IGNITE LIMITED — Annual Report 2013

Aug 20, 2013

Clarius Group Limited and Controlled Entities ASX Report for the Full Year Ended 30 June 2013 ABN 43 002 724 334

Overview

• Offices in Australia, New Zealand, Singapore and China.

• House of specialist brands with focus on IT, Accounting, Banking and Finance, Corporate Services, Engineering, Records and Information Management, Sales and Marketing.

• Permanent, Contact and Temporary placements.

• 12 Cities, 38 Offices, 290 Employees

Financial Results

	June 2013	June 2012
Revenue $m	$225.3m	$273.4m
Net profit/(loss) after tax $m (excluding impairment)	$(0.9)m	$2.1m
Impairment of goodwill	$40.9m	$11.5m
De-recognition of tax losses	$0.4m	-
Reported net (loss) after tax	$(42.2)m	$(9.4)m
Earnings per share (cents)	(47.2)	(10.6)
Operating cash flow	$4.4m	$(2.0)m
Gearing ratio	(0.6)%	2.2%

Financial Results

Profit & Loss	June 13	June 12
Total revenue	$225.3m	$273.4m
Gross profit (margin)	$37.5m	$46.3m
Employee benefits expense (excluding restructuring)	$27.0m	$32.3m
Restructuring costs	$0.7m	-
Finance costs	$0.3m	$0.3m
Depreciation and amortisation	$1.0m	$0.6m
Other overheads	$9.4m	$9.3m
NPAT (excluding impairment)	$(0.9)m	$2.1m

Financial Results

Financial Position	June 12	June 12
Cash	$1.0m	$0.9m
Trade Receivables	$48.8m	$60.5m
Intangible Assets	$2.5m	$42.4m
Bank Borrowings	$0.7m	-
Total Equity	$37.0m	$78.8m

Group Revenue Mix

FY 2013

==> picture [59 x 13] intentionally omitted <==

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

FY 2012
----- End of picture text -----

==> picture [639 x 210] intentionally omitted <==

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

4%
4% 12%
13%
Recruitment services
84%
83% Managed Services
IT Services
----- End of picture text -----

Recruitment Business Mix

Gross Margin Gross Margin FY 2013 FY 2012 Perm 31% Contracting 75% Contracting 69%

Permanent Revenue Mix

==> picture [223 x 239] intentionally omitted <==

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

FY 2013
12%
4%
85%
----- End of picture text -----

FY 2012 38% 58% 3% Australia % New Zealand % Asia %

Australia New Zealand Asia

Focus - Snapshot

• Investment in growth markets delivering results

• Investment in improved infrastructure and systems will enable a leaner cost structure for back office

• Continuing to adjust to market conditions with reduced management overhead

• Cash flow improved significantly and debtor control was tightened further as well as better management of payment cycles.

• Cash flow was also positively impacted by release of working capital from reduction in contractor numbers

• Reduction in levels of debt achieved over the half putting us in a strong financial position with un-drawn financing and no net gearing

• The Ignite business increasing traction with new service lines added

• Continue to consider strategic acquisitions that meet our rigorous criteria

Result Snapshot

• Total revenue for the year decreased by 17.6% to $225m which is largely attributable to decreasing demand for contracting services especially in IT;

• Total GM down marginally from 16.9% to 16.6% due to decline in contracting margin reduction in key accounts;

• Permanent revenue in $ terms was flat although there was a large increase in the contribution of China to this revenue (38% in FY 2013 vs 12% in FY 2012)

• Operating cash flow $4.4m vs outflow of $2.0 in FY 2012

• Staff labour costs were down 16.4% or $5.3m despite investment in China

• Restructuring costs of $0.7m will generate $6.5m in full year savings

• Goodwill impairment of $40.9m reflects the revaluation of assets from the price paid preGFC to the value in today’s market taking a conservative view on the timing of any improvement in economic activity

• No final dividend payment is proposed. This is due to both the impact of current trading conditions and the requirement for reinvestment into the infrastructure of the business to accommodate for future efficiencies and growth.

Outlook

• The outlook continues to be conservative with some signs that hiring sentiment is improving – consistent improvement is yet to be seen however

• Stemming of losses in Asia and the recovery of the business in China will provide a solid platform for improved results

• With a lower cost base and improving efficiencies, the opportunity for growth is positive into FY 2014

• With continued uncertainty in the market, we are positioned for stronger performance as a result of the internal improvements, consolidation of costs and the return on investments in growth markets

• Increased focus on diversification of service offerings reflecting client demand will assist to offset the impact of market cycles in recruitment;

• Clarius and related brands continue to win new business with significant new clients signed on in FY 2013

Strategic Focus

Protect and build our core business in the Asia Pacific Region; Attain Operational Excellence; Develop industry leading talent; Extend our capability into related lines of business

Disclaimer

The forward looking statements included in these materials involve subjective judgement and analysis and are subject to significant uncertainties, risks, contingencies, many of which are outside the control of, and are unknown to Clarius Group Limited. In particular, they speak only as of the date of these materials, they are based on particular events, conditions or circumstances stated in the materials, they assume the success of Clarius Group Limited’s business strategies , and they are subject to significant regulatory, business, competitive and economic uncertainties and risks.

Clarius Group Limited disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of Clarius Group Limited since the date of these materials.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including Clarius Group Limited). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events and conditions may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based. Given these uncertainties, readers are cautioned to not place undue reliance on such forward looking statements.