XREF LIMITED - Annual Report 2018

==> picture [40 x 39] intentionally omitted <==

==> picture [76 x 39] intentionally omitted <==

==> picture [444 x 434] intentionally omitted <==

ANNUAL REPORT 2018

Xref Limited / Annual Report 2018 / 1

2018 Highlights	2
Chairman’s Report	4
Chief Executive Ofcer’s & Chief Technology Ofcer’s Report	6
Directors’ Report	10
Independence Declaration	26
Financial Statements	27
Notes to the Financial Statements	34
Directors’ Declaration	76
Independent Auditor’s Report	77
Shareholder Information	82
Corporate Directory	86

make more confident, smarter decisions.

2 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 3

2018

Highlights

Total Sales

72%

$7.1 million

TOTAL ANNUAL GROWTH

Recognised Revenue 63% TOTAL ANNUAL GROWTH $4.8 million

Overseas Sales

Channel Sales

New Client Sales

==> picture [304 x 119] intentionally omitted <==

----- Start of picture text -----

13%
24%
Australia Overseas Direct Channel
----- End of picture text -----

==> picture [118 x 121] intentionally omitted <==

----- Start of picture text -----

45%
Existing New
----- End of picture text -----

Sales Revenue vs Recognised Revenue

==> picture [491 x 167] intentionally omitted <==

----- Start of picture text -----

Sales Revenue vs Recognised Revenue Credit sales: $7.1m
Revenue: $4.8m
Credit sales: $4.1m
Revenue: $3.0m
Credit sales: $1.7m
Revenue: $1.3m
Credit sales: $0.67m
Revenue: $0.37m
FY15 FY16 FY17 FY18
----- End of picture text -----

Under Xref’s business model, clients purchase Xref credits to use our candidate referencing platform. These credit sales are reported initially as unearned income, and when clients pay for the credits, this is recognised as cash receipts. The credits are consumed when reference checks are ordered, and credit usage becomes recognised revenue.

KEY METRICS

ANNUAL REVENUE PER ACCOUNT (ARPA)

New clients acquired during FY18 contributed an ARPA of $8,4k , while for clients in their second, third and fourth year their ARPA has grown to $9.5k , $12.5k and $17.9k respectively.

CLIENT ACQUISITION

Client acquisition continued to strengthen and at 30 June 2018, more than 750 direct paying clients were using our services globally. Use of integrations to access Xref also more than doubled in the final quarter of FY18 alone and at the end of the financial year 136 clients use our platform through channel partners.

$17.9K

$9.5K

Acquired FY17

Acquired FY15

32%

CLIENT ADOPTION

Acquired FY17

The adoption rate for newly acquired clients is 29% in their first year. For clients in their second, third and fourth years adoption rates have grown to 32% , 58% & 89% respectively. Overall client adoption was 38% at the end of the financial year.

58% Acquired FY16

89% Acquired FY15

==> picture [256 x 194] intentionally omitted <==

----- Start of picture text -----

379
Acquired
224
Acquired
Existing
New
121
Acquired
42
Acquired
FY14 FY15 FY16 FY17 FY18
----- End of picture text -----

2 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 3

Chairman’s

Report

Xref now supports over 750 direct paying clients as well as those businesses accessing our platform through our 13 established channel partners. Sales via channel partners now contribute over 20% of sales revenue which enables us to expand worldwide cost-effectively. Xref’s strong client acquisition and retention are testament to the value of our powerful technology platform.

A dedicated team

We delivered strong growth in Australia, and international sales continued to ramp up faster than Australian sales at the same stage of market development. We have focused on building skilled sales teams in Europe, the Nordics region and North America, that can replicate Australia’s fast sales growth.

Welcome to Xref’s third annual report.

This has been another year of great success for Xref. We are capitalising on a unique position in the global human resources technology market, providing a fully APIdriven, software as a-service platform that simplifies the way employers seek references. We automate one of the most difficult, time-consuming recruitment processes – obtaining candidate references – and provide intuitive, data-driven insights for human resources practitioners.

Technological change is creating massive opportunities for growth, particularly within the $14 billion human resources software sector. Globally, many organisations are transitioning to the cloud, creating opportunities for companies such as Xref, which has a first-mover advantage, to serve the growing data-driven recruiting sector.

Strong sales and client growth

It is with great pleasure that we report credit sales for the year of $7.1 million, up 72% when compared to FY17. The rapid rate of Xref’s organic growth can truly be seen in the fact that sales revenue for just the last week of FY18 was almost equal to the sales revenue generated during the entire year of FY15, before the company’s listing on the ASX.

Technological leadership

I am excited by our team’s ongoing innovation. Our newest product, People Search, for example, provides a leading analytics platform, helping employers and recruitment professionals efficiently make use of existing referee data in their Xref account, to find ‘passive’ candidates that meet top talent criteria. Identifying experienced and well-qualified candidates who may not be actively seeking employment is an ongoing challenge for the industry, this platform takes Xref users another step beyond traditional sourcing techniques.

Helping clients meet regulatory needs

The introduction of the General Data Protection Regulation (GDPR) in May 2018, marked one of the biggest collective shifts in the way businesses operate across the EU. Effective data management has become a key technology challenge for organisations globally. We are proud to offer the assurance of a fully GDPRcompliant reference checking process and actively support our clients’ compliance with their regulatory obligations.

Ongoing growth

4 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 5

CHIEF EXECUTIVE OFFICER’S & CHIEF TECHNOLOGY OFFICER’S REPORT

Chief Executive Officer’s & Chief Technology Officer’s Report

Records for all key metrics

We are delighted to report another year of record results and incredible progress across all key business metrics. Sales of Xref credits increased more than 70% year-onyear to a record $7.1 million in FY18, up from $4.1 million in FY17. Recognised Revenue increased 63%, rising to $4.8 million from $2.9 million.

Client acquisition continued to strengthen, and at 30 June 2018, more than 750 direct paying clients were using our services globally, excluding those accessing our platform through our partner network. We also measure our growth success in terms of client adoption, based on the rate at which clients implement our services across their entire organisation. 45% of sales revenue was derived from new clients in FY18. Adoption rates for these new clients is already 29%. For clients in their second, third and fourth years adoption rates have grown to 32%, 58% and 89% respectively. Overall client adoption was 38% at the end of the financial year.

Business model

Xref’s cloud-based software allows companies to harness the benefits of technology, supporting timely, datadriven decisions on talent acquisition and retention while reducing employers’ exposure to security breaches, discrimination and potential fraud.

Growing Average Revenue Per Account (ARPA)

Together with increased client acquisition and adoption, a sales focus on enterprise organisations and highvalue sectors has contributed to an increase in Average Revenue Per Account (ARPA). This is another key benchmark by which we measure our progress. Our ability to increase penetration within existing clients’ businesses, accessing a greater proportion of available hires, can be seen by comparing the ARPA for new and established clients.

New clients acquired during FY18 contributed an ARPA of $8.4k, while for clients in their second, third and fourth year their ARPA has grown to $9.5k, $12.5k and $17.9k respectively. Overall ARPA has grown to $10k. This demonstrates clients’ increased use of our platform over time and validates its value to their businesses.

Accelerating global growth

A highlight of the year was the opening of our Norwegian office in September 2017 to service the Nordic region, comprising Norway, Denmark, Sweden, Iceland and Finland. The Norwegian team has strong recruitment sector experience, and has already welcomed some extremely high-profile clients, including Clas Ohlsen, the Norwegian Refugee Council and Norwegian State Railways (NSB). The labour market in this region is approximately 30% larger than Australia’s, so we are very excited about the opportunity to build on these early successes.

Our total addressable market includes more than 180 million people in North America, 120 million people in Europe, and 15 million people in Australia and New Zealand. Having opened our first international sales office in 2016, we now support clients from offices in Sydney, London, Oslo and Toronto and our services have been used by employers, recruiters candidates and their referees in over 190 countries across the world.

International sales represented 13% of the total achieved in FY18, and trends are showing that this proportion will continue to grow. During the year we introduced notable new clients in every region - in Australia and New Zealand, these included Incitec Pivot, NRMA, and Coca Cola Amatil New Zealand; in Europe, Shangri-La Hotel Group, UBM plc and Sanctuary Group; and new North American clients, Snapchat (Snap Inc.), Hays Canada, and SCM Insurance.

Channel expansion

The integration partner channel is an essential component of our global growth strategy. It allows enterprise companies to seamlessly embed the Xref solution into their human resources workflow. We help to educate partner sales teams so they become advocates for our services, providing a cost-effective way to win new clients.

Use of integrations to access Xref more than doubled in the final quarter of FY18 alone and at the end of the financial year 136 clients use our platform through channel partners, including Qantas, Westpac and the NSW Government.

In FY18, we commenced several new channel partnerships and our integration portfolio now includes some of the world’s leading HR technology providers, including Bullhorn, Checkr, Equifax, Expr3ss!, iCIMS, Lever, Oracle Taleo, SmartRecruiters, SnapHire, Talent App Store, Workday and Zapier. In June 2018, we launched our latest platform integration with recruitment software provider, JobAdder, taking us to a total of 13 live integrations by the end of the year.

These platforms provide talent management solutions for more than 50,000 organisations worldwide. We participate in joint marketing activities with integration partners to promote Xref’s platform, which can be easily accessed through partners’ marketplaces.

During FY18, we also launched a public API platform to allow third-party organisations to more efficiently integrate their software with Xref. This reduces the time required to bring an integration with Xref’s platform to market. Shortly after the close of the financial year, we announced our first public API-driven integration with recruitment solution provider, PeopleScout.

Increased scalability and product improvement

During the year we continually improved and refined our services, increasing scalability and security, and adding new language capabilities to our solution. We introduced the Sentiment Engine, which provides a graphical way to interpret written references and offers further insight into referees’ responses, at a glance. We also beta launched People Search, a paid platform addition which offers users the ability to find and filter historical referee data that could present passive candidate targeting opportunities. Further platform updates introduced during the year included report branding, enhanced data analytics, enterprise security, GDPR compliance and improved user management features.

Cost management

While investing to support global growth, we have maintained a tight control over costs and cash outflows have been in line with anticipated budgets throughout the year. A new sales platform has significantly improved the speed of client acquisition, reducing the length of the sales cycle to secure new clients by 55% from 80 days to 39 days. Having expanded internationally to drive sales, our costs have now steadied as we experience significant revenue growth

6 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 7

Positive outlook for growth

8 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 9

DIRECTORS’ REPORT

Directors’

Report

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Xref Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2018.

Strong global growth

Xref continues to invest to build global scale, capitalising on its unique software platform. The Company’s fully API-enabled solution allows clients to achieve time and cost savings by connecting their human resources workflow systems through the internet.

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:

Brad Rosser (Chairman)

Lee-Martin Seymour

Timothy Griffiths

Timothy Mahony

Nigel Heap

Principal activities

During the financial year the consolidated entity continued to conduct its core activity which was to develop human resources technology that automates the candidate reference process for employers.

During this financial year, Xref improved its performance against three key business metrics that guide the Company’s global growth and progress towards profitability – client acquisition, client adoption and AveARPA)

Client acquisition strengthened and, at 30 June 2018, more than 750 direct paying clients were using our services globally. Use of integrations to access Xref also more than doubled in the final quarter of FY18 alone and at the end of the financial year 136 clients use our platform through channel partners.

Client adoption increases over time. It is measured by comparing the use of Xref credits as a percentage of a client organisation’s total expected hires over a year. 45% of sales revenue was derived from new clients in FY18. Adoption rates for these new clients is already 29%. For clients in their second, third and fourth years adoption rates have grown to 32%, 58% & 89% respectively. Overall client adoption was 38% at the end of the financial year.

Average Revenue Per Account of new clients acquired during FY18 was $8.4k, while for clients in their second, third and fourth year their ARPA has grown to $9.5k, $12.5k & $17.9k respectively. Overall ARPA has grown to $10k.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

Result

The loss for the consolidated entity after providing for income tax amounted to $8,912,898, and was within management expectations (30 June 2017: $6,457,005).

