Contents
2023 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
5
6
9
21
22
26
61
62
68
71
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 public listed 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.
Xref Limited | Annual Report 2022 | 1
The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 August 2023. The directors have the
power to amend and reissue the financial statements.
2023 Highlights
2 | Xref Limited | Annual Report 2023
Group RevenueXref RevenueTrust Marketplace RevenueEngage RevenueRegional RevenueAustralia & New ZealandNorth AmericaUnited KingdomGrowth of SaaS H1 v H2SaaS RevenueOther RevenueIncrease10%“Despite softening market conditions our revenue grew 10% to $20.4m, aided by a $1.8m contribution from Voice Project in the second half.”Lee SeymourCEO, Founder, Exec DirectorARR430%“The focus in FY2023 was transitioning clients to the new Enterprise Platform and the SaaS business model. As a result, Annualised Recurring Revenue (ARR) grew 430% to $5.6m at June 2023 since the launch of that Enterprise Platform which included both legacy clients from Xref Recruiter and newly won Enterprise Platform clients.”Lee SeymourCEO, Founder, Exec Director“North America now represents 18% of the Group’s active users, 21% of references requested and 34% of the Pulse Surveys already launched demonstrating the demand from this important region for future growth.”Lee SeymourCEO, Founder, Exec Director Xref Limited | Annuak Report 2023 | 3
Increase79%“Xref hasinvested considerable time andresources into product development, including $2.5m of new internally generated software assets being recognised during FY23. This was in addition to the $2.5m already recognised in FY21 and FY22 (combined) and in addition to the acquisition of Voice Project in FY23.”Lee SeymourCEO, Founder, Exec Director*Prior to FY21, Xref expensed immediately all of its product development costsGroup ProfitabilityGroup Net ProfitGroup RevenueCashflowCash ExpensesCash at BankCash CokkectionsCapitakisedInvestment in ProductNPAT Net Loss$3.36m“Operations delivered a cash surplus of$0.5m but after taking into account non-cash items such as share based payments, depreciation and amortisationan NPAT loss of $3.36m was incurred.”Lee SeymourCEO, Founder,Exec DirectorOperatingCash Surplus$0.5m“Xref generated positive operating cashflow of $0.5m, andduring the year $4.0m of cash was invested in developing new capability, (including $1.5m to acquire Voice Project and $2.5m on product development).”Lee SeymourCEO, Founder, Exec Director 2023
$
2022
$
20,398,912
18,591,434
(1,417,924)
(3,359,340)
454,402
1,774,730
729,575
4,622,960
2023
$
2022
$
16,018,222
15,568,389
2,620,628
1,760,062
3,023,045
-
20,398,912
18,591,434
(3,252,179)
(3,674,245)
(17,027,162)
(12,503,372)
(1,605,954)
(767,885)
(21,885,295)
(16,945,502)
68,459
(1,365,986)
(2,783,910)
59,465
(616,678)
(18,217)
128,798
(474,397)
1,300,333
5,739
(576,497)
-
Change
10%
(180)%
(560)%
(90)%
Change
3%
(13)%
10%
(11)%
36%
109%
29%
(47)%
188%
(314)%
936%
7%
(3,359,340)
729,575
(560)%
2023
$
(3,359,340)
557,213
1,365,986
18,217
2022
$
729,575
570,758
474,397
-
Change
(560)%
(2)%
188%
(1,417,924)
1,774,730
(180)%
2023 Operating Results
Financial Summary
Total revenue
EBITDA
Net profit/(loss) after tax
Net cash generated from operating activities
Business results
Xref revenue
RapidID revenue
Engage revenue
Total revenue
Cost of sales
OPEX
Share based payments
Total Expenses
Other income
Depreciation & amortisation
Operating profit
Finance income
Finance expense
Income tax expense
Net profit after tax
EBITDA
Net profit after tax
Add back: net interest income and expense
Add back: net depreciation and amortisation
Add back: income tax expense
EBITDA
4 | Xref Limited | Annual Report 2023
Chairman’s Report
I am pleased to present the Xref annual report for the year ended
30 June 2023.
The 2023 financial year saw your company make significant
investments in capability and functionality. During the year we:
•
•
•
•
•
acquired Voice Project Pty Ltd in January 2023. This
accelerated our launch of the engagement survey
product;
launched our Enterprise Platform offering reference
checks, pulse checks, and exit surveys. The enterprise
platform already has over 1,000 users and is expected
to be a key growth driver for the Company;
launched Trust MarketPlace, a single site providing
access to a suite of checking services including identity
checks, graduate verification, police checks, government
document verification service (DVS). We plan to add
more information vendors to the Trust MarketPlace such
as the recently signed “Certn”;
implemented a new billing system allowing clients to use
Xref via a SaaS subscription service; and
released Survey Builder on the enterprise platform
allowing clients to custom build over 500 staff surveys.
Investments in product innovation increased the size of our
underlying software assets (or code base) during the year. This
has been reflected in positive customer feedback and in a recent
customer survey Xref received 92% customer satisfaction and an
Net Promoter Score (NPS) of +35.
Despite softening market conditions and the resultant subdued
demand for our services, revenue grew 10% to $20.4m, aided by
a $1.8m contribution from Voice Project in the second half.
Operations delivered a cash surplus but disappointingly after
taking into account non-cash items such as share based
payments, depreciation and amortisation an NPAT loss of $3.36m
was incurred. The business has continued to innovate and invest
in its products, and this increases the size of our addressable
market and lays the foundation for ongoing growth in years to
come
The RapidID identity verification service had a 13% reduction in
revenue as a result of the reduction in demand from
cryptocurrency clients. These were a significant proportion of
RapidID revenue in FY22 but are now less significant as new
clients have been added.
Xref generated positive operating cash flow of $0.5m, however,
$4.5m of cash was invested in developing new capability
(including $1.5m to acquire Voice Project and $2.5m on product
development). These investments plus financing costs led to our
cash balance for the year reducing from $11.67m to $6.83m.
In the year ahead, we will continue to innovate and invest in
product development, however, we aim to scale that investment to
match the growth in revenue so as to maintain a cash buffer. In
addition, in order to give the Company more options for growth,
we aim to extend or replace the current debt facility.
While Xref has already established a leading global position in
reference checking, further development of product features are
needed to ensure ongoing total addressable market expansion.
Therefore, we will prioritise completing this development before
investing further in USA expansion.
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.
Tom Stianos
Chairman
Xref Limited | Annual Report 2023 | 5
Chief Executive Officer’s Report
● Xref Enterprise Platform, which includes the Reference, Pulse
and Exit survey products and now has over 1,000 users;
● Survey Builder, a feature of the Enterprise Platform which
has already allowed users to custom-build over 500 surveys;
and
● Xref Engage (previously known as Voice Project), which is
now integrated with the Xref Enterprise Platform and will be
introduced to users worldwide as part of an aggressive go-to-
market strategy during FY24.
FY2023 Results Summary
Group sales of $21.3m were up 2.2% and revenue of $20.4m was
up 10% on FY22. The focus in FY23 was transitioning clients to
the new Enterprise Platform and the SaaS business model. As a
result, Annual Recurring Revenue (ARR) grew to $5.6m at June
2023 which included both migrated clients from Xref Recruiter and
newly won Enterprise Platform clients. An operating cash surplus
of $0.5m was generated. Xref cash was invested in the $1.5m
payment for the acquisition of Voice Project, a $2.5m investment
into product development and $3.3m in related support activities.
User Activity and Customer Satisfaction
Despite the weaker market conditions references taken by Xref
clients grew 5% and the number of net new clients grew 9% when
compared to FY22. Xref now has over 16,000 active users across
its three platforms, up 8% when compared to FY22. These users
are part of 2,618 active accounts which grew 7% in FY23. Half of
Xref’s active users have been with Xref for more than 3 years with
a further 15% joining in FY23, demonstrating Xref’s client
retention and global credibility and market standing. In June 2023,
Xref conducted a customer survey which resulted in a 92%
satisfaction score as well as an overall Net Promoter Score (NPS)
of +35.
FY23 was a year of retention and transformation while Xref
endured tough global economic conditions. During the year Xref
launched numerous revenue-focused platforms, products and
features, transitioned successfully to a SaaS business model,
commenced marketing via a new website, acquired Voice Project,
and won over 160 new enterprise clients.
Xref has established a global leadership position in automated
applicant reference checking. Last year, Xref launched its Exit
Survey product, and following the acquisition of Voice Project,
it launched its Pulse and Engagement Survey offerings to
complete the hire-to-retire product portfolio.
Acquisition
The acquisition of Voice Project, completed in January 2023,
created an opportunity for cross-selling by giving Voice Project’s
900 plus clients access to Xref’s complementary services and
offering Voice Project’s services to Xref’s 1,300 enterprise clients
and 15,000 users. Furthermore, the Voice Project acquisition
provided the foundation for the launch into Pulse and
Engagement surveys and it is expected to add $4 million in
revenue in a full year.
Most importantly, the Voice Project acquisition accelerated Xref’s
product strategy and growth potential. As Xref integrates the
Voice Project portal, into Xref’s platform, employers will have
access to its comprehensive suite of market-leading surveys and
they will be able to view every single piece of information about a
candidate, employee, or ex-employee in one place, and identify
actionable insights.
Product Innovation
Xref invested considerable time and resources into product
development during the year and successfully delivered key
milestones in its product strategy. These have included the launch
of:
6 | Xref Limited | Annual Report 2023
During the year 1,000 users across 160 accounts joined the new Xref
Enterprise Platform, launched in October 2022, and 94% of all newly won
clients chose Xref Enterprise over Xref Recruiter. 47 key accounts also
migrated from Xref Recruiter to Enterprise during the financial year in
order to access the new products and features. Pleasingly, North America
now represents 18% of the Group's active users, 21% of references
requested and 34% of the Pulse Surveys already launched demonstrating
the demand from this important region for future growth.
The adoption of our new survey products, Pulse and Exit, was
encouraging with over 3,000 Exit Surveys launched during the year as well
as 50 new Pulse Surveys, in the 4 weeks since its launch in May 2023.
There was strong client adoptions of all products within the Enterprise
Platform and are now building insights across the entire hire-to-retire
journey by using Reference, Pulse and Exit simultaneously. Xref Engage
also sent 174,000 surveys during the year on behalf of 212 existing and 57
new clients. The Xref sales and marketing teams are now executing a go-
to-market strategy to introduce Xref Engage to all Xref’s global users.
.
Channel Partnerships and Integration Revenue
Xref now has 31 channel partners with direct integrations into their
applicant tracking systems (ATS) such as Bullhorn, Oracle or
Workday and 29% of active customers use Xref via integration
with an ATS. In FY23 37% of reference requests were made via
an integration and represented 30% of revenue from reference
checking. Clients using Xref via an integration grew 22% in FY23
to 504 despite overall reference requests remaining flat for the
year. This demonstrates that despite recruitment being slower,
clients and channel partners continue to see the value in
integrating Xref into their business-critical systems
Employee Engagement
There are now 114 employees in the Group, this has grown
through Voice Project acquisition and organically during the year
without the use of external recruiters and relying purely on Xref’s
strong employer brand. Overall employee retention remained at
87% and in May 2023 a company-wide employee engagement
survey returned an overall engagement score of 81%. In order to
further drive engagement, Xref launched meaningful employee
initiatives such as a revised ESOP, better internal processes and
policies including our new industry-leading parental leave policy,
targeted training budgets, and multiple health and well-being
initiatives. During the year Xref also announced its excellent
gender and equality statistics and details of these can be seen in
the recently released investor snapshot.
