company announcements office australian stock … rattray - non-executive director peter wicks -...

11 March 2014 The Manager Company Announcements Office Australian Stock Exchange Limited via ASX Online Total pages - 66 Dear Stephanie,

Re: 2013 Annual Report ComOps Limited lodged its Appendix 4E and unaudited Preliminary Final Report for the year ended 31 December 2013 on Friday 28 February 2014. In compliance with the listing rules, ComOps now lodges its 2013 Annual Report, which includes the audited Financial Statements incorporating the Directors and Auditor’s Reports for the year ended 31 December 2013. For and on behalf of the board of directors of ComOps Limited

Christopher Brooke Company Secretary

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COMPANY PARTICULARS

ComOps Limited ABN 79 000 648 082

The Company’s shares are quoted on the official list of the Australian Securities Exchange Limited The Company’s ASX code is “COM” Directors Niall CAIRNS - non-executive chairman Stephen RATTRAY - non-executive director Peter WICKS - non-executive director Andrew ROBERTS - non-executive director Phillip CARTER - non-executive director Secretary Christopher BROOKE Registered office and head office Ground Floor, 77 Pacific Highway North Sydney NSW 2060 Telephone 1300 853 099 Facsimile 9460 2236 Web address www.comops.com.au Share registry Computershare Investor Services Pty Limited Level 3, 60 Carrington Street Sydney NSW 2000 Telephone 1300 850 505 Facsimile (02) 8235 8150 Auditors Grant Thornton Audit Pty Ltd Level 17, 383 Kent Street Sydney NSW 2000 Australia Bankers St George Bank Level 12, 55 Market Street Sydney NSW 2000

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CONTENTS Page(s) Company particulars 2

Letter from the chairman 4

Directors’ report 5-14

Auditor’s independence declaration 15

Independent auditor’s report 16-18

Directors’ declaration 19

Consolidated statement of profit or loss and other comprehensive income 20

Consolidated statement of financial position 21

Consolidated statement of changes in equity 22

Consolidated statement of cash flows 23

Notes to the financial statements 24-60

Corporate governance statement 61-64

Securities exchange information 65

Annual General Meeting The 2014 annual general meeting of the members of ComOps Limited will be held at the offices of Grant Thornton, Level 17, 383 Kent Street, Sydney on Tuesday 20 May 2014 at 10 am. A formal notice of meeting together with a proxy form and additional information will be mailed to all shareholders.

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LETTER FROM THE CHAIRMAN Dear fellow shareholders, The 2013 financial year was a year of significant transformation for ComOps Limited (ComOps) with the sale of the ERP business unit, associated restructuring and the development of a strategic focus on the growth of the Microster workforce management business. These structural changes and the financial effect are reflected in the financial statements for the year ended 31 December 2013. They include: - Sale of the ComOps ERP, sales force automation and BI businesses and the restructure of ComOps

corporate management to more closely align to the future direction of ComOps;

- Payment in full of all ComOps and subsidiary company debt obligations to the Australian Taxation Office, following adherence to agreed compliance arrangements;

- Substantial operating and fixed cost savings, including the relocation and downsizing of the head office; - Reassessment of the carrying value of assets, including the deferred tax asset and intangibles, to ensure

it is appropriate. The changes, associated costs and the financial impact of repositioning the company are all reflected in the financial statements as at 31 December 2013. The changes also include the raising of new capital, by way of a rights issue and share placement, which not only enabled the settlement of the ATO liabilities, but importantly introduced new, private and institutional shareholders and technology growth company expertise. This enabled the company to report a cash balance of $1,008,042 at year end and a Balance Sheet free of long term debt. The transformation of ComOps will continue in 2014, with board and management’s focus on developing and maximizing the growth potential of the Microster Workforce Management Business. In addition to organic growth, the board will also seek acquisition opportunities to enhance and expand the reach of the highly regarded Microster business platform. The ComOps board is confident that the various initiatives underway will enable ComOps to emerge as a profitable growth company in 2014. In relation to capital management, the board intends to convene a shareholders meeting in early April to refresh the company's 15% placement capacity. Although no decision has been made to issue further equity, the process of refreshing the placement capacity will provide flexibility for potential acquisitions and any other requirements prior to the Annual General Meeting, which is scheduled for late May. In summary, the growth prospects of the Microster business, the newly introduced technology growth company expertise, the expanded shareholder base that has the capacity to invest new capital and the initial acquisition targets being reviewed provide the board with confidence that by organic growth and acquisition, there is a significant opportunity to build shareholder value over the next few years. To assist in delivering on this opportunity the board intends to appoint a suitable technology growth company chief executive officer. A search has commenced and our aim is to complete this process by June. Finally, I would like to thank my fellow directors for their dedication and effort, especially Peter Wicks for his steady stewardship as chairman, during this transformational period. Yours sincerely,

Niall Cairns Chairman

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DIRECTORS REPORT The directors of ComOps Limited submit herewith the annual financial report for the year ended 31 December 2013. In order to comply with the provisions of the Corporations Act 2001, the Directors’ report as follows:

The names and particulars of the current Directors of the Company are: Mr Niall Cairns (Non-Executive Chairman) Niall Cairns is a joint managing director and co-founder of Kestrel Capital Pty Limited, a private equity manager focused on growth companies with global opportunities in the technology, resources, niche manufacturing and services sectors. As an experienced growth company investor and developer, Niall has over 25 years of direct seed, private equity and listed company experience. In 1993 Niall cofounded Kestrel Capital, since which he has raised six funds and led the investments and been a director of companies such as Australian Helicopters, Avand (sold to Technology One), GMD (sold to SMS), Gale Pacific (AVCAL award winner) and Intrapower (sold to TPG Telecom).

Currently, Niall is a director of Tru-Test Corporation Limited, Goldminex Resources Limited and Nanyang Australia II Limited. Niall holds a bachelor of economics (BEc) and is a Chartered Accountant (CA) and Fellow of the Institute of Company Directors (FAICD). Mr Stephen Rattray Non-Executive Director) Steve Rattray has been principal of management consultancy Time Management Group P/L for the past 25 years, during which time he has designed and or managed numerous corporate rebranding, restructuring and reorganisation projects, established and run the Australasian operations of several US financial information distribution groups and been CEO of an ASX listed technologies group. Steve, who has been a substantial shareholder for many years and has consulted to ComOps several times, knows of the capabilities of ComOps Solutions, the markets in which ComOps is a potentially serious contender and also brings valuable experience in areas of capital raising, broker involvement, talent sourcing and the restructuring of SME’s. Andrew Roberts (Non-Executive Director) Andrew Roberts is a business executive /entrepreneur with over 20 years’ experience in the IT industry across Asia Pacific, and the United Kingdom. He has extensive commercial experience in business aggregation, business strategy, technology strategy, professional services, operations and general management. Mr Robert’s specialties include technology incubation, growing business from start-up to sale, business turnarounds, and technology M&A. Over the past 20 years, Andrew has served as a company director on a number of private and public company boards, both in Australia and overseas and is a member of the Australian Institute of Company Directors. He has previously been a director of ComOps Limited after his business was acquired by ComOps in 2008. Phillip Carter (Non-Executive Director) Phillip Carter is a joint managing director of Kestrel Capital Pty Limited, the Sydney‐based private equity manager. Phillip has extensive experience developing and financing technology rich industrials in Australia, Europe and the USA. Recently, as chairman of Prism Group Holdings – a developer of enterprise management information systems software – he led the restructure and turnaround of its global operations and sale of the business to a US competitor, delivering significant returns to investors. Previously, Phillip headed a leading UK technology consulting and investment advisory practice and managed the InterTechnology Fund, recognised by the EVCA as one of the most active development capital funds in Europe. Phillip has been a non-executive director of Goldminex Resources Limited and Sigtec Holdings Pty Ltd (Australia) for the past 5 years. Phillip holds a doctorate and bachelor degree in engineering (PhD, BEng) and a masters degree in finance (MAppFin). He is also a Fellow of the Institute of Company Directors (FAICD) and a Fellow of the Financial Services Institute.

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DIRECTORS REPORT (CONTINUED) Peter Wicks (Non-Executive Director) Peter Wicks is an experienced Chartered Accountant and Fellow of the Institute of Chartered Accountants. Peter has had extensive experience in the natural resources sector and more recently as a property developer. He has been an executive and non-executive director of many ASX listed companies over his career, recently being the executive Chairman of an ASX listed company, Republic Gold Ltd.

Directorships of other listed companies Niall Cairns Goldminex Resources Limited since April 2012

Phillip Carter Goldminex Resources Limited since June 2012

Peter Wicks Republic Gold Limited since November 2005

Company secretary Christopher Brooke Christopher Brooke is ComOps’ Chief Financial Officer and Company Secretary. An experienced finance professional, Chris has worked in senior roles with a range of ASX listed companies over his 23 year career, including KPMG and Boral Energy Resources Ltd as well as the Adelaide companies Suburban Transport Services and FH Faulding Ltd. Prior to joining ComOps, Chris was formerly the Group Chief Financial Officer for Razor Risk Technologies Ltd, whom he had been with since 2007. Chris has a proven track record in driving cost management, cash control and staff utilisations. He also has strengths in finance negotiations, liaison with sales teams and enhancement of management and board reporting information. Chris graduated with a bachelor of economics from Flinders University in 1989 and subsequently qualified as a CPA in 2004 and as an MBA from the University of Adelaide in 2006. Chris is a Fellow Member of both CPA Australia and the Institute of Chartered Secretaries and Administrators (London).

Principal activities The principal activities of the consolidated entity during the financial year were the development, licensing, integration and support of business software to a range of industry sectors. There was significant change to the nature of the consolidated entity’s principal activity during the year, with the sale of the Korellus Enterprise Resource Planning (ERP) business software operations, which had been the principal activity. At the end of the financial year the principal activities of the consolidated group were the provision of workforce management software and services for Australian and international customers. Microster provides mainly Australasian companies with real time, flexible, efficient and cost effective workforce management software. ComOps customers typically have complex or high asset utilisation environments:

Transportation (Ports, Rail, Shipping and Ferries); Government (Corrections, Emergency and Fire); and Health, Hospitality, Mining, Utilities, Security and Services.

The customer base is wide ranging, including a number of industry leaders such as BHP, DP World, Fortescue, Harbour City Ferries, ICTSI, Catholic Healthcare, NSW Rail, NZ health boards (4), Queensland and SA Corrections, Qube Logistics, SNP Security, Svitzer and T-T Lines.

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DIRECTORS REPORT (CONTINUED)

Review of Operations The group recorded revenue of $9,221,882 and a loss of $7,944,166 for the year. This result includes the effect of the sale of the group’s major activity, the Korellus ERP business, the settlement of the material debt owed to the Australian Taxation Office and a combination of costs associated with the alignment of the group to the scale of the continuing business. Highlights from the continuing businesses include:

- Revenues from the workforce management businesses increasing from $4,606,382 to $5,956,684;

- Establishment of new clients in the global ports, security and transport industries;

- Implementing the first international "Microster 4 Ports" in the Philippines;

- A strengthening sales pipeline; and

- The development of a framework to create new revenue streams, including the licensing and integration of Microster’s "awards interpretation engine" for payroll systems.

Goodwill Impairment A review of the carrying value of goodwill and intangibles has been undertaken following the restructure and refocus of the company. A non cash impairment charge of $7,202,646 follows the sale of the ERP business and the financial effect of the alignment of the group to the continuing business. The directors consider that this action is a necessary part of the restructure of the company. Deferred tax asset reduced In accordance with Australian Accounting Standards, the directors have resolved to write-off the deferred tax assets of the group which was recognised as an asset in prior periods. As a result, the deferred tax asset has decreased to nil (2012: $2,052,712).

Financial Highlights Highlights of ComOps financial statements (including discontinued operations) covering the year ended 31 December 2013 are as follows:

2013 2012 %

$ $ Increase/

(decrease)

Sales revenue 9,221,882 9,746,505 (5.4)

Expenses (including costs of restructuring and impairment) 16,031,916 22,013,894 (27.2)

Net loss before tax (6,810,034) (12,267,389) (44.5)

Tax (1,134,132) (331,090) 242.5

Net loss after tax (7,944,166) (12,598,479) (36.9)

Interest charge net of ATO remissions 1,717,895 (833,920) (306.0)

Depreciation and amortisation (259,056) (420,827) (38.4)

Impairment (7,202,646) (5,312,008) 35.6

Earnings before interest, tax, depreciation and amortisation (EBITDA) (1,066,227) (5,700,634) 98.7

Changes in state of affairs During the financial year the consolidated entity disposed of the ERP business unit and has restructured the remaining business, with strategic focus on the growth of the Microster workforce management business. There have been no other significant changes in the state of affairs of the consolidated entity other than that referred to in the financial statements or the notes thereto.

Subsequent events There has not been any other matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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Future developments The Board of Directors and management are committed to maintaining the highest level of corporate governance including cost control and financial transparency. The new board and management have three immediate objectives:

1. Continue to reduce the overhead and operating costs of the company; 2. Pursue opportunities to maximise returns in the expanding workforce management business; 3. Return to profitability and maintain compliance in all aspects of the business and reporting.

