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XREF LIMITED Interim / Quarterly Report 2021

Apr 5, 2021

66097_rns_2021-04-05_a2b02fe8-0070-4e29-b51f-60466fdbc14e.pdf

Interim / Quarterly Report

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6th�April�2021

X�ef�Re�e��e��������While�C�����Re�ai��Fla�

  • Re�e��e ���3�million���up�36�

  • Sale� ���4�million����up�62�

  • Ca�h�Recei����f����Sale� ���3�5�million���up�46�

  • Ca�h�E��e��e� ���3�5�million���down�17�

  • Ca�h�Bala�ce ���6�24�million

Xref Limited �ASX�XF�� �the human resources technology company�today reported a record third quarter of trading�The Group delivered records in revenue at �3 million�sales at �4 million and cash receipts�from�sales�at��3�5�million�for�the�quarter�

New clients acquired in the quarter contributed 13�of total sales�Xref further built on its success in healthcare globally and entered a new geographic market�South Africa� New clients in Australia included the Australian Prudential Regulation Authority ( APRA��Cash Converters and the Children�s Cancer Institute�In the United States and Canada�new clients included Granite Solutions Groupe�Baylis Medical and CrossMed Healthcare�In EMEA�Connect Health�Gray Healthcare and�South Africa�based� Mr Price Group were introduced to the platform�Details about these companies can be found in the appendix�

Rec��d�Re�e��e��C�edi��U�age�

Xref credits used during the quarter totalled �2�7 million and�together with RapidID�s net revenue of �0�3 million�contributed to a record quarterly revenue of �3 million�Xref credit usage grew 23�and RapidID�s�net�revenue�grew�2�1��on�the�previous�corresponding quarter��Q3�FY20��

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���Xref�credits�are�recognised�as�revenue�when�used ���RapidID�Net�Revenue�is�gross�revenue�less�the�cost of�3rd�party�checks

1

Xref monitors hiring recovery rates and hiring trends to predict the resilience of the industry and forecast activity�Australian clients usually take six weeks to return to peak credit usage levels following the Christmas and New Year break�due to the impact of the Australia Day holiday at the end of January� However�by week five of 2021�credit usage had already achieved �6�recovery and has continued to grow throughout the remainder of the Quarter�In the Northern Hemisphere�Christmas and New Year holidays are shorter and�over time�the Group expects its geographic expansion will result in less seasonality�in�overall�usage�

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Xref credits used via integration partners represented 2��of all credits used during the quarter and grew�by�61���to��0�8�million��when�compared�to�Q3 FY20�and�14��when�compared�to�Q2�FY21�

S����g�Sale��G����h

COVID�1�has accelerated the global demand for remote working and�as a result�employers�desire to improve governance is increasing�Accordingly�organisations are seeking better ways to perform candidate verification�Xref can now acquire clients via its self�serve platform�its in�house enterprise sales teams or via its 30 channel partners�As a result�Xref�s reliance on outbound�direct sales activities is fast being replaced by inbound�marketing�led demand�During the quarter�Xref witnessed a rise in inbound leads from�in the most part�channel partner integrations�an improved global digital strategy and�the�network�effect�generated�through�the�numerous sectors�and�global�regions�Xref�is�used�in� Group sales reached �4 million during the quarter�up 62�on the previous corresponding quarter �Q3 FY20�and 46�when compared to Q2 FY21�New clients accounted for 13�of sales�while 12�came

2

from Xref�s international offices in Europe and North America and 24�from RapidID�Sales �gross revenue��by�RapidID�grew�by�608��when�compared�to the�previous�corresponding�quarter��Q3�FY20��

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Clients who joined Xref prior to FY17 accounted for 30�of sales during Q3 FY21 despite significant sales growth since then�demonstrating Xref�s ability to retain and grow clients over time�Clients that joined within FY21 represented 1��of total sales�demonstrating Xref�s ability to also acquire new�high�value clients�

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3

C����C�����l

Since December 201��Xref has scaled back event costs�travel�development costs�and office leases and has reduced headcount from �8 to 64 people�This has driven a material reduction in cash expenses while continuing to support growth in sales�Operating cash outflows for the March quarter were down 17��to �3�5 million�from �4�2 million in Q3 FY20�Cash receipts from sales were up by 44� on the previous corresponding quarter�Xref was able to achieve an operating cash flow surplus of �3�000�

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��Government�COVID�1��subsidy�payments�finished�in early�October�2020��Total�subsidies�were��Q4FY20 ��376k��Q1FY21���461k��Q2FY21���184k�

Xref forecasts operating cash expenses for Q4 FY21 to be consistent with Q3 FY21 at �3�5 million�Cash on�hand�at�the�end�of�March was��6�24�million�

P��d�c��I��e���e��

Although the European and North American markets continue to be adversely impacted by the effects of COVID�1��Xref is preparing for the growth that is anticipated to come from millions of returning workers globally�Xref is working with some of its largest global clients to expand the current platform and support their future requirements�The enhanced platform will dramatically increase the global addressable market through the provision of additional services�allow for an entirely digital new client acquisition process and add a subscription�based ARR to the current credit�based model�During the quarter�Xref capitalised a proportion of internal and external development costs related to these platform�features�

Highe���Ra�i�g�Refe�e�ce�Checki�g�Pla�f������Gl�ball�

During the quarter�Xref was again named a leader by independent software review site� G2� appearing as its highest�rated and easiest to use reference checking solution� With a 4�7 star rating on G2� Capterra and Google�Xref is ideally placed to be found and�trusted�by�new�clients�globally�

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4

B��i�e���U�da�e���I��e�����Call�����h�A��il

Chief Executive Officer�Lee�Martin Seymour�will host an investor call to discuss Xref�s Q3 FY21 results on Tuesday�6th April 2021 at 11�00am AEST�The number for Australian investors is 1800 0�3 431 and for international�investors�is��61�2�8047��3�3��The�conference ID�is���3870�7��

Ma�age�e���C���e����

E�ec��i�e di�ec����CEO Lee�Ma��i�Se������aid� �Our annualised revenue run rate�generated by credits and checks used by existing clients�is now over �15 million and as we enter the busiest quarter of the year�we are excited about being very well positioned to achieve our first cash flow break�even quarter by the end of this financial year�In addition to sales growth and cost control�we are now also heavily focused on delivering our newly built and extended verification platform in Q1 FY22�which will help�us�scale�our�business�even�further

B�ad R���e��Chai��a��aid ��The evolution of Xref from a sales�led to a marketing�led business is paying off�In Q3 our marketing efforts generated �2�4 million in new opportunities�with 73�of new customers coming via our website�free template builder tool or online content�Paid advertising accounted for 4�and 23�came from clients who had used Xref Lite and requested an enterprise account�As we prepare to launch into a much larger addressable market�we can further leverage the channels�that�have�proven�to�perform�best�for�us

A��e�di���C�i�e����e��la�a��������e

As required by listing rule 4�7C�3�the amount of �318�000 shown at item 6 within this quarter�s 4C is payment of directors fees and salaries to executive directors�plus statutory entitlements�This includes payout�of�entitlements�to�T�Griffiths�during�the�quarter�

I��e�����a�d��edia�e���i�ie��

Presentation� xf1�com Investor�Centre� xref�com�en�investor�centre Twitter� �xf1 Email� investors�xf1�com

Authorised�by�the�Board��Xref�Limited��ASX���XF1� Xref�Limited��Suite�13��13�Hickson�Road��Dawes�Point�Sydney�NSW�2000�Australia

5

Ke���i���ab���X�ef Ke���i���ab���X�ef
Fi������e�ad�a��age Xref provided the frst automated solution for the candidate
referencing
process
and
it
is capitalising on its frst�mover
advantagebyfocusingonandinvestingforinternational growth�
B��i�e����del Under Xref�s business model�when clients purchase credits �credit
sales�to use the candidate referencing platform�the value of their
purchases is recognised as unearned income�When they pay for
the credits�the cash is recognised as cash receipts�Once the
credits are used by the client �usage��Xref recognises the value of
thecreditsusedasrevenue�recognisedrevenue��
Gl�baladd�e��able�a�ke� Xref�s
addressable
market
includes
more
than
180
million
employees in North America�120 million employees in Europe and
15millionemployeesinAustraliaandNewZealand�

A��e�di����Ne��Clie���

A����alia�a�d�Ne��Zeala�d

APRA �The Australian Prudential Regulation Authority �APRA�is an independent statutory authority that supervises institutions across banking�insurance and superannuation and promotes financial system stability�in�Australia��APRA�employs�more�than�730 staff�across�Australia�

Cash Converters �Cash Converters International is a franchised retail network listed on the ASX �CCV��It generates revenues from franchising�store operations�personal finance and vehicle finance�From its head�office in Perth�Western Australia the Company controls 700 stores across 16 countries�helping customers�meet�their�financial�needs�

Children�s Cancer Institute �Children�s Cancer Institute is the only independent medical research institute in Australia wholly dedicated to curing childhood cancer�It now employs more than 300 researchers�students and operational staff and is recognised as one of the leading international child cancer�research�institutes�

The�U�i�ed�S�a�e��a�d�Ca�ada

Granite Solutions Groupe �Granite Solutions Groupe provides financial services decision makers with effective people and solutions�It has four offices on three continents�with more than 250 team members�deployed�across�the�U�S��at�Fortune�500�companies and�high�performing�Fintech�firms�

Baylis Medical �Baylis Medical is a world leader in the conception�development�production and distribution�of�state�of�the�art�medical�products that�improve�the�lives�of�people�around�the�world�

6

CrossMed Healthcare Staffing Solutions �CrossMed Healthcare provides staffing solutions to nursing and�allied�health�care�professionals�

EMEA

Connect Health �Connect Health is a leading community services healthcare provider encompassing mental health�IAPT�psychological interventions�rehabilitation�MSK �musculoskeletal�conditions� chronic pain�orthopaedics�rheumatology and occupational health services�serving over 375k NHS patients�pa�across�50�NHS�CCGs�Trusts�and�100��occupational health�physiotherapy�services�

Gray Healthcare �Gray Healthcare is the UK�s leading specialist provider of individually tailored community�based support�Its front�line workers include highly skilled support workers and team leaders who use their extensive knowledge and skills to plan and deliver support based on people�s needs�and�desired�outcomes�

Mr Price Group �Mr Price Group Limited is a publicly traded retail company based in South Africa�It trades predominantly in South Africa as well as through owned and franchise stores across 13 African markets��It�targets�a�wide�range�of�customers�and is�well�known�for�fashion�value�offering�

7

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A������� 4C

Q�������� ���� ���� ������ ��� �������� ������� �� L������ R��� 4.7B

N��� �� ������

N��� �� ������ N��� �� ������ N��� �� ������ N��� �� ������ N��� �� ������
Xref Limited
ABN
34 122 404 666
Q������ ����� (�������� ��������)
31 March 2021
C����������� ��������� �� ���� ����� C������ �������
$A�000
Y��� �� ����
(9 ������)
$A�000
1.
C��� ����� ���� ��������� ����������
1.1
Receipts from c�stomers
1.2
Pa�ments for
(a)
research and de�elopment
(b)
prod�ct man�fact�ring and operating
costs
(c)
ad�ertising and marketing
(d)
leased assets
(e)
staff costs
(f)
administration and corporate costs
1.3
Di�idends recei�ed (see note 3)
1.4
Interest recei�ed
1.5
Interest and other costs of finance paid
1.6
Income ta�es paid
1.7
Go�ernment grants and ta� incenti�es
1.8
Other (pro�ide details if material)
-
Upfront ann�al s�bscriptions paid
-
GST for the period
-
Net foreign e�change
1.9
N�� ���� ���� / (���� ��) ���������
����������
3,468
(5)
(546)
(159)
(78)
(2,161)
(158)
-
2
-
-
-
(131)
(239)
10
8,858
(29)
(1,310)
(376)
(368)
(6,464)
(627)
-
9
-
-
645
(389)
(564)
24
3 (591)

