2021
Annual Report
i
Xref Limited |Annual Report 2021
Contents
2021 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
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6
8
18
26
27
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74
75
80
84
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 (ASX:XF1), incorporated and domiciled in Australia. Its registered office and
principal place of business is:
Suite 13, 13 Hickson Road,
Dawes Point, New South Wales, Australia, 2000
A description of the nature of the Group’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 31 August 2021. The directors have
the power to amend and reissue the financial statements.
Xref Limited | Annual Report 2021 | 1
2021 Highlights
Total
Sales
Recognised
Revenue
2 | Xref Limited | Annual Report 2021
$15.38M
$9.81M
FY 2020
FY 2021
$12.56M
$8.03M
FY 2020
FY 2021
Increase
57%
“The value of Xref credits sold
in FY21 grew 34% year-on-
year, to $12.5 million, while
gross sales for RapidID saw
an incredible 513% growth, to
$2.9 million representing 19% of
Group Sales.”
Lee Seymour
CEO, Co-Founder, Exec Director
Increase
56%
“The steady increase in revenue
across each quarter - $2.0
million, $2.7 million, $3.5 million
and $4.4 million respectively -
saw Xref end the financial year
with a record Group revenue
result of $12.6 million.”
Lee Seymour
CEO, Co-Founder, Exec Director
2021 Highlights
Key Expense Changes
s
n
o
i
l
l
i
M
$
15
10
5
0
FY17
FY18
FY19
FY20
FY21
Wages
Rent/occupancy
Marketing
Group Profitability
8.05
8.03
12.56
0.08
2.98
4.85
s
n
o
i
l
l
i
M
$
-6.46
-8.91
-8.18
-10.06
FY17
FY18
FY19
FY20
FY21
Group Revenue
Group Net Profit
Decrease
30%
“During the course of the
financial year, operating
expenses across the group
reduced 30% when compared
to the 2020 Financial Year.”
Lee Seymour
CEO, Co-Founder, Exec Director
EBITDA
$1M
“Xref achieved its maiden
full year cash flow surplus in
FY21, as well as a maiden net
profit after tax of $78,094 and
EBITDA of $1.04m.”
Lee Seymour
CEO, Co-Founder, Exec Director
Xref Limited | Annual Report 2021 | 3
15-155-50
2021 Highlights
Group Sales Growth
s
n
o
i
l
l
i
M
$
FY17
FY18
FY19
FY20
FY21
RapidID
Xref
Group Revenue Growth
s
n
o
i
l
l
i
M
$
FY17
FY18
FY19
FY20
FY21
Xref.com
Channel
Partners
RapidID
Wholesale
Partners
Sales by Region/Segment
APAC
APAC 68.0%
NA 9.0%
68.0%
EMEA
EMEA 4.1%
RapidID 18.9%
4.1%
NA
RapidID
9.0%
18.9%
Sales | Xref Client Cohort
FY21
FY14-17 29.1%
FY20 13.7%
22.0%
FY20
FY18 18.7%
FY21 22.0%
13.7%
FY19
FY19 16.4%
FY18
FY14-17
16.4%
18.7%
29.1%
Sales | RapidID Client Cohort
FY21
FY18 37.7%
FY20 42.7%
6.9%
FY20
FY19 12.7%
FY21 6.9%
42.7%
FY19
FY18
12.7%
37.7%
Group Sales | Quarterly FY21
Group Revenue | Quarterly FY21
s
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$
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i
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$
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
APAC
EMEA
NA
RapidID
Xref
RapidID
4 | Xref Limited | Annual Report 2021
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Directors’ Report
Chairman’s Report
Presenting the sixth annual Xref report
I am delighted to welcome shareholders to the FY21 Xref annual
report.
This year has been marked by change and uncertainty globally.
But for Xref, it has been defined by the agility of its platform
and people, the ability of its leadership team to make difficult
decisions under pressure and an unwavering focus on the future,
despite the major distractions in the present.
The result is an incredible story not only of survival but of
embracing change and exceeding expectations. It is with great
pleasure that I share the results of the company’s first profitable
year.
Embracing change
Xref was able to weather the first few months of the COVID-19
storm and end FY20 in a strong position providing the platform
for the company’s success in FY21. This was down to the
work that the leadership team did in streamlining operations,
preserving cash and pivoting the focus of the marketing function
from sales support to online lead generation.
The wider team also demonstrated their ability to adapt to new
ways of working, embracing new approaches, getting on board
with the decisions and direction outlined by the leadership team
and delivering outstanding outcomes as a result.
The value of Xref credits sold in FY21 grew 34% year-on-year,
to $12.5 million, while gross sales for RapidID saw an incredible
498% growth, to $2.9 million representing 19% of Group Sales.
Newly acquired Xref clients accounted for 27% of Xref sales,
while 16% of Xref sales came from Xref’s international offices in
Europe and North America.
Group revenue was also at an all time high by the end of the
year, with Xref revenue totalling $11.6 million and RapidID’s
net revenue reaching $1.0 million. Xref revenue grew 49% and
RapidID’s net revenue grew 305%, year-on-year.
Recognising future market needs
The investment of time and resources that has been put into
the development of the future Xref platform this year, has
demonstrated the ability of the leadership team to see beyond the
immediate challenges in the market and recognise and realise the
potential future direction of the business.
By working with some of its largest global clients, Xref has been
able to expand the platform, to ensure that it continues to add
value and support clients’ future needs. The enhanced platform
will dramatically increase the global addressable market through
the provision of additional services, allowing for an entirely digital
new client acquisition process and adding a subscription-based
ARR to the current credit-based model.
Outlook
Xref enters the new year buoyed by the determination, focus and
agility that has carried it confidently to its goals of reaching cash
flow break even and profitability and will continue to drive it into
it’s exciting and prosperous future.
Xref has an impressive ability to continually delight existing
clients while acquiring new business, despite the uncertain
macroeconomic conditions faced. Now, the business finds itself
at a very exciting junction in its journey, where it is positioned well
for scale and evolution and with a community of forward thinking
organisations around the world, who are ready to come along
with it.
Exceeding expectations
This year was no different from any other for Xref in the sense that
record results were achieved every quarter. However, this year
that was true not only in terms of the performance of the core Xref
platform, but also the performance of acquired ID verification
platform, RapidID.
Brad Rosser,
Chairman
6 | Xref Limited | Annual Report 2021
Xref Limited | Annual Report 2021 | 7
Chariman’s Report
Chief Executive Officer Report
Coming out on top
At the end of FY20, we felt proud to have made it to the end of
the year without suffering too dramatically from the effects of
several market challenges, including the bushfires and floods in
Australia, and the COVID-19 pandemic globally. It’s fair to say that
we, like most businesses, had no idea how much longer we would
be facing the challenges of COVID-19.
A year later, we see many of the markets we operate in still going
in and out of lockdown, we are still unable to travel freely and we
still don’t know when we’ll see a return to “normal”but regardless
Xref is positioned to succeed.
The rise of verification
As a result of the many changes that COVID-19 has enforced,
a number of new ways of working have emerged. More
organisations now allow, or even encourage, remote working,
which means that while the domestic talent pool may have
dwindled due to a lack of migrant workers, employers are feeling
more comfortable hiring remote talent internationally.
With that trend, recruiters and employees have realised the
importance of candidate verification. New hires are now found,
attracted and recruited from afar, so it has never been more
important to find a way to confirm who they are, where they have
been and what they have done.
8 | Xref Limited | Annual Report 2021
RapidID, the identity verification tool we acquired in July 2019,
has also enabled us to be on the forefront of another, rapidly
growing industry. Many organisations that have always required
stringent verification, such as those in the financial services and
insurance sectors, are evolving to turn a traditionally slow process
into an efficient, tech-led step in their customer onboarding
process. But we are also now seeing the HR community
beginning to understand the use and value of ID checks.
A profitable year
Despite the turbulence of this financial year, we never lost sight
of the goal set in November 2019, to preserve cash and reach
cash flow break even. Although at times it felt less certain than
we had hoped, we are delighted to have ended the year cash flow
positive and profitable.
The steady increase in revenue across each quarter - $2.0 million,
$2.7 million, $3.5 million and $4.4 million respectively - saw Xref
end the financial year with a record Group revenue result of $12.6
million.
Xref has been able to dramatically reduce expenses by further
refining measures introduced during FY20, including:
• building efficiencies in the acquisition, onboarding, support
and growth of clients; and
• redirecting marketing efforts from sales support to online lead
generation.
Xref has also actively pursued a reduction in headcount, from 100
in December 2019 to 60 as at 30 June 2021.
Cash at bank on 30 June 2021 was $8.13 million, compared to
$2.87 million in June 2020, including receipt of net proceeds
from the new convertible debt facility of $4.7 million raised in July
2020. Xref achieved an operating cash surplus of $2.3 million for
the year and a maiden full year cash flow surplus of $0.26 million
after including all development costs, funding acquisition costs
and interest costs.
Reframing the business
As foreshadowed in FY20, this financial year was largely
defined by our transition from being sales-led to digital-first
and marketing-led. Market conditions have brought candidate
verification up the priority list for employers and potential clients
are now looking for our services online.
Our increased focus on Xref’s online identity and the wealth
of resources we have created, including thought leadership
content, case studies, guides, video interviews and webinars has
enabled us to get in front of employers seeking a more efficient
recruitment process.
We have seen a significant rise in inbound leads from, in the most
part, channel partner integrations, our improved global digital
strategy and the network effect generated through the numerous
sectors and global regions Xref is now used in.
Maintaining a market leading position
Research has shown that B2B buyers are becoming increasingly
reliant on reviews when considering a software purchase. Our
digital-first mentality has ensured an improved online brand
salience but we realise their buying journey doesn’t stop there.
After a prospect finds Xref through their search for candidate
verification tools, they will then do their homework and see how
Xref performs on various ratings pages.
We have increased our focus on review platforms, such as G2,
Capterra and Google My Business, to ensure we are aware of
our online perception, encouraging customers to share their
feedback and responding to every review posted. While it is nice
to acknowledge and thank positive reviewers, we are also careful
to quickly respond to any negative reviews. The reason for this is
two-fold, first to ensure we deal with any immediate issues the
reviewer is having and secondly so that if any potential clients
read that review, they can see we have a solution to the issue
raised.
We ended the financial year with a 4.7 star rating on G2, Google
My Business and Capterra, and a combined total of more than
800 reviews across the three platforms. We also maintained a
‘Leader’ position in the reference checking category on G2 for
three consecutive quarters leading into the end of the year.
A decade of trust
December 2020 marked the 10 year anniversary of Xref and the
year leading up to it happened to present the perfect platform to
showcase the fruits of our labour for the last decade.
In a turbulent and unpredictable market we demonstrated that
we could:
» Act quickly
From our sales and onboarding processes to our messaging
in the market, we proved we have the best product and
team to pivot and offer new and existing customers
solutions, support and information they need, quickly and
with ease.
