IGNITE LIMITED — Interim / Quarterly Report 2014

Feb 18, 2014

Clarius Group Limited and Controlled Entities

ASX Report for the Full Year Ended 31 December 2013 ABN 43 002 724 334

Presented by: Kym Quick, Managing Director and Anne Bastock, Chief Financial Officer

www.clarius.com.au

Overview

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

• 12 Cities, 35 Offices, 336 Employees.

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

• Permanent, Contact and Temporary placements.

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Financial Results – 2014 Half Year

	Dec 2013	Dec 2012
Revenue	$91.3m	$123.0m
Net (loss)/profit after tax & before restructuring	$(1.4)m	$0.1m
Net (loss) after tax & restructuring	$(1.5)m	$(0.5)m
Loss per share (cents)	1.65 cents	0.52 cents
Operating cash flow	$1.2m	$3.3m
Gearing ratio	0%	0.5%
Dividend	nil	nil

Financial Results – 2014 Half Year

• Revenue declined 26% on PCP and 11% from June 2013, this is largely attributable to the decline in contracting in the recruitment services business across the half;

• The increase in permanent revenues in China (more than doubling from $1.7m to $4.1m PCP) has meant Gross Margin was less volatile and down by 9.7% PCP and 1.7% from June 2013;

• New Zealand financial performance has improved during the period with the region contributing $3.5m compared to $2.7m PCP due to a restructuring of the sales and management team and some market improvement;

• IT services also showed improvement in the first half and has continued this into the second half with strong demand and job fill rates from January;

• Managed services revenues declined as a result of the lack of demand in contracting services – due to the low margin nature of this business the impact on GM and Profit was less significant.

Financial Results – 2014 Half Year

P&L	Dec 13 $m	Jun 13 $m	Dec 12 $m	Jun 12 $m
Total Revenue	$91.3	$102.3	$123.0	$137.8
Gross Margin	$17.6	$17.9	$19.5	$22.0
Employee Benefits Expense	$(13.6)	$(13.0)	$(14.0)	$(15.5)
Finance Costs	$(0.1)	$(0.1)	$(0.2)	$(0.2)
Restructuring Costs	$(0.1)	-	$(0.6)	-
Other Overheads	$(3.3)	$(2.9)	$(3.1)	$(2.8)
Statutory NPAT	$(1.4)*	$(0.3)*	$0.1*	$0.8*
Operating cash flow	$1.2	$1.1	$3.3	$2.1
*Excluding impairment, restructuring & de-recognition of tax losses

Financial Results – 2014 Half Year

• The shift in the mix of revenue and improved permanent revenue has lessened the impact on the GM reduction – this is attributable to the growth of the China business;

• Employee benefits costs are down on PCP but higher than June 2013 due to investment in headcount in China;

• The increase in overheads is also due to investment in China;

• At the end of Dec 2013, the China business was in profit and it is expected to continue to make a profitable contribution in the second half;

• There were additional restructuring costs of $100k in the Australian business in the half;

• Operating cash flow was positive despite the loss, due to a refund of income tax in Australia and continued focus on cash collections and expense payment management.

Financial Position

Financial Position	Dec 13 $m	Jun 13 $m	Dec 12 $m	Jun 12 $m
Cash	$1.3	$1.0	$0.4	$0.9
Trade Receivables	$43.9	$48.8	$48.7	$60.5
Intangible Assets	$2.8	$2.5	$43.0	$42.4
Bank Borrowings	$(0.4)	$(0.7)	$(0.8)	$(0.0)
Total Equity	$36.0	$37.0	$78.2	$78.8

• 89m shares on issue

• Strong balance sheet with capacity for future growth and acquisitions

Recruitment Business Mix

Gross Margin Gross Margin H1 FY13 H1 FY14

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Perm
28%
Contracting
72%
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Perm
32%
Contracting
68%
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Group Revenue Mix

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H1 FY13
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Recruitment
IT Services
Managed Services
Other Revenue
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H1 FY14
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Recruitment
IT Services
Managed Services
Other Revenue
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Outlook and Strategic Focus

• Market conditions have shown some signs of improved sentiment;

• January has delivered a result ahead of PCP which is an encouraging sign of more positive market conditions;

• IT Services has had a particularly strong start to the year with record job numbers and conversion rates;

• Continued growth in Asia will drive profitability in the second half of 2014;

• The systems integration project commenced in 2013 to enhance invoicing and payroll processing is progressing well and we are starting to see benefits flow through;

• The second half will see continued focus on the technology platform which will deliver both opportunities for diversification along with greater efficiencies and productivity levels across the business.

Disclaimer

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

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

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