IGNITE LIMITED - Annual Report 2018

CLARIUS GROUP LIMITED

ABN 43 002 724 334

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

Level 9, 1 York Street Sydney NSW 2000 T: +61 2 9250 8000 W: www.igniteservices.com E: [email protected]

SHARE REGISTRY

Computershare Investor Services Pty Limited T: 1300 855 080 T: +61 2 9415 4000 www.computershare.com.au

CHAIRMAN

Garry Sladden

CHIEF EXECUTIVE OFFICER

Julian Sallabank

CHIEF FINANCIAL OFFICER

Mahendra Tharmarajah

COMPANY SECRETARY

Ian Gilmour

AUSTRALIAN SECURITIES EXCHANGE LISTING

CND

AUDITOR

Deloitte Touche Tohmatsu Grosvenor Place 225 George Street Sydney NSW 2000

SOLICITOR

Hall & Wilcox Level 9, 60 Castlereagh Street Sydney NSW 2000

BANKER

National Australia Bank Level 36, 255 George Street Sydney NSW 2000

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CONTENTS
	Page
Chairman’s Letter	1
Financial and Operational Review	2
Directors’ Report	8
Auditor’s Independence Declaration	17
Corporate Governance Statement	18
Consolidated Financial Statements	27
Directors’ Declaration	57
Independent Auditor’s Report	58
Additional Information	62

CHAIRMAN’S LETTER

Dear Shareholder,

Your Board is committed to ensuring the continued turnaround of the business via the successful implementation of the “Back in Black” strategic plan. To date the strategy has delivered impressive ongoing improvements in 2018. I am pleased to see this progress maintain a positive momentum in early 2019.

As a people business, it is essential that we have leaders with the finest knowledge and capabilities to guide our organisation. As such, new appointments were made in the 2018 financial year to enhance our leadership team.

With over seventy years of collective recruitment and business experience, our three new accomplished general managers have injected considerable firepower into our teams. They lead our core markets in Victoria, New South Wales and Queensland, producing the strongest senior management team the organisation has experienced for many years. Exceptional leaders attract quality talent and the positive results from our new managers have already started to show, particularly in Victoria.

Our financial performance is covered in the Financial and Operational Review. However, I believe it is important to note a few particularly encouraging outcomes delivered by the business including:

A return to profitability for our Victorian division.
Continued profitable growth for our Australian Capital Territory division.
Our On Demand division being awarded a number of new large contracts.
Continued growth of our China division, representing a valuable and growing asset.

Our 2018 initiatives, including the implementation of our new industry-leading applicant tracking system and payroll and billing system, have improved our back office and front office efficiencies and productivity.

Additionally, we developed a Reconciliation Action Plan with the support of our People Services team. We are very proud to be the first non-Indigenous recruitment and human resources business to embark on this journey. This initiative further differentiates our organisation and, most importantly, it provides much needed support to Indigenous Australians.

To say that our executive team and staff are committed would be an understatement. They could not work harder for our shareholders. Their passion and drive is demonstrated through their actions. Our staff live and breathe the organisation’s ethos and they truly believe their dedication will deliver positive outcomes for our shareholders.

On behalf of the Board, I would like to thank our shareholders for their continued support, our executive team and staff for their hard work, and our customers, contractors and candidates for supporting our business.

The Directors have chosen not to recommend a dividend for the 2018 financial year.

Through a unified Board and executive team, we are well positioned to maintain our 2018 trajectory and continue to deliver on our “Back in Black” strategy in 2019.

Yours faithfully,

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Garry Sladden Independent Non-Executive Chairman

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2018 Annual Report | www.igniteservices.com

FINANCIAL AND OPERATIONAL REVIEW

The Year in Review

This is my second annual report since assuming the role of Chief Executive Officer and I am delighted to report that the initiatives undertaken over the last twelve months, aligned with our 2020 “Back in Black” strategy, have delivered major operational improvements and generated ongoing positive momentum during the 2018 financial year.

Our “Back in Black” strategic plan focuses on three core areas:

Retaining, supporting and servicing the needs of our current customers and candidates.
Acquiring new customers to deliver revenue and margin upside for the organisation.
Developing organisational efficiencies in the back office and front office recruitment processes.

The initiatives we have delivered over the last twelve months include:

Continued implementation of the strategic plans for the four operating segments: Specialist Recruitment, On Demand and People Services in Australia and New Zealand and Specialist Recruitment in China.
Enhancement of our front office recruitment processes and cross-business unit revenue opportunities through the implementation of an industry-leading applicant tracking system which reduced eighteen candidate databases to one.
Implementation of a new payroll and billing system which has improved our back office efficiencies and productivity.
Recruitment of an experienced Australian leadership team capable of motivating our people to deliver improved operating results.

I am pleased to report that these initiatives led to the following highlights:

Improvement in gross profit margin to 22.6% (2017: 21.3%)
Decrease in the loss for the year after tax by 31.1% to $2,566k (2017: $3,724k loss)
Reduction in employee benefits expense by 9.0%
Reduction in operating rental expense by 6.2%
Improvement in operating cash flow to $4,117k (2017: $239k)
Reduction in net trade receivables by 16.0%
Improvement in cash balance of 55.6% to $2,782k (2017: $1,788k)
Reduction in the debtor finance facility utilised by 80.7% to $628k (2017: $3,253k)

Key Financial Metrics

Key Financial Metrics
	2018	2017
Metric	$000	$000	Change
Revenue	142,236	153,282	(7.2%)
Gross profit	32,209	32,627	(1.3%)
Gross profit margin	22.6%	21.3%
Loss for the year after tax	(2,566)	(3,724)	31.1%
Operating cash flow	4,117	239	1,622.6%
Debtor finance facility	(628)	(3,253)	80.7%
Net cash/(debt)	2,154	(1,465)	247.0%
Net assets	14,075	16,591	(15.2%)
Gearing	0.0%	8.1%

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2018 Annual Report | www.igniteservices.com

Financial Review

In the 2018 financial year, while revenue declined 7.2% from $153,282k to $142,236k and gross profit decreased 1.3% from $32,627k to $32,209k, the gross profit margin improved from 21.3% in 2017 to 22.6% this year. The revenue decline was largely due to the loss of two large payrolling services contracts. However, as a result we also saw significant improvements in our financial metrics, including trade debtors, net cash/(debt) and operating cash flow.

The Australia and New Zealand Specialist Recruitment business accounted for 83.6% of revenue (2017: 85.1%), the China Specialist Recruitment business represented 7.9% (2017: 6.8%), the On Demand business accounted for 6.6% (2017: 6.4%) and the People Services business made up the balance.

200,000 175,000 150,000 125,000 The loss from operating activities decreased 42.5% 100,000 to $2,084k (2017: $3,623k loss) largely due to favourable movements in 75,000 employee benefits expense of $2,351k (9.0% reduction) and operating rental 50,000 expense of $222k (6.2% reduction). Employee 25,000 benefits expense reductions came from a combination of lower headcount, vacancies 0 in senior management roles FY16 FY17 FY18 and workforce efficiencies from the implementation of Consolidated Revenue the applicant tracking system and the payroll and billing system. The

Consolidated profit before corporate overheads and tax improved 36.4% to $4,878k (2017: $3,577k), reflecting improvements in the performance of the four operating segments.

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40,000 40%
35,000 35%
30,000 30%
25,000 25%
20,000 20%
15,000 15%
10,000 10%
5,000 5%
0 0%
FY16 FY17 FY18
Gross Profit
Gross Profit Margin
A$000
Gross Profit Margin
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operating rental expense decrease this year was associated with relocating the Sydney South office to a more cost-effective location and delays in the relocation to the new Brisbane premises.

The China operations generated taxable income and having fully utilised all accumulated tax losses in that jurisdiction were in a tax paying position.

Operating cash flow also improved significantly for the year to $4,117k (2017: $239k) due to a combination of improved collection activities, loss of two large payrolling services contracts and strong cash inflows in China.

The loss for the year after tax decreased 31.1% to $2,566k (2017: $3,724k loss).

At 30 June 2018 the consolidated entity had net assets of $14,075k (2017: $16,591k). The consolidated entity’s total assets of $27,966k (2017: $35,008k) primarily consisted of net trade receivables of $17,848k (2017: $21,238k) and accrued income of $4,856k (2017: $8,493k). Net trade receivables declined 16.0% primarily on the back of improved collections and reduced billings to payrolling services customers. The consolidated entity’s total liabilities of $13,891k (2017: $18,417k) primarily comprised trade and other payables of $11,198k (2017: $12,875k).

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2018 Annual Report | www.igniteservices.com

The cash balance at 30 June 2018 improved 55.6% to $2,782k (2017: $1,788k). The improvements in trade debtors and cash flow saw the debtor finance facility utilised at the end of the financial year decrease 80.7% to $628k (2017: $3,253k). As a result, gearing at 30 June 2018 was zero (2017: 8.1%) with net cash of $2,154k (2017: $1,465k net debt).

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25,000 2,500 4,500
2,000
3,500
20,000
1,500
2,500
1,000
15,000
500 1,500
10,000 - 500
-500
5,000 -500
-1,000
-1,500
0 -1,500 FY16 FY17 FY18
FY16 FY17 FY18 FY16 FY17 FY18
Consolidated Net Assets Net Cash/(Debt) Operating Cash Flow
A$000
A$000 A$000
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Our People

The Australian operations bolstered execution of its strategy under the “Ignite” brand with the appointment of three experienced general managers in the core east coast states of Victoria, New South Wales and Queensland. These new leaders collectively add over seventy years of recruitment and operational experience to our Australian executive team.

General Manager, Victoria - Jayson Eichstadt

A highly experienced executive with strong international credentials, Jayson joined the business in November 2017 to reinvigorate our Victorian operations. In only eight months Jayson has rebuilt and expanded the team, recruiting nine additional team members and growing both existing customer and new customer accounts. He continues to grow the Ignite brand in the local market and make significant headway in acquiring new customers.

With over twenty four years of recruitment experience across four continents, Jayson is an inspiring leader who is guiding our Victorian operation to profitable outcomes.

General Manager, New South Wales - Stephen Hockey

Stephen joined our organisation in June 2018 and brings nearly thirty years of recruitment experience from Australia and Europe. His experience in developing high-performing customer and candidate service teams is a key competitive advantage for our New South Wales business.

He has board-level experience and has been the managing director of a listed multi-national recruitment firm. He offers our customers strong insight and superior service levels that are highly reflective of our organisational culture. Stephen successfully established one of the largest legal recruitment business in Europe and has a proven track record in building successful teams, developing new markets and identifying opportunities for business growth.

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2018 Annual Report | www.igniteservices.com

General Manager, Queensland - Bruce Moss

A highly regarded recruitment industry expert, Bruce has worked with many of Australia’s largest specialist recruitment and contracting companies. As the newest addition to our executive team, he brings with him over twenty years of experience. Bruce’s varied operational and management experiences from defence to telecommunications industries equip him with the tools needed to galvanise our Queensland team.

Bruce has a passion for developing quality teams, building strong relationships and creating new solutions. He intimately understands the importance of delivering quality service through an effective team.

Operational Review

Specialist Recruitment

Revenue from the Australia and New Zealand Specialist Recruitment business declined 8.8% in the 2018 financial year from $130,460k to $118,964k. This reduction was driven by the decline in revenue from the loss of two large payrolling services contracts during the year.

Despite the decline in revenue there were several stand out performances during the year, namely:

Profit before corporate overheads and tax improved 14.7% in the 2018 financial year from $3,366k to $3,859k. This was consistent with our goal to either improve or rationalise low margin customer contracts.
Our Australian Capital Territory office continued to perform strongly, delivering a profit before corporate overheads and tax up 26% on 2017.
Under new leadership our Victorian business returned to profitability before corporate overheads and tax for the first time in many years.

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175,000
150,000
125,000
100,000
75,000
50,000
25,000
0
FY16 FY17 FY18
Specialist Recruitment
A$000
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On Demand

Revenue declined 4.0% from $9,778k to $9,386k due to the completion of projects from the previous financial year and delays in the ramp-up of new projects awarded in 2018. However, profit before corporate overheads and tax remained flat at $526k (2017: $527k).

The general manager guided the team to focus their efforts on improving existing customer relationships and executing tactical business development activities. Consequently, our relationships strengthened and several new large contracts were obtained. Following the normal transition and ramp-up phases, these new contracts will provide further strong annuity revenue and a solid base from which the On Demand business can flourish.

Our On Demand team maintains a large network of pre-qualified information technology resources to deliver solutions for customers in Australia and New Zealand. Over the past twelve months the team has successfully delivered numerous projects for major customers of tier one system integrators including IBM, DXC Technology and TATA Consultancy Services as well as a range of large corporations.

Notable system integrator customer projects awarded during the year include a multi-year delivery contract to provide end user services across Australia for a major financial institution and a national hardware roll-out for a major government department.

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2018 Annual Report | www.igniteservices.com

People Services

Late in the previous financial year a strategic decision was made to refocus People Services on its core Australian Capital Territory market. This decision allowed the business to align its cost-to-revenue structure appropriately and deliver a profit before corporate overheads and tax in the 2018 financial year. During this period People Services were also successful in winning and retaining a number of contracts, including the provision of services to our largest federal government customer.

Our People Services team were integral in developing our Reconciliation Action Plan (RAP). I am very proud to inform our shareholders that we are the first non-Indigenous recruitment and human resource business with a RAP. Furthermore, the alignment of our RAP and Indigenous recruitment expertise has delivered a number of opportunities including the attainment of new preferred supplier agreements with several corporate partners.

China

The China Specialist Recruitment business, trading as “Lloyd Morgan”, grew revenue 8.4% from $10,347k to $11,212k, while overall profit before corporate overheads and tax dropped from 3.0% to 1.1% of revenue due to higher than normal professional fees, consulting fees and long-term performance incentive accruals.