» Scale
The Xref architecture has been built in a way that it is
extremely flexible and able to scale up and down to the
needs of different clients at any given time. While some
industries saw a complete hiring freeze, others had
to rapidly increase their recruitment. We were able to
confidently scale back and ramp up with our customers as
required.
» Offer unrivaled support
Xref has an incredible customer success team who are at
the heart of the Xref business. We offer great technology
with personable, passionate and knowledgeable support
and this is one of the reasons our clients love and stay
with us. This has never been more important than during
COVID-19, when processes had to be completed
efficiently, any issues needed to be resolved quickly and
account updates (such as adding new questionnaires or
topping up credits) were required at speed.
Xref Limited | Annual Report 2021 | 9
CEO Report
» Be trusted
Product development
Despite our impressive performance during otherwise difficult
times, we haven’t been resting on our laurels in the last year. Our
leadership, commercial, marketing, finance and development
teams have been working tirelessly to bring our next product
evolution to life.
Our new platform, which will become home to a number of
checks that span the length of the employee lifecycle, will
launch with exit checks for our largest customers in Q1 FY22.
This new offering will support our clients as they move out of
the COVID-19 fog, providing them with the tools they need to
understand the talent they are bringing into the business, how
they can encourage that talent to stay and, ultimately, why they
leave and how they can improve retention.
Outlook
I am incredibly proud of the many strategic decisions the team
made during FY21, which resulted in Xref emerging from the
pressures of the pandemic in our strongest position to date. Our
digital-first approach has been vital to our growth in FY21 and
Xref’s results not only reflect the critical nature and demand for
the Xref platform and services but demonstrate the brilliance and
professionalism of the Xref team.
We move into the new year with the foundations laid for
further success - we have a lean, productive team, world-
class leadership and an exciting new platform that tackles
very real problems in the market and delivers the convenience,
consistency and insights employers need in the future.
Lee-Martin Seymour,
Chief Executive Officer,
Co-Founder
Candidate verification is ultimately about trust - you need
to trust the partners you are bringing into your business
so you carry out the verification required. But you can only
be confident about the decisions you make if you trust
the processes you use to get there. Prior to 2020, we were
proud of the trust our customers had in our platform but in
the last financial year the type of organisations using Xref
has changed. The enterprise clients we had become used
to were joined by ‘essential services’, such as healthcare
and aged care providers. It was testament to the team and
platform that we became a critical tool for those hiring for
positions of trust during that time.
Leaning on leadership
This has been a year of difficult decisions caused by the most
challenging business environment. I am so proud we have
performed so well and none of it could have been achieved
without the support, guidance and expertise of the incredible
Xref leadership team.
Our CFO, James Solomons, CTO, Sharon Blesson, and Group
Marketing Director, Karina Guerra, were critical to our success
and I’m grateful for the leadership group’s response to the
circumstances. We collaborated, communicated clearly and
turned a crisis into a reframed opportunity. As a result, we
became marketing-led, achieved fiscal clarity and ensured
platform reliability, all of which were key to overall client retention,
acquisition and revenue growth.
Talent is in transition
We are on the cusp of a significant migration of talent. According
to the UN, there are currently 200 million people unemployed
globally. Some have been let go, some are the victims of
COVID-19 cuts and some have worked through COVID-19 and
are now on the lookout for something new. We also see many
“pandemic-proofers” who have demonstrated their ability to
apply their skills in new areas when their industry, organisation
and role have come to a standstill overnight.
Talent is on the move and employers are going to face an
extremely competitive market. Having the right processes in
place to make confident hiring decisions, quickly has never been
more important.
10 | Xref Limited | Annual Report 2021
CEO Report Xref Limited | Annual Report 2021 | 11
CEO 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 2021.
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
• Brad Rosser
• Nigel Heap
• Tim Griffiths (resigned 5 March 2021)
• Lija Wilson (appointed 2 June 2021)
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, It also embarked on significant product evolution, getting
the development of a new platform, including additional offerings for the HR industry, underway.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The profit for the Group after providing for income tax amounted to $78,084 (30 June 2020: a loss of $10,056,090).
Highlights of the financial year included:
• Success in a challenging market—COVID-19 continued to present challenges for businesses globally but Xref was able to thrive.
• Increased market demand—the conditions presented by COVID-19 resulted in an increased interest in verification tools that can
be used to make confident hiring decisions in a remote working environment.
• Record sales and revenue—a 56.70% increase in Group sales year-on-year and a 56.45% increase in Group revenue.
• A profitable result— having seen a cash burn rate of $5.2 million in FY20, Xref achieved its maiden full year cash flow surplus in
FY21. As well as a maiden net profit after tax of $78,084 and EBITDA of $1.04m.
• A leading online brand—4.7 star ratings across three major online review sites, G2, Google My Business and Capterra and a leading
position in G2’s reference checking category.
• New product development—the planning and initial development of a new Xref platform designed to meet emerging client needs
and significantly increase the addressable market.
Matters subsequent to the end of the financial year
With the fluctuating restrictions enforced by COVID-19 continuing to have an impact on businesses globally, and the virus itself still rife
in many markets, its ongoing effect is impossible to predict. As such, it is not viable to put a figure on the impact it has had following the
reporting date, particularly since Australian states have seen various levels of lockdown lifted and reintroduced during that time.
On 19 August 2021 the interest rate applicable to the debt funding of $5m provided by Pure Asset Management was renegotiated
downwards from 9.95% to 8.50%. This will result in an interest saving of $214,800 for the remainder of the term. In addition, Xref cannot
voluntarily repay all or any part of the loan during the period commencing from 19 August 2021 until and including the date that is 12
months after 19 August 2021. All other conditions under the debt funding agreement remain unchanged
No other matter or circumstances have arisen since the end of FY21, which could have had a notable impact on operations.
12 | Xref Limited | Annual Report 2021
Likely developments and expected results of operations
The Group anticipates continued growth driven by it’s existing reference checking services, as well as additional expected growth from
the new platform in development.
The success achieved during COVID-19 to date is expected to continue, given the strength of the company’s existing client portfolio,
along with the pipeline of opportunities established by marketing-led lead generation during FY22.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
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 21 years recruitment experience across
many geographic and market sectors. For 14 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.
Date of appointment as a director
18 January 2016
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Remuneration and Nomination Committee (ceased 8 July 2021)
Interests in shares:
31,730,108 ordinary shares
Interests in options:
None
Contractual rights to shares:
None (8,333,333 performance rights expired 20 January 2021)
Name:
Title:
Qualifications:
Experience and expertise:
Brad Rosser
Chairman
B.Com, 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-p
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.
Date of appointment as a director
18 August 2016
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee and Chairman of the Remuneration and Nomination
Committee
Interests in shares:
393,607
Interests in options:
7,000,000 options
Contractual rights to shares:
None
Xref Limited | Annual Report 2021 | 13
Directors’ Report
Name:
Title:
Nigel Heap
Non-Executive Director
Qualifications:
LLB, AMP
Experience and expertise:
Nigel Heap is the UK Ireland Managing Director, and Chairment of the Asia Pacific business,
of Hays plc, the leasding global professional recruitment group, and a member of the group’s
management board. He joined Hays in 1988 and over the last 21 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.
Date of appointment as a director
18 August 2016
Other current directorships:
Hays UK Ltd
Former directorships (last 3 years):
None
Special responsibilities:
Chairman of the Audit and Risk Committee and member of the Renumeration and Nomination
Committee
Interests in shares:
32,103 ordinary shares
Interests in options:
900,000 options
Contractual rights to shares:
None
Name:
Title:
Lija Wilson (commenced on 02 June 2021)
Non-Executive Director
Qualifications:
BCom
Experience and expertise:
Lija Wilson is the CEO and Founder of award-winning digital talent platform, Puffling, which
launched in 2017 to design solutions to support diverse hiring and flexible work best
practices. Prior to this, she held CMO-level roles at various organisations, including TEDx,
Qantas Group and Fairfax Media. She is also a global ambassador for Flexible Work Day.
Through her current work in Puffling, Lija has worked as a senior level career coach and
advisor, further crediting her passion for developing and mentoring top female talent,
particularly in tech.
Date of appointment as a director
2 June 2021
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Became a member of the Renumeration and Nomination Committee on 8 July 2021 and will
become a member of the Audit and Risk Committee on September 2021
Interests in shares:
None
Interests in options:
900,000 options
Contractual rights to shares:
Options are proposed to be issued, subject to approval at the 2021 AGM.
14 | Xref Limited | Annual Report 2021
Directors’ Report
Name:
Title:
Timothy Griffiths (Resigned on 05 March 2021)
Chief Strategy Officer
Qualifications:
MBA
Experience and expertise:
Tim Griffiths is a co-founder of Xref. Mr Griffiths, an MBA-qualified technologist, has 24 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.
Date of appointment as a director
18 January 2016
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Member of the Audit and Risk Committee
Interests in shares:
30,930,690 ordinary shares
Interests in options:
None
Contractual rights to shares:
None (8,333,333 performance rights expired 20 January 2021)
‘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, BCom, FCA, CTA, GAICD
James is a chartered accountant with over 20 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 brining with him to Xref
over 5 years of experiences 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 42 years of experience in financial and corporate roles, including more than 26 years in company secretarial and
director 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, Vectus Biosystems Limited and a director and Company Secretary of ASX-listed company R3D Resources Limited.
Chief Technology Officer
Mrs Sharon Blesson
Recognised for her ability to bridge the gap between IT and business, Sharon has a rich history of program management in both
delivery and operational environments. She has developed excellent leadership skills and expertise in managing diverse teams while
providing motivation and strategic vision. Prior to joining Xref, Sharon spent over a year as director of the project management office
at the Ivy College in Sydney, earlier she was a major corporate client manager at Sqware Peg, and also a IT&T Project Manager for
Xref Limited | Annual Report 2021 | 15
Directors’ Report
recruitment specialists Hays.
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 2021, and the number of meetings attended by each director were:
Board meeting held
12
Audit and Risk
Committee meeting
2
Remuneration and
Nomination Committee
meeting
0
Disclosure Committee
meetings
0
Directors
Attended
Attended
Attended
Attended
Lee-Martin Seymour *
Brad Rosser **
Nigel Heap ***
Lija Wilson ****
Timothy Griffiths*****
12
11
12
1
7
N/A
2
2
N/A
1
-
-
-
N/A
N/A
-
-
N/A
N/A
-
* Ceased to be a member of the Remuneration and Nomination Committee on 8 July 2021.
** Chairman of the board, and Chairman of the Remuneration and Nomination Committee.
*** Chairman of the Audit and Risk Committee.
**** Joined the Board on 2 June 2021, joined as a member of the Remuneration and Nomination Committee on 8 July 2021 and will
commence as a member of the Audit and Risk Committee in September 2021.
