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ross human directions limited annual report 30 June 2007

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contents

Board of directors 2

directors’ report 4

corporate Governance statement 26

income statements 36

Balance sheets 37

statements of chanGes in equity 38

cash flow statements 39

notes to the financial statements 40

directors’ declaration 90

independent audit report to the memBers 91

shareholder information 94

corporate directory 96

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board of directors

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Fergus AllAn McDonAlD – NoN-ExEcutivE chairmaN

Allan McDonald joined the board in April 2000 and was appointed to the Chair. He is a member of both the Audit and Remuneration Committees.

He has had an extensive career in the investment and commercial banking fields. He is presently Chairman of Babcock & Brown Japan Property Management Limited (appointed 2005 – Responsible Entity of Babcock & Brown Japan Property Trust) and Multiplex Limited (appointed director in 2003) and is a director of Billabong International Limited. In the three years immediately before the end of the financial year, Allan was also a director of the fol-lowing companies: Australian Leisure and Hospitality Group Limited (from 2003 to 2004); TAB Limited (from 1998 to 2004); Brambles Industries Limited (from 1981 to 2005); and DCA Group Limited (from 1988 to 2006).

Allan has a Bachelor of Economics degree from the University of Sydney and has completed the Advanced Management Programme at Macquarie University. He is a Fellow of the Australian Society of Certified Practicing Accountants, a Fellow of the AIM, a Fellow of the AICD, and a Fellow of the Chartered Institute of Company Secretaries in Australia.

JuliA MAry ross – ExEcutivE DEputy chairmaN

Julia Ross has twenty-five years’ experience in the recruitment industry. This followed a career in the construction industry where she earned her first management role for a division of the Taylor Woodrow Group. Julia’s progress to senior level at a young age resulted in her becoming a a finalist in the prestigious Business Women of the Year Awards presented by the London Times and Veuve Clicquot (UK).

Julia’s career in the recruitment industry began in the United Kingdom with an international group, with whom she progressed to manage their operations within Asia, Australia and New Zealand.

In 1988 Julia founded Julia Ross Recruitment and held the position of Managing Director for almost twenty years. During this twenty years, the company developed from a single service-line business to providing generalist, pro-fessional, specialist, executive and IT recruitment alongside HR Consulting services covering all aspects of human resources management including outsourcing, payroll services and managed training services. The company, through its Technology Solutions division, offers a further area of niche expertise in systems integration and design and project management.

Julia Ross has received many accolades including the Westpac Group Business Owner Award in the Telstra Business Woman of the Year Awards. She is a keen philanthropist and is involved with numerous community groups and chari-ties, supporting various committees dedicated to helping the disadvantaged and less privileged.

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KAren lynne Wilson – NoN-ExEcutivE DirEctor

Karen is a retailing and consumer marketing consultant in the retailing, fashion, health and beauty, housewares and financial services sectors. She is the Chairman of the Remuneration Committee and a member of the Audit Committee.

Prior to establishing her consulting business she worked in the cosmetics industry, for the last eight years as manag-ing director of Estee Lauder’s business in Australia.

She is a non-executive director of ING Australia Limited and NSW Business Chamber.

Karen has a degree in Arts and a diploma in Education from Sydney University, is a Fellow of the AICD, President of the New South Wales Business Chamber, Past President of Chief Executive Women Inc and Past President of the Australian Cosmetics, Fragrance and Toiletries Association.

eileen Joy Doyle – NoN-ExEcutivE DirEctor

Dr. Eileen Doyle joined the board in July 2005. She is the Chairman of the Audit Committee and a member of the Remuneration Committee.

Eileen has diverse business experience both as a senior executive and as a board member. She is a Fellow of the AICD. She is also Chairman of Port Waratah Coal Services, a director of State Super Financial Services Australia, OneSteel Limited, CSIRO and Steel & Tube Holdings Limited, a New Zealand listed company. Her previous roles included being a director of Austrade and senior management positions with CSR Timber Products, BHP Steel and Hunter Water Corporation.

HugH HenDerson – NoN-ExEcutivE DirEctor

Hugh Henderson is a mechanical engineer by profession with extensive experience in the automotive, white goods, high tech software, polymer and telecommunications industries in the UK, Asia, USA and Australia. Hugh has more recently established a brokerage business and is an experienced chairman and board member. He is a member of both the Audit and Remuneration Committees.

Hugh is a Fellow of the AICD and a Fellow of the Chartered Institute of Directors (UK) and has extensive knowledge of regulatory authority and corporate governance matters, acquisitions, mergers, IPO’s and business turnarounds.

rAlpH eDWArD sHreeve – Group maNaGiNG DirEctor

Ralph Shreeve was appointed as Group Managing Director of the company on 5 March 2007. He joined Ross Human Directions Limited in 2006 to take on the role of Global Managing Director for Ross Information Technology, Ross Specialist, Ross Executive, Ross Consulting, Ross Payroll Outsourcing and Ross Managed Training Services.

Ralph has a strong background in performance consulting and general management. Between 1995 and 1999, he was a senior executive with the listed professional services firm, Morgan and Banks Limited and was responsible for a number of the major operating divisions and geographical regions. His next role was Managing Partner of the Asia Pacific operation of a global management consulting firm, working with a diverse range of clients to achieve profitable revenue growth.

Between 2001 and 2005, Ralph was the CEO/Managing Director of IPN Ltd, Australia’s largest primary healthcare company, and led this listed company through a high profile turnaround.

Immediately before joining Ross Human Directions, Ralph was a partner with the world’s leading executive search firm where he headed up the healthcare, energy, infrastructure and Asia Pacific leadership consulting practices. F

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directors’ report

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Your directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Ross Human Directions Limited and the entities it controlled at the end of, or during, the year ended 30 June

2007.

DirectorsThe following persons were directors of Ross Human Directions Limited during the whole of the financial year and up to the date of this report:

Fergus Allan McDonald Julia Mary Ross Karen Lynne Wilson Eileen Joy Doyle Hugh Henderson Ralph Edward Shreeve was appointed a director on 5 March 2007 and continues in office at the date of this report.

principal activitiesDuring the year, the principal continuing activities of the Group consisted of the provision of contract, temporary and permanent job placements, technology consulting and management solutions, managed training solutions, and also business process outsourcing.

Dividends – ross human Directions LimitedDividends paid to members during the financial year were as follows: 2007 2006 $’000 $’000

Final fully franked ordinary dividend for the year ended 30 June 2006 of 2 cents (2005: 2 cents) per fully paid share paid on 13 October 2006 1,645 1,633

Interim fully franked ordinary dividend for the year ended 30 June 2007 of 2 cents (2006: 2 cents) per fully paid share paid on 30 March 2007 1,652 1,638

Total dividends in respect of the year 3,297 3,271

In addition to the above dividends, since the end of the financial year the directors have recommended the payment of a final fully franked ordinary dividend of $1,658,000 (2.0 cents per fully paid share) to be paid on or about 12 October 2007 out of retained profits at 30 June 2007.

The Dividend Reinvestment Plan is no longer operational and was suspended on 25 June 2007.

review of operations and activitiesThe net profit of the consolidated entity for the financial year was $5,005,000 (2006: $5,045,000) after deducting an income tax expense of $1,708,000 (2006: benefit of $326,000).

The operating profit before income tax of the consolidated entity for the financial year was $6,713,000 (2006: $4,719,000).

Revenue of $354.2 million was up 6.1% on the prior year result of $333.8 million. Temporary revenues were better than the prior year by 4% and this, coupled with a 22% improvement in revenues from permanent placements, translated to an increase of $5.9 million or 10% in gross margin.

Other expenses were up $2.0 million or 13% on the prior year. This was due mainly to an increase of $1.3 million in marketing expenses associated with a re-branding advertising campaign. Furthermore, other expenses were impacted by provision releases in the prior year.

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EBIT of $8.2 million was better by $2.1 million or 34% on the previous year, predominantly as a result of the stronger gross margin result.

The tax expense of $1.7 million was $2.0 million higher than the $0.3 million tax benefit in the previous year. This was impacted mainly by the recoupment of tax losses, delivering a tax benefit of $0.4 million in the current year compared to $1.3 million last year, where tax losses were recouped for both the 2004/05 and 2005/06 years.

Trade and Other Receivables increased by $9.8 million to $58.4 million. This increase was due essentially to stronger trading activity, as highlighted by the improved revenue result. The heightened activity has also resulted in a $4.2 million increase in Trade and Other Payables.

Net borrowings (borrowings less cash and cash equivalents) increased by $6.6 million during the year to $11.2m. The increase in net borrowings was due predominantly to payments for property, plant and equipment ($2.9 million) and the transfer of funds into the Ross Human Directions Limited Long-Term Senior Executive Share Plan ($2.1 million) that was established during the year.

The company operated predominantly in the recruitment and HR services market, offering services to all main cities in Australia, and in Auckland, Wellington, Hong Kong, Singapore, Malaysia, London, Edinburgh and Dublin.

Significant changes in the state of affairs

Significant changes in the state of affairs of the consolidated entity during the financial year were as follows:

2007 $’000(a) An increase in the contributed equity of $370,000

(from $24,398,000 to $24,768,000) as a result of:

Issue of 356,262 fully paid ordinary shares @ $0.50 each under the dividend reinvestment plan 178

Issue of 302,620 fully paid ordinary shares @ $0.63 each under the dividend reinvestment plan 192

Net increase in share capital 370

(b) There has been an increase in trade and other receivables of $9.8 million during the year due essentially to increased trading activity, as highlighted by the improved revenue result.

(c) Significant gains and expenses

Gains

Tax benefit associated with recoupment of tax losses for the 2007 tax year 424

Expenses

Reduction in carrying value of goodwill associated with recoupment of tax losses 424

Less: Applicable income tax -

424

matters subsequent to the end of the financial yearNo matter or circumstance has arisen since 30 June 2007 that has significantly affected, or may significantly affect:

(a) the consolidated entity’s operations in future financial years, or

(b) the results of those operations in future financial years, or

(c) the consolidated entity’s state of affairs in future financial years.

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Likely developments and expected results of operationsInformation on likely developments in the operations of the consolidated entity and the expected results of opera-tions have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Environmental regulationRoss Human Directions Limited is committed to the protection of the environment, to the health and safety of its employees, customers and the public at large and to compliance with all applicable environmental laws, rules and regulations in the jurisdictions in which it conducts its business.

The Group has assessed whether there are any particular or significant environmental regulations that apply to it and has determined that there are none.

information on directors

Fergus AllAn McDonAlD BEc, FcPA, FcIS, FAIM. chairmaN – NoN-ExEcutivE

experience and expertise

Independent non-executive chairman for 7 years.

Mr McDonald has had extensive executive experience in investment and commercial banking sectors and is presently associated with a number of companies as a consultant and as a non-executive director.

other current directorships

Director of the following listed entities: Babcock & Brown Japan Property Management Limited, Chairman from 2005 (the responsible entity of Babcock & Brown Japan Property Trust) Billabong International Limited, director from 2000Multiplex Limited, director from 2003 and Chairman from 2005Multiplex Funds Management Limited, director from 2003 and Chairman from 2005 (the responsible entity of Multiplex Property Trust and Multiplex SITES Trust)Former directorships in last 3 years

Australian Leisure and Hospitality Group Limited, Chairman from 2003 to 2004TAB Limited, director from 1998 to 2004Brambles Industries Limited, director from 1981 to 2005Brambles Industries plc, director from 2001 to 2005 (listed on London Stock Exchange) DCA Group Limited, director from 1988 to 2006

special responsibilities

Chairman of the boardMember of remuneration committee Member of audit committee

interests in shares and options

An indirect interest of 467,500 ordinary shares in Ross Human Directions Limited

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JuliA MAry ross ExEcutivE DEputy chairmaN


Executive Deputy Chairman from 5 March 2007. Group Managing Director for 18 years from 1988 to 5 March 2007.

Ms Ross founded the current Ross Human Directions Limited business in 1988 and took the company through to IPO in 2000. Previous background includes director of Australia and New Zealand of a leading multi-national employ-ment agency and role as Chief Executive of a division of Taylor Woodrow Group.


Nil

Former directorships in last 3 years

Nil


Executive Deputy Chairman


A direct and indirect interest of 37,080,159 ordinary shares in Ross Human Directions Limited

KAren lynne Wilson BA, DIP ED, FAIcD. DirEctor – NoN-ExEcutivE


Independent non-executive director for 7 years.

Ms Wilson is a retailing and consumer marketing consultant with extensive experience in the retailing, fashion, health and beauty, housewares and financial services sectors, and is also a non-executive director of several other Australian companies.


Director of the following entities:ING Australia Limited, director from 1995New South Wales Business Chamber, director from 1998 Vision Group Holdings Limited, director from 2004


ING Holdings Limited, director from 1995 to 2005 Angus and Coote (Holdings) Limited, director from 1996 to 2007


Chairman of remuneration committeeMember of audit committee


A direct interest of 47,181 ordinary shares in Ross Human Directions Limited

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information on directors (continued)

eileen Joy Doyle BMAth, MMAth, PhD, FAIcD. DirEctor – NoN-ExEcutivE


Independent non-executive director for 2 years.

Extensive executive experience in manufacturing sector, and a non-executive director of several other Australian companies.


Director of the following listed entities:OneSteel Limited, director from 2000Steel and Tube Holdings Limited, director from 2005 (NZ listed)

Also a director of:Port Waratah Coal Services, Chairman from 1998State Super Financial Services, director from 2002 CSIRO, director from 2006


Austrade board, director from 1999 to 2005


Member of remuneration committee

Chairman of audit committee


A direct interest of 10,000 ordinary shares in Ross Human Directions Limited

HugH HenDerson FAIcD, FBcIM. DirEctor – NoN-ExEcutivE


Independent non-executive director appointed 1 July 2006.

Mr Henderson is a mechanical engineer by profession with extensive experience in the automotive, white goods, high tech software, polymer and telecommunications industries in the UK, Asia, USA and Australia. Mr Henderson has more recently established a brokerage business and is an experienced chairman and board member.


Director of the following entities:Newman Henderson Pty. Ltd., director from 1990MacFarlane Partners, partner from 1997East West Holdings Pty Limited (from February 2007)


Rattoon Holdings Limited, director from 1996 to May 2006, Chairman from 2005 to May 2006 (Listed Newcastle Stock Exchange)Change of Australia Pty. Ltd., director from 2004 to 2006special responsibilities

Member of remuneration committee (appointed 18 August 2006)

Member of audit committee (appointed 18 August 2006)


Nil

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rAlpH eDWArD sHreeve Group maNaGiNG DirEctor


Group Managing Director appointed 5 March 2007.

Mr Shreeve joined the board after ten months with the organisation managing the Specialist and Information Technology Recruitment divisions along with its Consulting; Managed Training; Payroll Outsourcing and Technology Solutions Businesses. Mr Shreeve’s previous roles include CEO/Managing Director of IPN Limited and Managing Partner of the Asia Pacific operations of Sibson & Company, a leading strategy and human capital consulting firm.


Nil


IPN Limited, Managing Director from 2001 to 2005


Group Managing Director


A beneficial interest of 1,428,571 ordinary shares in Ross Human Directions Limited, held by the Ross Human Directions Limited Long-Term Senior Executive Share Plan, subject to vesting conditions.

coMpAny secretAryThe Company Secretary is Mr Glenn James Meekin BEc, CA. Mr Meekin was appointed to the position of Company Secretary and Chief Financial Officer on 26 February 2007. He joined Ross Human Directions Limited in May 2001 as Group Financial Controller and held this position until his appointment to Chief Financial Officer. Before joining Ross Human Directions Limited he was involved in senior financial roles with Reckitt Benkiser and KPMG.

meetings of directorsThe numbers of meetings of the company’s board of directors and of each board committee during the year ended 30 June 2007, and the numbers of meetings attended by each director were: FuLL mEEtiNG mEEtiNGS oF committEES oF DirEctorS Audit remuneration

Attendee: A B A B A B

Fergus Allan McDonald 11 11 2 2 3 3

Julia Mary Ross 10 11 * * * *

Karen Lynne Wilson 11 11 2 2 3 3

Eileen Joy Doyle 11 11 2 2 3 3

Hugh Henderson (appointed 1 July 2006) 11 11 2 2 3 3

Ralph Edward Shreeve (appointed 5 March 2007) 4 4 * * * *

A number of meetings attendedB number of meetings held during the time the director held office or was a member of the committee during the year* not a member of the relevant committee

retirement, election and continuation in office of directorsMr H Henderson was appointed as a non-executive director in addition to the existing directors by the directors on 1 July 2006. This appointment was approved by the members at the Annual General Meeting on 17 November 2006.

Mr RE Shreeve was appointed as Group Managing Director in addition to the existing directors by the directors on 5 March 2007.

Ms JM Ross and Mr FA McDonald are the directors retiring by rotation, who, being eligible, offer themselves for re-election.

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remuneration report The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remunerationB Details of remunerationC Service agreementsD Share-based compensationE Additional information

The information provided under headings A-D includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited. The disclosures in Section E are additional disclosures required by the Corporations Act 2001 and the Corporations Regulations 2001 which have not been audited.

(a) principles useD to DeterMine tHe nAture AnD AMount oF reMunerAtion (AuDiteD)The objective of the company’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objec-tives and the creation of value for shareholders, and conforms with market best practice for delivery of reward. The board ensures that executive reward satisfies the following key criteria for good reward governance practices:

n competitiveness and reasonablenessn acceptability to shareholdersn performance linkage / alignment of executive compensationn transparencyn capital management.

The company has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the organisation.

Alignment to shareholders’ interests:

n has economic profit as a core component of plan design n focuses on sustained growth in total shareholder return and delivering growth in return on funds employed as

well as focusing the executive on key non-financial drivers of value n attracts and retains high calibre executives.

Alignment to program participants’ interests:

n rewards capability and experience n reflects competitive reward for contribution to shareholder growth n provides a clear structure for earning rewards n provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives. As execu-tives gain seniority with the Group, the balance of this mix shifts to a higher proportion of “at risk” rewards.

The board has established a remuneration committee which provides advice on remuneration and incentive poli-cies and practices and specific recommendations on remuneration packages and other terms of employment for executive directors, other senior executives. The Corporate Governance Statement provides further information on the role of this committee.

NoN-ExEcutivE DirEctorS

Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed annually by the board.

DirEctorS’ FEES

The Chairman’s and non-executive directors’ remuneration is inclusive of committee fees.

Non-executive directors’ fees were determined based on market fees for directors at September 2000, and revised more recently in May 2005. From 1 July 2005 non-executive directors’ fees increased from $35,000 p.a. plus super-annuation to $45,000 p.a. plus superannuation, with the Chairman’s fees moving from $50,000 p.a. plus superan-nuation to $65,000 p.a. plus superannuation.

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ExEcutivE pay

The executive pay and reward framework has four components:

n base pay and benefits

n short-term performance incentives

n long-term incentives through participation in the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans and the Long-Term Senior Executive Share Plan, and

n superannuation.

The combination of these comprise the executive’s total remuneration.

BaSE pay

Structured as a total employment cost package that may be delivered as a mix of cash and prescribed non-financial benefits at the executive’s discretion.

Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. External remuneration consultants provide analysis and advice to ensure base pay is set to reflect the market for a compa-rable role. Base pay for senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An executive’s pay is also reviewed on promotion.

There are no guaranteed base pay increases fixed in any senior executives’ contracts.

BENEFitS

Executives may receive benefits including car allowances.

rEtirEmENt BENEFitS

Retirement benefits are delivered under a number of defined contribution superannuation funds. These funds provide lump sum benefits based on contributions and earnings of the funds. Other retirement benefits may be provided directly by the company if approved by shareholders.

Short-tErm iNcENtivES

Should the company achieve a pre-determined profit target set by the remuneration committee then a pool of short-term incentive (STI) is available for executives for allocation during the annual review. Commissions and bonuses are payable in cash each year. Using a profit target ensures variable award is only available when value has been created for shareholders and when profit is consistent with the business plan. The incentive pool is leveraged for performance above the threshold to provide an incentive for executive out-performance.

