / Decrease in trade debtors and accrued income	(12,466) (1,514) 547 (1,799)
(Increase) / Decrease in prepayments and accrued income	99 (171) 82 (115)
Increase / (Decrease) in trade creditors and accruals	1021 1,345 (3,596) 1,063
Movement in income taxes payable	(1,845) (349) (3,791) (1,031)
Movement in deferred taxes	(424) (134) 100 (252)
Unrealised foreign exchange movements on loan	- - -
Net cash provided by operating activities	(331) 14,384 463 10,572

(b) Non-Cash Financing and Investing Activities

Share issue – during the year the parent entity issued shares as set out in note 22.

(c) Credit Standby Arrangements with Banks

(c) Credit Standby Arrangements with Banks
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Bank bill credit facility	15,000 15,000 15,000 15,000
Amount utilised	(15,000) - (15,000) -
Unused credit facility	- 15,000 - 15,000

CND Annual Report 2008 55

(d) Overdraft Facilities

(d) Overdraft Facilities
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Overdraft facility	11,617 10,907 10,000 10,000
Amount utilised	(2,085) (2,847) (1,562) (2,847)
Unused overdraft facility	9,532 8,060 8,438 7,153

The credit standby arrangement and parent entity overdraft are subject to half yearly reviews with a term of agreement due for renewal at 30 September 2009.

Bank Overdrafts

The current interest rate on the parent entity overdraft facility is 8.5%. Bank overdraft facilities are arranged with both Australian ($10,000,000), New Zealand ($793,000) and Hong Kong banks ($824,000) 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 Consolidated Entity, or companies comprising the Consolidated Entity with overdraft facilities have not breached any borrowing requirements and the required financial ratios are met.

12. Cash and Cash Equivalents

	Consolidated Parent Entity 2008 $000 2007 $000 2008 $000 2007 $000
Cash at bank and on hand	3,478 2,248 532 782
Deposits at call	6 700 - -
	3,484 2,948 532 782

The deposits are bearing interest rates of 6% (2007: 6.25%). These deposits are at call.

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:

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Balances as above	3,484 2,948 532 782
Bank overdrafts (note 11)	(2,085) (2,847) (1,562) (2,847)
	1,399 101 (1,030) (2,065)

56 CND Annual Report 2008

13. Trade and Other Receivables

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Current
Trade receivables	48,650 32,355 28,448 26,401 (1)
Allowance for doubtful debts	(167) (224) (94) (137)
	48,483 32,131 28,354 26,264

Accrued income	13,771 17,675 13,355 15,900
Amounts receivable from:
Wholly owned subsidiaries	- - 22,706 7,625
Related parties	- 42 - -
Prepayments	327 427 212 294
Other debtors	528 332 24 115
	63,109 50,607 64,651 50,198
Non-Current Amounts receivable from: Controlled entity(2)	- - 10,782 5,190

(1) A significant portion of the increase in trade receivables relate to acquisitions referred to in note 30.

(2) The parent entity has agreed not to call upon this loan to the detriment of the Company or its creditors for at least one year.

CND Annual Report 2008 57

(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 2.

(d) Trade Receivables Aging Analysis

Refer to the disclosure in note 2.

(e) Movement in the Provision for Impairment of Trade Receivables

	Consolidated
	2008 $000 2007 $000
At July 1	224 221
Provision for impairment recognised during the year	167 224
Receivables written off as uncollectible subsequently recovered	43 8
Unused amount reversed	(267) (229)
	167 224

The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the income statement. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

14. Deferred Tax Assets

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
The balance comprises temporary differences attributable to:
Doubtful debts	39 63 28 41
Employee benefts	602 412 361 334
Provision for make good on leased premises	125 57 79 20
Lease incentive	136 185 21 40
Accruals	1,953 1,659 1,271 1,424
	2,855 2,376 1,760 1,860
Movements
Balance at the beginning of the year	2,376 2,231 1,860 1,608
Credited / (charged) to the income statement	479 145 (100) 252
Balance at the end of the year	2,855 2,376 1,760 1,860

58 CND Annual Report 2008

15. Property, Plant and Equipment

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Plant and equipment, at cost	8,124 7,676 4,573 5,093
Accumulated depreciation	(5,837) (3,759) (3,799)
	1,654 1,839 814 1,294