Outlook
During FY24 Xref will continue to focus on executing its product
innovation strategy, delighting its customers and rewarding and
retaining its employees. By leveraging its current clients Xref will
increase share of wallet by offering its extended services and
continue to attract new clients to increase revenue growth. Xref
will measure its progress against these strategic priorities by
building on the following opportunities:
Xref Enterprise: With a much larger addressable market and
aggressive go-to-market strategy, we expect the enterprise
platform will have an opportunity to grow revenue over time by
migrating current clients to Xref Enterprise and continuing to
attract new clients.
During FY24 Xref intends to increase the expected growth of
Reference requests, Pulse Surveys, Exit Surveys, and thereby
increase its ARR.
CEO’s Report
A typical client now has the opportunity to extend their use of Xref
past recruitment, which tends only to be 15% of their business, to
cover 100% of their employees with Pulse and a further 10% of
exiting employees, helping to recruit, retain and remember their
talent.
Xref Engage (formerly Voice Project) collected feedback from
174,000 employees across 271 key clients last year. Now
integrated to Xref we have the opportunity to introduce Engage
across 2,100 accounts which represent at least 6 million
employees. Xref intends to grow surveys taken, new clients, and
revenue as a result.
Trust Marketplace: As we increase the number of background
checking vendors in the Marketplace (such as the newly signed
Certn) we will, in turn, integrate those checks via Trust
Marketplace into Xref Enterprise. This presents an opportunity to
introduce all global customers to a suite of checking services that
we have not been able to offer before. 12,000 background checks
were consumed via Xref Recruiter last year which demonstrated
the demand from clients to have all feedback, including
background verifications in one place. The average margin for
Trust Marketplace is 42% due to the majority of checks being for
Identity and via the government document verification service
(DVS). It is expected that as vendors and checks grow the margin
will increase. Xref intends to share news about new partners,
when the integration to Xref Enterprise is complete, margin growth
and the increase in checks taken.
There are also cost strategies in place to offset expected expense
growth in FY24 such as reducing marketing spend, relying on self-
service features, extending the development team overseas and
improving internal processes in a more efficient way.
Despite the tough global economic conditions, we remained
resilient, and persevered with our strong focus on product
innovation whilst keeping costs at an optimal level. With proven
demand for our product, successful completion of the hire-to-retire
strategy and the conversion to a SaaS business model, Xref
elevates to a new level of competitiveness. We thank you for your
support and we look forward to continue delivering on our future
growth initiatives and company vision.
Lee-Martin Seymour,
Founder & Chief Executive Officer,
Xref Limited | Annual Report 2023 | 7
8 | Xref Limited | Annual Report 2023
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 2023.
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
• Lee-Martin Seymour
• Nigel Heap
• Lija Wilson (resigned 18 July 2023, effective 31 July 2023)
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.
Operating and Financial Review
The loss for the Group after providing for income tax amounted to $3,359,340 (30 June 2022: profit $729,575).
Review of Operations
FY23 was a year of retention and transformation. During the year Xref launched numerous revenue-focused platforms, products and
features, transitioned successfully to a SaaS business model, launched a new website, acquired Voice Project, and won over 160
new enterprise clients.
Xref increased investment into product innovation, employees, internal system efficiencies and strategies for long-term market
awareness in preparation for the next stage of its growth when the market recovers. Xref also continued to display strong levels of
staff engagement and client satisfaction and has demonstrated the ability to innovate whilst balancing costs and short-term cash
flow in a demanding economic climate.
Xref has invested considerable time and resources into product development during the year and has successfully delivered on key
milestones in its product strategy. These have included the launch of:
•
a new billing system that allows clients to join Xref on a traditional SaaS subscription model and this has helped build ARR
430% to $5.6m since its launch in October 2022. This in turn decouples revenue recognition from recruitment or seasonal
trends and allows Xref to forecast more accurately;
• Xref Enterprise Platform which includes the Reference, Pulse and Exit survey products and now has over 1,000 users;
• Survey Builder, a feature of the Enterprise platform, which has allowed users to custom-build over 500 surveys; and
• Xref Engage(previously known as Voice Project) is now integrated with the Xref Enterprise Platform and will be introduced
to users worldwide as part of an aggressive go-to-market strategy in FY24.
During the year, Xref focused on transitioning clients to the new Enterprise Platform under SaaS subscription agreements. This
included both migrated clients from Xref Recruiter and newly won Enterprise Platform clients.
The Xref Enterprise, Trust Marketplace and Xref Engage platforms have provided the ability to build and launch integrated products
such as Exit and Pulse Surveys and the ability to integrate all three with the goal of creating a best-in-class, hire-to-retire, feedback
platform.
Review of Financial Performance
As a result of the above operating and investment decisions, financial results for the year were a net loss of $3.36m, returning an underlying
negative EBITDA of $1.4m (positive EBITDA of $1.77m in FY22) and cash generated from operations of $0.5m ($4.6m in FY22).
Group sales growth was 2.6%, and group revenue growth was 10% year on year. A part of this growth was due to the acquisition of
Voice Project, which added $1.8m to headline revenue since its acquisition on 3 January 2023. Sales from Xref and Trust
Marketplace were, however, down 5% and 14% respectively when compared to FY22 due mainly to the difficult global economic
environment and its impact on hiring.
Xref Limited | Annual Report 2023 | 9
Total operating expenses grew 29% due to increases in strategic expenditure in the following key areas:
• Voice Project - incurred $1.3m in costs to the Group since acquisition;
•
headcount increased by 42 to 114 full-time employees, 15 from the acquisition of Voice Project, 15 for the development
team (of which 5 are based in Pakistan) and the remaining 12 were recruited across the operations, marketing and sales
teams. Total salaries for the group were $13.9m before capitalisation of $2.2m related to software development projects
delivered throughout the year;
• marketing expenses increased by $0.8m to drive lead flows, launch the new products, and the new Xref website; and
•
other expenses like rent, subscriptions and platform costs increased 34% to $3.3m to support the services required for the
extended platform architecture, Voice Project and general inflationary cost increases.
The increase in expenditure was in line with the budget and was part of Xref’s planned investment to enable future profitable
growth.
Likely developments, business strategies and prospects
During FY24 Xref will continue to focus on executing its product innovation strategy, delighting its customers and rewarding and retaining its
employees. By leveraging its current clients it will increase share of wallet by offering its extended services and continue to attract new clients
to increase revenue growth.
As Xref progresses development during FY24, it will focus on the features offered in its platforms as well as deeper integrations between
systems and with channel partners.
At the same time, Xref will focus on cost efficiencies and maximising recurring revenue to build a pathway to sustainable and growing profit.
Xref will measure its progress against these strategic priorities by reporting on the following opportunities:
• Xref Enterprise: With a much larger addressable market and aggressive go-to-market strategy, we expect the enterprise
platform will have an opportunity to grow revenue over time by migrating current clients to Xref Enterprise and continuing to
attract new clients. Xref intends to increase the expected growth of Reference requests, Pulse Surveys, Exit Surveys, and
thereby increase its ARR in FY24. A typical client now has the opportunity to extend their use of Xref past recruitment,
which tends to be 15% of their business and across 100% of their employees with Pulse as well as a further 10% of exiting
employees, helping to recruit, retain and remember their talent.
•
• Xref Engage(formerly Voice Project): Xref Engage collected feedback from 174,000 employees across 271 key clients last
year. Now integrated to Xref, we have the opportunity to introduce Engage across 2,100 accounts which represent at least
6 million employees and presenting opportunities for revenue synergies via cross sales, to grow surveys taken, expand
client base and contract values, positively impacting revenue as a result.
Trust Marketplace: As we increase the number of background checking vendors in the Marketplace (such as the newly
signed Certn) we will, in turn, integrate those checks via Trust Marketplace into Xref Enterprise. This presents an
opportunity to introduce all global customers to a suite of checking services that we have not been able to offer before.
12,000 background checks were consumed via Xref Recruiter last year which has demonstrated the demand by our clients
to have all feedback, including background verifications in one place. The average margin for Trust Marketplace is 42%
due to the majority of checks being for Identity and via the government document verification service (DVS). It is expected
that as vendors and checks grow the margin will increase. Xref intends to share news about new partners, when the
integration to Xref Enterprise is complete, margin growth and the increase in checks taken.
• Employee Engagement & Customer Satisfaction: Having now conducted both an employee engagement survey and a
customer satisfaction survey, Xref will pulse these results throughout the year and via another full Engagement and
Satisfaction survey in May 2024 which will benchmark the feedback as part of next year's results.
• Expense Management: Approximately two thirds of Xref’s expenses relate to headcount and this expense is expected to
increase in FY24 as a result of the increase in headcount in FY23 and wage and salary inflation. Current monthly salaries
for the Group as of July 15th are $1.3m and are forecast to total $16m in FY2024.
To partially offset this expense growth, Xref will focus on other cost efficiencies including:
•
Targeting a reduction in marketing spend by 39%, as Xref focuses on the growth of current clients by expanding their use
of the platform and migrating them to subscription agreements;
• An increase of self-service features removing the need to increase support headcount;
• Complementing our Australian development team with the offshore team extension in Pakistan;
•
• Keeping travel and event costs to a minimum; and
•
Increasing the speed to market of revenue-generating product initiatives.
Improved internal systems including billing, revenue recognition, performance reporting and talent management;
In addition, in order to give the Company more options for growth, we aim to extend or replace the current debt facility.
10 | Xref Limited | Annual Report 2023
Significant changes in the state of affairs
In the opinion of the directors, a significant change in the state of affairs of the Group that occurred during the financial year under
review was the strategic acquisition of Voice Project Pty Limited (VP) on 03 January 2023. This acquisition enhances the Group’s
product position and expands its total addressable market in the global hire-to-retire market, by filling a niche product opportunity
gap in its suite of products and is a significant business in Australia within the Group’s target market. The cost of acquisition was
$3.6m; $2.1m in cash, and $1.5m in future allocation of shares contingent on future EBITDA and other performance-related
covenants. An employee engagement mapping survey company, VP significantly enhances Xref’s hire-to-retire suite of products by
adding a key capability to map an employee’s engagement journey throughout a period of employment providing invaluable insights
to people managers and management teams. Xref has diligently worked on integrating VP into the fabric of its business to
accelerate synergies to be extracted from this acquisition, and has successfully achieved the following milestones to this end, as on
the date of this report -
Integration as a distinct business division, and as a reportable operating segment
• Rebranding as Xref Engage
•
• Uniformity in accounting policies and aligning with corporate group policies and processes
• Migration onto Xref’s management and financial reporting platforms
• Supported by Xref corporate, marketing and development teams to help achieve its growth vision
Events arising since the end of the reporting period
On the 18 July 2023, Mrs. Lija Wilson resigned as Non-Executive Director of the company effective on 31 July 2023. The board wishes to
acknowledge her contribution to Xref as director, and as member of the Remuneration and Nomination Committee, and the Audit and Risk
Committee respectively. Since her appointment to the board on the 2 June 2021, Lija has been a valued member whose guidance and
contribution were invaluable. The board is thankful and wishes her all the best for her future endeavours.