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12,000
10,000
8,000
6,000
4,000
2,000
0
FY16 FY17 FY18
China Specialist Recruitment
A$000
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During the 2018 financial year there were many cross-border collaboration opportunities between our operations in China and Australia resulting in placements with customers. Our unique “Australia-China” offering has been marketed to our existing and prospective customers, creating a sizeable pipeline of large multinational customers to partner with in the 2019 financial year.

To further strengthen the growth of our China operations, five senior managers were promoted to director during the financial year covering Beijing, Shanghai, Guangzhou and Suzhou. These promotions, combined with our regional director (responsible for Shanghai and Suzhou), bolster our Chinese management capabilities.

Under the guidance of the regional director appointed at the beginning of the 2018 financial year, our combined Shanghai and Suzhou revenue numbers continued to grow eclipsing the previous record. In the fast-growing regions of Guangzhou in Southern China and Chengdu in Central China we recorded strong year-on-year revenue growth.

The significant work that has been dedicated to our China operations continues to create an increasingly valuable asset.

The Year Ahead

To see the continuous improvements throughout the 2018 financial year, facilitated by our 2020 “Back in Black” strategy, has been heartening.

Our geographically focused brand strategy, covering Australia (“Ignite”) and China (“Lloyd Morgan”) has allowed our organisation to engage customers and candidates with a clear brand proposition in these key markets. Our streamlined approach to each market will be supported in the coming year with an aggressive marketing campaign emphasising our deep sector expertise and market-leading pedigree. We will specifically target and support the growth strategies of our four operating segments: Specialist Recruitment, People Services and On Demand in Australia and New Zealand, and Specialist Recruitment in China.

Innovation, focused on developing efficiencies in the back office and front office recruitment processes, will form a critical component of our strategy for the 2019 financial year. We have leveraged technology to enhance the delivery of our organisational efficiencies and to underpin our employee learning and development programs. These initiatives will continue to be refined to improve our candidate and customer outcomes.

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2018 Annual Report | www.igniteservices.com

Our strategic focus on people will be strengthened further in the 2019 financial year. Our online training platform, including our recently launched online induction program, will be complemented by intensive recruitment training. These courses focus on supporting our overall strategic imperatives of:

Improving the leadership capabilities of our people
Increasing the productivity of our consultants
Reducing the time and investment required to take a consultant from induction to profitable contributor.

In the 2019 financial year our Australia/New Zealand Special Recruitment business will be supported by a full complement of highly experienced general managers. Under the guidance of our Victorian General Manager, the implementation of our strategic plan has yielded an immediate financial return and successfully attracted talent. With the addition of similarly experienced leaders in New South Wales and Queensland, our expectations for 2019 are justifiably optimistic.

Our China operations provide us with a unique and strategic footprint from which to continue to expand our market presence. As the largest Australian owned recruitment business in China with operations in five key cities we believe we are just beginning to realise the opportunities this business represents.

Similarly, our On Demand business unit represents a specialised pillar of growth. With a portfolio of tier one system integrators, a range of large corporations and a marketplace that increasingly relies on information technology resources to satisfy business and technological transformation, we are well placed through our established partnerships to further drive and grow this business in 2019.

The combination of our China operations, On Demand service offering and deep vertical expertise, including large-scale Australia and New Zealand contracting capabilities, creates a truly differentiated brand in each of the markets in which we operate.

Our leadership additions, along with our successful transformation work undertaken to date, gives us great confidence that we have the ability to attract and train the most suitable people to further grow our existing teams and achieve our “Back in Black” strategy.

Our achievements are only made possible by our people who work tirelessly. I would like to thank each and every one of them for their continued dedication, passion and commitment. I encourage them to continue with the same enthusiasm in 2019.

Yours faithfully,

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Julian Sallabank Chief Executive Officer

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2018 Annual Report | www.igniteservices.com

DIRECTORS’ REPORT

The Directors present their report together with the financial report of Clarius Group Limited, (the “Company”) and its controlled entities (the “consolidated entity”) for the financial year ended 30 June 2018 and the auditor’s report thereon.

Directors

The Directors of the Company at any time during or since the end of the financial year are:

Garry Sladden Jennifer Elliott Craig Saphin Gabrielle Trainor (Resigned 25 July 2017)

Principal activities

The principal activities of the consolidated entity during the financial year were the provision of permanent and contingent recruitment and payroll services (“Specialist Recruitment”); on demand human resource solutions (“On Demand”); and outsourced recruitment and human resource consulting services (“People Services”).

The consolidated entity operates in 11 cities across Australia and China and employs more than 250 people.

Review of operations

The loss attributable to equity holders of the Company for the financial year was $2,566k (2017: $3,724k loss).

The Chairman’s Letter and Financial and Operational Review form part of the Directors’ Report for the financial year ended 30 June 2018.

Dividends

No dividends were paid, declared or recommended to members during the financial year. On 30 August 2018 the Directors resolved not to declare a final dividend for the year ended 30 June 2018.

Significant changes in state of affairs

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

Events subsequent to the reporting date

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.

Future developments

The consolidated entity continues to pursue a strategy centred on the provision of Specialist Recruitment, On Demand and People Services in the Asia-Pacific region.

Environmental issues

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

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2018 Annual Report | www.igniteservices.com

Information on the Directors

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GARRY SLADDEN

Independent Non-Executive Chairman

Garry is a business and strategic adviser who has a diversified business background in the areas of real estate, private equity, business operations, banking and finance, and equity raising. He was General Manager Operations at Consolidated Press Holdings for six years.

During the last three years Garry has been a director of listed companies Vision Eye Institute Limited (resigned January 2016) and Folkstone Limited. Garry is currently Chairman of Folkestone Limited, Chairman of Ashton Manufacturing Pty Limited, Chairman of FivePointFour Holdings Pty Ltd and Chairman of Star Car Wash Café Holdings Pty Ltd.

Garry is Chairman of the Board of Directors, a member of the Board Audit, Risk and Compliance Committee and a member of the Board Remuneration and Nomination Committee.

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JENNIFER ELLIOTT

Independent Non-Executive Director

Jennifer has broad experience across senior executive roles in financial services, with a particular focus on strategic planning, risk and compliance, joint ventures in Asia and global human resources. During a 20-year career with Moody’s Corporation, Jennifer held a variety of analytic and management roles, including over five years as head of Moody’s Investors Service Asian business, and also several years as Chief Human Resources Officer for Moody’s Corporation.

During the last three years Jennifer has not been a director of any other listed companies. Jennifer currently sits on several boards as an independent director, including not-for-profit entities.

She holds a Master of Asian Business Studies from SOAS, University of London, and arts and law degrees from the University of Sydney.

Jennifer is Chairman of the Board Audit, Risk and Compliance Committee and a member of the Board Remuneration and Nomination Committee.

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CRAIG SAPHIN GAICD

Independent Non-Executive Director

Craig Saphin is a seasoned executive with over 30 years’ experience in Asia-Pacific operations. He has held chief executive officer, general management, executive and non-executive directorships and board oversight roles with full profit and loss experience for public, private and not-for-profit organisations.

Previously, Craig was Executive Director with the technology and HR services company, en Japan, Inc., which is a publicly listed company in Tokyo. He also held the role of Chief Executive Officer at recruitment company en world where he led the growth strategy across Asia.

Prior to this he worked in executive roles leading diverse teams in Australia, China, Japan and Asia for the US technology company EFI, Inc. and Japanese company Fuji Xerox. He has been Chairman for the NFP English service lifeline in Japan, “TELL”.

During the last three years Craig has not been a director of any other listed companies.

Craig is Chairman of the Board Remuneration and Nomination Committee and a member of the Board Audit, Risk and Compliance Committee.

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2018 Annual Report | www.igniteservices.com

Directors’ 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 disclosed in the Remuneration Report on page 10.

Company Secretary

IAN GILMOUR FGIA, FCIA, CA, FAICD

Company Secretary

Ian is a seasoned and experienced company secretary and is currently director and company secretary of Gilmour & Co Pty Ltd, a provider of company secretarial services. He is company secretary of Property Exchange Australia Limited, Optalert Holdings Pty Limited and Sydney Institute of Marine Science. Ian was formerly director and company secretary of AQRB Pty Ltd (formerly Audit Quality Review Board Ltd) and company secretary of RedHill Education Limited (ASX: RDH), Goodman Fielder Limited (ASX: GFF) and has provided company secretarial services to a number of ASX listed companies.

Audited remuneration report

The remuneration report is set out under the following headings:

Director Remuneration
Principles Used to Determine the Nature and Amount of Executive Remuneration
Details of Directors’ and Key Management Personnel Remuneration
Short-Term Incentive
Long-Term Incentive
Employment Contracts
Option Holdings
Shareholdings

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.

Director Remuneration

The policy of the Board of Directors (“Board”) is to remunerate Directors at market rates for comparable companies. Such remuneration is provided in recognition of the time, commitment and responsibilities assumed by Directors. The Board Remuneration and Nomination Committee determines payments to 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 Directors is $500,000 per annum as approved by shareholders at the 2005 Annual General Meeting. Fees for Directors are not linked to the performance of the consolidated entity. Directors do not receive options or any form of equity as remuneration.

Directors are entitled to statutory superannuation and do not receive any other retirement benefits.

Principles Used to Determine the Nature and Amount of Executive Remuneration

Executive Remuneration Principles

The Board Remuneration and Nomination Committee’s Charter includes setting out the terms and conditions by which executive remuneration is determined. The Board Remuneration and Nomination Committee did not seek professional advice from independent external consultants in the financial year on executive remuneration. All executives receive a base salary (which is based on factors such as experience) and statutory superannuation and are eligible for fringe benefits as well as service and performance-based incentives. The Board Remuneration and Nomination Committee reviews senior executive remuneration annually, as requested by the Chief Executive Officer, by reference to the

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2018 Annual Report | www.igniteservices.com

consolidated entity’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

The consolidated entity’s executive remuneration practices have been designed to align executive and shareholder interests and objectives. The Board believes these practices to be appropriate and effective in attracting and retaining skilled executives to manage and operate the business.

The performance of executives is measured against criteria agreed annually with each executive. The criteria are based predominantly on the forecast financial performance of the consolidated entity. 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 review the Board Remuneration and Nomination Committee’s recommendations. Any changes must be justified by reference to measurable performance criteria. The policy is designed to attract and retain skilled executives and reward them for performance that results in long-term growth in shareholder wealth.

Executives may also be invited to participate in the Company’s Equity Incentive Plan.

Executives are entitled to statutory superannuation and do not receive any other retirement benefits.

All remuneration paid to executives is valued at cost to the Company and expensed.

Performance Based Remuneration

As part of the Chief Executive Officer and executives’ remuneration packages there is a performancebased 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, in consultation with executives to ensure their commitment to achieving those goals.

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 measures are specifically tailored to the areas of each executive’s involvement within the business and over which they have control. The level set for each KPI is based on budgeted amounts for the consolidated entity and industry standards.

Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. In determining whether or not a financial KPI has been achieved, the Company bases the assessment on audited financial information. The Chief Executive Officer’s achievement of KPIs is determined by the Board while the executive’s achievement of KPIs is determined by the Chief Executive Officer.

Following the annual assessment, the KPIs are reviewed by the Chief Executive Officer, with assistance as may be required from the Board Remuneration and Nomination Committee in light of the desired and actual outcomes for that year. The KPIs are then set for the year in order to align with the consolidated entity’s objectives.

Consequences of Performance on Shareholder Wealth

In considering the consolidated entity’s performance and impact on shareholder wealth, the Board Remuneration and Nomination Committee has regard to the following information in respect of the current financial year and prior four financial years.

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2018 Annual Report | www.igniteservices.com

	2018	2017	2016	2015	2014
	$000	$000	$000	$000	$000
Loss attributable to the Owners of the Company	(2,566)	(3,724)	(3,864)	(11,328)	(1,677)
Loss excluding impairment and de-recognition of tax
losses	(2,566)	(3,724)	(2,033)	(7,790)	(1,677)
	$	$	$	$	$
Share price at the beginning of the year	0.08	0.19	0.27	0.24	0.20
Share price at the end of the year	0.05	0.08	0.19	0.27	0.24
Return on capital employed	-	-	-	-	-
	Cents	Cents	Cents	Cents	Cents
Basic loss per share	(2.86)	(4.16)	(4.31)	(12.65)	(1.87)
Diluted lossper share	(2.86)	(4.16)	(4.31)	(12.65)	(1.87)

Details of Directors’ and Key Management Personnel Remuneration

The remuneration of Directors and key management personnel of the consolidated entity is as follows:

	Short-term Employment Benefits Post- Employment Benefits Long-term Employment Benefits Salary Bonus Non- Monetary Benefits Superannuation Long Service Leave Share Based Payments Total Remuneration $ $ $ $ $ $ $
Directors
Garry Sladden 2018 2017	99,000 - - 9,405 - - 108,405 99,000 - - 9,405 - - 108,405
Jennifer Elliott 2018 2017	53,425 - - 5,075 - - 58,500 53,425 - - 5,075 - - 58,500
Craig Saphin(1) 2018 2017	53,425 - - 5,075 - - 58,500 15,411 - - 1,464 - - 16,875
Gabrielle Trainor(2) 2018 2017	4,452 - - 423 - - 4,875 53,425 - - 5,075 - - 58,500
Key Management Personnel
Julian Sallabank(3) 2018 2017	379,951 - - 20,049 - 2,747 402,747 204,822 - - 11,198 - - 216,020
Mahendra Tharmarajah(4) 2018 2017	295,080 20,000 5,769 24,969 - - 345,818 154,108 - - 24,652 - - 178,760

(1) Craig Saphin was appointed on 20 March 2017.