Each executive has a target STI opportunity depending on the accountabilities of the role and impact on organisa-tion or business unit performance.

Each year, the remuneration committee considers the appropriate targets and key performance indicators (KPIs) to link the STI plan and the level of payout if targets are met. This includes setting any maximum payout under the STI plan, and minimum levels of performance to trigger payment of STI.

For the year ended 30 June 2007, the KPIs linked to short-term incentive plans were based on Group, individual business and personal objectives. The KPIs required performance in reducing operating costs and achieving specific targets in relation to profitability, as well as other key, strategic non-financial measures linked to drivers of per-formance in future reporting periods. These KPIs are not generic across the senior executive team.

The short-term commission and bonus payments may be adjusted up or down in line with under or over achieve-ment against the target performance levels. This is at the discretion of the remuneration committee. The STI target annual payment is reviewed annually.

LoNG-tErm iNcENtivES

Long-term incentives are provided to certain employees via the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans and the Long-Term Senior Executive Share Plan. See page 19 for further information.F

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remuneration report (continued)

(b) DetAils oF reMunerAtion (AuDiteD)

amouNtS oF rEmuNEratioN

Details of the remuneration of the directors and key management personnel (as defined in AASB 124 Related Party Disclosures) of Ross Human Directions Limited and Ross Human Directions Group are set out in the following tables.

The key management personnel of Ross Human Directions Limited includes the directors as per pages 6 to 9 above and the following executive officers who have authority and responsibility for planning, directing and controlling the activities of the entity:

CA Riley – Managing Director Recruitment (Aust/NZ) (from 21 May 2007)GJ Meekin – Chief Financial Officer/Company Secretary (Group Financial Controller prior to 26 February 2007)PD Madden – Managing Director Ross Consulting/Ross Payroll Outsourcing/Ross MTS and Chief Information OfficerL Robertson – Group Operations Manager (from 2 April 2007)C Vickers-Willis – Group Marketing Director (from 2 April 2007)CA Shewry – Global Managing Director Julia Ross (from 1 July 2006 to 31 October 2006)CJ McFadden – Chief Financial Officer/Company Secretary (from 1 July 2006 to 26 February 2007)ID Martin – Strategic Director (until 30 June 2006)

In addition, the following executives must be disclosed under the Corporations Act 2001 as they were one of the 5 highest remunerated executives in either the 30 June 2007 or 2006 years:

RA Pierro – General Manager Julia RossA Bradshaw – General Manager Ross Specialist JD Goode – General Manager Ross Specialist (until 9 June 2006)SP Gibbs – Regional General Manager Ross Brisbane

The key management personnel of the Group are the directors of Ross Human Directions Limited (see per pages 6 to 9 above) and those executives that report directly to the Group Managing Director being:

CA Riley – Managing Director Recruitment (Aust/NZ) (from 21 May 2007)GJ Meekin – Chief Financial Officer/Company Secretary (Group Financial Controller prior to 26 February 2007)PD Madden – Managing Director Ross Consulting/Ross Payroll Outsourcing/Ross MTS and Chief Information OfficerL Robertson – Group Operations Manager (from 2 April 2007)C Vickers-Willis – Group Marketing Director (from 2 April 2007)P Ritchie – General Manager Ross Hong KongI Boztepe – General Manager Singapore/Malaysia (from 4 September 2006)CA Shewry – Global Managing Director Julia Ross (from 1 July 2006 to 31 October 2006)CJ McFadden – Chief Financial Officer/Company Secretary (from 1 July 2006 to 26 February 2007)ID Martin – Strategic Director (until 30 June 2006)

In addition, the General Manager Julia Ross, RA Pierro and the General Manager, Ross Specialist, A Bradshaw are Group executives whose remuneration must be disclosed under the Corporations Act 2001 as they are both one of the 5 highest remunerated executives.

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Key management personnel of ross Human Directions limited 2007 Short-tErm poSt-EmpLoymENt SharE-BaSED

EmpLoyEE BENEFitS BENEFitS paymENtS

shares/options/ cash salary performance NamE and fees commission cash bonus superannuation share rights total $ $ $ $ $ $Non-executive directors

FA McDonald Chairman 65,000 - - 5,850 - 70,850

KL Wilson 45,000 - - 4,050 - 49,050

EJ Doyle 45,000 - - 4,050 - 49,050

H Henderson 44,135 - - 1,090 - 45,225

Sub-total non-executive directors 199,135 - - 15,040 - 214,175

Executive directors

JM Ross* - - - - - -

RE Shreeve** 373,228 - 154,000 12,686 149,130 689,044

Other key management personnel

CA Riley (from 21 May 2007) 28,846 - - 2,456 - 31,302

GJ Meekin^ 192,692 - 4,219 12,686 1,448 211,045

PD Madden^ 192,973 146,480 - 12,686 19,959 372,098

L Robertson (from 2 April 2007) 37,692 - - 2,928 - 40,620

C Vickers-Willis (from 2 April 2007) 51,923 - - 2,440 - 54,363

CA Shewry (from 1 July 2006 to 31 October 2006) 128,160 - 50,000 4,879 - 183,039

CJ McFadden^ (from 1 July 2006 to 19 March 2007) 223,641 - 41,927 9,759 3,725 279,052

Total key management personnel compensation 1,428,290 146,480 250,146 75,560 174,262 2,074,738

Other company executives

RA Pierro^ 200,000 90,616 - 12,686 14,636 317,938

A Bradshaw^ 169,981 73,481 - 12,686 - 256,148

* The Executive Deputy Chairman, J M Ross, did not take remuneration for the year ended 30 June 2007.** R E Shreeve was appointed Group Managing Director on 5 March 2007. Before this appointment he was the Global Managing Director

for Ross. Amounts shown above include all of Mr Shreeve’s remuneration during the reporting period from both roles. Amounts received in his position as Group Managing Director amounted to $333,857, made up of cash salary of $139,324, cash bonus of $41,500, superannuation of $3,903 and share based payments of $149,130.

^ Denotes one of the 5 highest paid executives of the company, as required to be disclosed under the Corporations Act 2001.

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(b) DetAils oF reMunerAtion (AuDiteD) (continued)

amouNtS oF rEmuNEratioN (continued)

Key management personnel of the group 2007 Short-tErm poSt-EmpLoymENt SharE-BaSED


shares/options/ cash salary cash non-monetary super- performance NamE and fees commission bonus benefits annuation share rights total $ $ $ $ $ $ $Non-executive directors

FA McDonald Chairman 65,000 - - – 5,850 - 70,850

KL Wilson 45,000 - - – 4,050 - 49,050

EJ Doyle 45,000 - - – 4,050 - 49,050

H Henderson 44,135 - - – 1,090 - 45,225

Sub-total non-executive directors 199,135 - - - 15,040 - 214,175

Executive directors

JM Ross* - - - - - - -

RE Shreeve** 373,228 - 154,000 - 12,686 149,130 689,044


CA Riley (from 21 May 2007) 28,846 - - - 2,456 - 31,302

GJ Meekin 192,692 - 4,219 - 12,686 1,448 211,045

PD Madden^ 192,973 146,480 - - 12,686 19,959 372,098

L Robertson (from 2 April 2007) 37,692 - - - 2,928 - 40,620

C Vickers-Willis (from 2 April 2007) 51,923 - - - 2,440 - 54,363

P Ritchie^ 185,144 97,987 - 46,285 1,792 7,806 339,014

I Boztepe (from 4 September 2006) 151,253 - - 20,816 - - 172,069

CA Shewry (from 1 July 2007 to 31 October 2007) 128,160 - 50,000 - 4,879 - 183,039

CJ McFadden^ (from 1 July 2006 to 19 March 2007) 223,641 - 41,927 - 9,759 3,725 279,052

Total key management personnel compensation 1,764,687 244,467 250,146 67,101 77,352 182,068 2,585,821

Other company executivesRA Pierro^ 200,000 90,616 - - 12,686 14,636 317,938

A Bradshaw^ 169,981 73,481 - - 12,686 - 256,148

* The Executive Deputy Chairman, J M Ross, did not take remuneration for the year ended 30 June 2007.** R E Shreeve was appointed Group Managing Director on 5 March 2007. Before this appointment he was the Global Managing Director

for Ross. Amounts shown above include all of Mr Shreeve’s remuneration during the reporting period from both roles. Amounts received in his position as Group Managing Director amounted to $333,857, made up of cash salary of $139,324, cash bonus of $41,500, superannuation of $3,903 and share based payments of $149,130.

^ Denotes one of the 5 highest paid executives of the Group, as required to be disclosed under the Corporations Act 2001.

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Key management personnel of the group2006 Short-tErm poSt-EmpLoymENt SharE-BaSED


shares/options/ cash salary cash non-monetary super performance NamE and fees commission bonus benefits annuation share rights total $ $ $ $ $ $ $Non-executive directors

FA McDonald Chairman 64,769 - - - 5,829 - 70,598

FH Burke (from 1 July 2005

to 18 November 2005) 22,346 - - - 2,011 - 24,357

KL Wilson 44,846 - - - 4,036 - 48,882

EJ Doyle (from 22 July 2005

to 30 June 2006) 44,308 - - - 5,296 - 49,604

Sub-total non-executive directors 176,269 - - - 17,172 - 193,441

Executive directors

JM Ross* - - - - - - -

JM Beaumont (from 1 July 2005 to

24 April 2006) 425,314 75,731 - - 10,116 - 511,161


CA Shewry (from 1 March 2006) 106,309 - - - 4,073 - 110,382

RE Shreeve (from 1 May 2006) 51,979 - - - 1,868 - 53,847

ID Martin^ (from 15 August 2005

to 30 June 2006) 284,148 - 45,000 - 54,536 - 383,684

PD Madden^ 184,576 81,908 - - 18,139 40,787 325,410

RA Pierro^ 200,000 70,175 - - 12,139 29,909 312,223

CJ McFadden^ 265,620 - - - 12,139 20,093 297,852

Total key management personnel compensation 1,694,215 227,814 45,000 - 130,182 90,789 2,188,000

Other company executives

P Ritchie^ 212,100 92,211 - 53,025 2,121 15,951 375,408

* The Group Managing Director, Julia Mary Ross, did not take remuneration for the year ended 30 June 2006.^ Denotes one of the 5 highest paid executives of the Group, as required to be disclosed under the Corporations Act 2001. F

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(b) DetAils oF reMunerAtion (AuDiteD) (continued)

amouNtS oF rEmuNEratioN (continued)

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:NamE FixED rEmuNEratioN at riSk – Sti at riSk – Lti 2007 2006 2007 2006 2007 2006

Executive directors of Ross Human Directions Limited

JM Ross - - - - - -RE Shreeve 56% 100% 22% - 22% -JM Beaumont - 85% - 15% - -

Other key management personnel of the Group

CA Riley 100% - - - - -GJ Meekin 97% 99% 2% - 1% 1%PD Madden 55% 62% 39% 25% 6% 13%L Robertson 100% - - - - -C Vickers-Willis 100% - - - - -P Ritchie 69% 71% 29% 25% 2% 4%I Boztepe 100% - - - - -CA Shewry 73% 100% 27% - - -CJ McFadden 84% 93% 15% - 1% 7%ID Martin - 88% - 12% - -

Other Company or Group executives

RA Pierro 66% 69% 29% 22% 5% 9%A Bradshaw 71% - 29% - - -

(c) service AgreeMents (AuDiteD)On appointment to the board, all non-executive directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the board policies and terms, including compensation, relevant to the office of director.

Remuneration and other terms of employment for the Group Managing Director, Chief Financial Officer and other specified executives are formalised in service agreements. Each of these agreements provide for the provision of performance-related cash bonuses, other benefits including additional superannuation contributions and car allowances and participation, when eligible, in the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans and the Long-Term Senior Executive Share Plan. Other major provisions of the agreements relating to remuneration are set out below.

Jm roSS, Executive Deputy Chairman (formerly Group Managing Director)n Term of agreement – ongoing contract commencing 21 June 2000.

n The contractual base salary, inclusive of superannuation, for the year ended 30 June 2007 was $436,000, how-ever, Ms Julia Ross elected not to take any remuneration during the period.

n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal to 12 months of base salary.

rE ShrEEvE, Group Managing Directorn Term of agreement – ongoing contract commencing 1 March 2007.

n Base salary, inclusive of superannuation, for the year ending 1 March 2008 of $462,686 (pro rata), to be reviewed annually by the remuneration committee.

n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal to six months of base salary.

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ca riLEy, Managing Director Recruitment (Aust/NZ)n Term of agreement – ongoing contract commencing 21 May 2007.n Base salary, inclusive of superannuation, for the year ending 21 May 2008 of $312,686 (pro rata), to be reviewed

annually by the remuneration committee.n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal

to three months of base salary.

GJ mEEkiN, Chief Financial Officer/Company Secretary n Term of agreement – ongoing contract commencing 1 March 2007.n Base salary, inclusive of superannuation, for the year ending 1 March 2008 of $237,686 (pro rata), to be

reviewed annually by the remuneration committee.n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal


pD maDDEN, Managing Director Ross Consulting/Ross Payroll Outsourcing/Ross MTS and Chief Information Officern Term of agreement – ongoing contract commencing 24 August 1989.n Base salary, inclusive of superannuation, for the year ended 30 June 2007 of $205,659, to be reviewed annually

by the remuneration committee.n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal

to four weeks of base salary.

L roBErtSoN, Group Operations Managern Term of agreement – ongoing contract commencing 2 April 2007.n Base salary, inclusive of superannuation, for the year ending 2 April 2008 of $212,686 (pro rata), to be reviewed



c vickErS-WiLLiS, Group Marketing Director

n Term of agreement – ongoing contract commencing 2 April 2007.n Base salary, inclusive of superannuation, for the year ending 2 April 2008 of $237,686 (pro rata), to be reviewed



p ritchiE, General Manager Hong Kong n Term of agreement – ongoing contract commencing 23 May 2005.n Base salary, inclusive of superannuation, for the year ended 30 June 2007 of $186,936, to be reviewed annually



i BoztEpE, General Manager Singapore/Malaysian Term of agreement – ongoing contract commencing 4 September 2006.n Base salary, inclusive of superannuation, for the year ending 4 September 2008 of $185,028 (pro rata), to be

reviewed annually by the remuneration committee.n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal


ra piErro, General Manager Julia Rossn Term of agreement – ongoing contract commencing 24 March 2005.n Base salary, inclusive of superannuation, for the year ended 30 June 2007 of $212,686, to be reviewed annually


to two weeks of remuneration package.

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(c) service AgreeMents (AuDiteD) (continued)

a BraDShaW, General Manager Ross Specialistn Term of agreement – ongoing contract commencing 4 December 2006.n Base salary, inclusive of superannuation, for the year ending 4 December 2007 of $200,000 (pro rata), to be

reviewed annually by the remuneration committee.

n Payment of termination benefit on early termination by the employer, other than for gross misconduct, equal to four weeks of base salary.

ca ShEWry, Global Managing Director Julia Ross (from 1 July 2006 to 31 October 2006)n Agreement terminated on 31 October 2006.

n Base salary, inclusive of superannuation, for the four months ended 31 October 2006 was $133,039.

cJ mcFaDDEN, Chief Financial Officer/Company Secretary (from 1 July 2006 to 19 March 2007)n Agreement terminated on 19 March 2007.

n Base salary, inclusive of superannuation, for the period ended 19 March 2007 was $233,400.

(d) sHAre-BAseD coMpensAtion (AuDiteD)

optioNS

Options over shares in Ross Human Directions Limited are granted under the Ross Human Directions Limited Employee Share Option Plan. All staff are eligible to participate in the plan. The Employee Share Option Plan is designed to provide long-term incentives for employees to deliver long-term shareholder returns. Under the plan, participants are granted options which only vest if the employees are still employed by the Group at the end of the vesting period. When options are granted, they vest over a 54 month period (for grants prior to 15 October 2004) or a 36 month period (for grants on or after 15 October 2004). Once vested, the options can only be exercised if a performance hurdle is met. No option can be exercised until the directors are satisfied that the total return on a share during the preceding 12 month period, or such other period as the directors deem necessary, is in excess of at least one half of the Total Shareholder Returns quoted on the ASX All Industries Accumulation Index.

Participation in the Plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

Options are granted for no consideration.

pErFormaNcE SharE riGhtS

Performance Share Rights are granted to executives under the Performance Share Rights Deed for $1.00 per grant. When performance share rights are granted, they vest over a 36 month period. No performance share right can be exercised until the directors are satisfied that the performance hurdle in respect to growth in basic earnings per share has been satisfied. If the growth in basic earnings per share is equal to or greater than:

n 7%, then one third of the employees’ vested performance share rights is available to be vested;

n 8%, then two thirds of the employees’ vested performance share rights is available to be vested;

n 9%, then the full allocation of the employees’ vested performance share rights is available to be vested.

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The terms and conditions of each grant of options and performance share rights affecting remuneration in the previous, this or future reporting periods are as follows: exercise value per option grant date expiry date price at grant date Date vested and exercisable4 September 2000 4 September 2005 $1.00 $0.18 25% after 4 March 2002; 25% after 4 March 2003;

25% after 4 March 2004; 25% after 4 March 2005.

12 November 2001 12 November 2006 $1.00 $0.10 25% after 12 May 2003; 25% after 12 May 2004; 25% after 12 May 2005; 25% after 12 May 2006.

19 February 2002 19 February 2007 $1.35 $0.19 25% after 19 August 2003; 25% after 19 August 2004; 25% after 19 August 2005; 25% after 19 August 2006.

15 October 2004 15 April 2008 $0.68 $0.21 One third after 15 October 2005; one third after 15 October 2006; one third after 15 October 2007.

19 November 2004* 19 November 2009 - $0.51 One third after 19 November 2005; one third after 19 November 2006; one third after 19 November 2007.

8 March 2005 8 September 2008 $0.68 $0.14 One third after 8 March 2006; one third after 8 March 2007; one third after 8 March 2008.

9 January 2006* 9 January 2011 - $0.31 One third after 9 January 2007; one third after 9 January 2008; one third after 9 January 2009.

* The issues dated 19 November 2004 and 9 January 2006 were in the form of unlisted performance share rights.

LoNG-tErm SENior ExEcutivE SharE pLaN

Ross Human Directions Limited shares are allocated to executives under the Long-Term Senior Executive Share Plan, established during the year. The Long-Term Senior Executive Share Plan is designed to provide long-term incentives for senior executives to deliver long-term shareholder returns. Under the plan, participants are granted shares which only vest if certain performance standards are met and employees are still employed by the Group at the end of the vesting period. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

When shares in the share plan are granted, they vest over a 36 month period. No shares vest until the directors are satisfied that the performance hurdle in respect to growth in basic earnings per share has been satisfied. If the growth in basic earnings per share is equal to or greater than:

n 7%, then one third of the shares are available to be vested;

n 8%, then two thirds of the shares are available to be vested;

n 9%, then the full allocation of the shares are available to be vested.

Shares that do not vest (and any entitlements accruing on them) are forfeited.

A participant must not sell, transfer, encumber, mortgage, charge or otherwise deal with the shares (being the “disposal restrictions”) allocated to the participant during the disposal restrictions period.

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(d) sHAre-BAseD coMpensAtion (AuDiteD) (continued)The disposal restrictions period commences on the date that the shares are allocated to the participant and ceases on the earlier of:

n the expiration of a period of ten years after the date of allocation;

n the date on which the participant ceases to be employed by the Group;

n the expiration of the escrow period applicable to the shares.

The trustee will hold in trust any income (dividends), bonus shares and other entitlements derived on shares allo-cated to a participant from the time shares are allocated to a participant until those shares vest. The trustee will distribute those dividends, bonus shares or other entitlements to participants on the date on which the shares vest. The participant is not entitled to any earlier distribution of those dividends, bonus shares or other entitlements before the date on which the relevant shares vest.

Until the vesting date for any shares, the participant must abstain from voting, and not exercise any voting rights attached to, those shares not vested in the participant.