No other matter or circumstances have arisen since the end of FY23, which could have had a notable impact on operations.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Thomas Stianos
Non-Executive Chairman
B. App Sc
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. He 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 (FAICD)
Date of appointment as a director
14 October 2021
Other current directorships:
Former directorships (last 3 years)
Chairman of Soco Limited (ASX:SOC), Non-Executive director of Gale Pacific Limited (ASX:GAP),
Chairman of Escient
Non-Executive director of Inabox Group Limited, Chairman of Empired Limited (ASX:EPD)
Special responsibilities:
Chairman of the Remuneration & Nomination Committee and Member of the Audit & Risk Committee
Interests in shares:
Interests in options:
Contractual rights to shares:
200,000
1,800,000
None
Xref Limited | Annual Report 2023 | 11
Name:
Title:
Qualifications:
Experience and expertise:
Date of appointment as a director
Lee-Martin Seymour
Managing Director and Chief Executive Officer
None
Lee-Martin Seymour is the 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.
18 January 2016
Other current directorships:
None
Former directorships (last 3 years):
Special responsibilities:
Interest in shares:
Interests in options:
Contractual rights to shares:
Name:
Title:
Qualifications:
Experience and expertise:
None
Member of the Remuneration & Nomination Committee (appointed 14 August 2023)
Member of the Audit & Risk Committee (appointed 14 August 2023)
31,730,108
None
None
Nigel Heap
Non-Executive Director
LLB, AMP
Nigel has been a non-executive director at Xref since 2016 and is Chairman of the Audit & Risk
Committee. He has 34 years of experience in the recruitment industry and spent his career at Hays
PLC, one of the world’s largest recruitment companies.
Nigel joined Hays UK in 1988 as a trainee consultant. By 1997, he was Managing Director of Hays
Australia, and consequently expanded operations to New Zealand, Hong Kong, China, Japan,
Singapore and Malaysia. This led to his appointment as Managing Director of Asia Pacific.
In 2012 he was appointed UK & Ireland Managing Director and Chairman of the Asia Pacific
business and in 2017 Nigel was appointed Managing Director of 12 countries in the EMEA region.
Nigel was also a member of the Management Board for many years until he left Hays in 2022
Date of appointment as a director
18 August 2016
Other current directorships:
Former directorships (last 3 years):
None
None
Special responsibilities:
Chairman of the Audit & Risk Committee and Member of the Remuneration & Nomination Committee
Interests in shares:
Interests in options:
Contractual rights to shares:
32,103
900,000
None
12 | Xref Limited | Annual Report 2023
Name:
Title:
Qualifications:
Experience and expertise:
Lija Wilson
Non-Executive Director
BCom
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
Date ceased to be a director
31 July 2023
Other current directorships:
None
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Contractual rights to shares:
None
Member of the Remuneration & Nomination Committee (ceased 31 July 2023)
Member of the Audit & Risk Committee (ceased 31 July 2023)
None
900,000
None
‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of
entities, unless otherwise stated.
‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
Key Management Personnel
Chief Financial Officer / Chief Operating Officer
James Solomons, BCom, FCA, CTA, GAICD
James is a chartered accountant with over 22 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 bringing 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
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.
In a prior role, she was a major corporate client manager at Sqware Peg, and also an IT&T Project Manager for recruitment specialists Hays.
Company Secretary
Robert Waring, BEc, ACA, FCIS, ASIA, FAICD
Robert has more than 44 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.
Xref Limited | Annual Report 2023 | 13
Meetings of directors
The number of meetings of the company’s Board of Directors and of each Board committee held during the 2022-23 financial year, and the
number of meetings attended by each Director were as follows:
Board meetings
held
14
Attended
14
14
14
14
Audit and Risk Committee
meetings held
3
Attended
3
N/A
3
3
Remuneration and
Nomination Committee
meetings held
2
Attended
2
N/A
2
2
Disclosure Committee
meetings held
0
Attended
-
-
N/A
N/A
Directors
Thomas Stianos *
Lee-Martin Seymour
Nigel Heap **
Lija Wilson
* Chairman of the Remuneration & Nomination Committee
** Chairman of the Audit and Risk Committee.
The Board has a Disclosure Committee, which meets as and when required to approve announcements when the full Board is not available
for this purpose. It was not required to meet this past year.
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 people who have 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
14 | Xref Limited | Annual Report 2023
• attracting and retaining high calibre executives
• increasing return on assets as well as focusing the executive on key non-financial drivers of value
Additionally, the reward framework should seek to enhance executives’ interests by:
• rewarding capability and experience
• reflecting competitive reward for contribution to growth in shareholder wealth
• providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is
separate.
Non-executive directors’ remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ fees and
payments are reviewed annually by the 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 23rd 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 an increase in shareholder value relative to the entire market and the increase compared to the
Group’s direct competitors.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the Group consisted of:
• Thomas Stianos - Non-Executive Chairman
• Lee-Martin Seymour - Managing Director & Chief Executive Officer
• Nigel Heap - Non-Executive Director
Xref Limited | Annual Report 2023 | 15
• Lija Wilson - Non-Executive Director
• James Solomons – Chief Financial Officer / Chief Operating Officer
• Sharon Blesson – Chief Technology Officer
• Robert Waring – Company Secretary
Short-term benefits
Post-
employment
benefits
Long-term
benefits Share-based payments
Cash
salary and
fees
$
110,000
55,000
55,000
2023
Non-Executive Directors:
Thomas Stianos
Nigel Heap
Lija Wilson
Executive Directors:
Lee-Martin Seymour
379,572
Other Key Management
Personnel:
James Solomons
Sharon Blesson
Robert Waring
353,208
354,433
84,203
1,391,416
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
11,550
5,775
5,775
-
28,428
-
-
-
-
27,865
27,994
-
107,387
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
121,550
60,775
60,775
-
-
408,000
-
25,050
406,123
25,050
407,477
62,550
146,753
112,650
1,611,453
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
$
Total
$
2022
Non-Executive Directors:
Thomas Stianos*
Nigel Heap
Lija Wilson
Brad Rosser**
Executive Directors:
73,333
55,000
55,000
68,744
-
-
-
-
-
-
-
-
7,333
5,500
5,500
-
Lee-Martin Seymour
320,216
83,363
-
26,034
Other Key Management
Personnel:
James Solomons
340,135
35,000
Sharon Blesson
Robert Waring
293,216
93,025
87,877
-
1,293,521
211,388
-
-
-
-
27,637
24,284
-
96,288
* Represents remuneration from 14 October 2021 to 30 June 2022
** Represents remuneration from 01 July 2021 to 26 November 2021
16 | Xref Limited | Annual Report 2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
540,000
620,666
270,000
330,500
350,606
411,106
-
68,744
-
-
429,613
-
402,772
410,525
87,877
-
-
-
1,160,606
2,761,803
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Thomas Stianos
Nigel Heap
Lija Wilson
Brad Rosser *
Executive Directors:
Lee-Martin Seymour
Other Key Management Personnel:
James Solomons
Robert Waring
Sharon Blesson
* Ceased to be a director on 26 November 2021
Service agreements
Fixed remuneration
2022
2023
At risk - STI
2023
2022
At risk - LTI
2023
2022
100%
100%
100%
-
100%
100%
100%
100%
100%
80.60%
100%
100%
100%
91.31%
100%
77.34%
-
-
-
-
-
-
-
-
-
-
-
-
-
19.40%
-
8.69%
-
22.66%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these
agreements are as follows:
Name:
Lee-Martin Seymour
Title:
Agreement commenced:
Term of agreement:
Details:
Managing Director and Chief Executive Officer
1 July 2022
No fixed term
Base salary for the year ending 30 June 2023 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.
Name:
James Solomons
Title:
Agreement commenced:
Term of agreement:
Details:
Chief Financial Officer & Chief Operating Officer
1 July 2022
No fixed term
Base salary for the year ending 30 June 2023 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.
Name:
Sharon Blesson
Title:
Agreement commenced:
Term of agreement:
Details:
Chief Technology Officer
1 July 2022
No fixed term
Base salary for the year ending 30 June 2023 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.
Xref Limited | Annual Report 2023 | 17
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 2023 and
30 June 2022 are set out below:
Name
Thomas Stianos
Lee-Martin Seymour
Nigel Heap
Lija Wilson
Brad Rosser *
James Solomons
Sharon Blesson
Robert Waring
*Ceased to be a director on 26 November 2021
Options granted carry no dividend or voting rights
No. of Shares
Granted 2023
No. of Shares
Granted 2022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
Number 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 2023 are set out below:
Name
Thomas Stianos
Nigel Heap
Lija Wilson
James Solomons
Sharon Blesson
Robert Waring
Number of Options Granted during the year
Number of Options Vested during the year
2023
-
-
-
105,000
105,000
355,000
2022
1,800,000
900,000
-
-
-
-
2023
600,000
300,000
300,000
-
-
-
2022
600,000
300,000
300,000
3,050,000
2,711,111
-
Details regarding the exercise price and valuation of the above options can be found in note 25.
18 | Xref Limited | Annual Report 2023
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 Received as part
start of the year of remuneration
Additions Disposals/ other
Balance at the
end of the year
Ordinary shares
Thomas Stianos
Nigel Heap
Lee-Martin Seymour
James Solomons
Sharon Blesson
Robert Waring
Option holding
-
32,103
31,730,108
400,000
500,000
276,350
32,938,561
-
-
-
-
-
-
-
200,000
-
-
-
-
-
-
-
-
(386,043)
(150,000)
-
200,000
32,103
31,730,108
13,957
350,000
276,350
200,000
(536,043)
32,602,518
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 theyear
Granted
Exercised
Expired/
forfeited/other
Balance at the
end of the year
Options over ordinary shares
Thomas Stianos
Nigel Heap
Lija Wilson
James Solomons
Sharon Blesson
Robert Waring
1,800,000
900,000
900,000
3,050,000
2,711,111
54,257
9,415,368
-
-
105,000
105,000
355,000
565,000
-
-
-
-
-
-
-
-
-
(750,000)
(300,000)
(20,714)
(1,070,714)
1,800,000
900,000
900,000
2,405,000
2,516,111
388,543
8,909,654
Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring of $84,203 (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.
Xref Limited | Annual Report 2023 | 19
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company,
or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or
part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor as outlined in Note 9 to the financial statements.
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
28 August 2023
Sydney
Thomas Stianos
Chairman
28 August 2023
Sydney
20 | Xref Limited | Annual Report 2023
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
28 August 2023
The Board of Directors
Xref Limited
Suite 13, 13 Hickson Road
Dawes Point NSW 2000
Dear Board Members
Xref Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the Directors of Xref Limited.
As lead audit partner for the audit of the financial report of Xref Limited for the financial period ended
30 June 2023, 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
Some of the Crowe personnel involved in preparing this document may be members of a professional scheme approved under Professional
Standards Legislation such that their occupational liability is limited under that Legislation. To the extent that applies, the following disclaimer
applies to them. If you have any questions about the applicability of Professional Standards Legislation Crowe’s personnel involved in preparing
this document, please speak to your Crowe adviser.
