Simply stronger.
Partnerships
2019
ANNUAL REPORT
i
Xref Limited |Annual Report 2019
Contents
2019 Highlights
Chairman’s Report
Chief Executive Officer and Chief Strategy Officer Report
Directors’ Report
Independence declaration
Financial Statements
Notes to the financial statements
Director’s Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
2
4
6
8
22
23
29
68
69
74
78
General information
The financial statements cover Xref Limited as a consolidated entity consisting of Xref Limited and the entities it controlled at the end
of, or during, the year. The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation
currency.
Xref Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal
place of business is:
Unit 14, 13 Hickson Road,
Dawes Point, New South Wales, Australia, 2000
A description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’ report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 29 August 2019. The directors have
the power to amend and reissue the financial statements.
Xref Limited | Annual Report 2019 | 1
2019 Highlights
Total Sales
$10 million
Recognised Revenue
$8 million
42%
TOTAL ANNUAL GROWTH
66%
TOTAL ANNUAL GROWTH
Average Revenue Per Account (ARPA)
$17.5K
The ARPA contributed by newly
acquired clients joining us during FY19
was $9,756, while pre-existing clients
who topped up in the same period
contributed, on average, $17,417. This
demonstrates the positive impact that an
increase in platform usage over time has
on ARPA.
$9.8K
Average sales from
clients acquired in FY19
Average sales from
pre-existing clients
Credit Sales vs. Recognised Revenue
Credit Sales
Recognised Revenue
Sales: $1.7m
Revenue: $1.3m
Sales: $0.67m
Revenue: $0.37m
Sales: $4.1m
Revenue: $3.0m
Sales: $10.0m
Revenue: $8.0m
Sales: $7.1m
Revenue: $4.8m
$1.5m
$1.0m
$0.5m
Checkr
Lever
iCIMS
JobAdder
Talent App
Store
Zapier
fit2work
Xref API
Springboard
Avature
RapidID
Partnerships
Since FY16, Xref has pogressively
built 16 new integrations with gobal
partners and launched its own public
API platform to allow third-party
organisations to more efficiently
integrate their software with Xref.
The recognised revenue associated
to credits consumed through an
integration grew to $1.4m in FY19
and contributed 17.5% of revenue.
Bullhorn
SmartRecruiters
Expr3ss!
Oracle Taleo
Equifax
Workday
FY15
FY16
FY17
FY18
FY19
Under Xref’s business model, clients purchase Xref credits to use our candidate referencing platform. These credit sales are
reported initially as unearned income, and when clients pay for the credits, this is recognised as cash receipts. The credits are
consumed when reference checks are ordered, and credit usage becomes recognised revenue.
FY15
FY16
FY17
FY18
FY19
Credit Sales vs. Operational Expenses
Credit Sales
Operational Expenses
Sales: $4.1m
Expenses: $10.3m
Sales: $10.0m
Expenses: $15.9m
Sales: $7.1m
Expenses: $14.8m
Sales: $1.7m
Expenses: $8.8m
Sales: $0.67m
Expenses: $0.62m
FY15
FY16
FY17
FY18
FY19
Overseas Sales and Locations
During the financial year, credit sales
contributed by regions outside of
APAC grew from 13% to 19% with
North Amercia contributing 10% of
total credit sales.
Sales by Region
APAC
81%
NA
10%
EMEA
9%
2 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 3
Chairman’s Report
Introducing Xref’s fourth annual report
It’s a pleasure to welcome shareholders to Xref’s annual report
for the 2019 financial year, which has been another significant
period of growth, evolution and expansion for the company.
Xref introduced automated reference checking to the HR and
recruitment industries a long time before the concept of
tech-driven recruitment processes had been established. This
first-mover advantage has always been a major catalyst for
the growth of the company and remains the backbone of its
success. Today, the narrative is changing for Xref as it continues
to educate the market on the importance of prioritising data and
knowledge when it comes to human capital decision making.
Xref’s platform continues to evolve and lead the
market
A consistent theme of the past year has been the ongoing
evolution of the services and support offered to our customers,
particularly in terms of the added security measures introduced.
The strength of the platform’s security was validated by the
achievement of ISO27001 certification.
User experience also continues to be a key focus, along with
adding and improving platform integrations. These partnerships
are becoming an increasingly important sales channel, providing
a growing number of users with ease of access to Xref from
within their existing recruitment workflow systems.
Sales and client growth
Credit sales of $10 million for the year, were up 42% when
compared to FY18. We are also delighted that international sales
during FY19 accounted for 19% of total credit sales, illustrating
the strong demand for Xref’s service in major global markets and
the very significant international growth opportunities that lie
ahead.
Active clients also grew significantly during FY19, with 915 clients
now using the platform directly. A further 229 are using it via one
of the 16 platform integrations the company now supports, and
17% of usage has come via an integrated solution provider.
RapidID acquisition
On 1st July 2019, we were delighted to announce the acquisition
of RapidID. RapidID is a highly complementary and strategically
important acquisition for Xref. Its technology has been integrated
into Xref’s core platform and it now allows Xref’s clients and
channel partners to perform identity checks on candidates.
HR professionals are looking for better ways to verify the
backgrounds and identity of candidates and Xref now brings a
seamless and integrated service to their platform of choice. This
paid service is already beginning to gain traction.
Global team growth
It goes without saying that the ongoing success of Xref would not
be possible without a highly skilled and dedicated team. As we
continue to expand our offering and our reach into new markets,
our global team continues to grow.
As well as leveraging the sales functions of our channel partners
we have grown our own sales, account management and
customer success teams across Australia, New Zealand, Norway,
the UK, Ireland, Canada and the US. Across the business, more
than 50% of our team is now client facing. As a “land and expand”
business, we have worked hard to understand our customer
journey and build highly skilled teams to support it.
Outlook
In our FY18 annual report, I talked about having laid the
foundations for strong and sustainable growth, and the exciting
path ahead for the company. I believe we have risen to that
expectation in the year that has passed and I maintain a bold and
positive outlook for the future.
This new financial year will again be transformational as we
move from being an automated reference checking provider
to a platform offering continuous verification of human capital,
from hire to retire. We are now capable of verifying a candidate’s
journey, performance and identity on a global scale. The HR and
recruitment industry has a growing focus on making sure the
candidate has been where they say they have been, has done
what they say they have done and are who they say they are. We
are in a great position to leverage this opportunity, globally and
at scale.
Brad Rosser,
Chairman
4 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 5
Chariman’s Report
Chief Executive Officer and
Chief Strategy Officer Report
A year of achievement and new opportunity
This financial year has been another exciting and enlightening
year for Xref. We started the year with a huge opportunity ahead
of us, to continue to expand our core offering through the direct
sales and indirect partner channels we had established and which
were performing well. As we closed the year, we evolved our
offering far beyond this core product and capability through the
acquisition of RapidID.
Over the last eight years, we have supported clients in validating
that the professional history claims made by candidates were
accurate and true. The acquisition of RapidID now allows
us to enable clients to go one major step further and verify
their candidate’s identity. This changes the Xref narrative and
once again puts us in a first-mover position, recognising and
embracing the opportunity presented by combining biometric
verification technologies with global identity databases,
something that is new to the market but will become absolutely
critical to future human capital management.
Growth against key business metrics
Under our business model, when clients purchase credits (credit
sales) to use the candidate referencing platform, the value of
their purchases is recognised as unearned income. When they
pay for the credits, the cash is recognised as cash receipts. Once
the credits are used by the client (usage), we recognise the value
of the credits used as revenue (recognised revenue).
We are delighted to report another year of record credit sales,
finishing the year with a 42% increase to $10 million, up from
$7.1 million in FY18. Our growth is underpinned by strong client
acquisition and increasing adoption of our service by existing
clients (ARPA). We expect both trends to continue and we are
encouraged by our strong momentum heading into FY20.
Client acquisition continued to grow in FY19, and at 30 June
2019, 915 direct paying clients were using our services globally,
excluding those accessing our platform through our partner
network. We also had another positive year in the growth of client
adoption, with 36% of sales revenue coming from new clients.
ARPA continues to increase
The ARPA (Average Revenue Per Account) across the business is
now $13,576, a 46% increase since the metric was first reported
in January 2018. First year clients (which comprise 32% of all
current clients) have an ARPA of $9,756. Based on historical
trends, the ARPA of these clients can be expected to almost
double by their third year using Xref. During FY19, existing clients
who topped up their credits contributed, on average, $17,417.
As the average tenure of Xref’s client base grows, ARPA will
also continue to grow and, along with it, Xref’s total revenue.
This organic growth comes at a low incremental cost thereby
accelerating Xref’s progress towards cash flow break-even.
Changing market trends
One of the key market influences we have noticed this year is a
more rapid recovery rate following the Christmas holiday period.
Xref monitors hiring recovery rates and trends to predict the
resilience of the industry and forecast activity. In previous years,
Australian clients have typically taken around six weeks to return
to peak credit usage levels due to the impact of the Australia Day
holiday at the end of January.
However, by week four of 2019, credit usage had already achieved
85% recovery. In the Northern Hemisphere, Christmas and
New Year holidays are shorter and, over time, we expect our
geographic expansion will result in less seasonality in overall
usage.
Security takes priority
Another increasingly important focus for all Xref users, regardless
of industry, region or role in the hiring process, is data security,
privacy and accessibility. Xref’s clients, candidates and referees
demand security standards compliant with regulations, such
as the European Union’s General Data Protection Regulation
(GDPR), Australia’s Privacy Act and Canada’s Personal Information
and Electronic Documents Act (PIPEDA). Our ability to meet and
exceed these standards is a powerful differentiator.
Following two rigorous years of development and compliance,
we were delighted, in September 2018, to secure ISO 27001
certification. This demonstrates best practice for a data
management system and validates the security of our business,
in terms of our platform structure, the behaviour of our people
and the way we manage data as an organisation. .
