2022
Contents
2022 Highlights
Chairman’s Report
Chief Executive Officer’s Report
Directors’ Report
Independence declaration
Financial Statements
Notes to the financial statements
Director’s Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
2
7
8
12
26
27
33
74
75
80
84
General information
Xref Limited ABN 34 122 404 666
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 23 August 2022. The directors have
the power to amend and reissue the financial statements.
Xref Limited | Annual Report 2022 | 1
2022 Highlights
$20.84M
$15.38M
$9.81M
Total
Sales
Xref Sales
Marketplace Sales
FY 2020
FY 2021
FY 2022
Increase
36%
“The value of Xref credits sold in
FY22 grew 41% year on year, to
$16.9 million, while Marketplace
sales grew 15% to $4 million.
Overall the combined growth
rate of 36% saw group sales
reach $20.8 million.”
Lee Seymour
CEO, Co-Founder, Exec Director
$18.59M
$14.45M
$8.27M
FY 2020
FY 2021
FY 2022
Increase
29%
“Continuing on from the strong
FY21 growth, Group revenue
grew a further 29% year on
year with Xref growing 33%
and Marketplace growing 14%
respectively.”
Lee Seymour
CEO, Co-Founder, Exec Director
Recognised
Revenue
Xref
Marketplace
2 | Xref Limited | Annual Report 2022
2022 Highlights
Key
Expense
Changes
Wages
Rent/occupancy
Marketing
FY 2020
FY 2021
FY 2022
Group Profitability
$18.59M
$14.45M
$8.27M
$0.08M
$0.73M
-$10.06M
FY 2020
FY 2021
FY 2022
Group Revenue
Group Net Profit
Increase
20%
“Increases in marketing spend
and wage costs to support
continued revenue growth and
product development were the
key expense changes for FY22.”
Lee Seymour
CEO, Co-Founder, Exec Director
Increase
834%
“After achieving profitability
in FY21, Xref remained
profitable in FY22 growing
NPAT 834% to $0.73 million
and EBITDA 75% to $1.77
million.”
Lee Seymour
CEO, Co-Founder, Exec Director
Xref Limited | Annual Report 2022 | 3
2022 Highlights
2022 Highlights
$18.59M
“All regions grew strongly in
FY22. North American revenue
grew 49% year on year with
revenue from the United
States growing by 129% when
compared to FY21 showing
strong demand for Xref’s
products from this area.”
$14.45M
$8.27M
Revenue
Region
North America
EMEA
ANZ
FY 2020
FY 2021
FY 2022
Lee Seymour
CEO, Co-Founder, Exec Director
$18.59M
$14.45M
$8.27M
Revenue
Stream
Trust Marketplace
Channel API
Xref Platform
FY 2020
FY 2021
FY 2022
4 | Xref Limited | Annual Report 2022
“Clients that use the Xref
platform directly accounted for
52% of revenue and usage grew
22% during FY2022. Clients
that use Xref’s services via a
Channel partner accounted
for 27% of revenue and
grew 64% during FY2020.
Trust Marketplace includes
revenues from RapidID and Xref
consumed via wholesale.”
Lee Seymour
CEO, Co-Founder, Exec Director
2022 Highlights
2022 Highlights
$18.59M
$14.45M
$8.27M
Client
Cohort
Joined FY2022
Joined FY2021
Joined FY2020
Pre Existing
FY 2020
FY 2021
FY 2022
$18.59M
$14.45M
$8.27M
Business
Model
Capped Subscription
Postpaid Checks
Prepaid Credits
FY 2020
FY 2021
FY 2022
“Clients who joined Xref prior to
FY2020 accounted for 60% of
revenue in FY2022. Clients who
joined in FY2021 grew by 131%
in FY2022 and revenue from
new clients grew 32% when
compared to the previous year.
This demonstrates Xref’s strong
track record in client retention
and increasing customer life
time value (LTV).”
Lee Seymour
CEO, Co-Founder, Exec Director
“The purchase of prepaid
credits accounted for 75% of
revenue in FY2022 and grew
33% year on year. Capped
subscriptions now contribute
4% of revenue and form a
strong foundation for growth as
the new Enterprise subscription
platform is launched.”
Lee Seymour
CEO, Co-Founder, Exec Director
Xref Limited | Annual Report 2022 | 5
2022 Operating Results
Financial summary
Total Revenue
EBITDA
Net profit after tax
Net cash generated from operating activities
Business results
Xref revenue
RapidID revenue
Total revenue
Cost of Sales
OPEX
Share based payments
Total Expenses
Other income
Depreciation & Amortisation
Operating profit
Finance income
Finance expense
30 June
2022
30 June
2021
%
Change
18,591,434
14,454,868
1,774,730
1,016,899
729,575
78,084
4,622,960
2,322,373
30 June
2022
30 June
2021
15,568,389
11,558,269
3,023,045
2,896,599
18,591,434
14,454,868
(3,674,245)
(3,045,508)
(12,503,372)
(10,715,970)
(767,885)
(318,550)
16,945,502
14,080,028
128,798
642,059
(474,397)
(440,206)
29%
75%
834%
99%
%
Change
35%
4%
29%
21%
17%
141%
20%
(80%)
8%
1,300,333
576,693
125%
5,739
11,779
(576,497)
(510,388)
(51%)
13%
Net profit after tax
729,575
78,084
834%
EBITDA
Net profit after tax
Add back: net interest income and expense
Add back: net depreciation and amortisation
30 June
2022
729,575
570,758
474,397
30 June
2021
78,084
498,609
440,206
EBITDA
1,774,730
1,016,899
%
Change
834%
14%
8%
75%
6 | Xref Limited | Annual Report 2022
Chairman’s Report
I am pleased to present the Xref annual report for the year ended
30 June 2022. In my first year as Chair, I have been impressed
with the passion and energy of the Xref management team and
their determination to make Xref a world class software product.
Your company has performed well, delivering revenue growth of
29% while also generating positive operating cash flow of $4.6m.
EBITDA also grew 75% to $1.77m. This places us in a strong
position to invest in product innovation and sales growth.
We launched an exit survey product to complement our core
reference checking software and plan to further fill out our
offering with pulse checks next year. We have made good
progress in developing a subscription-based service and plan
to launch the offering during FY23. The Company signed a
number of significant contracts during the year that will underpin
continued growth in future years. This included the Graduate
Verification Service and the Coles employee identity verification
system. We have begun to broaden the client base for our Rapid
ID product which will reduce its dependence on Crypto clients
and better integrate it with our core Xref client base.
The seasonally softer demand during the Australian summer
was moderated this year by an increased contribution from our
Europe and North America sales. All businesses have recovered
well following natural disasters, impacts of the pandemic, and
disruption from a national election.
We have provided comprehensive shareholder updates quarterly
during the year and have recently published the new investor
presentation that can be found at XF1.com.
The management team keep an unwavering focus on client
satisfaction. As a result, Xref has repeatedly ranked the #1
reference checking company based on customer reviews from
G2. This credibility boosts our brand and allows us to deliver new
products and services in a collaborative and successful manner.
Testimonials and case studies from organisations across multiple
geographies and industries are exemplary and demonstrate the
support Xref has from its clients.
Our ability to deliver global, accessible technology with the
aid of multi-language, multi-region data and certifications like
ISO27001, allow us to compete globally. This is further enhanced
through partnerships and integrations with industry peers.
Looking forward to 2023, I note that Xref is already credible,
profitable and scalable - this is an excellent foundation from
which to grow the business. Given the current challenging
employment market, Xref has invested time and resources in
people and culture, remuneration, and recognition to secure and
retain top talent. This gives us confidence that we have the talent
needed to execute on our growth plans.
We have also put in place a senior leadership team capable of
driving profitable growth in FY2023. Our key focus areas for the
year ahead include:
• Launch of new products such as Pulse Surveys, Engagement
and the Trust Marketplace for checks
• Growth of subscription revenue (ARR)
• Growth of North American revenue
• Sustained profitability
• Positive operating cash flow
On behalf of the Board, I would like to thank our staff for their
contribution during the year, our clients for their trust in Xref, and
our shareholders for their support.
Further investment in marketing has led to increased lead
flow during the year. This further pivoted the company from
salesperson led sales to marketing led sales and will allow us to
scale the business without adding proportionally to sales staff
costs.
Tom Stianos
Chairman
Xref Limited | Annual Report 2022 | 7
Chairman’s Report
Chief Executive Officer Report
Talent is on the Move
Talent remains on the move and employers are facing an
extremely competitive market. Increased salary expectations,
shorter tenures, and geographic barriers have all contributed to
a chaotic employment market. Employers need to move quickly
to hire the best talent, so having the right processes in place to
make confident hiring decisions has never been more important.
