ANNUAL
REPORT
2017
Xref Limited / Annual Report 2017 / 1
CONTENTS
2017 Highlights
Chairman’s Report
Chief Executive Officer’s & Chief Technology Officer’s Report
Directors’ Report
Independence Declaration
Financial Statements
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
2
4
6
10
26
27
34
73
74
78
82
With Xref, clients
make more confident,
smarter decisions.
2 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 3
2017
Highlights
Total Sales
$4.1 million
137%
TOTAL ANNUAL GROWTH
Revenue
$3.0 million
127%
TOTAL ANNUAL GROWTH
Client Sales Split
LARGEST CLIENT
TOP 10 CLIENTS
$250K
6%
of FY17
sales
$1.1M
28%
of FY17
sales
TOP 20 CLIENTS
$1.7M
42%
of FY17
sales
Industry Sector Growth
PRIVATE SECTOR
$1.4M
$3.4M
FY16 / 82% of sales
FY17 / 83% of sales
NOT FOR PROFIT
$163K
$332K
FY16 / 9% of sales
FY17 / 8% of sales
PUBLIC SECTOR
$171K
$458K
FY16 / 10% of sales
FY17 / 11% of sales
TOP GROWTH SECTORS
Manufacturing
Finance, Accounting & Banking
Transport & Logistics
Government - State
Construction & Civil Engineering
Healthcare & Medical
Retail & Consumer Products
144%
SALES GROWTH
104%
SALES GROWTH
168%
SALES GROWTH
% of total
FY17 sales
Sales
YoY Growth
2%
11%
5%
10%
4%
9%
8%
709%
376%
217%
152%
145%
132%
117%
MAP KEY
Office
Presence
2 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 3
CHAIRMAN’S REPORT
Chairman’s
Report
It is a pleasure to welcome shareholders to Xref’s annual
report for the 2017 financial year.
Having joined Xref’s board in August 2016, it has been
fantastic to see the outstanding progress the company
has made over the course of just one year. The new single
domain platform, xref.com, and the fresh new brand,
reflect our recent phase of maturity and our ambitions
for global growth.
First mover advantage driving client growth
At launch, Xref’s platform introduced an entirely new,
cloud-based human resources technology solution.
Today, its value has been recognised globally and it now
helps more than 600 organisations make significant
time and expense savings. Our software simplifies the
way employers seek references, automating one of the
most difficult, time-consuming processes and providing
intuitive, data-driven
insights for human resources
practitioners. This is a quantum leap forward, enabling
the industry to transition away from telephone-based
referencing, to offer a service in line with the expectations
of a digital age.
We are capitalising on our first mover advantage through
a global growth strategy. We achieved more than 50%
client growth during FY2017. While the majority of
our clients are currently in Australia and New Zealand,
including 36% of the Australian Securities Exchange’s top
50 companies, we also seeing strong growth in the UK,
Europe, Middle East and North America.
These are regions with large populations and labour
markets, presenting a significant opportunity for us to
continue to grow.
Ease of use
Our platform is built on powerful, scalable technology
with an open architecture that offers the flexibility
required to continue to develop and evolve our service.
We are anticipating the changing needs of the human
resources market, and constantly creating exciting new
features for clients.
One recent example of product improvement was the
introduction of the Sentiment analysis engine, which
provides greater insight into a referee’s feedback at
a glance. Based on machine learning, the algorithm
provides an assessment of a referee’s ‘tone of voice’,
offering a percentage breakdown of the feedback that
was positive, neutral and negative, helping employers
to interpret the data quickly and with ease. This reduces
opportunities for misinterpretation when assessing
a candidate’s professional performance and fit for a
position.
Strong revenue growth
It is a pleasure to report continued strong renewals
and new client growth. Xref set a $0.85 million monthly
sales record in June 2017, which exceeded the previous
monthly record by 70%. Our consistent focus on global
expansion helped drive a 127% increase in net revenue
to $3.0 million in FY2017 compared to $1.3 million in the
previous year.
We are investing to expedite global expansion and the
reported loss from continuing operations was in line with
management expectations.
Our growth has been accelerated by strong support
for the company’s capital raising efforts, including an
$8 million share placement in FY2016. A further $7.5
million before costs was raised in August 2017, through a
placement which closed oversubscribed. These funds are
supporting our growth through international expansion
and channel partnerships.
Following shareholder endorsement of a move for the
company’s domicile from New Zealand to Australia,
forms were lodged with ASIC to complete the process
on 28 August 2017, which successfully re-domiciled on
21 September 2017. Xref completed the divestment of
the mining assets owned as part of the activities of King
Solomon Mines Limited in early 2017.
A great and passionate team
The year’s success is ultimately the product of a talented
and dedicated team. Our staff grew significantly in 2017
and I would like to thank all of them for their ongoing
hard work and dedication. They are part of a highly
driven culture and the skills and commitment they offer
our clients is what helps make Xref great.
Strengthened Board
I would also like to thank my board colleagues for
their commitment and support over the year, and
acknowledge Nigel Heap who also joined the board in
August 2016 as a non-executive director. He is the UK
and Ireland Managing Director of Hays plc, the leading
global professional group, and brings significant human
resources expertise to our Board.
Looking ahead
I am excited by the growth opportunities both in
Australia and overseas, and optimistic about the future.
The new financial year has started with strong sales
growth and client renewals. Xref has secured some of
the world’s leading international brands as clients and
some HR market leaders as partners, having established
a sustainable growth path, the service looks set to
continue to expand and evolve in all the markets we
currently operate in and more.
Brad Rosser,
Chairman
4 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 5
Chief Executive Officer’s &
Chief Technology Officer’s Report
CHIEF EXECUTIVE OFFICER’S & CHIEF TECHNOLOGY OFFICER’S REPORT
Single global domain simplifies access
During the year we purchased xref.com, a memorable,
top-level and global
internet domain name. This
strengthens the value of our global platform and,
particularly for those organisations which use Xref in
many countries, simplifies access to our services as
individual country domains are no longer required. We
completed the transition to the xref.com domain effective
July 1, 2017. This move aligned with our new brand
launch, which emphasises the simplicity and efficiency
of our platform, and the maturity of the business today.
Xref exceeds 100% year-on-year growth
Xref passed many milestones in its first full year as an
Accelerating global growth
ASX-listed business. By the end of the 2017 financial
We are investing in our business to build global growth,
year, more than 140,000 candidates had experienced
and during FY17 we grew enough to enable support for
the benefits of the Xref platform; more than 280,000
clients in Australia, New Zealand, the United Kingdom,
referees had provided references; and more than 700
Europe and the Middle East, Canada and the USA, and
companies in seven countries had used our services.
Singapore, from offices in Sydney, London and Toronto.
Our business model is simple: we sell Xref credits to
our clients. Each credit allows a client to take as many
references as are required on one candidate. The credits
are consumed as candidates are referenced through the
Since the end of the year we have also introduced further
global expansion, with an office in Norway, that will
further support our European efforts, particularly across
the Nordic region.
Xref platform. Our process also places the candidate at
Xref has generated dramatic growth since listing on the
the centre of the referencing process for the first time,
ASX. Our clients include government, small- to medium-
enabling them to encourage timely responses from
sized businesses, recruitment agencies, not for profit
referees. Fast and efficient reference checking simplifies
organisations and others. More than 50% of our clients
the hiring process and reduces employers’ exposure to
are large enterprises, and we support clients in 32
security breaches, discrimination and potential fraud.
market sectors.
Our business is highly cash generative, and, during FY17
Australia and New Zealand
Xref continued to exceed 100% year-on-year growth.
Sales were a record $4.1 million, an increase of 137%
from $1.7 million in FY2016. We completed the year with
a new monthly record, achieving sales of $0.85 million
in June 2017, up 250% compared to June 2016. Clients’
consumption of credits also grew. Revenue, which
excludes sold but unused credits, was $3.0 million, more
than double $1.3 million for the previous year.
We completed the year with a strong cash position and
in August 2017, raised a further $7.5 million before costs
through a placement to institutional and sophisticated
investors. These funds will expedite our channel
integrations and partnerships, accelerating global
growth.
In Australia and New Zealand, we serve an employment
market of approximately 15 million people. This
business is now used by hundreds of clients every day,
and thousands of candidates and referees contribute
data to our platform every week. Significant new
clients introduced during the year included Auckland
Transport, Bluescope Steel, CSR, Department of Premier
and Cabinet (Victoria), KPMG, ME Bank, NBN, News
Corporation, NSW Treasury, Reserve Bank of Australia,
Telstra and Transurban.
Expansion in Europe and North America
Xref’s expansion is guided by demand from existing
clients, which include some of the world’s largest
enterprises and global brands. We track client and
referee activity, which led to the establishment of our
Workday. These organisations, which can be accessed
London and Canada offices, to capitalise on the growth
through Xref’s employee dashboard, support more than
potential of the regions we service. Our growth into
20,000 companies across the world. Applicant tracking
Europe, Canada and the USA has had a strong start.
systems’ (ATS) own marketplaces provide easy access
Client usage has grown faster than in Australia at a
to Xref through their platforms, helping their clients to
comparative stage of the company’s development.
manage all aspects of the recruitment lifecycle.
Our London office supports a European market of
Our partners provide a valuable marketing channel
approximately 120 million people, and also serves
and, combined, employ more than 1,500 support
the Middle East and Africa. Among our new clients are
staff. We are educating their sales teams through joint
household names including the Chelsea Football Club,
marketing activities and co-promoting the strengths of
the Chelsea Foundation, JCB (JC Bamford), Sue Ryder,
our combined services. As partners become familiar with
The Salvation Army, Thwaites and TMP Worldwide.
the benefits of using Xref, we anticipate they will become
During the year we also secured our first European
strong advocates of our services.
clients including Hammer & Hanborg in Sweden. The
Our platform has a 98% success rate, far higher than
Nordic market (Denmark, Finland, Norway, Iceland and
the results typically seen from telephone or email
Sweden) has an employment market of about 14 million
based candidate referencing. It also provides 60%
people and continues to provide a regional hotspot of
more data, five times faster, and on average, 60% of
candidate referencing activity. These market features
feedback is provided out of business hours.. It offers
led to the recently announced Norway office, opened to
users convenience and greater insight into candidate
better service the Nordic region.
suitability, while enabling them to make data-driven
Our Toronto office supports the Canadian and USA
employment market of about 180 million people, and we
have now secured more than 30 clients in the region,
including Bruce County Council, Konica, Lindt, Miele and
TravelEdge Group.
Expanding channels to market
Through our platform, we are able to bring tremendous
value to channel partners. Xref’s open architecture,
allows integrations to be deployed quickly and with ease.
Once activated, clients can move quickly between the
decisions.
Specialised, proprietary software
During the year we re-engineered our global technical
infrastructure and development resources. Significant
new services included launching a new, fully API-driven
employee dashboard, to improve the user experience;
developing a time-based referencing app for the
European market; and introducing the new Sentiment
analysis engine, which analyses reference data to provide
employers with an easy to understand sentiment score.
integrated platforms and embed automated candidate
We have also introduced multi-language capabilities,
referencing into their workflow.
such as localised French for the Canadian market,
Millions of organisations worldwide use applicant tracking
systems to manage recruitment and we aim to partner
with the world’s leading systems to form integrations that
Spanish and Swedish. This increases our addressable
market and we will systematically roll out new languages
during the coming year.
will enable us and out partners to offer organisations a
Our investment in technology is delivering continuous
more comprehensive suite of recruitment solutions. Our
improvement
in
client experience and driving
first integration with the Oracle Taleo applicant tracking
productivity, margin, and efficiency across our business.
system has been very successful, and we have since
added Bullhorn, Expr3ss!, iCIMS, SmartRecruiters and
6 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 7
CHIEF EXECUTIVE OFFICER’S & CHIEF TECHNOLOGY OFFICER’S REPORT / Continued
Structure for sustainable growth
We are focused on achieving operational excellence and have built a sustainable structure that supports
global growth. This includes a global marketing program that supports our sales and channel presence,
helping to develop leads. Our customer success team helps clients to achieve their business goals,
ensuring the continued strength of our client relationships. The positive testimonials of clients are
an important part of our program, demonstrating the value of our platform for human resources
business success.
We maintain tight control of costs through a sustainable and scalable global accounting
culture. This is led by CFO James Solomons who joined us from Xero where he was head
of accounting. As we enter new markets the ability to set accurate budgets and achieve
goals aligned with management targets is particularly important to our business.
Recently we also appointed a new Chief Operating Officer Sharon Blesson, to ensure
the success of ongoing integrations and delivery of operations.
Outlook for growth
We have established a strong position in our key markets and continue to
focus on building scale, driving new business and significant renewals from
existing clients. We are building a global business, and investing in our
capability to increase sales. Revenue growth continues to exceed 100%
year-on-year and we expect to maintain this dynamic growth trajectory.
Our channel strategy aims to capitalise on a cost-effective sales
expansion path that complements direct sales. Xref’s technology is
fully API-driven, aiding its connection with different technologies
and providing a modern foundation for future product
enhancements. We are continuing to integrate with applicant
tracking systems and other technology-driven human
resources platforms, and exploring partnerships with
human resources organisations to assist growth in new
markets.
Lee-Martin Seymour,
Tim Griffiths,
Chief Executive Officer,
Chief Technical Officer,
Co-Founder
Co-Founder
8 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 9
Directors’
Report
DIRECTORS’ REPORT
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
Xref demonstrated strong global growth in FY17
as the ‘consolidated entity’) consisting of Xref Limited, formerly known as King Solomon Mines Limited (referred to hereafter
as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2017.