If any shares are forfeited, all income derived on, all bonus shares that accrue to or any entitlements that accrue to (or any funds, shares, options or other securities arising from the sale or exercise of any entitlements that accrue to) those forfeited shares are also forfeited.

For a period of 24 months immediately following the vesting of the shares (each period being the escrow period) the disposal restrictions continue. During the escrow period the shares will be held by the trustee in accordance with the trust on behalf of the participant. At the conclusion of the escrow period, the shares are automatically released and the disposal restrictions terminate.

During the escrow period, participants are entitled to receive any dividends or other distributions (if any) paid or made on shares. This applies irrespective of the shares being subject to the disposal restrictions.

During the escrow period, participants are entitled to direct the trustee how the voting rights attaching to the shares will be exercised, either generally or in any particular case. This applies irrespective of the shares being subject to the disposal restrictions.

During the year ended 30 June 2007, there was only one grant of shares under the Long-Term Senior Executive Share Plan. The terms and conditions of this grant of shares affecting remuneration in the previous, this or future reporting periods are as follows: value of sharegrant date at grant date Date vested2 March 2007 $0.70 One third after 31 August 2008; one third after 31 August 2009;

one third after 31 August 2010.

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Details of options and performance share rights over ordinary shares in the company and ordinary shares granted under the Long-Term Senior Executive Share Plan, provided as remuneration to each director of Ross Human Directions Limited and each of the key management personnel of the Group, are set out below. When exercisable, each option and performance share right is convertible into one ordinary share of Ross Human Directions Limited. Further information on options , performance share rights and the Long-Term Senior Executive Share Plan is set out in note 36 to the financial statements. Number of shares, options Number of shares, options or performance share rights or performance share rights name granted during the year vested during the year 2007 2006 2007 2006

Directors of Ross Human Directions Limited

RE Shreeve* 1,428,571 - - -

Other key management personnel of the Group

GJ Meekin# - - 10,000 10,000

PD Madden^ - - 68,186 68,186

P Ritchie^ - - 26,667 26,667

ID Martin^ - 450,000 - -

CJ McFadden^ - 225,000 75,000 -

Other Company and Group Executives

RA Pierro^ - - 50,000 50,000

S Kilburn^ - - - 16,667

* Shares granted under the Long-Term Senior Executive Share Plan# Options granted under the Employee Share Option Scheme^ Unlisted performance share rights granted

The assessed fair value at grant date of options and performance share rights granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option or performance share right, the impact of dilution, the share price at grant date and the expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

No options or performance share rights were granted during the year ended 30 June 2007. The model inputs for performance share rights granted during the year ended 30 June 2006 included:

(a) performance share rights are granted for $1.00 for the whole grant, one third of each tranche vests after each of the first three anniversaries of the date of grant

(b) Exercise price: $nil

(c) Grant date: 9 January 2006

(d) Expiry date: 9 January 2011

(e) Share price at grant date: $0.56

(f) Expected price volatility of the company’s shares: 47%

(g) Expected dividend yield: 8.0%

(h) Risk-free interest rate: 5.24%

shares provided on exercise of remuneration options or performance share rights

No options or performance share rights were exercised during the year.

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(e) ADDitionAl inForMAtion – (unAuDiteD)

pErFormaNcE oF roSS humaN DirEctioNS LimitED

The overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis given to the current year. Over the past 5 years, the Group’s return on equity (calculated as profit after tax as a percentage of total equity) has averaged 15.3% per annum. During the same period, average executive remuneration has grown by approximately 12.4% per annum.

DEtaiLS oF rEmuNEratioN: caSh BoNuSES aND SharES/optioNS/pErFormaNcE SharE riGhtS

For each cash bonus and grant of shares, options or performance share rights included in the above tables, the per-centage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the bonuses are payable in future years. The shares, options and performance share rights vest over three years, pro-vided the vesting conditions are met and none of them will vest if the conditions are not satisfied, hence, the mini-mum value of yet to vest is $nil. The maximum value of the grant yet to vest has been determined as the amount of the grant date fair value of the shares, options and performance share rights that is yet to be expensed.

caSh BoNuS SharES, optioNS or pErFormaNcE SharE riGhtS

Financial years Minimum Maximum in which total value total value year performance of grant yet of grant yetNamE paid Forfeited granted vested Forfeited share rights to vest to vest % % % % may vest $ $

RE Shreeve* 66 34 2007 - - 31/8/2008 nil 1,000,000 31/8/2009 31/8/2010 GJ Meekin# 75 25 2005 66.7 - 30/6/2008 nil 2,189PD Madden^ - - 2005 66.7 - 30/6/2008 nil 36,704P Ritchie^ - - 2005 66.7 - 30/6/2008 nil 14,354CA Shewry^ 25 75 2005 - - nil -CJ McFadden^ 80 20 2006 33.3 66.7 nil -RA Pierro^ - - 2005 66.7 - 30/6/2008 nil 26,915

* Shares granted under the Long-Term Senior Executive Share Plan# Options granted under the Employee Share Option Scheme^ Unlisted performance share rights granted

Further details relating to shares, options and performance share rights are set out below: a B c D E remuneration consisting of shares/ value at value at value at total of NamE options/performance share rights grant date exercise date lapse date columns B-D $ $ $ $

RE Shreeve 21.6% 1,000,000 - - 1,000,000GJ Meekin 0.7% - - - -PD Madden 5.4% - - - -P Ritchie 2.3% - - - -CJ McFadden 1.3% - - - -RA Pierro 4.6% - - - -

A = The percentage of the value of remuneration consisting of options and performance share rights, based on the value at grant date set out in column B.

B = The value at grant date calculated in accordance with AASB 2 Share-based Payment of Options granted during the year as part of remuneration.

C = The value at exercise date of options that were granted as part of remuneration and were exercised during the year.D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the year.

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SharES uNDEr optioN aND pErFormaNcE SharE riGhtS

Unissued ordinary shares of Ross Human Directions Limited under option and performance share rights at the date of this report are as follows:

DatE optioNS GraNtED Expiry DatE iSSuE pricE oF SharES NumBEr uNDEr optioN

15 October 2004 15 April 2008 $0.68 302,000

19 November 2004* 19 November 2009 $0.00 534,558

8 March 2005 8 September 2008 $0.68 114,000

950,558* The issue dated 19 November 2004 was in the form of unlisted performance share rights.

No option or performance share rights holder has any right in accordance with the terms of these instruments to participate in any other share issue of the company or any other entity.

SharES iSSuED oN thE ExErciSE oF optioNS or pErFormaNcE SharE riGhtS

No ordinary shares of Ross Human Directions Limited were issued during the year ended 30 June 2007 on the exer-cise of options or performance share rights. No shares have been issued since that date.

insurance of officersDuring the year, Ross Human Directions Limited paid an insurance premium in respect of a directors’ and officers’ liability insurance policy to insure the directors and officers of Ross Human Directions Limited and all of its subsidi-ary companies. The policy insures directors and officers for those liabilities incurred in the performance of their duties that are specifically permitted to be indemnified by Ross Human Directions Limited under the Corporations Act 2001. In accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy including the nature of liabilities insured against and the amount of the premium.

Non-audit servicesThe company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the company and/or the Group are important.

Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for audit and non-audit services provided during the year are set out below.

The board of directors has considered the position and, in accordance with the advice received from the audit committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

n all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor

n none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

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

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Non-audit services (continued) coNSoLiDatED 2007 2006

$ $

1. AuDit services PricewaterhouseCoopers Australian firm: Audit and review of financial reports 251,800 225,000 Related practices of PricewaterhouseCoopers Australian firm 39,069 60,135 Non-PricewaterhouseCoopers audit firms (Slaven Jeffcote LLP, Deloitte Touche Tohmatsu, Moores Rowland, Bendall & Cant) 12,519 18,377

Total remuneration for audit services 303,388 303,512

2. non-AuDit services Audit-related services Non-PricewaterhouseCoopers audit firms (Horwath, KPMG,

Deloitte Touche Tohmatsu, PCS Limited) Valuation of intangibles acquired from business combination - 15,000 Valuation of options - 8,266 Company secretarial 28,446 - Long-Term Senior Executive Share Plan advice 8,762 - IT Strategy 65,250 -

Total remuneration for audit-related services 102,458 23,266

Taxation services Non-PricewaterhouseCoopers audit firms (Deloitte Touche Tohmatsu,

Trood Pratt, Moores Rowland) Tax compliance services 45,696 256,647

Total remuneration for taxation services 45,696 256,647

Total remuneration for non-audit services 148,154 279,913

auditor’s independence declarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 25.

rounding of amountsThe company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities & Investments Commission, relating to “rounding off” of amounts in the directors’ report. Amounts in the directors’ report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

auditorPricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of the directors.

Fergus AllAn McDonAlD JuliA MAry rossDirector Director

Sydney 21 September 2007

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auditor’s independence Declaration

As lead auditor for the audit of Ross Human Directions Limited for the year ended 30 June 2007, I declare that to the best of my knowledge and belief, there have been:

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

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Ross Human Directions Limited and the entities it controlled during the period.

MArc upcroFt Partner PricewaterhouseCoopers

Sydney21 September 2007

25

LiaBiLity LimitED By a SchEmE approvED uNDEr proFESSioNaL StaNDarDS LEGiSLatioN

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26

Ross Human Directions Limited (the company) and the board are committed to achieving and demonstrating the highest standards of corporate governance. An extensive review of the company’s corporate governance

framework was completed in light of the best practice recommendations released by the Australian Stock Exchange Corporate Governance Council in March 2003. The company’s framework was largely consistent with the recommendations and exceeded them in some areas. The company and its controlled entities together are referred to as the Group in this statement.

The relationship between the board and senior management is important to the Group’s long-term success. Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives are formally delegated by the board to the Group Managing Director and senior executives as set out in the Group’s delegations policy. These delegations are reviewed from time to time to meet business requirements.

The directors are responsible to the shareholders for the performance of the company in both the short and the longer term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. Their focus is to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.

A description of the company's main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire period.

the board of directorsThe board operates in accordance with the broad principles set out in its charter which is available on the company website. The charter details the board’s composition and responsibilities.

BoArD coMpositionThe charter states:

n the board is to be comprised of both executive and non-executive directors with a majority of non-executive directors. Non-executive directors bring a fresh perspective to the board’s consideration of strategic, risk and performance matters and are best placed to exercise independent judgement and review and constructively challenge the performance of management

n in recognition of the importance of independent views and the board’s role in supervising the activities of management, the majority of the board must be independent of management and all directors are required to bring independent judgement to bear in their board decision making

n the Chairman is elected by the full board and is required to meet regularly with the Group Managing Director

n the company is to maintain a mix of directors on the board from different backgrounds with complementary skills and experience

n the board is required to undertake an annual board performance review and consider the appropriate mix of skills required by the board to maximise its effectiveness and its contribution to the Group.

responsiBilitiesThe responsibilities of the board include:

n contributing to the development of and approving the corporate strategy

n reviewing and approving business plans, the annual budget and financial plans including available resources and major capital expenditure initiatives

n overseeing and monitoring:

• organisationalperformanceandtheachievementoftheGroup’sstrategicgoalsandobjectives

• compliancewiththecompany’scodeofconduct(seepage32)

• progressofmajorcapitalexpendituresandothersignificantcorporateprojectsincludinganyacquisitionsor divestments

n monitoring financial performance including approval of the annual and half-year financial reports and liaison with the company’s auditors

n appointment, performance assessment and, if necessary, removal of the Group Managing Director

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n ratifying the appointment and/or removal of and contributing to the performance assessment for the members of the senior management team including the Chief Financial Officer (CFO) / Company Secretary

n ensuring there are effective management processes in place and approving major corporate initiatives

n enhancing and protecting the reputation of the organisation

n ensuring the significant risks facing the Group, including those associated with its legal compliance obligations have been identified and appropriate and adequate control, monitoring, accountability and reporting mecha-nisms are in place

n reporting to shareholders.

BoArD MeMBersDetails of the members of the board, their experience, expertise, qualifications, terms of office and independent status are set out in the directors’ report under the heading Information on directors and the section preceding the directors’ report, entitled Board of directors. There are four non-executive directors, all of whom are deemed independent under the principles set out below, one executive Deputy Chairman and one Group Managing Director at the date of signing the directors’ report.

The directors in office were considered and nominated based on the skills and experience they could bring to board deliberations on current and emerging issues.

The board does not have a formal nominations committee as it considers it is sufficiently small for the whole board to consider director nominations, therefore, when a vacancy exists or where it is considered that the board would benefit from the services of a new director, directors are asked to nominate suitable candidates with advice from an external consultant where necessary. Potential candidates are reviewed by the board and the most suitable candidate is appointed, who must stand for election at the next general meeting of shareholders.

The board seeks to ensure that:

n at any point in time, its membership represents an appropriate balance between directors with experience and knowledge of the Group and directors with an external or fresh perspective

n the size of the board is conducive to effective discussion and efficient decision making.

Directors’ inDepenDenceThe board has adopted specific principles in relation to directors’ independence. These state that to be deemed independent, a director must be a non-executive and:

n not a substantial shareholder of the company or an officer of, or otherwise associated directly with, a substan-tial shareholder of the company

n within the last three years not employed in an executive capacity by the company or a controlled entity, or been a director after ceasing to hold any such employment

n within the last three years not a principal of a material professional adviser or a material consultant to the company or a controlled entity, or an employee materially associated with the service provided

n not a material supplier or customer of the company or a controlled entity, or an officer of or otherwise associ-ated directly or indirectly with a material supplier or customer

n must have no material contractual relationship with the company or a controlled entity other than as a director of the Group

n not been on the board for a period which could, or could reasonably be perceived to, materially interfere with the director’s ability to act in the best interests of the company.

Materiality for these purposes is determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the company or Group or 5% of the individual director’s net worth is considered material for these purposes. In addition, a transaction of any amount or a relationship is deemed material if knowledge of it impacts the shareholders’ understanding of the director’s performance.

Recent thinking on corporate governance has introduced the view that a director’s independence may be perceived to be impacted by lengthy service on the board. To avoid any potential concerns, the board has determined that a director will not be deemed independent if he or she has served on the board of the company for more than ten years. All four non-executive directors have satisfied this criterion.

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non-executive DirectorsThe four non-executive directors met informally during the period, in scheduled sessions without the presence of management, to discuss the operation of the board and a range of other matters. Relevant matters arising from these meetings is shared with the full board.

terM oF oFFiceThe company’s constitution specifies that at each annual general meeting, one third of the directors (other than the Group Managing Director), or, if their number is not 3 or a multiple of 3, then the number nearest one third, and any other director not in such one third who has held office for 3 years or more, must retire from office. The directors to retire at the annual general meeting must be those who have been longest in office since their last election, but, as between persons who were elected as directors on the same day, those to retire must be deter-mined by lot, unless otherwise agreed between themselves.

In determining the number of directors to retire at an annual general meeting, no account is to be taken of:

n a director appointed by the directors to fill a casual vacancy or as an addition to the existing directors and who only holds office until the meeting; or

n the Group Managing Director who is exempted from retirement by rotation.

cHAirMAn AnD group MAnAging Director (group MD)The Chairman is responsible for leading the board, ensuring that board activities are organised and efficiently conducted and for ensuring directors are properly briefed for meetings. The Group MD is responsible for imple-menting Group strategies and policies. The board charter specifies that these are separate roles to be undertaken by separate people.

coMMitMentThe board held eleven formal board meetings and a number of informal meetings during the year.

Non-executive directors are expected to spend sufficient time preparing for and attending board and committee meetings and associated activities.

The number of meetings of the company’s board of directors and of each board committee held during the year ended 30 June 2007, and the number of meetings attended by each director is disclosed on page 9.

It is the company’s practice to allow its executive directors to accept appointments outside the company with prior written approval of the board. No appointments of this nature were accepted during the year ended 30 June 2007.

The commitments of non-executive directors are considered by the board prior to the directors’ appointment to the board of the company and are reviewed each year.

Prior to appointment or being submitted for re-election each non-executive director is required to specifically acknowledge that they have and will continue to have the time available to discharge their responsibilities to the company.

conFlict oF interestAn entity connected with Ms J M Ross had business dealings with the consolidated entity during the year, as described in the Notes to the Financial Statements at note 25 to the financial statements. In accordance with the board charter the director concerned declared her interest in those dealings to the company and took no part in decisions relating to them or the preceding discussions. In addition, the director did not receive any papers from the Group pertaining to those dealings.

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inDepenDent proFessionAl ADviceDirectors and board committees have the right, in connection with their duties and responsibilities, to seek inde-pendent professional advice at the company's expense. Prior written approval of the Chairman is required, but this will not be unreasonably withheld.

perForMAnce AssessMentThe board undertook an assessment of performance, composition and tenure in relation to the year ended 30 June 2007. The review assessed the performance of directors and the Chairman and appraised their mix of skills in the context of the current and future requirements of the Group.

corporAte reportingThe Group MD and CFO / Company Secretary have made the following certifications to the board:

• thatthecompany’sfinancialreportsarecompleteandpresentatrueandfairview,inallmaterialrespects,ofthe financial condition and operational results of the company and Group and are in accordance with relevant accounting standards.

• thattheabovestatementisfoundedonasoundsystemofinternalcontrolandriskmanagementwhichimple-ments the policies adopted by the board and that the company’s risk management and internal control is oper-ating efficiently and effectively in all material respects.

The company adopted this reporting structure for the year ended 30 June 2007.

Board committeesThe board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex issues. Current committees of the board are the remuneration and audit committees. Each is comprised entirely of non-executive directors. The committee structure and membership are reviewed on an annual basis.

Each of these committees has its own written charter setting out its role and responsibilities, composition, struc-ture, membership requirements and the manner in which the committee is to operate. All of these charters are reviewed from time to time as required and are available on the company website. All matters determined by committees are submitted to the full board as recommendations for board decision.

reMunerAtion coMMitteeThe remuneration committee consists of the following non-executive directors:

KL Wilson (Chairman) EJ Doyle FA McDonald H Henderson (appointed 18 August 2006)

Details of these directors’ attendance at remuneration committee meetings are set out in the directors’ report on page 9.

The remuneration committee operates in accordance with its charter which is available on the company website. The remuneration committee advises the board on remuneration and incentive policies and practices generally, and makes specific recommendations on remuneration packages and other terms of employment for executive direc-tors, other senior executives and non-executive directors. The role of this committee is defined in greater detail in the remuneration report included in the directors’ report on page 10.

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Board committees (continued)

reMunerAtion coMMittee (continued)Each member of the senior executive team signs a formal employment contract at the time of their appointment covering a range of matters including their duties, rights, responsibilities and any entitlements on termination. The standard contract refers to a specific formal job description. This job description is reviewed by the remuneration committee on an annual basis and, where necessary is revised in consultation with the relevant employee.

Further information on directors’ and executives’ remuneration is set out in the directors’ report under the head-ing “Remuneration Report”.

The remuneration committee’s terms of reference include responsibility for reviewing any transactions between the organisation and the directors, or any interest associated with the directors, to ensure the structure and the terms of the transaction are in compliance with the Corporations Act 2001 and are appropriately disclosed.

The committee also assumes responsibility for management succession planning, including the implementation of appropriate executive development programmes and ensuring adequate arrangements are in place, so that appro-priate candidates are recruited for later promotion to senior positions.

AuDit coMMittee The audit committee consists of the following non-executive directors:

EJ Doyle (Chairman) FA McDonald KL Wilson H Henderson (appointed 18 August 2006)

Details of these directors’ qualifications and attendance at audit committee meetings are set out on pages 6 to 9.

The audit committee has appropriate financial expertise and all members have a working knowledge of the industry in which the Group operates.