Sector leaders are increasingly questioning legacy processes
and seeking new technology solutions designed to tackle the
pressures of remote working, talent sourcing, and candidate
verification - while increasing engagement and retention, and
combating attrition.
Product Development
Continual product development designed to meet the needs of
our users is in our DNA at Xref.
In 2010, we launched the Xref Automated Reference Check
platform and have continuously enhanced it over time with
Template Builder, Xref Lite, People Search, and a range of
integrations and added features.
During FY2022, we have been busy developing an all new
subscription-based Xref platform that increases self-service and
offers surveys at each stage of the complete employee lifecycle
from References to Pulses and Exits.
Trust Marketplace
In conjunction with our new platform launch, we will also launch
the Trust Marketplace that encompasses ID checks from RapidID,
the new Graduate Verification Service via the HES (formerly
‘Higher Ed Services’), and additional checks such as criminal,
right to work, and employment checks via our partner network.
The Trust Marketplace brings together a range of online
trust products in an agnostic, API-only marketplace. All Trust
Marketplace products will be available via Xref Recruiter and the
new Enterprise platform.
Client Acquisition and Customer Ratings
The attractiveness of our evolving product suite is reflected in
the high levels of new and existing customer demand for our
services, and the ratings we achieve from third-party sources.
As a response to the needs of our clients and the impact of the
COVID-19 pandemic, we launched the Xref Exit Platform in
November 2021.
During FY2022, all credibility ratings across referral sites such as
G2, Capterra, Get App, and Google increased and promoted Xref
as best in class globally.
8 | Xref Limited | Annual Report 2022
Xref was rated the #1 referencing platform by G2 on multiple
occasions throughout the year and continues to win multiple
badges for leadership, usability, and customer satisfaction.
Our global Google star rating was 4.8 out of 5 stars. Referrals
continue to form a major contributor to our overall lead flow.
Twenty-seven percent of our revenue originates from clients who
use our service via an integration. These channel partnerships
continue to drive lead flow and, as a result of those integrations,
client retention remains high.
In FY2022, Xref secured a number of significant clients operating
in a range of sectors globally, demonstrating the breadth of our
addressable market. Twenty-four percent of sales in FY2022
came from new clients during the year. Sales from these clients
converted to 8% of the revenue recognised during the year. Sales
to new clients during the year grew by 55% when compared to
FY2021.
Global Users
In FY2022, 1.3 million new users transacted on the Xref platform
across 195 countries globally, including employers, candidates,
and referees.
Xref referenced 60% more candidates during FY2022 compared
to FY2021, demonstrating significantly increased demand within
the global employment sector .
Profitable, Credible, Scalable
In FY2022, our profits and overall sales grew 834% and 36%
respectively. Having turned a $10 million loss in FY2020 into a
profit in FY2021, we remain focused on generating cash and
investing in growth.
Expenses grew by 20% in FY2022, driven by marketing
expenditure and commissions paid to salespeople as a result of
record sales results. Growth in sales far outweighed the increase
in expenses, demonstrating our ability to scale and sustain
profitability.
Lead flow grew by 100% during FY2022 when compared to
FY2021. This demonstrates Xref’s transition from being sales-
led to marketing-led. This further supports our ability to scale,
and strongly legitimises the decision to increase investment into
marketing over time.
FY2022 Results
Following on from a record FY2021 in which Xref posted its
maiden year of profitability, we continue to outperform in all areas
in FY2022.
Sales grew by 36% to $20.8 million and the Company saw a
29% increase in revenue to $18.6 million. Strong controls on
expenditure enabled Xref to increase net profit after tax by 834%
to $0.73 million and increase EBITDA 75% to $1.77 million.
Xref generated an operating cash surplus of $4.62 million for the
year and net increase in cash of $3.54 million after investing $1.4
million into the development of the new platform. Cash reserves
were strengthened during the year after receiving proceeds from
the exercise of warrants and options of $1 million, taking Xref’s
closing cash at bank to $11.7 million compared to $8.1 million at
June 2021.
FY2023 Strategy
In FY2023, Xref intends to increase its addressable market and
drive subscription revenues through the launch of the new
platform, including self-service, Pulse Checks, and the Trust
Marketplace.
The new Xref platform has been designed to leverage
opportunities identified in the North American market, following
revenue growth of 49% across the region. The United States saw
129% revenue growth during the year reaching $1 million. In
FY2022, when compared to FY2021, lead growth also increased
in the North American region. Lead generation will continue
via channel partners, through Xref products such as Template
Builder and Xref Lite, referral sites such as G2, Capterra and Get
App and online content such as thought-leadership blogs.
Xref Limited | Annual Report 2022 | 9
CEO Report
Leadership and People
Closing Remarks
Our digital-first approach has been vital to our growth in FY2022.
The Company’s outstanding 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.
I am incredibly proud of the many strategic decisions the team
made during FY2022, which resulted in our strongest position to
date.
Our executive and senior leadership team were critical to our
success, and I look forward to achieving many more years of
growth and profitability with this high-calibre team.
Lee-Martin Seymour,
Chief Executive Officer,
Co-Founder
Xref’s internal culture is echoed through feedback from our
clients and demonstrates the experience, tenure and quality of
our people. The high calibre of our staff is a direct result of Xref’s
unwavering focus to continually attract, retain and develop
industry-leading talent. Xref continues to invest in its team, with
14 senior promotions made in July 2022 as a result of individual
achievement.
During FY2022, Xref’s headcount rose to 74, with 43% of staff
focusing on development, and 30% of staff working in sales and
marketing.
Consistent and effective internal communication, plus rewards
systems established by our leadership team, continue to drive
Xref’s primary goals to scale revenue globally and grow profits
whilst delivering industry-leading, critical innovations to the
employment sector. Our vision to create the most credible, best
in class employment feedback platform is supported by our belief
in and ability to execute a winning strategy over time.
In July 2022, we launched a new policy for awarding options
under the Employee Option Plan for all staff in recognition of their
achievement, drive and passion to date.
Environmental, Social, Governance (ESG)
Xref continues to work with our Environment, Social, and
Governance (ESG) policy front of mind.
On an Environmental front, our people all work from home,
resulting in a low carbon footprint while as a tech solution, we
promote paperless automation. On a Social front, our multi-
language capabilities and cloud-based solution increase the
accessibility of our platform, helping to empower workforces
around the globe. In terms of Governance, we remain ISO27001
certified and GDPR compliant offering assurances to all our
users that Xref is built using the highest standard of data privacy,
security and quality management practices.
10 | Xref Limited | Annual Report 2022
CEO Report Xref Limited | Annual Report 2022 | 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 2022.
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:
• Thomas Stianos (appointed 14 October 2021, Chairman 26 November 2021)
• Lee-Martin Seymour
• Nigel Heap
• Lija Wilson
• Brad Rosser (ceased 26 November 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 $729,575 (30 June 2021: a profit of $78,084).
Highlights of the financial year included:
• Record results—Another record year for sales and revenue with a 36% increase in group sales year on year and a 29% increase in
group revenue.
• Profitable—Continued profitability with an increase in net profit after tax to $729,575, an increase in EBITDA to $1.77m ($1.02m in
FY2021) and an increase in surplus cash generated from operations to $4.62m ($2.32m in FY2021).
• Credible—Our best in class credibility as a leading online brand is evidenced by our continued ranking as #1 reference checking
company on G2. On this review platform, our customers have awarded us an average 4.7 star rating. This is further supported by our
global Google review rating of 4.8 stars, Capterra reviews also place us with 4.7 stars.
• Scalable—Our continual product development and imminent new platform release points to the scalability of our platform. The new
subscription model leaves plenty of opportunity for growth as we follow the expansion and success of our customer base. As they
grow and hire more people, Xref is with them on the talent journey. Specifically, the release of Xref Exit Surveys allows organisations
to survey retrospectively for informed people analytics. The number of past exitees and potential future leavers, especially in the
context of The Great Resignation, is unlimited.
Commentary on significant features of the operating performance, results of segments, trends in performance and other factors
affecting the results for the period are contained in the Chairman’s Report on page 7 and in the CEO’s Report on page 8.
12 | Xref Limited | Annual Report 2022
Matters subsequent to the end of the financial year
On August 1, 2022, the Board approved the issue of 880,000 fully paid ordinary shares to the Xref Employee Share Trust. The trust
was established to administer the Xref Limited Employee Option Plan. Xref uses its Employee Option Plan to attract and motivate high
performing team members to further the growth of the business globally.