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 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
© 2023 Findex (Aust) Pty Ltd
Xref Limited | Annual Report 2023 | 21
Financial Statements
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2023
Revenue
Cost of sales
Gross profit
Finance costs
Employee expenses
Overhead and administrative expenses
Share based payments
Depreciation
Impairment and amortisation
Total expenses
Operating profit/(loss)
Other income
Profit/(loss) before income tax expense
Income tax expense
Profit/(loss) 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/(loss) for the year, net of tax
Total comprehensive income/(loss) for the year attributable to the owners
of Xref Limited
Earnings/(loss) per share for profit from continuing operations attributable to
the owners of Xref
Basic earnings/(loss) per share
Diluted earnings(loss) per share
Consolidated
2023
$
2022
$
Note
8
20,398,912
18,591,434
(3,252,179)
(3,674,245)
17,146,733
14,917,189
(616,678)
(11,834,421)
(5,192,741)
(1,605,954)
(509,261)
(856,725)
(576,497)
(8,746,212)
(3,757,160)
(767,885)
(261,816)
(212,581)
(20,615,780)
(14,322,151)
(3,469,047)
595,038
127,924
(3,341,123)
(18,217)
134,537
729,575
-
(3,359,340)
729,575
-
(290,918)
(290,918)
-
(90,451)
(90,451)
(3,650,258)
639,124
(cents)
(1.81)
(1.81)
(cents)
0.40
0.36
9
10
10
8
11
27
27
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
22 | Xref Limited | Annual Report 2023
Statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets
Prepayments
Total current assets
Non-current assets
Financial assets
Property, plant and equipment
Right of use asset
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Financial liabilities
Employee benefits
Contract liabilities
Other liabilities
Total current liabilities
Non-current liabilities
Financial liabilities
Employee benefits
Contract liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Retained earnings
Total equity
Consolidated
2023
$
2022
$
Note
12
13
14
15
16
17
18
19
20
21
22
23
20
21
22
23
24
25
6,835,478
2,774,414
1,149,378
906,904
11,673,989
1,892,011
1,211,830
715,716
11,666,174
15,493,546
624,777
638,972
528,489
9,440,498
11,232,736
55,070
229,991
321,282
4,073,676
4,680,019
22,898,910
20,173,565
2,448,524
1,816,991
849,871
1,048,797
554,749
634,218
12,225,903
11,064,908
812,000
-
17,385,095
14,070,866
4,482,469
323,399
225,469
685,000
4,405,732
224,785
-
-
5,716,337
4,630,517
23,101,432
18,701,383
(202,522)
1,472,182
55,470,213
55,100,613
(20,742,001)
(21,492,803)
(34,930,734)
(32,135,628)
(202,522)
1,472,182
The above statement of financial position should be read in conjunction with the accompanying notes.
Xref Limited | Annual Report 2023 | 23
Statement of Changes in Equity
For the year ended 30 June 2023
Consolidated
Issued
capital Warrants
$
$
Share
option
reserves
$
Foreign
currency
translation Consolidation
reserve
$
reserve
$
Retained
Earnings
$
Total
$
Balance at 1 July 2022
55,100,613
308,571
1,596,643
(552,196)
(22,845,821)
(32,135,628)
1,472,182
Loss after income tax expense
for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income/(loss)
for the year
-
-
-
Transactions with owners
in their capacity as owners
Shares issued during the year
369,600
Options exercised
Options issued
Options lapsed
Options expired
Warrants exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,605,954
(79,399)
(484,835)
-
-
-
(3,359,340)
(3,359,340)
(290,918)
-
-
(290,918)
(290,918)
-
(3,359,340)
(3,650,258)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
369,600
-
1,605,954
79,399
484,835
-
-
-
-
Balance at 30 June 2023
55,470,213
308,571
2,638,363
(843,114)
(22,845,821)
(34,930,734)
(202,522)
For the year ended 30 June 2022
Consolidated
Issued
capital Warrants
$
$
Share
option
reserves
$
Foreign
currency
translation Consolidation
reserve
$
reserve
$
Retained
Earnings
$
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 expense
for the year
Other comprehensive income/(loss)
for the year
Total comprehensive income/(loss)
for the year
Transactions with owners in
their capacity as owners
Shares issued during the year
Options exercised
Options issued
Options lapsed
Options expired
-
-
-
60,000
15,240
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,240)
767,885
(110,406)
(1,041,626)
Warrants exercised
1,077,143
(77,143)
-
-
(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
24 | Xref Limited | Annual Report 2023
Statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Net cash provided by operating activities
Cash flows from investing activities
Payment for intangibles
Payment for business acquisitions, net of cash acquired
Payment for acquisition transaction costs
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
Repayment of financial liabilities
Net cash provided by / (used in) financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of year
Consolidated
2023
$
2022
$
Note
29
32
22,981,974
21,070,575
(22,587,037)
(16,453,354)
59,465
454,402
5,739
4,622,960
(2,515,407)
(1,474,475)
(238,100)
(112,120)
(1,410,675)
-
-
(50,075)
(4,340,102)
(1,460,750)
-
-
(527,812)
(425,000)
(952,812)
1,000,000
14,000
(182,779)
(450,514)
380,707
(4,838,511)
11,673,989
3,542,917
8,131,072
Cash and cash equivalents at end of financial year
12
6,835,478
11,673,989
The above statement of cash flows should be read in conjunction with the accompanying notes
Xref Limited | Annual Report 2023 | 25
Notes to the financial Statements
Note 1. Reporting Entity
Xref Limited is a limited liability company (limited by shares) 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 global HR technology company that automates pre-employment recruitment checks, retention feedback surveys, and exit interviews.
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.
c. 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.
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. These policies have been consistently applied to all the years presented,
unless otherwise stated.
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 34.
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.
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;
26 | Xref Limited | Annual Report 2023
» 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.
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.
Xref Limited | Annual Report 2023 | 27
e. Contract assets
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
Unsatisfied performance obligations associated with the unearned revenue balance for Xref and RapidID are expected to be satisfied within
12 months from the date of the balance sheet. Unearned revenue for Voice Project has a proportion where the platform subscription does not
begin until post year end and will continue to be recognised through to the following financial year. It will however be recognised within
12months of when the platform subscription starts. This is the value making up the non-current component.
Under Xref’s candidate referencing & exit surveys business model, clients can purchase Xref credits to use our candidate referencing platform
or they can take out a 12-month subscription which contains a profile cap to undertake candidate referencing or exit surveys which must be
used within the 12-month subscription period. Unused profiles do not role forward to the following year.
Where a client purchases credits in advance, the value of the deal is added to unearned revenue when the client has paid. 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 invoices are the
‘conditional credits’ represented in Note 22 and represents trade debtors (less goods & services tax). Where a client has purchased a
subscription, the value of the deal is added to unearned revenue when the contract begins and this can be before or after payment and so
‘conditional credits’ exist for subscription related deals
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.
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
28 | Xref Limited | Annual Report 2023
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.
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 (Capitalised development costs):
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, software acquired in business combinations are amortised over the assessed period of their expected benefit, being their
finite life of 5 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. Significant costs associated with acquisition of intellectual property rights in business combinations
are amortised over an assessed finite useful life of 5 years.
Brand Names
Significant costs associated with acquisition of brand assets in business combinations are amortised over an assessed finite useful life of 5
years.
Customer Relationships
Xref Limited | Annual Report 2023 | 29
Significant costs associated with acquisition of customer relationship assets acquired in business combinations are amortised over an
assessed finite useful life of 7 years.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised; it is instead tested annually for impairment, or more frequently if
events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and are not subsequently reversed.
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.
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
30 | Xref Limited | Annual Report 2023
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.
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
Xref Limited | Annual Report 2023 | 31
‘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 three main sources of Sales. The provision of candidate referencing services via the sale of credits & subscriptions through
Xref, the sale of ID verification checks through RapidID and the provision of engagement surveys through Xref Engage (Voice Project)
Revenue Recognition
For Xref sales, there are two revenue recognition events. When a customer uses a credit the service has been performed and the revenue is
recognised at the point in time when the customer uses the service. Or if the customer has purchased a subscription to the Xref platform,
revenue is recognised over the life of the contract.
For RapidID sales, when customers request a Check and it is performed the service has been delivered. Revenue is recognised at the point in
time when the customer uses the service.
For Voice Project sales, a customer will subscribe to the platform for 12 months to deliver and view results of engagement surveys over the
contracted subscription period. Revenue for the subscription component is recognised over the life of the contract. During the course of the
contracted service period, consultants will assist customers to design and deliver engagement surveys and provide back results & analysis to
the customer. Revenue is recognised as these services are delivered.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a
financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other income
Other revenue is recognised when it is received or when the right to receive payment is established.
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.
32 | Xref Limited | Annual Report 2023
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.
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.
y. Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other assets
are acquired. The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued,
or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each
business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the
acquiree’s identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity’s operating or accounting
policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest in the acquiree at
the acquisition-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent changes in the fair
value of the contingent consideration classified as an asset or liability is recognised in profit or loss. Contingent consideration classified as
equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling interest in the acquiree
and the fair value of the consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If
the consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired, being a bargain
purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the
consideration transferred and the acquirer’s previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts
recognised and recognises additional assets or liabilities during the measurement period, based on new information obtained about the facts
and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of
the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
Xref Limited | Annual Report 2023 | 33
z. Going concern
The financial report shows that a loss of $3,359,340 (2022: a profit of $729,575) has been incurred. There is also a deficiency of net current
assets of $5,718,921 (2022: positive net assets of $1,422,680) and a deficiency of net assets of $202,522 (2022: positive net assets of
$1,472,182).
The financial report has been prepared on the going concern basis which assumes that the company will be able to meet its commitments,
realise its assets and discharge its liabilities in the ordinary course of business.
This basis has been adopted by the directors of the company as they have;
•
Prepared a cash flow forecast for the period to September 2024 which indicates that they would be able to meet their obligations and
repay the debt facility at maturity which is 4 August 2024. In addition, in order to give the Company more options for growth, the
directors may look to extend or replace the current debt facility
• Met all covenants pertaining to the debt facility since drawdown. The directors are confident that the covenants will continue to be
met.
•
Post year end and up to 28 August 2023, the unaudited management accounts show that the business results are consistent with
the forecast. The directors therefore remain confident that the achievement of their forecast will continue to September 2024.
Given the Directors expectations, the financial statements have been prepared on the going concern basis which contemplates that
the business will continue as normal and therefore realise its assets and extinguish its liabilities in the normal course of business.
aa. Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in
the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their
economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined
based on a reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when
the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a
significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
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 2023.
Note 5. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on
other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected
credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These
assumptions include recent sales experience, historical collection rates, 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
34 | Xref Limited | Annual Report 2023
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 18 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.
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 the 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. Further details are in note 11.
Research and development refundable tax offset
There were no research or developments costs identified in the group in 2023 that qualified for any government Research & Development Tax
Xref Limited | Annual Report 2023 | 35
Offsets.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three-level hierarchy, based on the
lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Considerable judgement is required to determine what is significant to fair value and therefore which category the asset or liability is placed in
can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow
analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. Refer to note 30 for further
information.
Note 6. Group Information
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the
accounting policy described in note 3:
Name
Xref Limited
Xref (AU) Pty Limited
Xref Engage Pty Limited*
Rapid ID Pty Limited
TMP Digital Verifications Pty Limited**
Voice Project Pty Limited***
Xref (UK) Limited
Xref Referencing (CA) Limited
Xref LLC
Xref (NZ) Limited
Rapid ID Limited
* Established 13 December 2022
** Established 31 August 2022
*** Acquired 3 January 2023
Principal place of business/ Country of
incorporation
2023
%
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Canada
United States
New Zealand
New Zealand
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
2022
%
100.00
100.00
-
100.00
-
-
100.00
100.00
100.00
100.00
100.00
36 | Xref Limited | Annual Report 2023
Note 7. Operating segments
Identification of reportable operating segments
The consolidated entity is organised into three operating segments based on products and services sold: candidate referencing, ID verification
and engagement surveys. 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 three business segments.