Review of operations

Xref achieved strong sales growth during FY18 as it continued to invest for future growth.

HIGHLIGHTS OF THE FINANCIAL YEAR INCLUDED:

Sales - $7.1 million, up 72% from $4.1 million in FY17 with strong growth across Australia, New Zealand, Europe and North America. Sales cycle improved by 55%, reducing from 80 days to 39 days.
Recognised Revenue - increased 63% to $4.8 million from $2.9 million in FY17.

> Client Acquisition - continued to strengthen. At year end more than 750 direct paying clients were using Xref’s services globally, excluding those accessing the platform via a partner network.

Average Revenue Per Account (ARPA) - increased as a result of growing platform adoption.
Offices - Oslo office opened to service the Nordic region.
Integration Partners - more than doubled to 13, including some of the world’s leading applicant tracking systems. Landmark partnership with San Francisco-based Checkr, enabling North American background checks via the Xref platform.
Platform - new features and products, including Sentiment and People Search and public API to expedite thirdparty integrations.

Large addressable market

Clients across APAC, EMEA and North America are serviced from offices in Sydney, London, Toronto and, from September 2017, Oslo. The decision to introduce a physical presence in Oslo came in response to unsolicited demand for the Xref service in the region. Xref has a large addressable market, including more than 180 million people in North America, 120 million people in Europe, and 15 million people in Australia and New Zealand.

Technology improvement

The power of Xref’s platform increased in FY18 adding new features and updates including report branding, enhanced data analytics, enterprise security, GDPR compliance and improved user management features. The Company is also introducing products that present new revenue opportunities, including People Search, a separate paid platform that helps employers identify potential passive candidates in their existing referee data.

Xref’s partner channels expand

Collaboration with partners helps increase Xref’s channels to market, and the company has focused on introducing integrations with some of the world’s leading HR technology providers to build new business. These software systems are used by enterprises to manage talent acquisition. Sales via channel partners increased to contribute over 20% of the total sales in FY18, assisted by joint marketing campaigns with partners and other initiatives. Xref currently has 13 ‘live’ partners that support more than 50,000 organisations worldwide, and the number is growing. Integrations increase adoption, and a public API was launched to allow third-party organisations to connect with Xref’s platform more efficiently.

Finance and corporate

Cash outflows were within management expectations as the Company continued to build global scale. The net loss for the year was $8,912,898.

In July 2017 and March 2018, the Company invited eligible employees to participate in the Xref Employee Option plan.

Funding - successful capital raising of $7.5 million in August 2017.

10 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 11

DIRECTORS’ REPORT / Continued

Following 100% acceptance of the offer on both occasions, 1,055,449 and 2,749,782 new employee share options were issued.

In August 2017, Xref completed a $7.5 million capital raising which closed oversubscribed.

In September 2017, Xref opened its office in Oslo, Norway to service the Nordic region.

While Xref’s business has always been headquartered in Australia, the company moved its domicile from New Zealand to Australia on 21 September 2017.

In March 2018, executive directors Lee-Martin Seymour and Tim Griffiths sold 9,847,517 and 9,847,516 shares respectively, to meet demand from institutional investors. Following completion of the sale, they have entered into a voluntary agreement with Xref which restricts any further sale of shares before the announcement of the company’s FY19 results (i.e. September 2019).

Matters subsequent to the end of the financial year

In August 2018, the Board gave approval to issue further invitations to eligible employees to participate in the Xref Employee Option plan. Should 100% of the invitations be accepted 1,275,569 new employee share options will be issued

No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

Likely developments and expected results of operations

Xref anticipates continued growth across all business metrics and, with a strong pipeline of new business opportunities across all the markets within which it operates, we are confident about the year ahead.

Environmental regulation

The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Information on directors

==> picture [488 x 20] intentionally omitted <==

----- Start of picture text -----

Name: Lee-Martin Seymour
----- End of picture text -----

Title:	Managing Director and Chief Executive Ofcer
Qualifcations:	None
Experience and expertise:	Lee-Martin Seymour is a co-founder of Xref. He has 18 years recruitment

Lee-Martin Seymour is a co-founder of Xref. He has 18 years recruitment experience across many geographic and market sectors. For 12 years Lee worked for one of the world’s largest specialist recruitment companies. As a result he understands the demands of the employment market and is passionate about pioneering positive change for the long term. As a serial entrepreneur Lee has identified and successfully leveraged market opportunities to aid innovation in the employment sector.

Other current directorships:

None

==> picture [487 x 20] intentionally omitted <==

----- Start of picture text -----

Name:
Timothy Griffiths
----- End of picture text -----

Title:	Chief Technology Ofcer
Qualifcations:	MBA
Experience and expertise:	Timothy Grifths is a co-founder of Xref. Mr Grifths, an MBA-qualifed technologist, has 21 years’ experience advising companies, including Virgin
	and SkyTV. He worked for Benchmark Capital providing technical diligence for high tech start-up investment and was co-founder of media company a2a plc, which foated on the UK stock market. More recently Tim was CIO for Jcurve Solutions, an Australian cloud NetSuite ERP provider.
Other current directorships:	None
Former directorships (last 3 years): Special responsibilities:	None None
Interests in shares:	30,857,613 ordinary shares
Interests in options:	None
Contractual rights to shares:	8,333,333 performance rights

==> picture [484 x 20] intentionally omitted <==

----- Start of picture text -----

Name: Brad Rosser
----- End of picture text -----

Title:	Chairman
Qualifcations: Experience and expertise:	BCom, MBA Brad Rosser is a business builder and entrepreneur who worked for
	McKinsey and Co from 1992 to 1995 before working directly for Richard
	Branson as Director of Corporate Development for Virgin from 1995 to
	1999, helping to identify and implement start-up businesses. He holds an MBA from Cornell University’s Johnson Graduate School of Management and a Bachelor of Commerce (Honours) from the University of Western Australia.
Other current directorships:	None
Former directorships (last 3 years):	None
Special responsibilities:	Member of the Audit & Risk Committee and member of the Remuneration
	& Nomination Committee
Interests in shares:	None
Interests in options:	7,000,000
Contractual rights to shares:	None

Former directorships (last 3 years): None Special responsibilities: Member of the Remuneration & Nomination Committee Interests in shares: 30,857,612 ordinary shares Interests in options: None Contractual rights to shares: 8,333,333 performance rights

12 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 13

DIRECTORS’ REPORT / Continued

==> picture [485 x 20] intentionally omitted <==

----- Start of picture text -----

Name: Tim Mahony
----- End of picture text -----

Title:	Non-Executive Director
Qualifcations:	BFinAdmin
Experience and expertise:	Timothy Mahony spent 18 years in investment banking, specialising in
	capital markets and debt trading. Tim has been involved, as investor or
	founder, in a number of technology start ups, either successfully exiting
	the business or growing the business to a mature growth phase. He is a
	founder and director of Globalx Information, a digital information company
	providing information, software and services to the legal, corporate and
	spatial markets throughout Australia and the UK.
Other current directorships:	None
Former directorships (last 3 years):	None
Special responsibilities:	Member of the Audit & Risk Committee and member of the Remuneration
	& Nomination Committee
Interests in shares:	1,650,000 ordinary shares
Interests in options:	900,000
Contractual rights to shares:	None

Key Management Personnel

Chief Financial Officer

Mr James Solomons, BComm, FCA, CTA, GAICD

James is a chartered accountant with over 18 years of experience within the accounting & corporate finance industry. He has held various roles within the sector and has positioned himself as a leader in the accounting technology space bringing with him to Xref over 3 years of experience as Xero Australia’s Head of Accounting. A successful entrepreneur in his own right James has a deep understanding of the need to find a balance between investing for growth whilst maintaining strong corporate governance processes across the business.

Company Secretary

Mr Robert Waring, BEc, ACA, FCIS, ASIA, FAICD

Robert has over 40 years of experience in financial and corporate roles, including more than 25 years in company secretarial roles for ASX-listed companies. He is a director of Oakhill Hamilton Pty Ltd, a company that provides secretarial and corporate advisory services to a range of listed and unlisted companies. He is also the Company Secretary of ASX-listed companies Aeris Environmental Ltd, Vectus Biosystems Limited and Cobalt Blue Holdings Limited.

Meetings of directors

==> picture [485 x 20] intentionally omitted <==

----- Start of picture text -----

Name: Nigel Heap
----- End of picture text -----

Title:	Non-Executive Director
Qualifcations:	LLB,AMP
Experience and expertise:	Nigel Heap is the UK Ireland Managing Director, and Chairman of the Asia Pacifc business, of Hays plc, the leading global professional recruitment group, and a member of the group’s management board. He joined Hays
	in 1988 and over the last 20 years has successfully led the growth of the Asia-Pacifc business. He has completed INSEAD’s Advanced Management Program and holds a Bachelor of Laws from Manchester University.
Other current directorships:	Hays UK Ltd
Former directorships (last 3 years):	None
Special responsibilities:	Member of the Audit & Risk Committee
Interests in shares:	18,000 ordinary shares
Interests in options:	900,000
Contractual rights to shares:	None

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

The number of meetings of the company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended 30 June 2018, and the number of meetings attended by each director were:

==> picture [488 x 31] intentionally omitted <==

----- Start of picture text -----

Nomination and
Full Board Remuneration Committee Audit and Risk Committee
----- End of picture text -----

	Attended	Held	Attended	Held	Attended	Held
Lee-Martin Seymour	8	8	1	2	-	-
Timothy Grifths	7	8	-	-	2	2
Timothy Mahony	8	8	2	2	2	2
Nigel Heap	8	8	-	-	1	2
Brad Rosser	7	8	2	2	-	1

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Remuneration report (audited)

The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors.

14 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 15

DIRECTORS’ REPORT / Continued

The remuneration report is set out under the following main headings:

Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration

The objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors (‘the Board’) ensures that executive reward satisfies the following key criteria for good reward governance practices:

competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation

The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel.

The reward framework is designed to align executive reward to shareholders’ interests. The Board have considered that it

should seek to enhance shareholders’ interests by:

having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
increasing return on assets as well as focusing the executive on key non-financial drivers of value

Additionally, the reward framework should seek to enhance executives’ interests by:

rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth

Non-executive directors remuneration

Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors’ fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors’ fees and payments are appropriate and in line with the market. The chairman’s fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration.

ASX listing rules require the aggregate Non-Executive Directors’ remuneration be determined periodically by a general meeting. In the Prospectus dated 23th December 2015, noted on Page 18 the current maximum annual aggregate remuneration for directors was shown as $200,000. This has changed and a resolution was passed at the 2016 AGM that the maximum aggregate cash-based remuneration payable to Non Executive Directors in any financial year be increased by A$300,000 from A$200,000 to A$500,000.

Executive remuneration

The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components.

The executive remuneration and reward framework has four components:

base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave

The combination of these comprises the executive’s total remuneration.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of the consolidated entity and comparable market remunerations.

Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the executive.

The short-term incentives (‘STI’) program is designed to align the targets of the business units with the performance hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance indicators (‘KPI’s’) being achieved. KPI’s include profit contribution, customer satisfaction, leadership contribution and product management.

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.

The long-term incentives (‘LTI’) include long service leave and share-based payments. Shares are awarded to executives over a period of three years based on long-term incentive measures. These include increase in shareholders value relative to the entire market and the increase compared to the consolidated entity’s direct competitors.

The Company’s 2018 Annual Meeting (“AGM”)

A Remuneration Report has been prepared for the 2018 year and a resolution will be put to the 2018 AGM to ask shareholders to approve it.

16 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 17

DIRECTORS’ REPORT / Continued

Details of remuneration

Amounts of remuneration

Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.