***** Ceased to be a Director on 5 March 2021
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, 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 information
16 | Xref Limited | Annual Report 2021
Directors’ Report • Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and appropriate for the
results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for
shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors (‘the Board’)
ensures that executive reward satisfies the following key criteria for good reward governance practices:
• Competitiveness and reasonableness
• Acceptability to shareholders
• Performance linkage / alignment of executive compensation
• Transparency
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its
directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration
philosophy is to attract, motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders’ interests. The Board have considered that it should seek
to enhance shareholders’ interests by:
• having economic profit as a core component of plan design
• focusing on sustained growth in shareholder wealth, 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
•
increasing return on assets as well as focusing the executive on key non-financial drivers of value
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 Nomination and Remuneration Committee. The Nomination and Remuneration Committee may,
from time to time, receive advice from independent remuneration consultants to ensure non-executive directors’ fees and payments are
appropriate and in line with the market. The chairman’s fees are determined independently to the fees of other non-executive directors
based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his
own remuneration.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general meeting. In
the Prospectus dated 23th December 2015, noted on page 18 the current maximum annual aggregate remuneration for directors
was shown as $200,000. This has changed and a resolution was passed at the 2016 AGM that the maximum aggregate cash-based
Xref Limited | Annual Report 2021 | 17
Directors’ Report
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 Group 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 Nomination
and Remuneration Committee based on individual and business unit performance, the overall performance of the consolidated entity
and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where
it does not create any additional costs to the consolidated entity and provides additional value to the executive.
The short-term incentives (‘STI’) program is designed to align the targets of the business units with the performance hurdles of
executives. STI payments 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.
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 Group’s direct competitors.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the Group consisted of the following directors of Xref Limited:
• Lee-Martin Seymour Managing Director & Chief Executive Officer
• Nigel Heap - Non-Executive Director
• Brad Rosser – Chairman
• Lija Wilson - Non-Executive Director
• Timothy Griffiths - Executive Director & Chief Strategy Officer
And the Key Management Personnel:
• James Solomons – Chief Financial Officer
• Robert Waring – Company Secretary
• Sharon Blesson – Chief Technology Officer
18 | Xref Limited | Annual Report 2021
Directors’ Report Short-term benefits
Post-
employment
benefits
Cash
salary and
fees
$
162,279
59,582
2,597
305,000
319,827
290,000
84,440
270,000
1,493,725
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,660
247
27,075
25,015
25,650
-
23,750
107,397
Long-term
benefits Share-based payments
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
-
-
-
-
-
-
-
-
-
7,849
2,539
-
-
170,128
67,781
-
394***
3,238
13,154
13,154
-
-
345,229
357,996
87,461
123,300
526,411
2,280
1,040
87,760
86,538
121,164
501,452
212,975
245,898
2,059,995
2021
Non-Executive Directors:
Brad Rosser
Nigel Heap
Lija Wilson*
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths**
Other Key Management
Personnel:
James Solomons
Robert Waring
Sharon Blesson
* Represents remuneration from 02 June 2021 to 30 June 2021
** Represents remuneration from 01 July 2020 to 05 March 2021
*** Options are proposed to be issued, subject to approval at the 2021 AGM
Value of shares issued to Directors & KMP in lieu of forgone salaries as part of an agreed four day working week (April 1st 2020 to June
30th 2020) due to COVID-19. This scheme was applied to all staff within the business. James Solomons and Sharon Blesson includes
value of shares awarded on 7 Sept 2020.
Xref Limited | Annual Report 2021 | 19
Directors’ Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
2020
Non-Executive Directors:
Brad Rosser
Nigel Heap
Tim Mahony*
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths**
Other Key Management
Personnel:
James Solomons
Robert Waring
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long service
leave
$
169,845
47,667
17,215
292,519
292,519
277,738
72,100
1,169,603
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,528
1,635
25,889
25,889
24,485
-
82,426
-
-
-
-
-
-
-
-
*Represents remuneration from 1 July 2019 to 22 November 2019
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Equity-
settled
options
$
Total
$
48,787
218,632
-
-
-
-
52,195
18,850
318,408
318,408
27,562
329,785
-
72,100
76,349
1,328,378
Name
2021
2020
2021
2020
2021
2020
Fixed remuneration
At risk - STI
At risk - LTI
Non-Executive Directors:
Brad Rosser
Nigel Heap
Timothy Mahony
Lija Wilson
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths
Other Key Management
Personnel:
James Solomons
Robert Waring
Sharon Blesson
20 | Xref Limited | Annual Report 2021
100%
100%
-
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Directors’ Report 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 ‘Group performance and link to remuneration’.
The maximum bonus values are established at the start of each financial year and amounts payable are determined in the final month of
the financial year by the Nomination and Remuneration Committee.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these
agreements are as follows:
Name:
Title:
Lee-Martin Seymour
Managing Director and Chief Executive Officer
Agreement commenced:
01 July 2019
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2021 of $285,000 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 13 weeks
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:
01 July 2019
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2021 of $270,000 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 3 weeks
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.
Sharon Blesson
Chief Technology Officer
Agreement commenced:
01 November 2019
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2021 of $250,000 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 3 weeks
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.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Xref Limited | Annual Report 2021 | 21
Directors’ Report
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year ended 30 June
2021 are set out below:
Name
Nigel Heap
Brad Rosser
Lee-Martin Seymour
Timothy Griffiths*
James Solomons
Sharon Blesson
Robert Waring
No. of Shares
Granted 2021
No. of Shares
Granted 2020
14,103
43,607
73,077
73,077
569,231
564,103
12,665
-
-
-
-
-
-
-
*Resigned on 05 March 2021
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.
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 2021 are set out below:
Name
James Solomons
Sharon Blesson
Robert Waring
Lija Wilson
Number of Options Granted during the year
Number of Options Vested during the year
2021
2,300,000
2,111,111
33,543
900,000*
2020
-
-
-
-
2021
2,300,000
2,411,111
33,543
-
2020
750,000
600,000
-
-
*Options are proposed to be issued, subject to approval at the 2021 AGM
22 | Xref Limited | Annual Report 2021
Directors’ Report 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:
Balance at the
start of the year
Received as part
of remuneration
Additions
Disposals/ other
Balance at the
end of the year
Ordinary shares
Nigel Heap
Brad Rosser
Lee-Martin Seymour
Timothy Griffiths*
James Solomons
Sharon Blesson
Robert Waring
*Resigned on 05 March 2021
Option holding
18,000
-
31,101,476
30,857,613
9,000
16,519
213,885
14,103
43,607
73,077
73,077
569,231
564,103
12,665
62,216,493
1,349,863
-
350,000
555,555
-
-
-
50,000
955,555
-
-
-
-
-
-
(200)
(200)
32,103
393,607
31,730,108
30,930,690
578,231
580,622
276,350
64,521,711
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 Group, 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
Nigel Heap
James Solomons
Sharon Blesson
Robert Waring
Lija Wilson
7,000,000
900,000
2,500,000
900,000
37,026
-
-
-
2,300,000
2,111,111
33,543
900,000*
11,337,026
5,344,654
-
-
-
-
-
-
-
-
-
(1,000,000)
-
-
-
7,000,000
900,000
3,800,000
3,011,111
70,569
900,000
(1,000,000)
15,681,680
*Options are proposed to be issued, subject to approval at the 2021 AGM
Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring of $84,440 (ex GST) were
made.
All transactions were made on normal commercial terms and conditions and at market rates.
Performance Rights
16,666,666 C Class Performance Rights expired on 20 January 2021 as the relevant Performance Milestone was not achieved.
This concludes the remuneration report, which has been audited.
Xref Limited | Annual Report 2021 | 23
Directors’ Report
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any
related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined
in note 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.
Rounding of amounts
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.
24 | Xref Limited | Annual Report 2021
Directors’ Report Corporate Governance
The Group’s Corporate Governance Statement and Appenix 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
www.xref.com/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
31 August 2021
Sydney
Brad Rosser
Chairman
31 August 2021
Sydney
Xref Limited | Annual Report 2021 | 25
Directors’ Report
Independence declaration
31 August 2021
The Board of Directors
Xref Limited
13/13 Hickson Street
Dawes Point
Sydney NSW 2000
Dear Board Members
Xref Limited
Crowe Sydney
ABN 97 895 683 573
Level 15 1 O’Connell Street
Sydney NSW 2000
Australia
Tel +61 2 9262 2155
Fax +61 2 9262 2190
www.crowe.com.au
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Xref Limited.
As lead audit partner for the audit of the financial report of Xref Limited for the financial year ended 30
June 2021, I declare that to the best of my knowledge and belief, that there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(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.
© 2021 Findex (Aust) Pty Ltd.
26 | Xref Limited | Annual Report 2021
Financial Statements
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2021
Revenue
Revenue
Total revenue
Expenses
Employee expenses
Overheads and administrative expenses
Depreciation
Impairment and amortisation
Total expenses
Operating profit (loss)
Other income
Loss before income tax
Income tax expense
Note
2021
$
2020
$
8
12,555,708
8,028,306
12,555,708
8,028,306
(8,838,979)
(12,612,388)
9
(3,852,277)
(5,395,134)
(379,983)
(667,655)
(60,223)
(1,134)
(13,131,462)
(18,676,311)
(575,754)
(10,648,005)
8
653,838
591,915
78,084
(10,056,090)
11
-
-
Profit (Loss) after income tax expense for the year attributable to the owners of Xref Limited
78,084
(10,056,090)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income (loss) attributable to the owners of Xref Limited
Earnings per share for profit (loss) from continuing operations attributable to the owners of Xref
Limited
Basic earnings per share
Diluted earnings per share
(100,116)
(100,116)
14,858
14,858
(22,032)
(10,041,232)
Cents
0.04
0.04
Cents
(5.82)
(5.82)
26
26
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
Xref Limited | Annual Report 2021 | 27
Statement of financial position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Capitalised commission
Prepayments
Total current assets
Non current assets
Rental bonds
Property, plant and equipment
Right of use assets
Intangibles
Total non current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Employee entitlements
Contingent consideration
Unearned revenue
Superannuation Payable
Total current liabilities
Consolidated
2021
$
2020
$
Note
12
13
14
15
16
17
18
20
19
21
8,131,072
2,021,145
1,031,498
2,868,794
1,374,769
1,011,918
492,416
566,089
11,676,131
5,821,570
54,143
266,060
127,316
2,875,582
3,323,101
14,999,232
70,254
314,475
440,172
1,825,074
2,649,975
8,471,545
1,732,787
1,620,099
636,425
439,695
-
336,689
533,832
30,240
8,799,293
7,847,799
165,243
171,163
11,773,443
10,539,822
The above statement of financial position should be read in conjunction with the accompanying notes.
