XREF LIMITED — Interim / Quarterly Report 2017

Feb 27, 2017

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Xref Limited / Annual Report 2016 / 1

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2 / Xref Limited / Interim Report 31 December 2016
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CONTENTS

Chief Executive Ofcer’s & Chief Technology Ofcer’s Report	4
Directors’ Report	8
Financial Statements	10
Notes to the Financial Statements	16
Independent Auditor’s Report	28
Corporate Directory	30

GENERAL INFORMATION

The financial statements cover Xref Limited as a consolidated entity consisting of Xref Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation currency.

Xref Limited is a listed public company limited by shares.

A description of the nature of the consolidated entity’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 February 2017.

Xref Limited / Interim Report 31 December 2016 / 3

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

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

• “ The group has demonstrated strong demand for its products. Having validated its business model and global potential, Xref is investing to capitalise on its significant growth opportunity and ‘first mover’ advantage.

Continued sales and revenue growth, in excess of 100% year on year has underpined a strong first half year for Xref.

During this period, significant steps were taken to position the company for sustainable global growth. These included:

• Assembling a new board with the addition of business builder and entrepreneur, Brad Rosser, as non-executive Chairman and global professional recruitment group executive, Nigel Heap, as nonexecutive Director

• Completing of a successful $8 million share placement

• Driving global expansion, including sales growth in Australia, New Zealand and the UK, and securing the group’s first North American clients

• Strengthening the group’s business through building sales, marketing and customer success teams, improving sales efficiency, client retention and increased credit usage

• Developing a global marketing plan including repositioning the Xref website and demonstrating client advocacy through testimonials

• Re-engineering core business platforms to allow specific country websites, richer mobile experience and multi-language capabilities

• Integration with organisations including Expr3ss! and Verify to broaden Xref’s addressable market

• Launching a new candidate app to provide timebased referencing for the European market.

Global growth

Xref has developed a highly scalable platform and is investing to capitalise on its significant global opportunity. The company already serves clients in Australia and New Zealand, Europe, the Middle East and Africa, North America and Singapore. In 2016, Xref opened offices in the UK and North America targeting these large addressable markets.

More than 100 new clients began using Xref’s platform during the half, which now assists more than 500 organisations across government, small- to medium-size businesses, human resources agencies, not-for-profit groups and others. About 51% of Xref clients are large enterprises.

The group’s clients are strong advocates of Xref’s platform, which has a 98% success rate – far higher than telephone or email based reference gathering – and provides 60% more data.

Xref has extended its services for clients, adding sales staff to drive new sales, and customer success teams to help clients to use Xref’s platform. In the past 12 months, employee numbers have increased from 14 to 44, including five employees (and two board members) in London and four in Toronto.

Australia and New Zealand

The Australia and New Zealand business is used by hundreds of clients every day, with thousands of new candidates and referees every week providing data to Xref’s platform. The size of Australia’s and New Zealand’s addressable market is about 12 million positions.

Significant new clients and renewals in Australia and New Zealand included Auckland Airport, Auckland Transport, Caltex, CSR, DFP Recruitment Agency, Fitness First, Goodman Fielder, Hamilton City Council, Hays, Holcim, Hudson, Krispy Kreme, KPMG, Linx Cargo Care Group, Lion Nathan, Opal Aged Care, News Corporation, NSW Department of Family and Community Services (FACS), Optus, Qantas, Roy Hill, Sunrice, Target, Transport for NSW and WPP AUNZ.

EMEA

The group’s London office serves the Europe, Middle East and Africa (EMEA) region. The UK addressable market represents about 32 million positions, and new clients signed during the first half included Bytes Technology Group, Callidus Consulting, JCB (JC Bamford), Kuoni Group, Sue Ryder, The Salvation Army, Thwaites and TMP Worldwide. At 31 December 2016, the group supported 23 EMEA-based clients primarily in the UK.

North America

The Toronto office opened in May 2016, enabling entry into North America which has an addressable market of about 162 million positions, including around 18 million in Canada and 144 million in the US. During the half, Xref secured its first North American clients including Clarity, ES Fox, Miele, Revera, TravelEdge Group and WilsonCTS.

Integration

The Xref platform has been integrated with widelyused human resources technology platforms in order to broaden its addressable market cost-effectively. This allows the quick onboarding of clients without the need for a large sales team, and enables clients to access other human resources and recruitment services through Xref’s platform easily.

