Announcement PDF 2022 Contents 2022 Highlights  2 Chairman’s Report  7 Chief Executive Officer’s Report  8 Directors’ Report 12 Independence declaration  26 Financial Statements  27 Notes to the financial statements  33 Director’s Declaration  74 Independent Auditor’s Report  75 Shareholder Information  80 Corporate Directory  84 General information Xref Limited ABN 34 122 404 666 The financial statements cover Xref Limited as a consolidated entity consisting of Xref Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Xref Limited’s functional and presentation currency. Xref Limited is a listed public company limited by shares (ASX:XF1), incorporated and domiciled in Australia. Its registered office and principal place of business is: Suite 13, 13 Hickson Road, Dawes Point, New South Wales, Australia, 2000 A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 August 2022. The directors have the power to amend and reissue the financial statements.  Xref Limited | Annual Report 2022 | 1 2022 Highlights $20.84M Increase 36% $15.38M “The value of Xref credits sold in FY22 grew 41% year on year, to $16.9 million, while Marketplace $9.81M sales grew 15% to $4 million. Overall the combined growth rate of 36% saw group sales Total Sales reach $20.8 million.” Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Xref Sales FY 2021 FY 2022 Marketplace Sales $18.59M Increase 29% $14.45M “Continuing on from the strong FY21 growth, Group revenue $8.27M grew a further 29% year on year with Xref growing 33% and Marketplace growing 14% respectively.” Recognised Revenue Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Xref Marketplace 2 | Xref Limited | Annual Report 2022 FY 2021 FY 2022 2022 Highlights Increase 20% “Increases in marketing spend and wage costs to support continued revenue growth and product development were the Key Expense Changes key expense changes for FY22.” Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Wages Rent/occupancy FY 2021 FY 2022 Marketing Group Profitability Increase $18.59M 834% $14.45M “After achieving profitability $8.27M in FY21, Xref remained $0.08M $0.73M profitable in FY22 growing NPAT 834% to $0.73 million and EBITDA 75% to $1.77 million.” -$10.06M FY 2020 Group Revenue  Lee Seymour FY 2021 FY 2022 CEO, Co-Founder, Exec Director Group Net Profit Xref Limited | Annual Report 2022 | 3 2022 Highlights $18.59M “All regions grew strongly in FY22. North American revenue grew 49% year on year with revenue from the United $14.45M States growing by 129% when compared to FY21 showing strong demand for Xref’s products from this area.” $8.27M Revenue Region Lee Seymour CEO, Co-Founder, Exec Director FY 2020 North America EMEA FY 2021 FY 2022 ANZ $18.59M “Clients that use the Xref platform directly accounted for 52% of revenue and usage grew 22% during FY2022. Clients that use Xref’s services via a $14.45M Channel partner accounted for 27% of revenue and grew 64% during FY2020. $8.27M Trust Marketplace includes revenues from RapidID and Xref consumed via wholesale.” Revenue Stream Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Trust Marketplace Channel API 4 | Xref Limited | Annual Report 2022 Xref Platform FY 2021 FY 2022 2022 Highlights $18.59M “Clients who joined Xref prior to FY2020 accounted for 60% of revenue in FY2022. Clients who joined in FY2021 grew by 131% $14.45M in FY2022 and revenue from new clients grew 32% when compared to the previous year. This demonstrates Xref’s strong $8.27M track record in client retention and increasing customer life time value (LTV).” Client Cohort Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Joined FY2022 Joined FY2021 Joined FY2020 FY 2021 FY 2022 Pre Existing $18.59M “The purchase of prepaid credits accounted for 75% of revenue in FY2022 and grew 33% year on year. Capped subscriptions now contribute $14.45M 4% of revenue and form a strong foundation for growth as the new Enterprise subscription $8.27M platform is launched.” Business Model Lee Seymour CEO, Co-Founder, Exec Director FY 2020 Capped Subscription  Postpaid Checks FY 2021 FY 2022 Prepaid Credits Xref Limited | Annual Report 2022 | 5 2022 Operating Results 30 June 2022 30 June 2021 % Change Total Revenue 18,591,434 14,454,868 29% EBITDA 1,774,730 1,016,899 75% 729,575 78,084 834% 4,622,960 2,322,373 99% 30 June 2022 30 June 2021 % Change Xref revenue 15,568,389 11,558,269 35% RapidID revenue 3,023,045 2,896,599 4% Total revenue 18,591,434 14,454,868 29% Cost of Sales (3,674,245) (3,045,508) 21% OPEX (12,503,372) (10,715,970) 17% Share based payments (767,885) (318,550) 141% Total Expenses 16,945,502 14,080,028 20% Other income 128,798 642,059 (80%) Depreciation & Amortisation (474,397) (440,206) 8% Operating profit 1,300,333 576,693 125% Finance income 5,739 11,779 (51%) Finance expense (576,497) (510,388) 13% Net profit after tax 729,575 78,084 