28 | Xref Limited | Annual Report 2021
Financial Statements Statement of financial position continued
As at 30 June 2021
Non current liabilities
Financial liabilities
Employee entitlements
Contingent consideration
Total non current liabilities
Total liabilities
Net (liabilities)/assets
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
20
22
Consolidated
2021
$
4,048,950
185,666
-
4,234,616
2020
$
138,820
153,166
43,800
335,786
16,008,059
10,875,608
(1,008,827)
(2,404,063)
23
24
53,948,230
53,235,226
(20,939,822)
(21,410,328)
(34,017,235)
(34,228,961)
(1,008,827)
(2,404,063)
The above statement of financial position should be read in conjunction with the accompanying notes.
Xref Limited | Annual Report 2021 | 29
Financial Statements
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Xref Limited | Annual Report 2021 | 31
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Financial Statements
Statement of cash flows
For the year ended 30 June 2021
Cash flows from operating activites
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
Note
2021
$
2020
$
14,804,985
12,108,020
(12,494,391)
(19,791,253)
2,310,597
(7,683,233)
11,779
-
94,890
205,402
Net cash used in operating activities
28
2,322,373
(7,382,941)
Cash flows from investing activites
Payment for intangibles
Purchase of property, plant and equipment
Payments for purchase of business
Net cash used in investing activities
Cash flows from financing activites
Proceeds from issue of shares
Repayments of lease liabilities
Proceeds from borrowings
Borrowing transaction costs
Repayment of financial liabilities
Net cash used in financing activities
(1,110,732)
-
(19,501)
(64,676)
-
(583,944)
(1,130,233)
(648,620)
-
3,496,001
(348,566)
5,000,000
(209,744)
(371,552)
-
-
-
(631,585)
4,070,138
2,864,416
Net decrease in cash and cash equivalents held
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of financial year
5,262,278
(5,167,145)
2,868,794
12
8,131,072
8,035,939
2,868,794
The above statement of cash flows should be read in conjunction with the accompanying notes
32 | Xref Limited | Annual Report 2021
Financial Statements Notes to the financial Statements
Note 1. Reporting Entity
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 13, 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.
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
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.
Note 3. Significant Accounting Policies
The group 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.
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 31.
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.
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.
Xref Limited | Annual Report 2021 | 33
Note 3. Significant Accounting Policies continued
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
earnings as appropriate.
Interests in subsidiaries are held at cost less impairment in the Parent.
b. Foreign currency translation
The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation currency.
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 nonmonetary
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.
34 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 3. Significant Accounting Policies continued
The assets and liabilities of foreign operations, including any goodwill, are translated to AUDs at exchange rates at the reporting date.
The income and expenses of foreign operations, are translated to AUDs at exchange rates at the dates of the transactions.
Foreign currency differences are recognised on other comprehensive income, and presented in the foreign currency translation
reserve within equity.
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
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.
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 commission
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.
f. Trade creditors and other payables
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. Contract liabilities—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.
Xref Limited | Annual Report 2021 | 35
Notes to the Financial Statements
Note 3. Significant Accounting Policies continued
i.Property, 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.
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.
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 of their expected useful
lives as follows:
The depreciation rates used for each class of depreciable asset are shown below:
Office Furniture
Office Equipment
Computer Equipment
Office Fit Out
10-20 years
3-20 years
3-5 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.
j. Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asst is measured at cost, which comprises
the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net
of any lease incentives received, any initial direct costs incurred, and, expect where included in the cost of inventories, an estimate of
costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the
asst, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the
depreciation is over its estimated useful life, Right-of-use assets are subject to impairment or adjusted for any remeasurement of lease
liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12
months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
36 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 3. Significant Accounting Policies continued
k.Intangibles
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.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit,
being their finite life of 4 years.
Website
Significant costs associated with website development are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years.
Domain
Significant costs associated with domains are deferred and amortised on a straight-line basis over the period of their expected benefit,
being their finite life of 10 years.
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.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for impairment, or more
frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost leas accumulated impairment
losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Xref Limited | Annual Report 2021 | 37
Notes to the Financial Statements
Note 3. Significant Accounting Policies continued
l. Impairment of non financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use is the present value of the estimated
future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset
belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
m. Investment and other financial assets
Investments and other financial assts are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised
cost or fair value depending on their classifications. Classification is determined based on both the business model within which such
assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a
financial asset, it’s carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assts at
fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose
of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where
permitted. Fair value movement are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the Group intends to hold for the
foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The Group 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 Group’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.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss
allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event
that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk
has increased significantly, the loss allowance is based on the asset’s lifetime expected credit losses. The amount of expected credit
loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the
instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other
comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset’s
carrying value with a corresponding expense through profit or loss.
38 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 3. Significant Accounting Policies continued
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.
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.
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. Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the
lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a
change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty
of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding
rightof use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
p. 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.
Xref Limited | Annual Report 2021 | 39
Notes to the Financial Statements
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.
q. Revenue
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
Group Sales
The Group has two main sources of Sales. The sale of candidate referencing credits through Xref and the sale of ID verification checks
through RapidID.
For Xref sales, when customers use a credit the service has been performed. Revenue is recognised at the point in time when the
customer uses the service.
For RapidID sales, when customers take an ID Check 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.
40 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 3. Significant Accounting Policies continued
Other income
Other revenue is recognised when it is received or when the right to receive payment is established.
Government Grant—Covid-19 Subsidy
Government grant subsidies in relation to COVID-19 is recognised when it is received or when the right to receive payment is
established. These government grant income related to JobKeeper and Cash Boost payments.
r. 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.
s. 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.
t. 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.
Xref Limited | Annual Report 2021 | 41
Notes to the Financial Statements
Note 3. Significant Accounting Policies continued
u. 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.
v. 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.
w. 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.
x. Deficiency in net assets
The financial report is showing a deficiency of net current assets of $97,312 (2020: 4,718,252) and a deficiency of net assets of
$1,008,827 (2020: $2,404,063). The deficiency is correlated to the unearned revenue balance of $8,799,293 (2020: $7,847,799).
Nonetheless, the financial report has been prepared on the going concern basis which assumes that the company will be able to meet
its commitments, realise its assets and discharge its liabilities in the ordinary course of business.
This basis has been adopted by the directors of the company as they have:
• Prepared a cash flow forecast for the relevant period which includes financial year ended 30 June 2022 which indicates that the
Company will have sufficient cash flow to meet its obligations for the foreseeable future.
• The unearned revenue in its entirety is not refundable to customers. The portion refundable relates to the last month of sales which
approximates to $2 million.
Given the Directors expectations, the financial statements have been prepared on the going concern basis which contemplates that
the business will continue as normal and therefore realise its assets and extinguish its liabilities in the normal course of business.
y. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the profit or loss
over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not
incremental costs relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis
over the term of the facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting date.
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 2021.
42 | Xref Limited | Annual Report 2021
Notes to the Financial Statements 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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on
the Group based on known information. This consideration extends to the nature of the products and services offered, customers,
supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does
not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to
events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
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, historical collection rates, the impact of the Coronavirus (COVID-19)
pandemic and forward-looking information that is available. The allowance for expected credit losses, as disclosed in note 13, is
calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and
other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 3. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require
the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows. Refer to note 17 for further information.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised
in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be
exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In
determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to
exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of
the asset to the Group’s operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties;
existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it
is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant
change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future
lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the
Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use
asset, with similar terms, security and economic environment.
Xref Limited | Annual Report 2021 | 43
Notes to the Financial Statements
Note 5. Critical accounting judgements, estimates and assumptions continued
Employee benefits provision
As discussed in note 3, the liability for employee benefits expected to be settled more than 12 months from the reporting date are
recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the
reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and
inflation have been taken into account.
Share-based payment transactions
The Group 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.
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.
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.
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
There were no costs identified in the group in 2021 that were attributable to research and development costs.
44 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 6. Group Information
The preliminary consolidated financial statements of the Group include
Name
Xref Limited
Xref (AU) Pty Limited
Xref (UK) Limited
Xref Referencing (CA) Limited
Xref AS
Xref LLC
Xref (NZ) Limited
Rapid ID Pty Ltd
Principal place of business/ Country of
incorporation
Australia
Australia
United Kingdom
Canada
Norway
United State
New Zealand
Australia
2021
%
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
2020
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
During the last quarter of the 2020 financial year it was determined by the directors to close the Norway office and transfer management
of existing accounts and sales operations to the Europe head office based in London. The subsidiary that operated out of Oslo
Norway, Xref AS was wound up in accordance with Norwegian Corporations Law in June 2021. There has been no major impact on the
operations in Norway with sales continuing to be made to Norwegian businesses out of Xref UK.
Note 7. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into two operating segments based on differences in products and services provided: candidate
referencing and ID verification). 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 two business segments
Types of products and services
The principal products and services of each of these operating segments are as follows:
Xref
Rapid ID
Intersegment transactions
Candidate referencing
ID verification
Intersegment transactions were made at market rates. Candidate referencing and ID verification are complementary in nature and
intersegment transactions arise due to customer needs. Intersegment transactions are eliminated on consolidation.
Intersegment receivables, payables and loans
Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that
earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on
consolidation.
Xref Limited | Annual Report 2021 | 45
Notes to the Financial Statements
Note 7. Operating segments continued
Operating segment information
Revenue
Revenue from external customers
11,555,054
1,000,654
12,555,708
Consolidated 2021
Candidate
referencing
$
ID
verification
$
Total
$
Intersegment sales
Total earned revenue
Other revenue
Total segment revenue
Intersegment eliminations
Unallocated revenue:
Interest revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Intersegment eliminations
Unallocated assets:
Goodwill
Total Assets
Total assets includes:
Investments in subsidiaries
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
46 | Xref Limited | Annual Report 2021
4,628
-
4,628
11,559,682
1,000,654
12,560,336
612,662
29,397
642,059
12,172,344
1,030,051
13,202,395
-
-
(4,628)
583,757
453,202
11,779
13,209,546
1,036,959
(440,205)
11,779
(530,449)
78,084
-
78,084
16,321,739
2,015,808
18,337,547
(4,672,297)
1,333,986
14,999,236
4,672,297
-
4,672,297
14,469,238
1,542,378
16,011,616
(3,557)
16,008,059
Notes to the Financial Statements Note 7. Operating segments continued
Revenue
Revenue from external customers
Total earned revenue
Other revenue
Total segment revenue
Unallocated revenue:
Interest revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
Profit after income tax expense
Assets
Segment assets
Intersegment eliminations
Unallocated assets:
Goodwill
Total Assets
Total assets includes:
Investments in subsidiaries
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
Consolidated 2020
Candidate
referencing
$
ID
verification
$
7,781,197
7,781,197
534,745
8,315,942
247,109
247,109
12,016
259,125
(9,129,482)
(304,106)
Total
$
8,028,306
8,028,306
546,761
8,575,067
45,154
8,620,221
(9,433,588)
(667,656)
45,154
-
(10,056,090)
-
(10,056,090)
11,206,787
607,635
11,814,422
(4,676,863)
1,333,986
8,471,545
4,676,863
-
4,676,863
10,341,996
533,687
10,875,683
(75)
10,875,608
Xref Limited | Annual Report 2021 | 47
Notes to the Financial Statements
Note 7. Operating segments continued
Geographical information
Australia
Canada
United Kingdom
New Zealand
United States
Norway
Revenue from external customers Geographical non-current assets
2021
$
2020
$
2021
$
2020
$
9,724,103
7,257,970
3,136,185
2,370,839
719,695
683,142
548,509
407,665
1,011,173
1,020,215
417,595
-
299,153
281,201
180,547
269,683
6,051
318
-
-
8,817
636
-
-
12,555,708
9,814,713
3,323,101
2,649,975
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax assets, post-
employment benefits assets and rights under insurance contracts.