On August 15, 2022, the Board approved the issue of 7,060,100 Options across three tranches with varying exercises prices and
vesting periods to 71 eligible employees as part of the Xref Employee Option plan. Please refer to the announcement released to the
market on 19 August 2022 for further details.
No other matter or circumstances have arisen since the end of FY22, which could have had a notable impact on operations.
Likely developments and expected results of operations
The first half of FY23 will see Xref preparing to launch products to grow the marketplace and platform subscriptions. It is a very exciting
period in our growth journey.
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 22 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 (until 8 July 2021)
Interests in shares:
Interests in options:
Contractual rights to shares:
31,730,108
None
None
Xref Limited | Annual Report 2022 | 13
Directors’ Report
Name:
Title:
Thomas Stianos
Non-Executive Chairman
Qualifications:
B. App Sc
Experience and expertise:
Mr Stianos is widely recognised as one of the most successful and experienced leaders in the
IT industry. He is currently a non-executive director of Gale Pacific Limited. (ASX: GAP) and
Chairman of Escient. Mr Stianos was also previously a non-executive director of Inabox Group
Limited and the Managing Director of SMS Management & Technology Limited.
Mr Stianos has also previously held senior positions with the Department of Premier and
Cabinet, Department of Justice, and Department of Treasury & Finance. He holds a Bachelor
of Applied Science from the University of Melbourne and is a Fellow of the Australian Institute
of Company Directors.
Date of appointment as a director
14 October 2021
Other current directorships:
Non-Executive director of Gale Pacific Limited
Chairman of Escient
Former directorships (last 3 years):
Non-Executive director of Inabox Group Limited
Chairman of Empired Limited (ASX: EPD)
Special responsibilities:
Member of the Audit and Risk Committee (commenced 14 February 2022), Member and
Chairman of the Remuneration and Nomination Committee (commenced 16 May 2022).
Interests in shares:
Interests in options:
None
1,800,000
Contractual rights to shares:
None
Name:
Title:
Nigel Heap
Non-Executive Director
Qualifications:
LLB, AMP
Experience and expertise:
Nigel Heap is the Regional Managing Director of EMEA and ANZ for Hays PLC and is a member
of their group Management Board. He joined Hays in 1988 in the UK and served as Managing
Director of ANZ from 1997-2012. He also launched Hays operations in Asia and served as the
Regional Managing Director of APAC from 2005 -2012. In 2012 he was appointed Managing
Director of the UK & Ireland and served in this role until 2018.
Date of appointment as a director
18 August 2016
Other current directorships:
None
Former directorships (last 3 years):
None
Special responsibilities:
Chairman of the Audit and Risk Committee and member of the Remuneration and Nomination
Committee
Interests in shares:
Interests in options:
32,103
900,000
Contractual rights to shares:
None
14 | Xref Limited | Annual Report 2022
Directors’ Report
Name:
Title:
Lija Wilson
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 Remuneration and Nomination Committee on 8 July 2021 and
became a member of the Audit and Risk Committee on 1 September 2021
Interests in shares:
Interests in options:
None
900,000
Contractual rights to shares:
None
Name:
Title:
Brad Rosser (ceased to be a director 26 November 2021)
Non-Executive Chairman
Qualifications:
B.Com, MBA
Experience and expertise:
Brad Rosser is a business builder and entrepreneur who worked for McKinsey and Co
from 1992 to 1995 before working directly for Richard Branson as Director of Corporate
Development for Virgin from 1995 to 1999, helping to identify and implement start-up
businesses. He holds an MBA from Cornell University’s Johnson Graduate School of
Management and a Bachelor of Commerce (Honors) 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:
Ceased to be a member of the Audit and Risk Committee, and ceased to be the Chairman of
the Remuneration and Nomination Committee on 26 November 2021
Interests in shares:
Interests in options:
393,607
2,500,000
Contractual rights to shares:
None
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types
of entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Xref Limited | Annual Report 2022 | 15
Directors’ Report
Key Management Personnel
Chief Financial Officer / Chief Operating Officer
Mr. James Solomons, BCom, FCA, CTA, GAICD
James is a chartered accountant with over 21 years of experience within the accounting and 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.
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
recruitment specialists Hays.
Company Secretary
Mr. Robert Waring, BEc, ACA, FCIS, ASIA, FAICD
Robert has more than 43 years of experience in financial and corporate roles, including more than 27 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 and Vectus Biosystems Limited.
Meetings of directors
The number of meetings of the company’s Board of Directors and of each Board committee held during the 2021-22 financial year, and
the number of meetings attended by each Director were as follows:
Board meetings held
11
Audit and Risk Committee
meetings held
3
Remuneration and
Nomination Committee
meetings held
5
Disclosure Committee
meetings held
0
Attended
Attended
Attended
Attended
6
11
11
11
5
2
N/A
3
2
1
2
N/A
5
5
3
-
-
N/A
N/A
-
Directors
Thomas Stianos *
Lee-Martin Seymour **
Nigel Heap ***
Lija Wilson ****
Brad Rosser *****
* Joined the Board on 14 October 2021 as a Non-Executive Director and the Chairman of the Board, and joined as a member of the
Audit and Risk Committee on 14 February 2022, and joined as a member and the Chairman of the Remuneration and Nomination
Committee on 16 May 2022.
** Ceased to be a member of the Remuneration and Nomination Committee on 8 July 2021.
*** Chairman of the Audit and Risk Committee.
16 | Xref Limited | Annual Report 2022
Directors’ Report **** Joined as a member of the Remuneration and Nomination Committee on 8 July 2021, and joined as a member of the Audit and Risk
Committee on 1 September 2021.
***** Ceased to be a Director on 26 November 2021 (ceased to be Chairman of the Board, Chairman of the Remuneration and
Nomination Committee, and member of the Audit and Risk Committee on this date too).
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
• 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 Remuneration and Nomination 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
Xref Limited | Annual Report 2022 | 17
Directors’ Report
Additionally, the reward framework should seek to enhance executives’ interests by:
• rewarding capability and experience
• reflecting competitive reward for contribution to growth in shareholder wealth
• providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is
separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ fees and
payments are reviewed annually by the Remuneration and Nomination Committee. The Remuneration and Nomination Committee may,
from time to time, receive advice from independent remuneration consultants to ensure non-executive directors’ fees and payments are
appropriate and in line with the market. The chairman’s fees are determined independently to the fees of other non-executive directors
based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his
own remuneration.
ASX listing rules require the aggregate non-executive directors’ remuneration be determined periodically by a general meeting. In
the Prospectus dated 23th December 2015, noted on page 18 the current maximum annual aggregate remuneration for directors
was shown as $200,000. This has changed and a resolution was passed at the 2016 AGM that the maximum aggregate cash-based
remuneration payable to Non Executive Directors in any financial year be increased by $300,000 from $200,000 to $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
•
long-term performance incentives
• other remuneration such as superannuation and long service leave.
The combination of these comprises the executive’s total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Remuneration
and Nomination Committee based on individual and business unit performance, the overall performance of the consolidated entity and
comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where
it does not create any additional costs to the consolidated entity and provides additional value to the executive.
The short-term incentives (‘STI’) program is designed to align the targets of the business units with the performance hurdles of
executives. STI payments are granted to executives based on specific annual targets and key performance indicators (‘KPI’s’) being
achieved. KPI’s include profit contribution, customer satisfaction, leadership contribution and product management.
The long-term incentives (‘LTI’) are primarily 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.
18 | Xref Limited | Annual Report 2022
Directors’ Report 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
• Thomas Stianos - Non-Executive Chairman (commenced 14 October 2021)
• Lija Wilson - Non-Executive Director
• Brad Rosser - Non-Executive Chairman (ceased 26 November 2021)
And the Key Management Personnel:
• James Solomons – Chief Financial Officer / Chief Operating Officer
• Sharon Blesson – Chief Technology Officer
• Robert Waring – Company Secretary
Short-term benefits
Post-
employment
benefits
2022
Non-Executive Directors:
Thomas Stianos*
Nigel Heap
Lija Wilson
Brad Rosser**
Cash
salary and
fees
$
73,333
55,000
55,000
68,744
-
-
-
-
Executive Directors:
Lee-Martin Seymour
320,216
83,363
Other Key Management
Personnel:
James Solomons
340,135
35,000
Robert Waring
Sharon Blesson
87,877
-
293,216
93,025
1,293,521
211,388
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long-term
benefits Share-based payments
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
-
-
-
-
-
-
-
-
-
7,333
5,500
5,500
-
26,034
27,637
-
24,284
96,288
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
540,000
620,666
270,000
330,500
350,606
411,106
-
68,744
-
429,613
-
-
-
402,772
87,877
410,525
-
1,160,606
2,761,803
* Represents remuneration from 14 October 2021 to 30 June 2022
** Represents remuneration from 01 July 2021 to 26 November 2021
Xref Limited | Annual Report 2022 | 19
Directors’ Report
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
162,279
59,582
2,597
305,000
319,827
290,000
84,440
270,000
1,493,725
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,660
247
27,075
25,015
25,650
-
23,750
107,397
-
-
-
-
-
-
-
-
-
Total
$
170,128
67,781
3,238
7,849
2,539
-
-
-
394
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
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.