The audit committee operates in accordance with a charter which is available on the company website at www.rossjuliaross.com. The main responsibilities of the committee are to:

n review, assess and approve the annual report, the half-year financial report and all other financial information published by the company or released to the market

n assist the board in reviewing the effectiveness of the organisation's internal control environment covering:

• effectivenessandefficiencyofoperations

• reliabilityoffinancialreporting

• compliancewithapplicablelawsandregulations

n oversee the effective operation of the risk management framework

n recommend to the board the appointment, removal and remuneration of the external auditors, and review the terms of their engagement, the scope and quality of the audit and assess performance

n consider the independence and competence of the external auditor on an ongoing basis

n review and approve the level of non-audit services provided by the external auditors and ensure it does not adversely impact on auditor independence

n review and monitor related party transactions and assess their propriety

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In fulfilling its responsibilities, the audit committee:

n receives regular reports from management and the external auditors

n meets with the external auditors at least twice a year or more frequently if necessary

n reviews the processes the Group MD and CFO have in place to support the certifications to the board

n reviews any significant disagreements between the auditors and management, irrespective of whether they have been resolved

n meets separately with the external auditors at least twice a year without the presence of management

n provides the external auditors with a clear line of direct communication at any time to either the Chairman of the audit committee or the Chairman of the board.

The audit committee has authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.

External auditorsThe company and audit committee policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of perform-ance, existing value and tender costs. PricewaterhouseCoopers was appointed as the external auditor in 2000. It is PricewaterhouseCoopers policy to rotate audit engagement partners on listed companies at least every five years, and in accordance with that policy a new audit engagement partner was introduced for the year ended 30 June 2007.

An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in the directors’ report and in note 26 to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence to the audit committee.

The external auditor or his representative is required to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

risk assessment and managementThe board, through the audit committee, is responsible for ensuring there are adequate policies in relation to risk management, compliance and internal control systems. These policies have not been made available on the company website. In summary, the company policies are designed to ensure strategic, operational, legal, reputa-tion and financial risks are identified, assessed, addressed and monitored to enable achievement of the Group’s business objectives.

Considerable importance is placed on maintaining a strong control environment. There is an organisation struc-ture with clearly drawn lines of accountability and delegation of authority. Adherence to the code of conduct is required at all times and the board actively promotes a culture of quality and integrity.

The company has not as yet established a formal Risk Management Group as the size of the company has not warranted this. Company risk is managed by the Group Managing Director, CFO / Company Secretary and other specified executives. The Group Managing Director and CFO / Company Secretary report to the board on any material risks.

The board requires that each major proposal submitted to the board for decision be accompanied by a compre-hensive risk analysis.F

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the environment, health and safety management system (EhSmS)The company recognises the importance of environmental and occupational health and safety (OH&S) issues and is committed to the highest levels of performance. To help meet this objective the EHSMS was established to facilitate the systematic identification of environmental and OH&S issues and to ensure they are managed in a structured manner. This system allows the company to:

n monitor its compliance with all relevant legislation

n continually assess and improve the impact of its operations on the environment

n encourage employees to actively participate in the management of environmental and OH&S issues

n work with trade associations representing the entity’s businesses to raise standards

n use energy and other resources efficiently, and

n encourage the adoption of similar standards by the entity’s principal suppliers and contractors.

Information on compliance with significant environmental regulations is set out in the directors’ report.

code of conductThe company has developed a statement of values and a Code of Conduct (the Code) which has been fully endorsed by the board and applies to all directors and employees. The Code is regularly reviewed and updated as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the Group’s integrity.

In summary, the Code requires that at all times all company personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the law and company policies.

The board recognises it is the individual responsibility of each director and employee to ensure that they comply with the spirit and letter of the insider trading laws.

The board has adopted a policy to assist directors and employees in ensuring that they do not inadvertently breach the insider trading rules and trade RHD securities whilst in possession of price sensitive information. Broadly the policy requires that individuals do not actively trade in RHD securities and prior to dealing in RHD securities con-sider whether or not they are in possession of price sensitive information.

Prior to any trading, individuals will refer to the Chairman or the Chairman of the Audit Committee (in the case of the directors) or the Group Managing Director or CFO / Company Secretary (in the case of executives) to confirm matters they should be aware of in considering whether it is appropriate to trade in the company's securities.

It should be noted that in light of the continuous disclosure requirements under ASX Listing Rules, the RHD Board has chosen not to use trading windows. However the policy requires that individuals not buy or sell in the four-week period prior to half yearly and yearly profit announcements or prior to any other major announcements of which they are aware.

Directors have all entered into agreements to notify the company within three days of any dealing in the company's securities.

This Code and the company’s trading policy is discussed with each new employee as part of their induction training and all employees are asked to sign an annual declaration confirming their compliance.

The Code requires employees who are aware of unethical practices within the Group or breaches of the company’s trading policy to report these using the company’s whistleblower program. This can be done anonymously.

The directors are satisfied that the Group has complied with the policies on ethical standards, including trading in securities.

A copy of the Code and its full trading policy is available on the company’s website at www.rossjuliaross.com.For

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continuous disclosure and shareholder communication The CFO/Company Secretary has been nominated as the person responsible for communications with the Australian Stock Exchange (ASX). This role includes responsibility for ensuring compliance with the continuous disclosure requirements in the ASX listing rules and overseeing and co-ordinating information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.

The company has written policies and procedures on information disclosure that focus on continuous disclosure of any information concerning the company and its controlled entities that a reasonable person would expect to have a material effect on the price of the company’s securities.

All information disclosed to the ASX is posted on the company’s website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is released to the ASX and posted on the company’s website. Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed, and if so, this information is also immediately released to the market.

All shareholders may access a copy of the company’s annual report from the company's website, www.rossjuliaross.com. An annual report is mailed to those shareholders who have elected to receive one. In addition, the company seeks to provide opportunities for shareholders to participate through electronic means. All recent company announcements and financial reports for the last five years are available on the company’s website www.rossjuliaross.com.

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financial report

35

30 June 2007

contents

financial report

income statements 36

Balance sheets 37

statements of chanGes in equity 38

cash flow statements 39

notes to the financial statements 40

directors’ declaration 90

independent audit report to the memBers 91

This financial report covers both Ross Human Directions Limited as an individual entity and the consolidated entity consisting of Ross Human Directions Limited and its subsidiaries. The financial report is presented in Australian currency.

Ross Human Directions Limited is a company limited by shares, incorporated and domiciled in Australia. Its regis-tered office and principal place of business is:

Ross Human Directions Limited Level 11, 133 Castlereagh Street, Sydney NSW 2000

A description of the nature of the consolidated entity’s operations and its principal activities is included in the Directors’ Report on pages 4-24, which are not part of this financial report.

The financial report was authorised for issue by the directors on 21 September 2007. The company has the power to amend and re-issue the financial report.

Through the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the company. All press releases, financial reports and other information are available at our Investor’s Centre on our website: www.rossjuliaross.com.

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income statements

36

For tHe yeAr enDeD 30 June 2007

coNSoLiDatED parENt ENtity

2007 2006 2007 2006

Notes $’000 $’000 $’000 $’000

Revenue from continuing operations 5 354,200 333,797 154,340 144,448

Other income 6 - 4 - 4

Costs of temporary staff (288,152) (273,674) (123,974) (117,547)

Employee benefits expense (38,015) (35,689) (18,961) (16,886)

Depreciation and amortisation expenses 7 (1,718) (1,470) (1,176) (896)

Reduction in the carrying amount of goodwill due to the realisation of acquired tax losses 7 (424) (1,288) - -

Finance costs 7 (1,650) (1,427) (994) (882)

Other expenses (17,528) (15,534) (4,353) (7,554)

Profit before income tax 6,713 4,719 4,882 687

Income tax (expense) benefit 8 (1,708) 326 (1,087) 1,094

Profit attributable to the members of Ross Human Directions Limited 5,005 5,045 3,795 1,781

cents cents

Earnings per share for profit attributable to the ordinary equity holders of the company:

Basic EPS 35 6.1 6.2

Diluted EPS 35 6.0 6.1

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

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balance sheets

37

As At 30 June 2007


2007 2006 2007 2006

Notes $’000 $’000 $’000 $’000

ASSETS

Current assets

Cash and cash equivalents 9 9,725 5,736 7 57

Trade and other receivables 10 58,427 48,675 18,205 23,998

Total Current Assets 68,152 54,411 18,212 24,055

Non-Current Assets

Held-to-maturity investments 11 813 954 - -

Other financial assets 12 - - 27,085 24,959

Property, plant and equipment 13 3,188 1,555 1,830 1,220

Deferred tax assets 14 2,334 2,825 1,466 1,042

Intangible assets 15 8,358 8,992 2,187 2,406

Total Non-Current Assets 14,693 14,326 32,568 29,627

Total Assets 82,845 68,737 50,780 53,682

LIABILITIES

Current Liabilities

Trade and other payables 16 25,213 20,996 10,400 7,746

Borrowings 17 20,991 10,440 9,794 17,359

Current tax liabilities 782 500 278 -

Provisions 18 532 531 521 -

Total Current Liabilities 47,518 32,467 20,993 25,105

Non-Current Liabilities

Payables 19 92 92 - -

Deferred tax liabilities 20 733 675 616 550

Provisions 21 130 250 130 60

Total Non-Current Liabilities 955 1,017 746 610

Total Liabilities 48,473 33,484 21,739 25,715

Net Assets 34,372 35,253 29,041 27,967

EQUITY

Contributed equity 22 22,654 24,398 24,768 24,398

Reserves 23(a) (505) 383 541 335

Retained profits 23(b) 12,223 10,472 3,732 3,234

Total Equity 34,372 35,253 29,041 27,967

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

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statements of changes in equity

38



2007 2006 2007 2006

Notes $’000 $’000 $’000 $’000

Total equity at the beginning of the financial year 35,253 32,732 27,967 29,030

Exchange differences on translation of foreign operations 23 (1,094) 320 - -

Net income recognised directly in equity (1,094) 320 - -

Profit for the year 5,005 5,045 3,795 1,781

Total recognised income and expense for the year 3,911 5,365 3,795 1,781

Transactions with equity holders in their capacity as equity holders:

Employee share plan and share options 23 206 97 206 97

Treasury shares (2,114) - - -

Contributions of equity, net of transaction costs 22 370 330 370 330

Dividends paid 24 (3,254) (3,271) (3,297) (3,271)

(4,792) (2,844) (2,721) (2,844)

Total equity at the end of the financial year 34,372 35,253 29,041 27,967

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

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cash flow statements

39



2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000

Cash flows from operating activities

Receipts from customers (inclusive of goods and services tax) 379,472 380,813 167,156 160,725

Payments to suppliers and employees (inclusive of goods and services tax) (377,383) (361,957) (164,864) (154,366)

2,089 18,856 2,292 6,359

Interest paid (1,568) (1,349) (222) (818)

Income taxes refunded (paid) 1,284 (2,731) 1,560 (2,725)

Net cash inflow from operating activities 34 1,805 14,776 3,630 2,816

Cash flows from investing activities

Payment for purchase of Spherion (ACT) Pty Limited and controlled entities, net of cash acquired 30 - (4,367) - (4,367)

Payments for property, plant and equipment (2,913) (1,117) (1,410) (876)

Payments for intangible assets (197) (102) (157) (22)

Payments for held-to-maturity investments - (954) - -

Proceeds from sale of property, plant and equipment - 4 - 4

Loans to employees (4) (6)

Repayment of loans by employees - 12 - 13

Repayment of loans by related parties - - - 2,596

Interest received 217 81 129 24

Net cash outflow from investing activities (2,897) (6,443) (1,444) (2,628)

Cash flows from financing activities

Proceeds from borrowings 22,000 13,200 22,000 13,200

Repayment of borrowings (22,000) (8,964) (22,000) (8,964)

Payments for shares acquired by the Ross Human Directions Limited Long-Term Senior Executive Share Plan (2,113) - (2,125) -

Dividends paid to company’s shareholders 24 (2,885) (2,941) (2,927) (2,941)

Net cash (outflow) inflow from financing activities (4,998) 1,295 (5,052) 1,295

Net (decrease) increase in cash and cash equivalents (6,090) 9,628 (2,866) 1,483

Cash and cash equivalents at beginning of the financial year 570 (9,402) (2,167) (3,650)

Effect of exchange rate changes on cash and cash equivalents (519) 344 - -

Cash and cash equivalents at the end of the financial year 9 (6,039) 570 (5,033) (2,167)

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

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notes to the financial statements

40

30 June 2007

contents

note 1 summary of siGnificant accountinG policies 41

note 2 financial risk manaGement 51

note 3 critical accountinG estimates and JudGements 52

note 4 seGment information 53

note 5 operatinG revenue 54

note 6 other income 54

note 7 expenses 54

note 8 income tax expense 55

note 9 current assets – cash and cash equivalents 56

note 10 current assets – trade and other receivaBles 56

note 11 held-to-maturity investments 57

note 12 non-current assets – other financial assets 57

note 13 non-current assets – property, plant and equipment 58

note 14 non-current assets – deferred tax assets 60

note 15 non-current assets – intanGiBle assets 61

note 16 current liaBilities – trade and other payaBles 63

note 17 current liaBilities – BorrowinGs 63

note 18 current liaBilities – provisions 66

note 19 non-current liaBilities – payaBles 66

note 20 non-current liaBilities – deferred tax liaBilities 67

note 21 non-current liaBilities – provisions 67

note 22 contriButed equity 68

note 23 reserves and retained profits 69

note 24 dividends 70

note 25 key manaGement personnel disclosures 71

note 26 remuneration of auditors 74

note 27 continGent liaBilities 75

note 28 commitments for expenditure 76

note 29 related party transactions 76

note 30 Business comBination 78

note 31 suBsidiaries 78

note 32 deed of cross Guarantee 80

note 33 events occurrinG after reportinG date 82

note 34 reconciliation of profit after income tax to net cash inflow from operatinG activities 83

note 35 earninGs per share 83

note 36 share-Based payments 84

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30 June 2007

Note 1 Summary of Significant accounting policiesThe principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial report includes separate financial statements for Ross Human Directions Limited as an individual entity and the consolidated entity consisting of Ross Human Directions Limited and its subsidiaries.

(a) BAsis oF prepArAtionThis general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.

compLiaNcE With iFrSS

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the consolidated financial statements and notes of Ross Human Directions Limited comply with IFRS except that it has elected to apply the relief provided to parent entities in respect of certain disclosures contained in AASB 132 Financial Instruments: Disclosure and Presentation.

EarLy aDoptioN oF StaNDarDS

The Group has elected to apply the following pronouncement to the annual reporting period beginning 1 July 2006:n Revised AASB 101 Presentation of Financial Statements (issued October 2006)This includes applying the pronouncement to the comparatives in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. No adjustments to any of the financial statements were required for the above pronouncement, but certain disclosures are no longer required and have therefore been omitted.

hiStoricaL coSt coNvENtioN

These financial statements have been prepared under the historical cost convention, as modified by the revalu-ation of available-for-sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment and investment property, as applicable.

criticaL accouNtiNG EStimatES

The preparation of financial statements in conformity with AIFRS requires the use of certain critical account-ing estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assump-tions and estimates are significant to the financial statements, are disclosed in note 3.

(b) principles oF consoliDAtion

( i ) SuBSiDiariES

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Ross Human Directions Limited (''company'' or ''parent entity'') as at 30 June 2007 and the results of all subsidiaries for the year then ended. Ross Human Directions Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

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

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

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to note 1(h)).

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

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30 June 2007

Note 1 Summary of Significant accounting policies (continued)

(b) principles oF consoliDAtion (continued)

( i ) SuBSiDiariES (continued)

Investments in subsidiaries are accounted for at cost in the individual financial statements of Ross Human Directions Limited.

( i i ) LoNG-tErm SENior ExEcutivE SharE truSt

The Group has formed a trust to administer the Group’s long-term senior executive share plan. This trust is consolidated, as the substance of the relationship is that the trust is controlled by the Group.

Shares held by the Ross Human Directions Limited Long-Term Senior Executive Share Trust are disclosed as treasury shares and deducted from contributed equity.

(c) segMent reportingA business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Foreign currency trAnslAtion

( i ) FuNctioNaL aND prESENtatioN currENcy

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The con-solidated financial statements are presented in Australian dollars, which is Ross Human Directions Limited’s functional and presentation currency.

( i i ) traNSactioNS aND BaLaNcES

Foreign currency transactions are translated into the functional currency using the exchange rates prevail-ing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity.

( i i i ) Group compaNiES

The results and financial position of all the Group entities (none of which has the currency of a hyperinfla-tionary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

n assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

n income and expenses for each income statement are translated at average exchange rates (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

n all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of any net investment in foreign enti-ties, and of borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold or borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is recognised in the income statement as part of the gain or loss on sale where applicable.

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

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(e) revenue recognitionRevenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business activities as follows:

( i ) humaN rESourcES

Income from contracting is brought to account when the services are provided. Contracting services pro-vided but not yet billed are taken up as accrued revenue. All other fee income is recognised when services are performed.

( i i ) iNtErESt iNcomE

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

( i i i ) DiviDEND rEvENuE

Dividend revenue is recognised as revenue when the right to receive payment is established.

(f) incoMe tAxThe income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is prob-able that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

tax coNSoLiDatioN LEGiSLatioN

Ross Human Directions Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.

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

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 8.

Any differences between the amounts assumed and amount receivable or payable under the tax funding agree-ment are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.F

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(g) leAsesLeases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term or long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income state-ment over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classi-fied as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over the period of the lease.

Lease income from operating leases is recognised in income on a straight line basis over the lease term.

(h) Business coMBinAtionsThe purchase method of accounting is used to account for all business combinations, including business com-binations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are meas-ured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill (refer to note 1(p)). If the cost of acquisition is less than the Group’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are dis-counted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

(i) iMpAirMent oF AssetsGoodwill and intangible 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 are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(j) cAsH AnD cAsH equivAlentsFor cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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(k) trADe receivABles

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provi-sion for impairment.

Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provi-sion is recognised in the income statement in other expenses.

(l) non-current Assets (or DisposAl groups) HelD For sAle AnD DiscontinueD operAtionsNon-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographic area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclu-sively with a view to resale. The results of discontinued operations are presented separately on the face of the income statement.

(m) investMents AnD otHer FinAnciAl Assets

cLaSSiFicatioN

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The clas-sification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

(i) Financial assets at fair value though profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

(ii) 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 are included in current assets, except for those maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.

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(m)investMents AnD otHer FinAnciAl Assets (continued)

cLaSSiFicatioN (continued)

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the bal-ance sheet date.

rEcoGNitioN aND DErEcoGNitioN

Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group com-mits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities.

SuBSEquENt mEaSurEmENt

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective inter-est method.

Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the 'financial assets at fair value through profit or loss' category are presented in the income statement within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit and loss is recognised in the income statement as part of revenue from continuing operations when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity.

Fair vaLuE

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

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impairmENt

The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.

(n) FAir vAlue estiMAtionThe fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trad-ing and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assump-tions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

(o) plAnt AnD equipMentPlant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income state-ment during the financial period in which they are incurred.

Depreciation on assets is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows:

Office equipment 2-8 yearsFurniture and fittings 3-7 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(i)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of those assets to retained earnings.

(p) intAngiBle Assets

( i ) GooDWiLL

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill acquired in business combinations is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

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(p) intAngiBle Assets (continued)

( i ) GooDWiLL (continued)Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents the Group’s investment in each country of operation by each primary reporting segment.

( i i ) SoFtWarE

Software has a finite useful life and is carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of software over their esti-mated useful lives, which vary from 3 to 8 years.

( i i i ) prEFErrED SuppLiEr aGrEEmENt

The preferred supplier agreement has a finite useful life and is carried at cost less accumulated amortisa-tion and impaired losses. Amortisation is calculated using the straight line method to allocate the cost of the preferred supplier agreement over its estimated useful life of 4 years.

(q) trADe AnD otHer pAyABlesThese amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(r) BorroWingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemp-tion amount is recognised in the income statement over the period of the borrowings using the effective inter-est method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(s) BorroWing costsBorrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the entity's outstanding borrowings during the year, in this case 7.08% (2006 – 6.58%).

(t) provisionsProvisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to set-tle the present obligation at the balance sheet date. The discount rate used to determine present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(u) eMployee BeneFits

( i ) WaGES aND SaLariES aND aNNuaL LEavE

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

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( i i ) LoNG SErvicE LEavE

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

( i i i ) rEtirEmENt BENEFit oBLiGatioNS

All employees of the Group are entitled to benefits on retirement, disability or death from the Group’s super-annuation plans. The Group contributes to defined contribution plans. The plans receive fixed contributions from Group companies and the Group’s legal or constructive obligation is limited to these contributions.