Leasehold improvements, at cost	3,887 3,512 2,250 2,400
Accumulated amortisation	(2,628) (2,100) (2,015)
	787 884 150 385
Total property, plant and equipment	2,441 2,723 964 1,679

(a) Movements in Carrying Amounts

(a) Movements in Carrying Amounts
	Plant and Equipment Leasehold Improvements Total
	$000 $000 $000
Consolidated
Balance at the beginning of the year	1,839 884 2,723
Additions	601 253 854
Disposals	- - -
Depreciation expense	(786) (350) (1136)
Carrying amount at the end of the year	1,654 787 2,441
Parent Entity
Balance at the beginning of the year	1,294 385 1,679
Additions	171 73 244
Disposals	(6) 0 (6)
Disposal to wholly owned subsidiary under corporate reconstruction	(234) (135) (369)
Depreciation expense	(411) (173) (584)
Carrying Amount at the End of the Year	814 150 964

16. Other Financial Assets

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Investments comprise: Shares in: Controlled entities at cost	- - 19,074 25,234
	- - 19,074 25,234

CND Annual Report 2008 59

17. 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):

	Equity Holding(1)
	Country of Incorporation Class of Shares 2008 % 2007 %
Freeman Adams Pty Limited	Australia ordinary 100 100
Candle IT & T Recruitment Pty Limited	Australia ordinary 100 100
Alliance Recruitment Pty Limited	Australia ordinary 100 100
Workskills Professionals Pty Limited	Australia ordinary 100 100
Premier Personnel Pty Limited	Australia ordinary 100 100
Candle Australia Pty Limited	Australia ordinary 100 100
The One Umbrella Pty Limited	Australia ordinary 100 100
Candle Holdings Limited	New Zealand ordinary 100 100
Candle New Zealand Limited	New Zealand ordinary 100 100
Doughty Contractors Limited	New Zealand ordinary 100 100
Candle IT & T Recruitment Limited	New Zealand ordinary 100 100
Choice IT Pty Limited	Australia ordinary 100 100
Lloyd Morgan Sydney Pty Limited	Australia ordinary 100 100
Lloyd Morgan International Pty Limited	Australia ordinary 100 100
Lloyd Morgan (Brisbane) Pty Limited	Australia ordinary 100 100
JAV IT Group Pty Limited	Australia ordinary 100 -
Reality Check Pty Limited	Australia ordinary 100 -
Lloyd Morgan Limited	Hong Kong ordinary 100 100
Lloyd Morgan Hong Kong Limited	Hong Kong ordinary 100 100
Lloyd Morgan Singapore Pte Limited	Singapore ordinary 100 100
Lloyd Morgan Malaysia Sdn Bhd	Malaysia ordinary 100 100
Lloyd Morgan China Limited	China ordinary 89 89

(1) The proportion of ownership interest is equal to the proportion of voting power held.

60 CND Annual Report 2008

18. Intangible Assets

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Candidate databases	2,140 1,876 1,039 1,039
Accumulated amortisation	(1,973) (1,874) (1,037) (1,037)
	167 2 2 2

Capitalised software development costs	2,422 2,276 2,347 2,191
Accumulated amortisation	(2,215) (2,039) (2,167) (2,025)
	207 237 180 166

Goodwill at cost	76,734 61,984 21,088 23,196
Other intangibles	- 254 - 254
Total intangible assets	77,108 62,477 21,270 23,618

(a) Movements in Carrying Amounts

	Candidate Databases Capitalised Software Costs Goodwill Other Intangibles Total
	$000 $000 $000 $000 $000
Consolidated
Balance at the beginning of the year	2 237 61,984 254 62,477
Additions	264 147 15,037 - 15,448
Disposals	- - - (254) (254)
Amortisation expense	(99) (177) - - (276)
Exchange differences	- - (1,217) - (1,217)
Adjustment to contingent purchase price	- - 930 - 930
Carryingamount at the end of theyear	167 207 76,734 - 77,108
Parent entity
Balance at the beginning of the year	2 166 23,196 254 23,618
Additions	- 155 6,525 - 6,680
Disposals	- - (8,633) (254) (8,887)
Amortisation expense	- (142) - - (142)
Carryingamount at the end of theyear	2 180 21,088 - 21,270

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.