20 | Xref Limited | Annual Report 2022
Directors’ Report
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
2022
2021
2022
2021
2022
2021
Fixed remuneration
At risk - STI
At risk - LTI
100%
100%
100%
100%
-
100%
100%
100%
-
-
-
-
80.60%
-
100%
100%
19.40%
-
91.31%
100%
77.34%
100%
100%
100%
8.69%
-
22.66%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-Executive Directors:
Thomas Stianos*
Nigel Heap
Brad Rosser*
Lija Wilson**
Executive Directors:
Lee-Martin Seymour
Timothy Griffiths***
Other Key Management
Personnel:
James Solomons
Robert Waring
Sharon Blesson
* Ceased on 26 November 2021
** Appointed on 14 October 2021
*** Resigned 05 March 2021
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 January 2022
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2022 of $329,707 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 3 months
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.
Xref Limited | Annual Report 2022 | 21
Directors’ Report
Name:
Title:
James Solomons
Chief Financial Officer & Chief Operating Officer
Agreement commenced:
01 January 2022
Term of agreement:
No fixed term
Details:
Name:
Title:
Base salary for the year ending 30 June 2022 of $308,707 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 3 months
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 January 2022
Term of agreement:
No fixed term
Details:
Base salary for the year ending 30 June 2022 of $308,707 p.a. plus superannuation, plus $20,000
car allowance to be reviewed annually by the Remuneration and Nomination Committee. 3 months
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.
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
2022 are set out below:
No. of Shares
Granted 2022
No. of Shares
Granted 2021
-
-
-
-
-
-
-
-
14,103
43,607
73,077
569,231
564,103
12,665
-
-
Name
Nigel Heap
Brad Rosser*
Lee-Martin Seymour
James Solomons
Sharon Blesson
Robert Waring
Thomas Stianos
Lija Wilson
*Ceased on 26 November 2021
22 | Xref Limited | Annual Report 2022
Directors’ Report
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 2022 are set out below:
Name
James Solomons
Sharon Blesson
Robert Waring
Lija Wilson
Thomas Stianos
Nigel Heap
Number of Options Granted during the year
Number of Options Vested during the year
2022
-
-
-
-
1,800,000
900,000
2021
2,300,000
2,111,111
33,543
900,000
-
-
2022
3,050,000
2,711,111
-
300,000
600,000
300,000
2021
2,300,000
2,411,111
33,543
-
-
-
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*
32,103
393,607
Lee-Martin Seymour
31,730,108
James Solomons
Sharon Blesson
Robert Waring
578,231
580,622
276,350
33,591,021
*Ceased on 26 November 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,103
393,607
31,730,108
(178,231)
400,000
(80,622)
500,000
-
276,350
-
(258,853)
33,332,168
Xref Limited | Annual Report 2022 | 23
Directors’ Report
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other members of key
management personnel of the 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
Thomas Stianos
Lija Wilson
*Ceased on 26 November 2021
7,000,000
900,000
3,800,000
3,011,111
70,569
-
900,000
-
-
-
-
1,800,000
900,000
-
15,681,680
2,700,000
-
-
-
-
-
-
-
-
(4,500,000)
2,500,000
(900,000)
(750,000)
(300,000)
(16,312)
-
-
900,000
3,050,000
2,711,111
54,257
1,800,000
900,000
(6,466,312)
11,915,368
Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring of $87,877 (ex GST) were
made.
All transactions were made on normal commercial terms and conditions and at market rates.
This concludes the remuneration report, which has been audited.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or
executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company
against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any
related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
24 | Xref Limited | Annual Report 2022
Directors’ Report 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.
Corporate Governance
The Group’s Corporate Governance Statement and Appendix 4G checklist are released to ASX on the same day the Annual Report is
released. The Corporate Governance Statement and Corporate Governance manual can be found on the Company’s website at
https://xf1.com/#resources.
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
24 August 2022
Sydney
Thomas Stianos
Chairman
24 August 2022
Sydney
Xref Limited | Annual Report 2022 | 25
Directors’ Report
Independence declaration
24 August 2022
The Board of Directors
Xref Limited
Suite 13, 13 Hickson Road
Dawes Point NSW 2000
Dear Board Members
Crowe Sydney
ABN 97 895 683 573
Level 24, 1 O’Connell Street
Sydney NSW 2000
Main +61 (02) 9262 2155
Fax +61 (02) 9262 2190
www.crowe.com.au
Xref Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Xref Limited.
As lead audit partner for the audit of the financial report of Xref Limited for the financial year ended 30
June 2022, 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
Liability limited by a scheme approved under Professional Standards Legislation.
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 external audit, conducted via the Crowe Australasia external audit division and Unison SMSF Audit. All other professional services offered by
Findex Group Limited are conducted by a privately owned organization 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.
© 2022 Findex (Aust) Pty Ltd
26
26 | Xref Limited | Annual Report 2022
Financial Statements
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Revenue
Cost of sales
Gross profit
Finance costs
Employee expenses
Overhead and administration expenses
Share based payments
Depreciation
Impairment and amortisation
Total expenses
Operating profit/(loss)
Other income
Profit before income tax expense
Income tax expense
Profit after income tax expense for the year attributable to the owners of
Xref Limited
Other comprehensive income, net of income tax
Exchange differences on translating foreign controlled entities
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners
of Xref Limited
Earnings per share for profit from continuing operations attributable to
the owners of Xref
Basic earnings per share
Diluted earnings per share
Consolidated
2022
2021
18,591,434
14,454,868
(3,674,245)
(3,045,508)
14,917,189
11,409,360
(576,497)
(510,388)
(8,746,212)
(7,692,632)
(3,757,160)
(3,023,338)
(767,885)
(261,816)
(212,581)
(318,550)
(379,983)
(60,223)
(14,322,151)
(11,985,114)
595,038
(575,754)
134,537
729,575
-
653,838
78,084
-
729,575
78,084
(90,451)
(90,451)
(100,116)
(100,116)
639,124
(22,032)
$
0.40
0.36
$
0.04
0.04
Note
8
9
10
10
11
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 2022 | 27
Statement of financial position
As at 30 June 2022
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
Unearned revenue
Total current liabilities
Consolidated
2022
$
2021
$
Note
12
13
14
15
16
17
18
20
19
21
11,673,989
1,892,011
1,211,830
8,131,072
2,021,145
1,031,498
715,716
492,416
15,493,546
11,676,131
55,070
229,991
321,282
4,073,676
4,680,019
54,143
266,060
127,316
2,875,582
3,323,101
20,173,565
14,999,232
1,816,991
1,898,030
554,749
634,218
636,425
439,695
11,064,908
8,799,293
14,070,866
11,773,443
The above statement of financial position should be read in conjunction with the accompanying notes.
28 | Xref Limited | Annual Report 2022
Financial Statements Statement of financial position continued
As at 30 June 2022
Non current liabilities
Financial liabilities
Employee entitlements
Total non current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Retained earnings
Total equity
Note
20
22
Consolidated
2022
$
2021
$
4,405,732
4,048,950
224,785
185,666
4,630,517
4,234,616
18,701,383
16,008,059
1,472,182
(1,008,827)
23
24
55,100,613
53,948,230
(21,492,803)
(20,939,822)
(32,135,628)
(34,017,235)
1,472,182
(1,008,827)
The above statement of financial position should be read in conjunction with the accompanying notes.