Xref Limited - March Q�arter 2021 Appendi� 4C

Page 1

A������� 4C Q�������� ���� ���� ������ ��� �������� ������� ��L������ R��� 4.7B

2.
C��� ����� ���� ��������� ����������
2.1
Pa�ments to acq�ire:
(a)
entities
(b)
b�sinesses
(c)
propert�, plant and eq�ipment
(d)
in�estments
(e)
intellect�al propert�
(f)
other non-c�rrent assets - Website
2.2
Proceeds from disposal of:
(a)
entities
(b)
b�sinesses
(c)
propert�, plant and eq�ipment
(d)
in�estments
(e)
intellect�al propert�
(f)
other non-c�rrent assets
2.3
Cash flo�s from loans to other entities
2.4
Di�idends recei�ed (see note 3)
2.5
Other (pro�ide details if material)
2.6
N�� ���� ���� / (���� ��) ���������
����������
-
-
(10)
-
-
(364)
-
-
-
-
-
-
-
-
1
-
-
(31)
-
-
(594)
-
-
-
-
-
-
-
-
3
(373) (622)
3.
C��� ����� ���� ��������� ����������
3.1
Proceeds from iss�es of eq�it� sec�rities
(e�cl�ding con�ertible debt sec�rities)
3.2
Proceeds from iss�e of con�ertible debt
sec�rities
3.3
Proceeds from e�ercise of options
3.4
Transaction costs related to iss�es of
eq�it� sec�rities or con�ertible debt
sec�rities
3.5
Proceeds from borro�ings
3.6
Repa�ment of borro�ings
3.7
Transaction costs related to loans and
borro�ings
3.8
Di�idends paid
3.9
Other (pro�ide details if material)
3.10
N�� ���� ���� / (���� ��) ���������
����������
-
-
-
-
-
-
-
-
(125)
-
-
-
-
5,000
-
(235)
-
(250)
(125) 4,515

Xref Limited - March Q�arter 2021 Appendi� 4C

Page 2

A������� 4C Q�������� ���� ���� ������ ��� �������� ������� ��L������ R��� 4.7B

4.
N����������/ (��������) ���������
���� ����������� ��� ��� ������
4.1
Cash and cash eq�i�alents at beginning of
period
4.2
Net cash from / (�sed in) operating
acti�ities (item 1.9 abo�e)
4.3
Net cash from / (�sed in) in�esting acti�ities
(item 2.6 abo�e)
4.4
Net cash from / (�sed in) financing acti�ities
(item 3.10 abo�e)
4.5
Effect of mo�ement in e�change rates on
cash held
4.6
C��� ��� ���� ����������� �� ��� ��
������
4.
N����������/ (��������) ���������
���� ����������� ��� ��� ������
4.1
Cash and cash eq�i�alents at beginning of
period
4.2
Net cash from / (�sed in) operating
acti�ities (item 1.9 abo�e)
4.3
Net cash from / (�sed in) in�esting acti�ities
(item 2.6 abo�e)
4.4
Net cash from / (�sed in) financing acti�ities
(item 3.10 abo�e)
4.5
Effect of mo�ement in e�change rates on
cash held
4.6
C��� ��� ���� ����������� �� ��� ��
������
6,734
3
(373)
(125)
-
2,937
(591)
(622)
4,515
-
6,239 6,239
5.
R������������� �� ���� ��� ����
�����������
at the end of the q�arter (as sho�n in the
consolidated statement of cash flo�s) to the
related items in the acco�nts
C������ �������
$A�000
P������� �������
$A�000
5.1
Bank balances
5.2
Call deposits
5.3
Bank o�erdrafts
5.4
Other (pro�ide details)
5.5
C��� ��� ���� ����������� �� ��� ��
������� (������ ����� ���� 4.6 �����)
6,205
34
-
-
6,699
35
-
-
6,239 6,734
6.
P������� �� ������� ������� �� ��� ������ ��� �����
����������
C������ �������
$A'000
6.1
Aggregate amo�nt of pa�ments to related parties and their
associates incl�ded in item 1
6.2
Aggregate amo�nt of pa�ments to related parties and their
associates incl�ded in item 2
303
15
7.
F������������������
N��e: �he �e�m �facili��� i�cl�de� all f��m� �f fi�a�ci�g
a��a�geme��� a�ailable �� �he e��i��.
Add ���e� a� �ece��a�� f�� a� ��de���a�di�g �f �he
����ce� �f fi�a�ce a�ailable �� �he e��i��.
T���� ��������
������ �� �������
���
$A�000
A����� ����� ��
������� ���
$A�000
7.1
Loan facilities
5,000
7.2
Credit standb� arrangements
-
7.3
Other (please specif�)
-
7.4
T���� ��������� ����������
5,000
7.5
U����� ��������� ���������� ��������� �� ������� ���
5,000
-
-
5,000
5,000
-
-
5,000
-