Ongoing investment and platform development has enabled
us to meet the highest security and data protection standards.
This certification supports our strategy to be a global leader in
candidate information management and has proven to aid the
process of securing major client agreements while shortening
the overall sales cycle by eliminating the need for clients’ complex
security diligence.
Integrations and partnerships
In 2016, partnering with the world’s most successful ATS
providers became a major component of our growth strategy
and we continue to recognise the success of that decision. We
build these integrations based on the requirements of our clients,
they are feature-rich and ensure clients are afforded all of the
functionality of the native Xref platform, as part of their existing
recruitment workflow. This means every integration is built to
meet clients’ expectations and removes any risk of a poor client
experience.
With every integration we agree a go-to-market strategy and
work as a partner to leverage the opportunity. We have also
become a partner of choice for many providers and have been
recognised as SmartRecruiters’ partner of the year.
Our partnerships provide us with access to thousands of sales
people that can refer us to tens of thousands of businesses
we are not yet supporting. Over the last year we have seen
integrated clients improve their rate of adoption by using more
Xref credits.
During the year, the number of clients using Xref via integrated
platform partners grew to 229, up 92% on the previous year.
Credit usage from this channel grew 290% to $1,4 million and
reached 18% of overall credit usage.
We are now able to offer Xref through 16 ‘live’ platform
integrations, which include JobAdder, Bullhorn, Checkr, Equifax,
Expr3ss!, fit2work, iCIMS, Lever, Oracle Taleo, SmartRecruiters,
Talent App Store, Workday, Zapier, Avature and RapidID. Our new
public API platform now also allows third-party organisations
to more efficiently integrate their software with Xref, reducing
the time required to bring an integration with Xref’s platform
to market. In July 2018 we launched our first public API-driven
integration with the recruitment tool, Springboard, a workforce
solution offered by recruitment process outsourcing organisation
PeopleScout.
Industry recognition
During the first half of the year, Xref was recognised by two
awards programmes — the Deloitte Technology Fast 50 Awards,
and the HRD Service Provider Awards. Our inclusion at number
22 on the Deloitte list is a testament to the significant growth
and organisational maturity Xref has been able to achieve. Being
named Gold Medalists in both the pre-employment screening
and recruitment categories of the HRD Service Provider Awards
demonstrates our point of difference and the value we offer
customers.
In May 2019, we were also proud to be awarded the CRN IMPACT
Award in the Exporting Innovation category. These awards
celebrate Australian technology innovators and, through the
exporting innovation category in particular, the companies that
are successfully expanding their technology solutions globally.
With Xref now in use in almost 200 countries, this was an
important accolade for us, demonstrating the impact we are
having not just in Australia but internationally.
Future growth opportunities
We enter the new financial year with a positive outlook and an
extremely exciting journey ahead. We have made the first step
towards true platform diversification and, in turn, the first major
evolution of our brand. We have spent eight years building a
robust and reliable service for organisations looking to validate
the claims made by candidates and we’re delighted to now be
able to take those customers on the verification journey with
us, putting them ahead in their markets for the technology and
services they use.
The number of active Xref platform users (staff of our clients)
grew 55% during FY19 to 6,021. Xref marketing, customer
success and account management teams are focused on these
individuals to drive future growth via automated education
support campaigns while continuing to also focus on bringing in
new business from our core offering, additional platform features
and tools, and new products. We wish to thank our clients, team
and shareholders for their ongoing support as we continue to
grow and evolve the company together.
Lee-Martin Seymour,
Tim Griffiths,
Chief Executive Officer,
Chief Strategy Officer,
Co-Founder
Co-Founder
6 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 7
CEO and CSO Report
Directors’ Report
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the
'consolidated entity') consisting of Xref 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 2019.
Directors
The following persons were directors of Xref Limited during the whole of the financial year and up to the date of this report, unless
otherwise stated:
• Lee-Martin Seymour
• Timothy Griffiths
• Timothy Mahony
• Brad Rosser
• Nigel Heap
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
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $8,181,826 (30 June 2018: $8,912,898).
Highlights of the financial year included:
• Sales — $10 million, up 42% from $7.1 million in FY18
• International sales — continued to grow and now represent 19% of the total
• Recognised revenue (credit usage) — was a record $8.04 million, up 66% from $4.84 million in FY18
The company continued to capitalise on high demand for its core service, automated candidate referencing, in a growing human
resources technology market. The major drivers behind revenue growth included:
• Growth through integrations— A focus on optimising partnerships with integrated platforms resulted in the number of companies
using Xref through an integration increasing to 229 by the end of FY19. The company also completed the first integration using its
public API platform. Sales of credits to clients using the Xref platform through an integration reached $2,6 million and represented
26% of overall sales for the period. Credit usage by these customers was $1,4 million, up 290% on FY18.
• ISO 27001 certification — This globally recognised standard confirms that Xref’s platform meets the highest levels of data security
and privacy measures. ISO 27001 certification is a mandatory requirement for providing services to many large organisations.
Achieving certification has opened up a significant section of the market that was previously unable to be accessed
• International expansion — The company continues to grow its operations globally, from its headquarters in Sydney and offices in
Toronto, London, Oslo and its most recently introduced office in Auckland, New Zealand.
• Large addressable market — Xref has a large addressable market, including more than 180 million people in North America,
120 million people in Europe, and 15 million people in Australia and New Zealand.
Corporate
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On July 1st a share purchase agreement was entered into to acquire 100% of the issued capital of 'RapidID Pty Limited". The purchase
price for the acquisition of RapidID is a combination of cash and Xref Shares to a total value of $1.5m AUD. The Cash component is
$600,000 AUD and shares to the value of $900,000 AUD will be issued to the sellers. The transaction was settled on 9 August 2019.
Further details can be found at Note 34 in the Financial Statements.
No other matters or circumstances have arisen since 30 June 2019 that have significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The group anticipates continued growth across all business metrics and, having a strong pipeline of new business opportunities across
all markets in which it operates, continues to maintain a dynamic growth trajectory.
• User growth — the number of active users of the Xref platform grew 55% during FY19, to 6,021
Environmental regulation
• ARPA — continued to increase to $13,576 as a result of growing platform adoption
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
• Integrations — 229 companies using Xref’s platform through one of 16 integrations, up from 92% in FY18
• Funding — successful placement of shares to Australian institutional investors raising $8 million before costs in September 2018
• RapidID acquisition — strategic acquisition of a disruptive ID verification business to grow the XRef portfolio and increase market
opportunity globally
• Landmark clients — major enterprise accounts introduced during FY19, including Allianz, EY, Bunnings Group, the Department
of Corrections, PageGroup, Queensland Police and Sky News in Australia; New Zealand Inland Revenue, The New Zealand
Customs Service and New Zealand Post, in New Zealand; New York-based Compass Real Estate, Kipp LA Schools, Zoom Video
Communications and Arbor Memorial Services in North America; and Sopra Steria, Color line AS, The Crown Estates, Ocean Installer
AS, Sykehuspartner AS and Telia Norge AS and Sweco across the UK and Norway.
8 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 9
Directors’ Report
Information on directors
Name:
Title:
Lee-Martin Seymour
Managing Director and Chief Executive Officer
Qualifications:
None
Experience and expertise:
Lee-Martin Seymour is a co-founder of Xref. He has 19 years recruitment experience across
many geographic and market sectors. For 13 years Lee worked for one of the world’s largest
specialist recruitment companies. As a result he understands the demands of the employment
market and is passionate about pioneering positive change for the long term. As a serial
entrepreneur Lee has identified and successfully leveraged market opportunities to aid
innovation in the employment sector.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Remuneration and Nomination Committee
Interests in shares:
30,857,612 ordinary shares
Interests in options:
None
Contractual rights to shares:
8,333,333 performance rights
Name:
Title:
Timothy Griffiths
Chief Strategy Officer
Qualifications:
MBA
Experience and expertise:
Timothy Griffiths is a co-founder of Xref. Mr Griffiths, an MBA-qualified technologist, has
22 years’ experience advising companies, including Virgin and SkyTV. He worked for
Benchmark Capital providing technical diligence for high tech start-up investment and was
co-founder of media company a2a plc, which floated on the UK stock market. More recently
Tim was CIO for Jcurve Solutions, an Australian cloud NetSuite ERP provider.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
None
Interests in shares:
30,857,613 ordinary shares
Interests in options:
None
Contractual rights to shares:
8,333,333 performance rights
Name:
Title:
Qualifications:
Experience and expertise:
Brad Rosser
Chairman
BCom, MBA
Brad Rosser is a business builder and entrepreneur who worked for McKinsey and Co
from 1992 to 1995 before working directly for Richard Branson as Director of Corporate
Development for Virgin from 1995 to 1999, helping to identify and implement start-
up businesses. He holds an MBA from Cornell University's Johnson Graduate School of
Management and a Bachelor of Commerce (Honours) from the University of Western Australia.
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee and Remuneration and Nomination Committee
Interests in shares:
Interests in options:
None
7,000,000
Contractual rights to shares:
None
Name:
Title:
Nigel Heap
Non-Executive Director
Qualifications:
LLB,AMP
Experience and expertise:
Nigel Hays is the UK Ireland Managing Director, and Chairman of the Asia Pacific business,
of Hays plc, the leading global professional recruitment group, and a member of the group's
management board. He joined Hays in 1988 and over the last 20 years has successfully led
the growth of the Asia-Pacific business. He has completed INSEAD's Advanced Management
Program and holds a Bachelor of Laws from Manchester University.