Amounts stated in the parent entity for additions and disposals of goodwill represent movements in relation to internal corporate reconstruction.

CND Annual Report 2008 61

Impairment Tests

Goodwill is allocated to the Consolidated Entity’s cash-generating units, which are based on the Consolidated Entity’s individual brands and geographical segments.

	Consolidated
	2008 $000 2007 $000
ICT	13,709 13,486
New Zealand	4,059 4,642
Alliance Recruitment	23,503 23,503
The One Umbrella	3,423 3,423
Lloyd Morgan Australia	11,548 11,482
Lloyd Morgan Asia	5,454 5,448
Reality Check	73 -
JAV IT Group	8,733 -
Southtech	6,231 -
Total	76,734 61,984

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 (CGU).

Key Assumptions Used in Value-in-Use Calculations

(i) The discounted cash flow (DCF) projections are based on current annual budgets and forecasts for the year following the current reporting period (except for Lloyd Morgan Australia, which is based on a three year forecast) extrapolated over a ten year period with a growth rate of 4%. Management derives its forecasts and input variables to the DCF model based on past performance and its expectations for the future.
(ii) Current estimated terminal values are 4.5 times earnings before interest and taxation. Terminal values are used as an estimate to project beyond the forecast period.
(iii) The cash flows are discounted at 15%
(iv) All head office and shared services costs are allocated to the cash generating units in the DCF calculations in order to derive a stand alone basis for each CGU

Impairment Test Result

DCF analysis using the midpoint of input variables and taking in to consideration current business plans and external factors, such as economic environment, result in no impairment of the carrying value of intangible assets.

62 CND Annual Report 2008

19. Trade and Other Payables

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Current
Trade creditors	27,074 26,465 18,726 22,322
Amounts payable to:
Controlled entities	- - 2,640 3,076
Vendors of acquired businesses	9,136 2,944 44 124
	36,210 29,409 21,410 25,522
Non-Current
Trade creditors	- 24 - -

(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 and New Zealand 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.

CND Annual Report 2008 63

20. Tax Liabilities

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Current
Income tax	(396) 1,448 (3,042) 749

Deferred Tax Liabilities	66 10 - -
The balance comprises temporary differences attributable to: Depreciation and Recognition of Income in Asia Subsidiaries	66 10 - -
Movements
Balance at the beginning of the year	10 - - -
Charged / (Credited) to the income statement	56 10 - -
Balance at the end of the year	66 10 - -

21. Provisions

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Current
Dividend cheques not presented	129 89 129 89
Employee benefts	1,392 1,227 673 803
Lease Incentive	415 686 71 187
	1,936 2,002 873 1,079
Non-Current
Employee benefts	727 538 527 487
Make good on leased premises	434 418 226 226
	1,161 956 753 713
	3,097 2,958 1,626 1,792

64 CND Annual Report 2008

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:

	Dividends Lease Incentive Make-Good Total
	$000 $000 $000 $000
Consolidated
Carrying amount at the start of the year	89 686 418 1,193
Additional provision recognised	10,447 - 16 10,463
Amounts utilised	(10,408) (271) - (10,679)
Carrying amount at the end of the year	129 415 434 978
Parent Entity
Carrying amount at the start of the year	89 187 226 502
Additional provision recognised	10,447 - - 10,447
Amounts utilised	(10,408) (116) - (10,524)
Carrying amount at the end of the year	129 71 226 425

CND Annual Report 2008 65

22. Contributed Equity

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
57,404,189 fully paid ordinary shares (2007: 53,392,527)	71,611 62,921 71,611 62,921
Ordinary shares at the beginning of the year	62,921 54,072 62,921 54,072
Shares issued during the year:
Purchase consideration for acquisitions	2,154 4,925 2,154 4,925
Dividend Reinvestment Plan	1,793 2,035 1,793 2,035
Exercise of employee options	4,743 1,889 4,743 1,889
At the end of the year	71,611 62,921 71,611 62,921

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.