Directors
Xref is investing to build global scale and extended its client base by over 50% in FY17 to more than 600 clients worldwide,
including 36% of the ASX 50. The company services clients in Australia, New Zealand, the United Kingdom, Europe and
the Middle East, North America and Singapore, from offices in Sydney, London and Toronto. Since balance, Xref has also
introduced an office in Norway, to serve clients across the Nordic countries (Norway, Denmark, Sweden, Iceland and
The following persons were directors of Xref Limited during the whole of the financial year and up to the date of this
Finland).
report, unless otherwise stated:
Lee-Martin Seymour
Timothy Griffiths
Timothy Mahony
Brad Rosser (appointed 18 August 2016)
Nigel Heap (appointed 18 August 2016)
Simon O’Loughlin (resigned 18 August 2016)
Principal activities
During the financial year the consolidated entity continued to conduct its core activity which was to develop human
resources technology that automates the candidate reference process for employers.
Dividends
No dividends have been paid by the Company during the financial year ended 30 June 2017, nor have the Directors
recommended that any dividends be paid.
Review of operations
Xref is investing to build on a global scale, and the loss for the consolidated entity after providing for income tax amounted
to $6,456,038, within management expectations (30 June 2016: loss of $830,649).
Highlights of the FY17 included:
>
>
Sales of $4.1 million, up 137% compared to $1.7 million in FY16
Strong growth in Australia, New Zealand, UK, Europe, Middle East and North America, including more than 50%
annual client growth
> Net revenue of $3.0 million, up 127% compared to $1.3 million in FY16.
>
Securing the global domain Xref.com, enabling the launch of a global brand
> Activating six channel integration partners which support 20,000 organisations worldwide
>
Launching new products and services including new employee dashboard, time-based referencing and Sentiment
algorithm
> Winning HRD’s ‘Employer of choice’ gold award
> Completing an $8 million share placement in August 2016
> After balance date, Xref completed a $7.5 million placement, which was oversubscribed.
> After balance date, Xref also launched a new office in Oslo, Norway, to support European growth
Channel provides new growth path
Xref has focused on growth through integration partnerships which increase its channels to market. The company has
integrated, or is in the process of integrating, with 10 organisations and channel integrations that are now ‘live’ worldwide
including Bullhorn, Equifax (formerly Veda), Expr3ss!, iCIMS, Oracle Taleo, SmartRecruiters and Workday. Since balance,
Xref has also announced its integration with Checkr in Canada and the USA.
Channel partners employ more than 1,500 support staff and their advocacy helps to reduce Xref’s cost of acquiring new
business.
Re-engineering technology drives client growth
Xref continued to innovate and launch new systems, including a new fully API-driven employee dashboard with a rebuilt
client, candidate and referee experience. APIs allow exciting new features such as dynamic reports and self-service
‘customer success’ capabilities, and the platform also increased scale and security, and added mobile functionality and
multi-language capabilities.
On July 1, 2017, Xref launched the new Sentiment Engine which leverages the platform’s big data, and through machine
learning is able to analyse referee feedback and provide a sentiment breakdown, at a glance.
Winner of ‘Employer of choice’ gold award and cloud innovation award
Xref was pleased to receive Human Resource Director (HRD)’s ‘Employer of choice’ gold award for companies with less than
100 employees, as a recognition of the support and opportunities the company offers its people. In August 2017, Xref also
received the Australian Business Award for cloud innovation, recognising the power of the platform and the flexibility,
efficiency, security and automation it offers its clients.
Growth exceeds 100% year-on- year
Sales for FY17 were $4.1 million, up 137% from $1.7 million in FY16. Sales, which represent cash payments, are a leading
indicator of Xref’s revenue growth. Unearned revenue, which is represented in unused credits, was $2.03 million at 30 June
2017 (note 21), up from $904k at 30 June 2016. Revenue grew 127% to $3.0 million for FY17, compared to $1.3 million for
FY16, demonstrating the strong and continuing demand for Xref’s services.
At 30 June 2017, Xref held $4.1 million in cash (note 15). On 2 August 2017, the company raised $7.5 million before costs
through a placement, which closed oversubscribed, to Australian institutions and sophisticated investors at a price of 60c
per share. Funds from the placement will support:
> Marketing to accelerate expansion in key international markets and co-promotional activities with channel
partners to increase sales;
>
>
The further development of integrations with applicant tracking systems and other human resources platforms,
which provide a valuable marketing channel for Xref; and
Initiatives to educate global partner teams and leverage integrations, which provide enterprises access to Xref’s
candidate referencing platform, enabling the rapid digital onboarding of new clients.
10 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 11
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
In August 2016, Xref raised $8 million through a share placement which also closed oversubscribed. These funds were
We will continue to make evidence-based, strategic improvements to the business and pioneer positive change in the HR
used to accelerate the company’s investment in global sales growth, product integration and software development. The
industry, globally. Xref is on a dynamic growth trajectory and we anticipate continued 100% year-on-year revenue growth.
company also received an R&D refundable tax offset of $482,426 in December 2016.
As we scale, we have a strong platform for ongoing growth in our key markets of Australia, Europe, Canada and the USA,
Positive growth outlook
Xref maintains a dynamic growth trajectory and anticipates continued 100% year-on- year revenue growth.
Corporate
Following shareholder endorsement of moving the company’s domicile from New Zealand to Australia on 27 May 2016
the company lodged forms to this effect with ASIC on Monday 28th August 2017. The company successfully redomiciled
to Australia on 21 September 2017.
Xref fully divested the mining assets owned as part of the activities of King Solomon Mines Limited in March 2017 for a
total consideration of $2.
Matters subsequent to the end of the financial year
with great opportunities to expand further.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under New Zealand or Australian
Commonwealth or State law.
Information on directors
Name:
Title:
Lee-Martin Seymour
Chief Executive Officer
Qualifications:
None
On 2 August 2017, Xref Limited raised $7,500,000 before share placement costs through a placement to Australian
Experience and expertise:
institutions and sophisticated investors at a price of 60c per share.
Lee-Martin Seymour is CEO and co-founder of Xref. Having spent more than
17 years working in recruitment across various industries and geographies,
he developed a deep understanding of the demands of the industry and
a passion to pioneer change. A serial entrepreneur, Lee has been at the
forefront of multiple other technology and recruitment organisations that
redefine processes, build brands and streamline business practices.
During September, Xref incorporated a company in Norway (Xref AS) as part of its continued expansion into new regions.
The Norway office is focusing on the Nordic geographical region. Four staff have been hired including a General Manager,
and three sales staff. Customer support is initially being provided from the Xref London office. Clients have already been
secured in this new region. Refer to the market announcement on 21 September 2017 for further information.
On July 3, 2017 Xref issued invitations to eligible employees to participate in the Xref Employee Option plan. This plan was
approved at the EGM held in May 2016. The last date for acceptance to participate was September 7th 2017. With 100%
of employees accepting the invitation, the total number of new options issued in Xref Limited is 1,055,499. Refer to the
market announcement on 26 September 2017 for further information.
As at 21 September 2017 Xref is now domiciled in Australia. The address of its registered office is Unit 14, 13 Hickson Road,
Dawes Point, New South Wales, Australia 2000
Likely developments and expected results of operations
Our ongoing growth centres on three key pillars, global expansion, integrations, and product development. We continue
to invest in the global expansion of Xref, in terms of both the physical growth of the organisation - with new offices and
on partnerships and integrations, a major driver for our success in the last year, which has included agreements with
Bullhorn, Expr3ss!, iCIMS, Oracle Taleo, SmartRecruiters and Workday. Critically, we will never lose sight of the continuous
product developments required to meet the needs of clients around the world as their roles, industries and demands
evolve.
With offices in Australia, the UK and Canada at balance date and a new office with four experienced staff introduced in
Norway since, the global expansion and adoption of the Xref solution shows no signs of slowing. A pipeline of potential
markets will become the ongoing focus of the year ahead.
Integrations have also continued to gain momentum since balance date. An integration in the US and Canada with Checkr
Other current public directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Remuneration Committee
Interests in shares:
32,371,796 ordinary shares
Interests in options:
None
Contractual rights to shares:
16,666,667 performance rights
Name:
Title:
Timothy Griffiths
Chief Technology Officer
Qualifications:
MBA
Timothy Griffiths is CTO and co-founder of Xref. An MBA-qualified technologist
with more than 20 years’ experience advising global companies, Tim’s IT
expertise and technology start-up knowhow have taken the business from a
smart idea to a global success. Tim previously worked for Benchmark Capital
and was co-founder of media company a2a plc, which floated on the UK stock
market. More recently, Tim was also CIO for Jcurve Solutions, an Australian
cloud NetSuite ERP provider.
Other current public directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit Committee
Interests in shares:
32,371,796 ordinary shares
personnel - and the R&D required to introduce and scale the Xref service in new markets. We also maintain our focus
Experience and expertise:
- the first agreement that sees a partner integrated into the Xref platform, rather than vice versa - marks the beginning of
Interests in options:
None
another positive year of partnerships with other, smart HR solutions that will allow Xref to offer clients greater value with
Contractual rights to shares:
16,666,666 performance rights
minimal disruption to their existing workflow.
12 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 13
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Name:
Title:
Tim Mahony
Non-Executive Director
Qualifications:
BFinAdmin
Experience and expertise:
Timothy Mahony spent 17 years in investment banking, specialising in capital
markets and debt trading, and the last seven of those years as a director of
Fay Richwhite Australia. Mr Mahony has been involved, as investor or founder,
in a number of technology start ups, either successfully exiting the business or
growing the business to a mature growth phase. He is a founder and director
of Globalx Information, a digital information company providing information,
software and services to the legal, corporate and spatial markets throughout
Australia and the UK.
Other current public directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Remuneration Committees
Interests in shares:
1,650,000 ordinary shares
Interests in options:
900,000
Contractual rights to shares:
None
Name:
Title:
Nigel Heap
Non-Executive Director
Qualifications:
LLB,AMP
Experience and expertise:
Mr Nigel S. C. Heap has been UK & Ireland Managing Director and Chairman
of The Asia Pacific Business at Hays plc since 25 April 2012. Mr Heap has
been with Hays for 25 years. He served as Managing Director of Asia Pacific at
Hays plc. He joined Hays in 1988 and over the last 19 years has successfully
led the growth of the Asia-Pacific business. He has been a Non-Executive
Director of Xref Limited since 18 August 2016. Mr Heap serves as a Director
of Hays Specialist Recruitment (Australia) Pty Limited and Hays Specialist
Recruitment (Australia) Pty Limited New Zealand Branch. He has completed
INSEAD's Advanced Management Program and holds a Bachelor of Laws from
Manchester University.
Other current Public directorships:
Hays UK Ltd
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit Committee
Interests in shares:
18,000 ordinary shares
Interests in options:
900,000
Contractual rights to shares:
None
Name:
Title:
Qualifications:
Experience and expertise:
Brad Rosser
Chairman
BCom, MBA
Brad is a serial entrepreneur with interests in businesses in Australia, the UK
and the US. Businesses include assisting and funding startups through The
BSF Group, Real Estate, Fitness and Health and Online businesses. A speaker
and has published the book 'Better Stronger Faster: The Entrepreneurs Guide
to Success in Business'. Also a director of Sydney TIE, the largest Not for Profit
Entrepreneurial Organisation in the World and mentor for the ANZ Innovyz
program.
Other current public directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Remuneration Committee
Interests in shares:
Interests in options:
None
7,000,000
Contractual rights to shares:
None
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Key Management Personnel
Chief Financial Officer
Mr James Solomons, BComm, CA, CTA, AFA, MIPA, QCA, JP, GAICD
James is a chartered accountant with over 17 years of experience within the accounting & corporate finance industry. He
has held various roles within the sector and has positioned himself as a leader in the accounting technology space bringing
with him to Xref over 3 years of experience as Xero Australia’s Head of Accounting. A successful entrepreneur in his own
right James has a deep understanding of the need to find a balance between investing for growth whilst maintaining
strong corporate governance processes across the business.
Company Secretary
Mr Robert Waring, BEc, ACA, FCIS, ASIA, FAICD
Robert has more than 41 years of experience in financial and corporate roles, including more than 26 years in company
secretarial roles for ASX-listed companies. He is a director of Oakhill Hamilton Pty Ltd, a company that provides secretarial
and corporate advisory services to a range of listed and unlisted companies. He is also the Company Secretary of ASX-listed
companies Aeris Environmental Ltd, Brain Resource Limited, Nanosonics Limited and Vectus Biosystems Limited.
14 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 15
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Meetings of Directors
The number of meetings of the Company’s Board of Directors (the Board) and of each Board committee held during the
year ended 30 June 2017, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration
Committee
Audit and Risk
Committee
Attended
Held
Attended
Held
Attended
Held
5
5
5
-
4
4
5
5
5
5
5
5
-
-
-
-
-
-
-
-
-
-
-
-
-
3
3
-
-
-
-
3
3
-
-
-
Lee-Martin Seymour
Timothy Griffiths
Timothy Mahony
Simon O’Loughlin
Brad Rosser
Nigel Heap
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements
for its directors and executives. The performance of the consolidated entity depends on the quality of its directors and
executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders’ interests. The Board have considered that it
should seek to enhance shareholders’ interests by:
> having economic profit as a core component of plan design
>
>
>
focusing on sustained growth in shareholder wealth through growth in share price, and delivering constant or
increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
Additionally, the reward framework should seek to enhance executives’ interests by:
>
>
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
> providing a clear structure for earning rewards
Held: represents the number of meetings held during the time the Director held office or was a member of the relevant
remuneration is separate.
In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Director
committee.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity,
in accordance with the requirements of the Corporations Act 2001 Australia and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
> Principles used to determine the nature and amount of remuneration
> Details of remuneration
>
>
Service agreements
Share-based compensation
> Additional information
Non-executive directors remuneration
Fees and payments to Non-Executive Directors reflect the demands and responsibilities of their role. Non-executive
directors’ fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination
and Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to
ensure non-executive directors’ fees and payments are appropriate and in line with the market. The chairman’s fees are
determined independently to the fees of other Non-Executive Directors based on comparative roles in the external market.
The Chairman is not present at any discussions relating to the determination of his own remuneration.