(2) Gabrielle Trainor resigned on 25 July 2017.

(3) Julian Sallabank was appointed as Chief Executive Officer on 19 December 2016.

(4) Mahendra Tharmarajah was appointed as Chief Financial Officer on 12 December 2016.

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The relative proportions of remuneration that are fixed and performance based are as follows:

Fixed Remuneration %(1)	Performance Based Remuneration Service Based Remuneration
	Performance Based Remuneration %(1) % Vested in Year(2) % Forfeited in Year Service Based Remuneration % % Vested in Year(2) % Forfeited in Year
Directors
Garry Sladden 2018 100 2017 100	- - - - - - - - - - - -
Jennifer Elliott 2018 100 2017 100	- - - - - - - - - - - -
Craig Saphin 2018 100 2017 100	- - - - - - - - - - - -
Gabrielle Trainor 2018 100 2017 100	- - - - - - - - - - - -
Key Management Personnel
Julian Sallabank(3) 2018 99 2017 100	- - - 1 67 - - - - - - -
Mahendra Tharmarajah(4) 2018 93 2017 100	7 100 - - - - - - - - - -

(1) Fixed remuneration %, performance-based remuneration % and service-based remuneration % are based on the entitlements of each key management person during the financial year.

(2) Vesting percentages are based on actual remuneration payable in the financial year.

(3) Julian Sallabank was appointed as Chief Executive Officer on 19 December 2016 and on 6 July 2017 was granted 335,000 options over ordinary shares, which are service based options, that vest over a two-year period being 19 December 2016 to 18 December 2018.

(4) Mahendra Tharmarajah was appointed as Chief Financial Officer on 12 December 2016 and was entitled to an annual bonus of $40,000 pro-rated to $20,000 for the year ended 30 June 2017. The bonus was determined and paid in the year ended 30 June 2018.

The remuneration packages of key management personnel contain a performance-based remuneration component related to achievement of agreed KPIs. 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.

Performance linked compensation includes both short-term and long-term incentives and is designed to reward key management personnel for meeting or exceeding their financial and personal objectives. The short-term incentive is a bonus provided in the form of cash, while the long-term incentive is provided as options pursuant to the rules of the Company’s Equity Incentive Plan.

Short-Term Incentive

The objective of the short-term incentive (“STI”) is to reward key management personnel for their contribution to the achievement of the consolidated entity’s annual financial objectives, as well as individual KPIs. Each year the Board Remuneration and Nomination Committee sets KPIs for the key management personnel. The KPIs generally include measures relating to the consolidated entity, the relevant segment, and the individual, and include financial, people, customer and strategy measures. The measures are chosen as they directly align an individual’s reward to the KPIs of the consolidated entity and to its strategy and performance.

The Company’s STI plan provides for a cash payment based on achieving pre-determined KPIs and is assessed and paid annually. The financial performance objectives are set annually as deemed appropriate by the Board Remuneration and Nomination Committee and include measures such as gross margin, earnings before interest and tax (“EBIT”) margins and EBIT margin % targets. The nonfinancial objectives vary with role and responsibility and include measures such as achieving strategic outcomes, adhering to legal and operational compliance, customer satisfaction and staff development. Each financial and non-financial objective accounts for between 20 to 40 percent of the maximum STI.

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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 consolidated entity, and the achievement of the consolidated entity’s financial goals during the financial year. Therefore, the level of remuneration of key management personnel is directly linked to the performance of the consolidated entity in each financial year.

At the end of the financial year, the Board Remuneration and Nomination Committee assesses the actual performance of the consolidated entity, the relevant segment and the individual against the KPIs set at the beginning of the financial year. In determining whether or not a financial KPI has been achieved, the Company bases the assessment on audited financial information.

Long-Term Incentive

The objective of the long-term incentive (“LTI”) is to reward the Chief Executive Officer and key management personnel for their contribution to the creation of shareholder value over the long-term. Options are granted under the Company’s Equity Incentive Plan which provides for key management personnel to receive options as part of their remuneration. The options are granted based on performance criteria and to encourage staff retention.

The goal is to increase congruence of goals between executives and those of the business and shareholders. Options only vest where the performance and tenure hurdles are satisfied.

Employment Contracts

It is the consolidated entity’s policy that service contracts for key management personnel are on-going until terminated by either party. Remuneration and other terms of employment for the key management personnel are formalised in contracts of employment. Each of these contracts of employment specify the remuneration terms including the fixed and performance-based remuneration components providing for cash bonuses, options and other benefits. There are no specified lengths of service included within the contracts of employment. The contracts of employment of the key management personnel may be terminated by either party with three months’ notice.

Option Holdings

On 6 July 2017 the Chief Executive Officer was granted 335,000 options over ordinary shares, which are service based options, pursuant to the Company’s Equity Incentive Plan. The options have an exercise price of $0.15 each, vest over the two-year period 19 December 2016 to 18 December 2018, and expire five years from the date of grant. These options had a fair value at grant date of $0.0123 each.

Shareholdings

Shareholdings
	Balance		Balance
	1 July2017	Movement	30 June 2018
Directors
Garry Sladden	110,142	65,000	175,142
Jennifer Elliott	-	50,000	50,000
CraigSaphin	50,000	100,600	150,600
Key Management Personnel
Julian Sallabank	-	-	-
Mahendra Tharmarajah	-	200,000	200,000

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No shares were issued during the year to key management personnel pursuant to the exercise of options over ordinary shares.

Shareholdings are unchanged as at the date of this report.

End of Audited Remuneration Report

Meetings of Directors and Board committees

During the financial year, the following meetings of Directors, the Board Audit, Risk and Compliance Committee and the Board Remuneration and Nomination Committee were held with attendances as indicated:

indicated:
Directors	Meetings of Directors Meetings of the Board Audit, Risk and Compliance Committee Meetings of the Board Remuneration and Nomination Committee
	Meetings Held(1) Meetings Attended Meetings Held(1) Meetings Attended Meetings Held(1) Meetings Attended
Garry Sladden Jennifer Elliott Craig Saphin Gabrielle Trainor	16 15 4 4 3 3 16 16 4 4 3 3 16 16 4 4 3 3 1 1 - - - -

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

Indemnifying Officers

The Company has entered into deeds of indemnity, insurance and access with each of the Directors and the Company Secretary. The form of these deeds was approved by shareholders at the 2001 Annual General Meeting. The indemnity will only indemnify a Director and the Company Secretary to the extent permitted by the law and the Company’s Constitution.

During the year the Company paid a premium to insure the Directors and the Company Secretary 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 non-executive officers of the Company. The terms of the policy prohibit disclosure of the premium paid.

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, a 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 the Remuneration Report.

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

Proceedings on behalf of the Company

No person has applied for leave of the Court under section 237 of the Corporations Act 2001 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.

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Non-audit services

The Board, in accordance with advice from the Board Audit, Risk and Compliance Committee, are 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 Board are satisfied that the services disclosed in Note 22 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 APES 110 Code of Ethics for Professional Accountants.

Refer to Note 22 for amounts paid or payable during the financial year to the external auditors in respect of non-audit services.

Auditor’s independence declaration

The lead auditor’s independence declaration for the year ended 30 June 2018 is set out on page 17 of the Directors’ Report.

Rounding of amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars or in certain cases to the nearest dollar, unless otherwise indicated.

Signed in accordance with a resolution of the Board of Directors.

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Garry Sladden Independent Non-Executive Chairman

Dated at Sydney this 30[th] day of August 2018.

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Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

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Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia

DX 10307SSE

Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

The Board of Directors Clarius Group Limited Level 9, 1 York Street Sydney NSW 2000

30 August 2018

Dear Board Members

Clarius Group Limited

In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of independence to the directors of Clarius Group Limited.

As lead audit partner for the audit of the financial statements of Clarius Group Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

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DELOITTE TOUCHE TOHMATSU

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Jason Thorne Partner

Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

Corporate Governance Statement

This statement sets out the material governance principles and processes of the Company and the consolidated entity. The Board has followed recommendations established in the ASX Corporate Governance Principles and Recommendations, 3[rd] Edition (the “ASX Recommendations”).

The Directors have resolved to consider and apply these ASX Recommendations unless it is determined that, in the circumstances of the consolidated entity, there is a sound reason in the interests of shareholders not to do so.

Features of the consolidated entity’s corporate governance regime are summarized below. Details of the consolidated entity’s corporate governance codes, charters and policies are available on the consolidated entity’s website under Investor Information - Corporate Governance (www.igniteservices.com./investor-information/corporate-governance) (“website”).

Principle 1 – Lay solid foundations for management and oversight

The role of the Board is to approve the strategic direction of the consolidated entity, guide and monitor management and the business in achieving its strategic plans and oversee good governance practice. The Board aims to protect and enhance the interests of its shareholders, while taking into account the interests of other stakeholders, including customers, contractors, candidates, vendors, employees and the wider community.

The responsibilities and accountabilities of the Board have been framed in a Board Charter which reflects its governance principles. The Board Charter is available on the consolidated entity’s Website.

During the year the Board met 16 times. Meetings are held at regular intervals throughout the year supplemented by additional meetings as required in the conduct of the Board’s responsibilities.

The Board operates on the principle that all significant matters are dealt with by the full Board and has specifically reserved the following matters for its decisions:

Strategy and planning
Staffing
Remuneration
Capital management and financial reporting
Performance monitoring
Risk management
Audit, risk and compliance
Board processes and policies

To assist in its deliberations, the Board has established two main committees which, apart from routine matters, act primarily in a review or advisory capacity on the matters set out in their respective charters. These are the Board Audit, Risk and Compliance Committee and the Board Remuneration and Nomination Committee. The charters of each Committee are summarised in this report. Other committees may be established to address specific issues as may be required from time to time.

Chairman’s Responsibilities

The Chairman’s responsibilities are expressly identified in the Board Charter. The Chairman 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, governance and monitoring the performance of management. The Chairman is also responsible for ensuring that procedures to assess the performance of the Board and the Directors are operating; facilitating Board discussion and effective contribution of all Directors; and overseeing representations to and communications with the shareholders.

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Director Selection

It is the role of the Board Remuneration and Nomination Committee to identify suitable candidates to complement the existing Board and to make recommendations to the Board on their appointment. The Board considers the appointment or retirement of Directors annually under succession plan principles having regard to the size of the consolidated entity and to the appropriate skills and experience of Directors. Skills and experience regarded as important include experience as a chief executive officer; 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.

Before appointing a Director, the Company undertakes comprehensive due diligence including employment, character reference, criminal history, bankruptcy and disqualified company director investigations.

Directors’ Performance Review

During the year the Board surveyed the Directors regarding the performance of the Chairman, the Directors, the Board and its committees and discussed the results.

Company Secretary

The Company Secretary is appointed by the Board and is accountable to the Board, through the Chairman, on all governance matters. Biographical details showing the relevant skills, experience and expertise held by the Company Secretary are included in the Directors’ Report.

Role of the Chief Executive Officer

The responsibility for implementing the approved business plans and for the day-to-day operations of the consolidated entity is delegated to the Chief Executive Officer who, with the management team, is accountable to the Board. The Board approves the Delegation of Authority which sets out the authority limits for the Chief Executive Officer and the management team.

Performance Based Remuneration

Across the consolidated entity, there is a strong performance management discipline teamed with competitive reward and incentive programs. As part of the management team’s remuneration packages there is a performance-based component, related to Key Performance Indicators (KPI’s). The intention of this program is to facilitate congruence of goals between management and those of the business and shareholders. The KPI’s are set annually, in consultation with management to ensure their commitment to achieving those goals. The measures are specifically tailored to the areas of each manager's involvement within the business and over which they have control. Performance reviews have been carried out in accordance with policy during the financial year.

Diversity Policy

The consolidated entity understands that a diverse workforce is one that recognises and embraces the varied skills and perspectives that people bring to the organisation through their differences.

The consolidated entity values the differences between people and the contribution these differences make to its business. The consolidated entity recognises its talented and diverse workforce is a key competitive advantage and that its business success is a reflection of the quality and skills of its people. As such the consolidated entity is committed to seeking out and retaining the best people to ensure business growth and performance.

Above all, the consolidated entity is committed to ensuring that all employees, customers, consultants, suppliers and third-party stakeholders are treated with respect and dignity. It strives to create and foster a supportive and understanding environment in which all individuals realise their maximum potential within the consolidated entity, regardless of their differences.

The Board understands the importance of maintaining a diversity policy. The values are set out in the consolidated entity’s diversity policy which is available on the consolidated entity’s website.

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As part of monitoring its diversity policy, the Board measures its gender diversity noting the respective proportions of men and women on the Board, in key management roles and within broader management. However, the Board has determined not to set measurable objectives for achieving gender diversity for the foreseeable future.

Gender Diversity	30 June 2018 30 June 2017
	Female(%) Male(%) Female(%) Male(%)
Board of directors Key management personnel Management Consolidated entity	34% 66% 34% 66% 0% 100% 0% 100% 20% 80% 43% 57% 68% 32% 64% 36%

Principle 2 – Structure the Board to add value

The Board comprises three Directors. The Board considers this number appropriate in the present circumstances of the Company. The Board Charter requires that there be a majority of Directors who are independent and non-executive. All Directors in office are independent and non-executive. Onethird of the Board is required to retire at each Annual General Meeting and may stand for re-election. The Director(s) to retire shall be those who have been longest in office since their last election. A Director appointed to fill a casual vacancy or as an additional Director only holds office until the next Annual General Meeting, when they must retire, and seek re-election by shareholders at the meeting.

Biographical details showing the relevant skills, experience and expertise of each Director are included in the Information on Directors section of the Directors’ Report.