Integration with the Oracle Taleo applicant tracking system, a leading enterprise human resources technology system for management of staff recruitment, has opened access for 6,000 of the world’s largest companies to Xref’s platform. This has opened up a new marketing channel, supporting Xref’s globalisation strategy.

During the half Xref signed a pilot integration agreement with Verify, the employee verification and pre-screening business of Veda, the data analytics business, and the companies are in advanced negotiations regarding further business. A commercial partnership and integration with Expr3ss! has secured new clients and increased exposure to the small- to medium sized business market, which currently represents about 12% of Xref’s business. These integrations are also joint ventures, enabling Xref to leverage its partner’s credibility to enter new markets quickly.

New products

A new app developed for the European market has pioneered time-based candidate referencing, increasing Xref’s UK sales. The app provides an overview of the candidate’s experience across an extended time, helping employers to comply with changes to governance models. Regulation has restricted employers’ ability to collect and use data, aiming to protect consumers and prevent discrimination.

Xref has increased its global technical infrastructure and development resources, adding global scale, continuous deployment, testing and security. The newer, reengineered platform provides clients with a richer mobile experience in multiple languages.

Financial overview

Sales for the first half of FY2017 were $1.55 million, up 185% from $542,000 in the previous corresponding period. This included a record second quarter with sales of $821,000.

Revenue was $1.18 million for the first half, up 151% from $470,000. This included revenue from international operations for the first time. The company recognises revenue after Xref credits are used, with unused credits reported as unearned income.

The group has demonstrated strong demand for its products. Having validated its business model and global potential, Xref is investing to capitalise on its significant growth opportunity and ‘first mover’ advantage. The first half result reflects this strategy, and the company reported a net loss of $3.4 million.

4 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 5

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

In August 2016 Xref completed an $8 million placement (before costs) to Australian institutions and sophisticated investors which closed oversubscribed. The funds will be used to accelerate global sales growth, facilitate product integrations and drive software development.

The company received an R&D refundable tax offset of $482,000 in December 2016, and at 31 December 2016 held $7.0 million cash and had no debt.

Outlook

The group has a sales growth rate exceeding 100% yearon-year and expects to maintain this dynamic growth trajectory. Having positioned the company for growth in 2016, Xref has transitioned to focus on building scale.

Immediate priorities include increasing sales in the regions in which Xref operates and new regions, with a focus on regional financial sustainability, and the company anticipates strong international growth.

Revitalised board

Xref strengthened its board in August 2016, appointing Brad Rosser as non-executive Chairman and Nigel Heap as a non-executive Director.

Mr 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. After leaving Virgin, he worked for several successful start-ups as well as helping to set up Unilever Ventures, Unilever’s incubation arm in the UK. In 2008, he founded the BSF Group, an organisation that helps start-ups to secure funding, launch successfully, and then grow profitably. He holds an MBA (with distinction) from Cornell University’s Johnson Graduate School of Management and a Bachelor of Commerce (First Class Honours) from the University of Western Australia.

The group continues to focus on developing the capabilities of its global platform, and has ten integration programs under way. These provide efficient sales channels which also offer clients an enhanced digital human resources experience.

Xref continues to explore partnerships with human resources organisations to assist growth in new markets. The company is also investing in research and development to increase business process efficiency, create human resources data and analytics products, and develop new revenue streams.

Lee-Martin Seymour, Tim Griffiths, Chief Executive Officer, Chief Technical Officer, Co-Founder Co-Founder

Mr Heap is the UK and Ireland Managing Director of Hays plc, the leading global professional recruitment group; he is Chairman of its Asia Pacific business, and a member of the group’s management board. He joined Hays in 1988 and over the last 19 years has successfully led the growth of the Asia-Pacific business. He has completed INSEAD’s Advanced Management Program and holds a Bachelor of Laws from Manchester University.

6 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 7

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 half-year ended 31 December 2016.

Directors

The following persons were directors of Xref Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

The Xref platform has been integrated with widely-used human resources technology platforms in order to broaden its addressable market cost-effectively. This allows the quick onboarding of clients without the need for a large sales team, and enables clients to access other human resources and recruitment services through Xref’s platform easily.

There were no significant changes in the state of affairs of the consolidated entity during the financial half-year.

This report is made in accordance with a resolution of directors, pursuant to the Companies Act 1993.

Brad Rosser, Chairman (appointed 18 August 2016)

Timothy Mahony

On behalf of the directors

Nigel Heap (appointed 18 August 2016)

Lee-Martin Seymour

Timothy Griffiths

Simon O’Loughlin (resigned 18 August 2016)

Principal activities

During the financial half-year the principal continuing activities of the consolidated entity consisted of software development for the HR industry.