Xref Limited | Annual Report 2022 | 29
Financial Statements
Statement of Changes in Equity
For the year ended 30 June 2022
Consolidated
Issued
capital
$
Warrants
$
Share option
reserves
$
Foreign
currency
translation
reserve
$
Consolidation
reserve
$
Retained
profits
$
Total
$
Balance at 1 July 2021
53,948,230
385,714
1,982,030
(461,745)
(22,845,821)
(34,017,235)
(1,008,827)
Profit after income tax for
the year
Other comprehensive
income for the half-year
Total comprehensive income
for the half-year
-
-
-
Transactions with owners in
their capacity as owners
Shares issued during the year
60,000
Options exercised
15,240
Options issued
Options lapsed
Options expired
Warrants issued
-
-
-
-
-
-
-
-
-
-
-
-
-
Warrants exercised
1,077,143
(77,143)
-
-
-
-
(1,240)
767,885
(110,406)
(1,041,626)
-
-
-
(90,451)
(90,451)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
729,575
729,575
-
(90,451)
729,575
639,124
-
-
-
60,000
14,000
767,885
110,406
1,041,626
-
-
-
-
-
1,000,000
Balance at 30 June 2022
55,100,613
308,571
1,596,643
(552,196)
(22,845,821)
(32,135,628)
1,472,182
The above statement of changes in equity should be read in conjunction with the accompanying notes
30 | Xref Limited | Annual Report 2022
Financial Statements Statement of Changes in Equity continued
For the year ended 30 June 2022
Consolidated
Issued
capital
$
Warrants
$
Share option
reserves
$
Foreign
currency
translation
reserve
$
Consolidation
reserve
$
Retained
Earnings
$
Total
$
1,797,122
(361,629)
(22,845,821)
(34,228,961)
(2,404,063)
Balance at 1 July 2020
53,235,226
Profit after income tax expense
for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Transactions with owners in
their capacity as owners
-
-
-
Shares issued during the year
713,004
-
-
-
-
-
-
-
-
-
-
-
-
318,550
(63,972)
(69,670)
-
(100,116)
(100,116)
-
-
-
-
-
-
-
-
-
-
-
-
-
78,084
78,084
-
(100,116)
78,084
(22,032)
-
-
713,004
318,550
63,972
69,670
-
-
-
385,714
Options issued
Options lapsed
Options expired
Warrants issued
-
-
-
-
385,714
-
Balance at 30 June 2021
53,948,230
385,714
1,982,030
(461,745)
(22,845,821)
(34,017,235)
(1,008,827)
The above statement of changes in equity should be read in conjunction with the accompanying notes
Xref Limited | Annual Report 2022 | 31
Financial Statements
Statement of cash flows
For the year ended 30 June 2022
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Note
2022
$
2021
$
21,070,575
14,804,985
(16,453,354)
(12,494,391)
5,739
11,779
Net cash provided by operating activities
28
4,622,960
2,322,373
Cash flows from investing activities
Payment for intangibles
Purchase of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from exercise of options
Repayments of lease liabilities
Proceeds from borrowings
Borrowing transaction costs
Repayment of financial liabilities
Net cash provided by financing activities
Net increase in cash and cash equivalents held
Cash and cash equivalents at beginning of year
(1,410,675)
(1,110,732)
(50,075)
(19,501)
(1,460,750)
(1,130,233)
1,000,000
14,000
-
-
(182,779)
(348,566)
-
-
(450,514)
5,000,000
(209,744)
(371,552)
380,707
4,070,138
3,542,917
5,262,278
8,131,072
2,868,794
Cash and cash equivalents at end of financial year
12
11,673,989
8,131,072
The above statement of cash flows should be read in conjunction with the accompanying notes
32 | Xref Limited | Annual Report 2022
Financial Statements Notes to the financial Statements
Note 1. Reporting Entity
Xref Limited is a limited liability company incorporated on 28 January 2003 in New Zealand and from 21 September 2017 was
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
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 2022 | 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 2022
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 2022 | 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 2022
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 2022 | 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 assets 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 assets
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 2022
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 right
of 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 2022 | 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 2022
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 2022 | 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. 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 2022.
42 | Xref Limited | Annual Report 2022
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 2022 | 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. The Group has taken the view that they will wait for another consecutive period of profitability prior to
recognising any losses as a deferred tax asset.
Research and Development Refundable Tax Offset
There were no research or developments costs identified in the group in 2022 that qualified for any government Research &
Development Tax Offsets.
44 | Xref Limited | Annual Report 2022
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 LLC
Xref (NZ) Limited
Rapid ID Pty Ltd
Note 7. Operating segments
Identification of reportable operating segments
Principal place of business/ Country of
incorporation
Australia
Australia
United Kingdom
Canada
United State
New Zealand
Australia
2022
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
2021
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
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 2022 | 45
Notes to the Financial Statements
Note 7. Operating segments continued
Operating segment information
Revenue
Revenue from external customers
15,568,389
3,023,045
18,591,434
Consolidated 2022
Candidate
referencing
$
ID
verification
$
Total
$
Intersegment sales
Total sales 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 2022
820
-
820
15,569,209
3,023,045
18,592,254
113,609
15,189
128,798
15,682,818
3,038,234
18,721,052
-
-
(820)
1,319,529
455,201
5,739
18,725,971
1,774,730
(474,397)
5,739
(576,497)
729,575
-
729,575
20,750,980
2,760,896
23,511,876
(4,672,297)
1,333,986
20,173,565
4,672,297
-
4,672,297
16,669,504
2,032,771
18,702,275
(892)
18,701,383
Notes to the Financial Statements Note 7. Operating segments continued
Revenue
Revenue from external customers
11,558,269
2,896,599
14,454,868
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
4,628
-
4,628
11,562,897
2,896,599
14,459,496
612,662
29,397
642,059
12,175,559
2,925,996
15,101,555
-
-
(4,628)
563,697
453,202
11,779
15,108,706
1,016,899
(440,205)
11,779
(510,388)
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
Xref Limited | Annual Report 2022 | 47
Notes to the Financial Statements
Note 7. Operating segments continued
Geographical information
Australia
Canada
United Kingdom
New Zealand
United States
Revenue from external customers Geographical non-current assets
2022
$
2021
$
2022
$
2021
$
14,243,856
11,631,922
2,968,437
3,136,185
736,668
927,677
719,695
674,483
1,726,849
1,011,173
956,384
417,595
51,551
4,609
154
-
180,547
6,051
318
-
18,591,434
14,454,868
3,024,751
3,323,101
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
Revenue of Xref
Revenue of Rapid ID
Total revenue
Other revenue
Interest
Government subsidies
Other revenue
Consolidated
2022
$
2021
$
15,568,389
11,558,269
3,023,045
2,896,599
18,591,434
14,454,868
5,739
28,021
100,777
134,537
11,779
540,753
101,306
653,838
Total revenue and other income
18,725,971
15,108,706
48 | Xref Limited | Annual Report 2022
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
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Consolidated 2022
Candidate
referencing
$
ID
verification
$
Total
$
15,568,389
3,023,045
18,591,434
11,229,585
3,014,271
14,243,856
736,668
918,903
1,726,849
956,384
-
8,774
-
-
736,668
927,677
1,726,849
956,384
15,568,389
3,023,045
18,591,434
14,651,531
3,023,045
17,674,576
916,858
-
916,858
15,568,389
3,023,045
18,591,434
Xref Limited | Annual Report 2022 | 49
Notes to the Financial Statements
Consolidated 2021
Candidate
referencing
$
ID
verification
$
Total
$
11,558,269
2,896,599
14,454,868
8,735,323
2,887,941
11,623,264
719,695
674,483
1,011,173
417,594
-
8,658
-
-
719,695
683,141
1,011,173
417,595
11,558,269
2,896,599
14,454,868
10,689,356
2,896,599
13,585,955
868,913
-
868,913
11,558,269
2,896,599
14,454,868
Note 8. Revenue continued
Revenue from customers
Revenue
Geographical regions
Australia
Canada
United Kingdom
New Zealand
United States
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
50 | Xref Limited | Annual Report 2022
Notes to the Financial Statements Note 9. Overheads and administrative expenses
Accounting and consulting fees
Auditing or reviewing the financial report
Legal expenses deductible
Marketing fees
Consulting and professional fees
Administration expenses
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
Impairment and amortisation expense
Consolidated
2022
$
266,458
87,807
41,867
904,218
373,838
2,047,651
(78,422)
113,743
2021
$
246,842
85,901
177,471
468,106
269,768
1,809,634
(137,340)
102,956
3,757,160
3,023,338
2022
$
2021
$
87,807
85,901
2022
$
86,122
175,694
212,581
474,397
2021
$
67,916
312,067
60,223
440,206
Xref Limited | Annual Report 2022 | 51
Notes to the Financial Statements
Note 11. Income tax expense
Xref Limited has operating subsidiaries in Australia, the UK, 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
2022
$
729,575
2021
$
78,084
Tax at the statutory rate of 25% (2021: 26%)
182,394
20,302
Impact of tax effect:
Reduction in deferred tax asset
Permanent differences
Adjustment for foreign tax rates
(98,280)
16,145
(100,259)
(211,501)
5,864
185,335
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 $7,217,815 (2021:
$7,316,089).