ASX listing rules require the aggregate Non-Executive Directors’ remuneration be determined periodically by a general
meeting. In the Prospectus dated 23th December 2015, noted on Page 18 the current maximum annual aggregate
remuneration for directors was shown as $200,000. This has changed and a resolution was passed at the 2016 AGM that
the maximum aggregate cash-based remuneration payable to Non Executive Directors in any financial year be increased
by A$300,000 from A$200,000 to A$500,000.
Executive remuneration
> Additional disclosures relating to key management personnel
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria
for good reward governance practices:
>
>
competitiveness and reasonableness
acceptability to shareholders
> performance linkage / alignment of executive compensation transparency
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
> base pay and non-monetary benefits
>
>
short-term performance incentives
share-based payments
> other remuneration such as superannuation and long service leave
The combination of these comprises the executive’s total remuneration.
16 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 17
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Nomination and Remuneration Committee based on individual and business unit performance, the overall performance
of the consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives (‘STI’) program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments can be granted to executives based on specific annual targets and key performance
indicators (‘KPI’s’) being achieved. KPI’s include profit contribution, customer satisfaction, leadership contribution and
product management.
The long-term incentives (‘LTI’) include long service leave and share-based payments. Shares are awarded to executives
over a period of three years based on long-term incentive measures. These include increase in shareholders value relative
to the entire market and the increase compared to the consolidated entity’s direct competitors.
The company’s 2017 Annual General Meeting (‘AGM’)
A Remuneration Report has been prepared for the 2017 year and a resolution will be put to the 2017 AGM to ask
shareholders to approve it.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of Xref Limited:
>
>
>
Lee-Martin Seymour – Managing Director & Chief Executive Officer
Timothy Griffiths – Executive Director & Chief Technology Officer
Timothy Mahony – Non-Executive Director
> Nigel Heap – (appointed as Non-Executive Director on 18 August 2016)
> Brad Rosser – (appointed as Non-Executive Chairman on 18 August 2016)
>
Simon O’Loughlin – (Ex-Chairman, resigned 18th August 2016)
And the Key Management Personnel:
>
James Solomons – Chief Financial Officer
> Robert Waring – Company Secretary
Short-
term
benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash bonus
Nonmone-
tary
Superannua-
tion
Long
service
leave
Equity-
settled
shares
Equity-
settled
options
$
$
$
Cash
salary and
fees
$
12,500
125,032
54,555
2017
Non-Executive
Directors:
Simon
O’Loughlin
(Chairman)*
Brad Rosser
(Chairman)**
Timothy
Mahony
Nigel Heap**
47,755
$
-
-
-
-
Executive
Directors:
Lee-Martin
Seymour
Timothy
Griffiths
Other Key
Management
Personnel:
James
Solomons
250,000
41,450
250,000
41,450
209,644
41,450
Robert Waring
71,715
-
1,021,201
124,350
$
-
-
-
-
-
-
-
-
-
-
21,850
21,850
-
-
-
18,893
-
62,593
Total
$
12,500
$
-
292,232
417,264
15,300
69,855
55,921
103,676
-
-
-
-
313,300
313,300
269,987
71,715
-
-
-
-
-
-
-
-
-
363,453
1,571,597
-
-
-
-
-
-
-
-
-
*Represents remuneration from 1 July 2016 to 18 August 2016
**Represents remuneration from 18 August 2016 to 30 June 2017
18 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 19
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Short-term benefits
Post-em-
ployment
benefits
Long-
term
benefits
Share-based pay-
ments
Cash salary
and fees
Cash
bonus
Non-
mone-
tary
Superan-
nuation
Long
service
leave
Equity-set-
tled shares
Equi-
ty-settled
options
Total
2016
$
$
$
Non-Executive Directors:
Simon O’Loughlin
(Chairman)
Tim Mahony
Simon Taylor
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management
Personnel:
James Solomons
Robert Waring
Fu La
Stephen McPhail
30,000
20,833
16,450
248,807
248,807
16,962
96,173
36,000
63,000
777,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
10,962
10,962
1,611
-
-
-
23,535
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
$
15,300
45,300
21,588
42,421
12,750
29,200
-
-
-
-
-
259,769
259,769
18,573
96,173
36,000
12,750
75,750
62,388
862,955
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2017
2016
2017
2016
2017
2016
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Simon O’Loughlin (Chairman)
Brad Rosser (Chairman)
Timothy Mahony
Nigel Heap
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
100%
100%
100%
100%
100%
-
100%
-
87%
87%
100%
100%
Other Key Management Personnel:
James Solomons
Robert Waring
85%
100%
100%
100%
-
-
-
-
13%
13%
15%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined hav-
ing regard to the satisfaction of performance measures and weightings as described above in the section ‘Consolidated
entity performance and link to remuneration’. The maximum bonus values are established at the start of each financial
year and amounts payable are determined in the final month of the financial year by the Nomination and Remuneration
Committee.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Lee-Martin Seymour
Managing Director and Chief Executive Officer
Agreement commenced:
1 July 2016
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2017 of $230,000pa, plus superannuation,
plus $20,000 car allowance to be reviewed annually by the Nomination and
Remuneration Committee. 1 month termination notice by either party. Discretionary
bonus may be paid as per Nomination and Remuneration Committee approval and
KPI achievement. Non-solicitation and non- compete clauses exist.
Timothy Griffiths
Executive Director and Chief Technology Officer
Agreement commenced:
1 July 2016
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2017 of $230,000pa, plus superannuation,
plus $20,000 car allowance to be reviewed annually by the Nomination and
Remuneration Committee. 1 month termination notice by either party. Discretionary
bonus may be paid as per Nomination and Remuneration Committee approval and
KPI achievement. Non-solicitation and non- compete clauses exist.
James Solomons
Chief Financial Officer
Agreement commenced:
1 January 2017
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2017 of $230,000, plus superannuation, plus
$20,000 car allowance to be reviewed annually by the Nomination and Remuneration
Committee. 1 month termination notice by either party. Discretionary bonus
may be paid as per Nomination and Remuneration Committee approval and KPI
achievement along with ability to receive options in Xref Limited. Non-solicitation
and non-compete clauses exist.
20 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 21
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Share-based compensation
Options
Additional disclosures relating to key management personnel
Shareholding
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
The number of shares in the company held during the financial year by each director and other members of key
management personnel in this financial year or future reporting years are as follows:
management personnel of the consolidated entity, including their personally related parties, is set out below:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value per option
at grant date
7 December 2016
25/11/16 - 25/11/18
25 November 2021
7 December 2016
25/11/19
25 November 2022
$0.70
$0.70
$0.1198
$0.1428
Options granted carry no dividend or voting rights.
All options were granted over unissued fully paid ordinary shares in the company. The number of options granted was
determined having regard to the satisfaction of performance measures and weightings as described above in the section
‘Consolidated entity performance and link to remuneration’. Options vest based on the provision of service over the vesting
period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the
holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant
date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their
potential exercise.
The number of options over ordinary shares granted to and vested by directors and other key management personnel as
part of compensation during the year ended 30 June 2017 are set out below:
Name
Simon O’Loughlin
Tim Mahony
Simon Taylor
Stephen McPhail
Nigel Heap
Brad Rosser
Number of options
granted during the
year 2017
Number of options
granted during the
year 2016
Number of options
vested during the
year 2017
Number of options
vested during the
year 2016
-
-
-
-
900,000
7,000,000
300,000
900,000
250,000
250,000
-
-
-
300,000
-
-
300,000
-
300,000
300,000
250,000
250,000
-
-
Balance at
Received
Balance at
the start of
as part of
Disposals/
the end of
the year
remuneration
Additions
other
the year
Ordinary shares
Non-Executive Directors:
Simon O’Loughlin*
Brad Rosser **
Timothy Mahony
Nigel Heap**
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management Personnel:
James Solomons
Robert Waring
*for the period 1 July 2016 to 18 August 2016
**for the period 18 August 2016 to 30 June 2017
Option holding
550,000
-
1,650,000
-
24,038,462
24,038,462
-
213,885
50,490,809
-
-
-
-
-
-
-
-
-
-
-
18,000
8,333,333
8,333,334
9,000
-
-
16,693,667
-
-
-
-
-
-
-
-
-
550,000
-
1,650,000
18,000
32,371,795
32,371,796
9,000
213,885
67,184,476
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel
below:
as part of compensation during the year ended 30 June 2017 are set out below:
Value of options
granted during the
year
Value of options
exercised during the
year
Value of options
lapsed during the
year
Remuneration
consisting of options
for the year
Name
Nigel Heap
Brad Rosser
$
107,820
896,100
$
-
-
$
-
-
%
54%
70%
Options over ordinary shares
Simon O’Loughlin*
Brad Rosser
Timothy Mahony
Nigel Heap
*for the period 1 July 2016 to 18 August 2016
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
300,000
-
-
7,000,000
900,000
-
-
900,000
1,200,000
7,900,000
-
-
-
-
-
-
-
-
-
300,000
7,000,000
900,000
900,000
-
9,100,000
22 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 23
DIRECTORS’ REPORT / Continued
DIRECTORS’ REPORT / Continued
Other transactions with key management personnel and their related parties
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by
During the financial year;
the Corporations Act 2001.
Payments for accounting services from Aptus Accounting & Advisory (related entity of James Solomons) of $93,845 (ex GST)
The directors are of the opinion that the services as disclosed in note 10 to the financial statements do not compromise the
were made.
external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring) of $71,715 (ex
GST) were made.
All transactions were made on normal commercial terms and conditions and at market rates.
Performance Rights
>
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
> none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for
the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Lee-Martin Seymour had B Class Performance Rights converted into 8,333,333 fully paid ordinary shares after the
Rounding of amounts
achievement of the performance milestones set out in the conversion events, as approved by shareholders at the 26
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
November 2015 EGM, and as detailed in the terms and conditions of the Company’s B Class Performance Rights released
Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that
to ASX on 5 February 2016. As at the date of this report there is a balance of 16,666,667 Performance Rights available for
Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Lee-Martin Seymour.
Timothy Griffiths had B Class Performance Rights converted into 8,333,334 fully paid ordinary shares after the achievement
of the performance milestones set out in the conversion events, as approved by shareholders at the 26 November 2015
EGM, and as detailed in the terms and conditions of the Company’s B Class Performance Rights released to ASX on 5
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors’ report.
February 2016. As at the date of this report there is a balance of 16,666,667 Performance Rights available for Timothy
Corporate Governance
Griffiths.
This concludes the remuneration report, which has been audited.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of
the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
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.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 10 to the financial statements.
The Group’s Corporate Governance Statement and ASX Appendix 4G are released to ASX on the same day the Annual
Report is released. The Corporate Governance Statement and Corporate Governance Compliance Manual can be found on
the Company’s website at https://xref.com/en/investor-centre/.
This report is made in accordance with a resolution of Directors, pursuant to section 298 (2) (a) of the Corporations Act
2001.
On behalf of the directors
Lee-Martin Seymour
Brad Rosser
Managing Director
Chairman
27 September 2017
27 September 2017
Sydney
Sydney
24 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 25
Independence
Declaration
27 September 2017
The Board of Directors
Xref Limited
14/13 Hickson Street
Dawes Point
27 September 2017
SYDNEY NSW 2000
The Board of Directors
Xref Limited
14/13 Hickson Street
Dear Board Members
Dawes Point
SYDNEY NSW 2000
Xref Limited
Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Crowe Horwath Sydney
Fax +61 2 9262 2190
ABN 97 895 683 573
Member Crowe Horwath International
www.crowehorwath.com.au
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Xref Limited.
Dear Board Members
As lead audit partner for the audit of the financial report of Xref Limited for the financial year ended 30
Xref Limited
June 2017, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(i)
declaration of independence to the Directors of Xref Limited.
(ii) any applicable code of professional conduct in relation to the audit.
As lead audit partner for the audit of the financial report of Xref Limited for the financial year ended 30
June 2017, I declare that to the best of my knowledge and belief, that there have been no
Yours sincerely
contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(i)
(ii) any applicable code of professional conduct in relation to the audit.
CROWE HORWATH SYDNEY
Yours sincerely
ASH PATHER
CROWE HORWATH SYDNEY
Partner
ASH PATHER
Partner
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees.
Financial
Statements
Consolidated statement of comprehensive income for the year ended 30 June 2017
OPERATING ACTIVITIES
Sales - Credits Sold in Current Year
Less adjustment for Unearned Revenue
Revenue
Employee expenses
Overheads and administrative expenses
Depreciation, amortisation and impairment expenses
Operating profit/ (loss)
OTHER INCOME
Other income
Notes
2017
$
2016
$
4,107,518
1,734,426
(1,127,069)
(421,250)
9
2,980,449
1,313,176
10
11
5,418,895
5,409,076
1,912,737
2,144,376
46,181
17,310
10,874,152
4,074,423
(7,893,702)
(2,761,247)
13
1,437,665
1,916,721
Profit/(loss) before income tax from continuing activities
(6,456,038)
(844,526)
Income tax expense/ (credit)
14
-
716
Profit/(loss) for the year from continuing activities
(6,456,038)
(845,242)
DISCONTINUED OPERATIONS
Profit/ (loss) for the year from discontinued operations
8
(967)
(2,354)
Loss attributable to the shareholders of the Company
(6,457,005)
(847,596)
OTHER COMPREHENSIVE INCOME MOVEMENTS
Movements that will be reclassified to profit or loss in subsequent
periods:
Exchange differences on translation of foreign operations
Total other comprehensive income movements
(51,862)
(51,862)
16,947
16,947
Total comprehensive loss for the year
(6,508,867)
(830,649)
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees.