Lee-Martin Seymour, Director

27 February 2017 Sydney, Australia

Review of operations

The loss for the consolidated entity after providing for income tax amounted to $3,608,056 (31 December 2015: $619,061).

The group has demonstrated strong demand for its products. Having validated its business model and global potential, Xref is investing to capitalise on its significant growth opportunity and ‘first mover’ advantage. Continued investment in the platform as well as in existing and new markets are reflected in the company’s net reported loss from ordinary activities of $3.4 million.

Sales growth globally continued, up 185% when compared to the corresponding period. This included a record second quarter with sales of $821,000.

In August 2016 Xref completed an $8 million placement (before costs) to Australian institutions and sophisticated investors which closed oversubscribed. The funds are being and will continue to be used to accelerate global sales growth, facilitate product integrations and drive software development.

The company received an R&D refundable tax offset of $482,000 in December 2016, and at 31 December 2016 held $7.0 million cash and had no debt.

Xref has developed a highly scalable platform and is investing to capitalise on its significant global opportunity. The company already serves clients in Australia and New Zealand, Europe, the Middle East and Africa, North America and Singapore. In early 2016, Xref opened offices in the UK and North America targeting these large addressable markets.

More than 100 new clients began using Xref’s platform during the half year, which now assists more than 500 organisations across government, small- to medium-size businesses, human resources agencies, not-for-profit groups and others. Over 50% of Xref clients are large enterprises.

8 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 9

FINANCIAL STATEMENTS / For the half-year ended 31 December 2016

Financial Statements

Statement of profit or loss and other comprehensive income

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For the half-year ended 31 December 2016 Condolidated
31 December 31 December
Note
2016 2015
Unaudited Unaudited
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Note	ecemer 2016 Unaudited		ecemer 2015 Unaudited
Revenue Sales – Credits Sold in the Current Year Less adjustments for Unearned Revenue 12 Revenue Expenses Employee expenses Overheads and administration expenses 7 Depreciation and amortisation expense 10 Total Expenses Operating loss Other income 6 Proft / (loss) before income tax from continuing activities Income Tax Expense Loss from Continuing Operations attributable to the Owners of the Company Discontinued Operations Exploration Asset Maintenance Expenses 5 Other Expenses 5 Loss attributable to the Owners of the Company Other Comprehensive Income Currency Translation Diferences Total comprehensive income/(loss) for the half-year	1,546,740 (369,483)		541,554 (71,817)
	1,177,257 2,392,473 2,195,483 19,310		469,737 534,510 551,633 4,139
	4,607,266 (3,430,009)		1,090,282 (620,545)
	22,920 (3,407,089)		1,484 (619,061)
	- (3,407,089) (967) (200,000)	-	(619,061) -
	(3,608,056) 23,641		(619,061) -
	(3,584,415)		(619,061)

Statement of profit or loss and other comprehensive income (continued)

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Condolidated
31 December 31 December
Note
2016 2015
$/share $/share
Unaudited Unaudited
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		(cents)	(dollars)
Loss per share from continuing and discontinuing operations
Basic loss per share	15	3.65 cents	(6,190.61)
Diluted loss per share	15	3.65 cents	(6,190.61)
Loss per share from continuing operations
Basic loss per share	15	3.45 cents	(6,190.61)
Diluted loss per share	15	3.45 cents	(6,190.61)
Loss per share from discontinuing operations
Basic loss per share	15	0.20 cents	(0.00)
Diluted loss per share	15	0.20 cents	(0.00)