Other current directorships:
Hays UK Ltd
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee
Interests in shares:
18,000 ordinary shares
Interests in options:
900,000
Contractual rights to shares:
None
10 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 11
Directors’ ReportDirectors’ Report
Name:
Title:
Tim Mahony
Non-Executive Director
Qualifications:
BFinAdmin
Experience and expertise:
Timothy Mahony spent 18 years in investment banking, specialising in capital markets and debt
trading. Tim 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 directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee and Remuneration and Nomination Committee
Interests in shares:
2,550,000 ordinary shares
Interests in options:
Contractual rights to shares:
None
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, FCA, CTA, GAICD
James is a chartered accountant with over 19 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 40 years of experience in financial and corporate roles, including more than 25 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, Cobalt Blue Holdings Limited and Vectus Biosystems Limited.
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 2019, and the number of meetings attended by each director were:
Full Board
Remuneration and
Nomination Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
11
12
11
12
10
12
12
12
12
12
1
-
1
-
1
1
-
1
-
1
-
-
2
2
2
-
-
2
2
2
Lee-Martin Seymour
Timothy Griffiths
Timothy Mahony**
Nigel Heap
Brad Rosser*
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
At the 28 August 2018 Board meeting it was resolved to expand the role of the Audit Committee, which then became the Audit and Risk
Committee (with only the second of the two meetings held during the 2018-19 financial year being a joint Audit and Risk Committee
meeting), and to expand the role of the Remuneration Committee, which became the Remuneration and Nomination Committee (with
the one meeting held during the 2018-19 financial year being a Remuneration Committee meeting only).
*Chairman of the Board, and Chairman of the Remuneration and Nomination Committee.
**Chairman of the Audit and Risk 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 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 disclosures relating to key management personnel
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
The Remuneration and Nomination 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.
12 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 13
Directors’ ReportDirectors’ Report
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, consisting of dividends and 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
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 2019 Annual Meeting ("AGM")
A Remuneration Report has been prepared for the 2019 year and a resolution will be put to the 2019 AGM to ask shareholders to
approve it.
• increasing return on assets as well as focusing the executive on key non-financial drivers of value
Details of remuneration
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
In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is
separate.
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 Remuneration and Nomination Committee. The Remuneration and Nomination 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
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of 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.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Remuneration
and Nomination 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 are 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.
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 Strategy Officer
• Timothy Mahony – Non-Executive Director
• Nigel Heap – Non-Executive Director
• Brad Rosser – Chairman
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 salary
and fees
$
Cash bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
$
Total
$
146,574
54,167
59,583
270,000
270,000
270,000
75,054
1,145,378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,625
15,422
23,750
23,750
23,750
-
103,297
-
-
-
-
-
-
-
-
182,054
328,628
-
16,323
70,792
91,328
-
-
293,750
293,750
92,658
386,408
1,872
76,926
292,907
1,541,582
2019
Non-Executive Directors:
Brad Rosser
Tim Mahony
Nigel Heap
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management
Personnel:
James Solomons
Robert Waring
14 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 15
Directors’ ReportDirectors’ Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
$
Cash bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
$
Total
$
2018
Non-Executive Directors:
Brad Rosser
Tim Mahony
Nigel Heap
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management
Personnel:
149,081
51,815
55,000
-
-
-
271,167
270,000
25,000
25,000
James Solomons
270,000
25,000
Robert Waring
64,732
-
1,131,795
75,000
-
-
-
-
-
-
-
-
-
-
-
23,750
23,750
23,750
-
71,250
-
-
-
-
-
-
-
-
373,027
522,108
9,042
35,576
60,857
90,576
-
-
319,917
318,750
103,107
421,857
3,628
68,360
524,380
1,802,425
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Brad Rosser (Chairman)
Timothy Mahony
Nigel Heap
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management Personnel:
James Solomons
Robert Waring
Fixed remuneration
At risk - STI
At risk - LTI
2019
2018
2019
2018
2019
2018
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92%
92%
92%
100%
-
-
-
-
-
-
-
-
-
-
8%
8%
8%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined having 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 Remuneration and Nomination 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 2017
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2019 of $250,000pa, plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 1 month
termination notice by either party. Discretionary bonus may be paid as per Remuneration and
Nomination Committee approval and KPI achievement. Non-solicitation and non- compete clauses exist.
16 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 17
Directors’ ReportDirectors’ Report
Name:
Title:
Timothy Griffiths
Executive Director and Chief Strategy Officer
Agreement commenced:
1 July 2017
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2019 of $250,000pa, plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 1 month
termination notice by either party. Discretionary bonus may be paid as per Remuneration and
Nomination Committee approval and KPI achievement. Non-solicitation and non- compete clauses exist.
James Solomons
Chief Financial Officer
Agreement commenced:
1 July 2017
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2019 of $250,000, plus superannuation, plus $20,000 car
allowance to be reviewed annually by the Remuneration and Nomination Committee. 1 month
termination notice by either party. Discretionary bonus may be paid as per Remuneration and
Nomination Committee approval and KPI achievement along with ability to receive options in Xref
Limited. Non-solicitation and non-compete clauses exist.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management
personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price
Fair value per option
at grant date
4 December 2018
1 August 2019
1 August 2022
$0.66
$0.0997
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 2019 are set out below:
Name
Tim Mahony
Nigel Heap
Brad Rosser
James Solomons
Robert Waring
Number of options
granted during the year
2019
Number of options
granted during the year
2018
Number of options
vested during the year
2019
Number of options
vested during the year
2018
-
-
-
-
20,714
-
-
-
2,500,000
16,312
-
600,000
2,500,000
750,000
16,312
300,000
300,000
2,000,000
1,000,000
-
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of
compensation during the year ended 30 June 2019 are set out below:
Name
Tim Mahony
Robert Waring
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 %
-
2,065
45,900
-
-
-
-
3%
Performance rights
There were no performance rights over ordinary shares issued to directors and other key management personnel as part of
compensation that were outstanding as at 30 June 2019.
There were no performance rights over ordinary shares granted to or vested by directors and other key management personnel as part
of compensation during the year ended 30 June 2019.
Additional disclosures relating to key management personnel
Shareholding
The number of 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 below:
Ordinary shares
Timothy Mahony
Nigel Heap
Lee-Martin Seymour
Timothy Griffiths
James Solomons
Robert Waring
Balance at the
start of the year
Received
as part of
remuneration
Additions
Disposals/other
Balance at the
end of the year
1,650,000
18,000
30,857,612
30,857,613
9,000
213,885
63,606,110
-
-
-
-
-
-
-
900,000
-
-
-
-
-
900,000
-
-
-
-
-
-
-
2,550,000
18,000
30,857,612
30,857,613
9,000
213,885
64,506,110
18 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 19
Directors’ ReportDirectors’ Report
Option holding
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 below:
Balance at the
start of the year
Granted
Exercised
Expired/
forfeited/ other
Balance at the
end of the year
Options over ordinary shares
Brad Rosser
Timothy Mahony
Nigel Heap
James Solomons
Robert Waring
7,000,000
900,000
900,000
2,500,000
16,312
11,316,312
-
-
-
-
20,714
20,714
-
(900,000)
-
-
-
(900,000)
-
-
-
-
-
-
7,000,000
-
900,000
2,500,000
37,026
10,437,026
Other transactions with key management personnel and their related parties
During the financial year;
Payments for accounting services from Aptus Accounting & Advisory (related entity of James Solomons) of $131,415 (ex GST) were
made.
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 9 to the financial statements.
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 the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 9 to the financial statements do not compromise the external
auditor’s independence requirements of the Corporations Act 2001 for the following reasons:
• 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.
Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring) of $75,054 (ex GST) were
made.
Rounding of amounts
All transactions were made on normal commercial terms and conditions and at market rates.
Performance Rights
Lee-Martin Seymour had A 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 4 December 2017. As at the date of this
report there is a balance of 8,333,333 Performance Rights available for Lee-Martin Seymour.
Timothy Griffiths had A Class Performance Rights converted into 8,333,333 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 4 December 2017. As at the date of this
report there is a balance of 8,333,333 Performance Rights available for Timothy 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 is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments
Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument
to the nearest thousand dollars, or in certain cases, the nearest dollar.
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.
Corporate Governance
The Group’s Corporate Governance Statement and Appendix 4G checklist are released to ASX on the same day the Annual Report is
released. The Corporate Governance Statement and Corporate Governance 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
Managing Director
Brad Rosser
Chairman
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.
29 August 2019
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.
20 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 21
Directors’ ReportDirectors’ Report
Independence declaration
Financial Statements
Crowe Sydney
ABN 97 895 683 573
Member of Crowe Global
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.crowe.com.au
29 August 2019
The Board of Directors
Xref Limited
14/13 Hickson Street
Dawes Point
SYDNEY NSW 2000
Dear Board Members
Xref Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Xref Limited.
As lead audit partner for the audit of the financial report of Xref Limited for the financial year ended 30
June 2019, I declare that to the best of my knowledge and belief, that there have been no 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.
Yours sincerely
Crowe Sydney
Ash Pather
Partner
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd
Statement of profit or loss and other comprehensive income
Revenue
Sales - Credits Sold in Current Year
Less adjustment for Unearned Revenue
Other income
Expenses
Employee expenses
Overheads and administrative expenses
Depreciation, amortisation and impairment expenses
Impairment of assets
Loss before income tax expense
Income tax expense
Loss after income tax expense for the year attributable to the owners of
Xref Limited
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Note
Consolidated
2019
$
2018
$
8
12
9
10
13
10,011,929
7,071,723
(1,963,760)
(2,225,723)
8,048,169
4,846,000
402,644
1,849,140
(11,195,253)
(9,170,013)
(5,348,287)
(6,359,098)
(87,993)
(1,106)
(78,927)
-
(8,181,826)
(8,912,898)
-
-
(8,181,826)
(8,912,898)
(136,425)
(205,147)
Other comprehensive income for the year, net of tax
(136,425)
(205,147)
Total comprehensive income for the year attributable to the owners of
Xref Limited
(8,318,251)
(9,118,045)
Earnings per share for loss from continuing operations attributable to the
owners of Xref Limited
Basic earnings per share
Diluted earnings per share
26
26
(5.10)
(5.10)
(6.39)
(6.39)
Note
Cents
Cents
Earnings per share for loss attributable to the owners of Xref Limited
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
22 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 23
Statement of financial position
Statement of financial position continued
Non-current liabilities
Employee entitlements
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Other equity reserves
Accumulated losses
Total equity
Note
22
Consolidated
2019
$
89,668
89,668
2018
$
52,622
52,622
8,739,458
6,442,417
3,158,865
1,944,346
23
24
48,832,200
40,087,991
(21,539,113)
(21,754,920)
(24,134,222)
(16,388,725)
3,158,865
1,944,346
The above statement of financial position should be read in conjunction with the accompanying notes.