Note 12. Current assets—cash and cash equivalents
Cash at bank and in hand
2022
$
2021
$
11,673,989
8,131,072
52 | Xref Limited | Annual Report 2022
Notes to the Financial Statements Note 13. Current assets—trade and other receivables
Current
Trade receivables
Other receivables
Total current trade and other receivables
2022
$
2021
$
1,809,749
1,885,795
82,262
135,350
1,892,011
2,021,145
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. No allowance for expected credit losses was deemed to be necessary.
As at 30 June 2022, the ageing analysis of trade receivables post due but not impaired is detailed as follows:
0-30 days in terms
30-90 days overdue
90 days+ overdue
2022
$
2021
$
1,711,817
1,848,329
43,554
54,378
21,449
16,017
1,809,749
1,885,795
Xref Limited | Annual Report 2022 | 53
Notes to the Financial Statements
Note 14. Current assets—Capitalised Commission
Capitalised Commission Credit Sales
Capitalised Commission Subscriptions
Capitalised Commission People Search
2022
$
2021
$
1,160,636
1,013,035
51,194
-
18,373
90
1,211,830
1,031,498
(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
2022
$
1,031,498
1,757,989
2021
$
1,011,918
1,159,554
(1,580,602)
(1,140,761)
2,945
787
1,211,830
1,031,498
2022
$
98,230
(38,554)
59,676
2021
$
96,918
(31,774)
65,144
146,437
146,264
(112,091)
(105,759)
34,346
40,505
382,075
337,182
(280,578)
(238,684)
101,497
98,498
106,654
(72,182)
34,472
103,027
(41,114)
61,913
Total property, plant and equipment
229,991
266,060
54 | Xref Limited | Annual Report 2022
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
$
Balance at 1 July 2020
Additions
Depreciation
Balance at 30 June 2021
Additions
Disposals
Depreciation
Opening balance revaluation due to
forex
71,736
272
(6,864)
65,144
-
-
(6,032)
564
64,374
-
(2,461)
61,913
-
-
(28,733)
1,292
50,246
523
(10,264)
40,505
1,400
-
(5,933)
(1,626)
Total
$
314,475
19,501
(67,916)
266,060
50,075
(1,250)
128,119
18,706
(48,327)
98,498
48,675
(1,250)
(45,424)
(86,122)
998
1,228
Balance at 30 June 2022
59,676
34,472
34,346
101,497
229,991
Note 16. Non current assets—right of use assets
Right of use assets—Land and Buildings
Less: Accumulated depreciation
Total
2022
$
1,253,201
(931,919)
2021
$
860,792
(733,476)
321,282
127,316
Additions to the right-of-use assets during the year were $392,409.
The Group leases land and buildings for its offices under agreements which have terms remaining of no longer than 3 years and 2
months as at 30 June 2022. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
Two leases were renegotiated during the year resulting in an increase of right of use assets.
Xref Limited | Annual Report 2022 | 55
Notes to the Financial Statements
Note 17. Non current assets—intangible assets
Goodwill
Website
Less: Accumulated amortisation
Patents, trademarks and other rights
Less: Accumulated amortisation
Licenses
Domain Names
Less: Accumulated amortisation
Software development
Less: Accumulated amortisation
Consolidated
2022
$
2021
$
1,333,986
1,333,986
325,000
(162,055)
162,945
11,337
(4,504)
6,833
325,000
(53,722)
271,278
10,231
(2,267)
7,964
50,000
50,000
113,958
(16,316)
97,642
108,830
(5,638)
103,192
2,514,439
1,109,162
(92,169)
-
2,422,270
1,109,162
Total intangibles
4,073,676
2,875,582
56 | Xref Limited | Annual Report 2022
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
$
9,097
50,000
106,990
-
325,000
1,333,986
1,825,073
-
(1,133)
-
-
1,570
1,109,162
-
-
1,110,732
(5,368)
-
(53,722)
-
(60,223)
7,964
50,000
103,192
1,109,162
271,278
1,333,986
2,875,582
-
(1,131)
-
-
5,398
1,405,277
-
(10,948)
(92,169)
(108,333)
-
-
1,410,675
(212,581)
6,833
50,000
97,642
2,422,270
162,945
1,333,986
4,073,676
Consolidated
Balance at 1 July
2020
Additions
Amortisation
expense
Balance at 30 June
2021
Additions
Amortisation
expense
Balance at 30 June
2022
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 has built a significant enhancement which will expand the capability of the existing platform.
As at 30 June the new products for Xref remained in development. After their launch the software will be amortised over their respective
effective lives.
Xref Limited | Annual Report 2022 | 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
2022
$
2021
$
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:
• 14.5% post-tax discount rate;
• 20% per annum average projected revenue growth rate;
• 4% per annum average improvement in gross margin;
• 2.5% terminal value growth rate.
The discount rate of 14.5% 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 20% 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 $4.1m.
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 than 15% 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 35% 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 2022
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
Superannuation payable
Note
2022
$
366,429
423,268
277,114
545,118
205,062
2021
$
471,405
516,614
364,835
379,933
165,243
1,816,991
1,898,030
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
2022
$
2021
$
634,218
439,695
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. 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
2022
$
129,749
425,000
554,749
2021
$
138,925
497,500
636,425
200,540
4,205,192
4,405,732
3,072
4,045,878
4,048,950
Total borrowings
4,960,481
4,685,375
Xref Limited | Annual Report 2022 | 59
Notes to the Financial Statements
Note 20. Financial liabilities continued
a. Reconciliation
Loan Facility
Fair value of warrants
Transaction Cost
Amortisation of finance cost
Repayment of contractual payment
Gain on revaluation
Note
2022
$
2021
$
5,000,000
(385,714)
(209,744)
4,404,542
1,086,885
(822,065)
(39,170)
5,000,000
(385,714)
(209,744)
4,404,542
510,388
(371,551)
-
Closing Balance
4,630,192
4,543,378
During the current year, Xref Limited negotiated a more favourable interest rate for the Pure Asset loan facility which resulted in a
reduction of the interest rate from 9.95% to 8.5%. This reduction resulted in a change in the effective interest rate from 13.57% to
12.66%. The reduction in interest rate resulted in a gain on revaluation of $39,170.
Note 21. Current liabilities—Unearned Revenue
Xref unearned revenue movement
Opening balance - Xref
Credits sold
Add: Opening conditional credits
Less: Usage
Less: Closing conditional credits
Foreign exchange revaluation impacts
Closing balance – Unearned revenue Xref
RapidID unearned revenue movement
Opening balance - RapidID
Add: Prepaid Checks Sold
Less: Prepaid Checks Used
Closing balance - Unearned revenue RapidID
2022
$
2021
$
8,783,300
7,847,799
17,751,578
12,477,129
1,474,436
1,011,261
(15,551,723)
(11,091,879)
(1,428,393)
(1,474,436)
2,245,898
922,075
(41,973)
13,426
10,987,225
8,783,300
15,993
102,240
(40,550)
77,683
-
16,022
(29)
15,993
Balance carried forward
11,064,908
8,799,293
60 | Xref Limited | Annual Report 2022
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
2022
$
2021
$
224,785
185,666
Ordinary shares—fully paid
185,296,289
182,309,247
55,100,613
53,948,230
2022
Shares
2021
Shares
2022
$
2021
$
Balance
1 July 2020
178,055,751
53,235,226
Date
Shares
Issued price/
exercise price
$
Total
$
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
Issued under share based remuneration
Options exercised
Warrants exercised
2,878,496
300,000
1,000,000
75,000
0.18
0.10
0.15
0.20
517,764
30,240
150,000
15,000
30 June 2021
182,309,247
-
53,948,230
46,759
43,141
40,000
2,857,142
0.64
0.70
0.35
0.35
30,000
30,000
15,240
1,077,143
30 June 2022
185,296,289
-
55,100,613
Xref Limited | Annual Report 2022 | 61
Notes to the Financial Statements
Note 23. Equity—issued capital continued
Xref issued 43,141 shares at $0.70 per share and 46,759 shares at $0.64 per share to senior employees on 6 December 2021 as a
bonus for good performance.
Xref issued 40,000 shares at $0.35 per share to an employee on 6 December 2021 under the company’s employee option plan.
Xref issued 2,857,142 shares at $0.35 per share to Pure Asset Management on 6 December 2021 from an exercise of warrants.
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 2022 Annual Report.