	Consolidated Parent Entity
	2008 2007 2008 2007
At the beginning of the year	53,392,527 49,773,938 53,392,527 49,773,938
Shares issued during the year:
Purchase consideration for acquisitions	892,068 1,551,703 892,068 1,551,703
Dividend Reinvestment Plan	792,925 609,441 792,925 609,441
Exercise of employee options	2,994,835 1,457,445 2,994,835 1,457,445
At the end of the year	57,404,189 53,392,527 57,404,189 53,392,527

Share Options

Further information relating to the company share option plan is set out in note 27. Details of options granted to Directors and executive officers are set out in the Director’s report. At the 30 June 2008 there were 8,257,255 (2007: 7,130,929) options outstanding.

Capital Risk Management

The Consolidated Entity and the parent entity’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Consolidated Entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Consolidated Entity and the parent entity monitor capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Total capital is calculated as ‘equity’ as shown in the balance sheet plus debt.

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Total borrowings	11 17,085 2,847 16,562 2,847
Less: cash and cash equivalents	12 3,484 2,948 532 782
Net debt	13,601 (101) 16,030 2,065
Total equity	92,935 84,435 82,477 77,651
Total capital	106,536 84,334 98,507 79,716

Gearing ratio	12.8% 0% 16.3% 2.6%

The increase in the gearing ratio is primarily due to the funding of acquisitions and associated working capital requirements.

66 CND Annual Report 2008

23. Reserves

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Share-based payments	23(a) 1,081 664 1,081 664
Foreign currency translation	23(a) (1,157) 336 - -
Total	(76) 1,000 1,081 664

(a) Movements

(a) Movements
	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Share-Based Payments Movements during the year:
At the beginning of the year	664 364 664 364
Option expense	417 300 417 300
At the end of the year	1,081 664 1,081 664
Foreign Currency Translation Reserve Movements during the year:
At the beginning of the year	336 (209) - -
Adjustment arising from the translation of foreign controlled entities’ fnancial statements	(1,493) 545 - -
At the end of the year	(1,157) 336 - -

Nature and Purpose of Reserves

(i) Share-based payments

The share-based payments reserve is used to recognise the fair value of options issued over their vesting period.

(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.

Exchange differences arising on loans to foreign subsidiaries from the parent entity are recorded in the foreign currency translation reserve. The reserve is recognised in the profit and loss when the loans are re-paid and exchange differences realised.

CND Annual Report 2008 67

24. Retained Profits

	Consolidated Parent Entity
	Note 2008 $000 2007 $000 2008 $000 2007 $000
Retained profts at the beginning of the fnancial year	20,514 17,470 14,066 13,272
Net proft for the year	11,333 13,405 6,166 11,155
Dividends paid	7 (10,447) (10,361) (10,447) (10,361)
Retained profts at the end of the fnancial year	21,400 20,514 9,785 14,066

25. Capital Commitments and Leasing

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

	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Within one year	2,375 3,055 851 1,447
Later than one year but not later than fve years	2,176 4,378 356 1,321
Later than fve years	- - - -
	4,551 7,433 1,207 2,769

Operating lease commitments refer to property leases for the 27 sites (2007: 26 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. The reduction in lease commitments in 2008 for the parent entity is largely due to internal corporate reconstruction shifting lease commitments to the subsidiaries.

26. Contingent Liabilities

There are no material contingent liabilities.

68 CND Annual Report 2008

27. Share Based Payments

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

Consolidated and Parent Entity 2008

						Forfeited/
		Exercise	Balance at	Granted	Exercised	Lapsed	Balance at
	Date of	Price	Start of Year	during Year	during Year	during Year	End of Year
Grant Date	Expiry	$	No.	No.	No.	No.	No.
24 Jul 03	24 Jul 07	1.06	23,336	-	23,334	2	-
30 Jun 04	30 Jun 08	1.61	261,403	-	180,669	15,000	65,734
29 Nov 04	29 Nov 08	2.05	143,335	-	5,000	55,001	83,334
01 Jul 05	01 Jul 09	2.08	1,040,855	-	284,333	133,002	623,520
01 Jul 05	01 Jul 11	2.08	1,800,000	-	1,800,000	-	-
23 Dec 05	23 Dec 09	2.45	100,000	-	33,333	-	66,667
17 Mar 06	17 Mar 10	2.97	650,000	-	-	520,000	130,000
28 Sep 06	28 Sep 10	3.30	2,612,000	-	-	407,000	2,205,000
24 Apr 07	24 Apr 11	3.30	300,000	-	-	-	300,000
28 Jun 07	28 Jun 11	3.26	200,000	-	-	-	200,000
27 Sep 07	27 Sep 11	3.30	-	1,811,000	-	128,000	1,683,000
1 Nov 07	1 Nov 14	3.23	-	800,000	-	-	800,000
29 Nov 07	29 Nov 14	3.30	-	2,100,000	-	-	2,100,000
			7,130,929	4,711,000	2,326,669	1,258,005	8,257,225
Weighted Average Exercise Price			$2.75	$3.29	$1.91	$2.96	$3.16