The Board comprises the following Directors at the date of this report:

Name	Position	Appointed
Garry Sladden	Independent non-executive Chairman	September 2013
Jennifer Elliott	Independent non-executive Director	May 2014
CraigSaphin	Independent non-executive Director	March 2017

Directors’ 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 judgment, and otherwise meets the criteria for independence set out in the ASX Recommendations.

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

they are not a substantial (5% or greater) shareholder of the Company or an officer of a substantial shareholder of the Company;
they have not been employed in an executive capacity in the last three years by the Company or a subsidiary of the Company;
they have not been employed as a principal of a material professional advisor to the consolidated entity during the past three years;
they are not a material supplier or customer of the Company or any subsidiary of the Company;
• they have no material contractual relationship with the consolidated entity (other than as a Director of the Company); and
they are free from any interest, business or personal, which could, or could reasonably be perceived to materially interfere with their ability to act in the best interests of the consolidated entity.

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

Independent Professional Advice

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

Induction of New Directors and Ongoing Development

New Directors are provided with a formal letter of appointment which sets out the key terms and conditions of appointment, including their duties and responsibilities, required time commitment, requirement to disclose notifiable interests or other interests and matters affecting independence.

New Directors participate in an induction program designed to introduce the Director to all aspects of the consolidated entity’s business and corporate strategies, as well as incorporating information in relation to areas in which the Director will particularly be involved. The new Director will meet with the Chairman and each Director, the Chief Executive Officer and management in order to gain an insight into the values and culture of the consolidated entity.

On an ongoing basis, Directors are provided with presentations and briefings on matters impacting the strategy and operations of the consolidated entity.

Board Skills Matrix

The Board skills matrix is set out below:

The Board skills matrix is set out below:
Strategic Areas	Skills
Strong capital management and appropriate oversight of	•	Risk management
financial controls and risk	•	Financial accounts literacy
	•	Shareholder and investor relations
	•	Investment banking and capital management
Understanding of employment/labour hire business	•	Employment/labour hire business acumen
	•	Information technology
	•	Marketing
	•	Digital strategy
International business experience	•	Senior management experience leading
		international divisions
	•	Strategy
Other areas	•	Executive/senior management experience
	•	Corporate governance experience
	•	Diversity and inclusion

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Board Remuneration and Nomination Committee

The Board Remuneration and Nomination Committee operates under a Charter approved by the Board. The Committee Charter is available on the consolidated entity’s Website. The Committee’s objective is to assist the Board in the consideration of personnel and remuneration issues within the consolidated entity. The Committee ordinarily comprises a minimum of three Directors, a majority of whom are independent non-executive Directors.

The members of the Committee during the year were:

Name	Position
Craig Saphin	Chairman of the Committee appointed in July 2017
Garry Sladden	Member of the Committee
Jennifer Elliott	Member of the Committee
Gabrielle Trainor	Resigned as a Director and Chairman of the Committee in July2017

Qualifications of Committee members are set out in the Information on Directors section of the Directors’ Report.

The Committee, which is accountable to the Board, is required by its Charter to meet at least twice per year. Details of the number of meetings of the Committee held during the year, and the attendees at those meetings, are set out in the Meetings of Directors and Board Committees section of the Directors’ Report.

The responsibilities of the Board Remuneration and Nomination 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;
recommending Chairman and non-executive Director remuneration;
recommending remuneration framework and levels for the Chief Executive Officer and management;
assisting the Chairman in relation to performance goals for, and assessment of, the Chief Executive Officer and management;
policies and procedures regarding the management team for recruitment, retention, remuneration, training and succession planning; and
policies on superannuation arrangements for the consolidated entity.

For details on the amount of remuneration, and all monetary and non-monetary components for each of the key management personnel who were not Directors during the year, and for all Directors, refer to the Details of Directors’ and Key Management Personnel Remuneration section of the Directors’ Report. In relation to the payment of bonuses, granting of options, and other incentive payments, discretion is exercised by the Board having regard to the overall performance of the consolidated entity and the performance of the individual during the period.

There is no scheme to provide retirement benefits to non-executive Directors, other than statutory superannuation.

Principle 3 – Act ethically and responsibly

Code of Conduct/Ethical Business Behaviour

The Board recognises the need to observe the highest standards of corporate practice and business conduct. The Board has adopted a Code of Conduct applicable to all Directors, management and employees. The Code directs standards of behaviour and interpersonal dealings. Within the letter and spirit of the Code, the Directors, management and all employees are expected to act lawfully, in a professional manner, and with the utmost integrity and objectivity in their dealings with customers, contractors, candidates, vendors, competitors, the community and each other, striving at all times to enhance the reputation and performance of the consolidated entity.

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The Code is available on the consolidated entity’s website.

In addition, the consolidated entity has implemented a whistle-blower 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.

Share Ownership and Dealings

Details of shareholdings of Directors in the Company are set out in the Directors’ Report.

Securities Trading Policy

Directors, management and employees are subject to the Corporations Act 2001 which restricts their buying, selling or trading in securities in the Company if they are in possession of inside information.

The Board has adopted a formal policy for securities trading which is available on the consolidated entity’s website.

Directors, management and employees of the consolidated entity are not permitted to undertake any transactions in relation to shares in the Company in the period between the end of the financial halfyear or full-year and the release of the financial information relating to that period. Directors, management and employees of the consolidated entity are further prohibited from undertaking transactions involving the Company’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 Company.

Principle 4 – Safeguard integrity in corporate reporting

Board Audit, Risk and Compliance Committee

The Board Audit, Risk and Compliance Committee operates under a Charter approved by the Board. The Committee Charter is available on the consolidated entity’s Website. The Committee’s 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; recognising and managing risk; and overseeing the Company’s process for monitoring compliance with laws and regulations and the code of conduct. The Committee ordinarily comprises a minimum of three Directors, all of whom are to be independent non-executive Directors.

The members of the Committee during the year were:

Name	Position
Jennifer Elliott	Chairman of the Committee
Garry Sladden	Member of the Committee
Craig Saphin	Member of the Committee
Gabrielle Trainor	Resigned as a Director and member of the Committee in July2017

Qualifications of Committee members are set out in the Information on Directors section of the Directors’ Report

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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 financial statements;
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 consolidated entity’s internal control frameworks and risk management strategies and processes, including recommending the insurance strategy;
overseeing the scope, cost and performance of external audit; and directing the strategies and scope of internal audit; and
recommending the appointment of external auditors and monitoring the independence of external auditors.

External Auditors

The consolidated entity’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 Note 22 to the Consolidated Financial Statements. The external auditors provide an annual declaration of their independence to the Board and 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 content of the Independent Auditor’s Report.

Financial Reporting

The Chief Executive Officer and Chief Financial Officer have stated, in writing, to the Board that the consolidated entity’s financial statements for the year ended 30 June 2018 present a true and fair view in all material respects of the consolidated entity’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 Chief Executive Officer and Chief Financial Officer have further stated to the Board, in writing, that the consolidated entity’s records have been properly maintained under law; that the financial statements are underpinned by sound systems of risk management and internal compliance and control which are operating effectively in all material respects; and that there are no post 30 June 2018 events which would materially impact the effectiveness of those systems.

Principle 5 – Make timely and balanced disclosure

The consolidated entity’s practice, as reflected in the Communication and the Continuous Disclosure Policies which are available on the consolidated entity’s website, is to release all price-sensitive information in a timely manner and in accordance with practices directed by the ASX Listing Rules. For disclosure purposes, price-sensitive information is taken to be information that a reasonable person would expect to have a material effect on the price of the Company’s securities.

All material information issued to ASX, published annual reports, half-year and full-year results and presentation material provided to analysts, is published on the consolidated entity’s website.

The Company Secretary is the primary person responsible for communication with ASX.

The Chairman and Chief Executive Officer are the authorised spokespersons who can communicate on behalf of the consolidated entity with shareholders, the media and the investment community.

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Principle 6 – Respect the rights of shareholders

The rights of shareholders are detailed in the Company’s Constitution. Those rights include electing members of the Board. In addition, shareholders have the right to vote on important matters which have an impact on the Company. To allow shareholders to effectively exercise these rights, the Board is committed to improving the communication to shareholders of high quality, relevant and useful information in a timely manner, through:

ASX announcements;
Company publications including annual reports;
The Annual General Meeting; and
The consolidated entity website

Shareholders are encouraged to make their views known to the Company and to directly raise matters of concern. Shareholders are encouraged to attend the Annual General Meeting and use this opportunity to ask questions. The Annual General Meeting will remain the main opportunity each year for the majority of shareholders to question the Board and management and make their views known. The Company encourages two-way communication with shareholders and to this end has set up electronic communications facility via its website (www.igniteservices.com/contact-us).

Principle 7 – Recognise and manage risk

The Board has a Risk Management Framework which formalises the approach to management of material business risks. The policy is in the process of being fully implemented through a top down and bottom up approach to identifying, assessing, monitoring and managing key risks across the consolidated entity.

The Board is responsible for approving strategies and policies in relation to the identification of and management of risk and compliance. The Board oversees the effective management of risk and compliance, including delegation to the Board Audit, Risk and Compliance Committee and to management. The Board Audit, Risk and Compliance Committee reports to the Board on the effectiveness of the Risk Management Framework that is in place and all material business risks.

The external audit function, which is separate and independent to the internal audit function, also reviews the consolidated entity’s risk assessment and risk management.

The consolidated entity monitors its exposure to all material business risks including economic, social, governance and environmental risks. The consolidated entity has no material exposure to environment and social sustainability risks, other than in the normal course of business.

Internal Audit

The Board and the Board Audit, Risk and Compliance Committee are yet to implement an internal audit function.

In the absence of an internal audit function, management regularly review the consolidated entity’s risk management and internal control processes to ensure that they meet the evolving needs of the business.

Workplace Health and Safety

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

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Principle 8 – Remunerate fairly and responsibly

The Board Remuneration and Nomination Committee’s Charter includes setting out the terms and conditions by which the Chief Executive Officer and management remuneration is determined. The Board Remuneration and Nomination Committee seeks professional advice from independent external consultants where required. All management receive a base salary and statutory superannuation and are eligible for fringe benefits as well as service and performance-based incentives. The Board Remuneration and Nomination Committee reviews management remuneration annually, as requested by the Chief Executive Officer, by reference to the consolidated entity’s performance, individual performance and comparable information from industry sectors and other listed companies in similar industries.

The consolidated entity recognises the importance of ensuring that any recommendations given in relation to the remuneration of key management personnel provided by remuneration consultants are provided independently of those to whom the recommendations relate.

Management may be invited to participate in the Company’s Equity Incentive Plan, subject to the rules of the Plan. Pursuant to Section 5.3 of the Plan participants must not hedge the value of, or enter into a derivative arrangement in respect of, unvested or vested options.

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Consolidated Financial Statements

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2018

For the year ended 30 June 2018
		2018	2017
	Note	$000	$000
Continuing operations
Revenue		142,236	153,282
On hired labour costs		(110,027)	(120,655)
Gross profit		32,209	32,627
Other income		-	500
Employee benefits expense		(23,832)	(26,183)
Depreciation and amortisation expense	6	(1,143)	(1,127)
Operating rental expense		(3,334)	(3,556)
Other expenses	6	(5,984)	(5,884)
Loss from operating activities		(2,084)	(3,623)
Finance income		11	5
Finance cost		(315)	(206)
Loss before income tax		(2,388)	(3,824)
Income tax(expense)/benefit	7	(178)	100
Loss for the year attributable to the Owners of the Company		(2,566)	(3,724)
Other comprehensive loss
Items that may be subsequently reclassified to profit or loss:
Foreign currency translation differences for foreign
operations		47	(276)
Income tax on other comprehensive loss		-	-
Other comprehensive income/(loss) for the year, net of
income tax		47	(276)
Total comprehensive loss for theyear		(2,519)	(4,000)
		2018	2017
		Cents	Cents
Basic loss per share	19	(2.86)	(4.16)
Diluted loss per share	19	(2.86)	(4.16)
Net tangible assetsper share	19	15.33	18.27

The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes to the Consolidated Financial Statements.

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Consolidated Statement of Financial Position

As at 30 June 2018

As at 30 June 2018
		2018	2017
	Note	$000	$000
Current assets
Cash and cash equivalents	8	2,782	1,788
Trade and other receivables	9	23,855	31,244
Total current assets		26,637	33,032
Non-current assets
Plant and equipment	10	990	1,750
Intangible assets	11	339	226
Total non-current assets		1,329	1,976
Total assets		27,966	35,008
Current liabilities
Trade and other payables	12	11,198	12,875
Debtor finance facility	13	628	3,253
Provisions	14	1,577	1,471
Finance lease liability		-	17
Total current liabilities		13,403	17,616
Non-current liabilities
Provisions	14	488	801
Total non-current liabilities		488	801
Total liabilities		13,891	18,417
Net assets		14,075	16,591
Equity
Contributed equity	17	83,541	83,541
Reserves	18	(1,020)	(1,070)
Accumulated losses		(68,446)	(65,880)
Total equity		14,075	16,591

The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes to the Consolidated Financial Statements.

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Consolidated Statement of Changes in Equity For the year ended 30 June 2018

For the year ended 30 June 2018
	Contributed		Accumulated
	Equity	Reserves	Losses	Total
	$000	$000	$000	$000
Current Year
Balance as at 1 July 2017	83,541	(1,070)	(65,880)	16,591
Loss for the year attributable to the Owners of
the Company	-	-	(2,566)	(2,566)
Other comprehensive income/(loss) for the year
Foreign currency translation differences for
foreign operations	-	47	-	47
Total comprehensive income/(loss)for theyear	-	47	(2,566)	(2,519)
Transactions with the Owners recorded directly
in equity
Equityremuneration reserve	-	3	-	3
Total transactions with the Owners	-	3	-	3
Balance as at 30 June 2018	83,541	(1,020)	(68,446)	14,075

Prior Year
Balance as at 1 July 2016	83,541	(794)	(62,156)	20,591
Loss for the year attributable to the Owners of
the Company	-	-	(3,724)	(3,724)
Other comprehensive loss for the year
Foreign currency translation differences for
foreign operations	-	(276)	-	(276)
Total comprehensive loss for theyear	-	(276)	(3,724)	(4,000)
Transactions with the Owners recorded directly
in equity
Equityremuneration reserve	-	-	-	-
Total transactions with the Owners	-	-	-	-
Balance as at 30 June 2017	83,541	(1,070)	(65,880)	16,591

The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes to the Consolidated Financial Statements.