Products and services
The principal products and services of each of these operating segments are as follows:
Xref
Rapid ID
Candidate referencing
ID verification
Xref Engage (formerly Voice Project)
Engagement surveys
Intersegment transactions
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 2023 | 37
Operating segment information
Revenue
Revenue from external customers
16,018,222
2,620,628
1,760,062
20,398,912
Consolidated 2023
Candidate
referencing
$
ID
Engagement
verification
$
Surveys
$
Total
$
Intersegment sales
Total sales revenue
Other revenue
Total segment revenue
Intersegment eliminations
Non trading revenue:
Interest revenue
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Profit before income tax expense
Income tax expense
660
-
-
660
16,018,882
2,620,628
1,760,062
20,399,572
57,693
8,874
1,892
68,459
16,076,575
2,629,502
1,761,954
20,468,031
-
(660)
-
(660)
57,481
-
1,984
59,465
16,134,056
2,628,842
1,763,938
20,526,836
(2,253,764)
(740,156)
57,481
(603,718)
353,321
(232,016)
-
-
(3,540,157)
121,305
(18,217)
-
482,519
(393,814)
1,984
(12,960)
77,729
-
(1,417,924)
(1,365,986)
59,465
(616,678)
(3,341,123)
(18,217)
Profit after income tax expense
(3,558,374)
121,305
77,729
(3,359,340)
Assets
Segment assets
Intersegment eliminations
Unallocated assets:
Goodwill
Total Assets
Total assets includes:
Investments in subsidiaries
Liabilities
Segment liabilities
Intersegment eliminations
Total liabilities
23,098,787
1,202,267
4,513,102
28,814,156
(8,292,972)
2,377,726
22,898,910
8,292,972
-
-
8,292,972
20,958,221
270,050
1,873,161
23,101,432
-
23,101,432
38 | Xref Limited | Annual Report 2023
Consolidated 2022
ID
Candidate
referencing
$
verification
$
Total
$
Revenue
Revenue from external customers
Intersegment sales
Total earned revenue
Other revenue
Total segment revenue
Intersegment eliminations
Non trading 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
Geographical information
Australia
Canada
United Kingdom
New Zealand
United States
15,568,389
3,023,045
18,591,434
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)
(820)
5,739
-
5,739
15,688,557
3,037,414
18,725,971
1,319,529
(273,895)
5,739
(576,497)
474,876
-
455,201
(200,502)
-
-
254,699
-
1,774,730
(474,397)
5,739
(576,497)
729,575
-
474,876
254,699
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
Revenue from external customers
Geographical non-current assets
2023
$
2022
$
2023
$
2022
$
15,713,610
14,243,856
8,278,293
2,968,437
738,464
951,137
1,860,858
1,134,843
20,398,912
736,668
927,677
1,726,849
956,384
18,591,434
45,342
2,808
78
-
51,551
4,609
154
-
8,326,521
3,024,751
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.
Xref Limited | Annual Report 2023 | 39
Note 8. Revenue
Revenue from contracts with customers
- Xref
- Rapid ID
- Engage (Voice Project)
Total revenue
Other revenue
Interest
Government subsidies
Other revenue
Total revenue and other income
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated
2023
$
2022
$
16,018,222
15,568,389
2,620,628
1,760,062
3,023,045
-
20,398,912
18,591,434
59,465
14,787
53,672
127,924
5,739
28,021
100,777
134,537
20,526,836
18,725,971
Consolidated 2023
Candidate
referencing
$
ID
Engagement
verification
$
Surveys
$
Total
$
16,018,222
2,620,628
1,760,062
20,398,912
11,340,251
2,613,297
1,760,062
15,713,610
738,464
943,806
1,860,858
1,134,843
-
7,331
-
-
-
-
-
-
738,464
951,137
1,860,858
1,134,843
16,018,222
2,620,628
1,760,062
20,398,912
14,298,913
2,620,628
1,719,309
-
794,877
965,185
17,714,418
2,684,494
16,018,222
2,620,628
1,760,062
20,398,912
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
40 | Xref Limited | Annual Report 2023
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
Note 9. Overheads and administrative expenses
Accounting and consulting fees
Auditing or reviewing the financial report
Legal expenses
Marketing fees
Consulting and professional fees
Administration expenses
Platform expenses
Operating lease payments
Auditors remuneration
Fees charged by Audit Firm
Financial statement audit and review
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
2023
$
303,712
92,289
126,329
1,695,019
313,421
2022
$
266,458
87,807
41,867
904,218
373,838
1,879,680
1,543,178
665,134
117,157
426,051
113,743
5,192,741
3,757,160
2023
$
2022
$
92,289
87,807
Xref Limited | Annual Report 2023 | 41
Note 10. Depreciation, amortisation and impairment expenses
Depreciation, amortisation and impairment expenses
Depreciation
Depreciation ROU Asset
Impairment and amortisation
Note 11. Income tax expense
Consolidated
2023
$
2022
$
108,853
400,408
856,725
1,365,986
86,122
175,694
212,581
474,397
Xref Limited has operating subsidiaries in Australia, the UK, New Zealand, USA and Canada which are expected to accumulate tax losses.
(a). Reconciliation of effective tax rate :
Profit (loss) before income tax expense
Consolidated
2023
$
2022
$
(3,341,123)
729,575
Tax at the statutory rate of 25% (2022: 25%)
(835,281)
182,394
Impact of tax effect:
Reduction / (Increase) in deferred tax asset
Permanent differences
Adjustment for foreign tax rates
Income tax paid by subsidiaries
Income tax expense for the year
b. Deferred tax assets and liabilities
705,781
23,174
106,326
18,217
18,217
(98,280)
16,145
(100,259)
-
-
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 $7,923,596 (2022: $7,217,815).
Note 12. Current assets—cash and cash equivalents
Cash at bank and in hand
2023
$
2022
$
6,835,478
11,673,989
42 | Xref Limited | Annual Report 2023
Note 13. Current assets—trade and other receivables
Current
Trade receivables
Other receivables
Total current trade and other receivables
2023
$
2022
$
2,715,091
1,809,749
59,323
82,262
2,774,414
1,892,011
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 2023, 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
Note 14. Current assets—Contract assets
Capitalised Commission Credit Sales
Capitalised Commission Subscriptions
2023
$
2022
$
2,297,488
1,711,817
361,730
55,873
43,554
54,378
2,715,091
1,809,749
2023
$
852,227
297,151
2022
$
1,160,636
51,194
1,149,378
1,211,830
(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—financial assets
Rental Bonds
Employee Share Trust *
Total
2023
$
1,211,830
1,419,317
2022
$
1,031,498
1,757,989
(1,495,611)
(1,580,602)
13,842
2,945
1,149,378
1,211,830
2023
$
255,177
369,600
624,777
2022
$
55,070
-
55,070
Xref Limited | Annual Report 2023 | 43
* The Xref Employee Share trust was set up to administer the Xref Employee Option Plan. Xref Limited issues shares to the ‘Trust’ to be held
in trust on behalf of employees ‘pending exercise of options under grant’. When an employee makes an exercise request, the share trust will
honour this request by transferring ownership of the number of shares per the option grant document, from the ‘Trust’ to the employee (or
their nominee) at the ‘exercise price’ stated in the employee grant document. A single issue of 880,000 FPO has been made to the trust
during FY2023.
No employees have exercised their options and so the number of the shares held by the trust remains 880,000. The asset is valued at
$369,600 at the issue price of $0.42.
Note 16. 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
2023
$
98,617
(44,235)
54,382
964,191
(859,940)
104,251
523,236
(368,056)
155,180
457,250
(132,091)
325,159
2022
$
98,230
(38,554)
59,676
146,437
(112,091)
34,346
382,075
(280,578)
101,497
106,654
(72,182)
34,472
Total property, plant and equipment
638,972
229,991
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 2021
65,144
61,913
Additions
Disposals
Depreciation
Opening balance revaluation due to forex
Balance at 30 June 2022
Additions
Additions by acquisition
Disposals
Depreciation
-
-
(6,032)
564
59,676
-
-
-
-
-
(28,733)
1,292
34,472
-
304,105
-
40,505
1,400
-
(5,933)
(1,626)
34,346
667
79,713
(96)
98,498
48,675
(1,250)
(45,424)
998
101,497
111,453
21,527
(11,712)
(67,754)
169
Total
$
266,060
50,075
(1,250)
(86,122)
1,228
229,991
112,120
405,345
(11,808)
(97,044)
368
Opening balance revaluation due to forex
97
72
30
(5,391)
(13,490)
(10,409)
Balance at 30 June 2023
54,382
325,159
104,251
155,180
638,972
44 | Xref Limited | Annual Report 2023
Note 17. Non current assets—right of use assets
Right of use assets—Land and Buildings
Less: Accumulated depreciation
Total
2023
$
1,866,492
(1,338,003)
528,489
2022
$
1,253,201
(931,919)
321,282
Additions to the right-of-use assets during the year were $613,291 (unamortised / gross value). Of the total additions, $466,723 relate to lease
agreements with Voice Project Pty Limited, acquired and capitalised on 03 January 2023. The remaining $146,568 relate to extensions to
existing leased premises. These leases are subject to amortization in accordance with our accounting policy for leases, commencing on the
date of capitalization.
The Group leases land and buildings for its offices under agreements which have terms remaining of no longer than 2 years and 2 months as
at 30 June 2023. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
Note 18. Non current assets—intangible assets
Goodwill
Less: Accumulated impairment
Website
Less: Accumulated amortisation
Patents, trademarks and other rights
Less: Accumulated amortisation
Customer relationships
Less: Accumulated amortisation
Licenses
Less: Accumulated impairment
Domain Names
Less: Accumulated amortisation
Software development
Less: Accumulated amortisation
Total intangibles
Consolidated
2023
$
2022
$
2,377,726
1,333,986
-
-
2,377,726
1,333,986
325,000
(270,388)
54,612
853,737
(67,092)
786,645
847,000
(42,350)
804,650
325,000
(162,055)
162,945
11,337
(4,504)
6,833
-
-
-
50,000
50,000
-
-
50,000
50,000
113,958
(27,738)
86,220
113,958
(16,316)
97,642
6,004,846
2,514,439
(724,201)
(92,169)
5,280,645
2,422,270
9,440,498
4,073,676
Xref Limited | Annual Report 2023 | 45
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.
Consolidated
Balance at 1 July 2021
Additions
Amortisation expense
Balance at 30 June 2022
Additions
Patents,
trademarks
and other
Customer
rights Relationships Licenses
$
$
$
Domain
Software
Names Development Website Goodwill
$
$
$
$
Total
$
7,964
-
(1,131)
6,833
-
-
-
-
-
-
50,000
103,192
1,109,162
271,278 1,333,986
2,875,582
-
-
5,398
1,405,277
-
(10,948)
(92,169)
(108,333)
-
-
1,410,675
(212,581)
50,000
97,642
2,422,270
162,945 1,333,986
4,073,676
-
-
-
-
-
2,515,407
975,000
-
-
2,515,407
- 1,043,740
3,708,140
(11,422)
(632,032)
(108,333)
-
(856,725)
Additions by acquisition
842,400
847,000
Amortisation expense
(62,588)
(42,350)
Balance at 30 June 2023
786,645
804,650
50,000
86,220
5,280,645
54,612 2,377,726
9,440,498
Impairment testing
Goodwill acquired through business combination has been allocated to the following cash-generating units:
RapidID
Voice Project
1. RapidID
Consolidated
2023
$
1,333,986
1,043,740
2,377,726
2022
$
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:
• 16.83% post-tax discount rate;
• 15% per annum average projected revenue growth in FY2024 and 5% thereafter;
• 15% per annum in operating expenses;
• 35-45% per annum average in gross margin; and
• 2.5% terminal value growth rate.