Note 8. Revenue
Revenue from contracts with customers
Sales Xref
Less adjustment for unearned revenue
Sales Rapid ID
Less cost of sales Rapid ID
Total revenue
Other revenue
Interest
Government subsidies
Other revenue
Consolidated
2021
$
2020
$
12,477,129
9,327,638
(922,075)
(1,546,441)
11,555,054
7,781,197
2,906,269
487,075
(1,905,615)
(239,966)
1,000,654
247,109
12,555,708
8,028,306
11,779
540,753
101,306
653,838
45,154
527,422
19,339
591,915
Total revenue and other income
13,209,546
8,620,221
48 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 8. Revenue continued
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Revenue from customers
Revenue
Geographical regions
Australia
Canada
United Kingdom
New Zealand
United States
Norway
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated 2021
Candidate
referencing
$
ID
verification
$
Total
$
11,555,054
1,000,654
12,555,708
11,555,054
1,000,654
12,555,708
8,732,109
991,995
9,724,104
719,695
674,483
1,011,173
417,594
-
-
8,659
-
-
-
719,695
683,142
1,011,173
417,594
-
11,555,054
1,000,654
12,555,708
10,719,123
1,000,654
11,719,777
835,931
-
835,931
11,555,054
1,000,654
12,555,708
Xref Limited | Annual Report 2021 | 49
Notes to the Financial Statements
Note 8. Revenue continued
Revenue from customers
Revenue
Geographical regions
Australia
Canada
United Kingdom
New Zealand
United States
Norway
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated 2020
Candidate
referencing
$
ID
verification
$
Total
$
7,781,197
247,109
8,028,306
7,781,197
247,109
8,028,306
6,155,195
247,109
6,402,304
509,032
342,772
452,158
161,446
160,594
-
-
-
-
-
509,032
342,772
452,158
161,446
160,594
7,781,197
247,109
8,028,306
7,305,986
247,109
7,553,095
475,211
-
475,211
7,781,197
247,109
8,028,306
There are no customers for the current financial year which are greater than 10% of total revenue.
50 | Xref Limited | Annual Report 2021
Notes to the Financial Statements
Note 9. Overheads and administrative expenses
Accounting and consulting fees
Auditing or reviewing the financial report
Directors Fees
Legal expenses deductible
Marketing fees
Consulting and professional fees
Share based payment
Administration expenses (other)
Foreign exchange loss
Operating lease payments
Administrative expenses
Auditors remuneration
Fees charged by Audit Firm
Financial statement audit and review
Note 10. Depreciation, amortisation and impairment expenses
Depreciation, amortisation and impairment expenses
Depreciation
Depreciation ROU Asset
Consolidated
2021
$
246,842
85,901
-
177,471
468,106
269,768
318,550
2,320,023
(137,340)
102,956
2020
$
320,160
90,797
12,675
122,652
862,200
440,765
130,662
3,014,063
89,692
311,468
3,852,277
5,395,134
2021
$
2020
$
85,901
90,797
2021
$
67,916
312,067
379,983
2020
$
99,811
567,844
667,655
Xref Limited | Annual Report 2021 | 51
Notes to the Financial Statements
Note 11. Income tax expense
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.
(a). Reconciliation of effective tax rate :
Profit (loss) before income tax expense
2021
$
2020
$
78,084
(10,056,090)
Tax at the statutory rate of 26% (2020: 27.50%)
20,302
(2,765,425)
Less tax effect of:
Deferred tax asset not recognised
Permanent differences
Adjustment for foreign tax rates
(211,501)
2,617,925
5,864
185,335
24,309
123,191
Income tax expense for the year
-
-
b. Deferred tax assets and liabilities
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 Group 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 $7,316,089 (2020:
$7,527,590).
Note 12. Current assets—cash and cash equivalents
Cash at bank and in hand
Rental Bonds
2021
$
2020
$
8,131,072
2,793,337
-
75,457
8,131,072
2,868,794
52 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 13. Current assets—trade and other receivables
Current
Trade receivables
Other receivables
Total current trade and other receivables
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year as uncollectable
Balance at end of the year
2021
$
2020
$
1,885,795
1,196,209
135,350
178,560
2,021,145
1,374,769
-
-
-
-
-
-
-
-
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.
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.
As at 30 June 2021, 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
2021
$
2020
$
1,848,329
1,131,724
21,449
16,017
64,485
-
1,885,795
1,196,209
Xref Limited | Annual Report 2021 | 53
Notes to the Financial Statements
Note 14. Current assets—Capitalised Commission
Capitalised Commission at cost Credit Sales
Capitalised Commission at cost Subscriptions
Capitalised Commission at cost People Search
2021
$
1,013,035
18,373
90
2020
$
990,155
21,723
40
1,031,498
1,011,918
(a). Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below:
Opening Balance
Additions
Recognition as expenses
Balancing adjustment due to forex
Closing balance
Note 15. Non current assets —property, plant and equipment
Office furniture at cost
Less: Accumulated depreciation
Office equipment at cost
Less: Accumulated depreciation
Computer equipment at cost
Less: Accumulated depreciation
Office fitout
Less: Accumulated depreciation
2021
$
1,011,918
1,159,554
(1,140,761)
787
2020
$
613,757
1,215,582
(770,926)
(46,765)
1,031,498
1,011,918
2021
$
96,918
(31,774)
65,144
146,264
(105,759)
40,505
2020
$
96,387
(24,651)
71,736
143,771
(93,525)
50,246
337,182
317,660
(238,684)
(189,541)
98,498
128,119
103,027
(41,114)
61,913
102,749
(38,375)
64,374
Total property, plant and equipment
266,060
314,475
54 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 15. Non current assets —property, plant and equipment continued
Reconciliations
Reconciliations of the carrying value at the beginning and end of the current and previous financial year are set out below:
Office Furniture
$
Office Fitout
$
Office
Equipment
$
Computer
Equipment
$
Year ended 30 June 2019
Additions
Disposals
Depreciation
Balance at 30 June 2020
Additions
Disposals
Depreciation
Balance at 30 June 2021
69,002
10,752
-
(8,018)
71,736
272
-
(6,864)
65,144
75,726
1,627
-
(12,979)
64,374
-
-
(2,461)
61,913
Note 16. Non current assets—right of use assets
Right of use assets—Land and Buildings
Less: Accumulated depreciation
Total
62,457
5,809
-
(18,020)
50,246
523
-
142,425
46,488
-
(60,794)
128,119
18,706
-
Total
$
349,610
64,676
-
(99,811)
314,475
19,501
-
(10,264)
(48,327)
(67,916)
40,505
98,498
266,060
2021
$
2020
$
860,792
1,496,169
(733,476)
(1,055,997)
127,316
440,172
Additions to the right-of-use assets during the year were $0
The Group leases land and buildings for its offices under agreements which have terms remaining of no longer than 0.5 years as at 30
June 2021. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
One lease was not renegotiated during the year resulting in a reduction of right of use assets.
Xref Limited | Annual Report 2021 | 55
Notes to the Financial Statements
Note 17. Non current assets—intangible assets
Goodwill
Less: Impairment
Website
Less: Accumulated amortisation
Patents, trademarks and other rights
Less: Accumulated amortisation
Licenses
Domain Names
Less: Accumulated amortisation
Software development
Consolidated
2021
$
2020
$
1,333,986
1,333,986
-
-
1,333,986
1,333,986
325,000
(53,722)
271,278
10,231
(2,267)
7,964
50,000
50,000
108,830
(5,638)
103,192
1,109,162
1,109,162
325,000
-
325,000
10,231
(1,134)
9,097
50000
50000
106,990
-
106,990
-
-
Total intangibles
2,875,582
1,825,073
56 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 17. Non current assets—intangible assets continued
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
Movements in carrying amounts of intangible assets
Patents,
trademarks
and other
rights
$
Licenses
$
Domain
Names
$
Software
Development
$
Website
$
Goodwill
$
Total
$
10,231
50,000
106,990
(1,134)
-
-
-
-
325,000
1,333,986
1,826,207
-
-
(1,134)
9,097
50,000
106,990
-
325,000
1,333,986
1,825,073
-
-
(1,133)
-
-
-
1,570
1,109,162
-
(5,368)
-
-
-
-
-
-
1,110,732
-
(53,722)
-
(60,223)
7,964
50,000
103,192
1,109,162
271,278
1,333,986
2,875,582
Consolidated
Balance at 1 July
2020
Amortisation
expense
Balance at 30 June
2020
Additions
Impairment of
assets
Amortisation
expense
Balance at 30 June
2021
Xref is preparing for the growth that is anticipated to come from millions of returning workers globally. Xref is working with some of its
largest global clients to expand the current platform and support their future requirements. The enhanced platform will dramatically
increase the global addressable market through the provision of additional services, allowing for an entirely digital new client acquisition
process and add a subscription-based ARR to the current credit-based model.
In addition RapidID is building a significant enhancement which will expand the capability of the existing platform.
As at 30 June the new products for both Xref and RapidID remained in development. After their launch during H1 FY22 the software will
be amortised over their respective effective lives.
Xref Limited | Annual Report 2021 | 57
Notes to the Financial Statements
Note 17. Non current assets—intangible assets continued
Impairment testing
Goodwill acquired through business combination has been allocated to the following cash-generating units:
RapidID
Consolidated
2021
$
1,333,986
1,333,986
2020
$
1,333,986
1,333,986
The recoverable amount of the consolidated entity’s goodwill has been determined as the higher of the asset’s value in use and its fair
value less cost of disposal using a discounted cash flow model, based on a 5 year projection period approved by management and the
board, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
The following key assumptions were used in the discounted cash flow model for RapidID:
• 17.5% post-tax discount rate;
• 23% per annum average projected revenue growth rate;
• 4% per annum average improvement in gross margin;
• 14% per annum average increase in operating costs and overheads;
• 2.5% terminal value growth rate.
The discount rate of 17.5% post-tax reflects management’s estimate of the time value of money and the Group’s weighted average cost
of capital adjusted for RapidID, the risk free rate and the volatility of the share price relative to market movements.
Management have estimated a 23% growth in accordance with the acquisition strategy and have no reason to revise this estimation
based on current performance.