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Consolidated Statement of Cash Flows

For the year ended 30 June 2018

Consolidated Statement of Cash Flows For the year ended 30 June 2018
		2018	2017
	Note	$000	$000
Cash flows from operating activities
Receipts from customers		205,418	246,910
Payments to suppliers and employees		(187,922)	(233,143)
Interest received		11	5
Interest and other borrowing costs paid		(315)	(206)
Goods and services tax paid		(12,830)	(13,327)
Foreign income taxpaid		(245)	-
Net cashprovided byoperatingactivities	21	4,117	239
Cash flows from investing activities
Purchase of plant and equipment		(315)	(799)
Payments for intangible assets		(230)	(225)
Net cash used in investingactivities		(545)	(1,024)
Net increase/(decrease) in cash held		3,572	(785)
Cash and cash equivalents at the beginning of the year		(1,465)	(404)
Effect of exchange rates on cash holdings in foreign currencies		47	(276)
Cash and cash equivalents at the end of theyear	8	2,154	(1,465)

The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes to the Consolidated Financial Statements.

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Note 1 Reporting Entity

The Company is a company limited by shares, incorporated and domiciled in Australia. The consolidated financial statements represent the consolidated entity as at and for the financial year ended 30 June 2018.

Note 2 Basis of Preparation

The consolidated financial statements are general purpose financial statements prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The consolidated financial statements comply with the International Financial Reporting Standards (“IFRS”) and interpretations adopted by the International Accounting Standards Board (“IASB”).

The consolidated entity incurred a loss for the year of $2,566k and generated cash from operating activities of $4,117k. As such the consolidated entity is reliant on the existence and continuity of the debtor finance facility disclosed at Note 13 to meet its short-term working capital requirements. The Board have adopted, and consider it appropriate to adopt, the basis of going concern in preparing the financial statements. In making this assessment the Directors have assumed continuity of the debtor finance facility and have considered the drawdown conditions and overall limit associated with the facility in the context of the consolidated entity’s forecast performance and cash flows.

All amounts are presented in Australian dollars, unless otherwise noted.

The consolidated financial statements were authorised for issue by the Directors on the 30[th] day of August 2018.

Note 3 Significant Accounting Policies

(a) Principles of consolidation

The Company and its controlled entities are collectively referred to in the consolidated financial statements as the consolidated entity. The consolidated financial statements incorporate the assets and liabilities of the consolidated entity as at 30 June 2018 and the results of all controlled entities for the year ended 30 June 2018.

The consolidated entity controls the controlled entities when it has power over the entities, it is exposed, or has rights, to variable returns from its involvement with the entities and has the ability to affect those returns through its power over the entities. The consolidated entity reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the control elements.

Entities 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 acquisition method of accounting is used to account for the acquisition of entities by the consolidated entity.

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 controlled entities have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

Non-controlling interests, presented as part of equity, represent the portion of an entity’s profit or loss and net assets that is not held by the consolidated entity. The consolidated entity attributes total comprehensive income or loss of controlled entities between the owners of the parent entity and the non-controlling interests based on their respective ownership interests.

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(b) Revenue

Revenue is measured at the fair value of the consideration received or receivable. The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the consolidated entity and specific criteria have been met for each of the consolidated entity activities as described below.

Revenue is recognised for the major business activities as follows:

(i) Permanent Recruitment Revenue

Permanent recruitment revenue is brought to account once the sourcing and placement services of the consolidated entity are completed and the full time, part-time or fixed-term employee commences employment with the customer. Services provided but not yet billed are taken up as accrued revenue.

(ii) Contingent Recruitment Revenue

Contingent recruitment revenue is brought to account once the services of the temporary contract worker, independent contractor or consultant sourced and contracted by the consolidated entity are provided to the customer. Services provided but not yet billed are taken up as accrued revenue.

(iii) Payroll Services Revenue

Payroll services revenue is brought to account once the services of the temporary contract worker, independent contractor or consultant sourced by the customer and contracted by the consolidated entity are provided to the customer. Services provided but not yet billed are taken up as accrued revenue.

(iv) Interest Income

Interest income is recognised on a time proportion basis using the effective interest method.

(c) Income tax

Income tax expense comprises current and deferred 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 reporting date.

Deferred income tax is recognised 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 profit or loss or taxable income.

Deferred income 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 recorded in the consolidated statement of profit or loss and other comprehensive income except where it relates to items that may be recorded directly to equity, in which case the deferred tax is recorded directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future taxable income will be available against which they 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.

Tax Consolidation Legislation

The Company and its wholly-owned Australian subsidiaries have formed a tax consolidated group under the tax consolidation legislation whereby the Company is the head entity within the tax consolidated group and all members are taxed as a single entity.

Income tax expense/benefit, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax consolidated group are recognised in the separate financial statements of the members of the tax consolidated group using the “separate taxpayer within group”

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approach by reference to the carrying amounts in the separate financial statements of each entity and the tax values applying under tax consolidation. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the tax consolidated group are recognised by the Company (as head entity in the tax consolidated group).

Due to the existence of a tax funding arrangement between the members of the tax consolidated group, amounts are recognised as payable to or receivable by the Company and each member of the group in relation to the tax contribution amounts paid or payable between the Company and the other members of the group in accordance with the arrangement.

(d) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”) except where the amount of GST incurred is not recoverable from the Australian Taxation 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 cash flows arising from investing or financing activities which are recoverable from or payable to the Australian Taxation Office are presented as operating cash flows.

(e) Foreign currency translation

(i) Functional and Presentation Currency

Items included in the financial statements of each entity that is included in 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 the consolidated entity’s functional and presentation currency.

(ii) Currency Translation

In preparing the financial statements of each entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each financial year, monetary items denominated in foreign currencies are translated at the exchange rates prevailing at the reporting date. Nonmonetary items carried at fair value that are denominated in foreign currencies are translated at the exchange rates prevailing at the date when the fair value was determined.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

(iii) Foreign Operations

The results and financial position of all the entities included in 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:

Assets and liabilities are translated at the exchange rates at the reporting date;
Income and expenses are translated at average exchange rates during the financial year unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions; and
All resulting exchange differences are recognised in other comprehensive income/(loss) and presented in the foreign currency translation reserve in 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 exchange rates at the reporting date.

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(f) Financial instruments

Classification

The consolidated entity classifies its financial assets as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determine the classification of investments at initial recognition.

(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 current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables represent trade and other receivables on the consolidated statement of financial position.

(ii) Financial Liabilities

Non-derivative financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost. Financial liabilities comprise trade payables and the debtor finance facility.

(iii) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and options are recognised as a deduction from equity, net of any tax effects.

Recognition and Derecognition

Regular purchases and sales of financial assets are recognised or derecognised on trade-date being the date on which the consolidated entity commits to purchase or derecognise the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

(g) Impairment of non-financial 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 in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is the net present value of the future cash inflows. It is determined using a present value model based on management’s estimate of future net cash inflows from continued use, including movements in working capital and subsequent disposal of assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Impairment losses in respect of goodwill are not reversed.

(h) Cash and cash equivalents

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

Cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts;
Investments in money market instruments with less than 14 days to maturity; and
The debtor finance facility as shown in current liabilities in the consolidated statement of financial position.

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(i) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less impairment losses. 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 uncollectable are written-off to profit or loss. An impairment allowance on 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 trading terms. 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 allowance 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 consolidated statement of profit or loss and other comprehensive income in “other expenses”. When a trade receivable for which a provision for impairment has been recognised becomes uncollectable in a subsequent period, it is written-off against the provision account. Subsequent recoveries of amounts previously written-off are credited against “other expenses” in the consolidated statement of profit or loss and other comprehensive income.

(j) Plant and equipment

Plant and equipment is brought to account at cost less, where applicable, any accumulated depreciation and any accumulated impairment losses. The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of its recoverable amount.

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 are discounted to their present values in determining recoverable amounts.

The depreciable amount of all fixed assets, including capitalised leased assets, are 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. Cost is determined as the fair value of the consideration at the date of acquisition plus costs directly attributable to bringing the assets to a working condition for their intended use.

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 profit or loss in the year of disposal.

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

Class of asset	Rate	Method
Plant and equipment	9% - 60%	Straight Line
Leasehold improvements	11% - 50%	Straight Line

(k) Intangible assets

Software development costs are capitalised where it is expected they will contribute to a future period financial benefit through revenue generation and/or expenditure reduction. Otherwise such costs are expensed in the period in which they are incurred. Capitalised software development costs include external direct costs of materials and services, direct payroll and payroll related costs of employee time spent on the project. These costs are amortised over periods between three and five years on the basis of the expected useful life of the resulting software.

Unamortised costs are reviewed at each reporting date to determine the amount (if any) that is no longer recoverable and any amount so identified is written-off.

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(l) 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 the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. 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.

(i) Recruitment Services Under Guarantee

A provision is recognised to represent the liability associated with refunds for permanent placement fall-outs within the guarantee period provided to customers. This is based on the average permanent placement fees and historical experience with fall-outs.

(ii) Lease Incentives

Lease incentives under operating leases for premises are recognised as a liability and amortised on a straight-line basis over the lease term.

(iii) Make Good on Leased Premises

A provision is recognised for the expected cost to restore leased premises to their original condition at the expiration of the operating lease. The provision is based on an estimate of the costs to fulfil the obligations within individual operating leases.

(iv) Onerous Leases

The provision for onerous operating leases represents the present value of the future lease payments that the consolidated entity is presently obligated to make under non-cancellable onerous operating leases, less revenue expected to be earned on the lease, including estimated future sub-lease revenue, where applicable. The estimate may vary as a result of changes in the utilisation of the leased premises and sub-lease arrangements where applicable.

(m) Employee benefits

Provision is made for the liability for employee benefits arising from services rendered by employees to the reporting date. Short-term employee benefits expected to be settled within one year together with entitlements arising from wages, salaries and annual leave have been measured as the amounts expected to be paid when the liability is settled plus related on-costs. Other long-term employee benefits payable and annual leave expected to be settled in more 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 on behalf of employees to defined contribution superannuation funds and are charged as expenses when incurred.

Share Based Payments

The fair value of options granted is recognised as an employee benefits 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 employee benefits expense recognised in the equity reserve is based on the revised number of options that have vested as at the reporting date. The impact of the revision to original estimates, if any, is recognised in the consolidated statement of profit or loss and other comprehensive income with a corresponding adjustment to equity.

Termination Benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The consolidated entity recognises termination benefits at the earlier of when the offer of the termination benefit can no longer be withdrawn and when the costs for a restructuring that is within the scope of AASB 137

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Provisions, Contingent Liabilities and Contingent Assets involving the payment of a termination benefit is recognised. If the termination benefits are payable more than 12 months after the reporting date, they are discounted to their present value.

(n) Leases

Leases of 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 recognised as assets and liabilities at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments each determined at the inception of the lease. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability.

The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. If there is no reasonable certainty of ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

Leases of assets where substantially all the risks and benefits remain with the lessor are classified as operating leases. Lease payments are recognised in the consolidated statement of profit or loss and other comprehensive income on a straight-line basis over the term of the lease.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of lease expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(o) Earnings/(loss) per share

(i) Basic Earnings/(Loss) per Share

Basic earnings/(loss) per share is calculated by dividing the profit or loss 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 financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

(ii) Diluted Earnings/(Loss) per Share

Diluted earnings/(loss) per share is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year, adjusted for the effects of all dilutive potential ordinary shares which comprise relevant share options granted to employees.

Potential ordinary shares are anti-dilutive when their conversion to ordinary shares would increase earnings per share or decrease loss per share from continuing operations. The calculation of diluted earnings/(loss) per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an anti-dilutive effect on earnings per share.

(p) 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 financial year but not distributed at the reporting date.

(q) Critical accounting estimates and judgements

(i) Income Taxes

The consolidated entity is subject to income taxes in Australia and jurisdictions where it has foreign operations. Judgement is required in determining the consolidated entity’s provision for income taxes.

(ii) Impairment of Receivables

Included in trade receivables is a provision for impairment as disclosed in Note 9. At the reporting date this amount represents balances that are uncertain in relation to collectability.

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(r) Segment reporting

The consolidated entity determines and presents operating segments based on the information that is provided internally to the Board who are the consolidated entity’s chief operating decision maker.

An operating segment is a component of the consolidated entity that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the consolidated entity’s other components. All operating segment results are reviewed regularly by the Board in order to assess the performance of each segment and make decisions about the allocation of resources.

The consolidated entity is organised around four operating segments across two geographic regions. In Australia and New Zealand, these segments are Specialist Recruitment, On Demand and People Services operating under the “Ignite” brand while in China it is Specialist Recruitment operating under the “Lloyd Morgan” brand.

The following summary describes the operations in each of the consolidated entity’s reportable segments.

Australia and New Zealand

(i) Specialist Recruitment

The provision of permanent and contingent recruitment and payroll services. Permanent recruitment comprises the sourcing and placement of full time, part-time and fixed-term employees with customers. Contingent recruitment comprises the sourcing and placement of temporary contract workers, independent contractors and consultants contracted by the consolidated entity. Payroll services comprises the placement of temporary contract workers, independent contractors and consultants sourced by the customer and contracted by the consolidated entity.