Contributions to the defined contribution funds are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

( iv) SharE-BaSED paymENtS

Share-based compensation benefits are provided to employees via the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans and the Long-Term Senior Executive Share Plan. Information relating to these schemes is set out in note 36.

The fair value of options granted under the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employ-ees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

The fair value of the options and performance share rights granted excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each balance sheet date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent esti-mate. The impact of the revision to original estimates, if any, is recognised in the income statement with a corresponding adjustment to equity.

Upon the exercise of options or performance share rights, the proceeds received, net of any directly attrib-utable transactions costs, are credited to share capital.

Under the long-term senior executive share plan, shares issued by the Ross Human Directions Limited Long-Term Senior Executive Share Trust to senior executives for no cash consideration vest over a vesting period, as determined by the directors. The market value of the shares issued is recognised as an employee benefits expense with a corresponding increase in equity over the vesting period.

(v) proFit-ShariNG aND BoNuS pLaNS

The Group recognises a liability and an expense for bonuses and profit-sharing based on a formula that takes into consideration the profit attributable to the company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(vi ) 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 Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

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(v) contriButeD equityOrdinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.

If the entity reacquires its own equity instruments, eg as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable incremental costs (net of income tax) is recognised directly in equity.

(w) DiviDenDsProvision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at balance date.

(x) eArnings per sHAre

( i ) BaSic EarNiNGS pEr SharE

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

( i i ) DiLutED EarNiNGS pEr SharE

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(y) FinAnciAl guArAntee contrActsFinancial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accord-ance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compen-sation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

chaNGE iN accouNtiNG poLicy

The policy of recognising financial guarantee contracts as financial liabilities was adopted for the first time in the current financial year. In previous reporting periods, a liability for financial guarantee contracts was only recognised if it was probable that the debtor would default and a payment would be required under the contract.

The change in policy was necessary following the change to AASB 139 Financial Instruments: Recognition and Measurement made by AASB 2005-9 Amendments to Australian Accounting Standards in September 2005.

There was no impact on the consolidated financial statements of the Group or the earnings per share as a result of adopting this policy.

(z) gooDs AnD services tAx (gst)Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

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Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(aa)rounDing oF AMountsThe company is of a kind referred to in Class order 98/0100, issued by the Australian Securities and Investments Commission, relating to the ''rounding off'' of amounts in the financial report. Amounts in the financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(ab)neW Accounting stAnDArDs AnD interpretAtionsCertain new accounting standards and interpretations have been published that are not mandatory for 30 June 2007 reporting periods. The Group’s and the parent entity’s assessment of the impact of these new standards and interpretations is set out below.

( i ) aaSB 7 Financial instruments: Disclosures anD aasB 2005-10 amenDments to australian

accounting stanDarDs [aasB 132, aasB 101, aasB 114, aasB 117, aasB 133, aasB 139, aasB 1,

aasB 4, aasB 1023 & aasB 1038]

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

( i i ) aaSB-i 10 interim Financial reporting anD impairment

AASB-I 10 is applicable to reporting periods commencing on or after 1 November 2006. The Group has not recognised an impairment loss in relation to goodwill, investments in equity instruments or financial assets carried at cost in an interim reporting period but subsequently reversed the impairment loss in the annual report. Application of the interpretation will therefore have no impact on the Group’s or the parent entity’s financial statements.

Note 2 Financial risk management The Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value inter-est rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk exposures.

Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the board of directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The board provides written principles for overall risk management, as well as written poli-cies covering specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity.

(a) MArKet risK

( i ) ForEiGN ExchaNGE riSk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

The Group operates internationally and is not exposed materially to foreign exchange risk arising from cur-rency exposures to the Australian dollar.

As at 30 June 2007, no forward contracts have been entered into.

( i i ) pricE riSk

The Group is not exposed to equity securities or commodity price risk.

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Note 2 Financial risk management (continued)

(a) MArKet risK (continued)

( i i i ) Fair vaLuE iNtErESt ratE riSk

Refer to (d) below.

(b) creDit risKThe Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history.

(c) liquiDity risKPrudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to the dynamic nature of the underlying businesses, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available.

(d) cAsH FloW AnD FAir vAlue interest rAte risKAs the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are not materially exposed to changes in market interest rates.

The Group's interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. The Group’s finance costs and operating cash flows are not materially exposed to changes in market interest rates.

Note 3 critical accounting Estimates and JudgementsEstimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) criticAl Accounting estiMAtes AnD AssuMptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

( i ) EStimatED impairmENt oF GooDWiLL

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(p). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions. Refer to note 15 for details of these assumptions and the potential impact of changes to the assumptions.

( i i ) iNcomE taxES

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on esti-mates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current tax provisions in the period in which such determination is made.

Were the actual final outcome (on the judgement areas) to differ by 10% from management’s estimates, the Group would need to:

n increase the income tax liability by $42,000 if unfavourable.

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Note 4 Segment information

(a) Description oF segMents

BuSiNESS SEGmENtS

The consolidated entity’s operations are carried out in one industry sector, human resources. This is the primary format of segment reporting for the group.

GEoGraphicaL SEGmENtS

Although the consolidated entity is managed on a global basis it is operated in three main geographical areas:

Australia / new Zealand

Comprises operations in Australia and New Zealand. The parent entity is domiciled in Australia.

east Asia

Comprises operations carried on in Singapore, Hong Kong and Malaysia.

europe

Comprises operations carried on in The United Kingdom and Ireland.

(b) seconDAry reporting ForMAt – geogrApHicAl segMents acquiSitioNS oF

propErty, pLaNt

aND EquipmENt,

SEGmENt rEvENuES iNtaNGiBLES aND

From SaLES to othEr NoN-currENt

ExtErNaL cuStomErS SEGmENt aSSEtS SEGmENt aSSEtS

2007 2006 2007 2006 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000

Australia / New Zealand 308,108 292,296 69,109 55,530 2,847 1,179

East Asia 31,466 32,543 9,541 10,036 56 10

Europe 14,409 8,877 4,195 3,171 207 30

353,983 333,716 82,845 68,737 3,110 1,219

Segment revenues are allocated based on the country in which the customer is located. Segment assets and capital expenditure are allocated based on where the assets are located.

(c) notes to AnD ForMing pArt oF tHe segMent inForMAtion

accouNtiNG poLiciES

Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 1 and accounting standard AASB 114 Segment Reporting.

Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, property, plant and equipment and goodwill and other intangible assets, net of related provisions. While most of these assets can be directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are allo-cated based on reasonable estimates of usage. Segment liabilities consist primarily of trade and other creditors and employee benefits.F

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Note 5 operating revenue coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

From coNtiNuiNG opEratioNS

Sales revenue

Service 353,983 333,716 154,211 144,424

Other revenue

Interest 217 81 129 24

354,200 333,797 154,340 144,448

Note 6 other incomeNet gain on disposal of property, plant and equipment - 4 - 4

Note 7 Expenses

proFit BEForE iNcomE tax iNcLuDES thE FoLLoWiNG

SpEciFic ExpENSES:

Depreciation

Plant and equipment 519 409 334 222

Furniture and fittings 67 75 29 43

Leasehold improvements 493 303 216 82

Plant and equipment under finance lease - 1 - 1

Total depreciation 1,079 788 579 348

Amortisation

Software 627 670 585 536

Preferred supplier agreement 12 12 12 12

Total amortisation 639 682 597 548

Reduction in the carrying amount of goodwill due to the realisation of acquired tax losses 424 1,288 - -

Finance costs

Interest and finance charges paid/payable 1,488 1,414 985 882

Exchange losses on foreign currency borrowings 162 13 9 -

Finance costs expensed 1,650 1,427 994 882

Net loss on disposal of plant and equipment 45 249 - -

Rental expense relating to operating leases

Minimum lease payments 4,008 3,743 1,328 1,243

Defined contribution superannuation expense 17,193 14,968 10,341 9,461For

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Note 8 income tax Expense coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

(a) incoMe tAx expense Current tax 1,233 1,392 1,468 153

Deferred tax 549 (596) (358) (399)

Under (over) provided in prior years (74) (1,122) (23) (848)

Current tax 1,708 (326) 1,087 (1,094)

Income tax expense (benefit) is attributable to: Profit from continuing operations 1,708 (326) 1,087 (1,094)

Deferred income tax expense (revenue) included in income tax expense comprises:

Decrease (increase) in deferred tax assets (note 14) 491 (350) (424) (256)

Increase (decrease) in deferred tax liabilities (note 20) 58 (246) 66 (143)

549 (596) (358) (399)

(b) nuMericAl reconciliAtion oF incoMe tAx expense (BeneFit) to priMA FAcie tAx pAyABleProfit from continuing operations before income tax expense 6,713 4,719 4,882 687

Tax at the Australian tax rate of 30% (2006: 30%) 2,014 1,416 1,465 206

Tax effect of amounts which are not deductible (taxable) in calculating taxable income

Goodwill impairment/reduction 127 386 - -

Entertainment 83 64 41 25

Share-based payments 13 20 8 (34)

Non-deductible interest - 26 - 26

Sundry items 9 (102) 5 9

2,246 1,810 1,519 232

Difference in overseas tax rates (180) (225) - -

(Over) under provision in prior years (57) (636) 13 (678)

Prior year tax losses not recognised now recouped (445) (670) (445) (648)

Tax losses of subsidiaries not recognised 72 24 - -

Deferred tax asset written off 72 - - -

Recognition of deferred tax assets not previously brought to account - (629) - -

Income tax expense (benefit) 1,708 (326) 1,087 (1,094)

(c) tAx losses Unused tax losses for which no deferred tax asset has been recognised 17,313 18,494 16,812 18,226

Potential tax benefit @ 30% 5,163 5,527 5,044 5,468

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Note 8 income tax Expense (continued)

(d) tAx consoliDAtion legislAtionRoss Human Directions Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003. The accounting policy in relation to this legislation is set out in note 1(f).

From 1 July 2003 to 30 June 2005, the entities in the tax consolidated group had not entered into a tax sharing or tax funding agreement. During the year ended 30 June 2006, the entities entered into a tax sharing agree-ment which, in the opinion of the directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, Ross Human Directions Limited.

During the year ended 30 June 2006, the entities also entered into a tax funding agreement under which the wholly-owned entities fully compensate Ross Human Directions Limited for any current tax payable assumed and are compensated by Ross Human Directions Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Ross Human Directions Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.

Note 9 current assets – cash and cash Equivalents coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Cash at bank and on hand 9,725 5,736 7 57

(a) reconciliAtion to cAsH At tHe enD oF tHe yeAr The above figures are reconciled to cash at the end of the financial period as shown in the Cash Flow Statements as follows: Balances as above 9,725 5,736 7 57

Less: Bank overdrafts (note 17) (15,764) (5,166) (5,040) (2,224)

Balances per statements of cash flows (6,039) 570 (5,033) (2,167)

(b) cAsH At BAnK AnD on HAnD Cash at bank bears floating interest rates between 0.1% and 5.75% (2006: 0.1% and 5.25%). Cash on hand is non-interest bearing.

Note 10 current assets – trade and other receivables coNSoLiDatED parENt ENtity 2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade receivables 56,076 44,495 17,705 15,230

Less: Provision for doubtful debts (833) (946) (484) (475)

55,243 43,549 17,221 14,755

Other receivables 2,760 4,955 489 2,322

Less: Provision for doubtful receivables (556) (777) - -

2,204 4,178 489 2,322

Loans to related parties - - - 6,419

Prepayments 980 948 495 502

58,427 48,675 18,205 23,998

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Note 10 current assets – trade and other receivables (continued)

(a) otHer receivABles These amounts generally arise from transactions outside the usual operating activities of the Group. Interest

may be charged at commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained.

(b) loAns to relAteD pArties Further information relating to loans to related parties is set out in note 29.

(c) interest rAte risK The Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity

periods is set out in the following tables. fixed interest maturinG in:

Floating 1 year over 1 over 2 to over 3 over 4 to over non-interest interest rate or less to 2 years 3 years to 4 years 5 years 5 years bearing total2007 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Trade receivables - - - - - - - 55,243 55,243

Other receivables - - - - - - - 2,204 2,204

- - - - - - - 57,447 57,447

Weighted average interest rate - - - - - - - -

2006

Trade receivables - - - - - - - 43,549 43,549

Other receivables - - - - - - - 4,178 4,178

- - - - - - - 47,727 47,727

Weighted average interest rate - - - - - - - -

(d) creDit risK There is no concentration of credit risk with respect to current and non-current receivables, as the Group

has a large number of customers, internationally dispersed. Refer to note 2 for more information on the risk management policy of the Group.

Note 11 held-to-maturity investments coNSoLiDatED parENt ENtity

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Term deposits 813 954 - -

Note 12 Non-current assets – other Financial assets coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Shares in subsidiaries (note 31) - - 27,085 24,959

These financial assets are carried at cost.

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Note 13 Non-current assets – property, plant and Equipment Furniture leasehold construction & improve- plant & leased plant in progress fittings ments equipment & equipment totalcoNSoLiDatED $’000 $’000 $’000 $’000 $’000 $’000

At 1 July 2005

Cost - 656 3,330 6,690 7 10,683

Accumulated depreciation - (462) (2,865) (5,884) (6) (9,217)

Net book amount - 194 465 806 1 1,466

Year ended 30 June 2006

Opening net book value - 194 465 806 1 1,466

Exchange differences - 2 3 4 - 9

Additions 170 20 469 458 - 1,117

Assets classified as held for sale and other disposals - - (249) - - (249)

Depreciation charge - (75) (303) (409) (1) (788)

Reclassification - - 5 (5) - -

Closing net book amount 170 141 390 854 - 1,555

At 30 June 2006

Cost 170 680 2,721 7,091 7 10,669


Net book amount 170 141 390 854 - 1,555


Opening net book value 170 141 390 854 - 1,555

Exchange differences - 13 4 (3) - 14

Additions - 87 1,642 1,184 - 2,913

Assets classified as held for sale and other disposals - (45) - - - (45)

Depreciation charge - (67) (493) (519) - (1,079)

Reclassification (170) - (6) 6 - (170)

Closing net book amount - 129 1,537 1,522 - 3,188

At 30 June 2007

Cost - 655 4,311 8,078 7 13,051


Net book amount - 129 1,537 1,522 - 3,188

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Furniture leasehold construction & improve- plant & leased plant in progress fittings ments equipment & equipment totalparENt ENtity $’000 $’000 $’000 $’000 $’000 $’000At 1 July 2005

Cost - 480 435 1,796 7 2,718

Accumulated depreciation - (384) (326) (1,310) (6) (2,026)

Net book amount - 96 109 486 1 692


Opening net book value - 96 109 486 1 692

Additions 221 20 286 349 - 876

Depreciation charge - (43) (82) (222) (1) (348)

Closing net book amount 221 73 313 613 - 1,220

At 30 June 2006

Cost 221 500 721 2,134 7 3,583


Net book amount 221 73 313 613 - 1,220


Opening net book value 221 73 313 613 - 1,220

Additions - 38 504 868 - 1,410

Depreciation charge - (29) (216) (334) - (579)

Reclassification (221) - - - - (221)

Closing net book amount - 82 601 1,147 - 1,830

At 30 June 2007

Cost - 538 1,225 3,002 7 4,772


Net book amount - 82 601 1,147 - 1,830

Non-current assets pledged as security

Refer to note 17 for information on non-current assets pledged as security by the parent entity and its controlled entities.

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Note 14 Non-current assets – Deferred tax assets coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

thE BaLaNcE compriSES tEmporary

DiFFErENcES attriButaBLE to:

Tax losses* - 72 - - Employee benefits 608 657 608 201 Superannuation accrual 814 891 533 492

1,422 1,620 1,141 693

Other

Doubtful debts 378 481 145 143

Provision for legal costs and other provisions 125 241 15 66 Audit fees provision 75 134 56 84

Fringe benefits tax provision 28 28 23 22

Lease incentives 283 289 86 34

Depreciation 23 32 - -

Sub-total other 912 1,205 325 349

Total deferred tax assets 2,334 2,825 1,466 1,042

Deferred tax assets to be recovered after more than 12 months 39 186 36 18

Deferred tax assets to be recovered within 12 months 2,295 2,639 1,430 1,024

2,334 2,825 1,466 1,042

* The deferred tax asset attributable to tax losses does not exceed taxable

amounts arising from the reversal of existing assessable temporary differences.

tax employee superannuation movEmENtS – losses benefits accrual other totalcoNSoLiDatED $’000 $’000 $’000 $’000 $’000

At 1 July 2005 - 621 483 1,433 2,537Charged/(credited) to the income statement 72 36 408 (166) 350

Tax refund transferred to receivables - - - (62) (62)

At 30 June 2006 72 657 891 1,205 2,825

Charged/(credited) to the income statement (72) (49) (77) (293) (491)

At 30 June 2007 - 608 814 912 2,334

movEmENtS – parENt ENtity

At 1 July 2005 - 155 257 374 786Charged/(credited) to the income statement - 46 235 (25) 256

At 30 June 2006 - 201 492 349 1,042

Charged/(credited) to the income statement - 407 41 (24) 424

At 30 June 2007 - 608 533 325 1,466

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Note 15 Non-current assets – intangible assets preferred supplier software goodwill agreement totalcoNSoLiDatED $’000 $’000 $’000 $’000At 1 July 2005

Cost 5,035 9,003 50 14,088

Accumulated amortisation and impairment (2,454) (759) (15) (3,228)

Net book amount 2,581 8,244 35 10,860


Opening net book value 2,581 8,244 35 10,860

Additions 102 - - 102

Impairment charge** - (1,288) - (1,288)

Amortisation charge* (670) - (12) (682)

Closing net book amount 2,013 6,956 23 8,992

At 30 June 2006

Cost 5,137 9,003 50 14,190

Accumulated amortisation and impairment (3,124) (2,047) (27) (5,198)

Net book amount 2,013 6,956 23 8,992


Opening net book value 2,013 6,956 23 8,992

Additions 197 62 - 259

Impairment charge** - (424) - (424)

Amortisation charge* (627) - (12) (639)

Reclassification 170 - - 170

Closing net book amount 1,753 6,594 11 8,358

At 30 June 2007

Cost 5,521 9,065 50 14,636

Accumulated amortisation and impairment (3,768) (2,471) (39) (6,278)

Net book amount 1,753 6,594 11 8,358

* Amortisation of $639,000 (2006: $682,000) is included in depreciation and amortisation expense in the income statement.** In the 2007 and 2006 years, the carrying value of goodwill attributable to the acquisition of Spherion Asia Pacific in the Australia/

New Zealand segment was reduced due to the realisation of acquired tax losses previously not brought to account. This has been disclosed as a reduction in the carrying amount of goodwill due to the realisation of acquired tax losses in the income statement.

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Note 15 Non-current assets – intangible assets (continued) preferred supplier software goodwill agreement totalparENt ENtity $’000 $’000 $’000 $’000

At 1 July 2005 Cost 4,076 562 50 4,688


Net book amount 2,419 478 35 2,932


Opening net book value 2,419 478 35 2,932

Additions 22 - - 22

Amortisation charge (536) - (12) (548)

Closing net book amount 1,905 478 23 2,406

At 30 June 2006

Cost 4,098 562 50 4,710


Net book amount 1,905 478 23 2,406

Year ended 30 June 2007Opening net book value 1,905 478 23 2,406

Additions 157 - - 157

Amortisation charge (585) - (12) (597)

Reclassification 221 - - 221

Closing net book amount 1,698 478 11 2,187

At 30 June 2007 Cost 4,476 562 50 5,088


Net book amount 1,698 478 11 2,187

(a) iMpAirMent tests For gooDWill Goodwill is allocated to the Group’s cash-generating units (CGUs) identified as follows.