Substantial progress has been made in reducing fixed costs and the Board is very pleased with the recent successes in new business sales achieved in the Workforce Management Business. Nevertheless, it became necessary to sell the Enterprise Resource Planning (ERP) Business to enable the repayment of substantial debt to the Australian Taxation Office. The board and management intends to develop the Microster business from its solid base to a larger, more profitable domestic and international business. Currently, Microster operates mainly at the enterprise level, but has the capability to deliver “hosted” and “cloud” services to middle tier organisations, which will be undertaken on a greater scale in the near future. In addition, the integration of some of the Workforce Management unique functionality, especially Microster's "awards interpretation engine" is expected to commence this year. Although the priority of the board and management is to maximise the growth potential of the Microster Workforce Management business through organic growth, the board will also seek acquisition opportunities to enhance and expand the reach of the highly regarded Microster business platform. The ComOps board is confident that the various initiatives underway will enable ComOps to emerge as a profitable growth company in 2014.

Dividends In respect of the financial year ended 31 December 2013, the directors do not recommend the payment of a dividend (31 December 2012: Nil). The Board will continue to adhere to the following dividend policy: “The payment of dividends to shareholders will be in accordance with section 254T of the Corporations Act”.

Indemnification of officers and auditors In June 2013 the Company entered into a contract to insure the directors and officers of the Company against liabilities incurred by such a director or officer to the extent permitted by the Corporations Act 2001. The insurance cover is effective from July 2013 for a period of 12 months.

Under the provisions of the constitution of the Company, to the extent permitted by law, each officer of the Company is indemnified by the Company against liability incurred to another person (other than the Company or a related body corporate) except where the liability arises out of conduct involving a lack of good faith. Accordingly each officer of the Company is indemnified against any liability for costs and expenses incurred by the officer in defending proceedings, whether civil or criminal, in which judgement is given in favour of the officer or in which the officer is acquitted, or in connection with an application, in relation to such proceedings in which the court grants relief to the officer under the Corporations Act 2001.

The Company has not otherwise, during or since the close of the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate, against a liability incurred as such an officer or auditor. In accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy including the amount of the premiums.

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DIRECTORS REPORT (CONTINUED) Directors’ meetings The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the financial year and the number of meetings attended by each director (while they were a director or committee member). During the financial year, twenty-eight board meetings; four audit committee meetings and three remuneration and nomination committee meetings were held.

Director

Board

meetings Audit committee

meetings

Remuneration and nomination

committee meetings

Held*

attended Held* attended Held* attended

Niall Cairns

Peter Wicks

Andrew Roberts

Phillip Carter

Stephen Rattray

Murray A Creighton

Alex Ninis

Tony Karabatsas

2

10

10

2

12

20

17

20

2

10

9

2

12

20

17

19

-

2

-

-

-

2

2

2

-

2

-

-

-

2

2

2

-

1

-

-

1

2

2

2

-

1

-

-

1

2

2

1

* Refers to meetings held during each director’s tenure.

Directors’ shareholdings The following table sets out each director’s relevant interest in shares and options over unissued shares of the Company as at the date of this report:

Director Fully paid ordinary

sharesOptions (iv)

Niall Cairns (i) 58,153,932 2,000,000

Phillip Carter (ii) 52,703,932 2,000,000

Stephen Rattray 36,777,106 -

Andrew Roberts 30,063,842 -

Peter Wicks (iii) 2,997,248 -

(i) Mr Cairns’ shareholding is held indirectly through his directorships of Nanyang Australia 11 Ltd (holder of 51,003,932 shares) and Carnethy Evergreen P/L (holder of 7,150,000 shares).

(ii) Mr Carter’s shareholding is held indirectly through his directorships of Nanyang Australia 11 Ltd (holder of 51,003,932 shares) and Granta Capital Pty Ltd (holder of 1,700,000).

(iii) Mr Wicks’ shareholding is held indirectly through his directorships of Kinetic Investments Co Pty Ltd.

(iv) 2,000,000 options were issued to Kestrel Capital Pty Ltd on 19 December 2013 as part of the non-renounceable rights issue. Mr Cairns and Mr Carter are directors of Kestrel Capital Pty Ltd.

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DIRECTORS REPORT (CONTINUED) REMUNERATION REPORT Policy for performance evaluation of directors and executives The remuneration and nomination committee is required to undertake a review of the performance of directors, and senior executives on an annual basis.

Policy for remuneration of directors and executives In accordance with the constitution of the company, shareholders determine the aggregate remuneration of the non-executive directors, the maximum aggregate remuneration for non-executive directors is currently $500,000. The directors determine the allocation of the aggregate remuneration, or part thereof, between themselves.

There are no schemes or provisions for retirement benefits for non-executive directors other than statutory benefits and accumulated superannuation.

The current members of the board of directors are:

Niall Cairns (chairman, non-executive director) appointed 22/11/2013 Stephen Rattray (non-executive director) Peter Wicks (non-executive director)

appointed 31/05/2013 appointed 28/06/2013

Andrew Roberts (non-executive director) appointed 28/06/2013

Phillip Carter (non-executive director) appointed 22/11/2013

The following persons have resigned from the board of directors during or subsequent to the 2013 financial year: Alex Ninis (non-executive director) resigned 31/05/2013 Murray Creighton (non-executive chairman) resigned 28/06/2013 Tony Karabatsas (non-executive director) resigned 28/06/2013 The executives’ details of ComOps Limited during the year were: Christopher Brooke (Chief Financial Officer) appointed 23/04/2012 Darren Covington (Chief Operating Officer) appointed 1/07/2013 Stephen Aitken (General Manager Sales and Marketing) appointed 1/07/2013 Colin Henson (Interim Consultant Joint CEO) appointed 1/04/2013 and resigned 30/06/2013 Daniel Sheahan (Chief Executive Officer) resigned 30/06/2013

In 2013, the key management personnel of the company were the directors, the chief executive officer, the chief financial officer, chief operating officer and the general manager sales & marketing. Elements of director and executive remuneration Remuneration packages contain the following key elements:

a) Primary benefits-salary/fees, bonuses and non-monetary benefits including the provision of motor vehicle benefits;

b) Post – employment benefits – including superannuation contributions;

c) Equity – share options granted under the Employees’ Option Scheme and Directors’ Option Plan; and

d) Other benefits.

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DIRECTORS REPORT (CONTINUED) Remuneration report (continued)

The following tables disclose the remuneration of the key management personnel of the Company and the Group.

2013

Short term benefits

Post-employ-

ment benefits

Other long term

benefits

Share

based payments

Termin- ation

payments Total

Remuneration (i) Salary &

fees

Bonus payable Non-

monetary Other

(ii) Superannuation

Remun-eration

(iii) Salary &

fees

$

$ $ $ $ $ $ $ $

Niall Cairns 5,200 - - - - -

32,512 - 37,712

Stephen Rattray 28,000 - - 66,000 - - - - 94,000

Peter Alan Wicks 36,000 - - - - - - - 36,000

Andrew Roberts 24,000 - - 6,000 - - - - 30,000

Phillip Carter 5,200 - - - - - 32,512 - 37,712

Chris Brooke (iv) 188,346 40,000 - 1,858 16,939 - 1,613 - 248,756 Colin J Henson (consultant) 42,500 - - 55,500 - - 6,275 - 104,275

Darren Covington 122,500 - - - 10,109 - - - 132,609

Stephen Aitken 190,094 - - - 13,519 - - - 203,613 Murray A Creighton 30,000 - - - - -

- - 30,000

Tony Karabatsas 21,000 - - - - - - - 21,000

Alex Ninis 17,500 - - - - - - - 17,500

Daniel Sheahan 160,550 - - - 15,561 - - 12,350 188,461

Total 870,890 40,000 - 129,358 56,128 -

72,912 12,350 1,181,638

2012

Short term benefits

Post-employ-

ment benefits

Other long term

benefits

Share based

payments

Termin-ation

payments Total

Remuneration (i) Salary & fees

Bonus payable

Non- monetary

Other (ii) Superannuation

Remun-eration

(iii) Salary &

fees

$ $ $ $ $ $

$ $ $

Murray A Creighton 55,000 - - - - - - - 55,000

Alex Ninis 42,000 - - - - - - - 42,000

Tony Karabatsas 14,000 - - - - - - - 14,000

Daniel Sheahan 305,810 - 13,837 - 26,824 - - - 346,471

Christopher Brooke 126,557 - - - 11,379 - - - 137,936

Tim Cavil 24,500 - - - - - - - 24,500

Richard Bradley 209,057 - 7,418 - 25,000 136,445 - - 377,920

Stuart Clark 59,104 - 4,856 - 5,319 - - 16,476 85,755

Total 836,028 - 26,111 - 68,522 136,445 - 16,476 1,083,582

(i) For the purpose of the above disclosure, “executive” is defined as an individual who is responsible for planning, directing and controlling the activities of the entity directly or indirectly.

(ii) Other payments primarily represent payments in respect of motor vehicles, travel allowances and accrued long service leave.

(iii) All termination payments are based on statutory requirements.

(iv) During the year, Mr Christopher Brooke became entitled to a bonus of $40k, payable on completion of the ERP sale.

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DIRECTORS REPORT (CONTINUED) Remuneration report (continued) Elements of remuneration related to short term incentives The entire component of the 2013 salaries for the executive group was at an agreed annual rate. However, during the year, performance reviews were undertaken by the chief executive officer with each of the key managers. The three major performance elements reviewed each month for key managers were:

(a) revenue; (b) staff utilisations (and costs); and (c) profit and cashflow.

The salaries for the key management personnel are determined annually and are linked to their performance and their contribution to the abovementioned three major elements as well as the overall results for the group. The above mentioned performance elements are the major key performance indicators under the incentive scheme introduced for the new operational management team. The Remuneration Committee is currently in the process of finalising the 2014 short term incentive plan for the company’s key management personnel, and the Board is expected to resolve to implement a formal plan at the April 2014 Board meeting. Elements of remuneration related to long term incentives The Board is considering implementing a long term incentive plan which will involve the issue of shares to key management personnel in accordance with legislative requirements. It is intended that the long term incentive plan will be presented to shareholders for approval at the next AGM. Service contracts for key management personnel As per the Company constitution, one-third of the directors (excluding the managing director) stand for re-election at each annual general meeting. Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Christopher Brooke Title: Chief Financial Officer & Company Secretary Agreement commenced: 1 February 2013 Term of agreement: No fixed term Details: Base salary of $200,000 and 12 month notice period Name: Darren Covington Title: Chief Operations Officer Agreement commenced: 1 July 2013 Term of agreement: No fixed term Details: Base salary of $245,000 and 3 month notice period Name: Stephen Aitken Title: General Manager Sales and Marketing Agreement commenced: 1 July 2013 Term of agreement: No fixed term Details: Base salary of $160,000 and 1 month notice period

Share options Executive share option plan policy The Company has two ownership-based remuneration schemes for directors and employees. The following sets out the rules for each scheme. Directors’ Option Plan The board of directors can, at its discretion and in accordance with the Company’s Constitution, the Corporations Act 2001 and the ASX Listing Rules, issue options to directors to subscribe for shares on terms and conditions as determined by the board of directors from time to time. Directors (or companies controlled by the directors) have been, or are entitled to be, issued options to subscribe for ordinary shares in the capital of the Company under the Directors’ Option Plan. The options carry no rights to dividends and no voting rights.

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DIRECTORS REPORT (CONTINUED) Remuneration report (continued) Employees’ Option Scheme The Employees’ Option Scheme entitles the directors to offer employees of the Company (or any other member of the group) options to subscribe for shares in the Company at an exercise price being not less than the higher of the amount prescribed in the Listing Rules or the volume weighted average price of the shares in the Company trading on the ASX over the five trading days immediately prior to the date of offer. Options are offered to employees at the discretion of the board of directors from time to time following recommendations from the remuneration and nomination committee made on the basis of employee performance. The number of shares over which the options relate must not exceed 5% of the then total number of issued shares of the Company. The offer of options may be accepted by the employee or an associate of the employee being a close relative or a company controlled by the employee. Under the Employees’ Option Scheme, there are various limits on the exercise of the options if the employee ceases to be an employee of the Company or a member of the group, dies, becomes totally and permanently disabled, retires, ceases to be an eligible person, fails to comply in a material respect with the terms and conditions of the Employees’ Option Scheme or becomes an insolvent under administration. Subject to these qualifications, options may be exercised at any time from the date of their vesting to the date of their expiry. The options carry no rights to dividends and no voting rights. The Employees’ Option Scheme may be amended by the Company in general meeting. Share Options issued to a company associated with directors 2,000,000 options were issued to Kestrel Capital Pty Ltd on 19 December 2013 as part payment for Kestrel’s assistance in the success of the non-renounceable rights issue. Mr Cairns and Mr Carter are directors of Kestrel Capital Pty Ltd.

Employees’ Option Scheme 2,000,000 options were issued to Christopher Brooke on 20 June 2013. Use of remuneration consultants During the period, the company did not engage remuneration consultants to review its existing remuneration polices and provide recommendations on how to improve both the short-term incentives (‘STI’) and long-term incentives (“LTI) programs. The board of directors intends to consult with remuneration consultants in due course. Voting and comments made at the company’s 2012 Annual General Meeting (‘AGM’) At the last AGM 89% of the shareholders voted to adopt the remuneration report for the period ended 31 December 2012. The company did not receive any specific feedback at the AGM regarding its remuneration practices. END REMUNERATION REPORT

Consequences of performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous four financial years:

2013 2012 2011 2010 2009

EPS (cents) (0.06) (0.10) (0.71) 0.01 0.80Dividend (cents per share) - - - - -Net (loss) / profit ($’000) (7,944) (12,598) (909) 1,623 970Share price (cents) 0.036 0.008 0.015 0.03 0.11

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DIRECTORS REPORT (CONTINUED) Non-audit services During the year, Grant Thornton, the Company’s auditors, performed certain other services in addition to their statutory audit duties. The Board has considered the non-audit services provided during the year by the auditor and, in accordance with written advice provided by resolution of the Audit Committee, is satisfied that the provision of those non-audit services during the year is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services were subject to the corporate governance procedures adopted by the Company and have been reviewed by the Audit Committee to ensure they do not impact upon the impartiality and objectivity of the auditor; and

The non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

Details of the amounts paid to the auditors of the Company, Grant Thornton Audit Pty Ltd, and its related practices for audit and non-audit services provided during the year are set out in Note 6 to the Financial Statements. A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 is included on page 13 of this financial report and forms part of this Directors report.