834% EBITDA 30 June 2022 30 June 2021 % Change Net profit after tax 729,575 78,084 834% Add back: net interest income and expense 570,758 498,609 14% Add back: net depreciation and amortisation 474,397 440,206 8% 1,774,730 1,016,899 75% Financial summary Net profit after tax Net cash generated from operating activities Business results EBITDA 6 | Xref Limited | Annual Report 2022 Chairman’s Report Chairman’s Report We have provided comprehensive shareholder updates quarterly during the year and have recently published the new investor presentation that can be found at XF1.com. The management team keep an unwavering focus on client satisfaction. As a result, Xref has repeatedly ranked the #1 reference checking company based on customer reviews from G2. This credibility boosts our brand and allows us to deliver new products and services in a collaborative and successful manner. Testimonials and case studies from organisations across multiple geographies and industries are exemplary and demonstrate the support Xref has from its clients. I am pleased to present the Xref annual report for the year ended 30 June 2022. In my first year as Chair, I have been impressed with the passion and energy of the Xref management team and their determination to make Xref a world class software product. Your company has performed well, delivering revenue growth of 29% while also generating positive operating cash flow of $4.6m. EBITDA also grew 75% to $1.77m. This places us in a strong position to invest in product innovation and sales growth. We launched an exit survey product to complement our core reference checking software and plan to further fill out our offering with pulse checks next year. We have made good progress in developing a subscription-based service and plan to launch the offering during FY23. The Company signed a number of significant contracts during the year that will underpin continued growth in future years. This included the Graduate Verification Service and the Coles employee identity verification system. We have begun to broaden the client base for our Rapid ID product which will reduce its dependence on Crypto clients and better integrate it with our core Xref client base. Our ability to deliver global, accessible technology with the aid of multi-language, multi-region data and certifications like ISO27001, allow us to compete globally. This is further enhanced through partnerships and integrations with industry peers. Looking forward to 2023, I note that Xref is already credible, profitable and scalable - this is an excellent foundation from which to grow the business. Given the current challenging employment market, Xref has invested time and resources in people and culture, remuneration, and recognition to secure and retain top talent. This gives us confidence that we have the talent needed to execute on our growth plans. We have also put in place a senior leadership team capable of driving profitable growth in FY2023. Our key focus areas for the year ahead include: • Launch of new products such as Pulse Surveys, Engagement and the Trust Marketplace for checks • Growth of subscription revenue (ARR) • Growth of North American revenue • Sustained profitability The seasonally softer demand during the Australian summer was moderated this year by an increased contribution from our Europe and North America sales. All businesses have recovered well following natural disasters, impacts of the pandemic, and disruption from a national election. Further investment in marketing has led to increased lead flow during the year. This further pivoted the company from salesperson led sales to marketing led sales and will allow us to scale the business without adding proportionally to sales staff costs.  • Positive operating cash flow On behalf of the Board, I would like to thank our staff for their contribution during the year, our clients for their trust in Xref, and our shareholders for their support. Tom Stianos Chairman Xref Limited | Annual Report 2022 | 7 Chief Executive Officer Report Talent is on the Move Talent remains on the move and employers are facing an extremely competitive market. Increased salary expectations, shorter tenures, and geographic barriers have all contributed to a chaotic employment market. Employers need to move quickly to hire the best talent, so having the right processes in place to make confident hiring decisions has never been more important. Sector leaders are increasingly questioning legacy processes and seeking new technology solutions designed to tackle the pressures of remote working, talent sourcing, and candidate verification - while increasing engagement and retention, and combating attrition. Product Development Continual product development designed to meet the needs of our users is in our DNA at Xref. In 2010, we launched the Xref Automated Reference Check platform and have continuously enhanced it over time with Template Builder, Xref Lite, People Search, and a range of integrations and added features. As a response to the needs of our clients and the impact of the COVID-19 pandemic, we launched the Xref Exit Platform in November 2021. 