A summary of the goodwill allocation is presented below. Australia/ new Zealand east Asia europe total 2007 $’000 $’000 $’000 $’000 Julia Ross Perth 478 - - 478 Ross Specialist/Ross Executive 1,203 - - 1,203 Julia Ross UK 53 - - 53 Ross (IT/Consulting/MTS/Payroll Outsourcing) 4,860 - - 4,860 6,594 - - 6,594

2006

Julia Ross Perth 478 - - 478 Ross Specialist/Ross Executive 1,203 - - 1,203 Julia Ross UK 53 - - 53 Ross (IT/Consulting/MTS/Payroll Outsourcing) 5,222 - - 5,222

6,956 - - 6,956

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The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a one-year period. Cash flows beyond the one-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates.

(b) Key AssuMptions useD For vAlue-in-use cAlculAtions GroWth ratE * DiScouNt ratE **

cGu 2007 2006 2007 2006

% % % % Julia Ross Perth 4.0 3.0 11.0 10.5

Ross Specialist/Ross Executive 4.6 3.0 14.0 13.5

Julia Ross UK 4.1 3.0 11.0 10.5

Ross (IT/Consulting/MTS/Payroll Outsourcing) 4.1 2.5 16.4 16.4

* Weighted average growth rate used to extrapolate cash flows beyond the budget period. ** In performing the value-in-use calculations for each CGU, the company has applied post-tax discount rates to discount the

forecast future attributable post tax cash flows. The equivalent pre-tax discount rates are disclosed above. The movements in the equivalent pre-tax discount rates between 2006 and 2007 reflect changes in the anticipated timing of future cash flows.

These assumptions have been used for the analysis of each CGU within the business segment. Management determined budgeted gross margin based on past performance and its expectations for the future. The weight-ed average growth rates used are consistent with forecasts included in industry reports. The discount rates reflect specific risks relating to the relevant segments and the countries in which they operate.

(c) iMpAirMent cHArge The impairment charge arose in the Ross (IT/Consulting/MTS/Payroll Outsourcing) CGU (included in the

Australia/New Zealand segment summary) due to the realisation of acquired tax losses previously not brought to account. No class of asset other than goodwill was impaired.

Note 16 current Liabilities – trade and other payables coNSoLiDatED parENt ENtity

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Trade creditors 8,160 5,895 2,103 1,373

Other creditors 17,053 15,101 8,297 6,373

25,213 20,996 10,400 7,746

Note 17 current Liabilities – Borrowings

SEcurED

Bank overdrafts 15,764 5,166 5,040 2,224

Bank loan 827 873 - -

Commercial bills payable 4,400 4,400 4,400 4,400

20,991 10,439 9,440 6,624

uNSEcurED

Amounts payable to controlled entities - - 354 10,734

Other loans - 1 - 1

20,991 10,440 9,794 17,359

(a) coMMerciAl Bills pAyABle Commercial bills payable have been drawn as a source of short-term financing on a needs basis. They mature

on 17 July 2007 (2006 – 31 July 2006) and bear interest at 6.75% (2006 – 6.18%).

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Note 17 current Liabilities – Borrowings (continued)

(b) otHer loAns Other loans are repayable at call and bear no interest (2006 – nil interest).

(c) Assets pleDgeD As security The bank overdraft and commercial bill facility of the parent entity are secured by a fixed and floating charge

over the assets of the parent entity and its controlled entities domiciled in Australia. The bank loan of a controlled entity is secured by a fixed and floating charge over the assets of the parent entity and its controlled entities domiciled in Australia.

The bank overdraft, representing a debtor finance arrangement, is secured by a negative pledge that imposes certain covenants on the parent entity and certain subsidiary companies. The negative pledge states that (subject to certain exceptions) the borrower companies must not provide additional security over their assets and will ensure that the following ratios are met:

(i) earnings before interest, tax and amortisation must not be less than four times gross interest expense,

(ii) total net worth must not at any time fall below 25% of total tangible assets,

(iii) shareholder funds (excluding asset revaluations) must not at any time fall below an amount of $15 million,

(iv) total borrowings (including all drawn debt facilities and contingent liabilities under bank guarantees and/or letters of credit) must not at any time exceed a figure of three times earnings before interest, tax and amortisation, and

(v) drawn debt facilities must not at any time exceed 75% of the total Australian debtors aged less than 90 days.

The carrying amounts of non-current assets pledged as security for total borrowings are:


2007 2006 2007 2006 Notes $’000 $’000 $’000 $’000

currENt

Fixed and floating charge

Cash and cash equivalents 9 4,667 693 7 57

Receivables 10 52,158 43,277 18,205 23,998

Total current assets pledged as security 56,825 43,970 18,212 24,055

NoN-currENt

Fixed and floating charge

Other financial assets 12 - - 27,085 24,959

Plant and equipment 13 2,865 1,354 1,830 1,220

Intangible assets 15 8,358 8,992 2,187 2,406

Total non-current assets pledged as security 11,223 10,346 31,102 28,585

Total assets pledged as security 68,048 54,316 49,314 52,640

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(d) FinAncing ArrAngeMents Unrestricted access was available at balance date to the following lines of credit:


2007 2006 2007 2006 $’000 $’000 $’000 $’000

crEDit StaNDBy arraNGEmENtS

Total facilities

Bank overdrafts 31,000 31,000 14,000 14,000

Commercial bill facility 10,000 10,000 10,000 10,000

41,000 41,000 24,000 24,000

Used at balance date

Bank overdrafts (15,764) (5,166) (5,040) (2,224)

Commercial bill facility (4,400) (4,400) (4,400) (4,400)

(20,164) (9,566) (9,440) (6,624)

Unused at balance date

Bank overdrafts 15,236 25,834 8,960 11,776

Commercial bill facility 5,600 5,600 5,600 5,600

20,836 31,434 14,560 17,376

Bank loan facilities

Total facilities 827 873 - -

Used at balance date (827) (873) - -

Unused at balance date - - - -

The bank overdraft, representing a debtor financing arrangement, may be drawn at any time and may be terminated by the bank without notice. The commercial bill facility may be drawn at any time and is subject to annual review. The bank loan facility of a controlled entity may be drawn at any time in Pounds Sterling and expires on 30 June 2008 (2006 – 30 June 2007).

The current interest rates are 7.05% on the overdraft (2006: 6.55%), 6.75% on the commercial bill facility (2006: 6.18%) and 7.66% on the controlled entity bank loan (2006: 7.25%).

(e) interest rAte exposures The following table sets out the Group’s exposure to interest rate risk, including the contractual repricing dates

and the effective weighted average interest rate by maturity periods.

Exposures arise predominantly from liabilities bearing variable interest rates as the Group intends to hold fixed rate liabilities to maturity.

fixed interest maturinG in: Floating 1 year over 1 to More than interest rate or less 5 years 5 years total 2007 Notes $’000 $’000 $’000 $’000 $’000

Bank overdrafts and loans 17 15,764 827 - - 16,591

Commercial bills payable 17 4,400 - - - 4,400

20,164 827 - - 20,991 Weighted average interest rate 6.98% 7.66%

2006 Bank overdrafts and loans 17 5,166 873 - - 6,039

Commercial bills payable 17 4,400 - - - 4,400

9,566 873 - - 10,439

Weighted average interest rate 6.38% 7.25%

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Note 17 current Liabilities – Borrowings (continued)

(f) FAir vAlue The carrying amounts and fair values of borrowings at balance date are:

2007 2006 carrying amount Fair value carrying amount Fair value $’000 $’000 $’000 $’000

oN-BaLaNcE ShEEt

Non-traded financial liabilities

Bank overdrafts 15,764 15,764 5,166 5,166 Bank loans 827 827 873 873 Commercial bills payable 4,400 4,400 4,400 4,400

20,991 20,991 10,439 10,439

None of the classes are readily traded on organised markets in standardised form.

Fair value is inclusive of costs which would be incurred on settlement of a liability.

( i ) oN-BaLaNcE ShEEt

The fair value of borrowings is based upon market prices where a market exists or by discounting the expected future cash flows by the current interest rates for liabilities with similar risk profiles.

( i i ) oFF-BaLaNcE ShEEt

The parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in note 27. As explained in those notes, no material losses are anticipated in respect of any of those contingencies and the fair value disclosed below is the directors’ estimate of amounts which would be payable by the Group as consideration for the assumption of those contingencies by another party.

Note 18 current Liabilities – provisions coNSoLiDatED parENt ENtity

2007 2006 2007 2006 $’000 $’000 $’000 $’000

Employee benefits – long service leave 532 531 521 -

Note 19 Non-current Liabilities – payablesOther creditors 92 92 - -

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Note 20 Non-current Liabilities – Deferred tax Liabilities coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

thE BaLaNcE compriSES tEmporary DiFFErENcES

attriButaBLE to:

Property, plant and equipment 478 675 361 550

Other financial assets (investment in Long-Term Senior Executive Share plan) 255 - 255 -

Total deferred tax liabilities 733 675 616 550

Deferred tax liabilities to be settled after more than 12 months 536 499 427 407

Deferred tax liabilities to be settled within 12 months 197 176 189 143

733 675 616 550

property, plant other financial

movEmENtS – and equipment assets totalcoNSoLiDatED $’000 $’000 $’000

At 1 July 2005 921 - 921

Charged/(credited) to the income statement (246) - (246)

At 30 June 2006 675 - 675

Charged/(credited) to the income statement (197) 255 58

At 30 June 2007 478 255 733

movEmENtS –

parENt ENtity

At 1 July 2005 693 - 693

Charged/(credited) to the income statement (143) - (143)

At 30 June 2006 550 - 550

Charged/(credited) to the income statement (189) 255 66

At 30 June 2007 361 255 616

Note 21 Non-current Liabilities - provisions coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Employee benefits – long service leave 130 250 130 60

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Note 22 contributed Equity coNSoLiDatED coNSoLiDatED

aND parENt ENtity aND parENt ENtity

2007 2006 2007 2006

Notes shares Shares $’000 $’000 (a) sHAre cApitAl

Fully paid ordinary shares (b),(c)

Total contributed equity – parent entity 82,915,050 82,256,168 24,768 24,398

Treasury shares (d) (3,134,223) - (2,114) -

Total consolidated contributed equity 22,654 24,398

(b) MoveMents in orDinAry sHAre cApitAl:

Date Details notes number of shares issue price $’000 1 July 2005 Opening balance 81,657,866 24,068

14 October 2005 DRP issues (e) 241,979 $0.65 158

31 March 2006 DRP issues (e) 356,323 $0.48 172

30 June 2006 Balance 82,256,168 24,398

13 October 2006 DRP issues (e) 356,262 $0.50 178

30 March 2007 DRP issues (e) 302,620 $0.63 192

30 June 2007 Balance 82,915,050 24,768

(c) orDinAry sHAres Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company

in proportion to the number of and amounts paid on the shares held. All ordinary shares are fully paid.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) treAsury sHAres Treasury shares are shares in Ross Human Directions Limited that are held by the Ross Human Directions Limited

Long-Term Senior Executive Share Trust for the purpose of issuing shares under the Ross Human Directions Limited Long-Term Senior Executive Share Plan (see note 36 for further information).

Date Details number of shares $’000

1 July 2005 and 30 June 2006 Opening balance - -

15 January 2007 to 22 March 2007 Acquisitions of shares by the Trust (3,134,223) (2,114)

30 June 2007 Balance (3,134,223) (2,114)

(e) DiviDenD reinvestMent plAn The dividend reinvestment plan was suspended on 25 June 2007. Prior to that date, the company had

established a dividend reinvestment plan under which holders of ordinary shares could elect to have all or part of their dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash. Shares were issued under the plan at a 5% discount to the market price.

(f) long-terM senior executive sHAre plAn Information relating to the Ross Human Directions Limited Long-Term Senior Executive Share Plan, including

details of shares issued under the scheme, is set out in note 36.

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(g) options AnD perForMAnce sHAre rigHts Information relating to the Ross Human Directions Limited Employee Share Option and Performance Share

Rights Plans, including details of options and performance share rights issued, exercised and lapsed during the financial year and options outstanding at the end of the financial year, is set out in note 36.

(h) sHAre Buy-BAcK There is no current on-market buy back.

Note 23 reserves and retained profits coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

(a) reserves Share-based payments reserve 541 335 541 335

Foreign currency translation reserve (1,046) 48 - -

(505) 383 541 335

movEmENtS:

Share-based payments reserve

Balance 1 July 335 238 335 238

Option expense 57 97 57 97

Long-Term Senior Executive Share Plan expense 149 - 149 -

Balance 30 June 541 335 541 335

Foreign currency translation reserve

Balance 1 July 48 (272) - -

Currency translation differences arising during the year (1,094) 320 - -

Balance 30 June (1,046) 48 - -

(b) retAineD proFits Movements in retained profits were as follows:

Balance at 1 July 10,472 8,698 3,234 4,724

Net profit for the year 5,005 5,045 3,795 1,781

Dividends (3,254) (3,271) (3,297) (3,271)

Balance at 30 June 12,223 10,472 3,732 3,234

(c) nAture AnD purpose oF reserves

( i ) SharE BaSED paymENtS rESErvE

The share based payments reserve is used to recognise:

n the fair value of options and performance share rights issued but not exercised,

n the fair value of shares issued to senior executives,

n in the Group – the issue of shares held by the Ross Human Directions Limited Long-Term Senior Executive Share Trust to senior executives, and

n in the parent entity – the fair value of shares, options and performance share rights issued to employees of subsidiaries and the funding of the share purchase by the Ross Human Directions Limited Long-Term Senior Executive Share Trust.

( i i ) ForEiGN currENcy traNSLatioN rESErvE

Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.

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Note 24 Dividends parENt ENtity

2007 2006

$’000 $’000

orDinAry sHAres Final dividend for the year ended 30 June 2006 of 2 cents (2005 – 2 cents) per fully paid share paid on 13 October 2006 (2005 – 14 October 2005)

Fully franked based on tax paid @ 30% 1,645 1,633

Interim dividend for the year ended 30 June 2007 of 2 cents (2006 – 2 cents) per fully paid share paid on 30 March 2007 (2006 – 31 March 2006)

Fully franked based on tax paid @ 30% 1,652 1,638

Total dividends provided for or paid 3,297 3,271

Dividends paid in cash or satisfied by the issue of shares under the dividend reinvestment plan during the years ended 30 June 2007 and 30 June 2006 were as follows:

Paid in cash 2,927 2,941

Satisfied by issue of shares 370 330

3,297 3,271

DiviDenDs not recogniseD At yeAr enD In addition to the above dividends, since year end the directors have recommended the payment of a final dividend of 2 cents per fully paid ordinary share, (2006 – 2 cents) fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 12 October 2007 out of retained profits at 30 June 2007, but not recognised as a liability at year end, is: 1,658 1,645

FrAnKeD DiviDenDsThe franked portions of the dividends recommended after 30 June 2007 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ended 30 June 2007.


2007 2006 2007 2006 $’000 $’000 $’000 $’000

Franking credits available for subsequent financial years based on a tax rate of 30% (2006: 30%) 2,320 3,151 2,320 3,151

The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for:

(a) franking credits that will arise from the payment of the current tax liability

(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date, and

(d) franking credits that may be prevented from being distributed in subsequent financial years.

The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of $710,000 (2006: $707,000).

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Note 25 key management personnel Disclosures

(a) Directors The following persons were directors of Ross Human Directions Limited during the financial year:

Chairman – non-executive FA McDonald

Executive directors JM Ross, Executive Deputy Chairman RE Shreeve, Group Managing Director (from 5 March 2007)

Non-executive directors KL Wilson EJ Doyle H Henderson was appointed to the position of non-executive director on 1 July 2006.

(b) otHer Key MAnAgeMent personnel The following persons also had authority and responsibility for planning, directing and controlling the

activities of the Group, directly or indirectly, during the financial year:

name position employerCA Riley Managing Director Recruitment (Aust/NZ) Ross Human Directions Limited (from 21 May 2007)

GJ Meekin Chief Financial Officer/Company Secretary Ross Human Directions Limited (from 26 February 2007)

PD Madden Managing Director Ross Consulting/Ross Payroll Ross Human Directions Limited Outsourcing/Ross MTS and Chief Information Officer

L Robertson Group Operations Manager (from 2 April 2007) Ross Human Directions Limited

C Vickers-Willis Group Marketing Director (from 2 April 2007) Ross Human Directions Limited

P Ritchie General Manager Ross Hong Kong Ross Recruitment Limited (HK)

I Boztepe General Manager Singapore/Malaysia Ross Recruitment (S) Pte Ltd

CA Shewry Global Managing Director Julia Ross Ross Human Directions Limited (from 1 July 2006 to 31 October 2006)

CJ McFadden Chief Financial Officer/Company Secretary Ross Human Directions Limited (from 1 July 2006 to 26 February 2007)

The following persons had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the year ended 30 June 2006:

name position employerCA Shewry Global Managing Director Julia Ross Ross Human Directions Limited (from 1 March 2006)

RE Shreeve Global Managing Director Ross (IT, Specialist, Ross Human Directions Limited Executive, Consulting, MTS and Payroll Outsourcing) (from 1 May 2006)

ID Martin Strategic Director (from 15 August 2005 to Ross Human Directions Limited 30 June 2006)

PD Madden Managing Director Ross Consulting/Ross Payroll Ross Human Directions Group Outsourcing/Ross MTS and Chief Information Officer Limited

RA Pierro General Manager Julia Ross Ross Human Directions Limited

CJ McFadden Chief Financial Officer/Company Secretary Ross Human Directions Limited

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Note 25 key management personnel Disclosures (continued)

(c) Key MAnAgeMent personnel coMpensAtion coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$ $ $ $

Short-term employee benefits 2,326,401 1,967,029 1,824,916 1,700,545

Post employment benefits 77,352 130,182 75,560 112,043

Share-based payments 182,068 90,789 174,262 50,002

2,585,821 2,188,000 2,074,738 1,862,590

The company has taken advantage of the relief provided by Corporations Regulations CR2M.6.04 and has

transferred the detailed remuneration disclosures to the directors’ report. The relevant information can be found in sections A-C of the remuneration report on pages 10 to 19.

(d) equity instruMent Disclosures relAting to Key MAnAgeMent personnel

( i ) optioNS aND pErFormaNcE SharE riGhtS proviDED aS rEmuNEratioN aND SharES iSSuED oN

ExErciSE oF Such optioNS aND pErFormaNcE SharE riGhtS

Details of options and performance share rights provided as remuneration and shares issued on the exercise of such options and performance share rights, together with terms and conditions can be found in Section D of the remuneration report on pages 20 to 21.

( i i ) SharES proviDED aS rEmuNEratioN uNDEr thE LoNG-tErm SENior ExEcutivE SharE pLaN

Details of shares provided as remuneration under the Long-Term Senior Executive Share Plan, together with terms and conditions can be found in Section D of the remuneration report on pages 20 to 21.

(iii) SharE, optioN aND pErFormaNcE SharE riGhtS hoLDiNGS

The numbers of shares issued under the Long-Term Senior Executive Share Plan and options/performance share rights over ordinary shares in the company held during the financial year by each director of Ross Human Directions Limited and other key management personnel of the Group, including their personally-related parties, are set out below:

2007 Balance at Balance the start granted as other at the end vested and name of the year compensation exercised changes of the year exercisable unvested DirEctorS oF roSS

humaN DirEctioNS LimitED

RE Shreeve* - 1,428,571 - - 1,428,571 - 1,428,571

othEr kEy maNaGEmENt

pErSoNNEL oF thE Group

GJ Meekin# 50,000 - - (20,000) 30,000 - 10,000

PD Madden^ 204,558 - - - 204,558 - 68,186

P Ritchie^ 80,000 - - - 80,000 - 26,667

CJ McFadden^ 225,000 - - (225,000) - - -

* Shares granted under the Long-Term Senior Executive Share Plan # Options granted under the Employee Share Option Scheme ^ Unlisted performance share rights granted

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2006 Balance at Balance the start granted as other at the end vested and name of the year compensation exercised changes of the year exercisable unvested

DirEctorS oF roSS


FA McDonald# 100,000 - - (100,000) - - -

FH Burke# 100,000 - - (100,000) - - -

KL Wilson# 70,000 - - (70,000) - - -

JM Beaumont^ 505,545 - - (505,545) - - -



ID Martin^ - 450,000 - (450,000) - - -

PD Madden^ 204,558 - - - 204,558 - 136,372

RA Pierro#^ 170,000 - - - 170,000 - 105,000

CJ McFadden^ - 225,000 - - 225,000 - 225,000

# Options granted under the Employee Share Option Scheme ^ Unlisted performance share rights granted

(iv) sHAre HolDings The numbers of shares in the company held during the financial year by each director of Ross Human Directions

Limited and other key management personnel of the Group, including their personally-related parties, are set out below. There were no shares granted during the year as compensation apart from shares granted to Mr RE Shreeve, Group Managing Director, under the Long-Term Senior Executive Share Plan (see below).