The discount rate of 16.83% post-tax reflects Leadenhall’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. Overall, the discount rate has
not changed drastically compared to last year and is not expected to go above 19%.
Management have estimated $2.5M in revenue in FY24 similar to FY23, however as Trust Marketplace (where ID checks will be introduced
into the employment sector) is being built and launched, revenue is expected to pick up at the end of FY24/start of FY25 and onwards.
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. Operating expenses represent 15% of the revenue with employment expenses
slightly increasing in FY23 as a new General Manager was hired to lead RapidID into its new phase of growth. There were no other key
assumptions for RapidID.
Based on the above, the recoverable amount of RapidID exceeded the carrying amount by $4m.
46 | Xref Limited | Annual Report 2023
Sensitivity
As disclosed in note 5, management has made judgements and estimates in respect of impairment testing of goodwill and intangibles assets
including the ID Platform, Licence and Website. Should these judgements and estimates not occur the resulting carrying amount may
decrease. The sensitivities are as follows:
• 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.
2. Voice Project
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 Voice Project:
• 20.32% post-tax discount rate;
• 10-11% per annum average projected revenue growth rate during the forecast period;
• 58-62% per annum in wages during the forecast period;
• 20-23% in operating expenses during the forecast period;
• 2-3% in marketing expenses during the forecast period;
• 2.5% terminal value growth rate.
The discount rate of 20.32% post-tax reflects Leadenhall’s estimate of the time value of money and the Group’s weighted average cost of
capital adjusted for Voice Project, the risk-free rate and the volatility of the share price relative to market movements.
Voice Project’s revenue is expected to grow 10-11% in the next fours years from a boost in sales following full integration into Xref, then a
stabilising 2.5-5% growth in the long-term. Wages are expected to be about 60% of the revenue with few additions to the team. Second
largest expense is Occupancy & Office operations which will remain consistent with prior periods as the office will continue to be leased.
There were no other key assumptions for Voice Project.
Based on the above, the recoverable amount of Voice Project exceeded the carrying amount by $1.7m.
Sensitivity
As disclosed in note 5, management has made judgements and estimates in respect of impairment testing of goodwill and intangible assets
including the Voice Project Software, customer contracts, IP and brand. 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 18-20% over the forecast period for Voice Project before goodwill would need to be impaired,
with all other assumptions remaining constant.
• The discount rate would be required to increase by 38-42% for Voice Project 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 Voice Project’s goodwill is
based would not cause the cash-generating unit’s carrying amount to exceed its recoverable amount.
Xref Limited | Annual Report 2023 | 47
Note 19. Current liabilities—trade and other payables
Trade payables
GST payable
Accrued salaries, wages and related costs
Non trade payables and accrued expenses
Superannuation payable
2023
$
956,048
412,414
355,800
431,466
292,796
2022
$
366,429
423,268
277,114
545,118
205,062
2,448,524
1,816,991
Refer to note 28 for further information on financial instruments. Trade creditors and other payables are non interest bearing and normally
settled on 30 day terms; therefore, their carrying amount approximates their fair value.
Note 20. Financial liabilities
Current
Lease Liability
Borrowing [refer note (a) below]
Total current borrowings
Non-current
Lease Liability
Borrowing [refer note (a) below]
Total non-current borrowings
Total borrowings
a. Borrowing facility with Pure Asset Management
Reconciliation
Loan Facility
Fair value of warrants
Transaction Cost
Amortisation of finance cost
Repayment of contractual payment
Gain on revaluation
Closing Balance
2023
$
2022
$
424,120
425,751
849,871
107,279
4,375,190
4,482,469
5,332,340
129,749
425,000
554,749
200,540
4,205,192
4,405,732
4,960,481
2023
$
2022
$
5,000,000
5,000,000
(385,714)
(209,744)
(385,714)
(209,744)
4,404,542
4,404,542
1,643,466
(1,247,066)
-
1,086,885
(822,065)
(39,170)
4,800,942
4,630,192
The loan from Pure Asest Management matures on 4 August 2024 at which time the the loan of $5m is due to be repaid in full.
48 | Xref Limited | Annual Report 2023
Note 21. Employee benefits
Employee benefits - current (short-term)
Employee benefits - non-current (long-term)
Total Employee Benefits
2023
$
1,048,797
323,399
1,372,196
2022
$
634,218
224,786
859,004
Short–term employee benefits represent accruals for leave entitlements as at the reporting date, and the Group’s obligation to its current
employees that are expected to be settled within 12 months of the balance date.
Long–term employee benefits represent accruals for leave entitlements as at the reporting date, and the Group’s obligation to its current
employees that are expected to be settled beyond 12 months of the balance date.
Note 22. Contract Liabilities
Xref unearned revenue movement
Opening balance - Xref
Xref Sales
Add: Opening conditional credits
Less: Credit Usage & Subscriptions recognised
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
Voice Project unearned revenue movement
Opening balance - Voice Project (recognised at acquisition)
Add: Platform subscriptions sold
Less: Subscriptions recognised
Closing balance - Unearned revenue Voice Project
Total group unearned revenue
Current (within 12 months)
Non-Current (12-18 months)
Total contract liabilities
2023
$
2022
$
10,987,225
8,783,300
16,177,650
17,751,578
1,428,393
1,474,436
(16,332,384)
(15,551,723)
(992,194)
(1,428,393)
281,465
(50,956)
2,245,898
(41,973)
11,217,734
10,987,225
77,683
4,300
(22,003)
59,980
1,043,181
1,095,662
(965,185)
1,173,658
15,993
102,240
(40,550)
77,683
-
-
-
-
12,451,372
11,064,908
12,225,903
11,064,908
225,469
-
12,451,372
11,064,908
Xref Limited | Annual Report 2023 | 49
Note 23. Other Liabilities
Other liabilities represent the present value of the total earn-out consideration payable ($2,000,000), valued at $1,497,000 as at the balance
date (refer note 31 for valuation details) payable in Xref shares subject to Voice Project Pty Limited (now rebranded Xref Engage) achieving
performance hurdles as detailed in note 32 on the business combination completed on 03 January 2023.
Contingent consideration - current
Contingent consideration - non-current
Total contingent consideration
Note 24. Equity—issued capital
2023
$
812,000
685,000
1,497,000
2022
$
-
-
-
Ordinary shares—fully paid
186,176,289
185,296,289
55,470,213
55,100,613
2023
Shares
2022
Shares
2023
$
2022
$
Date
Shares
Issued price /
exercise price
$
Balance
1 July 2021
182,309,247
Issued under share based remuneration
Issued under share based remuneration
Options exercised
Warrants exercised
Issued to employee share trust
Issued under share based remuneration
Options exercised
Warrants exercised
46,759
43,141
40,000
2,857,142
30 June 2022
185,296,289
880,000
-
-
-
0.64
0.70
0.35
0.35
0.42
-
-
-
Total
$
53,948,230
30,000
30,000
15,240
1,077,143
55,100,613
369,600
-
-
-
30 June 2023
186,176,289
55,470,213
During the year ended 30 June 2023
No shares were issued under share based remuneration or due to exercising of Options or Warrants.
During the year ended 30 June 2022
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.
50 | Xref Limited | Annual Report 2023
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 following the
acquisition of Voice Project in January 2023 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 2023 Annual Report.
Note 25. Equity—other equity reserves
Foreign currency reserve
Options reserve
Warrants
Consolidation Reserve
Foreign Currency Reserve
2023
$
(843,114)
2,638,363
308,571
2022
$
(552,196)
1,596,643
308,571
(22,845,821)
(22,845,821)
(20,742,001)
(21,492,803)
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to
Australian dollars.
a). Share option reserve
Issue Date
4/12/2018
20/07/2020
20/07/2020
20/07/2020
7/09/2020
7/09/2020
26/11/2021
26/11/2021
5/07/2022
5/07/2022
5/07/2022
20/02/2023
20/02/2023
20/02/2023
Expiry Date
3/09/2023
15/01/2024
15/01/2024
15/01/2024
15/01/2024
15/01/2024
17/11/2024
17/11/2024
5/07/2025
5/07/2026
5/07/2026
20/02/2026
20/02/2027
20/02/2027
30/06/2023
Average exercise
price in $A per
share
$0.66
$0.35
$0.35
$0.35
$0.18
$0.18
$0.35
$0.54
$0.00
$0.50
$0.42
$0.00
$0.50
$0.42
Issue Date
7/12/2016
22/03/2018
12/4/2018
12/4/2018
12/4/2018
20/07/2020
20/07/2020
20/07/2020
7/9/2020
26/11/2021
26/11/2021
Expiry Date
25/11/2022
12/2/2023
3/9/2022
3/9/2023
1/8/2022
15/01/2024
15/01/2024
15/01/2024
15/01/2024
17/11/2024
17/11/2024
30/06/2022
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
300,000
1,613,558
300,000
33,543
2,000,000
2,000,000
900,000
2,700,000
626,859
4,670,000
1,460,741
275,000
1,010,000
687,500
18,577,201
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
14,096,660
Option Reserve
$
36,570
50,020
9,300
1,040
114,000
114,000
332,948
768,340
244,629
662,795
230,078
27,424
25,181
22,038
2,638,363
Option Reserve
$
357,000
84,023
28,620
36,570
17,567
66,245
9,300
1,040
228,000
232,665
535,613
1,596,643
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Closing Balance
At 30 June 2017
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Closing Balance
Options Reserve
During the year ended 30/06/2023, 8,995,100 options were issued, 887,181 options lapsed, 3,702,378 options expired, and Nil (40,000 in
FY2022) options were exercised.
Xref Limited | Annual Report 2023 | 51
Options vested and therefore exercisable
Options Vested - Brad Rosser
Options Vested - James Solomons
Options Vested - James Solomons
Options Vested - Employees and Contractors
Options Vested - Sharon Blesson
Options Vested - Sharon Blesson
Options Vested - Sharon Blesson
Options vested - Robert Waring
Options Vested - Employees
Options vested - Lija Wilson
Options vested - Thomas Stianos
Options vested - Nigel Heap
Expiry Date
25/11/2022
12/2/2023
15/01/2024
1/8/2022
3/9/2022
3/9/2023
15/01/2024
15/01/2024
15/01/2024
17/11/2024
17/11/2024
17/11/2024
2023
-
-
2,300,000
-
-
300,000
2,111,111
33,543
2,025,812
600,000
1,200,000
600,000
9,170,466
2022
2,500,000
750,000
2,300,000
176,194
300,000
300,000
2,111,111
33,543
2,025,812
300,000
600,000
300,000
11,696,660
The weighted average share price for the current financial year was $0.26 (2022: $0.57)
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 loan facility agreement executed on 31 July 2020, a warrant deed was also signed with Pure Asset Management on the
same date (note 20). Consequently, 14,285,714 detached warrants were issued to Pure Asset Management with an exercise option price 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 was $385,714 as originally assessed. 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 the current carrying value of
$308,571.
Note 26. Equity—dividends
No dividends were declared, recommended, or paid during the current or previous financial year.
Note 27. 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 (where
the exercise price is currently below the current share price). The Group recorded a loss for the year ended 30 June 2023 and a profit for the
year ended 30 June 2022.