Synergies achieved following the acquisition of RapidID combined with cost efficient customer acquisition strategies has result in the
operational costs budgeted initially being lower than forecast
There were no other key assumptions for RapidID.
Based on the above, the recoverable amount of RapidID exceeded the carrying amount by $1.18m.
Sensitivity
As disclosed in note 5, the directors have made judgements and estimates in respect of impairment testing of goodwill. Should these
judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows:
• Sales would need to decrease by more than14.2% over the forecast period for RapidID before goodwill would need to be impaired,
with all other assumptions remaining constant.
• The discount rate would be required to increase by 1.91% for RapidID before goodwill would need to be impaired, with all other
assumptions remaining constant.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount of RapidID’s goodwill is
based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount.
58 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 18. Current liabilities—trade and other payables
Trade payables
GST payable
Accrued salaries, wages and related costs
Non Trade payables and accrued expenses
Note
2021
$
471,405
516,614
364,835
379,933
2020
$
384,362
211,715
142,182
881,840
1,732,787
1,620,099
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 19. Current liabilities —employee entitlements
Annual leave
2021
$
2020
$
439,695
533,832
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 20. Current liabilities—financial liabilities
Current
Lease Liability
Borrowing—Pure Asset Management (a)
Total current borrowings
Non-current
Lease Liability
Borrowing—Pure Asset Management (a)
Total non-current borrowings
Total borrowings
2021
$
138,925
497,500
636,425
2020
$
336,689
-
336,689
2021
$
2020
$
3,072
138,820
4,045,878
4,048,950
-
138,820
4,685,375
475,509
Xref Limited | Annual Report 2021 | 59
Notes to the Financial Statements
Note 20. Current liabilities—financial liabilities continued
a. Reconciliation
Loan Facility
Fair value of warrants
Transaction Cost
Amortisation of finance cost
Repayment of contractual payment
Closing Balance
Note
2021
$
5,000,000
(385,714)
(209,745)
4,404,541
510,388
(371,551)
4,543,378
The Pure Asset loan facility over a 4 year term with a 9.95% interest rate, interest payable every 3 months. Transaction costs are costs
that are directly attributable to the loan and include loan origination fees, legal fees, and warrants. 14,285,714 detached warrants were
issued to Pure on 31/07/2020 with an exercise price of $0.35 each. These have been included in transaction costs and have been
valued using a Black-Scholes option pricing model. The balance of unamortised transactions cost of $595,458 is offset against the
borrowings of $5,000,000. The security of the facility is a first-ranking general security over all assets of Xref Limited and its subsidiaries.
The Group is in compliance with its loan covenants.
Note 21. Current liabilities—Unearned Revenue
2021
$
2020
$
7,847,799
6,262,763
12,477,129
1,011,261
9,325,579
1,881,476
(11,091,879)
(8,651,412)
(1,474,436)
(1,011,261)
922,075
1,547,525
13,426
15,993
38,595
-
8,799,293
7,847,799
Unearned Revenue
Balance brought forward
Unearned revenue movement
Credits sold
Add: Opening conditional credits
Less: Usage
Less: Closing conditional credits
Opening balance revaluation due to forex
Unearned revenue – Rapid ID
Total
60 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 21. Current liabilities—Unearned Revenue continued
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.
Note 22. Non current liabilities—Employee entitlements
Long service leave
Note 23. Equity—issued capital
2021
$
2020
$
185,666
153,166
Ordinary shares—fully paid
182,309,247
178,055,751
53,948,230
53,235,226
2021
Shares
2020
Shares
2021
$
2020
$
Balance
1 July 2019
165,578,370
-
48,832,200
Date
Shares
Issued price/
exercise price
$
Total
$
Issued for acquisition of Rapid ID
Issued under share based remuneration
Issued for cash
Capital raising costs
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
1,583,442
300,000
10,593,939
-
30 June 2020
178,055,751
2,878,496
300,000
1,000,000
75,000
0.57
0.46
0.33
-
-
0.18
0.10
0.15
0.20
900,000
138,000
3,496,000
(130,974)
53,235,226
517,764
30,240
150,000
15,000
30 June 2021
182,309,247
-
53,948,230
Xref Limited | Annual Report 2021 | 61
Notes to the Financial Statements
Note 23. Equity—issued capital continued
Xref issued 2,878,496 shares at $0.18 per share to employees on 8 August 2020 and directors on 12 August 2020, as remuneration for
forgone salaries during the period 1 April 2020 and 30 June 2020.
Xref issued 300,000 shares at $0.185 per share to Ashley Hoey, founder of Xref’s wholly owned subsidiary, RapidID. These shares
had been issued in accordance with his employee contract, which stipulated that the shares be issued on the first anniversary of his
commencement date with Xref. These shares are subject to escrow, in accordance with his contract for 12 months from the date of
issue.
Xref issued 1,000,000 shares at $0.15 per share to the Chief Financial Officer (500,000 shares) and Chief Technology Officer (500,000
shares), as a bonus in accordance with their employment contracts.
Xref issued 75,000 shares at $0.20 to the General Manager – Global Sales as part of his remuneration compensation.
Capital risk management
The Group’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 Group may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the
current company’s share price at the time of the investment. The Group 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 Group is in compliance with its loan covenants and expects to meet all covenants at the next review. The capital risk management
policy remains unchanged from the 30 June 2021 Annual Report.
Note 24. Equity—other equity reserves
Foreign currency reserve
Options reserve
Consolidation reserve
Warrants
Foreign Currency Reserve
2021
$
(461,745)
1,982,030
2020
$
(361,629)
1,797,122
(22,845,821)
(22,845,821)
385,714
-
(20,939,822)
(21,410,328)
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to
Australian dollars.
62 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 24. Equity—other equity reserves continued
a). Share option reserve
At 30 June 2017
Issue Date
7/12/2016
Expiry Date
25/11/2022
At 30 June 2017
7/12/2016
25/11/2021
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
22/09/2017
22/09/2017
22/03/2018
3/07/2021
3/07/2021
5/02/2022
22/03/2018
12/02/2021
22/03/2018
12/02/2022
22/03/2018
12/02/2023
4/12/2018
4/12/2018
4/12/2018
4/12/2018
3/09/2021
3/09/2022
3/09/2023
1/08/2022
4/12/2018
29/11/2022
Closing Balance
30/06/2020
Average exercise
price in $A per
share
$0.70
$0.70
$0.59
$0.58
$0.66
$0.70
$0.70
$0.70
$0.70
$0.70
$0.66
$0.66
$0.70
Options
2,500,000
5,400,000
746,025
95,390
187,661
1,000,000
750,000
750,000
300,000
300,000
300,000
315,664
Option Reserve
$
357,000
646,920
166,289
21,444
19,667
69,670
69,635
84,022
20,730
28,620
32,850
27,275
2,500,000
253,000
15,144,740
1,797,122
Xref Limited | Annual Report 2021 | 63
Notes to the Financial Statements
Note 24. Equity—other equity reserves continued
Issue Date
Expiry Date
At 30 June 2017
7/12/2016
25/11/2022
At 30 June 2017
7/12/2016
25/11/2021
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
22/09/2017
22/09/2017
22/03/2018
3/07/2021
3/07/2021
5/02/2022
22/03/2018
12/02/2022
22/03/2018
12/02/2023
4/12/2018
4/12/2018
4/12/2018
4/12/2018
3/09/2021
3/09/2022
3/09/2023
1/08/2022
4/12/2018
29/11/2022
20/07/2020
15/01/2024
20/07/2020
15/01/2024
20/07/2020
15/01/2024
7/09/2020
15/01/2024
7/09/2020
15/01/2024
14/06/2021
14/06/2024
14/06/2021
14/06/2025
14/06/2021
14/06/2026
Average exercise
price in $A per
share
$0.70
$0.70
$0.59
$0.58
$0.66
$0.70
$0.70
$0.70
$0.70
$0.66
$0.66
$0.70
$0.35
$0.35
$0.35
$0.18
$0.18
$0.35
$0.35
$0.35
Options
2,500,000
5,400,000
545,814
95,390
90,021
750,000
750,000
300,000
300,000
300,000
224,255
2,500,000
2,319,336
300,000
33,543
2,000,000
2,000,000
300,000*
300,000*
300,000*
Option Reserve
$
357,000
646,920
121,662
21,444
9,434
69,635
84,023
20,730
28,620
36,570
22,358
253,000
71,899
9,300
1,040
114,000
114,000
395
-
-
Closing Balance
30/06/2021
21,308,359
1,982,030
Options Reserve
During the year ended 30/06/2021, 389,260 options lapsed and no options were exercised.
On 20 July 2020, 2,931,099 options were issued to 50 eligible participants under the terms of the Employee Option Plan. Of these,
300,000 options were issued to the COO, and 33,543 were issued to the Company Secretary. These options vest on 15/01/21 and
expire on 15/01/24. Prior to 30/06/21, 278,200 options were cancelled due to termination.
On 7 September 2020, 2,000,000 options were issued to the CFO, and 2,000,000 options were issued to the COO under the terms of
Xref’s Employee option plan. These options vested on 07/09/20 and expire on 15/01/24.
On 6 November 2020, 107,143 options were issued to the General Manager – Global Sales as part of his remuneration compensation.
The options vest on 01/05/21 and will expire on 01/05/24. Prior to 30/06/21, all 107,143 options were cancelled due to termination.
*On 14 June 2021, 300,000 options were issued to Lija Wilson on her appointment to the Board of Directors. 300,000 further options
will be issued on the 1st anniversary of her appointment, and a further 300,000 options will be issued on the 2nd anniversary of her
appointment. Each parcel is exercisable during the period commencing on the date of issue and expiring on the third anniversary of the
date of issue. The options will have an exercise price of $0.35. Options are proposed to be issued, subject to approval at the 2021 AGM.
64 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 24. Equity—other equity reserves continued
Options vested and therefore exercisable
Expiry Date
2021
2020
Options Vested – Nigel Heap
Options Vested – Brad Rosser
Options Vested – James Solomons
Options Vested – James Solomons
Options Vested – James Solomons
Options Vested – James Solomons
Options Vested – Employees and Contractors
Options Vested – Employees and Contractors
Options Vested – Employees and Contractors
Options Vested – Sharon Blesson
Options Vested – Sharon Blesson
Options Vested – Sharon Blesson
Options Vested – Sharon Blesson
Options Vested – Senior Staff
Options vested – Robert Waring
Options vested – Employees
25/11/2021
900,000
900,000
25/11/2021
7,000,000
7,000,000
-
1,000,000
12/02/2021
12/02/2022
12/02/2023
750,000
750,000
15/01/2024
2,300,000
03/07/2021
05/02/2022
01/08/2022
30/09/2021
03/09/2022
03/09/2023
641,204
90,021
224,255
300,000
300,000
300,000
15/01/2024
2,111,111
750,000
750,000
-
841,415
187,661
315,664
300,000
300,000
-
-
29/11/2022
2,500,000
2,500,000
15/01/2024
33,543
15/01/2024
2,208,225
-
-
20,408,359
14,844,740
The weighted average share price for the current financial year was $0.22. (2020: $0.234).