The key management personnel of the consolidated entity consisted of the following directors of Xref Limited:

Lee-Martin Seymour – Managing Director & Chief Executive Officer
Timothy Griffiths – Executive Director & Chief Technology Officer
Timothy Mahony – Non-Executive Director
Nigel Heap – Non-Executive Director
Brad Rosser – Chairman

And the Key Management Personnel:

James Solomons – Chief Financial Officer
Robert Waring – Company Secretary

	Short-term benefts Post- employment benefts Long-term benefts Share- based payments

	Cash salary and fees Cash bonus Non- monetary Super- annuation Long service leave Equity- settled Total
2018	$ $ $ $ $ $ $
*Non-Executive* *Directors:* Brad Rosser Tim Mahony Nigel Heap *Executive Directors:* Lee-Martin Seymour Timothy Grifths *Other Key* *Management* *Personnel:* James Solomons Robert Waring	149,081 - - - - 373,027 522,108 51,815 - - - - 9,042 60,857 55,000 - - - - 35,576 90,576 271,167 25,000 - 23,750 - - 319,917 270,000 25,000 - 23,750 - - 318,750 270,000 25,000 - 23,750 - 103,107 421,857 64,732 - - - - 3,628 68,360
	1,131,795 75,000 - 71,250 - 524,380 1,802,425

==> picture [490 x 112] intentionally omitted <==

----- Start of picture text -----

Short- Post- Short- Post- Share-
term employment term employment Long-term based
benefits benefits benefits benefits benefits payments
Cash Long
salary and Non- Super- service Equity-
fees Cash bonus monetary annuation leave settled Total
2017 $ $ $ $ $ $ $
----- End of picture text -----

2017	Cash salary and fees Cash bonus Non- monetary Super- annuation Long service leave Equity- settled Total $ $ $ $ $ $ $
Non-Executive Directors: Simon O’Loughlin (Chairman) Brad Rosser (Chairman) Timothy Mahony Nigel Heap * Executive Directors: Lee-Martin Seymour Timothy Grifths Other Key Management Personnel: James Solomons Robert Waring	12,500 - - - - - 12,500 125,032 - - - - 292,232 417,264 54,555 - - - - 15,300 69,855 47,755 - - - - 55,921 103,676 250,000 41,450 - 21,850 - - 313,300 250,000 41,450 - 21,850 - - 313,300 209,644 41,450 - 18,893 - - 269,987 71,715 - - - - - 71,715
	1,021,201 124,350 - 62,593 - 363,453 1,571,597

Represents remuneration from 1 July 2016 to 18 August 2016
** Represents remuneration from 18 August 2016 to 30 June 2017

18 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 19

DIRECTORS’ REPORT / Continued

The proportion of remuneration linked to performance and the fixed proportion are as follows:

==> picture [489 x 37] intentionally omitted <==

----- Start of picture text -----

Fixed remuneration At risk - STI At risk - LTI
Name 2018 2017 2018 2017 2018 2017
----- End of picture text -----

Non-Executive Directors:
Simon O’Loughlin (Chairman)	-	100%	-	-	-	-
Brad Rosser (Chairman)	100%	100%	-	-	-	-
Timothy Mahony	100%	100%	-	-	-	-
Nigel Heap	100%	100%	-	-	-	-
Executive Directors:
Lee-Martin Seymour	92%	87%	8%	13%	-	-
Timothy Grifths	92%	87%	8%	13%	-	-
Other Key Management
Personnel:
James Solomons	92%	85%	8%	15%	-	-
Robert Waring	100%	100%	-	-	-	-

Cash bonuses are dependent on meeting defined performance measures. The amount of the bonus is determined having regard to the satisfaction of performance measures and weightings as described above in the section ‘Consolidated entity performance and link to remuneration’. The maximum bonus values are established at the start of each financial year and amounts payable are determined in the final month of the financial year by the Nomination and Remuneration Committee.

Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows:

==> picture [489 x 20] intentionally omitted <==

----- Start of picture text -----

Name: Lee-Martin Seymour
----- End of picture text -----

Title:	Managing Director and Chief Executive Ofcer
Agreement commenced:	1 July 2017
Term of agreement:	No fxed term
Details:	Base salary for the year ending 30 June 2018 of $250,000 per annum, plus
	superannuation, plus $20,000 car allowance to be reviewed annually by the
	Nomination and Remuneration Committee. 1 month termination notice by either
	party. Discretionary bonus may be paid as per Nomination and Remuneration
	Committee approval and KPI achievement. Non-solicitation and non- compete
	clauses exist.

Name:	Timothy Grifths
Title:	Executive Director and Chief Technology Ofcer
Agreement commenced:	1 July 2017
Term of agreement:	No fxed term
Details:	Base salary for the year ending 30 June 2018 of $250,000 per annum, plus
	superannuation, plus $20,000 car allowance to be reviewed annually by the
	Nomination and Remuneration Committee. 1 month termination notice by either
	party. Discretionary bonus may be paid as per Nomination and Remuneration
	Committee approval and KPI achievement. Non-solicitation and non- compete
	clauses exist.
Name:	James Solomons
Title:	Chief Financial Ofcer
Agreement commenced:	1 July 2017
Term of agreement:	No fxed term
Details:	Base salary for the year ending 30 June 2018 of $250,000 per annum, plus
	superannuation, plus $20,000 car allowance to be reviewed annually by the
	Nomination and Remuneration Committee. 1 month termination notice by either
	party. Discretionary bonus may be paid as per Nomination and Remuneration
	Committee approval and KPI achievement along with ability to receive options in Xref
	Limited. Non-solicitation and non-compete clauses exist.

Key management personnel have no entitlement to termination payments in the event of removal for misconduct.

Share-based compensation

Options

The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows:

Grant date	Vesting date and exercisable date	Expiry date	Exercise price	Fair value per option at grant date
26 September 2017	3/7/18	3 July 2021	$0.58	$0.3162
22 March 2018	12/2/18	1 February 2021	$0.70	$0.0697
22 March 2018	12/2/19	12 February 2022	$0.70	$0.0928
22 March 2018	12/2/20	12 February 2023	$0.70	$0.1120

Options granted carry no dividend or voting rights.

20 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 21

DIRECTORS’ REPORT / Continued

All options were granted over unissued fully paid ordinary shares in the company. The number of options granted was determined having regard to the satisfaction of performance measures and weightings as described above in the section ‘Consolidated entity performance and link to remuneration’. Options vest based on the provision of service over the vesting period whereby the executive becomes beneficially entitled to the option on vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the granting of such options other than on their potential exercise.

The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2018 are set out below:

Name	Number of options granted during the year 2018	Number of options granted during the year 2017	Number of options vested during the year 2018	Number of options vested during the year 2017
Tim Mahony	-	-	300,000	300,000
Nigel Heap	-	900,000	300,000	300,000
Brad Rosser	-	7,000,000	2,000,000	-
James Solomons	2,500,000	-	1,000,000	-
Robert Waring	16,312	-	-	-

Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as part of compensation during the year ended 30 June 2018 are set out below:

Performance rights

There were no performance rights over ordinary shares issued to directors and other key management personnel as part of compensation that were outstanding as at 30 June 2018.

There were no performance rights over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 30 June 2018.

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:

==> picture [489 x 40] intentionally omitted <==

----- Start of picture text -----

Balance at Received Balance at
the start of as part of Disposals/ the end of
the year remuneration Additions other the year
----- End of picture text -----

	Balance at the start of the year Received as part of remuneration Additions Disposals/ other Balance at the end of the year
*Ordinary shares* Timothy Mahony Nigel Heap Lee-Martin Seymour Timothy Grifths James Solomons Robert Waring	1,650,000 - - - 1,650,000 18,000 - - - 18,000 32,371,795 - 8,333,334 (9,847,517) 30,857,612 32,371,796 - 8,333,333 (9,847,516) 30,857,613 9,000 - - - 9,000 213,885 - - - 213,885
	66,634,476 - 16,666,667 (19,695,033) 63,606,110

Option holding

Name	Value of options granted during the year $	Value of options exercised during the year $	Value of options lapsed during the year $	Remuneration consisting of options for the year %
James Solomons	223,328	-	-	24%
Robert Waring	3,667	-	-	5%

The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

==> picture [488 x 41] intentionally omitted <==

----- Start of picture text -----

Balance at Expired/ Balance at
the start of forfeited/ the end of
the year Granted Exercised other the year
----- End of picture text -----

*Options over ordinary shares* Brad Rosser Timothy Mahony Nigel Heap James Solomons Robert Waring	7,000,000 - - - 7,000,000 900,000 - - - 900,000 900,000 - - - 900,000 - 2,500,000 - - 2,500,000 - 16,312 - - 16,312
	8,800,000 2,516,312 - - 11,316,312

22 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 23

DIRECTORS’ REPORT / Continued

Other transactions with key management personnel and their related parties

During the financial year;

Payments for accounting services from Verve Solutions Pty Ltd (related entity of James Solomons) of $154,154 (ex GST) were made.

Payments for company secretarial services from Oakhill Hamilton Pty Ltd (related entity of Robert Waring) of $64,732 (ex GST) were made.

All transactions were made on normal commercial terms and conditions and at market rates.

Performance Rights

Lee-Martin Seymour had A Class Performance Rights converted into 8,333,334 fully paid ordinary shares after the achievement of the performance milestones set out in the conversion events, as approved by shareholders at the 26 November 2015 EGM, and as detailed in the terms and conditions of the Company’s B Class Performance Rights released to ASX on 4 December 2017. As at the date of this report there is a balance of 8,333,333 Performance Rights available for Lee-Martin Seymour.

Timothy Griffiths had A Class Performance Rights converted into 8,333,333 fully paid ordinary shares after the achievement of the performance milestones set out in the conversion events, as approved by shareholders at the 26 November 2015 EGM, and as detailed in the terms and conditions of the Company’s B Class Performance Rights released to ASX on 4 December 2017. As at the date of this report there is a balance of 8,333,333 Performance Rights available for Timothy Griffiths.

This concludes the remuneration report, which has been audited.

Indemnity and insurance of officers

The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Non-audit services

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 10 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 10 to the financial statements do not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and

> none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

Rounding of amounts

The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors’ report.

Corporate Governance

The Group’s Corporate Governance Statement and Appendix 4G checklist are released to ASX on the same day the Annual Report is released. The Corporate Governance Statement and Corporate Governance Manual can be found on the - Company’s website at https://xref.com/en/investor centre/.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

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.