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

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

10 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 11

FINANCIAL STATEMENTS / For the half-year ended 31 December 2016

FINANCIAL STATEMENTS / For the half-year ended 31 December 2016

Statement of financial position

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As at 31 December 2016 Consolidated
31 December 30 June
Note 2016 2016
Unaudited Audited
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Note	31 December 2016 Unaudited	30 June 2016 Audited
Assets Current assets Cash and cash equivalents 8 Trade and other receivables 9 Prepayments Assets of disposal group classifed as held for sale 5 Total current assets Non-current assets Property, plant and equipment 10 Rental Prepayments Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 11 Employee Entitlements Superannuation payable Rent Incentives Liabilities included in disposal group classifed as held for sale 5 Total current liabilities Non-current liabilities Unearned Revenue 12 Rent Incentives Total non-current liabilities Total liabilities Net assets Shareholders’ Funds Share Capital 13 Other Equity Reserves 14 Retained earnings Total Funds Employed	6,994,625 571,829 150,206 333,814	2,270,832 944,060 52,132 333,814
	8,050,474 189,817 97,850	3,600,838 139,944 48,467
	287,667	188,411
	8,338,141	3,789,249
	658,042 146,007 80,046 12,785 333,812	530,929 62,922 57,679 21,470 333,812
	1,230,692 1,272,851 44,615	1,006,812 903,566 44,615
	1,317,466	948,181
	2,548,158	1,954,993
	5,789,983	1,834,256
	32,502,977 (22,086,116) (4,626,878) 5,789,983	25,042,977 (22,097,739) (1,110,982) 1,834,256

Statement of changes in equity (unaudited)

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Foreign
For the half- Currency Total
year ended 31 Share Share Translation Accumulated Performance Consolidation Shareholder
December 2016 Capital Options Reserve Loss Rights Reserve Funds
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For the half- year ended 31 December 2016	Share Capital Share Options Foreign Currency Translation Reserve Accumulated Loss Performance Rights Consolidation Reserve Total Shareholder Funds
Balance at 1 July 2016 Comprehensive Income Loss for 6 months ending 31 December Other Comprehensive Income Currency Translation Diferences Total Comprehensive Income for the 6 Months Other Transactions with owners: Shares Issued 13 Capital Raising Costs 13 Options Issued 14c Options expired 14c Total transactions with Owners Balance at 31 December 2016 (unaudited)	25,042,977 297,802 16,947 (1,110,982) 433,333 (22,845,821) 1,834,256 - - - (3,608,056) - - (3,608,056) - - 23,641 - - - 23,641
	- - 23,641 (3,608,056) - - (3,584,415) 8,000,000 - - - - - 8,000,000 (540,000) - - - - - (540,000) - 80,142 - - - - 80,142 - (92,160) - 92,160 - - -
	7,460,000 (12,018) - 92,160 - - 7,540,142
	32,502,977 285,784 40,588 (4,626,878) 433,333 (22,845,821) 5,789,983

The above statement of changes in equity should be read in conjunction with the accompanying notes

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

12 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 13

FINANCIAL STATEMENTS / For the half-year ended 31 December 2016

FINANCIAL STATEMENTS / For the half-year ended 31 December 2016

Statement of changes in equity (unaudited) (continued)

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Foreign
For the half- Currency Perfor- Total
year ended 31 Share Share Translation Accumulat- mance Consolidation Shareholder
December 2015 Note Capital Options Reserve ed Loss Rights Reserve Funds
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For the half- year ended 31 December 2015 Note	Share Capital Share Options Foreign Currency Translation Reserve Accumulat- ed Loss Perfor- mance Rights Consolidation Reserve Total Shareholder Funds
Balance at 1 July 2015 Prior Period Adjustment Restated Opening Equity Comprehensive Income Loss for 6 months ending 31 December Total Comprehensive Income for the 6 Months Other Transactions with owners: Convertible Notes Issued Capital Raising Costs Total transactions with Owners Balance at 31 December 2015 (unaudited)	100 - - (427,889) - - (427,789) - - - 164,503 - - 164,503
	100 - - (263,386) - - (263,286) - - - (619,061) - - (619,061)
	- - - (619,061) - - (619,061) 550,000 - - - - - 550,000 (33,000) - - - - - (33,000)
	517,000 - - - - - 517,000
	517,100 - - (882,447) - - (365,347)

The above statement of changes in equity should be read in conjunction with the accompanying notes

Statement of cash flows

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Consolidated
31 December 31 December
Note 2016 2015
Unaudited Unaudited
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Note	31 December 2016 Unaudited	31 December 2015 Unaudited
Cash fows from operating activities Receipts from customers Payments to suppliers and employees Interest received Other revenue Research & Development – Refundable Tax Ofset Income taxes paid Net cash from operating activities 16 Cash fows from investing activities Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Net cash used in investing activities Cash fows from fnancing activities Proceeds from issue of convertible notes Proceeds from issue of ordinary shares Payments for Share Raising expenses Net cash used in fnancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the fnancial half-year Efects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the fnancial half-year Represented by: Cash and Cash at Bank Short Term Dank deposits Cash at End of Period 8	1,443,704 (4,791,253)	590,964 (1,016,856)
	(3,347,549) 24,255 - 655,717 1,587 (2,665,990)	(425,892) 1,462 22 - - (424,408)
	(69,783) 273 (69,510)	(41,334) - (41,334)
	- 8,000,000 (540,000) 7,460,000	550,000 - (33,000) 517,000
	4,724,500 2,270,832 (707)	51,258 81,076 (1,097)
	6,994,625	131,237
	6,924,118 70,507 6,994,625	96,587 34,650 131,237