Auditor’s independence declaration The auditor’s independence declaration is included on page 15.

Former partners of the audit firm None of the officers of the Company were a partner in the audit firm of the Company at any time prior to or during the financial year.

Proceedings on behalf of the Company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

Environmental legislation ComOps operations are not subject to any particular or significant environmental regulation under a law of the Commonwealth or of a State or Territory in Australia. Signed in accordance with a resolution of the directors made pursuant to section 298(2) of the Corporations Act 2001. On behalf of the directors

Niall Cairns Director

Stephen Rattray Director Sydney 11 March 2014

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Directors’ declaration The Directors of the Company declare that:

1. The financial statements and notes, as set out on pages 20-60, are in accordance with the Corporations Act

2001 and:

a. comply with Accounting Standards and the Corporations Regulations 2001; and

b. give a true and fair view of the financial position as at 31 December 2013 and of the performance for theyear ended on that date of the Company and Consolidated Group.

2. The Board of Directors and Chief Financial Officer have each declared that:

a. the financial records of the company for the financial year have been properly maintained in accordance with section 295A of the Corporations Act 2001;

b. the financial statements and notes for the financial year comply with the Accounting Standards; and

c. the financial statements and notes for the financial year give a true and fair view.

3

The financial statements and notes also comply with International Financial Reporting Standards as disclosed inNote 1.

4 In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Niall Cairns Director

Stephen Rattray Director Sydney 11 March 2014 F

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COMOPS LIMITED ABN 79 000 648 082

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the financial year ended 31 December 2013

Consolidated

2013 2012

Restated *

Note $ $

Revenue 2(a) 5,959,286 4,606,382

Employee benefits expense 2(b) (4,582,970) (4,892,567)

Consultants’ fees (972,095) (1,097,897)

Directors’ fees (166,900) (133,770)

Depreciation and amortisation expense 2(b) (259,056) (420,827)

Impairment expense 2(b) (7,202,646) (5,312,008)

Bad debts expense 2(b) - (2,125,883)

Finance costs (243,107) (833,920)

ATO Interest remission 2(b) 1,961,002 -

Communication expenses (91,410) (298,320)

Corporate activity costs (193,837) (219,606)

Occupancy expenses 2(b) (697,654) (1,214,201)

Travel expenses (216,194) (238,970)

Other expenses (691,618) (532,038)

Legal costs (293,685) (79,702)

Loss on disposal of various assets (759,871) (1,710)

FX expenses (93,978) 36,202

Share based payment (67,086) -

Loss before income tax from continuing operations (8,611,819) (12,758,835)

Income tax (expense) 3(a) (1,134,132) (331,090)

Loss for the period from continuing operations (9,745,951) (13,089,925)

Profit after income tax for the period from discontinued operations

32 1,801,785 491,446

Loss for the year

(7,944,166) (12,598,479)

Other comprehensive Income

- -

Total comprehensive loss

(7,944,166) (12,598,479)

Earnings per share

- Basic (cents per share)

Earnings from continuing operations 22 (0.06) (0.10)

Earnings from discontinuing operations 0.01 (0.00)

- Diluted (cents per share)

Earnings from continuing operations 22 (0.06) (0.10)

Earnings from discontinuing operations 0.01 (0.00)

* Refer to note 1(d) Notes to the financial statements are included on pages 24-60

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2013

Consolidated

2013

2012 1 January 2012

Restated* Restated*

Note $ $ $CURRENT ASSETS Cash and cash equivalents 27(a) 1,008,042 33,290 1,530,132 Trade receivables 7 387,902 649,291 1,469,289 Work in progress 8 110,341 30,599 590,604 Income tax receivable 3 365,861 - - Other 9(a) 75,598 108,917 159,038 Assets included in disposal group held for sale 32 - 5,638,158 9,663,032

TOTAL CURRENT ASSETS 1,947,744 6,460,255 13,412,095

NON-CURRENT ASSETS Other receivables 10 146,889 129,593 12,401 Property, plant and equipment 11 42,718 907,630 1,084,051 Intangible assets 12 3,657,023 11,028,115 16,606,065 Deferred tax asset 3 - 1,855,242 2,190,722 Other 9(b) 63,046 104,192 64,333

TOTAL NON-CURRENT ASSETS 3,909,676 14,024,772 19,957,572

TOTAL ASSETS 5,857,420 20,485,027 33,369,667

Restated* CURRENT LIABILITIES Trade and other payables 13(a) 1,631,010 1,534,382 2,340,299 Other payables to taxation authorities 13(b) 72,827 3,789,900 3,341,505 Borrowings 14 - 122,775 928,956 Provisions 15 364,797 363,223 616,612 Provision for income tax 3(b) 89,818 2,021,492 1,737,541 Unearned maintenance income 16 1,198,968 1,736,083 1,122,197 Other liabilities 18 85,000 317,671 317,951 Liability included in disposal group held for sale 32 - 2,527,494 1,908,030

TOTAL CURRENT LIABILITIES 3,442,420 12,413,020 12,313,091 NON-CURRENT LIABILITIES Provisions 17 6,974 168,229 170,643 Unearned maintenance income 16 - 222,587 284,273 Other liabilities 18 34,448 497,700 819,690

TOTAL NON-CURRENT LIABILITIES 41,422 888,516 1,274,606

TOTAL LIABILITIES 3,483,842 13,301,536 13,587,697

NET ASSETS 2,373,578 7,183,491 19,781,970

EQUITY Issued capital 20 26,881,441 23,890,095 23,890,095 Stock option reserve 25 100,007 - - Shares paid but yet to be allotted 33 42,900 - - Accumulated losses 21 (24,650,770) (16,706,604) (4,108,125)

TOTAL EQUITY 2,373,578 7,183,491 19,781,970


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the financial year ended 31 December 2013

Consolidated

Accumulated losses

Total

Issued capital

SharesPaid but not yet

allocated Reserve

Share Option

Reserve

Ordinary

$ $ $ $ $

Balance as at 1 January 2012 23,890,095 - - (3,897,385) 19,992,710

Loss for the year - - - (12,598,479) (12,598,479)

Total comprehensive result - - - (12,598,479) (12,598,479)

Prior period adjustments * - - - (210,740) (210,740)

Balance as at 31 December 2012

23,890,095 - - (16,706,604) 7,183,491

Balance as at 1 January 2013 23,890,095 - - (16,706,604) 7,183,491

Stock Option Reserve - - 100,007 - 100,007

Loss for the year - - - (7,944,166) (7,944,166)

Shares paid but yet to be allotted - 42,900 - - 42,900

Cost of Capital Raising (161,163) - - - (161,163)

Shares issued during the year 3,152,509 - -

- 3,152,509

Balance as at 31 December 2013

26,881,441 42,900 100,007 (24,650,770) 2,373,578


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CONSOLIDATED STATEMENT OF CASH FLOWS for the financial year ended 31 December 2013 Consolidated 2013 2012

Note

$

$

Cash flows from operating activities

Receipts from customers 6,141,177 5,127,322

Payments to suppliers and employees (4,287,387) (2,835,844)

Income tax paid (966,432) -

Interest received 49 1,888

Interest and other costs of finance paid (5,117) (49,113)

Net cash from continuing operations 882,290 2,244,253

Net cash used in discontinued operations 32 (5,732,103) (2,818,115)

Net cash used in by operating activities 27(b) (4,849,813) (573,862)

Cash flows from investing activities

Payments relating to deferred consideration and

acquisitions of business - (110,500)

Payments for plant and equipment

- (6,299)

Proceeds from disposal of assets 32 2,850,000 -

Net cash from / (used in) by investing activities 2,850,000 (116,799)

Cash flows from financing activities

Proceeds from borrowings 3,416,224 11,343,240

Repayment of borrowings (3,538,999) (12,149,421)

Proceeds from issue of share capital 3,097,340 -

Net cash from / (used in) financing activities 2,974,565 (806,181)

Net increase / (decrease) in cash held 974,752 (1,496,842)

Cash at the beginning of the financial year 33,290 1,530,132

Cash at the end of the financial year 27(a)

1,008,042

33,290

Notes to the financial statements are included on pages 24-60

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NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 December 2013

1. Summary of accounting policies Corporate information The financial report comprises the financial statements of ComOps Limited and its controlled entities for the year ended 31 December 2013. The financial report was authorised for issue in accordance with a resolution of the directors on 11 March 2014. Basis of preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis. The financial report is presented in Australian dollars and values are rounded to the nearest dollar or unless otherwise stated. Compliance with IFRS The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. New accounting standards and interpretations i) Change in accounting policy and disclosure

The accounting policies adopted are consistent with those of the previous financial year.

ii) Accounting standards issued but not yet effective Australian Accounting Standards and Interpretations that have been recently issued or amended but are not yet effective and have not been adopted by the group for the annual reporting period ending 31 December 2013, outlined in the below table:

Reference Title Summary Application Date

Expected Impact

AASB 9 AASB 139 Financial Instruments: Recognition and Measurement (in part)

AASB 9 Financial Instruments, 2009-11 Amendments to Australian Accounting Standards arising from AASB9, 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and 2012-6 Amendments to Australian Accounting Standards arising from AASB 9

1-Jan-17

No significant impact

AASB 2011-4

Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements

Amends AASB 124 'Related Party Disclosures' by removing the disclosure requirements for individual key management personnel ('KMP').

1-Jul-13


AASB 2012-3

Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities

The amendments add application guidance to address inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning of "currently has a legally enforceable right of set-off"; and clarifies that some gross settlement systems may be considered to be equivalent to net settlement.

1-Jan-14


AASB 2013-3

Recoverable Amount Disclosures

for Non-Financial Assets

The disclosure requirements of AASB 136 ‘Impairment of Assets' have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals.

1-Jan-14


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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the financial year ended 31 December 2013

1. Summary of accounting policies (continued)

(iii) Accounting standards issued and effective Australian Accounting Standards and Interpretations that have been recently issued or amended and are effective have been adopted by the group for the annual reporting period ending 31 December 2013.

Reference Title Summary Application Date

Expected Impact

AASB 2013-3

Recoverable Amount Disclosures

for Non-Financial Assets

The disclosure requirements of AASB 136 ‘Impairment of Assets' have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposals.

1-Jan-14


AASB 10 Consolidated Financial Statements

The standard has a new definition of 'control'. Control exists when the reporting entity is exposed, or has the rights, to variable returns (e.g. dividends, remuneration, returns that are not available to other interest holders including losses) from its involvement with another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entity has power when it has rights that give it the current ability to direct the activities that significantly affect the investee’s returns. The consolidated entity will not only have to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes.

1-Jan-13


AASB 12 Disclosure of Interests in Other Entities

It contains the entire disclosure requirement associated with other entities, being subsidiaries, associates and joint ventures. The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in Associates', AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation - Special Purpose Entities'.

1-Jan-13


AASB 127 Separate Financial Statements (Revised)

They have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12.

1-Jan-13


AASB 2011-7

Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards

The amendments make numerous consequential changes to a range of Australian Accounting Standards and Interpretations, following the issuance of AASB 10, AASB 11, AASB 12 and revised AASB 127 and AASB 128.

1-Jan-13


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1. Summary of accounting policies (continued) Going concern The directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. The Statement of Financial Position as at 31 December 2013 reflects a deficiency in working capital of $1,494,676 (31 December 2012: $5,952,765). As a result of significant restructuring, the company has reported a net loss before tax of $6,810,034 and negative cashflows of $4,849,813 for the period. During the period under review, the group settled all liabilities to the Australian Taxation Office (ATO) (31 December 2012 owing: $5,811,392). The company’s management is committed to ensuring strict compliance in meeting all future taxation obligations. The December 2013 quarterly cashflow reflected a large payment to the Australian Taxation Office (ATO) of $1,504,225. This payment related to prior period unpaid taxes owing to the ATO. The finalisation of this matter was reported to the market on 11 December 2013. As a result of this final payment, ComOps has extinguished all prior period debt owing to the ATO. The company does not expect cash expenditure at the level indicated in the December 2013 Appendix 4C. The Board is confident that significant steps undertaken to restructure the operations will result in positive operating cashflows. A review of the carrying value of goodwill assets identified that the Workforce Management (WFM) business unit was impaired by $7,206,646. The director’s considered the following key factors in recommending an impairment charge:

the company’s recent move to a single business unit following the sale of the ERP business unit; the repositioning of the Microster Workforce Management business unit as the remaining business

unit of the company; and the absorption of 100% of the corporate overheads against the Workforce Management business unit.