2007 received during Balance at the the year on the other changes Balance at the name start of the year exercise of options during the year end of the year

DirEctorS oF roSS


Ordinary shares

JM Ross 37,728,499 - (692,553) 37,035,946

FA McDonald 367,500 - 50,000 417,500

KL Wilson 43,981 - 3,200 47,181

EJ Doyle 10,000 - - 10,000



Ordinary shares

RA Pierro 3,000 - - 3,000

Mr RE Shreeve, Group Managing Director has a beneficial interest in 1,428,571 ordinary Ross Human Directions

Limited shares, subject to vesting conditions. These shares were granted during the year under the terms of the Long-Term Senior Executive Share Plan.

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Note 25 key management personnel Disclosures (continued)

(d) equity instruMent Disclosures relAting to Key MAnAgeMent personnel (continued) 2006 received during Balance at the the year on the other changes Balance at the name start of the year exercise of options during the year end of the year

DirEctorS oF roSS


Ordinary shares JM Ross 36,394,734 - 1,333,765 37,728,499

FA McDonald 314,500 - 53,000 367,500

FH Burke 37,462 - (37,462) -

KL Wilson 40,972 - 3,009 43,981

EJ Doyle - - 10,000 10,000



Ordinary shares RA Pierro 3,000 - - 3,000

(e) loAns to Key MAnAgeMent personnel There were no loans to directors of Ross Human Directions Limited and other key management personnel of the

Group, including their personally-related parties during the year.

(f) otHer trAnsActions WitH Key MAnAgeMent personnel Ms Julia Ross, Executive Deputy Chairman controls a company, TPC Nominees Pty Limited. Ross Human Directions

Limited has rented a floor in an office building from TPC Nominees Pty Limited for the past seven years. The rental agreement is based on normal commercial terms and conditions. The rent and outgoings amounted to $68,222 (2006 - $72,763) for the company and the Group.

Note 26 remuneration of auditors coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$ $ $ $

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

(a) AuDit services PricewaterhouseCoopers Australian firm

Audit and review of financial reports 251,800 225,000 251,800 117,000

Related practices of PricewaterhouseCoopers Australian firm 39,069 60,135 - -

Non-PricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the Group 12,519 18,377 - -

Total remuneration for audit services 303,388 303,512 251,800 117,000For

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2007 2006 2007 2006

$ $ $ $

(b) non-AuDit services

auDit-rELatED SErvicES

Non-PricewaterhouseCoopers audit firms

Valuation of intangibles acquired from business combination - 15,000 - 15,000

Valuations of options - 8,266 - 7,648

Company secretarial 28,446 - - -

Long-Term Senior Executive Share Plan advice 8,762 - 8,762 -

IT Strategy 65,250 - 65,250 -

Total remuneration for audit-related services 102,458 23,266 74,012 22,648

taxatioN SErvicES

Non-PricewaterhouseCoopers audit firms

Tax compliance services 45,696 256,647 36,000 218,573

Total remuneration for taxation services 45,696 256,647 36,000 218,573

Total remuneration for non-audit services 148,154 279,913 110,012 241,221

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory duties where PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally legal advice and client surveys, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.

Note 27 contingent LiabilitiesThe parent entity and the Group had contingent liabilities at 30 June 2007 in respect of:

clAiMsDuring a previous financial period, claims were lodged with the company in respect of activities that relate to SPHN (ACT) Pty Limited and its controlled entities prior to their acquisition. Based on professional advice, the directors believe that the claims fall within the warranties given by the vendor, Spherion Corporation USA, at acquisition. Based on the latest published information of Spherion Corporation USA, the directors believe that Spherion Corporation USA is able to meet any or all liabilities that may arise under these claims.

In addition, the parent entity had contingent liabilities at 30 June 2007 and 30 June 2006 in respect of:

guArAnteesGuarantees given in respect of a bank loan of a controlled entity amounting to $974,000 (2006 - $906,000), secured by a fixed and floating charge over the assets of the parent entity and its Australian controlled entities, and unsecured guarantees given in respect of:

(a) leases of rental premises amounting to $1,033,000 (2006 – $1,335,000)

(b) contractual agreements between the parent entity and other third parties amounting to $Nil (2006 - $150,000).

Cross guarantees have been given by Ross Human Directions Limited and a number of its controlled entities as listed in note 32. No deficiencies of assets exist in any of these companies.

These guarantees may give rise to liabilities in the parent entity if the subsidiaries do not meet their obligations under the terms of the loans, leases or other liabilities subject to the guarantees.

No material losses are anticipated in respect of any of the above contingent liabilities.

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Note 28 commitments for Expenditure coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

LEaSE commitmENtS: Group compaNy aS LESSEE

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, payable:

Within one year 3,812 3,222 2,260 1,502

Later than one year but not later than five years 8,597 9,714 5,684 5,346

Later than five years 15 752 15 752

12,424 13,688 7,959 7,600

Representing:

Non-cancellable operating leases 12,424 13,688 7,959 7,600

Operating leases

The Group leases various offices under non-cancellable operating leases expiring within one to five years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

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

Within one year 3,812 3,222 2,260 1,502

Later than one year but not later than five years 8,597 9,714 5,684 5,346

Later than five years 15 752 15 752

12,424 13,688 7,959 7,600

Note 29 related party transactions

(a) pArent entities The ultimate parent entity and the ultimate Australian parent entity in the wholly-owned Group is Ross Human

Directions Limited.

(b) suBsiDiAries Interests in subsidiaries are set out in note 31.

(c) Key MAnAgeMent personnel Disclosures relating to key management personnel are set out in note 25.

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(d) trAnsActions WitH relAteD pArties The following transactions occurred with related parties: coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$ $ $ $

purchaSES oF GooDS aND SErvicES

Purchases of in-house developed software from subsidiaries - - - 191,065

tax coNSoLiDatioN LEGiSLatioN

Current tax payable assumed from wholly-owned tax consolidated entities - - - 331,284

Tax losses assumed from wholly-owned tax consolidated entities (881,716) -

SupEraNNuatioN coNtriButioNS

Contributions to superannuation funds on behalf of employees 17,193,157 14,968,301 10,340,702 9,460,779

(e) loAns to/FroM relAteD pArties

LoaNS to SuBSiDiariES

Beginning of the year - - 6,418,679 4,382,456

Loans advanced - - - 2,036,223

Loan repayments received - - (6,418,679) -

End of year - - - 6,418,679

LoaNS From SuBSiDiariES

Beginning of the year - - 10,733,743 7,352,599

Loans advanced - - - 3,381,144

Loan repayments made (10,379,650) -

End of year - - 354,093 10,733,743

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

(f) guArAntees The parent entity has provided guarantees in respect of:

Bank loan of a subsidiary (unsecured) - - 974,000 906,000

(g) terMs AnD conDitions In-house developed software sold during the 30 June 2006 year was at cost plus margin.

The terms and conditions of the tax funding agreement are set out in note 8(d).

All other transactions were made on normal commercial terms and conditions and at market rates, except that there are no fixed terms for the repayment of loans between the parties. Loans to/from subsidiaries are interest free.

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Note 30 Business combination

(a) suMMAry oF Acquisition

acquiSitioN oF SphN (act) pty LimitED aND itS coNtroLLED ENtitiES – 2006

A deferred settlement payment of $4,367,000 was made during the year ended 30 June 2006 in relation to the acquisition of the issued share capital of SPHN (ACT) Pty Limited and its controlled entities in the 30 June 2005 period. This was brought to account as a component of goodwill arising on the acquisition during the 2005 period.

Details are as follows: 2007 2006 $’000 $’000

Purchase consideration (refer to (b) below):

Cash paid - 4,367

Total cash consideration - 4,367

Extinguishment of deferred settlement liability - (4,367)

Total purchase consideration - -

(b) purcHAse consiDerAtion coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Outflow of cash to acquire subsidiary and business interest and net of cash acquired

Cash consideration - 4,367 - 4,367

Outflow of cash - 4,367 - 4,367

Note 31 SubsidiariesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1(b). country of class of e quity holding***name of entity incorporation shares 2007 2006 % %

Julia Ross Personnel Pty Limited* Australia Ordinary 100 100

Ross Training Pty Limited* Australia Ordinary 100 100

Ross Financial Pty Limited* Australia Ordinary 100 100

Ross Industrial Pty Limited* Australia Ordinary 100 100

Ross IT Consulting Pty Limited* Australia Ordinary 100 100

Ross Executive Pty Limited* Australia Ordinary 100 100

The Ross Group of Companies Pty Limited* Australia Ordinary 100 100

Ross Recruitment Pty Limited* Australia Ordinary 100 100

Julia Ross Call Centre Solutions Pty Limited* Australia Ordinary 100 100

Ross Outsourcing Pty Limited* Australia Ordinary 100 100

Associated Recovery Services Pty Limited* Australia Ordinary 100 100

Firstwater Pty Limited* Australia Ordinary 100 100

Firstwater Executive Pty Limited* Australia Ordinary 100 100

Julia Ross Recruitment Pty Limited* Australia Ordinary 100 100

Office Angels (Australia) Pty Limited* Australia Ordinary 100 100

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country of class of e quity holding***name of entity incorporation shares 2007 2006

% %

Ross Calibre Pty Limited* Australia Ordinary 100 100

Rossolutions Pty Limited* Australia Ordinary 100 100

SPHN (ACT) Pty Limited* Australia Ordinary 100 100

SPHN Australia Pty Limited* Australia Ordinary 100 100

Ross Human Directions Group Limited (formerly SPHN Group Limited)* Australia Ordinary 100 100

Verossity Pty Limited* Australia Ordinary 100 100

Ross Logic Pty Limited* Australia Ordinary 100 100

Ross Logic Outsourcing Pty Limited* Australia Ordinary 100 100

Ross Navigate Pty Limited* Australia Ordinary 100 100

SPHN Payroll Pty Limited* Australia Ordinary 100 100

A.C.N. 112 623 542 Pty Limited* Australia Ordinary 100 100




CPG Multimedia Research Pty Limited** Australia Ordinary - 100

CP Software Export Pty Limited** Australia Ordinary - 100

Ross Human Directions Limited New Zealand Ordinary 100 100

Ross Recruitment Limited (formerly Verossity Limited) New Zealand Ordinary 100 100

Ross Calibre Limited New Zealand Ordinary 100 100

Rossolutions Limited New Zealand Ordinary 100 100

Ross HD Limited New Zealand Ordinary 100 100

Firstwater Limited New Zealand Ordinary 100 100

Julia Ross Hot Limited New Zealand Ordinary 100 100

Ross Navigate Limited New Zealand Ordinary 100 100

Ross Logic Limited New Zealand Ordinary 100 100

ZZZ Limited New Zealand Ordinary 100 100

Ross Recruitment (S) Pte Limited (formerly Verossity (S) Pte Limited) Singapore Ordinary 100 100

Ross Recruitment (M) Sdn Bhd (formerly Verossity (M) Sdn Bhd) Malaysia Ordinary 100 100

Ross Human Directions Limited Hong Kong Ordinary 100 100

Ross Recruitment Limited (formerly Verossity Limited) Hong Kong Ordinary 100 100

Verossity Education Limited Hong Kong Ordinary 100 100

Rossolutions Limited Hong Kong Ordinary 100 100

Ross Solutions Consulting Limited Hong Kong Ordinary 100 100

Ross HD Limited Hong Kong Ordinary 100 100

Firstwater Executive Limited Hong Kong Ordinary 100 100

Julia Ross Hot Limited Hong Kong Ordinary 100 100

Ross Logic Limited Hong Kong Ordinary 100 100

Ross Navigate Limited Hong Kong Ordinary 100 100

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Note 31 Subsidiaries (continued) country of class of e quity holding***name of entity incorporation shares 2007 2006

% %

Ross Calibre Limited Hong Kong Ordinary 100 100

Strathord International Limited** Hong Kong Ordinary - 100

Ross Human Directions Limited United Kingdom Ordinary 100 100

Julia Ross Hot Limited United Kingdom Ordinary 100 100

Ross Calibre Limited United Kingdom Ordinary 100 100Verossity Limited United Kingdom Ordinary 100 100Ross HD Limited United Kingdom Ordinary 100 100Ross Logic Limited United Kingdom Ordinary 100 100Rossolutions Limited United Kingdom Ordinary 100 100Ross Navigate Limited United Kingdom Ordinary 100 100Ross Human Directions Limited Ireland Ordinary 100 -

* These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by the Australian Securities & Investments Commission. For further information see note 32.

** These dormant subsidiaries were deregistered during the year.*** The proportion of ownership interest is equal to the proportion of voting power held.

Note 32 Deed of cross GuaranteeRoss Human Directions Limited, Julia Ross Personnel Pty Limited, Ross Training Pty Limited, Ross Financial Pty Limited, Ross Industrial Pty Limited, Ross IT Consulting Pty Limited, Ross Executive Pty Limited, The Ross Group of Companies Pty Limited, Ross Recruitment Pty Limited, Julia Ross Call Centre Solutions Pty Limited, Ross Outsourcing Pty Limited, Associated Recovery Services Pty Limited, Firstwater Pty Limited, Firstwater Executive Pty Limited, Julia Ross Recruitment Pty Limited, Office Angels (Australia) Pty Limited, Ross Calibre Pty Limited, Rossolutions Pty Limited, SPHN (ACT) Pty Limited, SPHN Australia Pty Limited, Ross Human Directions Group Limited (formerly SPHN Group Limited), Verossity Pty Limited, Ross Logic Pty Limited, Ross Logic Outsourcing Pty Limited, Ross Navigate Pty Limited, SPHN Payroll Pty Limited, A.C.N 112 623 542 Pty Limited, A.C.N 113 177 825 Pty Limited, A.C.N 113 178 206 Pty Limited and A.C.N 113 177 521 Pty Limited are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly owned entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities & Investments Commission.

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(a) consoliDAteD incoMe stAteMent AnD A suMMAry oF MoveMents in consoliDAteD retAineD proFits

The above companies represent a “Closed Group” for the purposes of the Class Order, and as there are no other parties to the Deed of Cross Guarantee that are controlled by Ross Human Directions Limited, they also represent the “Extended Closed Group”.

Set out below is a consolidated income statement and a summary of movements in consolidated retained profits for the year ended 30 June 2007 of the Closed Group.

2007 2006

$’000 $’000

iNcomE StatEmENt

Revenue from continuing operations 302,515 289,506Other income - 4Costs of temporary staff (246,523) (238,123)Employee benefits expense (33,074) (31,876)Depreciation and amortisation expenses (1,586) (1,394)Reduction in carrying amount of goodwill due to realisation of acquired tax losses (424) (1,288)Finance costs (1,705) (1,356)Other expenses (14,912) (13,726)

Profit before income tax 4,291 1,747Income tax (expense) benefit (1,051) 797

Profit for the year 3,240 2,544

Summary oF movEmENtS iN coNSoLiDatED rEtaiNED proFitS Retained profits at the beginning of the financial year 5,869 6,596Profit for the year 3,240 2,544Dividends paid (3,254) (3,271)

Retained profits at the end of the financial year 5,855 5,869

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Note 32 Deed of cross Guarantee (continued)

(b) BAlAnce sHeet Set out below is a consolidated balance sheet as at 30 June 2007 of the Closed Group. 2007 2006

$’000 $’000

Current assets

Cash and cash equivalents 4,667 693 Trade and other receivables 52,158 43,277

Total current assets 56,825 43,970

Non-current assets Other financial assets 1,230 1,230 Property, plant and equipment 2,865 1,354 Deferred tax assets 2,311 2,719 Intangible assets 10,228 10,925

Total non-current assets 16,634 16,228

Total assets 73,459 60,198

Current liabilities Trade and other payables 22,500 18,365 Borrowings 20,164 9,567 Current tax liabilities 279 - Provisions 518 506

Total current liabilities 43,461 28,438

Non-current liabilities Payables 92 256 Deferred tax liabilities 724 652 Provisions 132 250

Total non-current liabilities 948 1,158

Total liabilities 44,409 29,596

Net assets 29,050 30,602

Equity Contributed equity 22,654 24,398 Reserves 541 335 Retained profits 5,855 5,869

Total equity 29,050 30,602

Note 33 Events occurring after reporting DateSince year end, the directors have recommended the payment of a final dividend of 2 cents per fully paid ordinary share, fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 12 October 2007 is $1.658 million. Apart from this, there are no material post balance date events.F

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Note 34 reconciliation of profit after income tax to Net cash inflow from operating activities


2007 2006 2007 2006

$’000 $’000 $’000 $’000

Profit for the year 5,005 5,045 3,795 1,781

Depreciation and amortisation 1,718 1,470 1,176 896

Impairment of goodwill 424 1,288 - -

Non-cash employee benefits expense – share based payments 206 97 206 97

Dividend and interest income (217) (81) (129) (24)

Net loss (gain) on sale of non-current assets 45 245 - (4)

(Increase) decrease in trade debtors (11,694) 10,000 (2,466) 1,216

Decrease (increase) in deferred tax assets 491 (288) (424) (256)

Decrease (increase) in other operating assets 1,874 (3,055) (2,125) (1,591)

Increase (decrease) in trade creditors 2,265 125 730 (407)

Increase in other operating liabilities 1,960 1,211 1,932 2,436

Increase (decrease) in provision for income taxes payable 282 (1,176) 278 (1,216)

Increase (decrease) in deferred tax liabilities 58 (246) 66 (143)

(Decrease) increase in other provisions (119) 141 591 31

Effect of exchange rates on non-cash assets and liabilities (493) - - -

Net cash inflow from operating activities 1,805 14,776 3,630 2,816

non-cAsH investing AnD FinAncing ActivitiesDividends satisfied by the issue of shares under the dividend reinvestment plan are shown in note 24.

Note 35 Earnings per Share coNSoLiDatED

2007 2006 cents cents

(a) BAsic eArnings per sHAre Profit attributable to the ordinary equity holders of the company 6.1 6.2

(b) DiluteD eArnings per sHAre Profit attributable to the ordinary equity holders of the company 6.0 6.1

(c) reconciliAtions oF eArnings useD in cAlculAting eArnings per sHAre

coNSoLiDatED

2007 2006

$’000 $’000

BaSic EarNiNGS pEr SharE

Profit attributable to the ordinary equity holders of the company used in calculating basic earnings per share 5,005 5,045

DiLutED EarNiNGS pEr SharE

Profit attributable to the ordinary equity holders of the company used in calculating diluted earnings per share 5,005 5,045

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Note 35 Earnings per Share (continued)

(d) WeigHteD AverAge nuMBer oF sHAres useD As A DenoMinAtor coNSoLiDatED

2007 2006 number Number

WEiGhtED avEraGE NumBEr oF orDiNary SharES uSED

aS a DENomiNator iN caLcuLatiNG BaSic EarNiNGS pEr SharE 82,586,220 81,918,408

Adjustments for calculation of diluted earnings per share:

Options/performance share rights 704,147 1,327,558

WEiGhtED avEraGE NumBEr oF orDiNary SharES aND potENtiaL

orDiNary SharES uSED aS a DENomiNator iN caLcuLatiNG

DiLutED EarNiNGS pEr SharE 83,290,367 83,245,966

(e) inForMAtion concerning tHe clAssiFicAtion oF securities

optioNS

Options and performance share rights granted to employees under the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options and performance share rights have not been included in the determination of basic earnings per share. Details relating to the options and performance share rights are set out in note 36.