On behalf of the directors

During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Lee-Martin Seymour Managing Director

29 August 2018

Brad Rosser

Chairman

24 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 25

Independence Declaration

Financial

Statements

Statement of profit or loss and other comprehensive income for the year ended 30 June 2018

==> picture [490 x 54] intentionally omitted <==

----- Start of picture text -----

Note Consolidated
2018 2017
$ $
----- End of picture text -----

Revenue
Sales - Credits Sold in Current Year		7,071,723	4,107,518
Less adjustment for Unearned Revenue		(2,225,723)	(1,127,069)
	9	4,846,000	2,980,449
Other income	13	1,849,140	1,437,665
Expenses
Employee expenses		(9,170,013)	(5,418,895)
Overheads and administrative expenses	10	(6,359,098)	(5,409,076)
Depreciation, amortisation and impairment expenses	11	(78,927)	(46,181)
Loss before income tax expense from continuing operations		(8,912,898)	(6,456,038)
Income tax expense	14	-	-
Loss after income tax expense from continuing operations		(8,912,898)	(6,456,038)
Loss after income tax expense from discontinued operations	8	-	(967)
Loss after income tax expense for the year attributable to the		(8,912,898)	(6,457,005)
owners of Xref Limited
Other comprehensive income
Items that may be reclassifed subsequently to proft or loss
Foreign currencytranslation		(205,147)	(51,862)
Other comprehensive income for theyear, net of tax		(205,147)	(51,862)
Total comprehensive income for the year attributable to the		(9,118,045)	(6,508,867)
owners of Xref Limited
Total comprehensive income for the year is attributable to:
Continuing operations		(9,118,045)	(6,507,900)
Discontinued operations		-	(967)
		(9,118,045)	(6,508,867)

26 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 27

FINANCIAL STATEMENTS / For the Year Ended 30 June 2018

Statement of profit or loss and other comprehensive income for the year ended 30 June 2018 (continued)

==> picture [489 x 55] intentionally omitted <==

----- Start of picture text -----

Note Consolidated
2018 2017
$ $
----- End of picture text -----

		Cents	Cents
Earnings per share for loss from continuing operations attributable
to the owners of Xref Limited
Basic earnings per share	26	(6.39)	(6.13)
Diluted earnings per share	26	(6.39)	(6.13)
Earnings per share for proft from discontinued operations
attributable to the owners of Xref Limited
Basic earnings per share		N/A	0.00
Diluted earnings per share		N/A	0.00
Earnings per share for loss attributable to the owners of Xref Limited

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Statement of financial position as at 30 June 2018

==> picture [489 x 54] intentionally omitted <==

----- Start of picture text -----

Note Consolidated
2018 2017
$ $
----- End of picture text -----

Assets
Current assets
Cash and cash equivalents	15	4,451,896	4,069,573
Trade and other receivables	16	3,144,727	2,616,084
Prepayments		229,886	192,620
Total current assets		7,826,509	6,878,277
Non-current assets
Property, plant and equipment	17	322,105	212,357
Intangibles	18	117,953	101,681
Rental Bonds		120,196	74,998
Total non-current assets		560,254	389,036

Total assets		8,386,763	7,267,313
Liabilities
Current liabilities
Trade and other payables	19	1,646,024	1,641,502
Employee Entitlements	20	277,529	162,725
Superannuation payable		184,268	115,258
Lease Incentive		13,103	31,512
Unearned Revenue	21	4,268,871	2,030,253
Total current liabilities		6,389,795	3,981,250
Non-current liabilities
Employee entitlements	22	52,622	22,436
Lease Incentive		-	13,103
Total non-current liabilities		52,622	35,539

Total liabilities		6,442,417	4,016,789
Net assets		1,944,346	3,250,524

28 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 29

FINANCIAL STATEMENTS / For the Year Ended 30 June 2018

Statement of financial position as at 30 June 2018 (continued)

	Note	2018 $	Consolidated 2017 $
Equity
Issued capital	23	40,087,991	32,687,991
Other equity reserves	24	(21,754,920)	(21,961,640)
Accumulated losses		(16,388,725)	(7,475,827)

Total equity		1,944,346	3,250,524

The above statement of financial position should be read in conjunction with the accompanying notes

Share capital Performance rights reserve Share option reserve Foreign currency translation reserve Consolidation reserve Retained profts Total equity Consolidated $ $ $ $ $ $ $ Balance at 1 July 2016 25,042,977 433,333 297,802 16,947 (22,845,821) (1,110,982) 1,834,256 Loss after income tax expense for the year - - - - - (6,457,005) (6,457,005) Other comprehensive income for the year, net of tax - - - (51,862) - - (51,862)	Total comprehensive income for the year - - - (51,862) - (6,457,005) (6,508,867) Transactions with owners in their capacity as owners: Shares Issued 8,101,681 - - - - - 8,101,681 Capital Raising Costs (540,000) - - - - - (540,000) Performance Rights B 83,333 (83,333) - - - - - Options Issued - - 363,454 - - - 363,454 Options Expired - - (92,160) - - 92,160 -		Balance at 30 June 2017 32,687,991 350,000 569,096 (34,915) (22,845,821) (7,475,827) 3,250,524	The above statement of changes in equity should be read in conjunction with the accompanying notes.

30 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 31

FINANCIAL STATEMENTS / For the Year Ended 30 June 2018

Statement of cash flows for the year ended 30 June 2018

Issued capital Performance rights reserve Share option reserves Foreign currency translation reserve Consolidation reserve Retained profts Total equity Consolidated $ $ $ $ $ $ $ Balance at 1 July 2017 32,687,991 350,000 569,096 (34,915) (22,845,821) (7,475,827) 3,250,524 Loss after income tax expense for the year - - - - - (8,912,898) (8,912,898) Other comprehensive income for the year, net of tax - - - (205,147) - - (205,147)	Total comprehensive income for the year - - - (205,147) - (8,912,898) (9,118,045) Transactions with owners in their capacity as owners: Shares Issued 7,500,000 - - - - - 7,500,000 Capital Raising Costs (450,000) - - - - - (450,000) Performance Rights 350,000 (350,000) - - - - - Options Issued - - 761,867 - - - 761,867		Balance at 30 June 2018 40,087,991 - 1,330,963 (240,062) (22,845,821) (16,388,725) 1,944,346	The above statement of changes in equity should be read in conjunction with the accompanying notes.

==> picture [490 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
Notes 2018 2017
$ $
----- End of picture text -----

Cash fows from operating activities
Receipts from customers (inclusive of GST)		7,207,058	3,524,328
Payments to suppliers and employees(inclusive of GST)		(15,523,197)	(9,631,070)
		(8,316,139)	(6,106,742)
Interest received		117,452	53,031
Other revenue		1,731,688	482,426
Net cash used in operating activities	28	(6,466,999)	(5,571,285)
Cash fows from investing activities
Payments for property, plant and equipment	17	(184,406)	(119,804)
Payments for intangibles	18	(16,272)	-
Cash from loans to other entities		-	31,416
Proceeds from disposal ofproperty,plant and equipment		-	233
Net cash used in investingactivities		(200,678)	(88,155)
Cash fows from fnancing activities
Proceeds from issue of shares	23	7,500,000	8,000,000
Share issue transaction costs	23	(450,000)	(540,000)
Net cash from fnancingactivities		7,050,000	7,460,000
Net increase in cash and cash equivalents		382,323	1,800,560
Cash and cash equivalents at the beginning of the fnancial year		4,069,573	2,270,832
Effects of exchange rate changes on cash and cash equivalents		-	(1,819)

Cash and cash equivalents at the end of the fnancialyear	15	4,451,896	4,069,573

32 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 33

NOTES TO THE FINANCIAL STATEMENTS / continued

Notes to the

Financial Statements

1. Reporting entity

Xref Limited is a limited liability company incorporated on 28 January 2003 and as at 21 September 2017 is domiciled in Australia. The address of its registered office is Unit 14, 13 Hickson Road, Dawes Point, New South Wales, Australia 2000.

Xref is a human resources technology company that automates the candidate reference process for employers.

2. Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’).

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:

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.

derecognises the assets (including goodwill) and liabilities of the subsidiary;
derecognises the carrying amount of any non-controlling interest;
derecognises the cumulative carrying amount of foreign currency translation; differences recorded in reserves;
recognises the fair value of the consideration received;
recognises the fair value of any investment retained;
recognises any surplus or deficit in profit or loss; and
reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss, or retained earnings as appropriate.
Interests in subsidiaries are held at cost less impairment in the Parent.

3. Significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 32.

b. Foreign currency translation

The financial statements are presented in Australian Dollars, which is Xref Limited’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into the functional currency of the Parent, using exchange rates prevailing at the dates of the transactions (i.e. the spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from measurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in the reported profit or loss.

Non-monetary items measured at historical cost are not re-translated at each year-end, instead they are only translated once using the exchange rate at the transaction date. Non-monetary items measured at fair value are translated using the exchange rates at the date when the year-end fair value was determined.

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.

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)”.

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.

34 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 35

NOTES TO THE FINANCIAL STATEMENTS / continued

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and loss are recognised in the Statement of Comprehensive Income as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in fair value movements disclosed within other comprehensive income.

Foreign operations

In the Group’s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than Australian Dollars are translated into Australian Dollars upon consolidation.

e. 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.

f. Property, plant and equipment

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.

Except for land and buildings, items of property, 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 property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised.

In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value at the acquisition date.

All repairs and maintenance expenditure is charged to profit or loss in the year in which the expense is incurred.

When an item of property, plant or equipment is disposed of, the gain or loss recognised in the profit or loss is calculated as the difference between the net sale proceeds and the carrying amount of the asset.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Computer Equipment	3-5 years
Ofce Equipment	3-20 years
Ofce Furniture	10-20 years
Ofce Fit-out	6-20 years

d. Trade debtors and other receivables

Trade debtors are amounts due from customers for goods sold and services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade debtors and other receivables are measured initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for any impairment.

An allowance for impairment is established where there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivable.

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 property, 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. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.

g. Intangible assets

Other receivables are recognised at amortised cost, less any provision for impairment.

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.

36 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 37

NOTES TO THE FINANCIAL STATEMENTS / continued

Internally developed intangible assets.

Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge and understanding,

is recognised in the reported profit or loss when incurred.

Development activities include a plan or design for the production of new or substantially improved products. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in the reported surplus and deficit when incurred.

Capitalised development expenditure is measured at cost less accumulated amortisation and any impairment losses.

j. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument in another entity.

Financial instruments are comprised of trade debtors and other receivables, cash and cash equivalents, other financial assets, trade creditors and other payables, borrowings, other financial liabilities and derivative financial instruments.

Initial recognition and measurement

Financial assets and financial liabilities are recognised initially at fair value plus transaction costs attributable to the acquisition, except for those carried at fair value through profit or loss, which are measured at fair value.

Financial assets and financial liabilities are recognised when the Parent and Group becomes a party to the contractual provisions of the financial instrument.

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.

h. Leased assets

Leases where the Group assumes substantially all the risks and rewards incidental to ownership of the leased assets, are classified as finance leases. All other leases are classified as operating leases.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Associated costs, such as maintenance and insurance, are expensed as incurred.

i. Impairment of non-financial assets

At each reporting date, the carrying amounts of tangible and intangible assets are reviewed to determine whether there is any indication of impairment. If any such indication exists for an asset, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

Goodwill and other intangible assets with indefinite useful life are tested for impairment annually.

An impairment loss is recognised whenever the carrying amount of an asset exceeds is recoverable amount. Impairment losses directly reduce the carrying amount of assets and are recognised in the reported profit or loss.

De-recognition of financial instruments

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or if the Group transfers the financial asset to another party without retaining control or substantial all risks and rewards of the asset.

A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Subsequent measurement of financial assets

The subsequent measurement of financial assets depends on their classification, which is primarily determined by the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition into one of four categories defined below, and re-evaluates this designation at each reporting date.

All financial assets except for those classified as fair value through profit or loss are subject to review for impairment at least at each reporting date. Different criteria to determine impairment are applied to each category of financial assets, which are described below.

The classification of financial instruments into one of the four categories below, determines the basis for subsequent measurement and the whether any resulting movements in value are recognised in the reported profit/ loss or other comprehensive income.

i. Loans and receivables

The estimated recoverable amount of an asset is the greater of their fair value less costs to sell and value in use. Value in use is determined by estimating future cash flows from the use and ultimate disposal of the asset and discounting to their present value using a pre-tax discount rate that reflects current market rates and risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss in respect of goodwill is not reversed. Other impairment losses are reversed when there is a change in the estimates used to determine the recoverable amount. An impairment loss on property carried at fair value is reversed through the relevant reserve. All other impairment losses are reversed through profit or loss.

Any reversal of impairments previously recognised is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group.

38 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 39

NOTES TO THE FINANCIAL STATEMENTS / continued

ii. Financial assets at fair value through profit and loss

Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or that meet certain conditions and are designated at fair value through profit or loss upon initial recognition. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of nonderivative financial instruments are determined by reference to active market transactions or using a valuation technique where no active market exists.

Equity investments are measured at cost less any impairment charges, where the fair value cannot currently be estimated

reliably.

When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income. Any associated interest income or dividends are recognised in profit or loss within “finance income”.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

k. Provisions

A provision is recognised for a liability when the settlement amount or timing is uncertain; when there is a present legal or constructive obligation as a result of a past event; it is probable that expenditures will be required to settle the obligation; and a reliable estimate of the potential settlement can be made. Provisions are not recognised for future operating losses.