Valuation of intangible assets The valuation of intangible assets and the assessment of the Group as a going concern are based on forecast results prepared by management and approved by the Board of Directors. These forecasts include recent restructure in operating divisions and the ongoing efforts of the company to build its sales force and revenue pipeline which management is confident will enhance growth prospects. In August 2013 the company was successful in securing a $1m trade receivables factoring facility. The outstanding balance of the facility as at 31 Dec 13 was nil. The Company has had sufficient cash flows to date, which has resulted in no need to draw down on the facility. Should the company be unable to successfully resolve the matters referred to in the preceding paragraphs and achieve the forecast profitable growth in the business, this could cast doubt on the company’s ability to continue as a going concern. If the company does not continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at values different to those stated in the full year financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern.

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2. Summary of accounting policies (continued) (a) Revenue recognition Sale of software Revenue from the sale of software is recognised when the consolidated entity has transferred to the customer the significant risks and rewards of ownership of the goods. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer. Rendering of services Revenue from a contract to provide installation or maintenance services that is separate from the sale of software is recognised by reference to the stage of completion of the contract. Dividends Revenue is recognised when the consolidated entity’s right to receive the payment is established. Interest revenue Revenue is recognised as interest accrues using the effective interest method. (b) Accounts payable

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to makefuture payments resulting from the purchase of goods and services. (c) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the net of statement of financial position. (d) Correction to prior period balances During the period, the company identified that license revenue recorded in the year ended 31 December 2011 has been incorrectly recognised, which resulted in a material overstatement in license revenue and an understatement in accrued expenses. The effect resulted in an overstatement of $210,740 in licence revenue and understatement in accrued expenses for the period ended 31 December 2011. As a result of the above, the financial statements as at 31 December 2013 have been restated to increase accrued expenses and increase accumulated losses by $210,740 to reflect the above prior period errors. For the period ended 31 December 2011, there is no effect on the statement of cashflow as a result of the above adjustments. The impact of this transaction on a basic and diluted earnings per share (EPS) is a reduction of 0.00 cents per share for the financial year ended 31 December 2011.

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1. Summary of accounting policies (continued) Correction to prior period balances(continued) This error has been rectified by restating each of the affected financial statement line items for prior periods as follows:

31 December 2012 31 December 2011

Previous Amount

Adjustment Restated Amount

Previous Amount

Adjustment Restated

Amount

$ $ $ $ $ $

Statement of financial position (extract)

Liability included in disposal group held for sale

2,316,754 210,740 2,527,494 1,697,290 210,740 1,908,030

NET ASSETS 7,394,231 (210,740) 7,183,491 19,992,710 (210,740) 19,781,970

EQUITY

Accumulated Losses

(16,495,864) (210,740) (16,706,604) (3,897,385) (210,740) (4,108,125)

TOTAL EQUITY 7,394,231 (210,740) 7,183,491 19,992,710 (210,740) 19,781,970

31 December 2011

Previous Amount

Adjustment Restated Amount

$ $ $

Statement of profit or loss and other comprehensive income (extract)

Profit after income tax for the period from discontinued operations

4,472,618 (210,740) 4,261,878

Total comprehensive loss (1,524,469) (210,740) (1,735,209)

(e) Foreign currency All foreign currency transactions during the financial year have been brought to account using the exchange the rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at that date. Exchange differences are brought to account in the profit or loss in the period in which they arise. (f) Provisions Provisions are recognised when the consolidated entity has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.

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(g) Share-based payment Director’s option plan Equity-settled share-based payments granted are measured at fair value at the date of grant. Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.

Payments to suppliers and other parties For equity-settled share-based payment transactions to acquire assets or supplies, the company measures the goods or services received, and the corresponding increase in equity, directly at the fair value of the goods or services received, unless the fair value cannot be estimated reliably. In that case, the entity measures the fair value of these goods and services, and the corresponding increase in equity indirectly, by reference to the fair value of the equity instruments granted. (h) Property, plant and equipment Plant and equipment, leasehold improvements are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The following estimated useful lives are used in the calculation of depreciation:

Leasehold improvements 6-15 years Plant and equipment 3-13 years Furniture and fittings 5-13 years Motor vehicles 4- 7 years

(i) Employee Benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits, expected to be settled wholly within the next 12 months, are

measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be wholly settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by employees up to the reporting date.

Contributions to defined contribution superannuation plans are expensed when incurred.

(j) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (“GST”), except: i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as

part of the cost of acquisition of an asset or as part of an item of expense; or ii. for receivables and payables which are recognised inclusive of GST. The net amount of GST

recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

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(k) Goodwill Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and contingent liabilities acquired, is recognised as an asset and not amortised, but tested for impairment half yearly and whenever there is an indication that the goodwill may be impaired. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

(l) Financial assets Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs except for those carried at fair value through profit or loss, which are measured initially at fair value. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

(m) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group.

(n) Income tax Current tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).

Deferred tax

Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/consolidated entity intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the periodCurrent and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.

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Income tax (continued)

Tax consolidation The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. ComOps Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group).

(n) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the profit and loss in the period in which they are incurred.

(o) Leased assets Operating lease payments are recognised as an expense on a basis which reflects the pattern in which economic benefits from the leased assets are consumed. Lease incentives In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(p) Principles of consolidation The Group financial statements consolidate those of the parent company and all of its subsidiaries as of 31 December 2013. The parent controls a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. All subsidiaries have a reporting date of 31 December. All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. The underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. Profit or loss and other comprehensive income of subsidiaries disposed of during the year are recognised up to the effective date of disposal, as applicable. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

(q) Research and development costs Expenditure on research activities are recognised as an expense in the period in which it is incurred. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period as incurred. An intangible asset arising from the development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the intention to complete the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development and to use or

sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible asset during its development.

(r) Work in progress Work in progress is valued at the estimated value of unbilled time after making appropriate provision for any unrecoverable amounts.

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(s) Software assets Software assets represent purchased software and are carried at cost less accumulated amortisation. Software assets are amortised on a straight-line basis over the anticipated useful life of underlying software. The useful life of the company’s software assets is estimated to be 7 years. (t) Franchise license assets Franchise license assets represent purchased rights to use of a license asset and are carried at cost less accumulated amortisation. Franchise license assets are amortised on a straight-line basis over the franchise period. (u) Significant accounting estimates

Impairment of assets At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired. An impairment of goodwill is not subsequently reversed. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future planning strategies. Markinson NTA Valuation As of the date of this report, Markinson and the Company are discussing various matters associated with the value of the net tangible assets of the ERP business as at the date of completion which determines the final contracted purchase adjustment amount. The directors are confident that all matters will be resolved in due course and have included their best estimate of the final purchase adjustment amount. Employee benefits Management judgement is applied in determining the following key assumptions used in the calculation of long service leave at reporting date:

Future increases in wages and salaries; Future on-cost rates; and Experience of employee departures and period of service.

Significant estimates – Make good provision Management recognised a make good provision for operating leases held that require management to make good the premises to its original condition on exit of the lease. The provision has been estimated for each office under lease based on prior experience. A provision has also been identified for those offices who have had works that will require expenditure to get the area back to its original condition.

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1. Summary of accounting policies (continued) Significant accounting estimates (continued) Revenue recognition The revenue and profit of fixed price contracts is recognised on a percentage of completion basis when the outcome of a contract can be estimated reliably. Management makes estimates of the time and cost incurred to date as a percentage of the total cost to be incurred. This involved forecasting future costs and requires estimates and judgements. These estimates are continually revised based on changes in the facts relating to each contract. Any changes in estimates are reflected in that period. Estimation of useful lives of assets The estimation of the useful lives of assets has been based on historical experience. In addition, the nature of the tangible and intangible assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

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2. LOSS FROM OPERATIONS Consolidated

2013 2012

$ $(a) Revenue

Revenue from continuing operations consisted of the following items:

Sales revenue:

Revenue from the sale of software 1,112,469 1,064,426 Revenue from the rendering of services 4,844,215 3,534,221

5,956,684 4,598,647 Interest revenue:

Bank deposits 2,602 7,735

5,959,286 4,606,382

(b) Loss before income tax

Loss before income tax has been arrived at after charging the following (gains) and losses from operations.

Finance costs:

Interest costs 243,107 833,920 Interest Remissions - ATO (1,961,002) - Total finance costs (1,717,895) 833,920

Impairment charges : Impairment charges – intangibles

7,202,646

5,019,508

Impairment of franchise license asset - 292,500

Total impairment expense 7,202,646 5,312,008

Depreciation and amortisation charges: Depreciation of non-current assets

82,191

138,047

Amortisation of non-current assets

8,419 16,838

Amortisation of software assets

168,446 168,442

Amortisation of franchise license asset - 97,500

Total depreciation and amortisation expense 259,056 420,827

Net bad and doubtful debts arising from:

Other entities - 2,125,883 Employee benefit expense: Post-employment benefits:

383,942 380,927

Wages and salaries 4,199,028 4,511,640

Total employee benefit expense 4,582,970 4,892,567

Research and development costs immediately expensed 1,340,899 1,388,624

Occupancy expenses: Equipment rental:

187,863 288,511 Hosting equipment: 386,613 170,247 Office rent: 123,178 755,443

Total occupancy expense 697,654 1,214,201

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3. INCOME TAX Consolidated

2013

$

2012 $

a) Income tax recognised in profit or loss Tax (expense) comprises: Current tax expense - 615,801 Deferred tax expense relating to the origination and reversal of temporary differences

(406,570) (331,090)

Deferred tax asset written off (1,448,672) - Refundable research and development

721,110 -

Under provision from prior periods - (615,801) Total tax (expense) (1,134,132) (331,090) Attributable to: Continuing operations (1,134,132) (331,090) (1,134,132) (331,090) The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax benefit in the financial statements as follows:

Loss from continuing operations before tax (8,611,819) (12,758,835) Loss from operations before tax (6,810,034) (12,267,389) Prima facie income tax benefit calculated at 30% 2,043,010 3,680,216 Non-deductible expenses (121,693) (1,568,899) Under provision from prior periods - (615,801) Refundable research and development 721,110 - Non-deductible research and development (402,270) (416,400) Less deferred tax assets relating to losses not recognised

(1,106,025) (1,410,206)

(1,134,132) (331,090) b) Current tax assets and liabilities Tax payable related to ComOps Australian operations - 2,021,492 Tax payable related to ComOps Indian operations 89,818 - Refundable Research and Development (365,861) -

c) Deferred tax balances Deferred tax balances comprise:

Tax losses – revenue - 1,448,672 Temporary differences - 406,570

- 1,855,242

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3. INCOME TAX (continued) Taxable and deductible temporary differences arise from the following:

Consolidated

2013

Opening balance

Charged to income

Closing balance

$ $ $

Gross deferred tax assets:

Doubtful debts 3,549 (3,549) -

Provisions & accruals in ERP Business (197,470) 197,470 -

Provisions, accruals & lease incentives 600,491 (600,491) -

Tax losses 1,448,672 (1,448,672) -

1,855,242 (1,855,242) -

Consolidated

2012

Opening balance

Charged to income

Closing balance

$ $ $

Gross deferred tax assets:

Doubtful debts 104,540 (100,991) 3,549

Provisions & accruals in ERP Business - (197,470) (197,470)

Provisions, accruals & lease incentives 830,590 (230,099)

600,491

Tax losses 1,448,672 - 1,448,672

2,383,802 (528,560) 1,855,242

Tax consolidation Relevance of tax consolidation to the consolidated entity The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with Effect from 1 July 2003 and have therefore been taxed as a single entity from that date. The head entity within the tax-consolidated group is ComOps Limited.

Nature of tax funding arrangements and tax-sharing agreements Entities within the tax-consolidated group have entered into a tax funding agreement and a tax-sharing agreement. ComOps Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group.

The tax sharing agreement entered into between members of the tax-consolidated group provide for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote. Deferred tax asset written-off In accordance with AASB, the directors have resolved to write-off the deferred tax assets of the group which was recognised in prior periods. As a result, the deferred tax asset has decreased to nil (2012:$2,052,712).

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KEY MANAGEMENT PERSONNEL COMPENSATION Details of executives and non-executives The key management positions (executives and non-executives) of ComOps Limited during the year were: Niall Cairns (chairman, non-executive director) appointed 22/11/2013 Peter Alan Wicks (non-executive director) appointed 28/06/2013 Stephen Francis Rattray (non-executive director) appointed 31/05/2013 Andrew Roberts (non-executive director) appointed 28/06/2013 Phillip Carter (non-executive director) appointed 22/11/2013 Christopher Ian Brooke (chief financial officer) appointed 23/04/2012 Darren Covington (chief operating officer) appointed 01/07/2013 Stephen Aitken (general manager marketing and sales) appointed 01/07/2013 Colin Henson (Interim consultant joint CEO) resigned 30/06/2013 Murray A Creighton (chairman, non-executive director) resigned 28/06/2013 Alex Ninis (non-executive director) resigned 31/05/2013 Tony Karabatsas (non-executive director) resigned 28/06/2013 Daniel Sheahan (chief executive officer) resigned 28/06/2013 Key management personnel compensation policy Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries and adjusted by a performance factor to reflect changes in the performance of the company. Key management personnel compensation The aggregate compensation of the key management personnel of the consolidated entity is set out below: Consolidated

2013 2012

$ $

Short-term employee benefits 1,040,248 862,139

Post-employment benefits 56,128 68,522

Other long term benefits - 136,445

Termination payments 12,350 16,476

Share based payment 72,912 -

1,181,638 1,083,582

Directors’ Option Plan The current status with respect to the directors’ option plan is as follows: Nil Options were granted, exercised or issued to directors under the directors’ option plan during the 2013 financial year (2011: nil). 2,000,000 options were issued to Kestrel Capital Pty Ltd during the 2013 financial year. Mr Cairns and Mr Carter are directors of Kestrel Capital Pty Ltd. Employees’ Option Scheme Mr Brooke was issued 2,000,000 options on 20 June 2013 to subscribe for 2,000,000 ordinary shares in the capital of the Company under the Directors’ Option Plan. The options were issued for nil cash consideration on signing of his employment contract. These options were exercisable at 2 cents each and will expire on 30 June 2019 . Service contracts for key management personnel As per the Company constitution, one-third of the directors and any directors (excluding the managing director) who have held office for three years or more, stand for re-election at each annual general meeting.