26 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 27
FINANCIAL STATEMENTS / For the Year Ended 30 June 2017
FINANCIAL STATEMENTS / For the Year Ended 30 June 2017
Consolidated statement of comprehensive income for the year ended 30 June 2017 (continued)
Consolidated statement of financial position as at 30 June 2017
EARNINGS PER SHARE
From continuing and discontinuing operations
Basic and diluted (cents per share)
From continuing operations
Basic (cents per share)
From discontinuing operations
Basic (cents per share)
Notes
2017
$
2016
$
25
25
25
(0.06)
(0.02)
(0.06)
(0.02)
-
-
These financial statements should be read in conjunction with the notes to the financial statements
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Non-current assets classified as held for sale
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Rental Bonds
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Unearned Revenue
Employee entitlements
Superannuation payable
Lease incentives
Liabilities directly associated with assets classified
as held for sale
Total current liabilities
Non-current liabilities
Employee entitlements
Lease Incentive
Total non-current liabilities
Total liabilities
Net assets
Notes
2017
2016
15
16
8
17
18
19
21
20
8
20
4,069,573
2,616,084
192,620
2,270,832
944,060
52,132
6,878,277
3,267,024
-
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333,814
3,600,838
212,357
101,681
74,998
389,036
139,944
-
48,467
188,411
7,267,313
3,789,249
1,641,502
2,030,253
162,725
115,258
31,512
530,929
903,566
62,922
57,679
21,470
3,981,250
1,576,566
-
333,812
3,981,250
1,910,378
22,436
13,103
35,539
-
44,615
44,615
4,016,789
3,250,524
1,954,993
1,834,256
28 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 29
FINANCIAL STATEMENTS / For the Year Ended 30 June 2017
FINANCIAL STATEMENTS / For the Year Ended 30 June 2017
Consolidated statement of financial position as at 30 June 2017 (continued)
EQUITY
Issued share capital
Retained earnings
Other equity reserves
Total equity
Notes
2017
2016
22
23
32,687,991
25,042,977
(7,475,827)
(1,110,982)
(21,961,640)
(22,097,739)
3,250,524
1,834,256
These financial statements should be read in conjunction with the notes to the financial statements.
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30 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 31
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Consolidated statement of cash flows for the year ended 30 June 2017
Cash flow from operating activities
Cash was provided from/(applied to):
Receipts from customers
Interest received
Other Income
Payments to suppliers and employees
Income Tax Paid
Notes
2017
$
2016
$
3,524,328
1,772,066
53,031
482,426
16,412
22
(9,631,070)
(3,666,643)
-
(716)
Net cash from/(used in) operating activities
27
(5,571,285)
(1,878,859)
Cash flow from investing activities
Cash was provided from/(applied to):
Proceeds from sale of property, plant and equipment
Proceeds from Acquisition of King Solomon Mines Limited Ltd
Cash from loans to other entities
Purchase of property, plant and equipment
Net cash from/(used in) investing activities
Cash flow from financing activities
Cash was provided from/(applied to):
Proceeds from issue of convertible notes
Transaction costs paid in relation to share capital issued
Net cash from/(used in) financing activities
233
-
31,416
271
3,770,054
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(119,804)
(146,404)
(88,115)
3,623,921
22
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(540,000)
7,460,000
550,000
(51,730)
498,270
Net increase/(decrease) in cash and cash equivalents
1,800,560
2,243,332
Cash and cash equivalents, beginning of the year
Net foreign exchange differences
Less cash included in disposal group
2,270,832
(1,819)
-
81,076
(48,101)
(5,475)
Cash and cash equivalents at end of the year
15
4,069,573
2,270,832
These financial statements should be read in conjunction with the notes to the financial statements.
32 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 33
Notes to the
Financial Statements
NOTES TO THE FINANCIAL STATEMENTS / continued
1. Reporting entity
If the Group loses control over a subsidiary, it:
Xref Limited is a limited liability company incorporated on 28 January 2003 and as at 21 September 2017 is domiciled in
Australia. The address of its registered office is Unit 14, 13 Hickson Road, Dawes Point, New South Wales, Australia 2000.
> derecognises the assets (including goodwill) and liabilities of the subsidiary;
> derecognises the carrying amount of any non-controlling interest;
Xref is a human resources technology company that automates the candidate reference process for employers.
> derecognises the cumulative carrying amount of foreign currency translation; differences recorded in reserves;
2. Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
a. Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
b. Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 5.
3. Summary of significant accounting policies
a. Basis of consolidation
>
>
>
>
>
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss; and
reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or
loss, or retained earnings as appropriate.
Interests in subsidiaries are held at cost less impairment in the Parent.
b. Foreign currency translation
Functional and presentation currency
The Group financial statements are presented in Australian dollars (AUDs), which is also the functional currency of the
Parent.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the Parent, using exchange rates prevailing at
the dates of the transactions (i.e. the spot exchange rate). Foreign exchange gains and losses resulting from the settlement
of such transactions and from measurement of monetary items denominated in foreign currency at year-end exchange
rates are recognised in the reported profit or loss.
Non-monetary items measured at historical cost are not re-translated at each year-end, instead they are only translated
once using the exchange rate at the transaction date. Non-monetary items measured at fair value are translated using the
The Group financial statements consolidate the financial statements of the Parent and all entities over which the Parent
exchange rates at the date when the year-end fair value was determined.
is deemed to have controlling relationship (defined as “subsidiaries”). An entity is defined as a subsidiary when the Group
is exposed, or has rights to variable returns from its relationship with the entity and has the ability to affect those returns
through its power over the entity.
When the Group has less than a majority of the voting power or similar rights of another entity, the Group considers all
relevant facts and circumstances in assessing whether it has power over the other entity.
The Group re-assesses whether or not it controls another entity if facts and circumstances indicate that there are changes
The net balance of foreign exchange gains and losses that relate to monetary items (such as borrowings, cash and cash
equivalents) are presented in the Statement of Comprehensive Income within “finance income” or “finance costs”. All other
foreign exchange gains and losses are presented in the Statement of Comprehensive Income within “Other gains/(losses)”.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit
and loss are recognised in the Statement of Comprehensive Income as part of the fair value gain or loss. Translation
differences on non-monetary financial assets, such as equities classified as available for sale, are included in fair value
in one or more of the three elements of control. The financial statements of subsidiaries are included in the preliminary
movements disclosed within other comprehensive income.
consolidated financial statements from the date that control commences until the date that control ceases.
The consolidation of the Parent and subsidiary entities involves adding together like terms of assets, liabilities, income
and expenses on a line-by-line basis. All significant intra-group balances are eliminated on consolidation of Group financial
position, performance and cash flows.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity
transaction - that is, as transactions with owners in their capacity as owners, recorded in the statement of movements in
equity.
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other
than AUDs are translated into AUDs upon consolidation.
34 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 35
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
The results and financial position of subsidiaries are translated into the presentation currency as follows:
No assets classified as “held for sale” are subject to depreciation or amortisation subsequent to their classification as “held
i. assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of
that statement of financial position;
for sale”.
g. Property, plant and equipment
ii. income and expenses for each statement of comprehensive income are translated at average exchange rates (unless
Except for land and buildings, items of property, plant and equipment are measured at cost, less accumulated depreciation
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,
and any impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.
in which case income and expenses are translated at the dates of the transactions); and
iii. all resulting exchange differences are recognised in other comprehensive income.
The assets and liabilities of foreign operations, including any goodwill, are translated to AUDs at exchange rates at the
reporting date. The income and expenses of foreign operations, are translated to AUDs at exchange rates at the dates of
the transactions.
Foreign currency differences are recognised on other comprehensive income, and presented in the foreign currency
translation reserve within equity.
Additions and subsequent costs
Subsequent costs and the cost replacing part of an item of property, plant and equipment is recognised as an asset if, and
only if, it is probable that future economic benefits or service potential will flow to the Group and the cost of the item can
be measured reliably. The carrying amount of the replaced part is derecognised.
In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost,
or for a nominal cost, it is recognised at fair value at the acquisition date.
All repairs and maintenance expenditure is charged to profit or loss in the year in which the expense is incurred.
When a foreign operation is disposed of such that control is lost, the cumulative amount of the translation reserve related
to the foreign operation is reclassified to the reported surplus or deficit as part of the gain or loss on disposal.
Disposals
c. Cash and cash equivalents
When an item of property, plant or equipment is disposed of, the gain or loss recognised in the profit or loss is calculated
as the difference between the net sale proceeds and the carrying amount of the asset.
Cash and cash equivalents include cash on hand, deposits held on call with banks, other short-term highly liquid investments
with original maturities of three months or less, and bank overdrafts.
Depreciation
d. Trade debtors and other receivables
Trade debtors are amounts due from customers for goods sold and services performed in the ordinary course of business.
If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current
assets.
Trade debtors and other receivables are measured initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for any impairment.
Depreciation is charged on a straight value (SL) basis on all property, plant and equipment over the estimated useful life of
the asset. The following depreciation rates have been applied at each class of property, plant and equipment:
Computer Equipment
Office Equipment
Office Furniture
Office Fit-out
3-5 years
3-20 years
10-20 years
6-20 years
An allowance for impairment is established where there is objective evidence the Group will not be able to collect all
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining life of the
amounts due according to the original terms of the receivable.
improvements, whichever is shorter.
e. Trade creditors and other payables
The residual value and useful life of property, plant and equipment is reassessed annually.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Creditors are classified as current liabilities if payment is due within one year or less. If not, they are
h. Intangible assets
presented as non-current liabilities.
Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost
Trade creditors and other payables are recognised initially at fair value and subsequently measured at amortised cost
less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of
using the effective interest method.
f. Assets available for sale
intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible
asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of
consumption or useful life are accounted for prospectively by changing the amortisation method or period.
When the Group intends to sell non-current assets or groups of assets, and if the sale is highly probable to be carried out
within 12 months, the asset or group of assets is classified as “held for sale” and presented as such in the statement of
Internally developed intangible assets
financial position.
Non-current assets classified as “held for sale” are measured at the lower of their carrying amounts, immediately prior
to their classification as held for sale and their fair value less costs to sell. However, some “held for sale” assets such as
financial assets or deferred tax assets continue to be measured in accordance with the Group’s accounting policy for those
assets.
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding,
is recognised in the reported profit or loss when incurred.
36 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 37
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Development activities include a plan or design for the production of new or substantially improved products. Development
Initial recognition and measurement
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and
Financial assets and financial liabilities are recognised initially at fair value plus transaction costs attributable to the
commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources
acquisition, except for those carried at fair value through profit or loss, which are measured at fair value.
to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct
labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other development
expenditure is recognised in the reported surplus and deficit when incurred.
Financial assets and financial liabilities are recognised when the Parent and Group becomes a party to the contractual
provisions of the financial instrument.
Capitalised development expenditure is measured at cost less accumulated amortisation and any impairment losses.
De-recognition of financial instruments
i. Leased assets
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or if the
Group transfers the financial asset to another party without retaining control or substantial all risks and rewards of the
Leases where the Group assumes substantially all the risks and rewards incidental to ownership of the leased assets, are
asset.
classified as finance leases. All other leases are classified as operating leases.
Upon initial recognition finance leased assets are measured at an amount equal to the lower of its fair value and the
present value of minimum leased payments at inception of the lease. A matching liability is recognised for minimum lease
payment obligations excluding the effective interest expense. Subsequent to initial recognition, the asset is accounted for
in accordance with the accounting policy applicable to the asset.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the
lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Associated costs, such as maintenance and insurance, are expensed as incurred.
j.
Impairment of non-financial assets
At each reporting date, the carrying amounts of tangible and intangible assets are reviewed to determine whether there
is any indication of impairment. If any such indication exists for an asset, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss.
Goodwill and other intangible assets with indefinite useful life are tested for impairment annually.
An impairment loss is recognised whenever the carrying amount of an asset exceeds is recoverable amount. Impairment
losses directly reduce the carrying amount of assets and are recognised in the reported profit or loss.
The estimated recoverable amount of an asset is the greater of their fair value less costs to sell and value in use. Value in
use is determined by estimating future cash flows from the use and ultimate disposal of the asset and discounting to their
present value using a pre-tax discount rate that reflects current market rates and risks specific to the asset. For an asset
that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating
unit to which the asset belongs.
An impairment loss in respect of goodwill is not reversed. Other impairment losses are reversed when there is a change in
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Subsequent measurement of financial assets
The subsequent measurement of financial assets depends on their classification, which is primarily determined by the
purpose for which the financial assets were acquired. Management determines the classification of financial assets at
initial recognition into one of four categories defined below, and re-evaluates this designation at each reporting date.
All financial assets except for those classified as fair value through profit or loss are subject to review for impairment at
least at each reporting date. Different criteria to determine impairment are applied to each category of financial assets,
which are described below.
The classification of financial instruments into one of the four categories below, determines the basis for subsequent
measurement and the whether any resulting movements in value are recognised in the reported profit/ loss or other
comprehensive income.
i. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. 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.
the estimates used to determine the recoverable amount. An impairment loss on property carried at fair value is reversed
ii. Financial assets at fair value through profit and loss
through the relevant reserve. All other impairment losses are reversed through profit or loss.
Any reversal of impairments previously recognised is limited so that the carrying amount of the asset does not exceed
its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years.
k. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument in another entity.
Financial instruments are comprised of trade debtors and other receivables, cash and cash equivalents, other financial
assets, trade creditors and other payables, borrowings, other financial liabilities and derivative financial instruments.
Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or
that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. All derivative
financial instruments fall into this category, except for those designated and effective as hedging instruments, for which
the hedge accounting requirements apply.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of non-
derivative financial instruments are determined by reference to active market transactions or using a valuation technique
where no active market exists.
38 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 39
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
iii. Held-to-maturity investments
m. Employee entitlements Short- term employee benefits
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity
Employee benefits, previously earned from past services, that the Group expect to be settled within 12 months of reporting
other than loans and receivables. Investments are classified as held-to-maturity if the Group have the intention and ability
date are measured based on accrued entitlements at current rate of pays.
to hold them until maturity. The Group currently hold listed bonds designated into this category.
These include salaries and wages accrued up to the reporting date and annual leave earned, but not yet taken at the
Held-to-maturity investments are measured subsequently at amortised cost using the effective interest method. If there is
reporting date.
objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset
is measured at the present value of estimated future cash flows. Any changes to the carrying amount of the investment,
The Group recognises a liability and an expense for bonuses where they are contractually obliged or where there is a past
including impairment losses, are recognised in profit or loss.
iv. Available-for-sale financial assets
practice that has created a constructive obligation.