The above statement of cash flows should be read in conjunction with the accompanying notes

14 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 15

NOTES TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements

Note 1. Reporting entity

XREF Limited previously named King Solomon Mines Limited (‘the Company’) is a limited liability company incorporated on 28 January 2003 and domiciled in New Zealand. The address of its registered office is 242 Marine Parade, Otaki Beach, Otaki, 5512.

The Company and its subsidiary (together ‘the Group’) were incorporated with the purpose of exploring and developing gold, copper and other metallic deposits in China and are profit oriented entities.

The Company ceased exploration activities in March 2013 as the Group and the Company were no longer deemed to be a going concern. Since that time, the Group sought to rationalise core assets and raise further share capital to maximise shareholder value.

The Directors actively assessed options available in and out of China to maximise shareholder value and on 18th January 2016 acquired Xref Pty Ltd after which the company changed its name to Xref Ltd.

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

The financial statements cover Xref Limited as a consolidated entity consisting of Xref Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation currency.

Note 4. Segment reporting

There is only one operating segment (candidate referencing) for the six months ended 31 December 2016. 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.

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Consolidated
31 Dec 2016 31 Dec 2015
$ $
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	31 Dec 2016 $	31 Dec 2015 $
Revenue from external customers Australia Canada United Kingdom Total operating revenue Non-current operating assets Australia Canada United Kingdom Total non-current operating assets	1,164,475 2,189 10,593	469,737 - -
	1,177,257	469,737
	188,997 62,128 36,542
	287,667

These consolidated financial statements were authorised for issue by the Board of Directors on 27 February 2017.

Note 5. Non-current assets held for sale and discontinued operations

Note 2. Basis of preparation

The condensed consolidated financial statements of the Group have been prepared in accordance with IAS 34 and NZ IAS 34 which deal with Interim Financial Reporting, and follow Generally Accepted Accounting Practice in New Zealand. The consolidated financial statements of the Group comply with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”,) interpretations and other applicable Financial Reporting Standards. They are in compliance with International Financial Reporting Standards. The consolidated financial statements have been prepared in accordance with the requirements of the Companies Act 1993 and Financial Reporting Act 2013 and have been prepared under the historical cost convention.

Note 3. Summary of significant accounting policies

The half yearly financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing activities of the Group as the full financial report. Accordingly, this report should be read in conjunction with the Annual Financial Report of Xref Limited for the year ended 30 June 2016.

The principal accounting policies applied in the preparation of these condensed consolidated financial statements of the Group are consistent with those of the previous financial year.

The Group has not adopted any new or amended NZ IFRS, interpretations and other applicable Financial Reporting Standards that are not yet mandatory.

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 Ltd.

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Consolidated
31 Dec 2016 31 Dec 2015
$ $
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Cash fows associated with discontinued operations
Operating cash fows – exploration asset maintenance expenses	(967)	-
Total cash fows from discontinued operations	(967)	-
Other expenses of discontinued operations GST repayable to New Zealand IRD (including interest)***	200,000
Net assets of disposal group classifed as held for sale Exploration and evaluation assets	240,000	-
Other assets	93,814	-
Total assets	333,814	-
Liabilities
Trade creditors and other payables	333,812	-
Total liabilities	333,812	-
Net assets of disposal group	2	-

16 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 17

NOTES TO THE FINANCIAL STATEMENTS / continued

NOTES TO THE FINANCIAL STATEMENTS / continued

The assets and liabilities of the discontinued operations are classified as held-for-sale and were written down to their fair value less costs to sell.

The measurement of fair value has been determined by using observable inputs, being the selling price agreed between the buyer and the company and is therefore within level 2 of the fair value hierarchy. The buyer is a related party of the company. The disposal has not been completed.

***On Feb 10[th] 2017 the company received notification from the New Zealand IRD that it had determined that the old business of Xref Limited (being the mining operations of King Solomon Mines) had not been carrying on a taxable activity in New Zealand and thus was not entitled to claim GST as it had done. At the time of preparing this half year report the management of Xref Limited are investigating the claims as it was not an issue uncovered during the due diligence process.