The executives have in place standard contracts with the Company which allow either party to give between one and twelve months’ notice to terminate the contract of employment.

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5. SHARE BASED PAYMENTS The Company has two ownership-based remuneration schemes for directors and employees. The following sets out the rules for each scheme.

Directors’ Option Plan The board of directors can, at its discretion and in accordance with the Company’s Constitution, the Corporations Act 2001 and the ASX Listing Rules, issue options to directors to subscribe for shares on terms and conditions as determined by the board of directors from time to time.

Directors (or companies controlled by the directors) have been, or are entitled to be, issued options to subscribe for ordinary shares in the capital of the Company under the Directors’ Option Plan.

The options carry no rights to dividends and no voting rights.

Employees’ Option Scheme The Employees’ Option Scheme entitles the directors to offer employees of the Company (or any other member of the group) options to subscribe for shares in the Company at an exercise price being not less than the higher of the amount prescribed in the Listing Rules or the volume weighted average price of the shares in the Company trading on the ASX over the five trading days immediately prior to the date of offer. Options are offered to employees at the discretion of the board of directors from time to time following recommendations from the remuneration and nomination committee made on the basis of employee performance.

The number of shares over which the options relate must not exceed 5% of the then total number of issued shares of the Company. The offer of options may be accepted by the employee or an associate of the employee being a close relative or a company controlled by the employee. Under the Employees’ Option Scheme, there are various limits on the exercise of the options if the employee ceases to be an employee of the Company or a member of the group, dies, becomes totally and permanently disabled, retires, ceases to be an eligible person, fails to comply in a material respect with the terms and conditions of the Employees’ Option Scheme or becomes an insolvent under administration. Subject to these qualifications, options may be exercised at any time from the date of their vesting to the date of their expiry.

The options carry no rights to dividends and no voting rights.

The Employees’ Option Scheme may be amended by the Company in general meeting.

Directors’ Option Plan 2013

Number 2013

Weighted Average

$

2012

Number 2012

Weighted Average

$

Balance as at 1 January

-

-

200,000

25,600

Granted during the financial year - - - -

Exercised during the financial year - - - -

Lapsed during the financial year - - (200,000) (25,600)

Balance on issue at end of the financial year

-

-

- -

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5. SHARE BASED PAYMENTS (continued) Share options issued by ComOps Limited to key management personnel

2013 Grant date Expiry date Exercise

price (cents)

Balance at the start of

the year Granted Exercised Expired

Vested and exercisable

at the end of the year

Christopher Brooke 20/06/2013 30/06/2019 2.0 - 2,000,000 - - 2,000,000 Details regarding the options issued to current employees are:

Mr Brooke was issued 2,000,000 options on 20 June 2013 to subscribe for 2,000,000 ordinary shares in the capital of the Company under the Directors’ Option Plan. The options were issued for nil cash consideration on signing of his employment contract. These options were exercisable at 2 cents each. These options will expire on 30 June 2019 with the hurdle rate of 2 cents.


price (cents)





Stuart Clark 16/06/2009 30/09/2011 12.8 200,000 - - 200,000 - Share based payment to other parties Set out below are summaries of options granted as share based payments to other parties.

The company issued a total of 2,000,000 options to Kestrel Capital Pty Ltd. The options issued to Kestrel Capital Pty Ltd were as part of the non-renounceable rights issue. Mr Cairns and Mr Carter are directors of Kestrel Capital Pty Ltd.

The company issued a total of 3,333,333 to Hugabel Pty Ltd. The options issued were valued on the basis of an equivalent cash payment of $50,000 for services provided by Mr Terry Brown for assisting the company in resolving the Australian Taxation Office tax debt issues.

Mr Henson is a director of Connaught Place Investments Pty Ltd which was issued 5,000,000 options on 3 May 2013 to subscribe for 5,000,000 ordinary shares in the capital of the Company. These options were issued to Connaught Place investments Pty Ltd as an incentive for Mr Henson to assist the Company following the resignation of the previous chief executive officer.


price (cents)





Connaught Place Investments Pty Ltd 3/05/2013 30/06/2019 1.0 - 2,000,000 - - 5,000,000 Connaught Place Investments Pty Ltd 2/07/2013 30/06/2019 1.0 - 3,000,000 - - 5,000,000 Hugabel Pty Ltd 23/11/2013 31/12/2016 1.5 - 3,333,333 - - 3,333,333 Kestrel Capital Pty Ltd 19/12/2013 31/12/2016

0.0 - 2,000,000 -

-

2,000,000

No options were issued to other parties in 2012. Share based payment expense recognised during the financial year Options issued to directors and executive option scheme; 2013: $1,613 (2012:$0) Options issued to other; 2013: $65,473 (2012: $0).

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Consolidated

2013 2012

$ $

6.

REMUNERATION OF AUDITOR

Audit and review of Financial statements - Auditors of ComOps Limited - Grant Thornton Audit Pty Ltd 73,500 - - Ernst & Young - 167,000 Remuneration for audit and review of financial statements 73,500 167,000

Other services Auditors of ComOps Limited - Grant Thornton - Taxation compliance 27,875 - - Other disbursements 3,293 - Total other service remuneration 31,168 - Total auditor's remuneration 104,168 167,000

7.

CURRENT TRADE RECEIVABLES

Trade receivables, gross 391,221 657,491 Provision for impairment of receivables (5,701) (8,200) Receivable due from related party (see note 26 (f)) 2,382 -

387,902 649,291

8.

WORK IN PROGRESS

Work in progress is the estimated value of unbilled time after making appropriate provision for unrecoverable amounts. 110,341 30,599

9(a). OTHER CURRENT ASSET

Prepayment - current 75,598 108,917

75,598 108,917

9(b).

OTHER NON-CURRENT ASSET

Security deposits - non current

63,046 104,192

63,046 104,192

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the financial year ended 31 December 2013 Consolidated

2013 2012

$ $

10. NON-CURRENT OTHER RECEIVABLES

Receivables as per contractual arrangements to be received over the next 3 years

Loans and advances 146,889 129,593

146,889 129,593

Ageing summaries of total current and non-current receivables as at 31 December 2013 and 31 December 2012 are set out in the following tables. Management consistently reviews aged receivables levels with a view to the collection of cash within the shortest possible time-frame. Within a mix of trade terms provided, typically debtors are considered overdue after 90 days. Ideally trade receivables are collected within 7 days however it is often the case that extended terms must be granted to win contracts and maintain long-term relationships in an increasingly competitive market. Therefore, management is confident that the $13,920 or 4% of receivables that are past due but not impaired, will be collected. All balances invoiced in the last three months are considered to be within standard trading term.

* Past due not impaired (PDNI)

Considered impaired (CI)

2013 Receivables Ageing

Trade & other Receivables

>2 years

CI*

>2 years PDNI*

>1 year CI*

>1 year PDNI*

>6 months CI*

>6 months PDNI*

>3 months

Within Standard

Terms Total

Total Receivables

- - $5,701 - - $8,219 $33,184 $344,117 $391,221

Ageing percentage

- - 1.4% - - 2.1% 8.5% 88.0% 100%

2012 Receivables Ageing

Trade & other Receivables

>2 years

CI*

>2 years PDNI*

>1 year CI*

>1 year PDNI*

>6 months

CI*

>6 months PDNI*

>3 months Within

Standard Terms

Total

Total Receivables

- - $8,200 - - $9,489 $15,252 $624,550 $657,491

Ageing percentage

- - 1.2% - - 1.5% 2.3% 95.0% 100%

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11. PROPERTY, PLANT AND EQUIPMENT

Consolidated

Plant and Furniture Motor Leasehold

equipment

and fittings

vehicles improvement

at cost at cost at cost at cost TOTAL

$ $ $ $ $

Gross carrying amount

Balance at 31 December 2011 658,742 633,017 8,471 1,181,225 2,481,455

Additions 2,349 - - 3,950 6,299

Disposals (6,769) (27,581) (8,471) (39) (42,860)

Balance at 31 December 2012 654,322 605,436 - 1,185,136 2,444,894

Additions 1,282 2,256 - 34,447 37,985

Disposals (635,417) (121,193) - (1,185,136) (1,941,746)

Balance at 31 December 2013 20,187 486,499 - 34,447 541,133

Accumulated depreciation

Balance at 31 December 2011 (576,048) (554,303) (4,877) (262,176) (1,397,404)

Disposals 812 8,229 5,984 - 15,025

Depreciation expense (33,767) (29,470) (1,107) (90,541) (154,885)

Balance at 31 December 2012 (609,003) (575,544) - (352,717) (1,537,264)

Disposals 602,684 110,496 - 416,279 1,129,459

Depreciation expense (11,218) (12,959) - (66,433) (90,610)

Balance at 31 December 2013 (17,537) (478,007) - (2,871) (498,415)

Net book value

As at 31 December 2012 45,319 29,892 - 832,419 907,630

As at 31 December 2013 2,650 8,492 - 31,576 42,718

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12. INTANGIBLE ASSETS Consolidated

2013 2012

$ $ Goodwill (note 12(a))

Gross carrying amount

Balance 1 January 15,551,003 15,551,003

Balance 31 December 15,551,003 15,551,003

Accumulated Impairment

Balance 1 January (5,019,508) -

Impairment loss recognised (7,202,646) (5,019,508)

Balance 31 December (12,222,154) (5,019,508)

Carrying amount at 31 December 3,328,849 10,531,495

Software asset (note 12(b))

Continuing operations 496,620 665,062

Additions (note 12(b)) - -

Amortisation expense (168,446) (168,442)

Disposal - -

At the end of the financial year 328,174 496,620

Franchise license asset

At the beginning of the financial year - 390,000

Additions - -

Amortisation expense - (97,500)

Impairment expense - (292,500)

At the end of the financial year - -

Total intangible assets 3,657,023 11,028,115

(a) Components of Goodwill Goodwill related to entity acquisitions relates to the following cash generating units:

Consolidated

2013 $

2012$

Goodwill arising from Acquisitions

Workforce Management Pillar 3,328,849

10,531,495

Total Goodwill – Continuing Operations

3,328,849

10,531,495

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12. INTANGIBLE ASSETS (continued)

Enterprise Resource Planning Business Unit In August 2013, the company sold the Enterprise Resource Planning business unit. The carrying value of goodwill totalling $3,623,122 (2012: $3,623,122), has been fully written back as part of the business unit sale (refer note 32).

Workforce Management Business Unit The Workforce Management business commenced within ComOps in 2007 when a strategy was established to target potential acquisitions. The Workforce Management business unit now incorporates Human Capital Solutions Group Pty Ltd, Concentric Business Solutions Limited, the business of Microster Pty Limited and Salvus Solutions Pty Ltd.

The value of goodwill related to the Workforce Management business acquisitions commencing January 2013 was $10,531,495. The recoverable value of the business is concentrated on cash flow projections approved by management and a pre-tax discount rate of 18% (31 December 2012-13.25%). The cash flow projections recognise the results to 31 December 2013, approved budget for the year ending 31 December 2014 and forecast incremental cash impacts from 1 January 2015 to 31 December 2018 across all entities. For impairment testing purposes, the forecast sales increase across all relevant entities from 2015 to 2018 is 10%. Over the past three years, on average, the Workforce Management business has shown annual revenue growth of between 7% and 35%. The directors note that a 10% annual growth rate for FY15 to FY18 is conservative given the trend. The expense increase factored for modelling purposes from 2015 to 2018 is 10% per annum for salaries and wages and 2% for other costs. After applying these sales and expense growth projections, a residual value has been calculated based on the projected 2018 net cash result.

A recent review of the carrying value of goodwill identified that the Workforce Management business forecasts (referred to above) support a reduction in the goodwill value. As a result of this assessment by the Directors, a non-cash impairment charge of $7,202,646 has been made in the accounts. Following this change, the value of the goodwill for the continuing operations remains at $3,328,849. As part of the impairment review, the director’s considered the following key factors in recommending the impairment charge:

the company had recently moved to a single business unit following the sale of the ERP business unit; and

the remaining business unit now absorbs 100% of the corporate overheads. Sensitivity analyses were performed by management taking into account the financial projections noted. A reduction of 5% in the projected revenue growth would result in a further impairment, resulting in the full write down of goodwill ($3.3M). An increase of 2% in the discount rate would result in a further impairment of $0.4m.

(b) Software Asset The Microster software asset was capitalised in 2008 at an acquisition cost of $1,178,061. This software is being amortised over 7 years and has a net carrying value of $328,174 as at 31 December 2013 (31 December 2012: $496,620). This asset has been assessed as part of the cash generating Workforce Management business unit for impairment testing purposes.