The following reflects the income and share data used in the basic and diluted EPS computations
Consolidated
2023
$
2022
$
Profit after income tax attributable to the owners of Xref Limited
(3,359,340)
729,575
Weighted average number of ordinary shares used in calculating basic earnings per share
186,101,549
184,003,268
Weighted average number of ordinary shares used in calculating diluted earnings per share
186,101,549
202,802,306
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Cents
(1.81)
(1.81)
Cents
0.40
0.36
52 | Xref Limited | Annual Report 2023
Note 28. Financial instruments
a. Classification of financial instruments
The carrying amounts presented in the statement of financial position relate to the following categories of financial assets and liabilities
Group 2023
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Financial liabilities
Total
Group 2022
Financial assets
Cash and cash equivalents
Trade debtors and other receivables
Total
Financial liabilities
Trade creditors and other payables
Financial liabilities
Total
Cash,
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
6,835,478
2,774,414
9,609,892
-
-
-
-
-
-
-
-
-
-
-
-
2,155,728
5,332,340
7,488,068
Cash,
Loans and
receivables
Available-for-
sale financial
assets
Financial
liabilities at fair
value through
profit and loss
Total
$
6,835,478
2,774,414
9,609,892
2,155,728
5,332,340
7,488,068
Total
$
11,729,059
1,892,011
13,621,070
-
-
-
-
-
-
-
-
-
-
-
-
11,729,059
1,892,011
13,621,070
1,611,919
4,960,481
6,572,400
1,611,919
4,960,481
6,572,400
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.
Xref Limited | Annual Report 2023 | 53
Group 2023
Trade creditors and
other payables
Superannuation
payable
Group 2022
Trade creditors and
other payables
Superannuation
payable
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 17.7% compared to 2022, against a revenue decrease of (2.2%) compared to 2022. This
combined with the prior year raise of debt funding and positive cash flow is enabling adequate management of liquidity risk.
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
2,155,728
2,155,728
2,155,728
292,796
292,796
292,796
-
-
-
-
Financial liabilities
4,800,941
5,530,259
214,247
211,504
5,104,508
Total
7,249,465
7,978,783
2,662,771
211,504
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
1,611,919
1,611,919
1,611,919
205,062
205,062
205,062
-
-
-
-
-
-
-
-
-
-
Financial liabilities
4,630,192
5,956,433
214,247
210,753
426,925
5,104,508
Total
6,447,173
7,773,414
2,031,228
210,753
426,925
5,104,508
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.
The exposure to currencies of the Group is as follows:
Canadian Dollars
UK Pound Sterling
New Zealand Dollars
United States Dollar
Total
54 | Xref Limited | Annual Report 2023
2023
$
852,133
867,256
821,480
696,419
3,237,288
2022
$
275,869
778,710
2,392,516
1,745,636
5,192,731
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%
$
42,607
43,363
41,074
34,821
10%
$
85,213
86,726
82,148
69,642
Total impact of potential change in exchange rate
161,865
323,729
20%
$
170,427
173,451
164,296
139,284
647,458
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 2023 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Short-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
5,967,958
(2,687,767)
953,635
(45,713)
927,980
(161,358)
978,523
(110,761)
781,795
-
3,280,191
907,922
766,622
867,762
781,795
30 June 2023 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Long-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
234,650
(4,375,190)
(4,140,540)
-
-
-
20,527
(107,279)
(86,752)
Short-term exposure
-
-
-
-
-
-
30 June 2022 – Group
Australia
United Kingdom
Canada
New Zealand
United States
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
(121,774)
1,859,684
-
6,118,528
827,727
77,148
2,455,482
1,859,684
30 June 2022 – Group
Australia
United Kingdom
Canada
New Zealand
United States
Long-term exposure
Financial Assets
Financial Liabilities
Net statements of financial
position exposure
Foreign exchange risk
Sensitivity analysis
34,650
(4,205,192)
(4,170,542)
-
-
-
20,420
(139,787)
(119,367)
-
-
-
-
-
-
The following analysis illustrates the sensitivity of profit and equity in regard to the Group’s financial assets and financial liabilities carried in
Xref Limited | Annual Report 2023 | 55
foreign currencies. It assumes a 5+/- % change in exchange rates for the year ended at 30 June 2023 (2022: 5%).
The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the previous 12 months.
Group
2023
2022
Profit for the
year
Equity
Profit for the
year
Equity
+
5% (2022: 5%) increase in AUD against foreign currencies
(3,313,465)
(603,423)
703,986
(990,829) +
5% (2022: 5%) decrease in AUD against foreign currencies
(3,373,887)
160,196
732,228
(1,907,692) +
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis
above is considered to be representative of the Group’s exposure to currency risk.
Interest rate risk
Interest rate risk is the risk that cash flows from a financial instrument will fluctuate because of changes in market interest rates.
Revenue of the Group is exposed to interest rate risk on interest bearing financial assets only as it has immaterial bank overdraft balances.
The Group is also exposed to interest rate risk on interest bearing financial assets. The Group’s investment in bonds all pay fixed interest
rates and the interest risk exposure on money market funds is considered immaterial.
Note 29. 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:
2023
$
2022
$
(3,359,340)
729,575
130,477
2,265,615
-
1,605,954
(28,426)
15,001
1,365,986
591,164
(882,402)
-
(191,190)
62,452
631,533
513,193
454,402
60,000
767,885
(117,519)
-
474,397
565,829
129,134
(927)
(223,300)
(180,332)
(81,039)
233,642
4,622,960
Operating profit
Non cash flows in profit:
Unearned income
Shares based payments
Options expense
Foreign exchange
Bad debts written off
Depreciation, amortisation and impairment
Interest expense on borrowing
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other assets
(Increase)/decrease in prepayments
(Increase)/decrease in contract assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in employee benefits
Net cash from operating activities
56 | Xref Limited | Annual Report 2023
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
Other related party balances Loans to directors for the year ended 30 June 2023 amounted to $0 (2022: $0).
c. Key management compensation see information below
Short term employee benefit
Post employment benefits
Share based payments
Note 31. Fair value measurement
Fair value hierarchy
2023
$
2022
$
84,203
87,877
2023
$
2022
$
1,391,416
1,504,909
107,387
112,650
1,611,453
96,288
1,160,606
2,761,803
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three-level hierarchy, based on the
lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 30 June 2023
Other liabilities
Contingent consideration
Total liabilities
Consolidated - 30 June 2022
Other liabilities
Contingent consideration
Total liabilities
Level 1
Level 2
Level 3
$
$
$
Total
$
-
-
-
-
-
-
-
-
1,497,000
1,497,000
1,497,000
1,497,000
-
-
-
-
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their
short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is
available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 3
Xref Limited | Annual Report 2023 | 57
The contingent consideration payable relates to acquisition of subsidiaries (refer to note 32 for further detail). The fair value of the contingent
consideration is estimated by calculating the present value of the future expected cash flows. The valuation model considers the present value
of the expected future payments, discounted using a risk-adjusted discount rate.
Subsidiary acquired
Voice Project Pty Limited
Fair value at
2023
$
1,497,000
2022
Significant unobservable
Relationship of unobservable
$ inputs
inputs to fair value
-
Risk-adjusted discount rate
19.1%
The estimated fair value would
increase (decrease) if the risk-
adjusted discount rate were
lower (higher).
Total
1,497,000
-
Level 3 assets and liabilities
Movement in level 3 assets and liabilities during the current and previous financial year are set out below:
Contingent Consideration
Consolidated
Balance at 1 July 2021
Expense recognised in profit or loss
Additions
Balance at 30 June 2022
Expense recognised in profit or loss
Additions
Settlement
Balance at 30 June 2023
Total
$
-
-
-
-
-
1,497,000
-
1,497,000
Applying a discount rate range of 16-21 % across the each of the contingent consideration payments results in a range of $1.5m to $1.6m of
potential movement in total contingent consideration.
Note 32. Business Combinations
On 03 January 2023, Xref Limited, entered into a share sale agreement to acquire 100% of the ordinary shares of The Voice Project Pty
Limited for a maximum purchase consideration of $3,620,675. $2,123,675 was settled on completion in cash and an earn out consideration of
up to $1,497,000 (refer note 31) in script subject to The Voice Project Pty Limited achieving performance hurdles based on the following
criteria:
1. The first earnout payment in Xref shares of the value $500,000 is contingent on Voice Project achieving an EBITDA of more than
$250,000 in the first year following completion and is payable on 24 March 2024.
2. The second earnout payment in Xref shares of the value $500,000 is payable if, during the first year following completion, permanent
employees of Voice Project work an average of 403 hours per week and is payable on 24 March 2024.
3. The third earnout payment in Xref shares of the value $1,000,000 is contingent on Voice Project achieving an EBITDA of more than
$300,000 in the second year following completion and is payable on 24 March 2025.
The transaction was completed on 03 January 2023.
Established in 2002, Voice Project is a human resources consulting company that utilizes proprietary IP to help organizations track employee
engagement, leadership, and customer satisfaction through research-backed surveys and expert guidance provided by organizational
psychologists. Voice Project leverages its proprietary database to provide meaningful analytics and benchmarking, enabling organizations to
make data-driven decisions.
The acquired business contributed revenues of $1,760,062 from 03 January 2023 to 30 June 2023. If the acquisition occurred on 1 July 2022,
the full year contributions would have been revenues of $3,541,358.
Goodwill on acquisition
The goodwill of $1,043,740 relates predominantly to the key management, specialised know-how of the workforce, employee relationships,
competitive position and service offerings that do not meet the recognition criteria as an intangible asset at the date of acquisition.
58 | Xref Limited | Annual Report 2023
The values identified in relation to the acquisition of The Voice Project Pty Limited are provisional as at 30 June 2023 as permitted by AASB 3
Business Combinations. Any true ups required to fair value of assets and liabilities taken on will be reflected as at 31 December 2023.
Details of the acquisition are set out below:
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Intellectual Property
Voice Project Software
Brand
Customer contracts and relationships
Trade and other payables
Employee benefits
Unearned revenue
Net Assets acquired
Goodwill
Acquisition date fair value of total consideration
Representing:
Cash paid / payable to the vendor
Contingent consideration
Total
Acquisition costs expensed to profit or loss
Cash used to acquire business, net of cash acquired:
Cash consideration payable
Less: Cash and cash equivalents acquired
Net cash paid
Note 33. Contingencies
Fair Value
$
649,200
324,892
25,100
405,345
797,400
975,000
45,000
847,000
(245,478)
(203,343)
(1,043,181)
2,576,935
1,043,740
3,620,675
2,123,675
1,497,000
3,620,675
238,100
2,123,675
(649,200)
1,474,475
There are two contingent liabilities relating to bank guarantees associated with the lease of office premises, totaling $233,550 (2022:
$33,550). These are asset backed by term deposits of equal value.
In the opinion of the Directors, the Company did not have any other contingent assets or liabilities at 30 June 2023.
Xref Limited | Annual Report 2023 | 59
Note 34. 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/ (loss)
Statement of Financial Position
Assets
Total non current assets
Total Assets
Liabilities
Total current liabilities
Total non-current liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained profits
Total Equity
2023
$
2022
$
(1,617,376)
(1,617,376)
(778,832)
(778,832)
38,707,171
36,851,993
38,707,171
36,851,993
812,000
685,000
1,497,000
-
-
-
37,210,171
36,851,993
55,470,213
55,100,613
2,946,934
1,905,214
(21,206,976)
(20,153,834)
37,210,171
36,851,993
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 2023 and 2022.