Before receiving the New Zealand IRD letter dated Feb 10[th] 2017, the facts and circumstances pertaining to Xref Limited’s GST claim did not lead to a conclusion that it is more likely than not Xref Limited’s GST claim was not valid and that a reversal of the GST claimed was required. Without further facts and evidence available to management other than the New Zealand IRD’s request for a reversal of the GST claimed as at the period end, a liability is considered appropriate to be recognised in this report.

The corresponding liability is included in “Trade & Other Payables, Note 11”. The GST component is $157,036 (in $AUD) and the balance estimated interest charges.

Note 6. Other income

	Consolidated 31 Dec 2016 31 Dec 2015 $ $	Consolidated 31 Dec 2016 31 Dec 2015 $ $
Interest Received	22,920	1,462
Other Income	-	22
Total	22,920	1,484

Note 8. Current assets - cash and cash equivalents

	Consolidated
	31 Dec 2016 30 Jun 2016
	$ $
Cash at bank and in hand Call deposits Bank overdrafts Total cash and cash equivalents	6,924,138 2,200,335 70,507 70,507 (20) (10) 6,994,625 2,270,832

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. Bank overdrafts are repayable on demand and form an integral part of an entity’s cash management. Accordingly, these balances have been netted in the Statements of Financial Position.

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

Note 9. Trade debtors and other receivables

	Consolidated	Consolidated
	31 Dec 2016	30 Jun 2016
	$	$
Trade debtors Related party receivables Research and development incentive grant Other receivables Total	506,584 5,995 - 59,250	220,114 25,995 655,717 42,234
	571,829	944,060

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

Note 7. Overhead and administration

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Consolidated
31 Dec 2016 31 Dec 2015
$ $
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All receivables are subject to credit risk exposure.

	31 Dec 2016 $	31 Dec 2015 $
Directors Fees Legal Fees Share Option Expense Foreign exchange loss Operating lease payments Loss on disposal of fxed assets Auditors’ remuneration Fees charged by Audit Firm Financial statement audit Total fees paid to audit frm	55,868 124,178 80,142 9,233 265,251 232 61,072	50,000 57,235 - 1,097 48,884 - 8,500
	61,072	8,500

18 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 19

NOTES TO THE FINANCIAL STATEMENTS / continued

NOTES TO THE FINANCIAL STATEMENTS / continued

Note 10. Non-current assets - property, plant and equipment

Movements for each class of property, plant and equipment are as follows:

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Computer Office Office Office
Equipment Equipment Furniture Fitout Total
Group 31 December 2016 $ $ $ $ $
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Group 31 December 2016	Computer Ofce Ofce Ofce Equipment Equipment Furniture Fitout Total $ $ $ $ $
Gross carrying amount Balance as at 1 July 2016 Additions Disposals Revaluation movements Closing balance Accumulated depreciation and impairment Balance as at 1 July 2016 Current year depreciation Depreciation written back on disposal Revaluation movements Closing balance Balance at 31 December 2016	30,114 96,499 22,979 10,941 160,533 55,866 2,571 10,003 1,343 69,783 - (566) - - (566) (8) (59) (38) - (105) 85,972 98,445 32,944 12,284 229,645 3,938 15,909 486 256 20,589 9,247 8,500 1,032 531 19,310 - (61) - - (61) (2) (5) (3) - (10)
	13,183 24,343 1,515 787 39,828 72,789 74,102 31,429 11,497 189,817

Note 11. Trade creditors and other payables

	Consolidated
	31 Dec 2016 30 Jun 2016
	$ $
Current Trade creditors Related party payables Other payables and accrued expenses Total	249,810 291,904 - 8,491 408,232 230,534
	658,042 530,929

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

Note 12. Unearned revenue

		Consolidated
		31 Dec 2016 30 Jun 2016
		$ $
Balance Brought Forward Add: Credits Sold Add: Opening Conditional Credits Less: Credit Used Less: Closing Conditional Credits Unearned Revenue Movement Opening Balance Revaluation due to change in foreign exchange rates Balance Carried Forward Note 13. Share capital – Xref Limited		903,566 482,316 1,546,740 1,734,426 205,132 83,949 (923,794) (1,191,993) (458,595) (205,132)
		369,483 421,250 (198) -
		1,272,851 903,566
	Number Of Shares	Issue Price Average Issue Price
		$ $/Share
Opening Balance 1 July 2016 Issued for Cash Capital Raising Costs Closing Balance 31 December 2016	90,273,668 11,428,571 - 101,702,239	25,042,977 0.277 8,000,000 0.700 (540,000) - 32,502,977 0.320

Explanation of movements in Issued Capital for 6 months ended 31 December 2016

Xref issued 11,428,571 shares at $0.70 (being a 5.4% discount to the market price at the time) to Australian institutions and sophisticated investors on 17 August 2016 with the aim of accelerating global sales growth, facilitating product integrations, driving software development and providing further working capital for the Group’s operations.