8 | Xref Limited | Annual Report 2022 During FY2022, we have been busy developing an all new subscription-based Xref platform that increases self-service and offers surveys at each stage of the complete employee lifecycle from References to Pulses and Exits. Trust Marketplace In conjunction with our new platform launch, we will also launch the Trust Marketplace that encompasses ID checks from RapidID, the new Graduate Verification Service via the HES (formerly ‘Higher Ed Services’), and additional checks such as criminal, right to work, and employment checks via our partner network. The Trust Marketplace brings together a range of online trust products in an agnostic, API-only marketplace. All Trust Marketplace products will be available via Xref Recruiter and the new Enterprise platform. Client Acquisition and Customer Ratings The attractiveness of our evolving product suite is reflected in the high levels of new and existing customer demand for our services, and the ratings we achieve from third-party sources. During FY2022, all credibility ratings across referral sites such as G2, Capterra, Get App, and Google increased and promoted Xref as best in class globally. CEO Report Xref was rated the #1 referencing platform by G2 on multiple occasions throughout the year and continues to win multiple badges for leadership, usability, and customer satisfaction. Our global Google star rating was 4.8 out of 5 stars. Referrals continue to form a major contributor to our overall lead flow. Twenty-seven percent of our revenue originates from clients who use our service via an integration. These channel partnerships continue to drive lead flow and, as a result of those integrations, client retention remains high. In FY2022, Xref secured a number of significant clients operating in a range of sectors globally, demonstrating the breadth of our addressable market. Twenty-four percent of sales in FY2022 came from new clients during the year. Sales from these clients converted to 8% of the revenue recognised during the year. Sales to new clients during the year grew by 55% when compared to FY2021. Global Users In FY2022, 1.3 million new users transacted on the Xref platform across 195 countries globally, including employers, candidates, and referees. Xref referenced 60% more candidates during FY2022 compared to FY2021, demonstrating significantly increased demand within the global employment sector . Profitable, Credible, Scalable In FY2022, our profits and overall sales grew 834% and 36% respectively. Having turned a $10 million loss in FY2020 into a profit in FY2021, we remain focused on generating cash and investing in growth. Expenses grew by 20% in FY2022, driven by marketing expenditure and commissions paid to salespeople as a result of record sales results. Growth in sales far outweighed the increase in expenses, demonstrating our ability to scale and sustain profitability. Lead flow grew by 100% during FY2022 when compared to FY2021. This demonstrates Xref’s transition from being salesled to marketing-led. This further supports our ability to scale, and strongly legitimises the decision to increase investment into marketing over time. Sales grew by 36% to $20.8 million and the Company saw a 29% increase in revenue to $18.6 million. Strong controls on expenditure enabled Xref to increase net profit after tax by 834% to $0.73 million and increase EBITDA 75% to $1.77 million. Xref generated an operating cash surplus of $4.62 million for the year and net increase in cash of $3.54 million after investing $1.4 million into the development of the new platform. Cash reserves were strengthened during the year after receiving proceeds from the exercise of warrants and options of $1 million, taking Xref’s closing cash at bank to $11.7 million compared to $8.1 million at June 2021. FY2023 Strategy In FY2023, Xref intends to increase its addressable market and drive subscription revenues through the launch of the new platform, including self-service, Pulse Checks, and the Trust Marketplace. The new Xref platform has been designed to leverage opportunities identified in the North American market, following revenue growth of 49% across the region. The United States saw 129% revenue growth during the year reaching $1 million. In FY2022, when compared to FY2021, lead growth also increased in the North American region. Lead generation will continue via channel partners, through Xref products such as Template Builder and Xref Lite, referral sites such as G2, Capterra and Get App and online content such as thought-leadership blogs. FY2022 Results Following on from a record FY2021 in which Xref posted its maiden year of profitability, we continue to outperform in all areas in FY2022.  