(ii) On Demand

The utilisation of an extensive network of pre-qualified information technology resources to deliver on demand solutions for customers in Australia and New Zealand. Customer solutions may include outsourcing the end-to-end management of short, medium or long-term projects or the provision of flexibility to scale workforces up or down as required to complete projects, without the overheads involved with permanent employment.

(iii) People Services

The provision of outsourced recruitment and human resource consulting services. Outsourced recruitment services are underpinned by innovative and valid assessment methodologies and utilise online screening and assessment tools to deliver quality outcomes on high volume outsourced recruitment events, including: graduate recruitment and bulk recruitment campaigns. Human resource consulting services support organisational change processes through organisational design, capability assessment, workforce planning and job sizing services.

China

Specialist Recruitment

The provision of permanent recruitment services. Permanent recruitment comprises the sourcing and placement of full time, part-time and fixed-term employees with customers.

(s) Rounding of amounts

The Company has applied the relief available under ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191 dated 24 March 2016, and in accordance with that Corporations Instrument, amounts in the financial report have been rounded to the nearest thousand dollars or in certain cases to the nearest dollar, unless otherwise indicated. Auditors’, Directors’ and executive remuneration has been rounded to the nearest dollar.

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(t) New accounting standards and interpretations

New and Revised AASB Standards Affecting Disclosures and/or Amounts Reported in the Consolidated Financial Statements

In the current financial year, the consolidated entity adopted a number of new and revised standards issued by the Australian Accounting Standards Board (“AASB”) that are relevant including:

AASB 1048 Interpretation of Standards
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle

Impact of the Application of New and Revised AASB Standards

The Board have considered the impact of all new and revised AASB standards on the disclosures and/or the amounts recognised in the consolidated financial statements. The consolidated entity does not intend to adopt any of these pronouncements before their effective date.

(i) Standards in Issue Not Yet Effective

At the date of authorisation of the consolidated financial statements the standards listed below were in issue but not yet effective and were relevant to the consolidated entity.

	Effective for annual	Expected to be initially
	reporting periods	applied in the financial
Standard mandatorybeyond June 2018	beginningon or after	year ending
AASB 9 “Financial Instruments”, and the relevant amending standards	1 January 2018	30 June 2019
AASB 15 “Revenue from Contracts with Customers”, AASB 2014-5
“Amendments to Australian Accounting Standards arising from AASB 15”, AASB
2015-8 “Amendments to Australian Accounting Standards – Effective date of
AASB 15” and AASB 2016-3 “Amendments to Australian Accounting Standards
– Clarifications to AASB 15”	1 January 2018	30 June 2019
AASB 16 “Leases”	1 January 2019	30 June 2020
AASB 2015-10 “Amendments to Australian Accounting Standards – Effective
Date of Amendments to AASB 10 and AASB 128”	1 January 2018	30 June 2019
AASB 2016-5 “Amendments to Australian Accounting Standards – Classification
and Measurement of Share-based Payment Transactions”	1 January 2018	30 June 2019
AASB 2017-1 “Amendments to Australian Accounting Standards – Transfers of
Investment Property, Annual Improvements 2014-2016 Cycle and Other
Amendments”	1 January 2018	30 June 2019

(ii) Impact of the Application of Standards Not Yet Adopted

The Board have considered the impact of all new accounting standards that are relevant to the consolidated entity as set out below.

AASB 9 Financial Instruments

AASB 9 Financial Instruments (revised December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) replace AASB 139 Financial Instruments: Recognition and Measurement.

AASB 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculation of impairment of financial assets and new general hedge accounting requirements. It also carries forward guidance on recognition and derecognition of financial instruments from AASB 139. The standard is mandatory for reporting periods beginning on or after 1 January 2018. Retrospective application is required with certain exceptions, however, restatement of comparatives is not required.

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The consolidated entity does not intend to early adopt the standard and will apply the new guidance from 1 July 2018 with the practical expedients permitted under the standard, however, comparatives for 2018 will not be restated.

Accordingly, the consolidated entity has undertaken an assessment of the classification and measurement impacts of AASB 9 and determined the following:

the new standard will not have a significant impact on the classification of the financial assets of the consolidated entity;
the new standard will not have an impact on the financial liabilities of the consolidated entity as none of its financial liabilities are held at fair value through profit or loss;
the consolidated entity does not enter into any hedge accounting transactions;
the new standard will not have a material impact on the loss allowance for financial assets; and
the new standard will require additional new disclosures surrounding credit risk and expected credit losses.

AASB 15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15, AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15 and AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15 replace AASB 118 Revenue.

AASB 15 establishes a comprehensive framework for determining the timing and quantum of revenue recognised. The core principle of the new standard is that revenue is recognised when control of a good or service underlying a particular performance obligation is transferred to a customer. Specifically, the standard introduces a five-step approach to revenue recognition:

Step 1 – Identify the contract with a customer;

Step 2 – Identify the performance obligations in the contract;

Step 3 – Determine the transaction price;

Step 4 – Allocate the transaction price to the performance obligations in the contract; and

Step 5 – Recognise revenue when (or as) a performance obligation is satisfied.

The standard is mandatory for reporting periods beginning on or after 1 January 2018. The standard permits either a full retrospective approach or a modified retrospective approach to adoption.

The consolidated entity does not intend to early adopt the standard and will apply the new guidance from 1 July 2018 with a modified retrospective approach to adoption.

The consolidated entity recognises revenue from the provision of services as disclosed in Note 3(b). The new standard requires revenue to be recognised when control of the services transfers to the customer. The consolidated entity has reviewed its contracts with customers across its two geographic regions and three service lines as described in Note 3(r) and determined the following:

Specialist Recruitment: Permanent – The services are the sourcing and placement of full-time, part-time or fixed term employees for customers who are governed by a contract which specifies the contingent transaction price. Control of the services transfers to the customer when the employee commences employment at which point the placement fees are recognised as revenue.

Specialist Recruitment: Contingent – The services are the sourcing, placement and payment of temporary contract workers, independent contractors and consultants for customers who are governed by a contract which specifies the transaction price which is generally on an hourly or daily basis. Control of the services transfers to the customer when the contracted hours are provided at which point the fees are recognised as revenue.

Specialist Recruitment: Payroll Services – The services are the payment of temporary contract workers, independent contractors and consultants for customers who are governed by a contract which specifies the transaction price which is generally on an hourly or daily basis. Control of the services transfers to the customer when the contracted hours are provided at which point the fees are recognised as revenue.

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On Demand – The services are the sourcing and provision of skilled information technology resources for customers who are governed by a contract which specifies the transaction price either on a fixed service or hourly rate basis. Control of the services transfers to the customer when the fixed service or contracted hours are provided at which point the fees are recognised as revenue.

People Services – The services are the provision of human resource and consulting services for customers who are governed by a contract which specifies the fixed transaction price, milestones and deliverables. Control of the services transfers to the customer when the deliverables are met at which point the proportion of fees earnt are recognised as revenue.

China – The services are the sourcing and placement of full-time, part-time or fixed term employees for customers who are governed by a contract which specifies the contingent transaction price. Control of the services transfers to the customer when the employee commences employment at which point the placement fees are recognised as revenue.

Management are currently finalising their review of contracts with customers and do not expect there to be a material impact on the consolidated entity’s results, valuation and classification of its assets and liabilities, nor on its statement of cash flows. The consolidated entity’s business processes will remain unchanged and the result from operating activities will also remain unchanged.

AASB 16 Leases

AASB 16 will have a material impact on the reporting of lease assets and lease liabilities. The operating lease commitments of $7,637k in Note 16 will be capitalised on the balance sheet and accounted for as right-of-use assets and lease liabilities. As such there will be an impact to the result from operating activities and gearing ratio.

(u) Comparatives

Comparative amounts have been reclassified where necessary to provide consistency with current period disclosures.

Note 4 Financial Risk Management

The Board of the Company has a formally constituted Board Audit, Risk and Compliance Committee (the “Committee”) which operates under a charter approved by the Board. The Committee’s 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 framework and risk management strategies and processes in relation to specific risks categorised as financial, economic, operational, compliance, intellectual capital, security and human capital.

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

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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 cash flow forecasting and debt covenant monitoring for liquidity risks.

The consolidated entity holds the following financial instruments:

		2018	2017
	Note	$000	$000
Financial assets
Cash and cash equivalents	8	2,782	1,788
Trade receivables (net of provision for impairment)	9	17,848	21,238
Other debtors	9	653	1,079
Total financial assets		21,283	24,105
Financial liabilities
Trade and other payables	12	11,198	12,875
Debtor finance facility	13	628	3,253
Finance lease liability		-	17
Total financial liabilities		11,826	16,145

(a) Market Risk

Foreign Exchange Risk

The consolidated entity operates internationally and is primarily exposed to foreign exchange risk arising from foreign currency exposures to the Chinese renminbi (CNY), the Hong Kong dollar (HKD) and the New Zealand dollar (NZD).

Foreign Currency Risk

To limit the exposure to foreign currency risk, the consolidated entity’s foreign controlled entities’ transactions are carried out in their local currency such that cash inflows and outflows are largely offset to minimise the impact of foreign currency translation. The consolidated entity does not undertake any hedging activities with respect to day-to-day foreign currency exposures.

The consolidated entity’s exposure to foreign currency risk was as follows, based on Australian dollar amounts:

amounts:
	CNY	HKD	NZD
	$000	$000	$000
30 June 2018
Cash and cash equivalents	12,792	-	121
Trade and other receivables	12,565	2	467
Trade and otherpayables	(8,222)	2	(70)
Net exposure on consolidated statement of financialposition	17,135	4	518
30 June 2017
Cash and cash equivalents	7,044	-	488
Trade and other receivables	15,463	4	577
Trade and otherpayables	(9,170)	-	(173)
Net exposure on consolidated statement of financialposition	13,337	4	892

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The following foreign exchange rates applied during the financial year:

	Average Rate Year End Spot Rate
	2018 2017 2018 2017
CNY HKD NZD	5.046 5.122 4.889 5.207 6.051 5.850 5.800 6.003 1.085 1.057 1.090 1.050

Currency Sensitivity on Consolidated Entity

The following table details the consolidated entity’s sensitivity to a 10% increase and a 10% decrease in the relevant foreign currency against the Australian dollar. A 10% sensitivity represents management’s assessment of the reasonably possible movement in foreign exchange rates.

	CNY	HKD	NZD
	$000	$000	$000
Impact of a 10% increase in foreign currency
against consolidated balances
30 June 2018
Net current financial assets	350	-	48
Impact on net loss after tax	(336)	92	(32)
30 June 2017
Net current financial assets	212	-	165
Impact on net loss after tax	13	3	(27)
Impact of a 10% decrease in foreign currency
against consolidated balances
30 June 2018
Net current financial assets	(350)	-	(48)
Impact on net loss after tax	336	(92)	32
30 June 2017
Net current financial assets	(212)	-	(165)
Impact on net loss after tax	(13)	(3)	27

Cash Flow and Fair Value Interest Rate Risk

The Company’s policy is to utilise its debtor finance facility to accommodate its short-term working capital requirements that vary with its on-hired labour funding cycle whilst minimising its interest costs. As at the reporting date the consolidated entity had the following variable rate borrowings:

	Weighted Average Interest Rate Balance
	2018 2017 2018 2017 % % $000 $000
Debtor finance facility (Note 13)	7.4 6.3 628 3,253

Consolidated Entity Sensitivity

	1% Increase in Weighted Average Interest Rate 1% Decrease in Weighted Average Interest Rate
	2018 2017 2018 2017 $000 $000 $000 $000
Impact on net loss after tax	(29) (19) 29 19

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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.

(b) Credit risk

Credit risk is managed on a consolidated entity basis. Credit risk arises from credit exposures to customer trade 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 provide 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 is monitored internally by the consolidated entity’s management. Trade receivable reports are submitted regularly to the Board 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 provision for impairment of trade receivables is considered a reasonable approximation of fair value due to their short-term nature.

The following table demonstrates the consolidated entity’s aged trade receivables at the reporting date aged from their due dates.

Consolidated Entity Receivables

	Trade Receivables Aged From Due Date
	Current 1-30 Days 31-60 Days 61-90 Days 90+ Days Total $000 $000 $000 $000 $000 $000
30 June 2018 Consolidated entity receivables	14,442 2,766 573 256 124 18,161 80% 15% 3% 1% 1% 100%
30 June 2017 Consolidated entity receivables	17,151 3,231 738 212 161 21,493 80% 15% 3% 1% 1% 100%

All of the consolidated entity’s trade and other receivables have been reviewed for indicators of impairment. As a result of this review there were doubts over the recoverability of certain trade receivables and a provision of $313k (2017: $255k) has been recorded. The provision for impairment includes amounts that are not considered to be recoverable from debtors and amounts that are expected to be credited to debtors as disclosed in Note 9.

(c) Liquidity risk

The consolidated entity manages liquidity risk by monitoring daily cash flows and ensuring that adequate finance facilities are maintained. The consolidated entity maintains cash and cash equivalents to meet its liquidity requirements through its debtor finance facility and also raises equity when required. Funding for long-term liquidity needs is secured by having adequate finance facilities in place.

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

Refer to Note 13 for a summary of the debtor finance facility as at the reporting date.

The carrying values of trade payables are considered to approximate their fair values due to their shortterm nature. Trade payables are settled within six months.