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.

None of Xref Limited’s shares are held by any company within the Group.

20 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 21

NOTES TO THE FINANCIAL STATEMENTS / continued

NOTES TO THE FINANCIAL STATEMENTS / continued

Note 14. Other equity reserves

	Consolidated 31 Dec 2016 30 Jun 2016 $ $	Consolidated 31 Dec 2016 30 Jun 2016 $ $
Foreign Currency Translation Reserve (a)	40,588	16,947
Performance Right Reserve (b)	433,333	433,333
Share Options (c)	285,784	297,802
Consolidation (d)	(22,845,821)	(22,845,821)
Total	(22,086,116)	(22,097,739)

a. Foreign currency translation 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.

b. Performance right reserve

The performance right reserve is used to record unutilised performance rights issued on 18 January 2016 as part of the consideration obtaining 100% equity interest in 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.

The 50,000,000 performance rights as at 31 December 2016 and 30 June 2016 are split into 3 Classes as shown below:

Class	Number Granted	Performance Right Reserve $A	Weighted Average Fair Value $/Right
Class A	16,666,667	350,000	0.021
Class B	16,666,667	83,333	0.005
Class C	16,666,666	-	0.000
	50,000,000	433,333	0.009

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 Sales Revenue of $A2,500,000 or more.

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).

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.

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 2.22 Years.

c. Share option reserve

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Unaudited Group Audited Group
at 31 December 2016 at 30 June 2016
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Expiry date		Average	Options	Option	Options	Option Reserve
		exercise		Reserve		$A
		price in		$A
		$A per
		share
29 July 2016	*	6.00	-	-	32,000	92,160
1 February 2019	*	0.23	4,508,909	213,292	4,508,909	205,642
25 November 2021	*	0.70	5,400,000	-	-	-
25 November 2022	*	0.70	2,500,000	-	-	-
		0.53	12,408,909	-	4,540,909	297,802

*No participation in future dividends until exercised

Option Movements

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 (split by 2 expiry dates) and 300,000 of these have vested.

Options issued in the 6 months ended 31 December 2016 have been valued using a binomial options method, using the following assumptions:

Option Expiry date	25/11/2021	25/11/2022
Listing date (re-listing as Xref Limited)	9/02/2016	9/02/2016
Price history for volatility determination	2.47yr	5.00yr
Grant date	25/11/2016	25/11/2016
Measurement date	25/11/2016	25/11/2016
Exercise price	$0.70	$0.70
Expiry date	25/11/2021	25/11/2022
Life of option	5.00 yr	6.00 yr
Price of underlying shares at measurement date	$0.47	$0.47
Risk free rate = 5 year Government Bond for the 5 year options and 10 year
Government Bond for the 6 year options	2.19%	2.7%
Expected volatility	40%	40%
Dividends expected on the shares	Nil	Nil

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.

22 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 23

NOTES TO THE FINANCIAL STATEMENTS / continued

NOTES TO THE FINANCIAL STATEMENTS / continued

Options Vested and therefore exercisable

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6 Months
Unaudited Group Audited Group
at 31 December 2016 at 30 June 2016
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	6 Months Unaudited Group Audited Group at 31 December 2016 at 30 June 2016
Expiry date 29 July 2016 1 February 2019 25 November 2021	Options Options - 32,000 3,908,909 3,908,909 300,000 -
	4,208,909 3,940,909

d. 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.

Note 15. Earnings per Share

The Group recorded losses for the periods ended 31 December 2015 and 31 December 2016. 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.