Contingent liabilities
In relation to the acquisition of Voice Project Pty Limited the parent entity has contingent consideration liabilities first recognised in 2023
(2022: Nil) dependent on successful achievement of earn out criteria. Further information can be found in the business combination note (Note
32).
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment in 2023 and 2022.
Note 35. Events Occurring After the Reporting Date
On the 18 July 2023, Mrs. Lija Wilson resigned as Non-Executive Director of the company effective on 31 July 2023.
No other matters or events requiring adjustments have arisen since 30 June 2023, that relate to circumstances that existed as on the balance
sheet date.
60 | Xref Limited | Annual Report 2023
Director’s Declaration
The directors of the Company declare that:
1. The financial statements and notes for the year ended 30 June 2023 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 Financial 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
28 August 2023
Sydney
Thomas Stianos
Chairman
28 August 2023
Sydney
Xref Limited | Annual Report 2023 | 61
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 Ltd (the Company and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of Group is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its
financial performance for the year then ended;
(b) and complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
Some of the Crowe personnel involved in preparing this document may be members of a professional scheme approved under Professional
Standards Legislation such that their occupational liability is limited under that Legislation. To the extent that applies, the following disclaimer
applies to them. If you have any questions about the applicability of Professional Standards Legislation Crowe’s personnel involved in preparing
this document, please speak to your Crowe adviser.
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 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
© 2023 Findex (Aust) Pty Ltd
62 | Xref Limited | Annual Report 2023
Independent Auditor’s Report
Xref Limited
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How we addressed the Key Audit Matter
Software Development Costs (Note 18)
According to AASB 138: Intangible Assets, the
group has capitalised software development costs
amounting to $4,403,145 (as of 2022, it's
$2,422,270). These costs include both external
expenses, and internal wage costs of Xref Limited's
developers.
This is a key audit matter because of the estimates,
criteria, and judgments involved in capitalising
internally developed intangible assets.
We critically analysed management’s assessment
in accordance with AASB 138: Intangible Assets,
including performing the following procedures:
a)
reviewed documentation produced by
Management outlining the nature of the
development projects, the benefits to the
business that the projects would achieve and
the project timeline and their introduction to
the market.
b) discussed with Management and certain
employees their role in developing projects to
determine the reasonableness of their input
and work performed to confirm criteria was
satisfied to capitalise certain internal (wage)
costs.
c)
obtained management 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)
f)
confirmed with management that
consideration of redundant technology has
been written off.
evaluated costs capitalised against the
requirements of AASB 138, ensuring the
criteria for development was satisfied and
any research was expensed in the period.
g) evaluated the reasonableness of the Group’s
financial report disclosures in light of the
requirements of Australian Accounting
Standards.
© 2023 Findex (Aust) Pty Ltd
www.crowe.com.au
Xref Limited | Annual Report 2023 | 63
Independent Auditor’s Report
Xref Limited
Goodwill (Note 18)
Goodwill is required by Australian Accounting
Standards to be tested annually for impairment at
the Cash Generating Unit (CGU) level.
The Group performed an impairment assessment of
goodwill by calculating the value in use for each
CGU using discounted cash flow models.
The impairment assessment was a key audit matter
due to the size of the goodwill balance and the
judgement involved in determining the value in use
of each CGU.
Business Combinations (Note 32)
The Group acquired The Voice Project Pty Limited
during the year.
The accounting for the acquisition of a business is
complex. Australian Accounting Standards require
the Group to identify all assets, liabilities and
contingent liabilities of the acquired businesses and
estimate the fair value at the date of acquisition.
The acquisition is a key audit matter because it is a
significant transaction to the Group, and the Group
made significant judgements when accounting for
the acquisition, including the measurement of
separately identifiable intangible assets and the
measurement of contingent consideration.
We critically analysed management’s workings,
including performing the following procedures:
a) assessed whether the Group’s identification
of CGUs was consistent with our knowledge
of the operations, internal reporting lines and
level of integration of the acquired
businesses
b) discussed with management the basis for the
significant assumptions and inputs used in
the value in use model calculations as
provided by management and its external
expert and challenged its appropriateness.
Additionally, assessed the expert’s
qualifications to provide such input
c)
d)
obtained reports of relevant industries to
compare to management’s growth rates
utilised in the calculation.
interrogated the value in use model using
different inputs as a means to perform
sensitivity analysis.
e) evaluated the reasonableness of the Group’s
financial report note disclosures in light of the
requirements of Australian Accounting
Standards.
We critically analysed the Group’s business
combination workings to ensure its
appropriateness with AASB 3: Business
Combinations, including performing the following
procedures:
a) developed an understanding of the relevant
purchase agreements.
b) obtained the purchase price allocated
prepared by an independent valuer and
evaluated the reasonability of estimates and
judgements used within the fair value
assessment.
c)
agreed the amount of the purchase
consideration paid and/or payable to the
transaction agreement, bank statements and
ASX notices. Where there were contingent
considerations, we assessed the
appropriateness of management’s
assumptions in measuring the fair value of
the consideration.
d) assessed the reasonableness of the financial
© 2023 Findex (Aust) Pty Ltd
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64 | Xref Limited | Annual Report 2023
Independent Auditor’s Report
Xref Limited
Going Concern (Note 3 (z))
There was a deficiency in current assets and net
assets for the Group, which amounts to $5,718,920
and $202,522, respectively. As a result, this was
considered a key audit matter.
Despite these deficiencies, the financial statements
were prepared on a going concern basis, taking into
account the measures implemented by
management as described in the related note.
report note disclosures in light of the
requirements of the Australian Accounting
Standards.
We critically analysed the Group’s cashflow
forecast, for at least twelve months from the date
of this report, which was used to support the
going concern assessment, including performing
the following procedures:
a) obtained justification from management
around the assumptions used within the
cashflow forecast.
b)
c)
critically evaluated assumptions used by
management against historical
performances.
interrogated the cashflow forecast using
different inputs as a means to perform
sensitivity analysis.
d) evaluated the reasonableness of the Group’s
financial report note disclosures in light of the
requirements of Australian Accounting
Standards.
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 2023, 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.
© 2023 Findex (Aust) Pty Ltd
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Xref Limited | Annual Report 2023 | 65
Independent Auditor’s Report
Xref Limited
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the group financial report. The
auditor is responsible for the direction, supervision and performance of the group audit. The
auditor remains solely responsible for the audit opinion.
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.
© 2023 Findex (Aust) Pty Ltd
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66 | Xref Limited | Annual Report 2023
Independent Auditor’s Report
Xref Limited
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 14 to 19 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the remuneration report of Xref Limited, for the year ended 30 June 2023, 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
28 August 2023
Sydney
© 2023 Findex (Aust) Pty Ltd
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Xref Limited | Annual Report 2023 | 67
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 4 August 2023, based on Substantial Shareholder Notices received by the ASX and the
Company:
Substantial Shareholders
Lee-Martin John Seymour
Timothy David Griffiths
Herald Investment Trust PLC
Shareholding
31,730,108
28,730,690
11,540,775
Based on the market price at 4 August 2023 there were 547 shareholders with less than a marketable parcel of 2,632 shares at a share
price of $0.19.
Number of Ordinary Shares Held
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of
Holders Ordinary Shares
% of Total Issued
Capital
235
686
456
635
101
120,741
2,004,867
3,506,766
18,053,669
162,490,246
2,113
186,176,289
0.06
1.08
1.88
9.70
87.28
100.00
Top 20 Holders of Ordinary Shares (XF1) as at 4 August 2023
Rank Name of Shareholder
Shares
% of Shares
1 West Riding Investments Pty Ltd
2
3
4
5
6
7
8
9
Netwealth Investments Limited
Squirrel Holdings Australia Pty Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
UBS Nominees Pty Ltd
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd
10 Mr Craig Graeme Chapman
11
12
Lightview Asset Pty Ltd
Seymour Superannuation Holdings Pty Ltd
13 Mijon Investments Pty Ltd
14 DMX Capital Partners Limited
15
16
Schindler Investment Haus Pty Ltd
Assumo (Nominees) Pty Ltd
17 Mr Michael Charles Bowden
18
19
INGTBWTS Pty Limited
Solium Nominees (Aus) Pty Ltd
20 Mr Mark William Hoey
Total of Top 20 Holdings
Other Holdings
Total Fully Paid Shares Issued
68 | Xref Limited | Annual Report 2023
30,090,353
29,899,191
27,157,613
13,318,516
10,298,552
8,608,538
3,633,893
3,208,198
2,467,201
2,320,924
2,000,000
1,639,755
1,500,000
979,199
912,500
836,827
823,659
793,166
780,000
754,020
142,022,105
44,154,184
186,176,289
16.16
16.06
14.59
7.15
5.53
4.62
1.95
1.72
1.33
1.25
1.07
0.88
0.81
0.53
0.49
0.45
0.44
0.43
0.42
0.41
76.29
23.71
100.00
Shareholder Information
Options (XF1AD to XF1AW) as at 4 August 2023
Name and Number of Option Holders
Sharon Blesson (under Employee Option Plan)
James Solomons and Sharon Blesson (under Employee Option Plan) –
2,000,000 options each
20 employees and contractors (under Employee Option Plan)
Thomas Stianos
Nigel Heap
Lija Wilson
53 employees and contractors (under Employee Option Plan)
14 employees and contractors (under Employee Option Plan)
58 employees and contractors (under Employee Option Plan)
56 employees and contractors (under Employee Option Plan)
14 employees and contractors (under Employee Option Plan)
14 employees and contractors (under Employee Option Plan)
Total Number of Options on Issue
Warrants (XF1AN) as at 4 August 2023
Name of Warrant Holder
Pure Asset Management Pty Ltd
Voting Rights
Shares the Option
Holder is Entitled to
Exercise Price
Option Expiry
Date
300,000
$0.70 3 September 2023
4,000,000
1,801,268
1,800,000
900,000
600,000
494,359
275,000
1,380,741
4,390,000
687,500
1,010,000
17,638,868
$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
Nil
5 July 2025
Nil 20 February 2026
$0.42
$0.50
5 July 2026
5 July 2026
$0.42 20 February 2027
$0.50 20 February 2027
Warrants the Holder is
Entitled to
Exercise Price
Expiry Date
11,428,572
$0.35
23 July 2024
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.
Xref Limited | Annual Report 2023 | 69
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70 | Xref Limited | Annual Report 2023
Corporate Directory
PLACE OF
BUSINESS
Australia (Head Office
and Registered Office)
Suite 13, 13 Hickson Road
Dawes Point, NSW 2000
Tel: +61 2 8244 3099
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
Investor Hub
xf1.com
DIRECTORS
OFFICERS
AUDITORS
Thomas Stianos
Chairman
Lee-Martin Seymour
Managing Director
Nigel Heap
Non-Executive Director
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
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
LEADERSHIP TEAM
SHARE REGISTRY
Tracy Murdoch
General Counsel
Karina Guerra
GM – Customer
Intelligence
Sarah Mulvenna
GM - Revenue
Peter Langford
GM – Xref Engage
Automic Pty Ltd
Level 5, 126 Phillip Street
Sydney NSW 2000
GPO Box 5193
Sydney NSW 2001
www.automic.com.au
hello@automic.com.au
Tel: 1300 288 664
(within Australia)
Tel: + 61 2 9698 5414
(outside Australia)
Xref Limited | Annual Report 2023 | 71
AUDITORS
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)
72 | Xref Limited | Annual Report 2023
X R E F
Xref Limited | Annual Report 2023 | 73