Consolidated and Parent Entity 2007

						Forfeited/
		Exercise	Balance at	Granted	Exercised	Lapsed	Balance at
	Date of	Price	Start of Year	during Year	during Year	during Year	End of Year
Grant Date	Expiry	$	No.	No.	No.	No.	No.
30 Oct 02	30 Oct 06	0.86	10,000	-	10,000	-	-
26 Feb 03	26 Feb 07	0.76	200,000	-	200,000	-	-
01 Jul 03	01 Jul 09	1.00	600,000	-	600,000	-	-
24 Jul 03	24 Jul 07	1.06	160,006	-	136,670	-	23,336
30 Jun 04	30 Jun 08	1.61	480,368	-	164,965	54,000	261,403
29 Nov 04	29 Nov 08	2.05	256,667	-	53,332	60,000	143,335
01 Jul 05	01 Jul 09	2.08	1,532,000	-	292,478	198,667	1,040,855
01 Jul 05	01 Jul 11	2.08	1,800,000	-	-	-	1,800,000
23 Dec 05	23 Dec 09	2.45	100,000	-	-	-	100,000
17 Mar 06	17 Mar 10	2.97	1,460,000	-	-	810,000	650,000
28 Sep 06	28 Sep 10	3.30	-	2,745,000	-	133,000	2,612,000
24 Apr 07	24 Apr 11	3.30	-	300,000	-	-	300,000
28 Jun 07	28 Jun 11	3.26	-	200,000	-	-	200,000
			6,599,041	3,245,000	1,457,445	1,255,667	7,130,929
Weighted Average Exercise Price			$2. 08	$3. 30	$1. 30	$2. 41	$2. 75

CND Annual Report 2008 69

The weighted average share price at the date of exercise during the year ended 30 June 2008 was $3.29 (2007: $3.39)

The weighted average remaining contractual life of share options outstanding at the year end was 3.8 years (2007: 2.8 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 Clarius Group Limited share price must outperform the relevant ASX Index on which the shares of Clarius Group Limited are listed.

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 $0.51 to $0.77 (2007: $0.38 to $0.47). 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.

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

28. Related Party Disclosures

(a) Parent Entity

The ultimate parent entity and ultimate controlling party within the Consolidated Entity is Clarius Group Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in note 17.

(c) Directors and Key Management Personnel

Disclosures relating to Director and key management personnel are set out in note 8.

(d) Transactions with Related Parties

(d) Transactions with Related Parties
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Sales of services Recruitment services related to parties	- - 159 296
Purchases Recruitment services received from subsidiaries	- - 475 245
Tax consolidation legislation Current tax payable assumed from wholly owned tax consolidation entities	- - 1,857 596
Dividend revenue Subsidiaries	- - 6,523 -

(e) Loans

(e) Loans
	Consolidated Parent Entity
	2008 $000 2007 $000 2008 $000 2007 $000
Loans to subsidiaries	- - 33,488 12,815
Loans to vendors of acquired business (secured)	97,223 - - -
Loans from subsidiaries	- - 2,640 3,076

70 CND Annual Report 2008

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.

29. Events Subsequent to the Reporting Date

On the 26 August 2008 the Company resolved that a fully franked final dividend of 7.0 cents per share be paid on 30 September 2008 and that the Dividend Reinvestment Plan operate with a 5% discount in relation to this final dividend.

30. Acquisitions of Subsidiaries

(a) On 16 August 2007, JAV IT Group Pty Limited (a subsidiary company) completed the acquisition of IT services business JAV IT Group.