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower that the unavoidable cost of meeting its obligation under the contract.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation.

Provisions are discounted to their present values, where the time value of money is material. The increase in the provision due to the passage of time is recognised as an interest expense.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

l. 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.

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 is respect of long service leave is the amount of future benefit that employees have earned in return for their services in the current and prior years. The obligation is calculated using the projected unit credit method and is discounted to its present value. Any actuarial gains and losses are recognised in profit or loss in the year in which they arise.

Share-based 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.

m. Revenue

Revenue is recognised to the extent that it is probable that the economic benefit will flow to the Group and revenue can be reliably measured. Revenue is measured at the fair value of consideration received, excluding GST, rebates, and trade discounts.

The following specific recognition criteria must be met before revenue is recognised:

Rendering of services

The Group sells candidate reference credits to its customers. When customers use a credit, the service has been performed and revenue is recognised in the accounting periods in which the services are provided. Unused credits are recognised as unearned income in the financial statements.

Interest income

Interest income is recognised as it accrues, using the effective interest method.

n. Finance costs

These include salaries and wages accrued up to the reporting date and annual leave earned, but not yet taken at the reporting date.

Finance costs recorded in the Statement of Comprehensive Income comprise the interest expenses charged on borrowings and the unwinding of discounts used to measure the fair value of provisions.

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.

40 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 41

NOTES TO THE FINANCIAL STATEMENTS / continued

o. Profit and loss from discontinued activities

A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and:

q. 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.

represents a separate major line of business or geographical area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business; or geographical area of operations; or
is a subsidiary acquired exclusively with a view to re-sale

The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date for the latest year presented. Where operations previously presented as discontinued are now regarded as continuing operations, prior year disclosures are correspondingly re-presented.

p. 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.

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.

r. 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.

s. 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.

t. 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.

u. 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.

v. Going Concern

Not withstanding the Group incurred a loss after tax for the year of $8,912,898 (2017: $6,457,005), the consolidated financial statements have been prepared on a going concern basis as the Group has a net asset position of $1,944,346 (2017: $3,250,524). The Group has an expectation that the sum of its activities will result in a positive cash position as at 30 June 2019, although a trading deficit is predicted. The Group has been able to demonstrate in previous years that they have been successful in raising capital when needed. In August 2017 $7.5 million was raised before costs. The Directors remain confident that this can again be done when required to support the Groups continuing activities. The directors believe the Group can support its operating activities and pay its debts when they fall due in the next 12 months and the foreseeable future. As such the consolidated financial statements have been prepared on the going concern basis.

42 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 43

NOTES TO THE FINANCIAL STATEMENTS / continued

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 2018. The consolidated entity’s assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below.

AASB 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, and recognition of revenue when each performance obligation is satisfied. The consolidated entity has at this time performed an assessment of the performance obligations within current contracts and has assessed that there will be no material impacts on the way revenue is currently recognised.

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.

Share-based payment transactions

The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.

AASB 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’. AASB 9 introduces new classification and measurement models for financial assets. For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity’s own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. The consolidated entity has considered its financial assets and liabilities and does not believe that there will be any material impacts on the financial statements.

AASB 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 ‘Leases’ and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a ‘right-of-use’ asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a ‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. The standard will impact the Group as it holds various leases for premises and assets. The full calculations of the impact have not yet been assessed as the nature of these contracts is subject to change. As the Group gets closer to the date of implementation, the Group will substantiate the effects to the financial statements.

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

Provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.

Internally generated software and research costs

Management monitors progress of internal research and development projects by using a project management system. Significant judgement is required in distinguishing research from the development phase.

To distinguish any research-type project phase from the development phase, it is the Group’s accounting policy to require a detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into the Group’s overall budget forecast as the capitalisation of development costs commences. This ensures that managerial accounting, impairment testing procedures and accounting for internally-generated intangible assets are based on the same data.

Management has determined that for the 2018 financial year that no expenditure be capitalised as an asset. The basis for this decision is that over the past 5 years there has been significant development of the platform and that the current platform is completely different to that which previously existed. The system that currently exists is not a standalone asset and is constantly evolving. Additionally, the codebase and infrastructure regularly changes to keep up with technological advances.

44 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 45

NOTES TO THE FINANCIAL STATEMENTS / continued

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax losses or credits. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full.

Research and Development Refundable Tax Offset

The Group has identified costs including hosting fees, market research, external contractors, system testing and remuneration which it has identified as research and development costs. The Research and Development tax refund is calculated as 43.5% of the total figure.

6. Group information

The preliminary consolidated financial statements of the Group include

Name	Principal activities	Principal place of business / Country of incorporation	Ownership interest 2018 %	2017 %
Xref Limited	Candidate Referencing	Australia	100.00%	100.00%
Xref (AU) Pty Limited	Candidate Referencing	Australia	100.00%	100.00%
Xref (UK) Limited	Candidate Referencing	United Kingdom	100.00%	100.00%
Xref Referencing (CA) Limited	Candidate Referencing	Canada	100.00%	100.00%
Xref AS	Candidate Referencing	Norway	100.00%	-

a. Investments in subsidiaries

All investments in subsidiaries are carried at cost and eliminated through consolidation in the Group.

7. Operating segments

There is only one operating segment (candidate referencing) for the year ended 30 June 2018. The disclosures on the face of the statement of comprehensive income to operating loss and the statement of financial position (excluding the items designated for sale) represent the Group’s one business segment.

Geographical information

	2018 2017
	$ $
Credit sales to external customers Australia Canada United Kingdom Norway	6,150,386 3,844,059 455,107 120,864 354,664 142,595 111,566 -
	7,071,723 4,107,518

	2018 2017
	$ $
Revenue from external customers Australia Canada United Kingdom Norway	4,316,355 2,889,087 222,011 23,124 241,223 68,238 66,411 -
	4,846,000 2,980,449

	Consolidated
	2018 2017
	$ $
Non-current operating assets Australia Canada United Kingdom Norway	390,283 207,128 104,842 22,125 58,113 58,102 7,016 -
Total Non-current operatingassets	560,254 287,355

The information above is based on the locations of the customers.

46 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 47

NOTES TO THE FINANCIAL STATEMENTS / continued

8. Discontinued operations

Description

The assets and liabilities related to Inner Mongolia Plate Mining Co Limited have been presented as held for sale following the acquisition by Xref Pty Limited.

Financial performance information

	Consolidated
	2018 2017
	$ $
Expenses Loss before income tax expense Income tax expense	- (967)
	- (967)
	- -
Loss after income tax expense from discontinued operations	- (967)

Cash flow information

	Consolidated 2018 2017 $ $	Consolidated 2018 2017 $ $
Net cash used in operatingactivities	-	(967)

9. Revenue

Revenue

	Consolidated 2018 2017 $ $
Renderingof services	4,846,000 2,980,449

10. Overheads and administrative expenses

==> picture [490 x 538] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
Audit fees 90,678 111,352
Accounting 250,709 314,279
Directors fees 263,157 232,353
Legal fees 178,566 187,628
Marketing fees 1,559,137 1,486,865
Other Consultants 900,470 830,788
Share Option Expense 761,867 363,454
Administration expense 1,742,124 1,301,920
Foreign exchange loss (76,477) 25,522
Operating lease payments 688,867 554,915
6,359,098 5,409,076
Consolidated
2018 2017
$ $
Auditors remuneration
Fees charged by Audit Firm:
Financial statement audit and review 90,678 111,352
11. Depreciation, amortisation and impairment expenses
Consolidated
2018 2017
$ $
Depreciation of property, plant and equipment 78,927 46,181
----- End of picture text -----

48 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 49

NOTES TO THE FINANCIAL STATEMENTS / continued

12. Research and development costs

	Consolidated 2018 2017 $ $
Research and development costs expensed	3,931,717 3,183,062

The Parent and Group research and development projects have focused on cloud-based solutions for candidate recruitment. Note 5 reflects the Groups policy on the expensing/ capitalisation of development costs.

Research and development costs expenses amount to $3,931,717 (2017: $3,183,063) of which $3,145,694 (2017: $2,420,768) are recognised in employee expenses.

13. Other income

Other Income

	Consolidated 2018 2017 $ $	Consolidated 2018 2017 $ $
Proft on Sale	-	2
Research & Development - Refundable Tax Offset	1,710,297	1,384,632
Interest Received	117,452	53,031
Other Income	21,391	-

Other income	1,849,140	1,437,665

14. Income tax expense

The Company has moved domicile from New Zealand to Australia, and so the company does not recognise a potential tax loss in New Zealand. However, Xref Limited has operating subsidiaries in Australia, the UK, Norway and Canada which are expected to accumulate tax losses prior to returning a profit.

==> picture [486 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
----- End of picture text -----

Numerical reconciliation of income tax expense and tax at the statutory rate a. Reconciliation of effective tax rate Loss before income tax expense from continuing operations Loss before income tax expense from discontinued operations Tax at the statutory tax rate of 27.5% (2017: 30%) Deferred tax asset not recognised Permanent differences Adjustment for foreign tax rates	(8,912,898) (6,456,038) - (967)
	(8,912,898) (6,457,005)
	(2,451,045) (1,937,102) 1,401,250 1,772,574 505,956 (441,019) 543,839 605,547
Income tax expense	- -

b. Deferred tax assets and liabilities

The company has not yet raised a deferred tax entry as the company is not certain whether the tax losses carried forward can be utilised in the foreseeable future. The deferred tax asset position of the Group, which has not been brought to account is $3,173,824 (2017: $1,772,574).

50 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 51

NOTES TO THE FINANCIAL STATEMENTS / continued

15. Current assets - cash and cash equivalents

	Consolidated
	2018 2017
	$ $
Cash at bank Rental bonds	4,381,389 3,999,066 70,507 70,507

	4,451,896 4,069,573

The carrying amount of cash and cash equivalents approximates their fair value.

The Parent has arranged a legal right of set off between its bank trading account, call deposit accounts, and its bank

overdraft. Cash at bank earns interest at floating rates on daily deposit balances.

Rental bonds are for a period of 3 years and serve as security for leased premises maturing at renewal dates. Interest is

paid annually.

16. Current assets - trade and other receivables

==> picture [489 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
----- End of picture text -----

Trade debtors Less: Provision for impairment of receivables Related party receivables Other receivables Research and development incentive grant	1,599,430 1,199,661 (165,000) -
	1,434,430 1,199,661
	- 1,499 - 30,292 1,710,297 1,384,632
	1,710,297 1,416,423

	3,144,727 2,616,084

Trade debtors and other receivables are non-interest bearing and receipt is normally on 30 days terms. Therefore, the carrying value of trade debtors and other receivables approximates its fair value.

All receivables are subject to credit risk exposure.

The maximum exposure to credit risk at the reporting date is the carrying amount of trade debtors and other receivables as disclosed above. The Group does not hold any collateral as security

The Group’s management considers that all financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. None of the Group’s financial assets are secured by collateral or other credit enhancements.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.

The impairment to receivables as at 30 June 2018 is $165,000 (2017: No impairment recognised).