Note 16. Reconciliation of cash flows from operating activities

	Consolidated
	31 Dec 2016 31 Dec 2015
	$ $
Loss for the year Add/(deduct) non-cash items Depreciation, impairment and amortisation Option expense Foreign exchange Unearned revenue Add/(deduct) movements classifed as investing activities (Proft)/loss on sale of property, plant and equipment Add/(deduct) movements in working capital Decrease/(increase) in trade and other receivables Decrease/(increase) in prepayments Decrease/(increase) in other fnancial assets Decrease/(increase) in trade creditors and other payables Decrease/(increase) in employee entitlements Increase/(decrease) in other fnancial liabilities Net cash from operating activities	(3,608,056) (619,061) 19,310 4,139 80,142 - 25,038 1,098 369,483 71,817 232 - 371,280 (23,826) (98,074) (4,408) (50,655) - 150,255 116,443 83,740 11,577 (8,685) 17,813 (2,665,990) (424,408)

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Consolidated
31 Dec 2016 31 Dec 2015
$ $
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		Consolidated 31 Dec 2016 31 Dec 2015 $ $
Loss attributable to ordinary equity Continuing operations Discontinued operations Loss attributable to ordinary equity holders of the parent for basic earnings Weighted average number of ordinary shares for basic EPS Weighted average number of ordinary shares adjusted for the efect of dilution		(3,407,089) (619,061) (200,967) - (3,608,056) (619,061) 98,720,873 100 98,720,873 100

24 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 25

NOTES TO THE FINANCIAL STATEMENTS / continued

NOTES TO THE FINANCIAL STATEMENTS / continued

Note 17. 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.

Transactions with related parties

The following transactions were carried out with related parties:

	6 Months 6 Months
	Unaudited Unaudited
	31 Dec 16 31 Dec 15
	$ $
a. Purchase of services Directors Key management personnel Other related parties Total purchase of services from related parties	418,528 156,538 155,199 - 22,131 - 595,858 156,538
	At 31 Dec 16 At 30 June 16
	$ $
b. Receivable/(payable) with related parties Receivable from related parties Directors Total Payable to related parties Other related party Directors Total	5,995 25,995
	5,995 25,995 - 8,491 - -
	- 8,491

Note 19. Commitments

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

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At 31 Dec 16 At 30 June 16
$ $
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	At 31 Dec 16 At 30 June 16 $ $
Not later than one year Later than one year and not greater than two years Later than two years and not greater than fve years Total Lease Commitment (net of incentive payment)	262,906 268,888 234,381 257,900 2,951 99,363
	500,237 626,151

Other than operating leases, the Group had no commitments at 31 December 2016 (30 June 2016; $Nil)

Note 20. Events after the reporting period

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

The Loans to directors for the 6 months’ year ended 31 December amounted to $5,995 (30 June 2016; $29,995). This is the balance of a loan repayable over 6 months at an interest rate of 5%.

Note 18. Contingent assets and contingent liabilities

The Group has no contingent assets or liabilities at 31 December 2016 except as disclosed in Note 5 in relation to the reversal of the GST claimed (30 June 2016; $Nil).

26 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 27

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

28 / Xref Limited / Interim Report 31 December 2016

Xref Limited / Interim Report 31 December 2016 / 29

Corporate Directory

PLACE OF BUSINESS

DIRECTORS

Australia (Head Office and Registered Office) Suite 17, 13 Hickson Road Dawes Point, NSW 2000 Tel: +61 2 8244 3099

Brad Rosser Chairman

Lee-Martin Seymour Tim Griffiths Tim Mahony Nigel Heap

United Kingdom

20 Little Britain London, EC1A 7DH

Canada

140 Yonge Street Toronto, Ontario M5C 1X6

New Zealand

Registered Office

242 Marine Parade Otaki Beach, Otaki 5512 New Zealand

Website

www.xref.global

LEADERSHIP TEAM

Lee-Martin Seymour Chief Executive Officer, Co-Founder

Tim Griffiths Chief Technology Officer, Co-Founder

James Solomons Chief Financial Officer

COMPANY SECRETARY

Robert Waring

AUDITORS

Crowe Horwath New Zealand Level 29, 188 Quay Street Auckland Central, Auckland 1010

STOCK EXCHANGE

The company’s ordinary shares are listed on the ASX

SHARE REGISTRY

Computershare Investor Services Pty Ltd Yarra Falls, 452 Johnston Street Abbotsford, Victoria Australia 3067 Tel: +61 3 9415 5000 Fax: +61 3 9473 2570

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“ Offering extreme value to our staff, customers & shareholders

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Xref Limited / Interim Report 31 December 2016 / 31

30 / Xref Limited / Interim Report 31 December 2016

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Candidate Referencing Shouldn’t Cost The Earth xref.global

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32 / Xref Limited / Interim Report 31 December 2016