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

Purchase Consideration	$000
Cash paid	3,200
Direct costs associated with the acquisition	158
Issue of 223,902 ordinary shares at market price	800
Balance of purchase price payable 4,792 8,950 e event that certain pre-determined targets are achieved by the subsidiary, contingent consideration becomes payable. e date of this fnancial report, it is probable that some of these payments will be made, and hence have been brought to unt as a component of goodwill. If it becomes probable that any element of the remaining consideration will be payable, be brought to account when the amount can be reliably measured. Assets and Liabilities Acquired at Acquisition Date: $000	4,792
	8,950
Property, plant and equipment	217
Total net assets acquired Goodwill	217
	8,733

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.

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.

Profit after tax relating to the acquisition from 1 July 2007 totalling $1,080,000 is included in the consolidated income statement for the year ended 30 June 2008.

CND Annual Report 2008 71

(b) On 24 October 2007, the Company completed the acquisition of all of the issued capital of Reality Check Pty Limited, a pre-employment probity checking and screening company.

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

Purchase Consideration	$000
Cash paid	26
Direct costs associated with the acquisition	4
Balance of purchase price payable	44
	74

unt as a component of goodwill. If it becomes probable that any element of the remaining consideration will be be brought to account when the amount can be reliably measured.	payable,
Assets and Liabilities Acquired at Acquisition Date:	$000
Property, plant and equipment	1
Total net assets acquired Goodwill on Consolidation	1
	73

A tax effected loss relating to the acquisition from 1 July 2007 totalling $69,000 is included in the consolidated income statement for the year ended 30 June 2008.

72 CND Annual Report 2008

(c) On 7 December 2007, Alliance Recruitment Pty Limited (a subsidiary company) completed the acquisition of the Engineering contracting and recruitment business SouthTech Personnel.

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

Purchase Consideration	$000
Cash paid	1,660
Direct costs associated with the acquisition	110
Issue of 225,496 ordinary shares at market price	540
Balance of purchase price payable	4,300
	6,610

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 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 Date:	$000
Property, plant and equipment Total Net Assets Acquired Goodwill	379
	379
	6,231

Profit after tax relating to the acquisition from 1 October 2007 totalling $699,000 is included in the consolidated income statement for the year ended 30 June 2008.

CND Annual Report 2008 73

Directors’ Declaration

The Directors of the Company declare that:

The financial statements and notes, as set out on pages 33-73, are in accordance with the Corporations Act 2001:
(a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

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.

(b) give a true and fair view of the financial position as at 30 June 2008 and performance for the year ended on that date of the Company and the Consolidated Entity;
The Managing Director and Chief Financial Officer have each declared that:

Geoffrey J Moles Non-Executive Chairman

(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.
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

Diana J Eilert Managing Director

Dated at Sydney this 26th day of August 2008

The audited remuneration disclosures set out on pages 21-27 of the Directors’ Report comply with the Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001.

74 CND Annual Report 2008

Independent Audit Report to the Members of Clarius Group Ltd

Report on the Financial Report

We have audited the financial report of Clarius Group Limited (the Company) and Clarius Group Limited and Controlled Entities (the Consolidated Entity), which comprises the balance sheets as at 30 June 2008, and the income statements, statements of changes in equity and cashflow statements 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.

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.

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.

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.

Independence

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

Auditor’s Opinion

In our opinion the financial report of Clarius Group Limited and Clarius Group 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 2008 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

the financial report also complies with International Financial Reporting Standards as disclosed in note 1.

Auditors Opinion on the Remuneration Disclosures Contained in the Directors’ Report

In our opinion the remuneration disclosures that are contained in pages 21-27 of the Directors’ Report comply with accounting standards AASB 124.

Report on the Remuneration Report

We have audited the Remuneration Report included on pages 21-27 of the Directors’ Report for the year ended. The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with the Australian Auditing Standards.

Auditor’s Opinion

In our opinion the remuneration report of Clarius Group Limited for the year ended 30 June 2008 complies with section 300A of the Corporation Act 2001.