Termination benefits
Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not
qualify for inclusion in any of the other categories of financial assets.
Termination benefits are recognised as an expense when the Group is committed without realistic possibility of
withdrawal, to terminate employment, or to provide termination benefits as a result of an offer made to encourage
voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has
Equity investments are measured at cost less any impairment charges, where the fair value cannot currently be estimated
made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can
reliably.
be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to
All other available-for-sale financial assets are measured at fair value. Gains and losses are recognised in other comprehensive
income and reported within the “available-for-sale revaluation reserve” within equity, except for impairment losses which
are recognised in profit or loss.
When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive
income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other
comprehensive income. Any associated interest income or dividends are recognised in profit or loss within “finance
income”.
Available-for-sale financial instruments are reviewed at each reporting date for objective evidence that the investment or
group investment is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the
investment below its cost.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle
on a net basis, to realise the assets and settle the liabilities simultaneously.
l. Provisions
A provision is recognised for a liability when the settlement amount or timing is uncertain; when there is a present legal or
constructive obligation as a result of a past event; it is probable that expenditures will be required to settle the obligation;
and a reliable estimate of the potential settlement can be made. Provisions are not recognised for future operating losses.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are
their present value.
Long-term benefits
The Group’s net obligation is respect of long service leave is the amount of future benefit that employees have earned in
return for their services in the current and prior years. The obligation is calculated using the projected unit credit method
and is discounted to its present value. Any actuarial gains and losses are recognised in profit or loss in the year in which
they arise.
Share-based compensation
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received
in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting
period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting
conditions (for example, profitability). Non-market vesting conditions are included in assumptions about the number of
options that are expected to become exercisable. At each reporting date, the entity revises its estimates of the number of
options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in
the statements of comprehensive income, and a corresponding adjustment to equity over the remaining vesting period. If
the options lapse or expire, the accumulated balance will be reclassified to retained earnings.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) when
the options are exercised.
n. Revenue
Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Group and revenue can
be reliably measured. Revenue is measured at the fair value of consideration received, excluding GST, rebates, and trade
lower that the unavoidable cost of meeting its obligation under the contract.
discounts.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable
The following specific recognition criteria must be met before revenue is recognised:
evidence available at the reporting date, including the risks and uncertainties associated with the present obligation.
Rendering of services
Provisions are discounted to their present values, where the time value of money is material. The increase in the provision
The Group sells candidate reference credits to its customers. When customers use a credit, the service has been performed
due to the passage of time is recognised as an interest expense.
and revenue is recognised in the accounting periods in which the services are provided. Unused credits are recognised as
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
unearned income in the financial statements.
40 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 41
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Interest income
Changes in deferred tax assets or liabilities are recognised as a component of income tax in profit or loss, except where
Interest income is recognised as it accrues, using the effective interest method.
they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related
o. Finance costs
Finance costs recorded in the Statement of Comprehensive Income comprise the interest expenses charged on borrowings
r. Goods and Services Tax (GST)
deferred tax is also recognised in other comprehensive income or equity, respectively.
and the unwinding of discounts used to measure the fair value of provisions.
All amounts in these financial statements are shown exclusive of GST, except for receivables and payables that are stated
p. Profit and loss from discontinued activities
A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and:
inclusive of GST.
The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD), Australian Taxation Office
ATO or tax offices in other jurisdictions is included as part of receivables and / or payables in the Statement of Financial
>
>
>
represents a separate major line of business or geographical area of operations;
Position. GST balances from different countries are not offset.
is part of a single co-ordinated plan to dispose of a separate major line of business; or geographical area of
operations; or
s. Share capital
is a subsidiary acquired exclusively with a view to re-sale
Share capital represents the consideration received for shares that have been issued. All transaction costs associated with
the issuing of shares are recognised as a reduction in equity, net of any related income tax benefits.
The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the
reporting date for the latest year presented. Where operations previously presented as discontinued are now regarded as
t. Dividend distribution
continuing operations, prior year disclosures are correspondingly re-presented.
q. Income tax
The income tax expense recognised in profit or loss comprises the sum of deferred tax movements and current tax not
recognised in other comprehensive income or directly in equity.
Dividend distributions to the parent’s shareholders are recognised as a liability in the Group’s financial statements in the
period in which the dividends are approved by the Parent Directors.
u. Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Parent by the weighted average number of ordinary
Current income taxes
shares outstanding during the year, adjusted for own shares held.
Current tax is the amount of income tax payable based on the taxable surplus for the current year, plus any adjustment to
income tax payable in respect of prior years. Current tax is calculated using tax rates (and tax laws) that have been enacted
or substantially enacted at the reporting date.
Deferred tax
Deferred tax is the amount of income tax payable or recoverable in future years in respect of temporary differences and
unused tax losses (if any). Temporary differences are differences between the carrying amount of asset and liabilities in
the financial statements and the corresponding tax bases used in the consumption of taxable surpluses.
Deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability,
unless the related transaction is a business combination or affects the tax or accounting profit. Deferred tax on temporary
differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that taxable surpluses will be available in future years,
against which the deductible temporary differences or tax losses can be utilised.
Deferred tax is measured at the tax rates that are expected to apply when the asset is realised or the liability settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The measurement of
deferred tax reflects the tax consequences that would follow from the manner in which the Group expects to recover the
carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and
liabilities from the same taxation authority.
Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shareholders outstanding, adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise convertible notes and share options granted to employees.
v. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is ultimately responsible for strategic decision, approving the
allocation of resources and assessing the performance of the operating segments, has been identified as the Board of
Directors.
w. Going Concern
Notwithstanding the Group incurred a loss after tax for the year of $6,457,005 (2016: $847,596), the consolidated financial
statements have been prepared on a going concern basis as the Group has a net asset position of $3,250,524 (2016:
$1,834,256) and has raised $7.5 million (before costs) in August 2017 which was oversubscribed. The directors believe this
is sufficient for the Group to support its operating activities and enable the Group to pay its debts when they fall due in
the next 12 months and the foreseeable future. As such the consolidated financial statements have been prepared on the
going concern basis.
42 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 43
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
4. New Accounting Standards and Interpretations not yet mandatory or early adopted
5. Significant accounting judgements, estimates and assumptions
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
The preparation of the financial statements requires management to make judgements, estimates and assumptions
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2017.
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations,
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements,
most relevant to the consolidated entity, are set out below.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the
estimates and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates
will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written,
Share-based payment transactions
verbal or implied) to be identified, together with the separate performance obligations within the contract; determine
the transaction price, and recognition of revenue when each performance obligation is satisfied. The consolidated entity
has at this time performed a preliminary assessment of the performance obligations within current contracts and has
assessed that there will be no material impacts on the way revenue is currently recognised.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces
all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. For financial liabilities,
the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented
in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to
more closely align the accounting treatment with the risk management activities of the entity. The consolidated entity has
considered its financial assets and liabilities and does not believe that there will be any material impacts on the financial
statements.
AASB 16 Leases
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial
or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The
accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Impairment
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds
its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from
each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash
flows. In the process of measuring expected future cash flows management makes assumptions about future operating
results.
These assumptions relate to future events and circumstances.
Internally generated software and research costs
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
Management monitors progress of internal research and development projects by using a project management system.
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
Significant judgement is required in distinguishing research from the development phase.
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting
policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss
as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments,
lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling
costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset
(included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the
earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will
be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16.
For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing
To distinguish any research-type project phase from the development phase, it is the Group’s accounting policy to require a
detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into
the Group’s overall budget forecast as the capitalisation of development costs commences. This ensures that managerial
accounting, impairment testing procedures and accounting for internally-generated intangible assets are based on the
same data.
Management has determined that for the 2017 financial year that no expenditure be capitalised as an asset. The basis
for this decision is that over the past 5 years there has been significant development of the platform and that the current
platform is completely different to that which previously existed. The system that currently exists is not a standalone asset
and is constantly evolving. Additionally, the codebase and infrastructure regularly changes to keep up with technological
advances.
activities) and interest (either operating or financing activities) component. The impact of this standard on the financial
Deferred tax assets
statements of the consolidated entity is yet to be assessed.
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the
Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific
limits to the use of any unused tax losses or credits. If a positive forecast of taxable income indicates the probable use of
a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised
in full.
44 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 45
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Research and Development Refundable Tax Offset
7. Segment reporting
The Group has identified costs including hosting fees, market research, external contractors, system testing and
remuneration which it has identified as research and development costs. The Research and Development tax refund is
calculated as 43.5% of the total figure.
These asset values have then been reduced prior to acquisition based on an estimation of fair value less costs to sell in line
with the sale and purchase agreement consideration for Inner Mongolia Plate Mining Co Limited of RMB 10 (equivalent to
AU$2). The sale agreement was executed in March 2017 for the written down value of $2 AUD.
6. Group information
The preliminary consolidated financial statements of the Group include:
Name
Parent
Xref Limited
Subsidiaries
Group % equity
interest
Principal activity
Country of
incorporation
2017
2016
Candidate Referencing
New Zealand
100%
100%
Xref (AU) Pty Limited
Xref (UK) Limited
Candidate Referencing
Australia
Candidate Referencing
United Kingdom
Xref Referencing (CA) Limited
Candidate Referencing
Inner Mongolia Plate Mining Co
Limited
Mineral exploration and
development
Canada
China
100%
100%
100%
0%
100%
100%
100%
90%
The mineral exploration & development asset was divested in March 2017 for the written down value of $2.
a. Investments in subsidiaries
All investments in subsidiaries are carried at cost and eliminated through consolidation in the Group.
There is only one operating segment (candidate referencing) for the year ended 30 June 2017. The disclosures on the face
of the statement of comprehensive income to operating loss and the statement of financial position (excluding the items
designated for sale) represent the Group’s one business segment.
Geographical information
Credit sales to external customers
Australia
Canada
United Kingdom
Total operating revenue
Revenue from external customers
Australia
Canada
United Kingdom
Total operating revenue
Non-current operating assets
Australia
Canada
United Kingdom
Total Non-current operating assets
The information above is based on the locations of the customers.
2017
$
3,844,059
120,864
142,595
4,107,518
2016
$
1,720,865
-
13,561
1,734,426
2,889,087
1,304,475
23,124
68,238
-
8,701
2,980,449
1,313,176
207,128
22,125
58,102
287,355
147,960
7,521
32,930
188,411
46 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 47
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
8. Non-current assets held for sale and discontinued operations
9. Revenue
The assets and liabilities related to Inner Mongolia Plate Mining Co Limited have been presented as held for sale following
the acquisition by Xref Pty Limited.
a. Cash flows associated with discontinued operations:
Operating cash flows – exploration and mining cost
Total cash flows from discontinued operations
b. Net assets of disposal group classified as held for sale
The asset was divested in March 2017 for the written down value of $2
Assets
Exploration and evaluation assets
Other assets
Total assets
Liabilities
Trade creditors and other payables
Total liabilities
Net assets of disposal group
2017
$
(967)
(967)
2017
$
-
-
-
-
-
-
2016
$
(2,297)
(2,297)
2016
$
240,000
93,814
333,814
333,812
333,812
2
The assets and liabilities of the discontinued operations are classified as held-for-sale and were written down to their fair
value in 2016.
The measurement of fair value in 2016 was been determined by using observable inputs, being the selling price agreed
between the buyer and the company and is therefore within level 2 of the fair value hierarchy. The buyer is a related party
of the company. The disposal was finalised in March 2017 for a consideration of $2.
c. Net profit of disposal group classified as held for sale
Rendering of services
Total revenue
10. Expenses
The following expenses were expensed in the operating profit/(loss) for the year:
Audit fees
Accounting
Directors Fees
Legal Fees
Marketing expenses
Other Consultants
Share Option Expense
Administration expense
Foreign exchange loss
Operating lease payments
Total
Auditors remuneration
Fees charged by Audit Firm:
Financial statement audit and review
Total fees paid to audit firm
11. Depreciation, amortisation and impairment expenses
Expenses
Profit/ (loss) for the year from discontinued operations
2017
$
(967)
(967)
2016
$
(2,354)
(2,354)
Depreciation of property, plant and equipment
Total
2017
$
2016
$
2,980,449
1,313,176
2,980,449
1,313,176
2017
$
111,352
314,279
232,353
187,628
1,486,865
830,788
363,454
1,301,920
25,522
554,915
2016
$
69,636
157,559
91,298
172,028
277,437
410,162
21,588
623,846
48,101
272,722
5,409,076
2,144,376
111,352
111,352
69,636
69,636
2017
$
46,181
46,181
2016
$
17,310
17,310
48 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 49
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
12. Research and development costs
Research and development costs expensed
Total research and development costs for the year
2017
$
2016
$
3,183,062
1,072,058
3,183,062
1,072,058
The Parent and Group research and development projects have focused on cloud-based solutions for candidate recruitment.
13. Other income
Profit on Sale
Research & Development - Refundable Tax Offset
Interest Received
Other Income
Total
14. Income tax
2017
$
2
1,384,632
53,031
-
2016
$
1,417,860
482,426
16,413
22
1,437,665
1,916,721
Australia
UK
Canada
$
(263,386)
$
-
$
-
NZ
$
Total
$
-
(263,386)
(333,250)
(363,246)
(98,298)
(52,802)
(847,596)
(596,636)
(363,246)
(98,298)
(52,802)
(1,110,982)
(740,555)
274,501
-
-
-
-
55,359
(685,196)
-
274,501
(1,062,690)
(363,246)
(98,298)
2,557
(1,521,677)
2016
Losses BF
Current year loss
Accumulated Losses
Permanent Tax Difference
Timing Differences
Taxable Loss CF
Tax Rates
30%
20%
27%
28%
Calculated Deferred Tax Asset
(318,807)
(72,649)
(26,049)
716
(416,789)
The Company has moved domicile from New Zealand to Australia and has sold the Chinese subsidiary, and so the company
does not recognise a potential tax loss in these countries. However, Xref Limited has operating subsidiaries in Australia,
Tax Expense
-
-
-
(716)
(716)
the UK and Canada which are expected to accumulate tax losses prior to returning a profit.