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Consolidated

2013 2012

$ $

13(a). CURRENT TRADE & OTHER PAYABLES Trade payables 926,316 1,345,708

Trade payables due to related party (see Note 26 f) 59,783 - Accruals 644,911 188,674

1,631,010 1,534,382

13(b). OTHER PAYABLES TO TAXATION AUTHORITIES

Taxes payable to the Australian Taxation Office (other than income tax)- current PAYG & GST

72,827 -

Taxes payable to the Australian Taxation Office (other than income tax), for which a payment plan has not been agreed

- 3,789,900

14. CURRENT BORROWINGS Secured: other entities - 122,775

- 122,775

15. CURRENT PROVISIONS Annual leave (refer note 19) 210,534 192,757 Long service leave 154,263 170,466

364,797 363,223

16. UNEARNED MAINTENANCE INCOME Current 1,198,968 1,736,083 Non – current - 222,587

1,198,968 1,958,670

17. NON-CURRENT PROVISIONS Long service leave (refer note 19) 6,974 16,228 Make good provision (refer note 19) - 152,001

6,974 168,229

18. OTHER CURRENT & NON-CURRENT LIABILITIES

Lease incentive - current 85,000 317,671 Lease incentive - non current 34,448 497,700

119,448 815,371

19.

PROVISIONS

Make good provision Balance at beginning of financial year 152,001 144,614 Additional provisions recognised 3,694 7,387 Provision written off (155,695) - Balance at end of financial year - 152,001

Annual leave Balance at beginning of financial year 192,757 297,872 Annual leave accrued 283,348 161,528 Leave taken during the year (265,571) (266,643) Balance at end of financial year 210,534 192,757

Long Service Leave Balance at beginning of financial year 170,466 318,740 Additional provisions recognised 11,681 51,329 Provision utilised (27,885) (199,603) Balance at end of financial year 154,263 170,466

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20. ISSUED CAPITAL Consolidated 2013 2012 No. $ No. Fully paid ordinary shares

Balance at beginning of financial year 130,995,085 23,890,095 130,995,085 23,890,095

Shares yet to be allotted 1,300,000 42,900 - -

Cost of capital raising - (161,163) - -

Issue of shares 189,767,206 3,152,509 - -

Balance at end of financial year 322,062,291 26,924,341 130,995,085 23,890,095

Fully paid ordinary shares carry one vote per share and carry the rights to dividend. The Company does not have a limited amount of authorised capital and issued shares do not have a par value. Refer note 33 for a detailed description of other components of equity.

21. ACCUMULATED LOSSES Consolidated

2013 $

2012$

Balance at beginning of the financial year (16,706,604) (3,897,385)

Net loss attributable to the members of the parent entity (7,944,166) (12,598,479)

Prior Period Adjustment - (210,740)

Balance at end of the financial year (24,650,770) (16,706,604)

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22. EARNINGS PER SHARE

2013 2012

cents per share cents per share

Basic earnings per share from continuing operations (0.06) (0.10) Diluted earnings per share from continuing operations (0.06) (0.10) Basic earnings per share from discontinuing operations

0.01

(0.00)

Diluted earnings per share from continuing operations 0.01 (0.00) Basic EPS disclosure 2013

$

2012

$ Earnings used in EPS calculation from continuing operations Net loss after tax

(8,611,819)

(9,745,951)

(12,758,835)

(13,089,925)

Earnings used in EPS calculation from discontinuing operations Net profit after tax

1,801,785

1,801,785

491,446

491,446

Number

Number

Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share

167,349,829

130,995,085

Diluted EPS disclosure 2013

$

2012

$ Earnings used in diluted EPS calculation from continuing operations Net loss after tax

(8,611,819)

(9,745,951)

(12,758,835)

(13,089,925)

Earnings used in diluted EPS calculation from discontinued operations Net profit after tax

1,801,785

1,801,785

491,446

491,446

Number

Number

Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share

167,349,829

130,995,085

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23. COMMITMENTS AND CONTINGENCIES Operating lease commitments

The consolidated entity has a commitment in respect of three non-cancellable operating leases over office premises located in Sydney, Brisbane and Newcastle.

The office lease expiration dates for each of the premises are set out below:

Sydney: 30 September 2016

Brisbane: 30 November 2014

Newcastle: 7 October 2017

The Brisbane office was sublet to Veolia Water Operation Pty Ltd on 23 August 2012. The Melbourne office was transferred to Markinson Software Solutions Pty Ltd, and ComOps is sub-letting office space from Markinson in accordance with the ERP Business Sale of Asset Agreement.

The following are the commitments of the consolidated entity over the lease period for all operating leases presented on the basis that the agreed rent and estimated outgoings are paid over the contracted leaseperiod:

Consolidated

2013

2012

$ $

No greater than one year 302,244 921,857

Greater than one year and not greater than five years 331,505 1,372,827

Greater than five years - -

633,749 2,294,684

In respect of the non-cancellable operating lease for premises occupied in Sydney by the consolidated entity, the financial statements recognise lease incentives negotiated in the lease. At the end of the financial year, the unamortised lease credit was $85,000 (31 December 2012: $815,371). ComOps has a bank guarantee in place with Commonwealth Bank Ltd which amounts to $35,883 (2012: $35,883)

24. SUBSIDIARIES

Country of incorporation Ownership interest Dec 2013

% Dec 2012

% Parent entity ComOps Limited (i)

Australia

Subsidiaries ComOps Solutions Pty Ltd

Australia

100%

100%

Human Capital Solutions Group Pty Ltd Australia 100% 100% ComOps (NZ) Limited New Zealand 100% 100% Concentric Business Solutions Limited Microster Solutions Pty Ltd Salvus Solutions Pty Ltd ComOps India Pvt Ltd

New Zealand Australia Australia

India

100% 100% 100% 100%

100% 100% 100% 100%

(a) ComOps Limited is the head entity within the tax consolidated group.

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25. INFORMATION RELATING TO COMOPS LIMITED (‘THE PARENT ENTITY’) 2013 2012

$ $

Current Assets 695,373 42,622

Total Assets 30,152,320 24,365,086

Current Liabilities 20,932,679 23,711,299

Total Liabilities 20,967,126 24,335,330

Issued capital 26,924,339 23,890,093

Stock Option Reserve 100,007 -

Accumulated losses (17,839,152) (23,860,337)

9,185,194 29,756

Loss of the parent entity (3,857,285) (16,160,614)

Total comprehensive loss of the parent entity (3,857,285) (16,160,614)

The parent has entered into a deed of cross guarantee and indemnity with respect to the compliance of its subsidiaries with the financing arrangements referred to in note 29 (f). The parent entity has no contingent liabilities as at 31 December 2013.

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26. RELATED PARTY DISCLOSURES

a) Key management personnel compensation Details of specified key management personnel remuneration are disclosed in note 4 to the financial statements.

b) Equity interests in related parties Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 24 to the financial statements. c) Key management personnel equity holdings As at 31 December 2013, key management personnel and their personally related entities held a total of 134,809,360 (2012: 1,307,722) fully paid ordinary shares.

d) Fully paid ordinary shares issued by ComOps Limited

Balance Granted as

Received on

exercise Net other Balance Balance

January compensation

of options

Change (i) December held

nominally

2013

Number Number Number Number Number Number

Niall Cairns (ii) - - - 58,153,932 58,153,932 58,153,932

Phillip Carter (iii) - - - 52,703,932 52,703,932 52,703,932

Stephen Rattray - - - 36,777,106 36,777,106 -

Andrew Roberts - - - 30,063,842 30,063,842 -

Christopher Brooke 979,910 - - 3,979,910 4,959,820 -

Stephen Aitken - - - 3,934,999 3,934,999 -

Grahame Neilson - - - 3,000,000 3,000,000 -

Peter Wicks (iv) - - - 2,997,248 2,997,248 -

Murray Creighton 327,812 - - (327,812) - -

1,307,722 - - 191,283,157 192,590,879 110,857,864

(i) Net other changes:

- Stephen Rattray was appointed as non-executive director on 31/05/2013

- Murray Creighton resigned as non-executive director on 28/06/2013

- Peter Alan Wicks was appointed as chairman on 28/06/2013 and resigned as chairman on 11 February 2014

- Andrew Roberts was appointed as non-executive director on 28/06/2013

- Niall Cairns was appointed as non-executive director on 22/11/2013

- Phillip Carter was appointed as non-executive director on 22/11/2013

- The remaining net other changes relate to the key management personnel’s purchase of shares during 2013

(i) Mr Cairns’ shareholding is held indirectly through his directorships of Nanyang Australia 11 Ltd (holder of 51,003,932 shares) and Carnethy Evergreen P/L (holder of 7,150,000 shares).

(ii) Mr Carter’s shareholding is held indirectly through his directorships of Nanyang Australia 11 Ltd (holder of 51,003,932 shares) and Granta Capital Pty Ltd (holder of 1,700,000 shares).

(iii) Mr Wicks’ shareholding is held indirectly through his directorships of Kinetic Investments Co Pty Ltd.

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26. RELATED PARTY DISCLOSURES (continued)

Balance Granted as

Received on exercise Net other Balance Balance

January compensation of options Change (ii) December held

nominally

2012

Number Number Number Number Number Number

Murray Creighton - - - 327,812 327,812 -

Richard E Bradley 37,353,910 - - (37,353,910) - -

Mary F Clarke 339,000 - - (339,000) - -

Stephen Rattray 20,024,735 - - (20,024,735) -

Christopher Brooke - - - 979,910 979,910 -

57,717,645 - - (56,409,923) 1,307,722 - (i) Net other changes:

- Stephen Rattray resigned as GM-Executives Online on 9/3/2012 - Murray Creighton was appointed a non-executive director on 22/02/2012 - Christopher Brooke was appointed as chief financial officer on 23/04/2012 - Richard Bradley resigned as managing director on 11/5/2012 - Mary Clarke resigned as GM-Enterprise Management on 31/12/2011 - The remaining net other changes relate to the key management personnel’s purchase of shares during 2013

e) Loan disclosures There were no director’s loans in existence during the 2012 and 2013 financial year. f) Other transactions with key management personnel

The loss from operations includes the following items of revenue and expense that resulted from transactions with directors or their personally related entities other than remuneration, loans or equity holdings:

Field Solutions Pty Ltd is an IT services provider. Mr Roberts who joined the ComOps Ltd board on 28 June 2013 is a director of Field Solutions Pty Ltd. Blue Rock Law Pty Ltd is a legal practice which provides ComOps with advice and services related to a range of commercial and legal matters. Mr Alex Ninis who joined the ComOps Limited board on 24 December 2010 (resigned 31/5/2013) has been a director of Blue Rock Law Pty Ltd since July 2010. Transactions with Blue Rock Law Pty Ltd are made on an arm’s length basis. Time Management Group Pty Ltd is an independent contractor organisation who deploys resources on projects related to IT, relocation and project management services. Mr Rattray is a director of this organisation. Kestrel Capital Pty Ltd is a private equity and venture capital company. Both Mr Carter and Mr Cairns are directors of Kestrel Capital Pty Ltd. Kestrel Capital was appointed to assist the company in relation to the successful capital raising. Kinetic Investments Pty Ltd is a private company which provides consulting services. Mr Wicks is a director of this organisation.

Co

Consolidated

2013 2012

$ $

Purchases - Field Solutions Pty Ltd 130,287 -

Purchases - Blue Rock Law Pty Ltd 37,651 10,159

Purchases - Time Management Group Pty Ltd 72,140 -

Purchases - Kinetic Investment Co Pty Ltd 783 -

Purchases - Calais Estate Wines - 12,190

Purchases - Kestrel Capital Pty Ltd 52,684 -

293,545 22,349

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26. RELATED PARTY DISCLOSURES (continued) Calais Estate Wines Pty Ltd (“Calais”) is a private company controlled by Mr Richard Bradley. Transactions with Calais were made on an arm’s length basis. Mr Bradley resigned as managing director on 11 May 2012. Payables due to related party as of 31 December 2013

Field Solutions Pty Ltd 26,928 Time Management Group Pty Ltd 3,521 Kinetic Investment Co Pty Ltd 358 Kestrel Capital Pty Ltd 28,976 Total 59,783 Receivable due from related party as of 31 December 2013

Field solutions Pty Ltd 2,382 g) Parent entities The ultimate parent entity of the wholly-owned group is ComOps Limited.

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27. NOTES TO THE STATEMENT OF CASH FLOWS Consolidated 2013

$ 2012

$ a) Reconciliation of cash For the purposes of the statement of cash flows, cash includes cash on hand and at bank, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related items in the statement of financial position as follows:

Cash

1,008,042

33,290

b) Reconciliation of loss for the year to net cash flows from operating

activities

Loss for the year (7,944,166) (12,598,479)

Depreciation of property, plant and equipment , amortisation of intangibles 259,056 420,827

Impairment of intangibles 7,202,646 5,312,008

Loss on disposal of asset 774,302 - FV gains on financial assets / derivatives

100,007

-

Interest remission - ATO (1,961,002) -

Profit on disposal of ERP business (298,957) - (Increase)/decrease in assets: Current receivables Work in progress Other current assets Non-current receivables Other non-current assets Deferred tax assets

1,720,423 (23,781)

(120,113) (17,296)

87,302 1,855,242

4,048,890 1,360,377

50,121 (117,192)

98,476 331,090

Increase/(decrease) in liabilities: Current trade payables and accruals Current provisions Other current liabilities Other non-current liabilities Other non-current provisions

(2,028,006) (2,670,700)

(960,685) (433,327) (390,758)

(357,522) (46,595)

1,277,933 (29,392)

(324,404) Net cash from operating activities

(4,849,813)

(573,862)

28. SEGMENT INFORMATION

On 17 July 2013 the Board announced the sale of the Enterprise Resource Planning Business (ERP) unit to Markinson Software Solutions Pty Ltd. The consolidated entity is now organised into one major operating business for management reporting purposes, being Workforce Management. The prior acquisitions of Human Capital Solutions Group Pty Ltd (“HCS”), Microster Solutions Pty Ltd (“Microster”), and Salvus Solutions Pty Ltd (“Salvus”) will continue to operate under the Workforce Management business.