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.
Warrant reserve
In conjunction with the facility agreement being signed on 31 July 2020, a warrant deed was also signed with Pure Asset Management
on the same date (note 7). 14,285,714 detached warrants were issued to Pure Asset Management with an exercise option of $0.35 each
exercisable within the next 4 year period. The fair value of the warrants was determined using the black scholes methodology with a
volatility rate of 62% and a grant date share price of $0.13. The fair value of the warrants as disclosed per the financials is $385,714.
Note 25. Equity—dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Xref Limited | Annual Report 2021 | 65
Notes to the Financial Statements
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 a profit for the year ended 30 June 2021 and a loss for the year ended 30 June 2020. The effect of including the
share options in the calculation would be anti dilutive. Hence the diluted earnings per share is the same as the basic earnings per share.
The following reflects the income and share data used in the basic and diluted EPS computations
Profit (Loss) after income tax attributable to the owners of Xref Limited
2021
$
2020
$
78,084
(10,056,090)
Weighted average number of ordinary shares used in calculating basic earnings per share
181,978,936
172,871,318
Weighted average number of ordinary shares used in calculating diluted earnings per share
202,917,529
172,871,318
Basic earnings per share
Diluted earnings per share
Note 27. Financial instruments
a. Classification of financial instruments
Cents
0.04
0.04
Cents
(5.82)
(5.82)
The carrying amounts presented in the statement of financial position relate to the following categories of financial assets and liabilities
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
8,185,215
2,021,145
10,206,360
-
-
-
-
-
-
-
-
-
-
-
-
8,185,215
2,021,145
10,206,360
1,898,030
1,898,030
4,685,376
4,685,376
6,583,406
6,583,406
Group 2021
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Financial liabilities
Total
66 | Xref Limited | Annual Report 2021
Notes to the Financial Statements
Note 27. Financial instruments continued
Group 2020
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Financial liabilities
Total
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
2,868,794
1,374,769
4,243,563
-
-
-
-
-
-
-
-
-
Total
2,868,794
1,374,769
4,243,563
-
-
-
1,791,263
1,791,263
475,509
475,509
2,266,772
2,266,772
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 has no significant concentration of risk in relation to cash and cash equivalents, trade debtors and other financial assets.
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 13.
ii. Liquidity risk
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 expenses decreased by 30% compared to 2020, and revenue increased by 56% compared to 2020. The raise
of debt funding combined with ongoing strong cost control is enabling adequate management of liquidity risk.
Xref Limited | Annual Report 2021 | 67
Notes to the Financial Statements
Group 2021
Non-derivative
financial liabilities
Trade creditors and
other payables
Superannuation
payable
Financial liabilities
Group 2020
Non-derivative
financial liabilities
Trade creditors and
other payables
Superannuation
payable
Note 27. Financial instruments continued
All amounts shown as current financial liabilities are expected to be paid on demand and without interest. The Group’s financial liabilities
have contractual maturities (including interest payments where applicable) as summarised below:
Contractual cash-flow maturities
Carrying
amounts
Total
contractual
cash-flows
0-6 months
6-12 months
1 - 2 years
2-5 years
Later than 5
years
-
-
-
1,732,787
1,732,787
1,732,787
165,243
165,243
165,243
-
-
-
-
-
-
-
-
-
4,577,159
6,617,089
250,795
246,705
497,500
5,622,089
-
-
-
-
-
Total
6,475,189
8,515,119
2,148,825
246,705
497,500
5,622,089
Contractual cash-flow maturities
Carrying
amounts
Total
contractual
cash-flows
0-6 months
6-12 months
1 - 2 years
2-5 years
Later than 5
years
-
-
-
1,620,099
1,620,099
1,620,099
171,164
171,164
171,164
Financial liabilities
475,509
475,509
475,509
Total
2,266,772
2,266,772
2,266,772
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.
iv. Foreign exchange risk
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.
68 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 27. Financial instruments continued
The exposure to currencies of the Group is as follows:
Canadian Dollars
UK Pound Sterling
Norwegian Krone
New Zealand Dollars
United States Dollar
Total
2021
$
343,684
128,279
-
1,204,091
540,635
2,216,689
2020
$
130,958
103,130
74,723
279,411
164,724
752,946
The potential impact on the bank accounts, net deficits and equity movements in foreign currency exchange rates (calculated by
applying the change in foreign exchange rate to foreign currencies held at balance date) is indicated below:
Potential Foreign Exchange Rate Fluctuation
Impact on valuation of holding in:
Canadian Dollars
UK Pound Sterling
New Zealand Dollar
United States Dollar
Total impact of potential change in exchange rate
Foreign exchange risk
5%
$
17,184
6,414
60,205
27,032
110,835
10%
$
34,368
12,828
20%
$
68,737
25,656
120,409
240,818
54,064
221,669
108,127
443,338
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 Zeland 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 2021 – Group
Australia
United
Kingdom
Canada
Norway
New Zealand
United States
Financial Assets
7,569,100
194,303
Financial Liabilities
2,157,948
40,249
442,033
208,583
Net statements of financial
position exposure
5,411,152
154,054
233,450
-
-
-
1,317,354
602,428
127,675
-
1,189,679
602,428
Xref Limited | Annual Report 2021 | 69
Notes to the Financial Statements
Note 27. Financial instruments continued
Long-term exposure
30 June 2021 – Group
Australia
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
34,650
4,045,879
4,080,529
United
Kingdom
-
-
-
Canada
Norway
New Zealand
United States
19,493
3,071
22,564
-
-
-
-
-
-
-
-
-
Short-term exposure
30 June 2020 – Group
Australia
United
Kingdom
Canada
Norway
New Zealand
United States
Financial Assets
3,189,920
117,939
Financial Liabilities
1,599,080
79,774
141,051
248,804
74,723
-
439,116
125,568
166,515
-
Net statements of financial
position exposure
1,590,084
38,165
(107,753)
74,723
313,548
166,515
Long-term exposure
30 June 2020 – Group
Australia
United
Kingdom
Canada
Norway
New Zealand
United States
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
50,948
33,768
17,180
-
-
-
63,351
105,052
(41,701)
-
-
-
-
-
-
-
-
-
Foreign exchange risk
Sensitivity analysis
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 2021 (2020: 3%).
The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the previous 12
months.
Group
2021
2020
Profit for the
year
Equity
Profit for the
year
Equity
3% (2020: 3%) increase in AUD against foreign currencies
59,349
(1,010,926)
(10,142,335)
(2,444,029)
3% (2020: 3%) decrease in AUD against foreign currencies
122,958
(1,006,850)
(10,007,031)
(2,366,425)
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.
70 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 27. Financial instruments continued
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.
Note 28. Cash Flow Information
(a). Reconciliation of result for the year to cashflows from operating activities
Reconciliation of net income to net cash provided by operating activities:
Operating profit/ (loss)
Non cash flows in profit:
Unearned income
Shares based payments
Options expense
Foreign exchange
Depreciation, amortisation and impairment
Interest expense on borrowing
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
(Increase)/decrease in prepayments
(Increase)/decrease in contract assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Net cash from (used) in operating activities
Note 29. Contingencies
2021
$
2020
$
78,084
(10,056,090)
922,076
686,196
318,550
(117,133)
440,206
525,442
(646,375)
16,111
73,672
(19,583)
106,767
(61,640)
1,547,442
-
130,611
82,498
667,656
-
883,858
39,503
(105,445)
(398,161)
(414,054)
239,241
2,322,373
(7,382,941)
In the opinion of the Directors, the Company did not have any contingent assets or liabilities at 30 June 2021. Prior year contingent
consideration relating to the purchase of Rapid ID is no longer payable as Ash Hoey resigned during the financial year.
Xref Limited | Annual Report 2021 | 71
Notes to the Financial Statements
Note 30. Related Parties
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. The following transactions were carried out with related parties
a. Purchase of services
Key management personnel
Total
b. Other related party balances
2021
$
84,440
84,440
2020
$
230,802
230,802
Other related party balances Loans to directors for the year ended 30 June 2021 amounted to $0 (2020: $0).
c. Key management compensation see information below
Short term employee benefit
Post employment benefits
Share based payments
Total
2021
$
2020
$
1,493,725
1,169,639
107,397
458,874
82,427
76,349
2,059,996
1,328,415
72 | Xref Limited | Annual Report 2021
Notes to the Financial Statements Note 31. Parent entity
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
Statement of Financial Position
Assets
Total non current assets
Total Assets
Liabilities
Total current liabilities
Total non-current liabilities
Total Liabilities
Equity
Issued capital
Reserves
Retained profits
Total Equity
2021
$
2020
$
(284,684)
(284,684)
(130,661)
(130,661)
35,788,942
34,730,398
35,788,942
34,730,398
-
-
-
30,240
43,800
74,040
53,948,230
53,235,227
2,367,744
1,797,122
(20,527,032)
(20,375,991)
35,788,942
34,656,358
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 2020 or 2021.
Contingent liabilities
The parent entity had no contingent liabilities in 2021.
Capital commitments Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment in 2021 and 2020
Note 32. Events Occurring After the Reporting Date
With the fluctuating restrictions enforced by COVID-19 continuing to have an impact on businesses globally, and the virus itself still rife
in many markets, its ongoing effect is impossible to predict. As such, it is not viable to put a figure on the impact it has had following the
reporting date, particularly since Australian states have seen various levels of lockdown lifted and reintroduced during that time.
On 19 August 2021 the interest rate applicable to the debt funding of $5m provided by Pure Asset Management was renegotiated
downwards from 9.95% to 8.50%. This will result in an interest saving of $214,800 for the remainder of the term. In addition, Xref cannot
voluntarily repay all or any part of the loan during the period commencing from 19 August 2021 until and including the date that is 12
months after 19 August 2021. All other conditions under the debt funding agreement remain unchanged
No other matter or circumstances have arisen since the end of FY21, which could have had a notable impact on operations.
Xref Limited | Annual Report 2021 | 73
Notes to the Financial Statements
Director’s Declaration
The directors of the Company declare that:
1. the financial statements and notes for the year ended 30 June 2021 are in accordance with the Corporations Act 2001 and
a. comply with Accounting Standards, which, as stated in basis of preparation Note 2 to the financial statements, constitutes explicit
and unreserved compliance with International Financial Reporting Standards (IFRS); and
b. give a true and fair view of the financial position and performance of the consolidated group;
2. the Chief Executive Officer and Chief Finance Officer have given the declarations required by Section 295A that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with section 286 of the
Corporations Act 2001;
b. the financial statements and notes for the financial year comply with the Accounting Standards; and
c. the financial statements and notes for the financial year give a true and fair view.