Potential Deferred Tax Asset Not
Recognised
(318,807)
(72,649)
(26,049)
-
(417,505)
a. Components of income tax expense
Current year tax expense
Income tax profit and loss
b. Reconciliation of effective tax rate
Profit/(loss) before income tax
Income tax using Company tax rates @30% (2015: 30%)
2017
$
-
-
2016
$
716
716
(6,457,005)
(846,880)
Expected income tax expense (deferred tax asset)
(1,937,102)
(254,064)
Adjustments:
Deferred tax asset not recognised
Permanent differences
Adjustment for foreign tax rates
Interest resident withholding tax unable to claimed
Current year income tax expense
(441,019)
1,772,574
605,547
-
-
417,505
(163,441)
-
716
716
2017
Losses BF
Current year loss
Accumulated Losses
(596,636)
(363,246)
(98,298)
(52,802)
(1,110,982)
(4,388,877)
(850,881)
(727,341)
(489,906)
(6,457,005)
(4,985,513)
(1,214,127)
(825,639)
(542,708)
(7,567,983)
Permanent Tax Difference
1,458,892
11,179
4,128
-
1,474,199
Timing Differences
Taxable Loss CF
(420,761)
(1,083)
(9,155)
102,449
(328,550)
(3,947,382)
(1,204,031)
(830,666)
(440,259)
(6,422,338)
Tax Rates
30%
20%
27%
28%
Calculated Deferred Tax Asset
(1,184,215)
(240,806)
(224,280)
(123,273)
(1,772,574)
Tax Expense
-
-
-
-
-
Potential Deferred Tax Asset Not
Recognised
(1,184,215)
(240,806)
(224,280)
(123,273)
(1,772,574)
50 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 51
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
c. Income tax payable/(receivable)
Provisional tax and resident withholding tax paid
Closing balance
d. NZ Imputation credits
Closing balance
e. Deferred tax assets and liabilities
2017
$
-
-
2017
$
-
2016
$
716
716
2016
$
15,948
16. Trade debtors and other receivables
Trade debtors
Related party receivables
Research and development incentive grant
Other receivables
Total
2017
$
1,199,661
1,499
1,384,632
30,292
2,616,084
2016
$
220,114
25,995
655,717
42,234
944,060
Trade debtors and other receivables are non-interest bearing and receipt is normally on 30 days terms. Therefore, the
carrying value of trade debtors and other receivables approximates its fair value.
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the
All receivables are subject to credit risk exposure.
Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific
limits to the use of any unused tax losses or credits. If a positive forecast of taxable income indicates the probable use of
a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised
in full.
The company has not yet raised a deferred tax entry as the company is not certain whether the tax losses carried forward
The maximum exposure to credit risk at the reporting date is the carrying amount of trade debtors and other receivables
as disclosed above. The Group does not hold any collateral as security.
As at 30 June 2017, the ageing analysis of trade receivables post due but not impaired is detailed as follows:
can be utilised in the foreseeable future.
15. Cash and cash equivalents
Cash at bank and in hand
Rental bonds
Bank overdrafts
Total cash and cash equivalents
The carrying amount of cash and cash equivalents approximates their fair value.
2017
$
2016
$
3,999,066
2,200,335
70,507
-
70,507
(10)
4,069,573
2,270,832
0 – 30 days overdue
30 – 90 days overdue
90 days overdue
Total
2017
$
793,537
348,375
57,749
1,199,661
2016
$
152,309
67,651
154
220,114
The Group’s management considers that all financial assets that are not impaired or past due for each of the reporting
dates under review are of good credit quality. None of the Group’s financial assets are secured by collateral or other credit
enhancements.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade
The Parent has arranged a legal right of set off between its bank trading account, call deposit accounts, and its bank
and other receivables. The main components of this allowance are a specific loss component that relates to individually
overdraft. Bank overdrafts are repayable on demand and form an integral part of an entity’s cash management. Accordingly,
significant exposures, and a collective loss component established for groups of similar assets in respect of losses that
this balance has been netted in the 2017 Statement of Financial Position.
Cash at bank earns interest at floating rates on daily deposit balances.
Term deposits are for a period of 3 years and serve as security for leased premises maturing at renewal dates. Interest is
paid annually.
have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment
statistics for similar financial assets.
There was no impairment as at 30 June 2017 (2016: No impairment recognised).
52 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 53
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
17. Property, plant and equipment
Movements for each class of property, plant and equipment are as follows:
Group 2016
Gross carrying amount
Opening balance
Acquisitions from Reverse Acquisition
Other additions
Disposals
Closing balance
Accumulated depreciation and
impairment
Opening balance
Current year depreciation
Depreciation written back on disposal
Closing balance
Computer
Equipment
Office
Equipment
Office
Furniture
Office
Fitout
$
-
-
$
18,614
864
$
-
-
$
-
-
Total
$
18,614
864
30,114
82,370
22,979
10,941
146,404
18. Intangibles
Domain: Xref.com
Less: impairment
Total
2017
$
101,681
-
101,681
2016
$
-
-
-
Xref issued 200,554 shares at $0.507, being $101,681 to Jeffery Robert Di Donato on the 10th May 2017 as consideration
for the payment of the purchase price of the domain name xref.com. The value of consideration payable in share capital
has been classified as an intangible asset.
-
(5,349)
-
-
(5,349)
19. Trade creditors and other payables
30,114
96,499
22,979
10,941
160,533
-
8,357
3,938
-
12,630
(5,078)
3,938
15,909
-
486
-
486
-
256
-
256
8,357
17,310
(5,078)
20,589
Trade payables
Non trade payables and accrued expenses
Related party payables
Accrued salaries, wages and related costs
GST Payable
Total
2017
$
571,166
552,807
4,097
481,441
31,991
2016
$
291,904
165,414
8,491
21,070
44,050
1,641,502
530,929
Carrying amount 30 June 2016
26,176
80,590
22,493
10,685
139,944
Trade creditors and other payables are non-interest bearing and normally settled on 30 day terms; therefore, their carrying
Group 2017
Gross carrying amount
Opening balance
Other additions
Disposals
Closing balance
Accumulated depreciation and
impairment
Opening balance
Current year depreciation
Depreciation written back on disposal
Computer
Equipment
Office
Equipment
Office
Furniture
Office
Fitout
$
$
$
$
Total
$
30,114
93,485
96,499
22,979
10,941
160,533
7,982
16,994
1,343
119,804
-
(1,210)
-
-
(1,210)
123,599
103,271
39,973
12,284
279,127
3938
25,250
-
15,909
17,580
486
256
2,248
1,103
20,589
46,181
-
-
-
-
amount approximates their fair value.
20. Employee entitlements
Current
Annual leave entitlements
Total
2017
$
162,725
162,725
2016
$
62,922
62,922
Short–term employee entitlements represent the Group’s obligation to its current and former employees that are expected
to be settled within 12 months of balance date. These consist of accrued holiday entitlements at the reporting date.
2017
$
22,436
22,436
2016
$
-
-
Closing balance
29,188
33,489
2,734
1,359
66,770
Carrying amount 30 June 2017
94,411
69,782
37,239
10,925
212,357
Non current
Long Service Leave Entitlements
Total
54 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 55
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
21. Unearned revenue
Balance Brought Forward
Unearned Revenue Movement:
Credits Sold
Opening Conditional Credits
Credits Used
Closing Conditional Credits
2017
$
2016
$
903,566
482,316
4,107,518
1,734,426
205,132
83,949
(2,100,318)
(1,191,993)
(1,085,263)
(205,132)
Opening Balance 2016
Shares Issued for Cash
Performance rights Conversion
Capital Raising Costs
Number
Issue Price
Average
Issue Price
of Shares
$
$/Share
90,273,668
25,042,977
11,428,571
8,000,000
16,666,667
83,333
0.277
0.700
0.005
-
(540,000)
Issued for acquisition of domain name
200,554
101,681
0.507
Closing Balance 2017
118,569,460
32,687,991
0.0276
Xref issued 11,428,571 shares at $0.70 (being a 5.4% discount to the market price at the time) to Australian institutions
Net Unearned Revenue Movement
1,127,069
421,250
and sophisticated investors on 17 August 2016 with the aim of accelerating global sales growth, facilitating product
integrations, driving software development and providing further working capital for the Group’s operations.
Opening Balance Revaluation due to change in foreign exchange rates
(382)
-
Xref issued 200,554 shares at $0.507 to Jeffery Robert Di Donato on the 10th May 2017 as consideration for the payment
Balance Carried Forward
2,030,253
903,566
of the purchase price of the domain name xref.com
All issued shares are fully paid and do not have a par value. The holders of ordinary shares have equal voting rights and
share equally in any dividend distribution and any surplus on winding up of the Parent.
22. Share capital - Xref Limited
Capital risk management
Number
Issue Price
Average
Issue Price
of Shares
$
$/Share
Opening Balance 2015
834,929,348
18,733,002
0.022
Consolidation (1 for 50)
Rounding after Consolidation
Issued to redeem Xref Pty Ltd Convertible notes
Issued for Cash
Issued for Acquisition of Xref Pty Ltd
Capital Raising Costs - King Solomon Mines
Capital Raising Costs - Xref Pty Ltd
Closing Balance 2016
16,698,587
81
3,575,000
20,000,000
50,000,000
-
-
0.160
0.200
0.051
572,000
4,000,000
2,525,000
(735,295)
(51,730)
90,273,668
25,042,977
0.277
The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company’s share price at the time of the investment. The consolidated entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in
order to maximise synergies.
The consolidated entity is not subject to certain financing arrangements covenants during the financial year ended 30 June
2017. The capital risk management policy remains unchanged from the 30 June 2016 Annual Report.
56 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 57
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
23. Other equity reserves
Class C Conversion Event
Upon the Group, during any six month reporting period of the Company that ends on or prior to five years after the date
of issue of the rights, achieving EBITDA of $A2,500,000 or more.
The conversion ratio of the Performance Rights into ordinary shares upon achievement of a relevant Performance
Milestone is one ordinary share for each Performance Right. They are in escrow until 8 February 2018.
The key inputs used in the binomial valuation of the Xref PR’s are summarised in the table below.
Grant date
Expiry date - Class A
Expiry date - Class B
Expiry date - Class C
Xref share value at issue
Share price hurdle (150% above the issue price)
Period over which the VWAP must exceed the share price hurdle
Expected volatility
Risk free rate
Dividend yield
20/01/2016
20/07/2018
20/01/2018
20/01/2021
$0.03
$0.50
20 days
60% to 70%
2.09%
0.00%
Class C options were considered based on likelihood of reaching the target EBITDA and a Nil valuation adopted. All rights
may be converted immediately in the event of a change of control event.
The weighted average contractual life of the outstanding performance rights is 2.31 Years.
a. Foreign Currency Translation Reserve
b. Performance Right Reserve
c. Share Options Reserve
d. Consolidation Reserve
Total
a. Foreign currency translation reserve
2017
$
2016
$
(34,915)
16,947
350,000
433,333
569,096
297,802
(22,845,821)
(22,845,821)
(21,961,640)
(22,097,739)
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign subsidiaries for consolidation purposes. It is also used to record gains and losses on hedges of the
net investments in foreign operations.
b. Performance right reserve
The performance right reserve is used to record unutilised performance rights issued on 18 January 2016 as part of the
consideration for Xref Pty Ltd. Performance Rights operate as an equity-settled, share based compensation plan. When
rights are realised, the balance less any attributable transaction costs will be transferred to issued capital. If rights are not
used, they would be offset against the consolidation reserve.
The 50,000,000 performance rights are split into 3 Classes as shown below:
Class
Class A
Class B
Class C
Less Conversion Event
Performance right reserve
balance
Class A Conversion Event
Number Granted
Performance Right
Reserve
$A
Weighted Average
Fair Value
$ / Right
16,666,667
16,666,667
16,666,666
50,000,000
(16,666,667)
350,000
83,333
-
433,333
(83,333)
0.021
0.005
0.000
0.009
33,333,333
350,000
0.0105
Upon the Group, during any six month reporting period of the company that ends on or prior to 30 months after the date
of issue of the rights, achieving Credit Sales of $A2,500,000 or more.
Class B Conversion Event
Upon the Company achieving a 20 day Volume Weighted Average Market Price of the shares equal to or greater than
$0.50 within two years after the date of issue of the rights and a minimum sale in the UK of either 1000 credits or £25,000
(whichever comes first).
The Class B Conversion Event was achieved and the Class B shares were issued 10 March 2017.
58 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 59
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
c. Share option reserve
Issued option and movements of options are shown below:
The options have been valued using a binomial options method, using the following assumptions:
Issue Date
Expiry date
Average exercise
price in $A per
share
Options
Option
Reserve $A
(a)
Listing date (re-listing as Xref Limited)
Price history for volatility determination
Consolidation (1 for
50)
29 July 2016
6.000
32,000
92,160
Granted
1 February 2016
1 February 2019
Granted - Class A
1 February 2016
1 February 2019
Granted - Class B
1 February 2016
1 February 2019
Closing Balance
30 June 2016
At 1 July 2016
At 1 July 2016
Expired
Granted
7 December 2016
Granted
7 December 2016
29 July 2016
1 February 2019
29 July 2016
25 November
2022
25 November
2021
0.230
0.230
0.230
0.271
0.120
0.230
0.120
3,908,909
199,354
300,000
300,000
3,144
3,144
4,540,909
297,802
32,000
92,160
4,508,909
220,942
(32,000)
(92,160)
0.700
(b) 2,500,000
67,576
0.700
(a) 5,400,000
280,578
Closing Balance
30 June 2017
0.529
12,408,909
569,096
Grant date
Measurement date
Exercise price
Expiry date
Life of option
Price of underlying shares at measurement date
Risk free rate = 5 year Government Bond (26/11/2016)
Expected volatility
Dividends expected on the shares
(b)
Listing date (re-listing as Xref Limited)
Price history for volatility determination
Grant date
Measurement date
Exercise price
Expiry date
Life of option
Price of underlying shares at measurement date
Risk free rate = 5 year Government Bond (26/11/2016)
Expected volatility
Dividends expected on the shares
9/02/2016
2.47yr
26/11/2016
26/11/2016
$0.70
25/11/2021
5.00 yr
$0.47
2.19%
40%
Nil
09/02/2016
5.00yr
25/11/2016
25/11/2016
$0.70
25/11/2022
6.00 yr
$0.47
2.7%
40%
Nil
Class A Vesting Event is the same as a Performance Right Class A Conversion Event
Upon the Group, during any six month reporting period of the company that ends on or prior to 30 months after the date
of issue of the rights, achieving Credit Sales of $A2,500,000 or more.