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Capitalised Commission
Prepayments
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
Employee Entitlements
Superannuation payable
Lease Incentive
Unearned Revenue
Total current liabilities
Note
Consolidated
2019
$
2018
$
14
15
16
17
18
19
20
21
8,035,939
2,258,627
613,757
399,955
4,451,896
3,144,727
-
229,886
11,308,278
7,826,509
349,610
130,678
109,757
590,045
322,105
117,953
120,196
560,254
11,898,323
8,386,763
1,813,560
1,646,024
358,092
215,375
-
6,262,763
8,649,790
277,529
184,268
13,103
4,268,871
6,389,795
The above statement of financial position should be read in conjunction with the accompanying notes.
24 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 25
Financial Statements Financial Statements
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26 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 27
Financial Statements Financial Statements
Statement of cash flows
Note 1. Reporting entity
Notes to the financial statements
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from Options Exercised
Note
Consolidated
2019
$
2018
$
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.
Xref is a human resources technology company that automates the candidate reference process for employers.
10,431,625
7,207,058
(17,315,885)
(15,523,197)
(6,884,261)
(8,316,139)
133,522
1,724,281
117,452
1,731,688
(5,026,457)
(6,466,999)
Note 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
(119,878)
(13,831)
(184,406)
(16,272)
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.
(133,709)
(200,678)
Note 3. Significant accounting policies
8,000,000
7,500,000
(522,794)
1,267,003
(450,000)
-
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
28
17
18
23
23
23
Net cash from financing activities
8,744,209
7,050,000
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
3,584,043
4,451,896
382,323
4,069,573
Cash and cash equivalents at the end of the financial year
14
8,035,939
4,451,896
The above statement of cash flows should be read in conjunction with the accompanying notes
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models
for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to
hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt
investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective
is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as
well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit
or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that
are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income (‘OCI’).
Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce
the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, 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. New impairment requirements use an ‘expected credit loss’ (‘ECL’) model to recognise
an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to
measuring expected credit losses using a lifetime expected loss allowance is available.
28 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 29
Financial Statements
Note 3. Significant accounting policies continued
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or
services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that
is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented
separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity’s statement
of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s
performance and the customer’s payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be
capitalised as an asset and amortised over the contract period.
The impact on the financial performance and position of the consolidated entity from the adoption of these Accounting Standards is
detailed below.
Note 3. Significant accounting policies continued
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.
If the Group loses control over a subsidiary, it:
» derecognises the assets (including goodwill) and liabilities of the subsidiary;
» derecognises the carrying amount of any non-controlling interest;
» derecognises the cumulative carrying amount of foreign currency translation; differences recorded in reserves;
» 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
Adoption of AASB 9 ‘Financial Instruments’
The consolidated entity has adopted AASB 9 from 1 July 2018, using the full retrospective approach. The consolidated entity has applied
the simplified approach to measuring expected credit losses. No retrospective adjustment is required.
earnings as appropriate.
» Interests in subsidiaries are held at cost less impairment in the Parent.
b. Foreign currency translation
Adoption of AASB 15 ‘Revenue from Contracts with Customers’
The consolidated entity has adopted AASB 15 from 1 July 2018 and retrospectively with the cumulative effect of initially applying this
Standard recognised in the opening balance of retained earnings as at 1 July 2018. The retrospective adjustments for capitalised
commission of $398,833 was adjusted to the opening balance of retained earnings as at 1 July 2018.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in note 32.
a. Basis of consolidation
The Group financial statements consolidate the financial statements of the Parent and all entities over which the Parent 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 in one or
more of the three elements of control. The financial statements of subsidiaries are included in the preliminary 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.
The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation currency.
Foreign currency transactions
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 exchange rates at the date
when the year-end fair value was determined.
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 movements disclosed within other
comprehensive income.
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than
Australian Dollars are translated into Australian Dollars upon consolidation.
The results and financial position of subsidiaries are translated into the presentation currency as follows:
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;
ii.
income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
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.
30 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 31
Notes to the Financial Statements Notes to the Financial Statements
Note 3. Significant accounting policies continued
Foreign currency differences are recognised on other comprehensive income, and presented in the foreign currency translation reserve
within equity.
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.
c. Cash and cash equivalents
Note 3. Significant accounting policies continued
i. Plant and equipment
Items of plant and equipment are measured at cost, less accumulated depreciation and any impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset.
Subsequent costs and the cost replacing part of an item of 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.
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.
In most instances, an item of 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.
d. Trade debtors and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method,
less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
e. Contract assets - capitalised commissions
Contract assets are recognised when the consolidated entity has transferred services to the customer but where the consolidated
entity is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment
purposes. Contract assets include commissions paid and are amortised as performance obligations are met and an unconditional right
to consideration is established.
Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained or which are not otherwise
recoverable from a customer are expensed as incurred to profit or loss. Incremental costs of obtaining a contract where the contract
term is less than one year is immediately expensed to profit or loss.
All repairs and maintenance expenditure is charged to profit or loss in the year in which the expense is incurred.
When an item of 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.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their expected
useful lives as follows:
Computer Equipment
Office Equipment
Office Furniture
Office Fit-out
3-5 years
3-20 years
10-20 years
6-20 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or the
estimated useful life of the assets, whichever is shorter.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
f. Trade creditors and other payables
j. Intangible assets
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 presented as non-current liabilities.
Trade creditors and other payables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
g. Unearned revenue
Contract liabilities represent the consolidated entity’s obligation to transfer goods or services to a customer and are recognised when a
customer pays consideration, or when the consolidated entity recognises a receivable to reflect its unconditional right to consideration
(whichever is earlier) before the consolidated entity has transferred the goods or services to the customer.
h. Refund liabilities
A cooling off period of 28 days exists within all contracts. After this period has passed no refunds are provided even if the client does
not use their purchased credits. If a client exercises their right to cancel their purchase during this cooling off period they can be
refunded an amount equal to the value of credits not used.
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 less amortisation
and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of 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.
Internally developed intangible 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.
Development activities include a plan or design for the production of new or substantially improved products. Development
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable, and the Group intends to and has sufficient resources 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.
Capitalised development expenditure is measured at cost less accumulated amortisation and any impairment losses.
32 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 33
Notes to the Financial Statements Notes to the Financial Statements
Note 3. Significant accounting policies continued
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 10 years.
k. Leased assets
Leases where the Group assumes substantially all the risks and rewards incidental to ownership of the leased assets, are classified as
finance leases. All other leases are classified as operating leases.
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.
l. 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.
Intangible assets with indefinite useful life are tested for impairment annually.
Note 3. Significant accounting policies continued
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at
amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the
consolidated entity’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased
significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to
obtain.
Equity investments are measured at cost less any impairment charges, where the fair value cannot currently be estimated reliably.
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.
n. 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.
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.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower that
the unavoidable cost of meeting its obligation under the contract.
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 the
estimates used to determine the recoverable amount. An impairment loss on property carried at fair value is reversed 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.
m. 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.
Initial recognition and measurement
Financial assets and financial liabilities are recognised initially at fair value plus transaction costs attributable to the acquisition, except
for those carried at fair value through profit or loss, which are measured at fair value.
Financial assets and financial liabilities are recognised when the Parent and Group becomes a party to the contractual provisions of the
financial instrument.
De-recognition of financial instruments
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 asset.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and uncertainties associated with the present obligation.
Provisions are discounted to their present values, where the time value of money is material. The increase in the provision due to the
passage of time is recognised as an interest expense.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
o. Employee benefits
Short-term employee benefits
Employee benefits, previously earned from past services, that the Group expect to be settled within 12 months of reporting date are
measured based on accrued entitlements at current rate of pays.
These include salaries and wages accrued up to the reporting date and annual leave earned, but not yet taken at the reporting date.
The Group recognises a liability and an expense for bonuses where they are contractually obliged or where there is a past practice that
has created a constructive obligation.
Termination benefits
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 made an offer of voluntary redundancy, it is
probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than
12 months after the reporting date, then they are discounted to their present value.
Long-term benefits
The Group’s net obligation in 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.
34 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 35
Notes to the Financial Statements Notes to the Financial Statements
Note 3. Significant accounting policies continued
Note 3. Significant accounting policies continued
Share-based payments
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.
p. Revenue
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into
account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services
promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates
and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined
using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining
principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable
consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as
deferred revenue in the form of a separate refund liability.
Sales of credits
The Group sells candidate reference credits. When customers use a credit, the service has been performed. Revenue is recognised at
the point in time when the customer uses the service.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on agreed rates.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised
cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the
financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
q. Income tax
Current income taxes
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.
Changes in deferred tax assets or liabilities are recognised as a component of income tax in profit or loss, except where they relate to
items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised
in other comprehensive income or equity, respectively.
r. Goods and Services Tax (GST)
All amounts in these financial statements are shown exclusive of GST, except for receivables and payables that are stated inclusive of
GST.
The net amount of GST recoverable from, or payable to the Australian Taxation Office (ATO), or tax offices in other jurisdictions is
included as part of receivables and / or payables in the Statement of Financial Position. GST balances from different countries are not
offset.
s. Share capital
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.
t. Dividend distribution
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.