As at 30 June 2018, the ageing analysis of trade receivables post due but not impaired is detailed as follows:

	Consolidated
	2018 2017
	$ $
0 - 30 days overdue 30 - 90 days overdue 90 days overdue	1,129,135 793,537 292,920 348,375 12,375 57,749

	1,434,430 1,199,661

52 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 53

NOTES TO THE FINANCIAL STATEMENTS / continued

17. Non-current assets - property, plant and equipment

==> picture [488 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
----- End of picture text -----

	Consolidated 2018 2017 $ $
Ofce Fitout Less: Accumulated depreciation Computer equipment - at cost Less: Accumulated depreciation Ofce equipment - at cost Less: Accumulated depreciation Ofce furniture - at cost Less: Accumulated depreciation	96,784 12,284 (10,058) (1,359)
	86,726 10,925
	183,028 123,599 (76,275) (29,188)
	106,753 94,411
	116,087 103,271 (50,815) (33,489)
	65,272 69,782
	72,915 39,973 (9,561) (2,734)
	63,354 37,239

	322,105 212,357

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:

==> picture [487 x 47] intentionally omitted <==

----- Start of picture text -----

Computer Office Office
Equipment Equipment Furniture Office Fitout Total
Consolidated $ $ $ $ $
----- End of picture text -----

Consolidated	Computer Equipment Ofce Equipment Ofce Furniture Ofce Fitout Total $ $ $ $ $
Balance at 1 July 2016 Additions Disposals Depreciation expense Balance at 30 June 2017 Additions Prior year adjustment Depreciation expense	26,176 80,590 22,493 10,685 139,944 93,485 7,982 16,994 1,343 119,804 - (1,210) - - (1,210) (25,250) (17,580) (2,248) (1,103) (46,181)
	94,411 69,782 37,239 10,925 212,357 59,092 7,986 32,888 84,440 184,406 - 4,269 - - 4,269 (46,750) (16,765) (6,773) (8,639) (78,927)

Balance at 30 June 2018	106,753 65,272 63,354 86,726 322,105

18. Non-current assets - intangibles

	Consolidated
	2018 2017
	$ $
Patents and trademarks - at cost Domain: Xref.com & XF1.com	10,963 - 106,990 101,681
	117,953 101,681

54 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 55

NOTES TO THE FINANCIAL STATEMENTS / continued

19. Current liabilities - trade and other payables

==> picture [489 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
----- End of picture text -----

	Consolidated 2018 2017 $ $
Trade payables Non trade payables and accrued expenses Related party payables Accrued salaries, wages and related costs GST Payable	162,894 571,166 525,139 552,807 - 4,097 853,126 481,441 104,865 31,991

	1,646,024 1,641,502

Refer to note 27 for further information on financial instruments.

Trade creditors and other payables are non-interest bearing and normally settled on 30 day terms; therefore, their carrying amount approximates their fair value.

20. Current liabilities - Employee Entitlements

	2018 $	Consolidated 2017 $
Annual leave	277,529	162,725

Short–term employee entitlements represent the Group’s obligation to its current and former employees that are expected to be settled within 12 months of balance date. These consist of accrued holiday entitlements at the reporting date.

21. Current liabilities - Unearned Revenue

==> picture [488 x 37] intentionally omitted <==

----- Start of picture text -----

2018 2017
$ $
----- End of picture text -----

	2018 2017 $ $
Unearned Revenue Balance Brought Forward Unearned Revenue Movement Credits Sold Add Opening Conditional Credits Less: Credit Used (Cash Basis*) Less: Closing Conditional Credits Net Unearned Revenue Movement Opening Balance Revaluation due to Forex Balance Carried Forward	2,030,253 903,566 7,071,723 4,107,518 1,085,263 205,132 (4,485,468) (2,100,318) (1,445,795) (1,085,263)
	2,225,723 1,127,069
	12,895 (382)
	4,268,871 2,030,253

*This is the value of the credits that have been used in the period

Under Xref’s business model, clients purchase Xref credits to use our candidate referencing platform. The value of credits sold are added to unearned revenue when the client has paid. The credits are consumed when reference checks are ordered, and credit usage becomes recognised revenue. At balance date some clients will have purchased credits and have been issued an invoice but will not have paid. The value of these unpaid credit sale invoices are the ‘conditional credits’ above and represents trade debtors (less goods & services tax).

56 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 57

NOTES TO THE FINANCIAL STATEMENTS / continued

22. Non-current liabilities - Employee entitlements

Non-Current

==> picture [489 x 217] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
Long service leave 52,622 22,436
23. Equity - issued capital
Consolidated
2018 2017 2018 2017
Shares Shares $ $
Ordinary shares - fully paid 147,736,127 118,569,460 40,087,991 40,087,991
----- End of picture text -----

The Class A Conversion Event for performance rights was achieved and the Class A shares were issued 4 December 2017.

All issued shares are fully paid and do not have a par value. The holders of ordinary shares have equal voting rights and share equally in any dividend distribution and any surplus on winding up of the Parent.

Capital risk management

The consolidated entity’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.

The consolidated entity is not subject to certain financing arrangements covenants during the financial year ended 30 June 2018. The capital risk management policy remains unchanged from the 30 June 2017 Annual Report.

Movements in ordinary share capital

24. Equity - Other equity reserves

==> picture [490 x 20] intentionally omitted <==

----- Start of picture text -----

Details Date Shares Issue price $
----- End of picture text -----

Details Date	Shares Issue price	$
Balance 1 July 2016 Shares Issued for Cash Performance rights Conversion Capital Raising Costs Issued for acquisition of domain name Balance 30 June 2017 Issued for cash Capital raising costs Performance rights conversion Balance 30 June 2018	90,273,668 11,428,571 $0.70 16,666,667 $0.00 - $0.00 200,554 $0.50 118,569,460 12,500,000 $0.60 - $0.00 16,666,667 $0.02 147,736,127	25,042,977 8,000,000 83,333 (540,000) 101,681
		32,687,991 7,500,000 (450,000) 350,000

		40,087,991

Xref issued 12,500,000 shares at $0.60 (a 10.2% discount to the 5-day volume weighted average price) to Australian institutions and sophisticated investors on 7 August 2017 with the aim of accelerating global sales growth, facilitating product integrations, driving software development and providing further working capital for the Group’s operations.

	Consolidated
	2018 2017
	$ $
Foreign currency reserve Options reserve Performance right reserve Consolidation reserve	(240,062) (34,915) 1,330,963 569,096 - 350,000 (22,845,821) (22,845,821)
	(21,754,920) (21,961,640)

Foreign currency reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries for consolidation purposes. It is also used to record gains and losses on hedges of the net investments in foreign operations.

Performance right reserve

The performance right reserve is used to record unutilised performance rights issued on 18 January 2016 as part of the consideration for Xref Pty Ltd. Performance Rights operate as an equity-settled, share based compensation plan. When rights are realised, the balance less any attributable transaction costs will be transferred to issued capital. If rights are not used, they would be offset against the consolidation reserve.

58 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 59

NOTES TO THE FINANCIAL STATEMENTS / continued

The 50,000,000 performance rights are split into 3 Classes as shown below:

==> picture [489 x 48] intentionally omitted <==

----- Start of picture text -----

Performance Right Weighted Average Fair
Class Number Granted Reserve Value
$A $/Right
----- End of picture text -----

Class	Number Granted Performance Right Reserve Weighted Average Fair Value $A $/Right
Class A Class B Class C Less Conversion Event	16,666,667 350,000 0.021 16,666,667 83,333 0.005 16,666,666 - 0.00
	50,000,000 433,333 0.009 (33,333,334) (433,333)
Performance right reserve balance	16,666,666 - 0.00

Class A Conversion Event

Upon the Group, during any six month reporting period of the company that ends on or prior to 30 months after the date of issue of the rights, achieving Credit Sales of $A2,500,000 or more.

The Class A Conversion Event was achieved and the Class A shares were issued 4 December 2017.

Class B Conversion Event

Upon the Company achieving a 20 day Volume Weighted Average Market Price of the shares equal to or greater than $0.50 within two years after the date of issue of the rights and a minimum sale in the UK of either 1000 credits or £25,000 (whichever comes first).

The Class B Conversion Event was achieved and the Class B shares were issued 10 March 2017.

Class C Conversion Event

Upon the Group, during any six month reporting period of the Company that ends on or prior to five years after the date of issue of the rights, achieving EBITDA of $A2,500,000 or more.

The conversion ratio of the Performance Rights into ordinary shares upon achievement of a relevant Performance Milestone is one ordinary share for each Performance Right. They are in escrow until 8 February 2018.

The key inputs used in the binomial valuation of the Xref PR’s are summarised in the table below.

Grant date	20/01/2016
Expiry date - Class A	20/07/2018
Expiry date - Class B	20/01/2018
Expiry date - Class C	20/01/2021
Xref share value at issue	$0.03
Share price hurdle (150% above the issue price)	$0.50
Period over which the VWAP must exceed the share price hurdle	20 days
Expected volatility	60% to 70%
Risk free rate	2.09%
Dividend yield	0.00%

Class C options were considered based on likelihood of reaching the target EBITDA and a Nil valuation adopted. All rights may be converted immediately in the event of a change of control event.

The weighted average contractual life of the outstanding performance rights is 2.55 years.

a. Share option reserve

Issued option and movements of options are shown below:

==> picture [489 x 40] intentionally omitted <==

----- Start of picture text -----

Average
exercise price
Issue Date Expiry date per share Options Option Reserve
----- End of picture text -----

Consolidation (1 for 50) 29 July 2016 6.000 Granted 1 February 2016 1 February 2019 0.230 Granted - Class A 1 February 2016 1 February 2019 0.230 Granted - Class B 1 February 2016 1 February 2019 0.230 Closing Balance 30 June 2016 0.271 At 1 July 2016 29 July 2016 0.120 At 1 July 2016 1 February 2019 0.230 Expired 29 July 2016 0.120 Granted (b) 7 December 2016 25 November 2022 0.700 Granted (a) 7 December 2016 25 November 2021 0.700 Closing Balance 30 June 2017 0.529 At 1 July 2016 1 February 2019 0.230 At 30 June 2017 7 December 2016 25 November 2022 0.700 At 30 June 2017 7 December 2016 25 November 2021 0.700 Granted (c) 22 September 2017 3 July 2021 0.585 Granted (d) 22 September 2017 3 July 2021 0.580 Granted (e) 22 March 2018 5 February 2022 0.660 Granted (f) 22 March 2018 12 February 2021 0.700 Granted (g) 22 March 2018 12 February 2022 0.700 Granted (h) 22 March 2018 12 February 2023 0.700 Closing Balance 30 June 2018	32,000 92,160 3,908,909 199,354 300,000 3,144 300,000 3,144
	4,540,909 297,802
	32,000 92,160 4,508,909 220,942 (32,000) (92,160) 2,500,000 67,576 5,400,000 280,578
	12,408,909 569,096
	4,508,909 229,954 2,500,000 187,895 5,400,000 568,862 960,109 211,748 95,390 21,217 249,782 8,180 1,000,000 69,670 750,000 21,295 750,000 12,142
	16,241,190 1,330,963

60 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 61

NOTES TO THE FINANCIAL STATEMENTS / continued

The options have been valued using a binomial options method, using the following assumptions:

(a)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	2.47yr
	Grant date	26/11/2016
	Measurement date	26/11/2016
	Exerciseprice	$0.70
	Expirydate	25/11/2021
	Life of option	5.00yr
	Price of underlyingshares at measurement date	$0.47
	Risk free rate = 5year Government Bond(26/11/2016)	2.19%
	Expected volatility	40%
	Dividends expected on the shares	Nil

(b)	Listingdate(re-listingas Xref Limited)	09/02/2016
	Price historyfor volatilitydetermination	5.00yr
	Grant date	25/11/2016
	Measurement date	25/11/2016
	Exerciseprice	$0.70
	Expirydate	25/11/2022
	Life of option	6.00yr
	Price of underlyingshares at measurement date	$0.47
	Risk free rate = 5year Government Bond(26/11/2016)	2.7%
	Expected volatility	40%
	Dividends expected on the shares	Nil

(c)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	1.63yr
	Grant date	22/09/2017
	Measurement date	22/09/2017
	Exerciseprice	$0.585
	Expirydate	03/07/2021
	Life of option	3.77yr
	Price of underlyingshares at measurement date	$0.745
	Risk free rate = 5year Government Bond(26/11/2016)	2.295%
	Expected volatility	40%
	Dividends expected on the shares	Nil

(d)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	1.63yr
	Grant date	22/09/2017
	Measurement date	22/09/2017
	Exerciseprice	$0.58
	Expirydate	03/07/2021
	Life of option	3.77yr
	Price of underlyingshares at measurement date	$0.745
	Risk free rate = 5year Government Bond(26/11/2016)	2.295%
	Expected volatility	40%
	Dividends expected on the shares	Nil