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Note 5 Segment Reporting

The consolidated entity is organised around four operating segments across two geographic regions. In Australia and New Zealand, these segments are Specialist Recruitment, On Demand and People Services while in China it is Specialist Recruitment. Segment information for the financial year is as follows:

(a) Segments

	Australia an	Australia an	d New Zealand China emand People Services Specialist Recruitment 2017 2018 2017 2018 2017 $000 $000 $000 $000 $000 9,778 2,674 2,697 11,212 10,347 - - - - - 9,778 2,674 2,697 11,212 10,347 527 368 (630) 125 314 New Zealand China 2018 2017 2018 2017 $000 $000 $000 $000 1,957 2,604 11,212 10,347 - - 7 3 1,957 2,604 11,219 10,350 - - 231 414	China	Consolidated
	Specialist Recruitment On D 2018 2017 2018 $000 $000 $000			Specialist Recruitment 2018 2017 $000 $000	2018 2017 $000 $000
Operating segments Segment revenue – external sales (-) Reclassification of directgross margin	159,440 191,016 9,386 (40,476) (60,556) -			11,212 10,347 - -	182,712 213,838 (40,476) (60,556)
Consolidated revenue	118,964 130,460 9,386			11,212 10,347	142,236 153,282
Reportable segments Profit/(loss) before tax		3,859 3,366 526		125 314	4,878 3,577
Less: Corporate overheads Consolidated loss before tax		Australia 2018 2017 $000 $000 129,067 140,331 4 2 129,071 140,333 1,098 1,562 y revenue.	New Zealand 2018 2017 $000 $000 1,957 2,604 - - 1,957 2,604 - -		(7,266) (7,401)
					(2,388) (3,824)
					Consolidated
					2018 2017 $000 $000
External sales(1) Interest revenue					142,236 153,282 11 5
Total revenue Non-current assets					142,247 153,287 1,329 1,976
(1) Reconciles to stat	utor

(b) Segment accounting policies

Segment information is prepared in accordance with the accounting policies of the consolidated entity as disclosed in Note 3(r) and accounting standard AASB 8 Segment Reporting. The consolidated entity’s on hired labour revenue contributes 90% (2017: 91%) of the consolidated revenue while permanent recruitment services contributes 10% (2017: 9%). During the financial year, there were no changes in segment accounting policies that had a material effect on the segment information.

(c) Income

The consolidated entity derived income from the provision permanent recruitment services, contingent recruitment services and payroll services for government, non-government entities and private customers throughout the Asia-Pacific region.

(d) Inter-segment transactions

The pricing of inter-segment transactions is on the same basis as prices charged on transactions with parties outside the consolidated entity. Such transactions are eliminated on consolidation, with the exception of margin earned on the transactions where the services will ultimately be provided outside of the consolidated entity.

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(e) Information about major customers

Included in revenue arising from specialist recruitment in Australia and New Zealand of $159,440k (2017: $191,016k) are revenues of approximately $27,895k (2017: $52,473k) which arose from sales to the consolidated entity’s two largest customers. The largest customer contributed $16,611k (2017: $27,318k) and the second largest customer accounted for $11,284k (2017: $25,155k). No other single customer contributed 7% or more to the consolidated entity’s revenue for 2018.

Note 6 Expenses

Note 6 Expenses
	Consolidated
	2018 2017 $000 $000
Depreciation and amortisation Plant and equipment Leasehold improvements Capitalised software development costs	388 559 638 549 117 19
Total depreciation and amortisation expense	1,143 1,127
Other expenses Provision for impairment Consultancy fees Professional fees Insurances Marketing and advertising costs Office expenses Software licences and services Other operatingoverheads	75 153 501 286 509 645 422 271 292 430 338 441 752 475 3,095 3,183
Total other expenses	5,984 5,884
Payments to defined contribution superannuationplans	2,341 2,597

Note 7 Income Tax (Expense)/Benefit

	Consolidated
	2018 2017 $000 $000
The prima facie tax on loss before income tax is reconciled to the income tax benefit as follows: Prima facie tax benefit on loss before income tax at 30% Add tax effect of: Non-deductible expenses Current year losses for which no deferred tax asset is recognised Foreign tax provision adjustment Foreign tax rate adjustment Permanent difference arising from foreign tax treatment Prioryear foreign tax losses recognised(1)	717 1,147 (22) (20) (796) (1,127) 67 100 (37) - (714) - 607 -
Total income tax(expense)/benefit	(178) 100

(1) The Company’s subsidiary Lloyd Morgan China Limited operates on a calendar fiscal year for local statutory purposes and had taxable income during the year ended 30 June 2018.

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Note 8 Cash and Cash Equivalents

Note	Consolidated
	2018 2017 $000 $000
Cash at bank and on hand Debtor finance facility(1) 13	2,782 1,788 (628) (3,253)
Net cash/(debt)	2,154 (1,465)

(1) The debtor finance facility is equivalent to a revolving overdraft facility and as such is classified as cash for the purposes of the statement of cash flows.

Note 9 Trade and Other Receivables

	Consolidated
	2018 2017 $000 $000
Trade receivables Provision for impairment	18,161 21,493 (313) (255)
Accrued income Prepayments Other debtors	17,848 21,238 4,856 8,493 498 434 653 1,079
Total trade and other receivables	23,855 31,244

All trade and other receivables are current and are non-interest bearing. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value due to their short-term nature. Refer to the disclosure in Note 4 regarding financial risk management.

(a) Movement in the provision for impaired trade receivables

		Consolidated
	2018	2017
	$000	$000
Balance at the beginning of the year	255	202
Provision for impairment recognised during the year	75	153
Amounts written-off duringtheyear as uncollectible	(17)	(100)
Balance at the end of theyear	313	255

All of the consolidated entity’s trade and other receivables have been reviewed for indicators of impairment. The provision in respect of trade and other receivables is used to record impairment losses unless the consolidated entity is satisfied that no recovery of the amounts owing are possible at which point they are considered irrecoverable and are written-off against the financial asset directly. The creation and release of the provision for impaired receivables has been included in “other expenses” in the consolidated statement of profit or loss and other comprehensive income.

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(b) Past due but not impaired

As at the reporting date, trade receivables of $3,406k, relating to a number of customers for whom there was no history of default, were past due but not impaired. The ageing analysis of these past due but not impaired trade receivables is as follows:

	Past Due But Not Impaired Trade Receivables Aged From Due Date
	1-30 Days 31-60 Days 61-90 Days 90+ Days Total $000 $000 $000 $000 $000
30 June 2018 Trade receivables	2,766 573 67 - 3,406
30 June 2017 Trade receivables	3,231 738 118 - 4,087

Note 10 Plant and Equipment

Note 10 Plant and Equipment
	Consolidated
	2018 2017 $000 $000
Plant and equipment, at cost Accumulated depreciation	1,462 1,884 (1,012) (1,137)
	450 747
Leasehold improvements, at cost Accumulated depreciation	2,695 2,520 (2,155) (1,517)
	540 1,003
Totalplant and equipment	990 1,750

Movements in carrying amounts

Movements in carrying amounts
	Plant and Equipment Leasehold Improvements Total
	2018 2018 2018 $000 $000 $000
Balance at the beginning of the year Additions Disposal Depreciation expense	747 1,003 1,750 140 175 315 (49) - (49) (388) (638) (1,026)
Balance at the end of theyear	450 540 990
	2017 2017 2017 $000 $000 $000
Balance at the beginning of the year Additions Disposal Depreciation expense	1,028 1,046 2,074 284 515 799 (6) (9) (15) (559) (549) (1,108)
Balance at the end of theyear	747 1,003 1,750

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Note 11 Intangible Assets

Note 11 Intangible Assets
	Consolidated
	2018 2017 $000 $000
Capitalised software development costs Accumulated amortisation	2,932 2,496 (2,612) (2,495)
Work inprogress	320 1 19 225
Total intangible assets	339 226

Movements in carrying amounts

Movements in carrying amounts
	2018	2017
	$000	$000
Balance at the beginning of the year	226	20
Additions	230	225
Amortisation expense	(117)	(19)
Balance at the end of theyear	339	226

Intangible assets have finite useful lives. The current year amortisation expense in respect of intangible assets is included under depreciation and amortisation expense in the consolidated statement of profit or loss and other comprehensive income.

All trade and other payables are non-interest bearing. The carrying value of trade and other payables is considered a reasonable approximation of fair value due to their short-term nature. Trade payables are settled within six months.

Note 13 Debtor Finance Facility

The Company relies on a secured debtor finance facility to meet its short-term working capital requirements. On 1 February 2018 the company increased the limit on this facility from $10,000k to $15,000k for 24 months from that date. The facility is subject to certain drawdown conditions and as at the reporting date the approved drawdown was $9,688k (2017: $7,452k) and the applicable interest rate was 7.54% (2017: 7.77%).

was 7.54% (2017: 7.77%).
	Consolidated
	2018 2017 $000 $000
Approved drawdown under debtor finance facility Amount utilised under debtor finance facility	9,688 7,452 (628) (3,253)
Unused debtor finance facility	9,060 4,199

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Note 14 Provisions

Note 14 Provisions
	Consolidated
	2018 2017 $000 $000
Current Employee benefits Lease incentives Make good on leased premises Recruitment services underguarantee	1,088 1,067 323 374 136 - 30 30
Total currentprovisions	1,577 1,471
Non-current Employee benefits Lease incentives Makegood on leasedpremises	138 259 248 303 102 239
Total non-currentprovisions	488 801

Movements in provisions

Movements in provisions during the financial year, other than employee benefits, are set out below:

	Lease Incentives Recruitment Services Under Guarantee Make Good on Leased Premises Total
	$000 $000 $000 $000
Balance at the beginning of the year Additional provision recognised Amounts utilised	677 30 239 946 42 - 17 59 (148) - (18) (166)
Balance at the end of theyear	571 30 238 839

Note 15 Deferred Tax Assets

There are unrecognised deferred income tax assets in relation to Australian tax losses (on revenue account) of $13,318k (2017: $8,963k). Unrecognised deferred income tax assets are reassessed at each reporting date and will be recognised to the extent that the Directors consider it probable that future taxable profit will allow the deferred income tax asset to be realised.

Note 16 Operating Lease Commitments

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

follows:
	Consolidated
	2018 2017 $000 $000
Not later than one year Later than oneyear but not later than fiveyears	3,381 3,978 4,256 5,460
	7,637 9,438

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(a) Operating leases

Operating lease commitments relate to leases for 13 office locations (2017: 13) in Australia and China with lease terms of between 6 months and 5 years. The consolidated entity does not have an option to purchase the leased premises at the expiry of the lease terms. Certain lease arrangements contain clauses for market rental reviews and options to renew the lease terms.

(b) Financial guarantees

Bank guarantees for $1,034k (2017: $1,034k) have been provided on behalf of the Company to third parties in relation to the consolidated entity’s operating leases. In the event of default, the issuing bank has recourse to the Company for these amounts.

Note 17 Contributed Equity

The Company does not have authorised capital or par value in respect of its listed ordinary shares. All issued ordinary shares are fully paid and rank equally with regards to the Company’s residual assets.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The holders of ordinary shares are entitled to receive dividends as entitled to one vote per share at meetings of the Company.	declared from time to time and
	Consolidated
	2018 2017 $000 $000
Paid up share capital at the beginning of the year Paid upshare capital at the end of theyear	83,541 83,541 83,541 83,541
	No. No.
Issued shares at the beginning of the year Issued shares at the end of theyear	89,582,175 89,582,175 89,582,175 89,582,175

Capital Risk Management

The Company’s objective when managing capital is to safeguard the ability to continue as a going concern, so that the Company can continue to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to minimise the cost of capital.

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

The Company monitors capital on the basis of its 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.

Note	Consolidated
	2018 2017 $000 $000
Cash and cash equivalents 8 Debtor finance facility 13	2,782 1,788 (628) (3,253)
Net cash/(debt) 8 Total equity	2,154 (1,465) (14,075) (16,591)
Total capital	(11,921) (18,056)
Gearingratio	0.0% 8.1%

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Note 18 Reserves

Note 18 Reserves
	Consolidated
	2018 2017 $000 $000
Balance at the beginning of the year Foreign currency translation differences for foreign operations Equityremuneration reserve	(1,070) (794) 47 (276) 3 -
Balance at the end of theyear	(1,020) (1,070)

Foreign Currency Translation

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

Note 19 Dividends and Per Share Information

(a) Dividends

On 30 August 2018 the Directors resolved not to declare a final dividend for the year ended 30 June 2018. No dividends were paid by the Company in the previous corresponding period. (b) Franking account balance

(b) Franking account balance
	2018	2017
	$000	$000
Frankingcredits available to the Company	15,679	15,679

(c) Per share information

(c) Per share information
	Consolidated
	2018 2017 Cents Cents
Basic loss per share Diluted loss per share Net tangible assetsper share	(2.86) (4.16) (2.86) (4.16) 15.33 18.27

Reconciliation of Loss per Share

	Consolidated
	2018 2017 $000 $000
Loss after tax used in calculating basic loss per share Loss after tax used in calculating diluted loss per share Net tangible assets	(2,566) (3,724) (2,566) (3,724) 13,736 16,365

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Weighted Average Number of Shares Used as the Denominator

	Consolidated
	2018 2017 No. No.
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculatingdiluted lossper share	89,582,175 89,582,175 89,582,175 89,582,175

Note 20 Share Based Payments

Note 21 Cash Flow Information

Reconciliation of loss after tax to net cashflow from operating activities

Reconciliation of loss after tax to net cashflow from	operating activities
	Consolidated
	2018 2017 $000 $000
Loss after income tax for the year Adjustments for: Depreciation and amortisation Loss on disposal of fixed asset Equity remuneration expense Changes in assets and liabilities: Decrease in trade debtors and accrued income (Increase)/decrease in prepayments Decrease in trade creditors and accruals Decrease inprovisions	(2,566) (3,724) 1,143 1,127 49 15 3 - 7,453 8,127 (64) 49 (1,694) (5,104) (207) (251)
Net cashprovided byoperatingactivities	4,117 239

Note 22 Remuneration of Auditors

During the financial year, the following fees were paid or were payable for services provided by the auditor of the Company and its related practices and to audit firms of controlled entities:

	Consolidated
	2018 2017 $ $
Audit services Auditors of the Company Network firm of the Companyauditor	160,000 177,000 60,678 55,134
Taxation services Auditors of the Company Network firm of the Companyauditor	220,678 232,134 22,000 21,000 33,788 27,372
	55,788 48,372

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2018 Annual Report | www.igniteservices.com

Note 23 Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following controlled entities in accordance with the accounting policy described in Note 3(a). The Company does not have any holdings in joint ventures or associates.