Xref Limited - March Q�arter 2021 Appendi� 4C

Page 3

A������� 4C Q�������� ���� ���� ������ ��� �������� ������� ��L������ R��� 4.7B

  • 7.6 Incl�de in the bo� belo� a description of each facilit�abo�e, incl�ding the lender, interest rate, mat�rit� date and �hether it is sec�red or �nsec�red. If an� additional financing facilities ha�e been entered into or are proposed to be entered into after q�arter end, incl�de a note pro�iding details of those facilities as �ell.

$5m f�ll� dra�n facilit� �ith PURE Asset Management. 4-�ear term. 9.95% interest rate, interest to be paid e�er� 3 months. No principal amortisation, repa�able at mat�rit�. Sec�red against assets of Xref Limited & s�bsidiaries. ASX release 31 J�l� 2020

8.
E�������� ���� ��������� ��� ������ ��������� ����������
$A�000
8.1
Net cash from / (�sed in) operating acti�ities (Item 1.9)
3
8.2
Cash and cash eq�i�alents at q�arter end (Item 4.6)
6,239
8.3
Un�sed finance facilities a�ailable at q�arter end (Item 7.5)
-
8.4
Total a�ailable f�nding (Item 8.2 + Item 8.3)
6,239
8.5
E�������� �������� �� ������� ��������� (I��� 8.4 ������� ��
I��� 8.1)
2,080
N��e: if �he e��i��ha��e����ed ���i�i�e �e���e�a�i�g ca�h fl���i�i�em 1.9, a���e�i�em 8.5 a��N/A�. O�he��i�e, a
fig��e f�� �he e��ima�ed ��a��e�� �f f��di�g a�ailable m��� be i�cl�ded i� i�em 8.5.
3
6,239
-
6,239
2,080
  • 8.6 If Item 8.5 is less than 2 q�arters, please pro�ide ans�ers to the follo�ing q�estions:

  • 8.6.1 Does the entit� e�pect that it �ill contin�e to ha�e the c�rrent le�el of net operating cash flo�s for the time being and, if not, �h� not?

Ans�er: N�� A��licable

  • 8.6.2 Has the entit� taken an� steps, or does it propose to take an� steps, to raise f�rther cash to f�nd its operations and, if so, �hat are those steps and ho� likel� does it belie�e that the� �ill be s�ccessf�l?

Ans�er: N�� A��licable

  • 8.6.3 Does the entit� e�pect to be able to contin�e its operations and to meet its b�siness objecti�es and, if so, on �hat basis?

Ans�er: N�� A��licable

N��e: �he�e i�em 8.5 i� le�� �ha� 2 ��a��e��, all �f ��e��i��� 8.6.1, 8.6.2 a�d 8.6.3 ab��e m��� be a���e�ed.

Xref Limited - March Q�arter 2021 Appendi� 4C

Page 4

A������� 4C Q�������� ���� ���� ������ ��� �������� ������� ��L������ R��� 4.7B

C��������� ���������

  • 1 This statement has been prepared in accordance �ith acco�nting standards and policies �hich compl� �ith Listing R�le 19.11A.

  • 2 This statement gi�es a tr�e and fair �ie� of the matters disclosed.

Date: 6 A��il 2021

A�thorised b�: The B�a�d �f Di�ec���� �f X�ef Limi�ed

Xref Limited - March Q�arter 2021 Appendi� 4C

Page 5