36 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Note 3. Significant accounting policies continued
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 shares outstanding during the
year, adjusted for own shares held.
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.
Note 5. Critical accounting judgements, estimates and assumptions continued
Share-based payment transactions
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
w. Going Concern
Not withstanding the Group incurred a loss after tax for the year of $8,181,826 (2018: $8,912,898), the consolidated financial
statements have been prepared on a going concern basis as the Group has a net asset position of $3,158,865 (2018: $1,944,346).
The directors believe the Group can support its operating activities and 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.
Determination of variable consideration
Judgement is exercised in estimating variable consideration which is determined having regard to past experience with respect to
refund where the customer maintains a right of refund pursuant to the customer contract or where goods or services have a variable
component. Revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised under the contract will not occur when the uncertainty associated with the variable consideration is
subsequently resolved
Note 4. New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not
been early adopted by the consolidated entity for the annual reporting period ended 30 June 2019.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 ‘Leases’
and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, 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.
As at the reporting date, the group has non-cancellable operating lease commitments of $1,265,846, see note 33. Of these
commitments, approximately $173,023 relate to short-term leases which will both be recognised on a straight-line basis as expense in
profit or loss. For the remaining lease commitments the group expects to recognise right-of-use assets of approximately $914,669 on
1 July 2019, lease liabilities of $967,962 (after adjustments for prepayments and accrued lease payments recognised as at 30 June 2019)
and deferred tax assets of $14,646. Overall net assets will be approximately $38,638 lower, and net current assets will be $106,588
lower due to the presentation of a portion of the liability as a current liability. The group expects that net profit after tax will decrease by
approximately $50,000 for 2020 as a result of adopting the new rules.
Note 5. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, 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.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime
expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each
group. These assumptions include recent sales experience and historical collection rates.
Internally generated software and research costs
Management monitors progress of internal research and development projects by using a project management system. Significant
judgement is required in distinguishing research from the development phase.
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 2019 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.
Deferred tax assets
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.
Research and Development Refundable Tax Offset
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.
38 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Note 6. Group information
The preliminary consolidated financial statements of the Group include
Note 7. Operating segments continued
Name
Xref Limited
Xref (AU) Pty Limited
Xref (UK) Limited
Xref Referencing (CA) Limited
Xref AS
Xref LLC
Xref (NZ) Limited
a. Investments in subsidiaries
Principal place of business /
Country of incorporation
Australia
Australia
United Kingdom
Canada
Norway
United States
New Zealand
Ownership interest
2019
%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
2018
%
100.00%
100.00%
100.00%
100.00%
100.00%
-
-
All investments in subsidiaries are carried at cost and eliminated through consolidation in the Group.
Note 7. Operating segments
There is only one operating segment (candidate referencing) for the year ended 30 June 2019. 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.
Revenue from external customers
Service performed at a point in time
Services transferred over time
Non-current operating assets
Global
Australia
Canada
United Kingdom
Norway
New Zealand
Consolidated
2019
$
2018
$
7,913,524
4,846,000
134,645
-
8,048,169
4,846,000
Consolidated
2019
$
106,990
330,751
104,060
30,047
2,475
15,722
2018
$
-
390,283
104,842
58,113
7,016
-
Geographical information
Credit sales to external customers
Australia
Canada
United Kingdom
Norway
Revenue from external customers
Australia
Canada
United Kingdom
Norway
2019
$
2018
$
8,148,721
6,150,386
956,787
530,713
375,708
455,107
354,664
111,566
Total Non-current operating assets
590,045
560,254
The information above is based on the locations of the customers.
Note 8. Revenue
10,011,929
7,071,723
Rendering of services
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
Sales of credits
Subscription services
2019
$
2018
$
6,754,930
4,316,355
772,576
375,108
145,555
222,011
241,223
66,411
8,048,169
4,846,000
Consolidated
2019
$
2018
$
7,913,524
4,846,000
134,645
-
8,048,169
4,846,000
40 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 41
Notes to the Financial Statements Notes to the Financial Statements
Note 9. Overheads and administrative expenses
Audit fees
Accounting
Directors fees
Legal fees
Marketing fees
Other Consultants
Share Option Expense
Administration expense
Foreign exchange loss
Operating lease payments
Auditors remuneration
Fees charged by Audit Firm:
Financial statement audit and review
Consolidated
2019
$
85,578
195,741
145,047
192,543
2018
$
90,678
250,709
263,157
178,566
1,572,628
1,559,137
461,320
619,682
900,470
761,867
1,358,171
1,742,124
(42,129)
759,706
(76,477)
688,867
5,348,287
6,359,098
Note 12. Other income
Other Income
Research & Development - Refundable Tax Offset
Interest Received
Other Income
Other income
Note 13. Income tax expense
Consolidated
2019
$
205,402
183,258
13,984
2018
$
1,710,297
117,452
21,391
402,644
1,849,140
Xref Limited has operating subsidiaries in Australia, the UK, Norway, New Zealand, USA and Canada which are expected to accumulate
tax losses prior to returning a profit.
85,578
90,678
Numerical reconciliation of income tax expense and tax at the statutory rate
a. Reconciliation of effective tax rate
Loss before income tax expense
Consolidated
2019
$
2018
$
(8,181,826)
(8,912,898)
Note 10. Depreciation, amortisation and impairment expenses
Tax at the statutory tax rate of 27.5% (2017:27.5%)
(2,250,002)
(2,451,047)
Depreciation of property, plant and equipment
Note 11. Research and development costs
Research and development costs expensed
Consolidated
2019
$
87,993
2018
$
78,927
Consolidated
2019
$
2018
$
472,189
3,931,717
The Parent and Group research and development projects have focused on cloud-based solutions for candidate recruitment. Note 5
reflects the Groups policy on the expensing/capitalisation of development costs.
Reseach and development costs expensed amount to $472,189 (2018: $3,931,717) of which $304,235 (2018: $3,145,694) are
recognised in employee expenses.
Deferred tax asset not recognised
Permanent differences
Adjustment for foreign tax rates
Income tax expense
b. Deferred tax assets and liabilities
1,999,462
1,401,252
86,361
164,179
505,956
543,839
-
-
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.
The company has not yet raised a deferred tax entry as the company is not certain whether the tax losses carried forward can be
utilised in the foreseeable future. The deferred tax asset position of the Group, which has not been brought to account is $5,173,286
(2018: $3,173,824)
42 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Note 14. Current assets - cash and cash equivalents
Note 15. Current assets - trade and other receivables continued
Cash at bank
Rental bonds
Consolidated
2019
$
2018
$
7,960,482
4,381,389
75,457
70,507
8,035,939
4,451,896
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
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 and other
receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and
a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified.
The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
The carrying amount of cash and cash equivalents approximates their fair value.
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.
Note 15. Current assets - trade and other receivables
Trade debtors
Less: Allowance for expected credit losses
Other receivables
Research and development incentive grant
Interest receivable
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Closing balance
Consolidated
2019
$
2018
$
1,899,415
1,599,430
-
1,899,415
104,074
205,402
49,736
359,212
(165,000)
1,434,430
-
1,710,297
-
1,710,297
2,258,627
3,144,727
(165,000)
-
-
(165,000)
165,000
-
-
(165,000)
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.
All receivables are subject to credit risk exposure.
As at 30 June 2019, the ageing analysis of trade receivables post due but not impaired is detailed as follows:
0-30 days overdue
30-90 days overdue
90 days+ overdue
Note 16. Current assets - Capitalised Commission
Capitalised Commission - at cost - Credit Sales
Capitalised Commission - at cost - Subscriptions
Capitalised Commission - at cost - People Search
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
Retrospective adjustment as at 1 July 2018
Additions
Recognition as expenses
Balance adjustment due to forex
Closing balance
Consolidated
2019
$
2018
$
1,876,873
1,192,135
22,542
-
292,920
12,375
1,899,415
1,434,430
Consolidated
2019
$
604,256
9,180
321
613,757
-
398,833
1,010,836
(807,601)
11,689
613,757
2018
$
-
-
-
-
-
-
-
-
-
-
44 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 45
Notes to the Financial Statements Notes to the Financial Statements
Note 17. Non-current assets - property, plant and equipment
Note 18. Non-current assets - intangibles
Office Fitout
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
Office equipment - at cost
Less: Accumulated depreciation
Office furniture - at cost
Less: Accumulated depreciation
Consolidated
2019
$
101,122
(25,396)
75,726
266,989
(124,564)
142,425
131,865
(69,408)
62,457
85,635
(16,633)
69,002
2018
$
96,784
(10,058)
86,726
183,028
(76,275)
106,753
116,087
(50,815)
65,272
72,915
(9,561)
63,354
349,610
322,105
Reconciliations
Reconciliations of the carrying value at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Adjustment
Depreciation expense
Balance at 30 June 2018
Additions
Disposals
Depreciation expense
Office
Fitout
$
10,925
84,440
-
(8,639)
86,726
4,338
-
(15,338)
Computer
equipment
$
Office
equipment
$
Office
furniture
$
94,411
59,092
-
69,782
7,986
4,269
(46,750)
(16,765)
106,753
87,042
(3,081)
(48,289)
65,272
15,778
-
(18,593)
37,239
32,888
-
(6,773)
63,354
12,720
-
(7,072)
Total
$
212,357
184,406
4,269
(78,927)
322,105
119,878
(3,081)
(89,292)
Balance at 30 June 2019
75,726
142,425
62,457
69,002
349,610
Patents and trademarks - at cost
Less: Impairment
Preliminary expenses (a)
Domain: Xref.com
Consolidated
2019
$
11,337
(1,106)
10,231
13,457
2018
$
10,963
-
10,963
-
106,990
106,990
130,678
117,953
a.Preliminary expenses relate to the aquisition of RapidID
Reconciliations
Reconciliations of the carrying value at the beginning and end of the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Additions
Impairment expense
Patents and
trademarks
$
Preliminary
expenses
$
Domain
$
Total
$
-
10,963
10,963
374
(1,106)
-
-
-
13,457
-
-
-
106,990
117,953
106,990
-
-
117,953
13,831
(1,106)
Balance at 30 June 2019
10,231
13,457
106,990
130,678
46 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 47
Notes to the Financial Statements Notes to the Financial Statements
Note 19. Current liabilities - trade and other payables
Note 21. Current liabilities - Unearned Revenue continued
Trade payables
Non trade payables and accrued expenses
Accrued salaries, wages and related costs
GST Payable
Consolidated
2019
$
450,452
246,528
876,029
240,551
2018
$
162,894
525,139
853,126
104,865
Unsatisfied performance obligations
The performance obligations associated with the unearned revenue balance are expected to be satisfied within 12 months from the
date of the balance sheet
Under Xref’s business model, clients purchase Xref credits to use our candidate referencing platform. The value of credits sold are
added to unearned revenue when the client has paid. The credits are consumed when reference checks are ordered, and credit usage
becomes recognised revenue. At balance date some clients will have purchased credits and have been issued an invoice but will not
have paid. The value of these unpaid credit sale invoices are the ‘conditional credits’ above and represents trade debtors (less goods &
services tax). In addition, clients that have subscribed to People Search or an Xref Subscription pay for 12 months in advance and each
month a proportion of the upfront payment is recognised as revenue.