==> picture [54 x 30] intentionally omitted <==

==> picture [101 x 18] intentionally omitted <==

WHK Howath Sydney David Sinclair

Dated at Sydney this 26th day of August 2008

CND Annual Report 2008 75

==> picture [274 x 267] intentionally omitted <==

Additional Information

76 CND Annual Report 2008

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

(i) There is only one class of equity securities, being ordinary shares.
(ii) The number of shareholdings held in less then marketable parcels is 247.
(iii) 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’
(i) There is currently no On-Market Buy-Back

Distribution of Shareholder Numbers

Distribution of Shareholder Numbers
Category	Number of
	Holders
1 – 1,000	858
1,001 – 5,000	2,376
5,001 – 10,000	927
10,001 – 100,000	714
100,001 and over	44
	4,919

The Names of Substantial Shareholders Listed in the Holding Company’s Register as at 9 September 2008

Shareholder	Shareholder	Number of Ordinary Shares	Number of Ordinary Shares
Perpetual	Limited and subsidiaries		7,811,981
Commonwealth Bank of Australia			3,899,771
20 Largest Shareholders of Fully Paid Ordinary Shares as at 9 September		2008
Rank	Name of Holder	Number of	%
		Units
1	RBC Dexia Investor Services Australia Nominees Pty Limited	8,064,111	14.0
2	Citicorp Nominees Pty Limited	2,996,471	5.2
3	Citicorp Nominees Pty Limited	1,579,036	2.8
4	Perman Investments Pty Ltd	1,453,371	2.5
5	HSBC Custody Nominees (Australia) Limited	1,448,547	2.5
6	ANZ Nominees Limited	1,325,984	2.3
7	MFPH Superannuation Management Pty Ltd	926,521	1.6
8	Mr Ian Wallace Edwards & Mrs Josephine Edwards	718,927	1.3
9	Gracelite Pty Ltd	546,874	1.0
10	Wecare Distributors Pty Ltd	542,631	0.9
11	Mr Victor John Plummer	490,000	0.9
12	National Nominees Limited	445,203	0.8
13	HSBC Custody Nominees (Australia) Limited - A/C 3	444,752	0.8
14	Engoordina Pty Ltd	404,860	0.7
15	Mr Geoff Moles & Mrs Janice Barbara Moles	350,199	0.6
16	J P Morgan Nominees Australia Limited	343,234	0.6
17	Ewart Pty Limited	290,000	0.5
18	Mr David Bates	225,174	0.4
19	Mr Roy Lachlan Nicolson & Mrs Marion Frances Nicolson	224,956	0.4
20	Mr Joseph A Vella	223,902	0.4
		23,044,753	40.1

The Company has the following restricted securities on issue as at the date of this report.

442,670 fully paid ordinary shares held in voluntary escrow until 14 April 2009 by the vendors of Lloyd Morgan Asia

CND Annual Report 2008 77

==> picture [274 x 268] intentionally omitted <==

Corporate Directory

78 CND Annual Report 2008

Corporate Directory

Registered Office

Australian Company Secretaries Pty Limited Level 5 255 George Street Sydney NSW 2000 +61 2 9252 1933

Postal Address GPO Box 4231 Sydney, NSW 2001

Company Secretary

Mr Nicholas J V Geddes

Share Registrar

Registries Limited Level 2 28 Margaret Street Sydney NSW 2000 phone: +61 2 9290 9600 fax: +61 2 9279 0664