The Workforce Management business focuses on providing effective Workforce Management solutions including Rostering & Scheduling, Award Interpretation, Labour Cost Management, Fatigue Risk Management, Leave Management, Time & Attendance, Employee Self-Service Portals, Risk Management & Safety Compliance and Workforce Analytics. The software central to this business is Microster (Workforce Management Solutions), Salvus (Safety, Risk and Claims Solutions) and Content Solutions (Innovative Multimedia Learning and communications).

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28. SEGMENT INFORMATION (continued) Consolidated

2013 2012

$ $

Segment revenue

Enterprise Resource Planning 3,262,596 5,140,123

Workforce Management 5,956,684 4,606,382

Admin 2,602 -

Total segment revenue 9,221,882 9,746,505

Segment results

Enterprise Resource Planning 1,801,785 491,446

Workforce Management (5,657,851) (6,492,398)

Admin 2,602 -

Total segment results (3,853,464) (6,000,952)

Head office costs and interest

Employee benefits expense (1,484,758) (2,499,986)

Consultants’ fees (431,928) (588,311)

Directors’ fees (166,900) (133,770)

Depreciation and amortisation expense (70,925) (106,443)

Finance costs (208,180) (817,723)

Bad debts expense - (28,710)

ATO Interest remission 1,937,850 -

Occupancy expenses (475,666) (987,167)

Travel expenses (58,789) (150,244)

Corporate activity costs (193,012) (218,947)

Communication expenses (69,904) (246,424)

Other expenses (1,734,358) (488,715)

Total of head office costs and interest (2,956,570) (6,266,437)

Loss for the period before income tax (6,810,034) (12,267,389)

Income tax expense (1,134,132) (331,090)

Loss for the period (7,944,166) (12,598,479)

Major Customer

During 2013, 28% (2012: 20%) of the Workforce Management Pillar revenue depended on a single customer.

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29. FINANCIAL INSTRUMENTS

(a) Financial risk management objectives The consolidated entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The consolidated entity’s activities expose it primarily to the financial risks of changes in interest rates. Exposure limits are reviewed by the board of directors on a continuous basis.

(b) Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

(c) Interest rate management The consolidated entities only exposures to interest rate risk as at the reporting date are as follows:

Maturity profile of financial instruments Fixed Interest Variable interest

maturity

2013

Interest rate

%

maturity less than 1 year

$

Less than 1 year

$

1 to 5 years

$

Non-interest bearing

$

Total

$ Financial assets Cash – St George Cash – ANZ

0.01 0.01

- -

966,562 2,102

- -

4,700 -

971,262 2,102

Cash - India - - 34,432 - - 34,432 Other assets Other assets Other assets Trade receivables

- 4.60 6.20

Nil

- 46,156 40,477

-

- - - -

- - - -

63,715 - -

387,902

63,715 46,156 40,477

387,902 86,633 1,003,096 - 456,317 1,546,046 Financial liabilities Trade payables ATO payable-income tax ATO payable-other taxes

Nil 10.62 10.62

- - -

2,479,786 -

67,782

- - -

- - -

2,479,786 -

67,782 - 2,547,568 - - 2,547,568

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29. FINANCIAL INSTRUMENTS (Continued) Fixed interest Variable interest

maturity

2012

Interest rate

%

maturity less than 1 year

$

Less than 1 year

$

1 to 5 years

$

Non-interest bearing

$

Total

$ Financial assets Cash Cash

0.01 3.50

- -

23,449 5,141

- -

4,700 -

28,149 5,141

Other assets Other assets Other assets Trade receivables

- 4.60 6.20

Nil

- 46,156 40,477

-

- - - -

- - - -

63,715 - -

649,291

63,715 46,156 40,477

649,291 86,633 28,590 - 717,706 832,929 Financial liabilities Trade payables ATO payable-income tax ATO payable-other taxes

Nil 10.62 10.62

- - -

- 2,021,492 3,789,900

- - -

1,534,382 - -

1,534,382 2,021,492 3,789,900

- 5,811,392 - 1,534,382 7,345,774 All other financial assets and liabilities are non-interest bearing.

(d) Credit risk management Credit risk refers to the risk that a customer will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has adopted the policy of only dealing with creditworthy customers and inquires into each customer’s ability to satisfy the consideration prior to undertaking a sale as a means of mitigating the risk of financial loss from defaults. The consolidated entity does not have any significant credit risk exposure to any single customer. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the consolidated entity’s maximum exposure to credit risk.

(e) Fair value of financial instruments

The directors consider that the carrying amount of financial assets and liabilities recorded in the financial statements approximates their fair values, determined in accordance with the accounting policies disclosed in note 1 to the financial statements.

(f) Liquidity risk management The company entered into a non-recourse receivables facility in September 2013. Under this facility the Company sells selected trade receivables and receives 80% of the invoiced value of those trade receivables in cash. The Company pays a service fee on this facility. The Company transfers substantially all of the risks and rewards to the financier which bears the collection risks without the right to receive payments from the Company in the event of any loss arising from the non-collectability of these receivables. The facility limit is $1,000,000 for selected trade receivables.

(g) Capital management Management controls the capital of the group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern. The group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

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29. FINANCIAL INSTRUMENTS (Continued)

(h) Sensitivity Analysis

Interest Rate Risk, Foreign Currency Risk and Price Risk The group is not exposed to any foreign currency risk or price risk at balance date. The group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in interest rate risk.

Interest Rate Sensitivity Analysis

At 31 December 2013, the effect on the loss and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

Consolidated

2013

$

2012

$

Change in loss

Increase in interest rate by 2% (20,439) (113,923)

Decrease in interest rate by 2% 20,439 113,923

Change in Equity (excluding change in loss)

Increase in interest rate by 2% - -

Decrease in interest rate by 2% - -

30. SUBSEQUENT EVENTS There has not been any other matter or circumstance that has arisen since the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

31. ADDITIONAL COMPANY INFORMATION ComOps Limited is a listed public company incorporated, domiciled and operating in Australia.

Registered office and principal place of business:

Ground Floor, 77 Pacific Highway, North Sydney NSW 2060

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32. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS

On 17 July 2013 the Board announced to the Australian Securities Exchange (ASX) that it had executed a contract with Markinson Software Solutions Pty Ltd for the sale to them of the Korellus Enterprise Resource Planning Business (ERP), effective 30 August 2013. Total cash received in consideration of the ERP Business was $2,850,000 and the Group recorded a profit on sale of $298,957. As of the date of this report, Markinson and the Company are discussing various matters associated with the value of the net tangible assets of the ERP business as at the date of completion which determines the final contracted purchase adjustment amount. The directors are confident that all matters will be resolved in due course and have included their best estimate of the final purchase adjustment amount. Revenue and expenses, gains and losses relating to the discontinuation of this segment have been eliminated from the profit of the Group’s continuing operations for the full year and are shown as a single line item on the face of the statement of profit and loss and other comprehensive income, which is summarised as follows:

Consolidated

2013

2012

$ $

Revenue 3,262,596 5,140,123 Employee benefits expense (1,486,809) (2,860,773) Consultants’ fees (228,414) (295,714) Bad debts expense - (1,399,812) Communication expenses (10,476) (14,644) Occupancy expenses (13,039) (23,264) Travel expenses (13,107) (41,997) Other expenses (7,923) (12,473)

Profit before income tax

1,502,828 491,446

Income tax (expense) /benefit - -

Profit after income tax expense /benefit

1,502,828 491,446

Profit on sale before income tax 298,957 -

Income tax expense - -

Profit after income tax expense from discontinued operations

1,801,785

491,446

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32. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)

The carrying amounts of assets and liabilities in the segment group sold are summarised as follows:

Details of the disposal

Total sales consideration 2,850,000 - Carrying amount of net assets sold

(2,551,043)

-

Profit on disposal before income tax 298,957 -

Income tax expense - -

Profit on disposal after income tax 298,957 -

Cash flows generated by the ERP segment for the full year to 31 December 2013 are as follows:

Consolidated

Net cash from operating activities (5,732,103) (2,818,115)

Net cash used in investing activities Net cash used in financing activities

- 5,282

- (384,766)

Net increase in cash and cash equivalents from discontinued operations

(5,726,821) (3,202,881)

Consolidated

30 August 2013

2012 December

$ $

CURRENT ASSETS

Trade Receivable 196,025 1,277,707

Work in progress 23,744 55,958

Other 153,432 483,901

Deferred Tax Asset 197,470 197,470

Goodwill 3,623,122 3,623,122

TOTAL CURRENT ASSETS 4,193,793 5,638,158

CURRENT LIABILITIES

Provisions 233,750 507,929

Payables - 210,740

Unearned Maintenance Income 1,409,000

1,808,825

TOTAL CURRENT LIABILITIES 1,642,750 2,527,494

NET ASSETS 2,551,043 3,110,664

30 August

2013 2012

December $ $

30 August 2013

2012 December

$ $

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33. OTHER COMPONENTS OF EQUITY Share option reserve The reserve is used to recognise the cost of share options issued under the share based payment scheme identified under Note 5.

Shares paid but not yet allocated As of 31 December 2013, cash received for the allotment of 1,300,000 shares did not get allotted by the share registry until 3 January 2014 totalling $42,900 (31 December 2012: Nil).

Cost of capital raising The reserve is used to recognise the cost of capital raising to underwriters during the year.

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CORPORATE GOVERNANCE STATEMENT

BOARD CHARTER The following statement outlines the principal corporate governance practices and procedures that were in place throughout the financial year and the extent to which they depart from the second edition of best practice recommendations of the ASX Corporate Governance Council released in August 2007.

Principle 1: Lay solid foundations for management and oversight

Roles of the Board and Management The board of directors is responsible for the corporate governance practices of the company including the direction and oversight of the company's business on behalf of the shareholders. Responsibility for the formulation of strategy, and management of day-to-day operations and administration, is delegated by the board of directors to the chief executive officer. During the year, the board of directors appointed Mr Colin Henson as joint chief executive officer following the resignation of Mr Daniel Sheahan as chief executive officer on Friday 5 April, 2013, effective 30 June 2013.

Mr Henson’s appointment under a short term consultancy agreement concluded on 30 June 2013. On 1 July 2013, the Board resolved that until the new direction of the company was fully established, the company would operate without a full time chief executive officer. On 1 July 2013, Mr Stephen Rattray, a non-executive director of the company, was appointed under a consultancy agreement with responsibility for the day to day management of the company. From February 2014, Mr Rattray joined Mr Philip Carter and Mr Andrew Roberts on an Executive Committee, which along with the senior management team manages all aspects of the business reporting directly to the Board. With the progress of the company, the Board has commenced a search for a Chief Executive Officer.

Policy and other functions of the board of directors include: approving goals, strategy and plans for the company's direction formulated by management and monitoring

their implementation; ensuring appropriate resources are available to undertake those strategies; the appointment and supervision of the managing director, chief executive officer, chief financial officer and

secretary of the company and ensuring that they appropriately qualified and experienced to discharge their respective responsibilities;

receiving and approving management recommendations such as for capital expenditure and monitoring the company's financial performance and results on a monthly basis;

ensuring appropriate management control and accountability systems are in place and monitoring the corporate conduct of the company’s officers;

identifying areas of significant business risk and the management of those risks; reviewing published reports and stock exchange announcements to ensure their accuracy and compliance with

statutory requirements; ensuring compliance with the continuous disclosure requirements of the ASX Listing Rules and the

Corporations Act; meeting statutory, regulatory and other reporting requirements of the Corporations Act and the ASX Listing

Rules; and the establishment and maintenance of appropriate ethical standards for the company, its directors and

executives.

The board of directors meets monthly and directors receive various reports including a report from the Executive Committee, senior management team, sales reports and management accounts. At meetings of the board, the directors deal with the various policy and corporate governance matters set out above.

The company recognises the need for directors and employees to observe the highest standards of behaviour and business ethics when engaging in corporate activity. All directors and employees are expected to act in accordance with the law.

Separate committees of the board have been formed. These comprise an audit committee and a remuneration and nomination committee. The composition and delegated functions of these committees are set out below.

The skills and experience of each of these directors is set out in the accompanying directors’ report. All five directors are non-executive, including the chairman, and the roles of chairman and chief executive are not currently and have not historically been exercised by the same individual.

At the date of this statement, the remuneration and nomination committee consists of all directors. Mr Rattray is chairman of the remuneration and nomination sub-committee.

The audit committee established by the company consists of two non-executive directors, Mr Niall Cairns and Mr Peter Wicks and Mr Colin Henson. Mr Henson, a consultant to the Board, is chairman of the audit committee. Representatives of management including the chief financial officer and external auditors are invited to attend meetings from time to time. The audit committee meets at least four times each year.