Note 24. Equity—other equity reserves
Foreign currency reserve
Options reserve
Warrants
Consolidation Reserve
Foreign Currency Reserve
2022
$
(552,196)
1,596,643
308,571
2021
$
(461,745)
1,982,030
385,714
(22,845,821)
(22,845,821)
(21,492,803)
(20,939,822)
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 2022
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
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
Xref Limited | Annual Report 2022 | 63
Notes to the Financial Statements
Note 24. Equity—other equity reserves continued
At 30 June 2017
07/12/2016
25/11/2022
Issue Date
Expiry Date
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
22/03/2018
12/02/2023
04/12/2018
03/09/2022
04/12/2018
03/09/2023
04/12/2018
01/08/2022
20/07/2020
15/01/2024
20/07/2020
15/01/2024
20/07/2020
15/01/2024
07/09/2020
15/01/2024
26/11/2021
17/11/2024
26/11/2021
17/11/2024
Average exercise
price in $A per
share
$0.70
$0.70
$0.70
$0.66
$0.66
$0.35
$0.35
$0.35
$0.18
$0.35
$0.54
Options
2,500,000
750,000
300,000
300,000
176,194
2,136,923
300,000
33,543
4,000,000
900,000
2,700,000
Option Reserve
$
357,000
84,023
28,620
36,570
17,567
66,245
9,300
1,040
228,000
232,665
535,613
Closing Balance
30/06/2022
14,096,660
1,596,643
Options Reserve
During the year ended 30/06/2022, 1,190,474 options lapsed, 8,681,228 options expired, and 40,000 options were exercised.
On 26/11/2021, 1,800,000 options, at a fair value of $0.30, were issued to Mr Thomas Stianos as a key component of his remuneration.
The first tranche of 600,000 options vested on 26/11/2021, the second tranche of 600,000 options will vest on 14/10/2022, and the
third tranche of 600,000 options will vest on 14/10/2023. The options will expire on 17/11/2024.
On 26/11/2021, 900,000 options, at a fair value of $0.30, were issued to Mr Nigel Heap as a key component of his remuneration. The
first tranche of 300,000 options vested on 26/11/2021, the second tranche of 300,000 options will vest on 14/10/2022, and the third
tranche of 300,000 options will vest on 14/10/2023. The options will expire on 17/11/2024.
64 | Xref Limited | Annual Report 2022
Notes to the Financial Statements Note 24. Equity—other equity reserves continued
Options vested and therefore exercisable
Options Vested – Nigel Heap
Options Vested - Brad Rosser
Options Vested – James Solomons
Options Vested – James Solomons
Options Vested – James Solomons
Expiry Date
25/11/2021
2022
-
2021
900,000
25/11/2022
2,500,000
7,000,000
12/02/2022
-
12/02/2023
750,000
750,000
750,000
15/01/2024
2,300,000
2,300,000
Options Vested - Employees and Contractors
Options Vested - Employees and Contractors
03/07/2021
05/02/2022
-
-
Options Vested - Employees and Contractors
01/08/2022
176,194
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
Options vested - Lija Wilson
Options vested - Thomas Stianos
Options vested - Nigel Heap
641,204
90,021
224,255
300,000
300,000
300,000
30/09/2021
03/09/2022
03/09/2023
-
300,000
300,000
15/01/2024
2,111,111
2,111,111
29/11/2022
-
2,500,000
15/01/2024
33,543
33,543
15/01/2024
2,025,812
2,208,225
17/11/2024
17/11/2024
17/11/2024
300,000
600,000
300,000
-
-
-
11,696,660
20,408,359
The weighted average share price for the current financial year was $0.57 (2021: $0.22)
Consolidation Reserve
The reserve was formed on the reverse acquisition of assets and liabilities of King Solomon Mines Limited by Xref Pty Limited which
brought the share capital of Xref Pty Limited to the share capital of King Solomon Mines Limited immediately after the reverse
acquisition.
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 20). 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.
On 6 December 2021, Pure Asset Management exercised 2,857,142 warrants at $0.35 each, reducing the fair value of the warrant
reserve to $308,571.
Xref Limited | Annual Report 2022 | 65
Notes to the Financial Statements
Note 25. Equity—dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 26. Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to
ordinary equity holders of the Parent by the weighted average number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The Group recorded a profit for the year ended 30 June 2022 and the year ended 30 June 2021.
The following reflects the income and share data used in the basic and diluted EPS computations
Profit after income tax attributable to the owners of Xref Limited
2022
$
729,575
2021
$
78,084
Weighted average number of ordinary shares used in calculating basic earnings per share
184,003,268
181,978,936
Weighted average number of ordinary shares used in calculating diluted earnings per share
202,802,306
202,917,529
Basic earnings per share
Diluted earnings per share
Note 27. Financial instruments
a. Classification of financial instruments
Cents
0.40
0.36
Cents
0.04
0.04
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
11,729,059
1,892,011
13,621,070
-
-
-
-
-
-
-
-
-
-
-
-
11,729,059
1,892,011
13,621,070
1,611,919
1,611,919
4,960,481
4,960,481
6,572,400
6,572,400
Group 2022
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 2022
Notes to the Financial Statements
Note 27. Financial instruments continued
Group 2021
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
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
b. Financial instrument risk management
The Group is exposed 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 increased 19% compared to 2021, against a revenue increase of 29% compared to 2021. This
combined with the prior year raise of debt funding and positive cash flow is enabling adequate management of liquidity risk.
Xref Limited | Annual Report 2022 | 67
Notes to the Financial Statements
Group 2022
Non-derivative
financial liabilities
Trade creditors and
other payables
Superannuation
payable
Group 2021
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
-
-
-
1,611,919
1,611,919
1,611,919
205,062
205,062
205,062
-
-
-
-
-
-
-
-
-
Financial liabilities
4,630,192
5,951,775
214,247
210,753
426,925
5,104,508
Total
6,447,173
7,768,756
2,031,228
210,753
426,925
5,104,508
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
-
-
-
-
-
-
-
-
-
Financial liabilities
4,543,378
6,617,089
250,795
246,705
497,500
5,622,089
Total
6,441,408
8,515,119
2,148,825
246,705
497,500
5,622,089
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
and the UK Pounds Sterling.
68 | Xref Limited | Annual Report 2022
-
-
-
-
-
-
-
-
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
New Zealand Dollars
United States Dollar
Total
2022
$
275,869
778,710
2021
$
343,684
128,279
2,392,516
1,204,091
1,745,636
5,192,731
540,635
2,216,689
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
5%
$
13,793
38,936
10%
$
27,587
77,871
119,626
239,252
20%
$
55,174
155,742
478,503
87,282
174,564
349,127
Total impact of potential change in exchange rate
259,637
519,274
1,038,546
Foreign exchange risk
Currency risk is the risk that the fair value of financial instruments will fluctuate due to a change in foreign exchange rates.
Most of the Group transactions are carried out in Australian Dollars (AUD). Exposures to currency exchange rates arise from the Group’s
overseas sales and purchases, which are primarily denominated in United Kingdom Pounds Sterling (GBP) , Canadian dollars (CAD),
New Zealand Dollar (NZD) and United States Dollar (USD).
The Group monitors foreign expenditure, seeking favourable terms when it is time to for further funding. By adopting this passive
strategy, it expects its average foreign exchange rates to reflect the average foreign exchange rate for the year.
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The
amounts shown are those reported to key management translated into AUD at the closing rate:
30 June 2022 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Short-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
7,931,106
1,812,578
891,938
64,211
306,016
228,868
2,577,256
1,859,684
121,774
-
6,118,528
827,727
77,148
2,455,482
1,859,684
Xref Limited | Annual Report 2022 | 69
Notes to the Financial Statements
Note 27. Financial instruments continued
Long-term exposure
30 June 2022 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
34,650
4,205,192
4,170,542
-
-
-
20,420
139,787
119,367
-
-
-
-
-
-
30 June 2021 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Short-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
7,569,100
2,157,948
194,303
40,249
442,033
208,583
1,317,354
127,675
602,428
-
5,411,152
154,054
233,450
1,189,679
602,428
30 June 2021 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Long-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
34,650
4,045,879
4,011,229
-
-
-
19,493
3,071
16,422
-
-
-
-
-
-
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 5+/- % change in exchange rates for the year ended at 30 June 2022 (2021: 3%).
The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the previous 12
months.