Head Office

Sydney

Level 14 1 York Street Sydney NSW 2000 +61 2 9250 8100

Candle ICT

Sydney Level 5 1 York Street Sydney NSW 2000

Melbourne

Level 14 333 Collins Street Melbourne VIC 3000

Brisbane

Ground Floor 52 McDougall Street Brisbane QLD 4064

New Zealand

Auckland

Level 16 1 Queen Street Auckland 1001

Wellington

Level 9, Lumley House 3-11 Hunter Street Wellington

The One Umbrella

Sydney

Level 9, 162 Goulburn Street Surry Hills Sydney NSW 2010

Melbourne

Level 14 333 Collins Street Melbourne VIC 3000

Brisbane

Australian Stock Exchange Listing

CND

Canberra Suite 2G 65 Canberra Avenue ACT 2603

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

Canberra

Auditors

WHK Horwath Level 15 309 Kent Street Sydney NSW 2000

Bankers

Westpac Banking Corporation 273 George Street Sydney NSW 2000

Perth

Level 3 191 St Georges Terrace Perth WA 6000

Adelaide

Level 2 74 Pirie Street Adelaide SA 5000

65 Canberra Ave Griffith ACT 2603

Alliance

Sydney

Level 13 55 Clarence St Sydney NSW 2000

CND Annual Report 2008 79

Corporate Directory

Chatswood

Level 3 815 Pacific Hwy Chatswood NSW 2067

Fairfield

1st Floor 45-47 Smart St Fairfield NSW 2165

Parramatta

Level 1 20-22 Macquarie St Parramatta NSW 2150

Melbourne

Level 9 50 Queen St Melbourne VIC 3000

Mt Waverley

Suite 32 1 Ricketts Rd Mount Waverley VIC 3149

Lloyd Morgan

Sydney

Level 5 1 York Street Sydney NSW 2000

Melbourne

Level 14 333 Collins Street Melbourne VIC 3000

Brisbane

Level 14 500 Queen Street Brisbane QLD 4000

Lloyd Morgan (Asia)

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

Singapore

10 Hoe Chiang Road 14-02 Keppel Towers Singapore 089315

Kuala Lumpur

C706 Metropolitan Square Mall Jalan PJU 8/1 Bandar Damansara Perdana 47820 Petaling Jaya Selangor Malaysia

JAV IT

Sydney

Suite 1 13 Sirius Road Lane Cove NSW 2066

Melbourne

Level 9 50 Queen St Melbourne VIC 3000

Beijing

Brisbane

Level 4 359 Queen Street Brisbane QLD 4000

Perth

Suite 4 1 Scarborough Beach Rd North Perth WA 6006

2W Guomen Building No 1 Zuojiazhuang Chaoyang District Beijing 10002

Shanghai

501 Pacheer Commercial Centre 555 Nan Jing West Road Shanghai 200041

Reality Check

Level 5 1 York Street Sydney NSW 2000

SouthTech

862-868 Old Princes Highway Sutherland NSW 2232

Shenzhen

1609 Tower A Galaxy Centre Building 3069 Cai Tian Nan Road Futian District Shenzhen 518031

80 CND Annual Report 2008

AI assistant

IGNITE LIMITED — Annual Report 2008

65110_rns_2008-09-29_d07974c4-f067-479b-a8e0-f7326f562c59.pdf

Company InformatIon

Clarius Group Limited

Specialist White-Collar Recruitment for Permanent, Contract & Temporary Staff

Aligned Services

Strong Financial Results

Changing Gears

Dear Fellow Shareholders

Strong Financial Performance

Challenges we Faced over the Past Year

We are ‘Changing Gears’ to Maximise Long-Term Growth

Outlook

Structure of the Board

Directors in Office at the Date of this Statement

Independence

The Chairman

Board Committees

Risk Management

External Auditors

Statement by Managing Director and Chief Financial Officer

Ethical Standards

Occupational Health and Safety

Transactions in Shares of the Group

Shareholders

ASX Corporate Governance Guidelines

Geoffrey J Moles

Non-Executive Chairman

Diana J Eilert

Managing Director – appointed 28 August 2007

Lawrence J Gibbs

Non-Executive Director

Peter D Bunting

Non-Executive Director

Penelope Morris AM

Non-Executive Director

Robert J Collins

Operating Results

Directors

Principal Activities

Recruitment

Aligned Services

Dividends Paid or Recommended

Review of Operations

Financial Position

Company Secretary

Significant Changes in State of Affairs

Future Developments

After Balance Date Events

Environmental Issues

Director’s Interests in Shares and Options

Remuneration Report

Non-Executive Director Remuneration

Diana J Eilert

Principles Used to Determine the Nature and Amount of Executive Remuneration

Executive Remuneration Policy

Options Issued as Part of Remuneration

Performance-Based Remuneration

Details of Directors’ and Key Management Personnel Remuneration

Employment Contracts

Share-Based Payments

Option Holdings

Shareholdings

Shares Issued on Exercise of Options during the Year

Meetings of Directors

Board Audit Risk and Compliance Committee Meetings

Board Remuneration and Nominations Committee Meetings

Indemnifying Officers or Auditor

Directors’ Benefits

Proceedings on Behalf of the Company

Non-Audit Services

Auditor’s Independence

Rounding of Amounts

Auditor’s Independence Declaration

Financial Statements

Income Statement[(1)]

Balance Sheet[(1)]

Statement of Changes in Equity[(1)]

Cash Flow Statement[(1)]

IGNITE LIMITED Annual Report 2008