Note 36 Share-Based payments

(a) ross HuMAn Directions liMiteD eMployee sHAre option AnD perForMAnce sHAre rigHts plAns

Details of the Ross Human Directions Limited Employee Share Option and Performance Share Rights Plans are set out below.

roSS humaN DirEctioNS LimitED EmpLoyEE SharE optioN pLaN

Offers

Under the Employee Share Option Plan, the board may offer options, such offer being in a form determined by the board. All staff are eligible to participate in the plan (including executive directors).

Exercise Price – the prevailing market price of the share at the date of issue of the option (the ‘issue date’).

Exercise Period – an option may be exercised at any time after the option has vested but prior to the first to occur of:

n for grants on or after 15 October 2004, the expiry of 42 months after the issue date of that option (for grants prior to 15 October 2004, the expiry of 5 years after the issue date of the option)

n the expiry of 30 days after termination of the participant’s employment without cause or ceasing to be a director

n immediately upon termination of the participant’s employment with cause, and

n if the participant is a director, not sooner than 3 days and not later than 30 days following the release of the preliminary final result, the half yearly result or the annual report of the company.

Vesting

Unless otherwise determined by the board, the grant of options vests as follows:

For grants on or after 15 October 2004, over a period of 36 months as follows:

n one third of the number of options granted vest on the expiry of 12 months after the issue date

n a further one third of the number of options granted vest on expiry of 24 months after the issue date, and

n the final one third of the number of options granted vest on the expiry of 36 months after the issue date.

(continued)


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For grants prior to 15 October 2004, over a period of 54 months as follows:

n 25% of the number of options granted vest on the expiry of 18 months after the issue date n a further 25% of the number of options granted vest on expiry of 30 months after the issue date n a further 25% of the number of options granted vest on the expiry of 42 months after the issue date, and n the final 25% of the number of options granted vest on expiry of 54 months after the issue date.

Performance Hurdle

No option can be exercised until the directors are satisfied that the total return on a Share during the preceding 12 month period, or such other period as the directors deem necessary (‘Total Shareholder Return’) is in excess of at least one half of the Total Shareholder Returns quoted on the ASX All Industries Accumulation Index (the ‘performance hurdle’).

The directors will make this determination at the first board meeting after each relevant vesting date of options. At each such meeting, the directors will determine whether the performance hurdle has been met in regard to any vested options that were not able to be exercised because the performance hurdle had not been met on any previous vesting date.

roSS humaN DirEctioNS LimitED pErFormaNcE SharE riGhtS pLaN

Offers

Under the Performance Share Rights Plan, the board may offer performance share rights, such offer being in a form determined by the board. All staff are eligible to participate in the plan (including executive directors).

Exercise Price - $Nil.

Exercise Period – a performance share right may be exercised at any time after the right has vested but prior to the first to occur of:

n the expiry of 5 years after the issue date of the performance share right n the expiry of 30 days after termination of the participant’s employment with the company n the 5th business day immediately following the end of any offer period in respect of a takeover bid of the

company provided that at the end of the offer period the bidder holds a relevant interest of not less than 50% of the ordinary shares of the company or a majority of directors of the company have recommended that offers under the takeover bid for the company be accepted.

n Any other date as the board in its absolute discretion determines.

Vesting

Unless otherwise determined by the board, the grant of performance share rights vests over a period of 36 months as follows:

n one third of the number of performance share rights granted vest on the expiry of 12 months after the issue date

n a further one third of the number of performance share rights granted vest on expiry of 24 months after the issue date, and

n the final one third of the number of performance share rights granted vest on the expiry of 36 months after the issue date.

Performance Hurdle

No performance share right can be exercised until the directors are satisfied that the performance hurdle in respect to growth in basic earnings per share has been satisfied. If the growth in basic earnings per share is equal to or greater than:

n 7%, then one third of the employees’ vested performance share rights is available to be vested; n 8%, then two thirds of the employees’ vested performance share rights is available to be vested; n 9%, then the full allocation of the employees’ vested performance share rights is available to be vested.

The directors will make this determination at the first board meeting after each relevant vesting date of performance share rights. At each such meeting, the directors will determine whether the performance hurdle has been met in regard to any vested performance share rights that were not able to be exercised because the performance hurdle had not been met on any previous vesting date.

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Note 36 Share-Based payments (continued)

(a) ross HuMAn Directions liMiteD eMployee sHAre option AnD perForMAnce sHAre rigHts plAns (continued)

Escrow Period

Any shares issued on the exercise of performance share rights must not be transferred or sold to any person for a period of 24 months immediately following the issue of shares. The shares will be placed in trust for the employee by Ross Human Directions Limited and automatically released at the expiration of the 24 month period. Dividends paid (that relate to the shares held in trust) will be paid directly to the employee.

Limit on Options and Performance Share Rights

The total number of shares represented by options or performance share rights issued under the Employee Share Option and Performance Share Rights Plans will not exceed 5% of all shares.

Other matters

Options and performance share rights granted under the plans carry no dividend or voting rights. Options are granted for no consideration. Performance share rights are granted for $1.00 for the whole grant. The amount received on their exercise is recognised as issued capital at the date of issue of the shares.

Other Details

Set out below are summaries of options and performance share rights granted under the plans. Balance at granted exercised lapsed Balance exercisable exercise start of during the during during at end of at end of grant date expiry date price the year the year the year the year the year the year number number number number number number

Consolidated and parent entity – 2007

19 February 2002** 19 February 2007 $1.35 140,000 - - (140,000) - -

15 October 2004 15 April 2008 $0.68 483,000 - - (181,000) 302,000 -

19 November 2004* 19 November 2009 $0.00 584,558 - - (50,000) 534,558 -

8 March 2005 8 September 2008 $0.68 134,000 - - (20,000) 114,000 -

9 January 2006* 9 January 2011 $0.00 225,000 - - (225,000) - -

1,566,558 - - (616,000) 950,558 -

Consolidated and parent entity – 2006

4 September 2000** 4 September 2005 $1.00 270,000 - - (270,000) - -

19 February 2002 19 February 2007 $1.35 190,000 - - (50,000) 140,000 -

15 October 2004 15 April 2008 $0.68 708,000 - - (225,000) 483,000 -

19 November 2004* 19 November 2009 $0.00 1,220,103 - - (635,545) 584,558 -

8 March 2005 8 September 2008 $0.68 139,000 - - (5,000) 134,000 -

9 January 2006* 9 January 2011 $0.00 - 675,000 - (450,000) 225,000 -

2,527,103 675,000 - (1,635,545) 1,566,558 - * The issues dated 19 November 2004 and 9 January 2006 were in the form of unlisted performance share rights.** These options expired during the financial period.

No options or performance share rights were exercised during the financial period.

The weighted average remaining life of share options and performance share rights outstanding at the end of the year was 1.74 years (2006 – 2.74 years).

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30 June 2007

Fair value of options and performance share rights granted - 2007

No options or performance share rights were granted in the 30 June 2007 year.

Fair value of performance share rights granted - 2006

The assessed fair value at grant date of performance share rights granted during the year ended 30 June 2006 was 30.5 cents. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the performance share right, the impact of dilution, the share price at grant date and the expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the performance share right.

The model inputs for performance share rights granted during the year ended 30 June 2006 included:

(i) performance share rights are granted for $1.00 for the whole grant, one third of each tranche vests after each of the first three anniversaries of the date of grant

(ii) Exercise price: $nil(iii) Grant date: 9 January 2006(iv) Expiry date: 9 January 2011(v) Share price at grant date: $0.56(vi) Expected price volatility of the company’s shares: 47%(vii) Expected dividend yield: 8.0%(viii) Risk-free interest rate: 5.24% The expected price volatility is based on the historic volatility (based on the remaining life of performance share rights), adjusted for any expected changes in future volatility due to publicly available information.

(b) long-terM senior executive sHAre plAn A plan under which shares may be issued by the company to senior executives for no cash consideration was

approved by the board during the year ended 30 June 2007. All senior executives in the Group are eligible to participate in the plan. Senior executives may elect not to participate in the plan.

During the year, the Ross Human Directions Limited Long-Term Senior Executive Trust was formed to administer the share plan. The Trust has been consolidated in accordance with note 1(b)(ii).

Shares issued by the trust to the employees are acquired on-market prior to the issue. Shares held by the trust and not yet issued to employees at the reporting date are shown as treasury shares in the consolidated financial report, see note 22(d).

Under the plan, eligible senior executives may be granted fully paid ordinary shares in Ross Human Directions Limited for no cash consideration. The market value of shares issued under the plan, measured as the weighted average price at which at which the company’s shares are traded on the Australian Securities Exchange during the week up to and including the date of the grant, is expensed as part of salaries and wages over the vesting period.

The number of shares issued to participants in the plan is the offer amount divided by the weighted average share price as determined as per above.

Vesting

Unless otherwise determined by the board, the grant of shares vests as follows:

n one third of the number of shares granted vest on the expiry of 12 months after the allocation date or such other period as the company, with the agreement of the senior executive may determine

n a further one third of the number of shares granted vest on expiry of 24 months after the allocation date or such other period as the company, with the agreement of the senior executive may determine, and

n the final one third of the number of shares granted vest on the expiry of 36 months after the allocation date or such other period as the company, with the agreement of the senior executive may determine.F

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Note 36 Share-Based payments (continued)

(b) long-terM senior executive sHAre plAn (continued) Performance Hurdle

The performance hurdle is based on basic earnings per share. If the growth in basic earnings per share is equal to or greater than:

n 7%, then one third of the number of shares available for vesting at the time (being one third of the total number of shares) will vest;

n 8%, then two thirds of the number of shares available for vesting at the time will vest; n 9%, then all of the shares available for vesting at the time will vest.

Shares that do not vest (and any entitlements accruing on them) are forfeited.

Disposal Restrictions

A participant must not sell, transfer, encumber, mortgage, charge or otherwise deal with the shares (being the “disposal restrictions”) allocated to the participant during the disposal restrictions period.

The disposal restrictions period commences on the date that the shares are allocated to the participant and ceases on the earlier of:

n the expiration of a period of ten years after the date of allocation; n the date on which the participant ceases to be employed by the company; n the expiration of the escrow period applicable to the shares.

Benefits on Shares

The trustee will hold in trust any income (dividends), bonus shares and other entitlements derived on shares allocated to a participant from the time shares are allocated to a participant until those share vest. The trustee will distribute those dividends, bonus shares or other entitlements to participants on the date on which the shares vest. The participant is not entitled to any earlier distribution of those dividends, bonus shares or other entitlements before the date on which the relevant shares vest.

Voting

Until the vesting date for any shares, the participant must abstain from voting, and not exercise any voting rights attached to, those shares not vested in the participant.

From the vesting date:

n the trustee will give participants, at the same time as they are given to shareholders of the company, notice of every general meeting of the company and any documents which accompany such notice.

n a participant may give the trustee not less than 72 hours before a general meeting of the company written notice of how to vote in respect of the shares held for and vested in that participant and the trustee shall, to the extent permitted by law, exercise such votes accordingly.

n in the absence of a notice from a participant, the trustee shall abstain from voting in respective of shares held for that participant.

Forfeiture of Dividends and Other Entitlements

If any shares are forfeited, all income derived on, all bonus shares that accrue to or any entitlements that accrue to (or any funds, shares, options or other securities arising from the sale or exercise of any entitlements that accrue to) those forfeited shares are also forfeited.

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(continued)

notes to the financial statements30 June 2007

Escrow Period

For a period of 24 months immediately following the vesting of the shares (each period being the escrow period) the disposal restrictions continue. During the escrow period the shares will be held by the trustee in accordance with the trust on behalf of the participant. At the conclusion of the escrow period, the shares are automatically released and the disposal restrictions terminate.

During the escrow period, participants are entitled to receive any dividends or other distributions (if any) paid or made on shares. This applies irrespective of the shares being subject to the disposal restrictions.

During the escrow period, participants are entitled to direct the trustee how the voting rights attaching to the shares will be exercised, either generally or in any particular case. This applies irrespective of the shares being subject to the disposal restrictions.

Grants to Senior Executives of Subsidiary Companies

Where shares are issued to senior executives of subsidiaries within the Group, the subsidiaries compensate Ross Human Directions Limited for the fair value of these shares.

(c) expenses Arising FroM sHAre-BAseD pAyMent trAnsActions Total expenses arising from share-based payment transactions recognised during the year as part of employee

benefits expense were as follows: coNSoLiDatED parENt ENtity

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Options and performance share rights issued under employee share option and performance share rights plans 57,000 97,000 28,000 97,000

Shares issued under Long-Term Senior Executive Share Plan 149,000 - 149,000 -

206,000 97,000 177,000 97,000

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In the directors’ opinion:

(a) the financial statements and notes set out on pages 35 to 89 are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

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

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and

(c) the audited remuneration disclosures set out on pages 10 to 21 of the directors’ report comply with Accounting Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001; and

(d) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 32 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 32.

The directors have been given the declarations by the Group Managing Director and the Chief Financial Officer required by section 295A of the Corporations Act 2001.

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

Fergus AllAn McDonAlD JuliA MAry ross Director Director

Sydney 21 September 2007

directors’ declaration

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independent audit report to the members of ross human Directions Limited

rEport oN thE FiNaNciaL rEport aND thE aaSB 124

rEmuNEratioN DiScLoSurES coNtaiNED iN thE DirEctorS’ rEport

We have audited the accompanying financial report of Ross Human Directions Limited (the company), which comprises the balance sheet as at 30 June 2007, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for both Ross Human Directions Limited and the Ross Human Directions Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at the year's end or from time to time during the financial year.

We have also audited the remuneration disclosures contained in the directors’ report. As permitted by the Corporations Regulations 2001, the company has disclosed information about the remuneration of directors and executives (“remuneration disclosures”), required by Accounting Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” in pages 10 to 23 of the directors’ report and not in the financial report.

DirEctorS’ rESpoNSiBiLity For thE FiNaNciaL rEport aND thE aaSB 124 rEmuNEratioNS DiScLoSurES

coNtaiNED iN thE DirEctorS' rEport

The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes, complies with International Financial Reporting Standards.

The directors of the company are also responsible for the remuneration disclosures contained in the directors’ report.

independent audit report

to tHe MeMBers oF ross HuMAn Directions liMiteD

LiaBiLity LimitED By a SchEmE approvED uNDEr proFESSioNaL StaNDarDS LEGiSLatioN

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auDitor’S rESpoNSiBiLity

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report and the remuneration disclosures contained in the directors’ report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report and the remuneration disclosures contained in the directors’ report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’ report.

Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report.

For further explanation of an audit, visit our website http://www.pwc.com/au/financialstatementaudit.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

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

mattErS rELatiNG to thE ELEctroNic prESENtatioN oF thE auDitED FiNaNciaL rEport

This audit report relates to the financial report and remuneration disclosures of Ross Human Directions Limited (the company) for the financial year ended 30 June 2007 included on the Ross Human Directions web site. The company's directors are responsible for the integrity of the Ross Human Directions web site. We have not been engaged to report on the integrity of this web site. The audit report refers only to the financial report and remuneration disclosures identified above. It does not provide an opinion on any other information which may have been hyperlinked to/from the financial report or remuneration disclosures. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report and remuneration disclosures to confirm the information included in the audited financial report and remuneration disclosures presented on this web site.

iNDEpENDENcE

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

(continued) independent audit report to tHe MeMBers oF ross HuMAn Directions liMiteD

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auDitor’S opiNioN oN thE FiNaNciaL rEport

In our opinion, the financial report of Ross Human Directions Limited is in accordance with the Corporations Act 2001, including:

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

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

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

auDitor’S opiNioN oN thE aaSB 124 remuneration Disclosures containeD in the Directors’ report

In our opinion, the remuneration disclosures that are contained in pages 10 to 23 of the directors’ report comply with Accounting Standard AASB 124.

priceWAterHousecoopers

MArc upcroFt Partner

Sydney21 September 2007

(continued)

independent audit report to tHe MeMBers oF ross HuMAn Directions liMiteD

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30 June 2007

shareholder information

The shareholder information set out below was applicable as at 4 September 2007.

(a) DistriBution oF equity securities Analysis of numbers of equity security holders by size of holding:

ordinary shares shares options

1 — 1,000 152 46

1,001— 5,000 620 8

5,001— 10,000 445 -

10,001— 100,000 744 16

100,001 and over 36 2

1,997 72

There were 91 holders of less than a marketable parcel of ordinary shares.

(b) equity security HolDers Twenty largest quoted equity security holders

The names of the twenty largest holders of quoted equity security are listed below:

ordinary shares

number percentage of name held issued shares

J M Ross 37,080,159 44.72

Corom Pty Limited 7,883,283 9.51

A.C.N. 112623542 Pty Limited 3,134,223 3.78

Queensland Investment Corporation 1,334,384 1.61

V J Plummer 1,181,000 1.42

A M Van Der Steeg 935,024 1.13

John E Gill Operations Pty Limited 644,778 0.78

Dr L Johnson 546,322 0.66

W F Holland 520,000 0.63

Lawnsong Pty Ltd 467,500 0.56

D A Bates 418,070 0.50

Hillmorton Custodians Pty Limited 400,726 0.48

UBS Nominees Pty Limited 378,102 0.46

Altbury Pty Ltd 334,006 0.40

Forbar Custodians Limited 314,566 0.38

Custodial Services Limited 303,683 0.37

P J & J H Eriksen 299,728 0.36

J P Morgan Nominees Australia Limited 291,210 0.35

Five Talents Limited 259,424 0.31

Kosata Pty Limited 250,000 0.30

56,976,188 68.71

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shareholder information

30 June 2007

uNquotED Equity SEcuritiES number number on issue of holders Options/performance share rights issued under the

Employee Share Option and Performance Share Rights Plans to take up ordinary shares 950,558* 72

* Number of unissued ordinary shares under the options/performance share rights. Apart from one employee who holds 21.52% of the issued options/performance share rights, no other person holds 20% or more of these securities

(c) suBstAntiAl HolDers

Substantial holders in the company are set out below: number held percentage Ordinary Shares

J M Ross 37,080,159 44.72

Corom Pty Limited 7,883,283 9.51

(d) voting rigHts The voting rights attaching to each class of equity securities are set out below:

(a) orDiNary SharES

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

(b) optioNS/pErFormaNcE SharE riGhtS

No voting rights.

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corporate directory

Directors Fergus Allan McDonald NoN-ExEcutivE chairmaN

Julia Mary Ross ExEcutivE DEputy chairmaN

Ralph Edward Shreeve Group maNaGiNG DirEctor

Karen Lynne Wilson

Eileen Joy Doyle

Hugh Henderson

secretAry Glenn James Meekin

notice oF AnnuAl The annual general meeting of Ross Human Directions Limited

generAl Meeting will be held at:

Green Room

Wesley Conference Centre

220 Pitt Street

Sydney NSW 2000

Time: 10.00am

Date: 16 November 2007

A formal notice of meeting is enclosed or will be mailed separately to shareholders who have not elected to receive a hard copy of the annual report.

principAl registereD Level 11, 133 Castlereagh Street

oFFice in AustrAliA Sydney NSW 2000 sHAre register Computershare Investor Services Pty Limited

Level 3, 60 Carrington Street

Sydney NSW 2000 AuDitor PricewaterhouseCoopers

Darling Park Tower 2

201 Sussex Street

Sydney NSW 1171 solicitors Gilbert and Tobin

2 Park Street

Sydney NSW 2000 BAnKers National Australia Bank Limited

255 George Street

Sydney NSW 2000

stocK excHAnge listing Ross Human Directions Limited shares are listed on the Australian Stock Exchange.

stocK excHAnge coDe RHD

WeBsite ADDress www.rossjuliaross.com

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www.rossjuliaross.com www.juliaross.com

spine 5mm

ABN 25 003 758 709

ross human directions limited annual report 30 June 2007

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For personal use only - ASX2007/10/16 · Immediately before joining Ross Human Directions, Ralph...

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