(e)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	2.11yr
	Grant date	22/03/2018
	Measurement date	22/03/2018
	Exerciseprice	$0.66
	Expirydate	05/02/2022
	Life of option	3.88yr
	Price of underlyingshares at measurement date	$0.57
	Risk free rate = 5year Government Bond(26/11/2016)	2.395%
	Expected volatility	26.37%
	Dividends expected on the shares	Nil

(f)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	2.11yr
	Grant date	22/03/2018
	Measurement date	22/03/2018
	Exerciseprice	$0.70
	Expirydate	01/02/2021
	Life of option	2.87yr
	Price of underlyingshares at measurement date	$0.57
	Risk free rate = 5year Government Bond(26/11/2016)	2.160%
	Expected volatility	26.3%
	Dividends expected on the shares	Nil

62 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 63

NOTES TO THE FINANCIAL STATEMENTS / continued

(g)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	2.11yr
	Grant date	22/03/2018
	Measurement date	22/03/2018
	Exerciseprice	$0.70
	Expirydate	12/02/2022
	Life of option	2.87yr
	Price of underlyingshares at measurement date	$0.57
	Risk free rate = 5year Government Bond(26/11/2016)	2.395%
	Expected volatility	26.340%
	Dividends expected on the shares	Nil

(h)	Listingdate(re-listingas Xref Limited)	9/02/2016
	Price historyfor volatilitydetermination	2.11yr
	Grant date	22/03/2018
	Measurement date	22/03/2018
	Exerciseprice	$0.70
	Expirydate	12/02/2023
	Life of option	4.90yr
	Price of underlyingshares at measurement date	$0.57
	Risk free rate = 5year Government Bond(26/11/2016)	2.395%
	Expected volatility	26.350%
	Dividends expected on the shares	Nil

Class A Vesting Event is the same as a Performance Right Class A Conversion Event

Upon the Group, during any six month reporting period of the company that ends on or prior to 30 months after the date of issue of the rights, achieving Credit Sales of $A2,500,000 or more.

Class B Vesting Event is the same as a Performance Right Class B Conversion Event

Class B Vesting Event is the same as a Performance Right Class B Conversion Event Upon the Company achieving a 20 day Volume Weighted Average Market Price of the shares equal to or greater than $0.50 within two years after the date of issue of the rights and a minimum sale in the UK of either 1000 credits or £25,000 (whichever comes first). The Class B Conversion Event was achieved and the Class B shares were issued 10 March 2017.

Class A and B option expense is being recognised over the two years during which the options may be exercised. If the options were to be exercised, the full remaining option expense if any would be immediately recognised and the Option Reserve figure transferred to Issued Capital.

Option movements during the year

At 26 September 2017, 1,055,499 options were issued under the terms of the Employee Option Plan to 52 of its employees and 5 of its contractors.

At 22 March 2018, 2,749,782 options were issued under the terms of the Employee Option Plan to 25 of its employees and to the Company’s Chief Financial Officer (CFO).

Option movements during the previous year

On the 29th July 2016, 92,160 options expired.

As approved at the 25th November 2016 AGM, 7,900,000 options were issued to 2 directors of the company as a key component of their remuneration by the company. Chairman Brad Rosser was issued with 7,000,000 with 4,500,000 expiring on the 25th November 2021 and 2,500,000 expiring on the 25th November 2022. Nigel Heap was issued 900,000 options, all expiring on the 25th November 2021. 300,000 of the options issued to Nigel Heap vested on the 25th November 2016.

Options vested and therefore exercisable

Source Expiry Date Acquisition of Xref Pty Ltd 1 February 2019 Options Vested – Tim Mahony 1 February 2019 Options Vested – Nigel Heap 25 November 2021 Options Vested - Brad Rosser 25 November 2021 Options Vested – James Solomons 12 February 2021	2018 2017 3,908,809 3,908,809 900,000 600,000 300,000 300,000 2,000,000 - 1,000,000 -
	8,108,809 4,808,909

The weighted average share price for the 2018 financial year was $0.624 (2017: $0.548)

b. 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.

25. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial year.

26. Earnings per share

Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The weighted average contractual life of the performance rights for the 2018 year was 2.55 years (2017: 1.59 years).

The Group recorded losses for the years ended 30 June 2017 and 30 June 2018. Diluted earnings per share has not been calculated because the effect of including the share options in the calculation would be anti-dilutive. Hence the diluted earnings per share is the same as the basic earnings per share.

64 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 65

NOTES TO THE FINANCIAL STATEMENTS / continued

The following reflects the income and share data used in the basic and diluted EPS computations

==> picture [490 x 431] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
Earnings per share for loss from continuing operations
Loss after income tax attributable to the owners of Xref Limited (8,912,898) (6,456,038)
Number Number
Weighted average number of ordinary shares used in calculating basic earnings 139,516,949 105,341,482
per share
Weighted average number of ordinary shares used in calculating diluted earnings
per share 139,516,949 105,341,482
Cents Cents
Basic earnings per share (6.39) (6.13)
Diluted earnings per share (6.39) (6.13)
Consolidated
2018 2017
$ $
Earnings per share for loss from discontinued operations
Loss after income tax attributable to the owners of Xref Limited N/A (967)
Consolidated
2018 2017
$ $
Earnings per share for loss
Loss after income tax attributable to the owners of Xref Limited (8,912,898) (6,457,005)
----- End of picture text -----

Group 2018	Loans and receivables	Available-for- sale fnancial assets	Financial liabilities at fair value through proft and loss	Total
Financial assets
Cash and cash equivalents	4,451,896	-	-	4,451,896
Trade debtors and other receivables	3,144,727	-	-	3,144,727
Total	7,596,623	-	-	7,596,623
Financial liabilities
Trade creditors and otherpayables	-	-	2,107,821	2,107,821
Total	-	-	2,107,821	2,107,821
Group 2017	Loans and receivables	Available-for- sale fnancial assets	Financial liabilities at fair value through proft and loss	Total
Financial assets
Cash and cash equivalents	4,069,573	-	-	4,069,573
Trade debtors and other receivables	2,616,084	-	-	2,616,084
Total	6,685,657	-	-	6,685,657
Financial liabilities
Trade creditors and otherpayables	-	-	1,919,485	1,919,485
Total	-	-	1,919,485	1,919,485

b. Financial instrument risk management

The Group has exposure to the following risks from its use of financial instruments:

Credit risk

27. 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.

Liquidity Risk
Market Risk

The Group is exposed to market risk through their use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities.

The Group 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.

66 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 67

NOTES TO THE FINANCIAL STATEMENTS / continued

i. Credit risk

Credit risk is the risk that a third party will default on its obligation to the Group, causing the Group to incur a loss.

The Group has no significant concentration of risk in relation to cash and cash equivalents, trade debtors and other financial assets.

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls.

Further details in relation to the credit quality of financial assets is provided in Note 16

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 expense growth reduced from 90% in the 2017 year to 44% in 2018, with a growth in revenue of 72%. There is continued growth forecasted and ongoing strong cost control enabling adequate management of liquidate risk.

All amounts shown as current financial liabilities are expected to be paid on demand and without interest.

The Group’s financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:

Group 2018 Non-derivative fnancial liabilities	Carrying amounts	Total contractual cash-fows	Contractual 0-6 months 6-12 months	Contractual 0-6 months 6-12 months	cash-fow maturities 1 - 2 years 2-5 years	cash-fow maturities 1 - 2 years 2-5 years	Later than 5 years
Trade creditors and other	1,646,024	1,646,024	1,646,024	-	-	-	-
payables
Superannuationpayable	184,268	184,268	184,268	-	-	-	-
Total	1,830,292	1,830,292	1,830,292	-	-	-	-
Group 2017	Carrying amounts	Total contractual cash-fows	Contractual 0-6 months 6-12 months		cash-fow maturities 1 - 2 years 2-5 years		Later than 5 years
Non-derivative fnancial liabilities
Trade creditors and other	1,641,502	1,641,502	1,641,502	-	-	-	-
payables
Superannuationpayable	115,258	115,258	115,258	-	-	-	-
Total	1,756,760	1,756,760	1,756,760	-	-	-	-

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 Canadian Dollar, the UK Pounds Sterling and the Norwegian Krone.

The exposure to currencies of the Group is as follows:

	2018 $	2017 $
Canadian Dollars	176,044	37,130
UK Pound Sterling	100,975	56,284
Norwegian Krone	111,427	-
New Zealand Dollars	-	1,507
Total	388,446	94,921

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:	5% $	10% $	20% $
Canadian Dollars	8,802	17,604	35,209
UK Pound Sterling	5,049	10,098	20,195
Norwegian Krone	5,571	11,143	22,285
Total impact ofpotential change in exchange rate	19,442	38,845	77,689

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) and Norwegian Krone (NOK)

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.

68 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 69

NOTES TO THE FINANCIAL STATEMENTS / continued

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:

==> picture [489 x 420] intentionally omitted <==

----- Start of picture text -----

Short-term exposure
30 June 2018 – Group AUD United Kingdom Canada Norway
Financial Assets 7,083,425 153,396 211,955 147,847
Financial Liabilities 1,842,269 62,332 75,948 127,272
Net statements of financial
position exposure 5,241,156 91,064 136,007 20,575
Long-term exposure
30 June 2018 – Group AUD United Kingdom Canada Norway
Financial Assets 50,948 51,411 17,836 -
Financial Liabilities - - - -
Net statements of financial
position exposure 50,948 51,411 17,836 -
Short-term exposure
30 June 2017 – Group AUD United Kingdom Canada Norway
Financial Assets 6,385,797 112,949 111,913 -
Financial Liabilities 1,636,040 95,076 25,644 -
Net statements of financial
position exposure 4,749,757 17,873 86,269 -
Long-term exposure
30 June 2017 – Group AUD United Kingdom Canada Norway
Financial Assets 74,998 - - -
Financial Liabilities - - - -
Net statements of financial
position exposure 74,998 - - -
----- End of picture text -----

Foreign exchange risk

Sensitivity analysis

The following analysis illustrates the sensitivity of profit and equity in regard to the Group’s financial assets and financial liabilities carried in foreign currencies. It assumes a +/- 5% change in exchange rates for the year ended at 30 June 2018 (2017: 5%).

The percentage movement has been determined based on the average exchange rate market volatility for the AUD in the previous 12 months.

Group	2018 Proft for the year Equity	2018 Proft for the year Equity	2017 Proft for the year Equity	2017 Proft for the year Equity
5% (2017: 5%) increase in AUD against	(9,038,288)	1,707,900	(6,540,069)	3,143,168
foreign currencies
5% (2017: 5%) decrease in AUD against	(8,850,009)	2,158,275	(6,416,487)	3,347,656
foreign currencies

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.

28. Reconciliation of loss after income tax to net cash used in operating activities

==> picture [490 x 54] intentionally omitted <==

----- Start of picture text -----

Consolidated
2018 2017
$ $
----- End of picture text -----

Loss after income tax expense for the year	(8,912,898)	(6,457,005)
Adjustments for:
Depreciation, amortisation and impairment	78,927	46,181
Option expense	761,867	363,454
Foreign exchange	(205,147)	(56,853)
Unearned revenue	2,225,723	1,127,069
Change in operating assets and liabilities:
Increase in trade and other receivables	(528,643)	(1,572,023)
Increase in prepayments	(37,266)	(140,488)
Decrease in other fnancial assets	(45,198)	(26,531)
Increase/(decrease) in trade and other payables	253	1,001,202
Increase in employee benefts	144,990	122,239
Increase in other fnancial liabilities	50,393	21,470
Net cash used in operatingactivities	(6,466,999)	(5,571,285)

70 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 71

NOTES TO THE FINANCIAL STATEMENTS / continued

29. Contingent assets

The Group has no contingent assets at 30 June 2018 (2017: $Nil).

c. Other related party balances

Loans to directors for the year ended 30 June 2018 amounted to $0 (2017: $1,499).