Particulars of committee meetings held during the year ended 31 December 2013 and the attendance of each committee member is set out in the accompanying directors’ report.

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CORPORATE GOVERNANCE STATEMENT (Continued)

Principle 1: Lay solid foundations for management and oversight (continued) The dates on which each director was appointed and last re-elected are as follows: Director Appointed Resigned Last re-elected Mr Niall Cairns (non-executive chairman)* 22/11/2013 n/a n/a Mr Stephen Rattray (non-executive director)* 31/05/2013 n/a n/a Mr Peter Wicks (non-executive director)* 28/06/2013 n/a n/a Mr Andrew Roberts (non-executive director)* 28/06/2013 n/a n/a Mr Phillip Carter (non-executive director)* 22/11/2013 n/a n/a Mr Alex Ninis (non-executive director) 24/12/2010 31/05/2013 17/05/2011 Mr Murray Creighton (non-executive director) 22/02/2012 28/06/2013 22/05/2012 Mr Tony Karabatsas (non-executive director) 12/09/2012 28/06/2013 31/05/2013 * The above directors have been appointed during the year as additional directors and to fill casual vacancies.

Mr Cairns, Mr Rattray, Mr Wicks, Mr Roberts and Mr Carter are standing for re-election at the 2014 annual general meeting having first been appointed a director after the 2013 annual general meeting.

Principle 2: Structure the board to add value The composition of the board of directors is assessed and recommended by the remuneration and nomination committee using the following principles which accord with the following ASX Corporate Governance Council recommendations:

The chairman should be an independent director; and

The roles of chairman and chief executive should not be exercised by the same person.

During 2013, the company was compliant in both aspects of principle 2. Mr Niall Cairns, a non-independent director was appointed chairman in February 2014. The board of directors intends to appoint an independent director as chairman in due course.

The board of directors regularly assesses the independence of each director in light of the interests they have disclosed and such other factors as the board of directors determines are appropriate to take into account in determining whether the director is independent of management and free of any business or other relationship that could materially interfere with or could be perceived to materially interfere with, the exercise of their unfettered and independent judgement.

The directors' terms of appointment are governed by the constitution of the company and one-third of the directors and any directors who have held office for three years or more (excluding the managing director) must retire at each annual general meeting of members. Each director has the right to seek independent professional advice at the Company's cost, subject to the prior approval of the chairman, which may not be unreasonably withheld, and the other directors being given a copy of such advice.

Changes to the board of directors in recent years have resulted in the board of directors having a strong mix of skills and experience. It is considered that the current composition of the board of directors is appropriate to help the company achieve its goals, strategies and plans whilst maintaining overall compliance with the corporate governance practices and procedures to the extent outlined in this statement and that the composition of the board of directors will continue to be reviewed on a regular basis by the remuneration and nomination committee.

The board has considered the independence of each of the directors and has determined that Mr Niall Cairns, Mr Phillip Carter, Mr Stephen Rattray and Mr Andrew Roberts are non-independent, non-executive directors as each is a substantial shareholder or is associated directly with a substantial shareholder. Mr Peter Wicks is considered to be an independent, non-executive director.

In the event that a potential conflict of interest may arise, involved directors withdraw from deliberations concerning the matter.

The directors of the Company in office at the date of this statement are:

Mr Niall Cairns (chairman, non-executive director)

Mr Stephen Rattray (non-executive director)

Mr Peter Wicks (non-executive director)

Mr Andrew Roberts (non-executive director)

Mr Phillip Carter (non-executive director)

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Principle 3: Promote ethical and responsible decision making Board members, executive management and company officers are made aware of the requirements to follow corporate policies and procedures, to obey law and to maintain appropriate standards of honesty and integrity at all times.

Set out below and on the company web site are the following significant policies instigated and monitored by the board of directors under the terms of principle 3.

Securities trading policy No director, senior executive or employee shall purchase or sell ComOps securities, or securities of a company in a "special relationship" with ComOps, while in possession of material information concerning the ComOps or such a company that has not previously been generally disclosed to the investing public for at least two business days. Nor shall an employee inform any individual or entity of any such material information, except in the necessary course of business.

Employees are encouraged to invest in the ComOps securities, but must avoid trading when in possession of confidential material information which, if generally available, would reasonably be expected to either have an effect on the market price or value of those securities or affect an investor's decision as to whether to buy, sell or hold securities in ComOps.

There is an absolute prohibition of ComOps securities trading by a director and other key management personnel during the two month period before the announcement of the ComOps half-year results or the ComOps full year results. A director or other key management personnel must not trade in ComOps securities without advising the Chairman in writing in advance and receiving written clearance from the Chairman before any dealing (including market dealing) in ComOps securities. In his or her own case the Chairman must advise the board of directors in advance at a board of directors meeting and receive clearance from the board of directors.

A director or other key management personnel must advise the company secretary in writing of the details of any completed transactions within 3 business days of the transaction. The company secretary will be responsible for maintaining a record of disclosures and advising the ASX.

The complete securities trading policy was released to the market by the ASX in December 2010 and is also available on the company web-site under Investors in the Corporate Section.

Continuous disclosure All directors, senior executives and employees have been made aware of the continuous disclosure requirements of the ASX Listing Rules and have been provided with a copy of the relevant rules and guidance notes. Continuous disclosure is included on the agenda for all formal meetings of the directors. Directors and senior executives are made aware of the constraints applicable to private briefings and broker and analyst presentations.

The directors have allocated responsibility to the chief executive officer and the company secretary to alert the board of directors to any operational or regulatory matters respectively which they consider may require disclosure to the market under the continuous disclosure requirements of the ASX Listing Rules. The directors then consider and approve the form of any such announcement.

All company announcements require the approval of the chairman with provision for available directors to approve urgent announcements. The company secretary is responsible for communication with the ASX. The chairman is responsible for all media contact and comment.

Diversity policy Due to significant structural change in the business, a diversity policy has not yet been finalised. In due course, the company will establish a diversity policy which can be practically implemented and maintained within the framework of a company of ComOps’ size.

Code of conduct Board members, executive management and company officers are made aware of the requirements to follow corporate policies and procedures, to obey the law and to maintain appropriate standards of honesty and integrity at all times. In this regard the directors have adopted a code of conduct for directors, senior executives and employees which “inter alia” deals with compliance with legal and other obligations to legitimate stakeholders. More specifically, the code of conduct covers ethical operations, compliance with laws, dealings with customers and public officials, conflicts of interest, confidential and proprietary information and insider trading. The code of conduct underpins the formal charter and all policies of the company. A copy of the code of conduct is available on the company web site under Investors in the corporate section.

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Principle 4: Safeguard integrity in financial reporting The board of directors has established an audit committee.

The key matters dealt with by the audit committee include the review of: the annual and half-year financial reports prior to their approval by the board of directors; the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the

audit and the independence of the external auditor; all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; any management letter sent by the external auditor to the company; the effectiveness of management information or other systems of internal control; the financial statements of the company with both management and external auditors; and monitoring of compliance with the requirements of the Corporations Act, ASX Listing Rules, Australian Taxation

Office and financial institutions. The chief executive officer and the chief financial officer are required to confirm to the Board that, for each financial reporting period, the company’s financial reports present a true and fair view, in all material respects, of the company’s financial position and operational results and are in accordance with relevant accounting standards.

The committee has a formal charter, a copy of which is available on the company web site under Investors in the Corporate Section.

Principle 5: Make timely and balanced disclosures The company and its directors are aware of continuous disclosures requirements under the Listing Rules and Corporations Act and operate in an environment where strong emphasis is placed on full and appropriate disclosure. The company has formal written policies regarding disclosure which is publicly available on the company’s website: www.comops.com.au.

Principle 6: Respects the rights of shareholders The company’s communications strategy articulates clear and effective communications with its shareholders through ASX announcements, newsletters, the half-year report, the annual report and the annual general meeting. Copies of all such ASX announcements, newsletters and reports are posted to the Company website. The board encourages full participation of shareholders at the annual general meeting to ensure high level of accountability and identification of the company’s strategic goals. Important issues are presented to the shareholders as single resolutions. The company requests that the external independent auditor attend the annual general meeting to respond to questions from shareholders on the conduct of the audit and the preparation and content of the audit report.

Principle 7: Recognise and manage risk The board of directors has accepted the role of identification, assessment, monitoring and managing the significant areas of risk applicable to the company and its operations. It has not established a separate committee to deal with these matters as the directors consider the size of the company and its operations does not warrant a separate committee at this time. The board of directors has identified the significant areas of risk applicable to the company and its operations and considers the matter of risk management on an on-going basis at its monthly meetings.

Principle 8: Remunerate fairly and responsibly The board of directors has established a remuneration and nomination committee.

On an annual basis the committee reviews the remuneration and performance of the managing director, chief executive officer and senior executives and makes recommendations on remuneration packages for directors and senior executives and terms of employment generally.

This committee also reviews the composition of the board of directors to ensure that it comprises an appropriate mix of skills and experience. When a vacancy exists on the board of directors, or where it is considered that a director with particular skills or experience is required, the committee interviews appropriate candidates with suitable expertise and experience from which the committee will select a candidate for recommendation to the board. The candidate selected and appointed by the board will stand for election at the next annual general meeting of the company.

Performance evaluation of directors and executives The remuneration and nomination committee is required to undertake a review of the performance of directors, and senior executives on an annual basis.

Remuneration of directors and executives In accordance with the constitution of the company, shareholders determine the aggregate remuneration of the non-executive directors, the maximum aggregate remuneration for non-executive directors is currently $500,000. The directors determine the allocation of the aggregate remuneration, or part thereof, between themselves.

There are no schemes or provisions for retirement benefits for non-executive directors other than statutory benefits and accumulated superannuation.

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SECURITIES EXCHANGE INFORMATION Statement of quoted securities as at 28 February 2014

There are 534 shareholders holding a total of 322,062,291 ordinary fully paid shares.

The twenty largest shareholders between them hold 73.66% of the total issued capital of the Company.

Voting rights are that on a show of hands each member present in person or by proxy or attorney or representative shall have one vote and upon a poll every member so present shall have one vote for every share held.

Distribution of securities as at 28 February 2014

Range Number of Holders

1-1000 35

1001-5000 153

5001-10000 80

10001-100000 146

100001-and over 120

Total Holders 534

There are 287 shareholders holding less than a marketable parcel of 13,889 shares at the market price of $0.036 per share.

Substantial shareholdings as at 28 February 2014 The following shareholders have notified the Company that they are substantial shareholders.

Substantial Shareholders Total relevant interest notified % of total issues capital Kestrel Capital Pty Limited 59,853,932 shares 18.59

R E Bradley 36,853,910 shares 11.44

S F Rattray 36,777,106 shares 11.41

A J Roberts 30,063,842 shares 9.34

Directors' shareholdings As at 28 February 2014 directors of the Company held a relevant interest in the following shares and options in the Company.

Director Shares Niall Cairns 58,153,932

Phillip Carter 52,703,932

Stephen Rattray 36,777,106

Andrew Roberts 30,063,842

Peter Wicks 2,997,248

Audit committee The Company has a formally constituted audit committee.

On-market buy-backs At the date of this report, the company has no intention to buy back shares in the company. Reconciliation to 4E Subsequent to the release of the Appendix 4E there was a reallocation between continuing and discontinuing operations of $407,139. However there was no impact on the overall profit or net asset position. Top twenty shareholders at 28 February 2014

Shareholder name & ranking Number of

shares held % of total

1. Nanyang Australia 11 Ltd 51,003,932 15.84 2. Richard Edward Bradley 35,520,000 11.03 3. Mr Stephen Francis Rattray + Mrs Peta Michelle Rattray <Stepeta Super Fund a/c) 30,000,000 9.31 4. Aust Executor Trustees Sa Ltd <Tea Custodians Limited> 20,003,060 6.21 5. Compost Investments Pty Ltd <Compost Investments Unit Ac> 15,031,921 4.67 6. Mr Andrew Roberts 15,031,921 4.67 7. Iain Dunstan + Caroline Dunstan <Dunstan Family S/F A/C> 7,844,218 2.44 8. Abn Amro Clearing Sydney Nominees Pty Ltd <Custodian A/C> 7,752,668 2.25 9. Carnethy Evergreen Pty Ltd <Carnethy Evergreen Fund A/C> 7,150,000 2.22 10. Airthrey Investments Pty Limited <Airthrey A/C> 6,800,000 2.11 11. Mr Stephen Francis Rattray + Mrs Peta Michelle Rattray <Stepeta Super Fund a/c) 6,777,106 2.10 12. Mr Barry Laurence Smith 5,336,000 1.66 13. Mr Christopher Ian Brooke + Mr David Joseph Lochhead 4,959,820 1.54 14. Mr Stephen John Aitken + Mrs Brooke Elizabeth Aitken <Montebello Fund a/c) 3,934,999 1.22 15. Michael John Bowman + Sue Ellen Bowman <Bowman S/F> 3,833,333 1.19 16. Mr David Edgley + Mrs Louise Edgley 3,761,636 1.17 17. Mr Owen Kelly + Mrs Beryl Kelly <O & B Kelly Super Fund A/C> 3,500,000 1.09 18. Edgley Pty Ltd <Tecorp Super Fund A/C> 3,486,000 1.08 19. Grahame Neilson <Neilson Family S/Fund A/C> 3,000,000 0.93 20. Reef Securities Limited 3,000,000 0.93 Total held by top 20 shareholders 237,226,614 73.66

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