Class B Vesting Event is the same as a Performance Right Class B Conversion Event
Upon the Company achieving a 20 day Volume Weighted Average Market Price of the shares equal to or greater than
$0.50 within two years after the date of issue of the rights and a minimum sale in the UK of either 1000 credits or £25,000
(whichever comes first). The Class B Conversion Event was achieved and the Class B shares were issued 10 March 2017.
Class A and B option expense is being recognised over the two years during which the options may be exercised. If the
options were to be exercised, the full remaining option expense if any would be immediately recognised and the Option
Reserve figure transferred to Issued Capital.
The weighted average contractual life of the performance rights for the 2017 year was 1.59 years (2016: 2.59 years)
60 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 61
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Option movements during the year
On the 29th July 2016, 92,160 options expired.
As approved at the 25th November 2016 AGM, 7,900,000 options were issued to 2 directors of the company as a key
25. Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares outstanding during the year.
component of their remuneration by the company. Chairman Brad Rosser was issued with 7,000,000 with 4,500,000 expiring
Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the
on the 25th November 2021 and 2,500,000 expiring on the 25th November 2022. Nigel Heap was issued 900,000 options,
weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary
all expiring on the 25th November 2021. 300,000 of the options issued to Nigel Heap vested on the 25th November 2016.
shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
Option movements during the previous year
The 2,000,000 options issued to Directors and an employee lapsed.
At 30 June 2015, the remaining 1,600,000 options had an historical value of $92,160 carried in the Options Reserve, which
expired on 29th July 2016. (based on the Black Scholes valuation model; assuming a stock volatility ranging between 80%
The Group recorded losses for the years ended 30 June 2016 and 30 June 2017. Diluted earnings per share has not been
calculated because the effect of including the share options in the calculation would be anti-dilutive. Hence the diluted
earnings per share is the same as the basic earnings per share.
The following reflects the income and share data used in the basic and diluted EPS computations:
to 120% depending on time of grant).
Options Vested and therefore exercisable
Source
BF from King Solomon Mines Limited &
Consolidated (1 for 50)
Expiry Date
29 July 2016
2017
Acquisition of Xref Pty Ltd
1 February 2019
3,908,909
Options Vested – Tim Mahony
Options Vested – Nigel Heaps
1 February 2019
25 November 2021
300,000
300,000
2016
32,000
3,908,809
300,000
Loss attributable to ordinary equity holders of the parent:
Continuing operations
Discontinued operations
2017
$
2016
$
(6,456,038)
(845,242)
(967)
(2,354)
Loss attributable to ordinary equity holders of the parent for basic earnings
(6,457,005)
(847,596)
Weighted average number of ordinary shares for basic EPS
105,341,482
50,919,627
4,508,909
4,240,909
Weighted average number of ordinary shares adjusted for the effect of dilution
105,341,482
50,919,627
The weighted average share price for the 2017 financial year was $0.548 (2016: $0.465)
d. Consolidation Reserve
The reserve was formed on the reverse acquisition of assets and liabilities of King Solomon Mines Limited by Xref Pty
Limited which brought the share capital of Xref Pty Limited to the share capital of King Solomon Mines Limited immediately
after the reverse acquisition.
24. Dividends
The following dividends were declared and paid by the Parent.
$0.00 per ordinary share (2016: $0)
2017
2016
$
-
$
-
26. Financial instruments
a. Classification of financial instruments
The carrying amounts presented in the statement of financial position relate to the following categories of financial assets
and liabilities.
Group 2017
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Total
4,069,573
2,616,084
6,685,657
-
-
-
-
-
-
-
-
-
-
4,069,573
2,616,084
6,685,657
1,919,485
1,919,485
1,919,485
1,919,485
62 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 63
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
The oversubscribed $7.5million raise in August 2017 has allowed the Group to continue its expansion plans. As at this date
the Group has sufficient cash on hand to fund current planned expansion.
All amounts shown as current financial liabilities are expected to be paid on demand and without interest
The Group’s financial liabilities have contractual maturities (including interest payments where applicable) as summarised
Group 2016
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Trade debtors and other receivables
classified as held for sale
Total
Financial liabilities
Trade creditors and other payables
Liabilites designated as held for sale
Total
2,270,832
944,060
-
-
-
3,214,892
93,814
93,814
-
-
-
2,270,832
944,060
93,814
-
3,308,706
-
-
-
-
-
-
651,530
333,812
651,530
333,812
985,342
985,342
b. Financial instrument risk management
The Group has exposure to the following risks from its use of financial instruments:
> Credit risk
>
Liquidity Risk
> Market Risk
The Group is exposed to market risk through their use of financial instruments and specifically to currency risk, interest
rate risk and certain other price risks, which result from both its operating and investing activities.
The Group have a series of policies to manage the risk associated with financial instruments. Policies have been established
which do not allow transactions that are speculative in nature to be entered into and the Group are not actively engaged in
the trading of financial instruments. As part of this policy, limits of exposure have been set and are monitored on a regular
basis.
i. Credit risk
Credit risk is the risk that a third party will default on its obligation to the Group, causing the Group to incur a loss.
The Group have no significant concentration of risk in relation to cash and cash equivalents, trade debtors and other
financial assets.
below:
Group 2017
Non-derivative financial
liabilities
Trade creditors and other
payables
Contractual cash-flow maturities
Carrying
amounts
Total
contractual
cash-flows
0-6
months
6-12
months
1 - 2 years 2-5 years
Later
than 5
years
1,641,502
1,641,502
1,641,502
Superannuation payable
115,258
115,258
115,258
Total
1,756,760
1,756,760
1,756,760
-
-
-
-
-
-
-
-
-
-
-
-
Group 2016
Contractual cash-flow maturities
Carrying
amounts
Total
contractual
cash-flows
0-6
months
6-12
months
1 - 2 years 2-5 years
Later
than 5
years
Non-derivative financial
liabilities
Trade creditors and other
payables
530,929
530,929
530,929
Superannuation payable
57,679
57,679
57,679
Liabilities included in
disposal group classified as
held for sale
333,812
333,812
333,812
Total
922,420
922,420
922,420
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Group continuously monitors defaults of customers and other counterparties, identified either individually or by
group, and incorporates this information into its credit risk controls.
iii. Market risk
Further details in relation to the credit quality of financial assets is provided in Note 16.
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
ii. Liquidity risk
to manage and control market risk exposures within acceptable parameters, while optimising the return.
Liquidity risk represents the Group’s ability to meet is contractual obligations as they fall due. The Group manages liquidity
iv. Foreign exchange risk
risk by managing cash flows and ensuring that adequate cash is in place to cover any potential short falls.
The Group is exposed to fluctuations in foreign currency exchange rates as a result of maintaining foreign currency
denominated bank accounts and entering into foreign currency transactions. Thus, the Group will incur a foreign exchange
gain or loss each year due to the appreciation and depreciation of the Australian dollar relative to other currencies including
the Canadian dollar, the UK Pounds Sterling and the New Zealand dollar.
64 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 65
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
The exposure to currencies of the Group is as follows:
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below.
The amounts shown are those reported to key management translated into AUD at the closing rate:
Canadian dollars
UK Pound Sterling
New Zealand Dollars
Chines Yuen
Total
2017
$
31,734
56,284
1,507
-
2016
$
13,853
60,889
34,552
12,727
89,525
122,021
The potential impact on the bank accounts, net deficits and equity movements in foreign currency exchange rates
(calculated by applying the change in foreign exchange rate to foreign currencies held at balance date) is indicated below:
Potential Foreign Exchange Rate Fluctuation
Impact on valuation of holding in:
Canadian dollars
UK Pound Sterling
New Zealand Dollars
Total impact of potential change in exchange rate
a. Measurement of financial assets
5%
$
1,857
2,814
75
4,746
10%
$
3,713
5,628
151
9,492
20%
$
7,426
11,254
301
18,981
The Group would normally require the determination of fair value for the assets designated available for sale. These are
subject of a contract for sale and carried at that net valuation of RMB 10 (AUD 2) This sale agreement was executed in
March 2017 for the written down value of $2 AUD.
Foreign exchange risk
Currency risk is the risk that the fair value of financial instruments will fluctuate due to a change in foreign exchange rates.
Most of the Group transactions are carried out in AUD. Exposures to currency exchange rates arise from the Group’s
overseas sales and purchases, which are primarily denominated in United Kingdom Pounds Sterling (GBP) and Canadian
dollars (CAD).
Short-term exposure
30 June 2017
Financial Assets
Financial Liabilities
Net statements of financial position
exposure
4,749,757
-
17,873
86,269
AUD
China
United
Kingdom
Canada
New
Zealand
6,385,797
(1,636,040)
-
-
112,949
111,913
(95,076)
(25,644)
-
-
-
Long-term exposure
30 June 2017
Financial Assets
Financial Liabilities
Net statements of financial position
exposure
Short-term exposure
30 June 2016
Financial Assets
Financial Liabilities
AUD
China
United
Kingdom
Canada
New
Zealand
74,998
-
74,998
-
-
-
-
-
-
-
-
-
-
-
-
AUD
China
United
Kingdom
Canada
New
Zealand
2,987,225
93,814
99,842
20,262
37,056
(512,817)
(333,812)
(50,371)
(6,286)
(18,934)
Net statements of financial position
exposure
2,474,408
(239,998)
49,471
13,976
18,122
Long-term exposure
30 June 2016
Financial Assets
Financial Liabilities
AUD
China
United
Kingdom
Canada
New
Zealand
70,507
-
70,507
-
-
-
-
-
-
-
-
-
-
-
-
The Group monitors foreign expenditure, seeking favourable terms when it is time to for further funding. By adopting this
passive strategy, it expects its average foreign exchange rates to reflect the average foreign exchange rate for the year.
Net statements of financial position
exposure
66 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 67
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Foreign exchange risk
Sensitivity analysis
The following analysis illustrates the sensitivity of profit and equity in regards to the Group’s financial assets and financial
liabilities carried in foreign currencies. It assumes a +/- 5% change in exchange rates for the year ended at 30 June 2017
(2016: 12%).
The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the
previous 12 months.
Group
5% (2016: 12%) increase in AUD against foreign
currencies
5% (2016: 12%) decrease in AUD against foreign
currencies
2017
2016
Loss for the
year
Equity
Loss for the
year
Equity
(6,540,069)
3,143,168
(883,180)
1,811,678
(6,416,487)
3,347,656
(811,965)
1,845,974
27. Reconciliation of cash flows from operating activities
Profit/(loss) for the year
Add/(deduct) non-cash items
Depreciation, amortisation and impairment
Interest on Convertible Notes
Option expense
Foreign exchange
Unearned revenue
Profit on acquisition
Other non-cash items
2017
$
2016
$
(6,457,005)
(847,596)
46,181
-
363,454
(56,853)
17,309
22,000
21,588
65,048
1,127,069
421,250
-
(1,417,860)
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless,
the analysis above is considered to be representative of the Group’s exposure to currency risk.
Add/(deduct) movements classified as investing activities
Interest rate risk
Interest rate risk is the risk that cash flows from a financial instrument will fluctuate because of changes in market interest
rates.
Add/(deduct) movements in working capital
Revenue of the Group is exposed to interest rate risk on interest bearing financial assets only as it has immaterial bank
overdraft balances.
The Group are also exposed to interest rate risk on interest bearing financial assets. The Group’s investment in bonds all
pay fixed interest rates and the interest risk exposure on money market funds is considered immaterial.
Interest rate risk profile
Group
(Increase)/ decrease in trade debtors and other receivables
(1,572,023)
(679,191)
(Increase)/ decrease in prepayments
(140,488)
(49,790)
(Increase)/ decrease in other financial assets
Increase/ (decrease) in trade creditors and other payables
Increase/ (decrease) in employee entitlements
(Increase)/ decrease in other financial liabilities
(26,531)
1,001,202
122,239
21,470
(48,467)
518,101
54,134
44,615
(Profit)/loss on sale of property, plant and equipment
-
-
At the reporting date the interest rate profile of interest-bearing
financial instrument was:
Fixed interest instruments
Financial assets
Variable rate instruments
Financial assets
Total
2017
2016
Net cash flows from/ (used in) operating activities
(5,571,285)
(1,878,859)
$
$
28. Contingent assets and contingent liabilities
The Group has no contingent assets or liabilities at 30 June 2017 (2016: $Nil).
70,507
70,507
29. Related party transactions
3,999,066
4,069,573
2,200,325
2,270,832
Related party transactions arise when an entity or person(s) has the ability to significantly influence the financial and
operating policies of the Group.
The Group has a related party relationship with its Shareholders, Directors and other key management personnel.
Unless otherwise stated transactions with related parties in the years reported have been on an arms-length basis, none
of the transactions included special terms, conditions or guarantees.