30. Contingent liabilities

The Group has no contingent liabilities at 30 June 2018 (2017: $Nil).

31. Related party transactions

Related party transactions arise when an entity or person(s) has the ability to significantly influence the financial and operating policies of the Group.

The Group has a related party relationship with its Shareholders, Directors and other key management personnel.

Unless otherwise stated transactions with related parties in the years reported have been on an arms-length basis, none of the transactions included special terms, conditions or guarantees.

The following transactions were carried out with related parties

a. Purchase of services

	Consolidated
	2018 2017
	$ $
Key management personnel Other related parties	218,886 165,560 - 19,396
	218,886 184,956

b. Year end receivable/ (payable) with related parties

The following balances are outstanding at the reporting date in relation to transactions with related parties:

d. Key management compensation

The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:

	Consolidated
	2018 2017
	$ $
Short-term employee beneft Post employment benefts Share-based payments	1,206,795 1,145,551 71,250 62,593 524,380 363,453
	1,802,425 1,571,597

32. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

	Parent
	2018 2017
	$ $
Loss after income tax Total comprehensive income	(761,781) (489,902) (761,781) (489,902)

	2018 $	Consolidated 2017 $
Receivable from related parties:
Directors	-	1,499
Payable to related parties:
Other related party	-	4,097

72 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 73

NOTES TO THE FINANCIAL STATEMENTS / continued

Statement of financial position

==> picture [490 x 55] intentionally omitted <==

----- Start of picture text -----

Parent
2018 2017
$ $
----- End of picture text -----

Total current assets Total non-current assets Total assets Total current liabilities Total liabilities Equity Issued capital Reserves Retained profts Total equity	- 1,507
	21,705,222 14,849,709
	21,705,222 14,851,216
	(33,750) 112.655
	(33,750) 112,655
	40,087,991 33,089,721 1,330,963 569,096 (19,679,982) (18,920,256)
	21,738,972 14,738,561

33. Commitments

Operating leases are held for premises used for office space. Lease commitments net of incentive payments are:

	Consolidated
	2018 2017
	$ $
Non-cancellable operating leases are payable as follows: Less than one year Later than one year and not greater than two years Later than two years and not greater than fve years	507,020 257,357 548,036 104,480 461,506 -
	1,516,562 361,837

The Group had no other commitments at 30 June 2018 (2017; $Nil).

34. Events after the reporting period

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 the debts of its subsidiary Inner Mongolia Plate Mining Limited or any other Xref subsidiary in 2018 or 2017.

No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

Contingent liabilities

The parent entity had no contingent liabilities in 2018 or 2017.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment in 2018 or 2017

74 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 75

Directors’

Report

Independent Auditor’s Report

In the directors’ opinion:

the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 3 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and

> there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

Lee-Martin Seymour Brad Rosser Managing Director Chairman 29 August 2018 29 August 2018 Sydney Sydney

76 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 77

INDEPENDENT AUDITOR’S REPORT / continued

78 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 79

INDEPENDENT AUDITOR’S REPORT / continued

80 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 81

SHAREHOLDER INFORMATION / Continued

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 as at 23 July 2018, as disclosed in substantial holding notices given to the ASX and to the Company:

==> picture [361 x 20] intentionally omitted <==

----- Start of picture text -----

Substantial Shareholders Shareholding % Shares Issued
----- End of picture text -----

Squirrel Holdings Australia Pty Ltd	30,857,613	20.89
West Riding Investments Pty Ltd	30,857,612	20.89
Industry Super Holdings Pty Ltd	10,941,897	7.41
FIL Limited	8,435,033	5.71

Based on the market price at 23 July 2018 there were 125 shareholders with less than a marketable parcel of 1,021 shares at a share price of $0.49.

Number of Ordinary Shares Held Number of Holders Ordinary Shares % of Total Issue Capital	Number of Ordinary Shares Held Number of Holders Ordinary Shares % of Total Issue Capital	Number of Ordinary Shares Held Number of Holders Ordinary Shares % of Total Issue Capital
1 - 1,000	123 53,654	0.04
1,001 - 5,000	208 648,180	0.44
5,001 - 10,000	153 1,226,735	0.83
10,001 - 100,000	257 9,738,711	6.59
100,001 and over	82 136,068,847	92.10
Total	823 147,736,127	100.000

Top 20 Holders of Ordinary Shares as at 23 July 2018

==> picture [489 x 20] intentionally omitted <==

----- Start of picture text -----

Rank Name of Shareholder Shares % of Shares
----- End of picture text -----

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Squirrel Holdings Australia Pty Ltd
30,857,613
20.89
West Riding Investments Pty Ltd
30,857,612
20.89
HSBC Custody Nominees (Australia) Limited
26,309,701
17.81
CS Third Nominees Pty Limited
6,548,841
4.43
Citicorp Nominees Pty Limited
4,441,603
3.01
UBS Nominees Pty Ltd
4,110,414
2.78
J P Morgan Nominees Australia Limited
3,095,141
2.10
Austral Capital Pty Ltd
3,000,000
2.03
Morgan Stanley Australia Securities (Nominee) Pty Limited
2,250,802
1.52
Parkstone House Pty Ltd
1,923,076
1.30
Yeehah Pty Ltd
1,180,000
0.80
CS Fourth Nominees Pty Limited
1,039,674
0.70
Mr Tim Mahony + Ms Jacki Pervan
1,000,000
0.68
Debuscey Pty Ltd
996,592
0.67
Schindler Investment Haus Pty Ltd
912,500
0.62
Brispot Nominees Pty Ltd
908,842
0.62
Calama Holdings Pty Ltd
831,600
0.56
National Nominees Limited
778,409
0.53
First Trustee Company (NZ) Limited
750,000
0.51
Est Mr John Alan MacBride Price
750,000
0.51
Total of Top 20 Holdings
122,542,420
82.95
Other Holdings
25,193,707
17.05

Total FullyPaid Shares Issued
147,736,127
100.00

Performance Rights as at 23 July 2018

==> picture [490 x 20] intentionally omitted <==

----- Start of picture text -----

Name of Performance Holder Performance Shares the Holder is Entitled to
----- End of picture text -----

Squirrel Holdings Australia Pty Ltd	C Class Performance Rights: 8,333,333
West RidingInvestments PtyLtd	C Class Performance Rights: 8,333,333
Total	16,666,666

The conversion ratio of the Performance Rights into ordinary shares upon achievement of a relevant performance milestone is one ordinary share for each Performance Right.

82 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 83

SHAREHOLDER INFORMATION / continued

Options as at 23 July 2018

==> picture [489 x 30] intentionally omitted <==

----- Start of picture text -----

Shares the Option
Name of Option Holder Holder is Entitled to Exercise Price Option Expiry Date
----- End of picture text -----

Taycol Nominees Pty Ltd	2,808,909	$0.23	1 February 2019
Yoix Pty Ltd	300,000	$0.23	1 February 2019
Bear and Unicorn Properties Limited	250,000	$0.23	1 February 2019
Jimbzal Pty Ltd	250,000	$0.23	1 February 2019
Mr Timothy Lloyd Mahony + Jackie Tadranka Pervan <Mahony Super Fund A/C	900,000	$0.23	1 February 2019
Brad Rosser	4,500,000	$0.70	25 November 2021
Brad Rosser	2,500,000	$0.70	25 November 2022
Nigel Heap	900,000	$0.70	25 November 2021
57 employees and contractors (under Employee Option Plan)	1,055,499	$0.585	3 July 2021
24 employees (under Employee Option Plan)	249,782	$0.66	5 February 2022
James Solomons (under Employee Option Plan)	1,000,000	$0.70	12 February 2021
James Solomons (under Employee Option Plan)	750,000	$0.70	12 February 2022
James Solomons(under Employee Option Plan)	750,000	$0.70	12 February2023
Total	16,214,190

This page has been left intentionally blank.

Voting Rights

At general meetings of the Company, all fully paid ordinary shares carry one vote per share without restriction. On a show of hands, every member present at a general meeting, or by proxy, shall have one vote and, upon a poll, each share shall have one vote. Performance Rights holders and Option holders have no voting rights until the Performance Rights are converted and the Options are exercised, respectively.

On-Market Buy-Back

There is no current on-market buy-back of shares in the Company.

84 / Xref Limited / Annual Report 2018

Xref Limited / Annual Report 2018 / 85

Corporate Directory

PLACE OF BUSINESS

Australia (Head Office and Registered Office) Suite 14, 13 Hickson Road Dawes Point, NSW 2000 Tel: +61 2 8244 3099

United Kingdom

46 New Broad Street London, EX2M 1JH

Canada

Suite 202

1 Adelaide Street East Toronto, Ontario M5C 1X6

Norway

Rådmann Halmrastsvei 16 1337 Sandvika Norway

Website

xref.com

DIRECTORS

Brad Rosser

Chairman

Lee-Martin Seymour Tim Griffiths Tim Mahony Nigel Heap

LEADERSHIP TEAM

Lee-Martin Seymour Chief Executive Officer, Co-Founder

Tim Griffiths Chief Technology Officer, Co-Founder

James Solomons Chief Financial Officer

Sharon Blesson Chief Operating Officer

COMPANY SECRETARY

Robert Waring

AUDITORS

Crowe Horwath Level 15 1 O’Connell Street Sydney NSW 2000 Tel: +61 2 9262 2155

STOCK EXCHANGE

The company’s ordinary shares are listed on the ASX under code XF1

SHARE REGISTRY

Computershare Investor Services Pty Ltd Yarra Falls, 452 Johnston Street Abbotsford, Victoria Australia 3067 Tel: 1300 850 505 (within Australia) Tel: + 61 3 9415 4000 (outside Australia)

AI assistant

XREF LIMITED — Annual Report 2018

66097_rns_2018-08-29_4a746c4e-02fc-4914-8730-41170fe62acf.pdf

CONTENTS

2018

Highlights

Total Sales

$7.1 million

Sales Revenue vs Recognised Revenue

KEY METRICS

ANNUAL REVENUE PER ACCOUNT (ARPA)

CLIENT ACQUISITION

CLIENT ADOPTION

Chairman’s

Report

A dedicated team

Welcome to Xref’s third annual report.

Strong sales and client growth

Technological leadership

Helping clients meet regulatory needs

Ongoing growth

Chief Executive Officer’s & Chief Technology Officer’s Report

Records for all key metrics

Business model

Growing Average Revenue Per Account (ARPA)

Accelerating global growth

Channel expansion

Increased scalability and product improvement

Cost management

Positive outlook for growth

Directors’

Report

Strong global growth

Directors

Principal activities

Dividends

Result

Review of operations

HIGHLIGHTS OF THE FINANCIAL YEAR INCLUDED:

Large addressable market

Technology improvement

Xref’s partner channels expand

Finance and corporate

Matters subsequent to the end of the financial year

Likely developments and expected results of operations

Environmental regulation

Information on directors

Other current directorships:

None

Key Management Personnel

Company Secretary

Meetings of directors

Remuneration report (audited)

Principles used to determine the nature and amount of remuneration

Non-executive directors remuneration

Executive remuneration

The Company’s 2018 Annual Meeting (“AGM”)

Details of remuneration

Amounts of remuneration

Service agreements

Share-based compensation

Options

Performance rights

Additional disclosures relating to key management personnel

Shareholding

Option holding

Other transactions with key management personnel and their related parties

Performance Rights

Indemnity and insurance of officers

Non-audit services

Rounding of amounts

Auditor’s independence declaration

Corporate Governance

Indemnity and insurance of auditor

Proceedings on behalf of the company

Independence Declaration

Financial

Statements

Statement of profit or loss and other comprehensive income for the year ended 30 June 2018 (continued)

Statement of financial position as at 30 June 2018

XREF LIMITED Annual Report 2018