1,813,560
1,646,024
Note 22. Non-current liabilities - Employee entitlements
Refer to note 27 for further information on financial instruments.
Trade creditors and other payables are non-interest bearing and normally settled on 30 day terms; therefore, their carrying amount
approximates their fair value.
Note 20. Current liabilities - Employee Entitlements
Annual leave
Consolidated
2019
$
2018
$
358,092
277,529
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.
Note 21. Current liabilities - Unearned Revenue
Long service leave
Note 23. Equity - issued capital
Ordinary shares - fully paid
Movements in ordinary share capital
Details
Balance
Issued for cash
Capital raising costs
Performance rights conversion
Balance
Issued for cash
Capital raising costs
Option Conversion
Consolidated
2019
$
89,668
2018
$
52,622
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
165,578,370
147,736,127
48,832,200
40,087,991
Date
Shares
Issue price/
exercise price
1 July 2017
118,569,460
12,500,000
-
16,666,667
30 June 2018
147,736,127
13,333,334
-
4,508,909
$0.60
$0.00
$0.02
$0.60
$0.00
$0.23
$
32,687,991
7,500,000
(450,000)
350,000
40,087,991
8,000,000
(522,793)
1,267,003
48,832,200
Consolidated
2019
$
2018
$
4,268,871
2,030,253
10,011,929
1,445,795
7,071,723
1,085,263
(7,612,488)
(4,485,468)
(1,881,476)
(1,445,795)
Balance
30 June 2019
165,578,370
1,963,760
2,225,723
30,132
12,895
Unearned Revenue
Balance Brought Forward
Unearned Revenue Movement
Credits Sold
Add: Opening Conditional Credits
Less: Usage
Less: Closing Conditional Credits
Net Unearned Revenue Movement
Opening Balance Revaluation due to Forex
Balance Carried Forward
6,262,763
4,268,871
48 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 49
Notes to the Financial Statements Notes to the Financial Statements
Note 23. Equity - issued capital continued
Note 24. Equity - Other equity reserves continued
Performance Rights Reserve Balance
Class C
Number
Granted
16,666,666
Performance
Right Reserve
$A
Weighted
Average Fair
Value $/Right
-
-
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.
The Class A Conversion Event was achieved and the Class A shares were issued 4 December 2017.
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 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 were in escrow until 8 February 2018.
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.
Xref issued 13,333,333 fully paid ordinary shares at $0.60 per share, at a 2.4% discount to the trading five-day volume weighted average
price and a 3.2 % discount to Xref’s last traded share price on 1 October 2018.
Xref issued 13,300,000 shares at $0.60 (a 2.4% discount to the five-day volume weighted average price) to Australian institutions and
sophisticated investors on 28 September 2018 which support’s the business’ international expansion, ongoing focus on strategic
integrations and partnerships, and help to drive the key business metrics of client acquisition, client adoption and annual revenue per
account (ARPA)
The Class A Conversion Event was achieved and the Class A shares were issued 4 December 2017.
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.
Capital risk management
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. Other than as disclosed in note 34, 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 2019. The
capital risk management policy remains unchanged from the 30 June 2018 Annual Report.
Note 24. Equity - Other equity reserves
Foreign currency reserve
Options reserve
Consolidation reserve
Consolidated
2019
$
2018
$
(376,487)
(240,062)
1,683,195
1,330,963
(22,845,821)
(22,845,821)
(21,539,113)
(21,754,920)
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to
Australian dollars.
Performance Rights 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.
50 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 51
Notes to the Financial Statements Notes to the Financial Statements
a) Share option reserve
At 1 July 2016
At 30 June 2017 (b)
At 30 June 2017 (a)
Granted (c)
Granted (d)
Granted (e)
Granted (f)
Granted (g)
Granted (h)
Closing Balance
At 30 June 2017 (b)
At 30 June 2017 (a)
Granted (c)
Granted (d)
Granted (e)
Granted (f)
Granted (g)
Granted (h)
Granted (i)
Granted (j)
Granted (k)
Granted (l)
Granted (m)
Closing Balance
Issued Date
Expiry Date
01/02/2019
07/12/2016
25/11/2022
07/12/2016
25/11/2021
22/09/2017
03/07/2021
22/09/2017
03/07/2021
22/03/2018
05/02/2022
22/03/2018
12/02/2021
22/03/2018
12/02/2022
22/03/2018
12/02/2023
30/06/2018
07/12/2016
25/11/2022
07/12/2016
25/11/2021
22/09/2017
03/07/2021
22/09/2017
03/07/2021
22/03/2018
05/02/2022
22/03/2018
12/02/2021
22/03/2018
12/02/2022
22/03/2018
12/02/2023
04/12/2018
03/09/2021
04/12/2018
03/09/2022
04/12/2018
03/09/2023
04/12/2018
01/08/2022
04/12/2018
29/11/2022
Average
exercise price
in $A per share
$0.230
$0.700
$0.700
$0.585
$0.580
$0.660
$0.700
$0.700
$0.700
$0.700
$0.700
$0.585
$0.580
$0.660
$0.700
$0.700
$0.700
$0.700
$0.700
$0.660
$0.660
$0.700
Note 24. Equity - Other equity reserves continued
The options have been valued using a binominal options method, using the following assumptions:
Options
4,508,909
2,500,000
5,400,000
960,109
95,390
249,782
1,000,000
750,000
750,000
Option Reserve
$A
229,954
187,895
586,862
211,748
21,217
8,180
69,670
21,295
12,142
16,241,190
1,330,963
2,500,000
5,400,000
811,480
95,390
208,116
1,000,000
750,000
750,000
300,000
300,000
300,000
315,664
308,214
646,920
180,879
21,444
21,810
69,670
69,635
56,460
20,730
21,806
11,904
27,275
a)
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
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
2,500,000
226,448
c)
Listing date (re-listing as Xref Limited)
30/06/2019
15,230,650
1,683,195
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
9/02/2016
1.63 yr
22/09/2017
22/09/2017
$0.585
03/07/2021
3.77 yr
$0.745
2.295%
40%
Nil
52 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 53
Notes to the Financial Statements Notes to the Financial Statements
Note 24. Equity - Other equity reserves continued
Note 24. Equity - Other equity reserves continued
d)
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
e)
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
f)
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
1.63 yr
22/09/2017
2/09/2017
$0.58
03/07/2021
3.77 yr
$0.745
2.295%
40%
Nil
9/02/2016
2.11 yr
22/03/2018
22/03/2018
$0.66
05/02/2022
3.88 yr
$0.57
2.395%
26.37%
Nil
9/02/2016
2.11 yr
22/03/2018
22/03/2018
$0.70
01/02/2021
2.87 yr
$0.57
2.160%
26.3%
Nil
g)
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
h)
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
i)
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 = 3 year Government Bond (04/12/2018)
Expected volatility
Dividends expected on the shares
9/02/2016
2.11 yr
22/03/2018
22/03/2018
$0.70
12/02/2022
2.87 yr
$0.70
2.395%
26.340%
Nil
9/02/2016
2.11 yr
22/03/2018
22/03/2018
$0.70
12/02/2023
4.90 yr
$0.57
2.395%
26.350%
Nil
9/02/2016
2.82yr
04/12/2018
04/12/2018
$0.70
03/09/2021
2.75 yr
$0.475
1.990%
38.63%
Nil
54 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 55
Notes to the Financial Statements Notes to the Financial Statements
Note 24. Equity - Other equity reserves continued
Note 24. Equity - Other equity reserves continued
j)
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 (04/12/2018)
Expected volatility
Dividends expected on the shares
k)
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 (04/12/2018)
Expected volatility
Dividends expected on the shares
l)
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 (04/12/2018)
Expected volatility
Dividends expected on the shares
09/02/2016
2.82yr
04/12/2018
04/12/2018
$0.70
03/09/2022
3.75 yr
$0.475
2.17%
39.19%
Nil
9/02/2016
2.82 yr
04/12/2018
04/12/2018
$0.70
03/09/2023
4.75yr
$0.475
2.170%
40.42%
Nil
9/02/2016
2.82 yr
04/12/2018
04/12/2018
$0.66
01/08/2022
3.66 yr
$0.475
2.170%
39.23%
Nil
m)
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 (04/12/2018)
Expected volatility
Dividends expected on the shares
9/02/2016
2.82 yr
04/12/2018
04/12/2018
$0.70
29/11/2022
3.99 yr
$0.475
2.170%
39.90%
Nil
Class A Vesting 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 2019 year was 1.55 years (2018: 2.55 years)
Option movements for the period
During the year ended 30 June 2019, 190,295 options lapsed and 4,508,909 options were exercised.