Group
2022
2021
Profit for the
year
Equity
Profit for the
year
Equity
5% (2021: 3%) increase in AUD against foreign currencies
703,986
(990,829)
59,349
(1,010,926)
5% (2021: 3%) decrease in AUD against foreign currencies
732,228
(1,907,692)
122,958
(1,006,850)
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 2022
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
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:
2022
$
729,575
2,265,615
60,000
767,885
2021
$
78,084
922,076
686,196
318,550
(117,519)
(117,133)
474,397
565,829
440,206
525,442
(Increase)/decrease in trade and other receivables
129,134
(646,375)
(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 operating activities
Note 29. Contingencies
There is a contingent liability of $33,550 for a bank guarantee.
(927)
(223,300)
(180,332)
(81,039)
233,642
16,111
73,672
(19,583)
106,767
(61,640)
4,622,960
2,322,373
In the opinion of the Directors, the Company did not have any other contingent assets or liabilities at 30 June 2022.
Xref Limited | Annual Report 2022 | 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
b. Other related party balances
2022
$
2021
$
87,877
84,440
Other related party balances Loans to directors for the year ended 30 June 2022 amounted to $0 (2021: $0).
c. Key management compensation see information below
Short term employee benefit
Post employment benefits
Share based payments
2022
$
2021
$
1,504,909
1,493,725
96,288
1,160,606
107,397
458,874
2,761,803
2,059,996
72 | Xref Limited | Annual Report 2022
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
2022
$
2021
$
(778,832)
(778,832)
(284,684)
(284,684)
36,851,993
35,788,942
36,851,993
35,788,942
-
-
-
-
-
-
55,100,613
53,948,230
1,905,214
2,367,744
(20,153,834)
(20,527,032)
36,851,993
35,788,942
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 2021 or 2022.
Contingent liabilities
The parent entity had no contingent liabilities in 2021 or 2022.
Capital commitments Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment in 2021 and 2022.
Note 32. Events Occurring After the Reporting Date
On August 1, 2022, the Board approved the issue of 880,000 fully paid ordinary shares to the Xref Employee Share Trust. The trust
was established to administer the Xref Limited Employee Option Plan. Xref uses its Employee Option Plan to attract and motivate high
performing team members to further the growth of the business globally.
On August 15, 2022, the Board approved the issue of 7,060,100 Options across three tranches with varying exercises prices and
vesting periods to 71 eligible employees as part of the Xref Employee Option plan. Please refer to the announcement released to the
market on 19 August 2022 for further details.
No other matter or circumstances have arisen since the end of FY22, which could have had a notable impact on operations.
Xref Limited | Annual Report 2022 | 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 2022 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
24 August 2022
Sydney
Thomas Stianos
Chairman
24 August 2022
Sydney
74 | Xref Limited | Annual Report 2022
Crowe Sydney
ABN 97 895 683 573
Level 24, 1 O’Connell Street
Sydney NSW 2000
Main +61 (02) 9262 2155
Fax +61 (02) 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 2022, 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 the 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 2022 and of its
financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (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.
Liability limited by a scheme approved under Professional Standards Legislation.
The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of pe rsons 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 external audit, conducted via the Crowe Australasia external audit division and Unison SMSF Audit. 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.
© 2022 Findex (Aust) Pty Ltd
75
Xref Limited | Annual Report 2022 | 75
Independent Auditor’s Report
Xref Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How we addressed the Key Audit Matter
Software Development Costs
As per Note 17, the Group has capitalised software
development costs of $2,422,270 (2021:
$1,109,162) in accordance with the requirements of
AASB 138 Intangible Assets. The capitalised
development costs are inclusive of external costs of
being use of specialists, as well as internal wage
costs primarily of developers employed by Xref
Limited.
We have determined this is 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
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
© 2022 Findex (Aust) Pty Ltd
www.crowe.com.au
76
76 | Xref Limited | Annual Report 2022
Independent Auditor’s Report
Xref Limited
ID’s revenue through Xref’s client base.
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.
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.
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 2022, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists.
© 2022 Findex (Aust) Pty Ltd
www.crowe.com.au
77
Xref Limited | Annual Report 2022 | 77
Independent Auditor’s Report
Xref Limited
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.
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.
© 2022 Findex (Aust) Pty Ltd
www.crowe.com.au
78
78 | Xref Limited | Annual Report 2022
Independent Auditor’s Report
Xref Limited
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included on pages 17 to 24 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the remuneration report of Xref Limited, for the year ended 30 June 2022, 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
24 August 2022
Sydney
© 2022 Findex (Aust) Pty Ltd
www.crowe.com.au
79
Xref Limited | Annual Report 2022 | 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 22 July 2022, based on Substantial Shareholder Notices received by the ASX and the
Company:
Substantial Shareholders
Netwealth Investment Limited
Lee-Martin John Seymour
Timothy David Griffiths
National Nominees Ltd ACF Australian Ethical Investment Limited
Shareholding
30,472,161
30,090,353
28,657,613
18,230,579
Based on the market price at 22 July 2022 there were 281 shareholders with less than a marketable parcel of 1,163 shares at a share
price of $0.43.
Number of Ordinary Shares Held
Number of Holders
Ordinary Shares
% of Total Issued Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
257
807
555
710
101
2,430
144,810
2,330,612
4,293,614
19,454,328
159,072,925
185,296,289
0.08
1.26
2.32
10.50
85.85
100.00
80 | Xref Limited | Annual Report 2022
Top 20 Holders of Ordinary Shares as at 22 July 2022
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
Netwealth Investments Limited
West Riding Investments Pty Ltd
Squirrel Holdings Australia Pty Ltd
National Nominees Limited
UBS Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Sweet As Developments Pty Ltd
BNP Paribas Nominees Pty Ltd
Seymour Superannuation Holdings Pty Ltd
Mijon Investments Pty Ltd
Mr Craig Graeme Chapman
Assumo (Nominees) Pty Ltd
Citicorp Nominees Pty Limited
DMX Capital Partners Limited
Gang-Gang Pty Ltd
Schindler Investment Haus Pty Ltd
Daniel P Moses (Nominees) Pty Ltd
INGTBWTS Pty Limited
Mr Mark William Hoey
Total of Top 20 Holdings
Other Holdings
Total Fully Paid Shares Issued
30,472,161
30,090,353
28,657,613
18,230,579
8,608,538
6,403,645
3,094,357
2,000,000
1,666,423
1,639,755
1,500,000
1,320,924
1,136,827
1,124,174
979,199
926,605
912,500
910,000
793,166
754,020
141,220,839
44,075,450
185,296,289
16.45
16.24
15.47
9.84
4.65
3.46
1.67
1.08
0.90
0.88
0.81
0.71
0.61
0.61
0.53
0.50
0.49
0.49
0.43
0.41
76.21
23.79
100.00
Xref Limited | Annual Report 2022 | 81
Shareholder Information
Options as at 22 July 2022
Name and Number of Option Holders
Brad Rosser
James Solomons (under Employee Option Plan)
16 employees and contractors (under Employee Option Plan)
Three senior staff members (under Employee Option Plan),
each holding 500,000 Options
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
40 employees and contractors (under Employee Option Plan)
Thomas Stianos
Nigel Heap
Lija Wilson
Total Number of Options on Issue
Warrants as at 22 July 2022
Shares the Option
Holder is Entitled to
Exercise Price Option Expiry Date
2,500,000
750,000
164,241
1,500,000
300,000
300,000
4,000,000
2,324,633
1,800,000
900,000
900,000
15,438,874
$0.70
25 November 2022
$0.70
12 February 2023
$0.66
1 August 2022
$0.70
29 November 2022
$0.70
3 September 2022
$0.70
3 September 2023
$0.18
15 January 2024
$0.35
15 January 2024
$0.54
17 November 2024
$0.54
17 November 2024
$0.35
17 November 2024
Name of Warrant Holder
Warrants the Holder is Entitled to
Exercise Price
Expiry Date
Pure Asset Management Pty Ltd
11,428,572
$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.
82 | Xref Limited | Annual Report 2022
Shareholder Information This page has been left intentionally blank.
Xref Limited | Annual Report 2022 | 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
Thomas Stianos
Chairman
Lee-Martin Seymour
Nigel Heap
Lija Wilson
Lee-Martin Seymour
Chief Executive Officer,
Co-Founder
James Solomons
Chief Financial Officer,
Chief Operating Officer
Sharon Blesson
Chief Technology Officer
Robert Waring
Company Secretary
Karina Guerra
Group Marketing Director
Tracy Murdoch
General Counsel
David Haines
GM RapidID
United Kingdom
Kemp house
124 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
Website
xref.com
84 | Xref Limited | Annual Report 2022
Crowe Sydney
Level 24
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)
This page has been left intentionally blank. This page has been left intentionally blank.