3. In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable with the continuing support of creditors.
At the date of this declaration, there are reasonable grounds to believe that the companies which are party to this deed of cross
guarantee will be able to meet any obligations or liabilities to which they are, or may become subject to, by virtue of the deed.
This declaration is made in accordance with a resolution of the Board of Directors.
Lee-Martin Seymour
Managing Director
31 August 2021
Sydney
Brad Rosser
Chairman
31 August 2021
Sydney
74 | Xref Limited | Annual Report 2021
Crowe Sydney
ABN 97 895 683 573
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 2021, 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 2021 and of its financial
performance for the year then ended;
(b) and 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 (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We 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.
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.
© 2021 Findex (Aust) Pty Ltd.
Xref Limited | Annual Report 2021 | 75
Independent Auditor’s Report
Xref Limited
Key Audit Matter
How we addressed the Key Audit Matter
Software Development Costs
As per Note 17, the Group has capitalised software
development costs of $1,109,162 (2020: $NIL) in
accordance with the requirements of AASB 138
Intangible Assets. The capitalised development costs
are inclusive of external costs of $368,346, being use
of specialists, as well as internal costs (wages) of
$740,816 primarily developers employed by Xref
Limited.
We have determined this to be a key audit matter
because of the detailed recognition criteria which
needs to be satisfied to capitalise development costs.
We critically analysed management’s assessment in
accordance with AASB 138 Intangible Assets,
including performing the following procedures:
a) Reviewed documentation produced by
Management which outlined the nature of
the development projects, the benefits to the
business that the projects would achieve
and the timeline for the projects and their
introduction to the market.
b) Discussed with Management and certain
employees their role in the development
projects to determine the reasonableness of
their input and work performed in order to
confirm criteria was satisfied to capitalise
certain internal (wage) costs.
c) Obtained managements reports, along with
timesheets in relation to the internal payroll
costs capitalised. Performed detailed tests
verifying the amounts capitalised in
comparison to the work performed as
recorded in timesheets.
d) Obtained supporting documentation in
relation to external costs capitalised to
ensure the scope of work performed by
experts was in relation to the development of
software.
e) Confirmed with management that
consideration of redundant technology has
been written off.
f) Evaluated costs capitalised against the
requirements of AASB 138 ensuring the
criteria for development was satisfied and
any research was expensed in the period.
Goodwill Impairment
The acquisition of Rapid ID resulted in a recognition
of Goodwill on consolidation of $1,333,986 as per
Note 17. The Goodwill represents the expected
synergies from merging Rapid ID with Xref along with
the significant opportunity to increase Rapid ID’s
revenue through Xref’s client base.
We obtained management’s discounted cashflow
forecast for the cash generating unit Rapid ID Pty
Limited, critically evaluated the key assumptions and
estimates used which have been disclosed in Note
17, to ascertain impairment, including performing the
following procedures:
As per the requirements of AASB 136 Impairment of
Assets, an annual review of Goodwill for the cash
generating unit (CGU) Rapid ID Pty Limited was
performed based on a value in use calculation.
Given the materiality of this item and the use of
assumptions in the value in use calculation we have
determined this to be a key audit matter.
a) Discussed with management the basis for
the significant assumptions and inputs used
in the value in use calculation as provided by
management and its external expert and
challenged its appropriateness. Additionally,
assessed the expert’s qualifications to
provide such input.
© 2021 Findex (Aust) Pty Ltd
76 | Xref Limited | Annual Report 2021
www.crowe.com.au
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Independent Auditor’s Report
Xref Limited
Key Audit Matter
How we addressed the Key Audit Matter
Going Concern Assessment
The Group had a net deficiency in current assets
$97,312 (2020: $4,718,252) and a deficiency in net
assets of $1,008,827 (2020: $2,404,063). For this
reason, we determined this to be a key audit matter.
The deficiency is a direct result of unearned revenue
$8,799,293 (2020: $7,847,799).
Notwithstanding the net current asset deficiency and
net asset deficiency, the financial statements have
been prepared on a going concern basis based on
the actions undertaken by management as outlined in
Note 3(x) of the financial report.
b) Obtained reports of relevant industries to
compare to management’s growth rates
utilised in the calculation.
c) Reperformed the discounted cashflow
forecast using different inputs as a means to
perform a sensitivity analysis.
d) Reviewed the disclosures on this item to
ensure that they were adequate.
We critically analysed the Group’s cashflow forecast,
for at least twelve months from the date of this report,
including the potential impact of COVID-19, that was
used to support the going concern assessment,
including performing the following procedures:
a) Compared the prior year cash flow forecast
prepared by management with the actual
cashflows achieved and obtained
justification from management on variances
in order to evaluate the reliability of
management’s current forecasting
processes.
b) Evaluated the reasonableness and
appropriateness of management’s
judgement on the key assumptions used in
the cash flow forecast.
c) Reperformed sensitivity analysis using
different inputs to management.
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 2021, 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.
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
77
Xref Limited | Annual Report 2021 | 77
Independent Auditor’s Report
Xref Limited
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:
•
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.
© 2021 Findex (Aust) Pty Ltd
78 | Xref Limited | Annual Report 2021
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78
Independent Auditor’s Report
Xref Limited
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, actions
taken to eliminate threats or safeguards applied.
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included on pages 16 to 23 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Xref Limited., for the year ended 30 June 2021, 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
31 August 2021
Sydney
© 2021 Findex (Aust) Pty Ltd
www.crowe.com.au
79
Xref Limited | Annual Report 2021 | 79
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.
Substantial Shareholders of the Company as at 6 August 2021, based on Substantial Shareholder Notices received by the ASX and the
Company:
Substantial Shareholders
Squirrel Holdings Australia Pty Ltd
West Riding Investments Pty Ltd
National Nominees Ltd ACF Australian Ethical Investment Limited
Shareholding
30,857,613
30,857,612
14,902,422
Based on the market price at 6 August 2021 there were 160 shareholders with less than a marketable parcel of 1,087 shares at a share
price of $0.46.
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
152
588
473
688
94
1,995
58,160
1,786,750
3,616,602
19,684,004
157,163,731
182,309,247
0.03
0.98
1.98
10.80
86.21
100.00
80 | Xref Limited | Annual Report 2021
Top 20 Holders of Ordinary Shares as at 6 August 2021
Rank
Name of Shareholder
Shares
% of Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
West Riding Investments Pty Ltd
Squirrel Holdings Australia Pty Ltd
Netwealth Investments Limited
National Nominees Limited
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr Craig Graeme Chapman
Citicorp Nominees Pty Limited
Sweet As Developments Pty Ltd
Mijon Investments Pty Ltd
BNP Paribas Nominees Pty Ltd
Assumo (Nominees) Pty Ltd
Daniel P Moses (Nominees) Pty Ltd
Mr Craig Graeme Chapman + Mrs Joanne Chapman
Mr Craig Graeme Chapman + Mrs Joanne Chapman
Gang-Gang Pty Ltd
Schindler Investment Haus Pty Ltd
Hoedog Enterprises Pty Ltd
Seymour Superannuation Holdings Pty Ltd
INGTBWTS Pty Limited
Total of Top 20 Holdings
Other Holdings
Total Fully Paid Shares Issued
30,930,689
30,857,613
24,513,549
18,023,546
8,718,896
6,484,938
3,217,718
2,584,710
2,000,000
1,700,000
1,659,911
1,200,000
1,069,938
1,000,000
1,000,000
926,605
912,500
829,422
799,419
793,166
139,222,620
43,086,627
182,309,247
16.97
16.93
13.45
9.89
4.78
3.56
1.76
1.42
1.10
0.93
0.91
0.66
0.59
0.55
0.55
0.51
0.50
0.45
0.44
0.44
76.39
23.61
100.00
Xref Limited | Annual Report 2021 | 81
Shareholder Information
Options as at 6 August 2021
Name of Option Holder
Brad Rosser
Brad Rosser
Nigel Heap
Six employees (under Employee Option Plan)
James Solomons (under Employee Option Plan)
James Solomons (under Employee Option Plan)
20 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
47,045
750,000
750,000
193,190
$0.70
25 November 2021
$0.70
25 November 2022
$0.70
25 November 2021
$0.66
5 February 2022
$0.70
12 February 2022
$0.70
12 February 2023
$0.66
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)
James Solomons and Sharon Blesson (under Employee Option
Plan) – 2,000,000 options each
46 employees and contractors (under Employee Option Plan)
Total
Warrants as at 6 August 2021
300,000
300,000
300,000
$0.70
3 September 2021
$0.70
3 September 2022
$0.70
3 September 2023
4,000,000
$0.18
15 January 2024
2,652,879
19,693,114
$0.35
15 January 2024
Name of Warrant Holder
Warrants the Holder is Entitled to
Exercise Price
Expiry Date
Pure Asset Management Pty Ltd
14,285,714
$0.35
23 July 2024
Voting Rights
At general meetings of the Company, all fully paid ordinary shares carry one vote per share without restriction. On a show of hands,
every member present at a general meeting, or by proxy, shall have one vote and, upon a poll, each share shall have one vote. Option
holders and Warrant holders have no voting rights until the Options are exercised and the Warrants are exercised, respectively.
On-Market Buy-Back
There is no current on-market buy-back of shares in the Company.
Securities Subject to Voluntary Escrow
The number and class of securities subject to voluntary escrow that are on issue are: Squirrel Holdings Australia Pty Ltd with 30,857,613 ordinary shares and Timothy David Griffiths with 73,077 ordinary shares. The escrow period on these shares
ends on 31 March 2022.
82 | Xref Limited | Annual Report 2021
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Xref Limited | Annual Report 2021 | 83
Shareholder Information
Corporate Directory
PLACE OF BUSINESS
DIRECTORS
LEADERSHIP TEAM
AUDITORS
Australia (Head Office and
Registered Office)
Suite 13, 13 Hickson Road
Dawes Point, NSW 2000
Tel: +61 2 8244 3099
United Kingdom
Kemp house
152-160 City Road
London
Canada
Suite 202
1 Adelaide Street East
Toronto, Ontario
United States
Suite 500
13809 Research Blvd
Austin, Texas
New Zealand
Level 10
11 Britomart Place
Auckland
Brad Rosser
Chairman
Lee-Martin Seymour
Nigel Heap
Lija Wilson
Lee-Martin Seymour
Chief Executive Officer,
Co-Founder
James Solomons
Chief Financial Officer
Robert Waring
Company Secretary
Sharon Blesson
Chief Technology Officer
Karina Guerra
Group Marketing Director
Tracy Murdoch
General Counsel
David Haines
GM RapidID
Website
xref.com
84 | Xref Limited | Annual Report 2021
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
www.investorcentre.com/au
Tel: 1300 850 505
(within Australia)
Tel: + 61 3 9415 4000
(outside Australia)
xref.com
86
Xref Limited |Annual Report 2021
Financial Statements