As approved at the 28 November 2018 AGM, 2,500,00 options were issued to 5 senior staff members of the company as a key
component of their remuneration by the company. The Chief Operating Officer (COO) was issued with 900,000 with 300,000 vesting on
date of issue and expiring on the 3 September 2021, the second tranche of 300,000 options vesting on 3 September 2019 and expire if
not exercised by 3 September 2022, and the third tranche of 300,000 options vesting on 3 September 2020 and expire if not exercised
by 3 September 2023)
Option movements during the previous year
At 26 September 2017,1,055,499 options were issued under the terms of the Employee Option Plan to 52 employees and 5 of its
contractors.
At 22 March 2018, 2,749,782 options were issued under the terms of the Employee Option Plan to 25 of its employees and to the
Company’s Chief Financial Officer (CFO).
56 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 57
Notes to the Financial Statements Notes to the Financial Statements
Note 24. Equity - Other equity reserves continued
Note 26. Earnings per share continued
Options vested and therefore exercisable
Expiry Date
2019
Acquisition of Xref Pty Ltd
Options Vested – Tim Mahony
Options Vested – Nigel Heap
Options Vested - Brad Rosser
Options Vested – James Solomons
Options Vested - Employees and Contractors
Options Vested - Employees and Contractors
Options Vested – Sharon Blesson
Options Vested – Senior Staff
01/02/2019
01/02/2019
-
-
25/11/2021
900,000
25/11/2021
4,500,000
01/02/2021
1,750,000
03/07/2021
05/02/2022
30/09/2021
29/12/2022
906,870
208,116
300,000
2,000,000
2018
3,908,809
900,000
300,000
2,000,000
1,000,000
-
-
-
-
The following reflects the income and share data used in the basic and diluted EPS computations
Loss after income tax attributable to the owners of Xref Limited
(8,181,826)
(8,912,898)
Weighted average number of ordinary shares used in calculating basic earnings per share
160,330,586
139,516,949
Number
Number
Weighted average number of ordinary shares used in calculating diluted earnings per share
160,330,586
139,516,949
Consolidated
2019
$
2018
$
The weighted average share price for the current financial year was $0.555 (2018: $0.624).
10,564,986
8,108,809
Basic earnings per share
Diluted earnings per share
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 ref Pty Limited to the share capital of King Solomon Mines Limited immediately after the reverse acquisition.
Note 27. Financial instruments
a. Classification of financial instruments
Cents
(5.10)
(5.10)
Cents
(6.39)
(6.39)
The carrying amounts presented in the statement of financial position relate to the following categories of financial assets and liabilities
Note 25. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 26. 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.
Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into ordinary shares.
The Group recorded losses for the years ended 30 June 2018 and 30 June 2019. 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.
Group 2019
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Total
Loans and
receivables
8,035,939
2,258,628
10,294,567
-
-
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
8,035,939
2,258,628
10,294,567
-
-
-
2,387,028
2,387,028
2,387,028
2,387,028
-
-
-
-
-
58 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 59
Notes to the Financial Statements Notes to the Financial Statements
Note 27. Financial instruments continued
Note 27. Financial instruments continued
Group 2018
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Total
Loans and
receivables
4,451,896
3,144,727
7,596,623
-
-
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
4,451,896
3,144,727
7,596,623
-
-
-
2,107,821
2,107,821
2,107,821
2,107,821
-
-
-
-
-
b. Financial instrument risk management
The Group is exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity Risk
• Market Risk
The Group are 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 has 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 is 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’s financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:
Group 2019
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
-
-
-
1,813,561
1,813,561
1,813,561
Superannuation payable
215,375
215,375
215,375
Total
2,028,936
2,028,936
2,028,936
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Group 2018
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
-
-
-
1,646,024
1,646,024
1,646,024
Superannuation payable
184,268
184,268
184,268
Total
1,830,292
1,830,292
1,830,292
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
iii. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
The Group has no significant concentration of risk in relation to cash and cash equivalents, trade debtors and other financial assets.
iv. Foreign exchange risk
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.
Further details in relation to the credit quality of financial assets is provided in Note 16
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 United States dollar, the Canadian
dollar, the UK Pounds Sterling and the Norwegian krone.
ii. Liquidity risk
The exposure to currencies of the Group is as follows:
Liquidity risk represents the Group’s ability to meet is contractual obligations as they fall due. The Group manages liquidity risk by
managing cash flows and ensuring that adequate cash is in place to cover any potential short falls.
During the financial year expense growth reduced from 44% in the 2018 year to 16% in 2019, with a growth in sales of credits of 42%.
There is continued growth forecasted and ongoing strong cost control enabling adequate management of liquidate risk.
All amounts shown as current financial liabilities are expected to be paid on demand and without interest
Canadian Dollars
UK Pound Sterling
Norwegian Krone
New Zealand Dollars
United States Dollar
Total
2019
$
290,205
227,165
157,041
-
13,631
688,042
2018
$
176,044
100,975
111,427
-
-
388,446
60 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Note 27. Financial instruments continued
Note 27. Financial instruments continued
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:
Short-term exposure
Total impact of potential change in exchange rate
34,402
68,805
137,618
30 June 2018 – Group
Australia
Potential Foreign Exchange Rate Fluctuation
Impact on valuation of holding in:
Canadian Dollars
UK Pound Sterling
Norwegian Krone
New Zealand Dollar
United States Dollar
5%
$
14,510
11,358
7,852
-
682
10%
$
29,021
22,717
15,704
-
1,363
20%
$
58,041
45,433
31,408
-
2,726
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 Australian Dollars (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) , Canadian dollars (CAD),
Norwegian Krone (NOK), New Zealand Dollar (NZD) and United States Dollar (USD).
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.
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:
Short-term exposure
30 June 2019 – Group
Australia
United
Kingdom
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
(1,964,604)
(124,554)
(106,402)
(151,872)
(15,722)
-
7,320,554
182,901
337,396
92,653
(15,722)
13,631
Long-term exposure
30 June 2019 – Group
Australia
United
Kingdom
Canada
Norway New Zealand United States
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
50,948
24,245
18,843
-
-
-
50,948
24,245
18,843
-
-
-
15,722
-
15,722
-
-
-
30 June 2018 – Group
Australia
United
Kingdom
Norway New Zealand United States
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
7,083,425
153,396
1,842,269
62,332
Canada
211,955
75,948
147,847
127,272
5,241,156
91,064
136,007
20,575
-
-
-
-
-
-
Long-term exposure
United
Kingdom
Canada
Norway New Zealand United States
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
Foreign exchange risk
Sensitivity analysis
50,948
51,411
17,836
-
-
-
50,948
51,411
17,836
-
-
-
-
-
-
-
-
-
The following analysis illustrates the sensitivity of profit and equity in regard to the Group’s financial assets and financial liabilities
carried in foreign currencies. It assumes a 3+/- % change in exchange rates for the year ended at 30 June 2019 (2018: 5%).
The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the previous
12 months.
3% (2018: 5%) increase in AUD against
foreign currencies
3% (2018: 5%) decrease in AUD against
foreign currencies
(8,144,314)
2,963,850
(9,038,288)
1,707,900
(8,059,861)
3,342,526
(8,850,009)
2,158,275
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.
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.
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 is 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
9,285,158
307,455
Canada
443,798
Norway New Zealand United States
244,525
-
13,631
Group
2019
2018
Profit for the year
Equity
Profit for the year
Equity
62 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 63
Notes to the Financial Statements Notes to the Financial Statements
Note 28. Reconciliation of loss after income tax to net cash used in operating activities
Note 31. Related party transactions continued
Consolidated
2019
$
2018
$
The following transactions were carried out with related parties
a. Purchase of services
Loss after income tax expense for the year
(8,181,826)
(8,912,898)
87,993
619,682
78,927
761,867
(136,425)
(205,147)
Key management personnel
c. Other related party balances
Loans to directors for the year ended 30 June 2019 amounted to $0 (2018: $0).
Adjustments for:
Depreciation, amortisation and impairment
Option expense
Foreign exchange
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
886,100
(528,643)
(Increase) in prepayments
Decrease/(increase) in other financial assets
(Increase) in contract assets
Increase in trade and other payables
Increase in unearned revenue
Increase in employee benefits
Increase in other financial liabilities
(170,069)
10,439
(613,757)
341,900
(37,266)
(45,198)
-
253
1,963,760
2,225,723
117,609
48,137
144,990
50,393
Net cash used in operating activities
(5,026,457)
(6,466,999)
Note 29. Contingent assets
The Group has no contingent assets at 30 June 2019 (2018: $Nil).
Note 30. Contingent liabilities
The Group has no contingent liabilities at 30 June 2019 (2018: $Nil).
Note 31. Related party transactions
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.
d. Key management compensation
See Information below
Short-term employee benefit
Post employment benefits
Share-based payments
Note 32. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Consolidated
2019
$
2018
$
206,479
218,886
Consolidated
2019
$
2018
$
1,145,378
1,206,795
103,297
292,907
71,250
524,380
1,541,582
1,802,425
Parent
2019
$
2018
$
(619,682)
(761,781)
(619,682)
(761,781)
64 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Note 32. Parent entity information continued
Statement of financial position
Note 33. Commitments
Operating leases are held for premises used for office space. Lease commitments net of incentive payments are:
Total current assets
Total non current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained profits
Total equity
Parent
2019
$
-
2018
$
-
30,253,229
21,705,222
30,253,229
21,705,222
-
-
(33,750)
(33,750)
48,832,200
40,087,991
1,683,195
1,330,963
(20,262,166)
(19,679,982)
30,253,229
21,738,972
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
There are no guarantees entered into by the parent entity in relation to any of its subsidiaries in 2018 or 2019.