				Equity	Holding%(1)
	Principal	Country of	Class of
Subsidiary	Activity	Incorporation	Shares	2018	2017
Candle IT & T Recruitment Pty Limited	Dormant	Australia	Ordinary	100	100
Ignite Management Services Pty Limited	Dormant	Australia	Ordinary	100	100
JAV IT Group Pty Limited	Dormant	Australia	Ordinary	100	100
Lloyd Morgan International Pty Limited	Dormant	Australia	Ordinary	100	100
Candle Holdings Limited	Holding	New Zealand	Ordinary	100	100
Candle New Zealand Limited	Operating	New Zealand	Ordinary	100	100
Lloyd Morgan Limited	Holding	Hong Kong	Ordinary	100	100
Lloyd Morgan Hong Kong Limited	Holding	Hong Kong	Ordinary	100	100
Candle Recruitment Pte Limited	Dormant	Singapore	Ordinary	100	100
Beijing Candle Technology Service Co Ltd	Dormant	China	Ordinary	100	100
Lloyd Morgan China Limited	Operating	China	Ordinary	89	89

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

During the financial year the following wholly-owned non-operating subsidiaries were deregistered:

	Country of
Subsidiary	Incorporation
Alliance Recruitment Pty Ltd	Australia
Candle IT & T Recruitment Limited	New Zealand
DoughtyContractors Limited	New Zealand

Note 24 Related Party Disclosures

(a) Parent entity

The ultimate parent entity and ultimate controlling entity within the consolidated entity is Clarius Group Limited.

(b) Subsidiaries

Interests in subsidiaries are set out in Note 23.

(c) Directors and key management personnel

The aggregate compensation made to Directors and key management personnel of the consolidated entity is set out below:

entity is set out below:
	2018	2017
	$	$
Short-term employment benefits	911,102	1,131,491
Post-employment benefits	64,996	88,474
Share-basedpayments	2,747	-
	978,845	1,219,965

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2018 Annual Report | www.igniteservices.com

(d) Terms and conditions

All transactions between related parties were made on normal commercial terms and conditions. There are no fixed terms for the repayment of loans between entities within the consolidated entity.

Note 25 Contingent Liabilities

The consolidated entity has no material contingent liabilities to disclose at the reporting date.

Note 26 Deed of Cross Guarantee

Pursuant to ASIC Class Order 98/1418 dated 13 August 1998 (as amended) (the “Class Order”), a company is relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of a financial report and directors’ report.

The Company and Alliance Recruitment Pty Ltd (“Alliance”), a wholly-owned subsidiary of the Company, in reliance on the Class Order entered into a Deed of Cross Guarantee dated 19 April 2011 (the “Guarantee Deed”). The effect of the Guarantee Deed was that the Company guaranteed to each creditor payment in full of any debt in the event of the winding up of Alliance under certain provisions of the Corporations Act 2001 (the “Act”). If a winding up occurred under the provisions of the Act, the Company was only liable in the event that after six months any creditor had not been paid in full. Alliance provided similar guarantees in the event that the Company was wound up.

The Company and Alliance entered into a Deed of Revocation dated 19 April 2017 (the “Revocation Deed”) to terminate the Guarantee Deed which was subsequently lodged with ASIC on 3 May 2017 and gazetted on 30 May 2017. The Revocation Deed became effective on 30 November 2017 at the expiration of the six-month gazetting period. Alliance was subsequently deregistered on 3 March 2018.

Note 27 Parent Entity Disclosure

Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2018

For the year ended 30 June 2018
	2018	2017
	$000	$000
Revenue from continuing operations	129,087	140,331
On hired labour costs	(108,396)	(118,244)
Gross profit	20,691	22,087
Other income	-	500
Employee benefits expense	(16,004)	(18,965)
Depreciation and amortisation expense	(904)	(677)
Operating rental expense	(2,142)	(2,371)
Other expenses	(7,548)	(4,271)
Loss from operating activities	(5,907)	(3,697)
Finance income	4	2
Finance cost	(315)	(206)
Loss before income tax	(6,218)	(3,901)
Income tax benefit	67	100
Total comprehensive loss for theyear	(6,151)	(3,801)
Accumulated losses at the beginning of the year	(62,281)	(58,480)
Loss after income tax	(6,151)	(3,801)
Accumulated losses at the end of theyear	(68,432)	(62,281)

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Statement of Financial Position

As at 30 June 2018

Statement of Financial Position As at 30 June 2018
	2018	2017
	$000	$000
Assets
Current assets	23,568	33,070
Non-current assets	4,322	4,770
Total assets	27,890	37,840
Liabilities
Current liabilities	12,291	15,838
Non-current liabilities	487	742
Total liabilities	12,778	16,580
Equity
Contributed equity	83,541	83,541
Reserves	3	-
Accumulated losses	(68,432)	(62,281)
Total equity	15,112	21,260

Parent Entity Contingencies

The Company has no material contingent liabilities to disclose at the reporting date (2017: Nil).

The Company has no capital commitments for the acquisition of property, plant and equipment at the reporting date (2017: Nil).

Parent Entity Guarantees

Bank guarantees have been provided on behalf of the Company to third parties in relation to the consolidated entity’s operating leases (refer Note 16(b)). In the event of default, the issuing bank has recourse to the Company for these amounts.

Note 28 Events Subsequent to the Reporting Date

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2018 Annual Report | www.igniteservices.com

Directors’ Declaration

The Directors of the Company declare that:

In the opinion of the Directors of the Company:
(a) the consolidated financial statements and notes that are contained in pages 27 to 56 and the remuneration report in the Directors’ Report, set out on pages 10 to 15, are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and
- (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the consolidated entity will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2018.
The Directors draw attention to Note 2 to the financial statements, which include a statement of compliance with International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors made pursuant to Section 295(5) of the Corporations Act 2001.

Signed in accordance with a resolution of the Board of Directors.

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Garry Sladden Independent Non-Executive Chairman

Dated at Sydney this 30[th] day of August 2018.

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2018 Annual Report | www.igniteservices.com

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1217 Australia

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DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

Independent Auditor’s Report to the members of Clarius Group Limited

We have audited the financial report of Clarius Group Limited (the “Company”) and its subsidiaries (the “Group”) which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

(i) giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Group, would be in the same terms if given to the directors as at the time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited

Page 2

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Key Audit Matter

How the scope of our audit responded to the
Key Audit Matter

Debtor finance facility
As disclosed in Note 13 the Group is reliant
upon a debtor finance facility of up to $15
million to meet its liabilities and obligations
at certain points within its cash flow cycle.
There is a significant degree of management
judgement
relating
to
the
future
performance
of
the
Group
and
the
continuing availability of the debtor finance
facility in reaching the conclusion that the
financial statements be prepared on a going
concern basis.

Our procedures included, but were not limited to:
•
inquiring of management and the directors
as to knowledge of events and conditions
that may impact the assessment on the
Group’s ability to continue as a going
concern;
•
evaluating
management’s
process
for
developing cash flow forecasts;
•
assessing
the
historical
accuracy
of
budgets
and
forecasts
prepared
by
management;
•
challenging the assumptions contained in
management’s
cash
flow
forecast
in
relation to the Group’s ability to continue
as a going concern;
•
comparing the cash flow forecasts with
management’s budget; and
•
reviewing
correspondence
with
the
provider of the Group’s finance facility to
assess its continuing availability.
We also assessed the appropriateness of the
disclosures in the Basis of Preparation Note 2 to the
financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

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

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Page 3

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Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Page 4

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Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 10 to 15 of the Directors’ Report for the year ended 30 June 2018.

In our opinion, the Remuneration Report of Clarius Group Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Group 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 Australian Auditing Standards.

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DELOITTE TOUCHE TOHMATSU

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Jason Thorne Partner Chartered Accountants Sydney, 30 August 2018

Additional Information

The following information is required by ASX.

(a) Classes of securities and voting rights

There are two classes of equity securities, being ordinary shares and options. The ordinary shares are quoted on ASX, while the options are unlisted.

The voting rights in respect of the ordinary shares are established by the Company’s Constitution which reads as follows:

Clause 5.12: “On a show of hands every Eligible Member present has one vote. On a poll every Eligible Member has one vote for each fully paid up share.”

There is currently no on-market buy-back.

No securities on issue are currently subject to voluntary escrow.

(b) Shareholders and option holders

As at 24 August 2018, the number of shareholders holding less than marketable parcels is 1,424 and the details and distribution of holders of ordinary shares and holders of options are as follows:

Range of Shareholdings	Number of Holders
1-1,000	448
1,001-5,000	714
5,001-10,000	306
10,001-100,000	397
100,001 and over	62
	1,927
Option Holders	Number
Options granted	335,000
Holders of options	1

(c) Substantial shareholders

As at 24 August 2018, the names of the substantial shareholders listed in the Company’s register are:

	Number of Ordinary
Shareholder	Shares
Ego Pty Limited	22,957,459
Collins St Asset Management ATF Collins St Value Fund	10,444,969
Sandon Capital PtyLtd	10,150,664

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2018 Annual Report | www.igniteservices.com

(d) Twenty largest shareholders

As at 24 August 2018, the names of the twenty largest shareholders according to the Company’s share registry are:

		Number of
		Ordinary
Rank	Shareholder	Shares	%
1	EGO PTY LIMITED	23,000,000	25.67
2	J P MORGAN NOMINEES AUSTRALIA LIMITED	12,804,049	14.29
3	ONE MANAGED INVT FUNDS LTD	7,591,834	8.47
4	BNP PARIBAS NOMINEES PTY LTD	6,894,776	7.70
5	NATIONAL NOMINEES LIMITED	3,402,867	3.80
6	AVANTEOS INVESTMENTS LIMITED <3495510 SOUTHSIDE A/C>	2,895,020	3.23
7	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	1,942,351	2.17
8	MR DAVID C SCICLUNA + MR ANTHONY A SCICLUNA	1,446,179	1.61
9	MR IAN WALLACE EDWARDS + MRS JOSEPHINE EDWARDS	1,083,072	1.21
10	MR MATTHEW DONALD MULLINS	1,026,611	1.15
11	G J P INVESTMENTS PTY LTD	764,886	0.85
12	SUPER SMART INVESTMENTS PTY LTD	700,000	0.78
13	MR ROGER ALAN CATTON	550,000	0.61
14	MR WILLIAM YUE	440,230	0.49
15	FIVE TALENTS LIMITED	425,266	0.47
16	MR CHRISTOPHER ANDREW GRUMMET	422,491	0.47
17	GUOCO PTY LTD	414,000	0.46
18	FRETENSIS PTY LTD	400,000	0.45
19	MRS JACQUELINE GARRETT	370,239	0.41
20	MR WILLIAM HENRY HERNSTADT	357,956	0.40
		66,931,827	74.69

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2018 Annual Report | www.igniteservices.com

AI assistant

IGNITE LIMITED — Annual Report 2018

65110_rns_2018-08-29_6d05e13a-6f07-4797-bc85-e61de5c6eb05.pdf

CLARIUS GROUP LIMITED

ABN 43 002 724 334

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

SHARE REGISTRY

CHAIRMAN

CHIEF EXECUTIVE OFFICER

CHIEF FINANCIAL OFFICER

COMPANY SECRETARY

AUSTRALIAN SECURITIES EXCHANGE LISTING

AUDITOR

SOLICITOR

BANKER

CONTENTS

CHAIRMAN’S LETTER

Dear Shareholder,

FINANCIAL AND OPERATIONAL REVIEW

The Year in Review

Key Financial Metrics

Financial Review

Our People

General Manager, Victoria - Jayson Eichstadt

General Manager, New South Wales - Stephen Hockey

General Manager, Queensland - Bruce Moss

Operational Review

Specialist Recruitment

On Demand

People Services

China

The Year Ahead

DIRECTORS’ REPORT

Directors

Principal activities

Review of operations

Dividends

Significant changes in state of affairs

Events subsequent to the reporting date

Future developments

Environmental issues

Information on the Directors

GARRY SLADDEN

Independent Non-Executive Chairman

JENNIFER ELLIOTT

Independent Non-Executive Director

CRAIG SAPHIN GAICD

Independent Non-Executive Director

Directors’ interests in shares and options

Company Secretary

IAN GILMOUR FGIA, FCIA, CA, FAICD

Company Secretary

Audited remuneration report

Director Remuneration

Principles Used to Determine the Nature and Amount of Executive Remuneration

Executive Remuneration Principles

Performance Based Remuneration

Consequences of Performance on Shareholder Wealth

Details of Directors’ and Key Management Personnel Remuneration

Short-Term Incentive

Long-Term Incentive

Employment Contracts

Option Holdings

Shareholdings

End of Audited Remuneration Report

Meetings of Directors and Board committees

Indemnifying Officers

Directors’ benefits

Proceedings on behalf of the Company

Non-audit services

Auditor’s independence declaration

Rounding of amounts

DX 10307SSE

Clarius Group Limited

DELOITTE TOUCHE TOHMATSU

Corporate Governance Statement

Principle 1 – Lay solid foundations for management and oversight

Chairman’s Responsibilities

Director Selection

Directors’ Performance Review

IGNITE LIMITED Annual Report 2018