68 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 69
NOTES TO THE FINANCIAL STATEMENTS / continued
NOTES TO THE FINANCIAL STATEMENTS / continued
Transactions with related parties
The following transactions were carried out with related parties:
30. Parent Information
a. Purchase of services
Directors
Key management personnel
Other related parties
Total purchase of services from related parties
b. Year end receivable/ (payable) with related parties
Receivable from related parties:
Directors
Total
Payable to related parties:
Other related party
Total
c. Other related party balances
Directors
2017
$
2016
$
1,229,896
576,959
475,547
19,396
68,260
92,571
1,724,839
737,790
2017
$
1,499
1,499
4,097
4,097
2016
$
25,995
25,995
8,491
8,491
Loans to directors for the year ended 30 June 2017 amounted to $1,499 (2016: $25,995). The loan was repaid on 7th July
2017
d. Key management compensation
Salaries and other short-term employee benefits
Total
2017
$
1,133,523
1,133,523
2016
$
645,219
645,219
Result of the parent entity
Loss for the year
Other Comprehensive Income
Total comprehensive loss for the year
Financial position of the parent entity at year end
Current assets
Non Current assets
Total assets
Current Liabilities
Non Current Liabilities
Total Liabilities
Total equity of the parent entity comprising of:
Share Capital
Reserves
Accumulated Losses
Parent entity contingencies
There are no contingencies for the parent entity in 2017 or 2016.
Parent entity guarantees
2017
$
2016
$
(489,907)
(592,336)
5
-
(489,902)
(592,336)
1,507
3,794,927
14,849,709
3,530,335
14,851,216
7,325,262
(112,655)
(21,930)
-
-
(112,655)
(21,930)
(33,089,721)
25,094,707
(569,096)
731,135
18,430,354
(18,522,510)
There are no guarantees entered into by the parent entity in relation to the debts of its subsidiary Inner Mongolia Plate
Mining Limited or any other Xref subsidiary in 2017 or 2016.
Parent entity capital commitments for acquisition of property, plant and equipment
There are no capital commitments for the parent entity in 2017 or 2016.
70 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 71
NOTES TO THE FINANCIAL STATEMENTS / continued
31. Commitments
Operating leases are held for premises used for office space. Lease commitments net of incentive payments are:
Directors’
Declaration
In the directors’ opinion:
Non-cancellable operating leases are payable as follows:
Less than one year
Later than one year and not greater than two years
Later than two years and not greater than five years
Total
The Group had no other commitments at 30 June 2017 (2016; $Nil).
32. Events after the reporting period
Group
2017
$
257,357
104,480
-
361,837
2016
$
268,888
257,900
99,363
626,151
>
>
>
>
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in notes 1,2 & 3 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position
as at 30 June 2017 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On 2 August 2017, Xref Limited raised $7,500,000 before share placement costs through a placement to Australian
On behalf of the directors
institutions and sophisticated investors at a price of 60c per share.
During September, Xref incorporated a company in Norway (Xref AS) as part of its continued expansion into new regions.
The Norway office is focusing on the Nordic geographical region. Four staff have been hired including a General Manager,
and three sales staff. Customer support is initially being provided from the Xref London office. Clients have already been
secured in this new region. Refer to the market announcement on 21 September 2017 for further information.
On July 3, 2017 Xref issued invitations to eligible employees to participate in the Xref Employee Option plan. This plan was
approved at the EGM held in May 2016. The last date for acceptance to participate was September 7th 2017. With 100%
of employees accepting the invitation, the total number of new options issued in Xref Limited is 1,055,449. Refer to the
market announcement on 26 September 2017 for further information.
As at 21 September 2017 Xref is now domiciled in Australia. The address of its registered office is Unit 14, 13 Hickson Road,
Dawes Point, New South Wales, Australia 2000
No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of
authorisation.
Lee-Martin Seymour
Brad Rosser
Managing Director
Chairman
27 September 2017
27 September 2017
Sydney
Sydney
72 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 73
Independent
Auditor’s Report
Xref Limited
Independent Auditor’s Report to the Members of Xref Limited
Report on the Audit of the Financial Report
Crowe Horwath Sydney
ABN 97 895 683 573
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Crowe Horwath Sydney
Fax +61 2 9262 2190
ABN 97 895 683 573
www.crowehorwath.com.au
Member Crowe Horwath International
Audit and Assurance Services
Level 15 1 O'Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowehorwath.com.au
Xref Limited
Opinion
We have audited the financial report of Xref Limited (the Company and its subsidiaries (the Group)),
Independent Auditor’s Report to the Members of Xref Limited
which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements,
Report on the Audit of the Financial Report
including a summary of significant accounting policies, and the directors’ declaration.
Opinion
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
We have audited the financial report of Xref Limited (the Company and its subsidiaries (the Group)),
Act 2001, including:
which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the
(a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the year then ended; and
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Basis for Opinion
Act 2001, including:
performance for the year then ended; and
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
(a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Basis for Opinion
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Report section of our report. We are independent of the Group in accordance with the auditor
for our opinion.
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Key Audit Matters
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
for our opinion.
a separate opinion on these matters.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
a separate opinion on these matters.
financial services licensees.
INDEPENDENT AUDITOR’S REPORT / continued
Key Audit Matter
How we addressed the Key Audit Matter
Intangibles and Research and Development Costs - Notes 12 and 16
In the current year, the Group incurred significant
expenditure, comprising mostly payroll costs, to
develop its domain and to advance several cloud-
based solutions for candidate recruitment.
Whilst the Group generates revenue by delivering
services through its website and related software
applications, we focused our attention on the fact
that the Group has not capitalised research and
development costs as intangible assets in the
financial report.
Management had outlined their key judgements
made in relation to internally generated software
and research costs in Note 5 of the financial
report.
Going concern - Note 3(w)
We focus our attention on management’s
assertions in relation to going concern, as
outlined in Note 3(w) of the financial report.
We held discussions with management to
understand the nature of the Group’s research
and development processes, recognising that the
Group’s systems are constantly evolving and its
codebase and infrastructure is regularly being
modified.
We challenged management’s approach to
exercising their key judgements in relation to
internally generated software and research costs
in the context of the period that management
expects to recover economic benefits associated
with these activities.
We critically analysed the Group’s cash flow
forecast that was used to support the going
concern assessment, including performing the
following procedures:
a. We compared the prior year cash flow
forecast prepared by management with
the actual cash flows achieved, and
obtained justification from management
on variances in order to evaluate the
validity of management’s current
forecasting processes.
b. We interrogated the cash flow forecast
using different inputs as a means to
perform a sensitivity analysis.
c. We discussed with management the
significant assumptions and inputs used
in the cash flow forecast, comparing the
inputs used with historical results, and
obtained reasonable justification for those
inputs that differ from historical results.
Crowe Horwath Sydney is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and
independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees.
74 / Xref Limited / Annual Report 2017
Page | 2
Xref Limited / Annual Report 2017 / 75
INDEPENDENT AUDITOR’S REPORT / continued
INDEPENDENT AUDITOR’S REPORT / continued
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards, International Financial
Reporting Standards and the Corporations Act 2001 and for such internal control as the directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view
and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf .This
description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 24 of the directors’ report for the
year ended 30 June 2017.
In our opinion, the Remuneration Report of Xref Limited, for the year ended 30 June 2017, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
CROWE HORWATH SYDNEY
ASH PATHER
Partner
Sydney
27 September 2017
76 / Xref Limited / Annual Report 2017
Page | 3
Page | 4
Xref Limited / Annual Report 2017 / 77
Shareholder
Information
SHAREHOLDER INFORMATION / Continued
Information relating to shareholders, as required by ASX Listing Rule 4.10, and not disclosed elsewhere in this Annual
Top 20 Holders of Ordinary Shares as at 24 August 2017
Report, is detailed below.
Rank
Name of Shareholder
Shares
% of Shares
Substantial Shareholders as at 24 August 2017, as disclosed in substantial holding notices given to the ASX and to the
Company:
Substantial Shareholders
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
Industry Super Holdings Pty Ltd
Shareholding
% Shares Issued
24,038,462
24,038,462
11,051,770
23.64
23.64
8.43
Based on the market price at 24 August 2017 there were 91 shareholders with less than a marketable parcel of 863 shares
at a share price of $0.58.
Number of Ordinary Shares
Held
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of Holders
Ordinary Shares
% of Total Issue Capital
112
179
112
276
92
771
48,839
547,423
912,371
10,306,153
119,254,674
131,069,460
0.04
0.42
0.70
7.86
90.99
100.000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
Morgan Stanley Australia Securities (Nominee) Pty Limited
J P Morgan Nominees Australia Limited
Austral Capital Pty Ltd
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
Parkstone House Pty Ltd
CS Third Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
Mr Craig Mcdonald + Mrs Kim Mcdonald
MSR Nominees Pty Limited
Calama Holdings Pty Ltd
Mr Tim Mahony + Ms Jacki Pervan
Schindler Investment Haus Pty Ltd
Twenty Ten Enterprise Ltd
Biatan Pty Ltd
Hughnan Pty Ltd
GP Securities Pty Ltd
Total of Top 20 Holdings
Other Holdings
Total Fully Paid Shares Issued
32,371,796
32,371,795
10,237,857
3,159,365
3,050,255
3,000,000
2,647,890
2,071,430
1,923,076
1,900,000
1,736,667
1,665,500
1,408,763
1,193,370
1,000,000
912,500
727,500
650,000
550,000
527,742
103,105,506
27,963,954
131,069,460
24.70
24.70
7.81
2.41
2.33
2.29
2.02
1.58
1.47
1.45
1.32
1.27
1.07
0.91
0.76
0.70
0.56
0.50
0.42
0.40
78.66
21.34
100.00
78 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 79
SHAREHOLDER INFORMATION / continued
SHAREHOLDER INFORMATION / Continued
Fully Paid Ordinary Shares in Escrow as at 24 August 2017
Name of Shareholder
Shares the Holder is Entitled to
ASX Escrow Until
Squirrel Holdings Australia Pty Ltd
32,371,796
8 February 2018
West Riding Investments Pty Ltd
32,371,795
8 February 2018
Voting Rights
At general meetings of the Company, all fully paid ordinary shares carry one vote per share without restriction. On a show
of hands, every member present at a general meeting, or by proxy, shall have one vote and, upon a poll, each share shall
have one vote. Performance Rights holders and Option holders have no voting rights until the Performance Rights are
Biatan Pty Ltd
150,000
8 February 2018
converted and the Options are exercised, respectively.
Total
64,893,591
Use of Funds
Performance Rights as at 24 August 2017
Name of Performance Holder
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
Total
Performance Shares the
Holder is Entitled to
A Class Performance Rights:
8,333,333
A Class Performance Rights:
8,333,334
C Class Performance Rights:
8,333,333
C Class Performance Rights:
8,333,333
33,333,333
ASX Escrow Until
8 February 2018
In accordance with ASX Listing Rule 4.10.19, the Company advises that it has used its cash and assets in a form readily
convertible to cash, that it had at the time of the Company’s reinstatement of its shares to quotation following compliance
with ASX Listing Rule 11.1.3, in a way consistent with its business objectives, as set out in its Replacement Prospectus
dated 7 December 2015. This statement refers to the time between the Company’s reinstatement to quotation on ASX on
8 February 2016 and the end of the reporting period, being 30 June 2017.
8 February 2018
On-Market Buy-Back
There is no current on-market buy-back of shares in the Company.
8 February 2018
8 February 2018
The conversion ratio of the Performance Rights into ordinary shares upon achievement of a relevant performance
milestone is one ordinary share for each Performance Right.
Options as at 24 August 2017
Name of Option Holder
Taylor Collison Limited
Shares the Option
Holder is Entitled to
Exercise
Price
Option Expiry
Date
ASX Escrow
Until
2,808,909
$0.23
1 February 2019
Simon Thomas O’Loughlin
300,000
$0.23
1 February 2019
Stephen James McPhail and Olinka
Clare Heath
250,000
$0.23
1 February 2019
Simon James Robson Taylor
250,000
$0.23
1 February 2019
Timothy Lloyd Mahony, Jackie
Tadranka Pervan and Thomas James
Mahony
Brad Rosser
Brad Rosser
Nigel Heap
Total
900,000
$0.23
1 February 2019
4,500,000
$0.70
2,500,000
$0.70
900,000
$0.70
12,408,909
25 November
2021
25 November
2022
25 November
2021
8 February
2018
8 February
2018
8 February
2018
8 February
2018
8 February
2018
No escrow
No escrow
No escrow
80 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 81
Corporate
Directory
PLACE OF BUSINESS
DIRECTORS
LEADERSHIP TEAM
AUDITORS
Brad Rosser
Chairman
Lee-Martin Seymour
Tim Griffiths
Tim Mahony
Nigel Heap
Lee-Martin Seymour
Chief Executive Officer,
Co-Founder
Tim Griffiths
Chief Technology Officer,
Co-Founder
James Solomons
Chief Financial Officer
Sharon Blesson
Chief Operating Officer
COMPANY SECRETARY
Robert Waring
Australia (Head Office
and Registered Office)
Suite 14, 13 Hickson Road
Dawes Point, NSW 2000
Tel: +61 2 8244 3099
United Kingdom
46 New Broad Street
London, EX2M 1JH
Canada
Suite 202
1 Adelaide Street East
Toronto, Ontario M5C 1X6
Norway
Rådmann Halmrastsvei 16
1337 Sandvika
Norway
Website
xref.com
Crowe Horwath
Level 15
1 O’Connell Street
Sydney NSW 2000
Tel: +61 2 9262 2155
STOCK EXCHANGE
The company’s
ordinary shares are listed
on the ASX under code XF1
SHARE REGISTRY
Computershare
Investor Services Pty Ltd
Yarra Falls,
452 Johnston Street
Abbotsford, Victoria
Australia 3067
Tel: 1300 850 505
(within Australia)
Tel: + 61 3 9415 4000
(outside Australia)
Offering extreme value
to our staff, clients and
shareholders
82 / Xref Limited / Annual Report 2017
Xref Limited / Annual Report 2017 / 83
Love. Simplicity
84 / Xref Limited / Annual Report 2017