Contingent liabilities
The parent entity had no contingent liabilities in 2018 and 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment in 2018 and 2019
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
Consolidated
2019$
2018$
797,727
345,561
122,558
507,020
548,036
461,506
1,265,846
1,516,562
The Group had no other commitments at 30 June 2019 (2018: $Nil).
Note 34. Events after the reporting period
Only July 1st a share purchase agreement was entered into to acquire 100% of the issued capital of ‘RapidID Pty Limited”. The purchase
price for the acquisition of RapidID is a combination of cash and Xref Shares to a total value of $1.5m AUD. The Cash component is
$600,000 AUD and shares to the value of $900,000 AUD will be issued to the sellers. The transaction settled 9 August 2019. RapidID is
a disruptive ID verification and fraud prevention platform which aggregates leading customer verification technologies for flexible and
seamless integration for onboarding and risk analysis monitoring.
RapidID’s platform simplifies identification, screening and compliance in an all-in-one integrated API which enables real-time identity
verification:
• Global ID Checks - one simple integration checking against more than 100 billion identity records across 180 countries and over
2.5 million risk entities in 50 countries;
• AML & KYC Compliance - Anti-Money Laundering (“AML”) screening and background checks, including politically exposed persons
and terrorism watch lists. Domestic and international AML and ‘Know Your Customer’ (“KYC’) compliance.
• ID Document Verification - which allows customers to scan documents in seconds and verify against government sources; and
• Biometric Verification - confirms identity beyond a doubt, with facial recognition and liveness technology.
RapidID’s Clients
Although still relatively early in its evolution, Rapid ID has already acquired some significant clients including Uber, Experian, Sunsuper,
Creditor Watch, Coinspoit, Judobank, Easypay and Health Engine. RapidID’s stand-a-lone revenues are not material to Xref at this point,
however, a significant opportunity exists to increase revenues through sales to Xref’s client base.
Strategic Fit
RapidID is a highly complementary acquisition for Xref. For eight years, Xref has checked that candidates have worked where and how
they say they have. With RapidID, Xref now has the ability to also check candidates are who they say they are.
RapidID has been integrated into Xref’s core platform and the additional paid identity checks will be available to Xref’s clients from
today. HR professionals are looking for better ways to verify the backgrounds and identity of candidates and Xref now brings a seamless
and integrated service to their platform of choice.
RapidID will continue to evolve under its current branding and website but it will be identified as an Xref company. RapidID will also able
to develop further in non-HR markets and this will create opportunities for Xref in new sectors.RapidID’s Queensland-based founder,
Ashley Hoey, will join Xref along with his development team of two and will continue to develop the RapidID platform and business as
General Manager, RapidID.
66 | Xref Limited | Annual Report 2019
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Notes to the Financial Statements Notes to the Financial Statements
Director’s Declaration
In the directors’ opinion:
• 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 note 2 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 2019
and of its performance for the financial year ended on that date; and
• 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 behalf of the directors
Lee-Martin Seymour
Managing Director
29 August 2019
Sydney
Brad Rosser
Chairman
29 August 2019
Sydney
Crowe Sydney
ABN 97 895 683 573
Member of Crowe Global
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.crowe.com.au
Independent Auditor’s Report to the Members of Xref
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Xref Limited (the Company and its subsidiaries (the Group)),
which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of Group is in accordance with the Corporations Act
2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an
equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership
is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately
owned organisation and/or its subsidiaries.
Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a
separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe
Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or
partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a
scheme approved under Professional Standards Legislation. Liability limited other than for acts or omissions of financial services licensees.
© 2019 Findex (Aust) Pty Ltd.
68 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 69
Independent Auditor’s Report
Xref Limited
70
Independent Auditor’s Report
Xref Limited
71
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report 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 a
separate opinion on these matters.
Key Audit Matter
How we addressed the Key Audit Matter
Intangibles and Research and Development Costs
In the current year, the Group incurred
expenditure, comprising mostly payroll costs, to
develop its domain and to advance its 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.
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.
Operating Losses and Going Concern Assessment
The Group incurred losses before tax of
$8,181,826 (2018: loss $8,912,898).
Notwithstanding the continued losses the
financial report has been prepared on a going
concern basis as the Group obtained sufficient
funds from its capital raising which allows the
Group to continue operating as outlined in Note
3(w) of the financial report.
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
Key Audit Matter
How we addressed the Key Audit Matter
obtained reasonable justification for
those inputs that differ from historical
results.
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 2019 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 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
70 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 71
Independent Auditor’s Report
Xref Limited
72
Independent Auditor’s Report
Xref Limited
73
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included on pages 13 to 20 of the directors’ report for the year
ended 30 June 2019.
In our opinion, the remuneration report of the Company, for the year ended 30 June 2019, 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 Sydney
Ash Pather
Partner
29 August 2019
Sydney
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as
a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The auditor
is responsible for the direction, supervision and performance of the group audit. The auditor remains
solely responsible for the audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during the audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in the auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in the auditor’s report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
72 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 73
Shareholder Information
Information relating to shareholders, as required by ASX Listing Rule 4.10, and not disclosed elsewhere in this Annual Report, is detailed
below.
Top 20 Holders of Ordinary Shares as at 13 August 2019
Rank
Name of Shareholder
Shares
% of Shares
Substantial Shareholders of the Company as at 13 August 2019:
Substantial Shareholders
Shareholding
% Shares Issued
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
FIL Limited
AustralianSuper Pty Ltd
30,857,613
30,857,612
13,475,065
10,000,000
18.43
18.43
8.14
6.04
Based on the market price at 13 August 2019 there were 155 shareholders with less than a marketable parcel of 1,076 shares at a
share price of $0.465.
Number of Ordinary Shares Held
Number of Holders
Ordinary Shares
% of Total Issue Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
148
268
162
357
93
1,028
67,510
791,895
1,300,821
12,314,573
152,987,013
167,461,812
0.04
0.47
0.78
7.35
91.36
100.00
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
J P Morgan Nominees Australia Pty Limited
Netwealth Investments Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
Austral Capital Pty Ltd
CS Third Nominees Pty Limited
Mr Tim Mahony + Ms Jacki Pervan
Morgan Stanley Australia Securities (Nominee) Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
Yeehah Pty Ltd
Parkstone House Pty Ltd
CS Fourth Nominees Pty Limited
Debuscey Pty Ltd
Schindler Investment Haus Pty Ltd
Hoedog Enterprises Pty Ltd
Mr Mark William Hoey
Home Capital Finance Pty Ltd
Total of Top 20 Holdings
Other Holdings
Total Fully Paid Shares Issued
30,857,613
30,857,612
26,366,033
13,837,183
5,720,941
4,835,984
4,356,785
3,000,000
2,778,643
1,900,000
1,878,150
1,648,804
1,200,000
1,019,410
1,018,276
996,592
912,500
829,422
754,020
674,981
135,442,949
32,018,863
167,461,812
18.43
18.43
15.74
8.26
3.42
2.89
2.60
1.79
1.66
1.14
1.12
0.98
0.72
0.61
0.61
0.60
0.54
0.50
0.45
0.40
80.88
19.12
100.00
Performance Rights as at 13 August 2019
Name of Performance Holder
Performance Shares the Holder is Entitled to
Squirrel Holdings Australia Pty Ltd
C Class Performance Rights: 8,333,333
West Riding Investments Pty Ltd
C Class Performance Rights: 8,333,333
Total
16,666,666
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.
74 | Xref Limited | Annual Report 2019
Xref Limited | Annual Report 2019 | 75
Shareholder Information
Options as at 13 August 2019
Name of Option Holder
Brad Rosser
Brad Rosser
Nigel Heap
43 employees and contractors (under Employee Option Plan)
16 employees (under Employee Option Plan)
James Solomons (under Employee Option Plan)
James Solomons (under Employee Option Plan)
James Solomons (under Employee Option Plan)
31 employees and contractors (under Employee Option Plan)
Shares the Option
Holder is Entitled to
Exercise Price
Option Expiry Date
4,500,000
2,500,000
900,000
906,870
194,331
1,000,000
750,000
750,000
315,664
$0.70
25 November 2021
$0.70
25 November 2022
$0.70
25 November 2021
$0.585
3 July 2021
$0.66
$0.70
$0.70
$0.70
$0.66
5 February 2022
12 February 2021
12 February 2022
12 February 2023
1 August 2022
Five senior staff members (under Employee Option Plan)
2,500,000
$0.70
29 November 2022
Sharon Blesson (under Employee Option Plan)
Sharon Blesson (under Employee Option Plan)
Sharon Blesson (under Employee Option Plan)
Total
Voting Rights
300,000
300,000
300,000
15,216,865
$0.70
$0.70
$0.70
3 September 2021
3 September 2022
3 September 2023
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 converted and the Options are
exercised, respectively.
On-Market Buy-Back
There is no current on-market buy-back of shares in the Company.
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76 | Xref Limited | Annual Report 2019
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Shareholder InformationShareholder Information
Corporate Directory
PLACE OF BUSINESS
DIRECTORS
LEADERSHIP TEAM
AUDITORS
Brad Rosser
Chairman
Lee-Martin Seymour
Tim Griffiths
Tim Mahony
Nigel Heap
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
Canada
Suite 202
1 Adelaide Street East
Toronto, Ontario
Norway
Karl Johans Gate 16,
Oslo
United States
Unit 1401
700 Lavaca Street
Austin, Texas
New Zealand
Level 10
11 Britomart Place
Auckland
78 | Xref Limited | Annual Report 2019
Lee-Martin Seymour
Chief Executive Officer,
Co-Founder
Tim Griffiths
Chief Strategy Officer,
Co-Founder
James Solomons
Chief Financial Officer
Sharon Blesson
Chief Operating Officer
COMPANY SECRETARY
Robert Waring
Website
xref.com
Crowe Sydney
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)
xref.com
80
Xref Limited |Annual Report 2019
Financial Statements