Xref Limited | Annual Report 2022 | 9 CEO Report Leadership and People Closing Remarks Xref’s internal culture is echoed through feedback from our clients and demonstrates the experience, tenure and quality of our people. The high calibre of our staff is a direct result of Xref’s unwavering focus to continually attract, retain and develop industry-leading talent. Xref continues to invest in its team, with 14 senior promotions made in July 2022 as a result of individual achievement. Our digital-first approach has been vital to our growth in FY2022. The Company’s outstanding results not only reflect the critical nature and demand for the Xref platform and services but demonstrate the brilliance and professionalism of the Xref team. During FY2022, Xref’s headcount rose to 74, with 43% of staff focusing on development, and 30% of staff working in sales and marketing. Consistent and effective internal communication, plus rewards systems established by our leadership team, continue to drive Xref’s primary goals to scale revenue globally and grow profits whilst delivering industry-leading, critical innovations to the employment sector. Our vision to create the most credible, best in class employment feedback platform is supported by our belief in and ability to execute a winning strategy over time. In July 2022, we launched a new policy for awarding options under the Employee Option Plan for all staff in recognition of their achievement, drive and passion to date. Environmental, Social, Governance (ESG) Xref continues to work with our Environment, Social, and Governance (ESG) policy front of mind. On an Environmental front, our people all work from home, resulting in a low carbon footprint while as a tech solution, we promote paperless automation. On a Social front, our multilanguage capabilities and cloud-based solution increase the accessibility of our platform, helping to empower workforces around the globe. In terms of Governance, we remain ISO27001 certified and GDPR compliant offering assurances to all our users that Xref is built using the highest standard of data privacy, security and quality management practices. 10 | Xref Limited | Annual Report 2022 I am incredibly proud of the many strategic decisions the team made during FY2022, which resulted in our strongest position to date. Our executive and senior leadership team were critical to our success, and I look forward to achieving many more years of growth and profitability with this high-calibre team. Lee-Martin Seymour, Chief Executive Officer, Co-Founder CEO Report  Xref Limited | Annual Report 2022 | 11 Directors’ Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘consolidated entity’) consisting of Xref Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors The following persons were directors of Xref Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: • Thomas Stianos (appointed 14 October 2021, Chairman 26 November 2021) • Lee-Martin Seymour • Nigel Heap • Lija Wilson • Brad Rosser (ceased 26 November 2021) Principal activities During the financial year, the consolidated entity continued to conduct its core activity which was to develop human resources technology that automates the candidate reference process for employers. It also embarked on significant product evolution, getting the development of a new platform, including additional offerings for the HR industry, underway. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The profit for the Group after providing for income tax amounted to $729,575 (30 June 2021: a profit of $78,084). Highlights of the financial year included: • Record results—Another record year for sales and revenue with a 36% increase in group sales year on year and a 29% increase in group revenue. • Profitable—Continued profitability with an increase in net profit after tax to $729,575, an increase in EBITDA to $1.77m ($1.02m in FY2021) and an increase in surplus cash generated from operations to $4.62m ($2.32m in FY2021). • Credible—Our best in class credibility as a leading online brand is evidenced by our continued ranking as #1 reference checking company on G2. On this review platform, our customers have awarded us an average 4.7 star rating. This is further supported by our global Google review rating of 4.8 stars, Capterra reviews also place us with 4.7 stars. • Scalable—Our continual product development and imminent new platform release points to the scalability of our platform. The new subscription model leaves plenty of opportunity for growth as we follow the expansion and success of our customer base. As they grow and hire more people, Xref is with them on the talent journey. Specifically, the release of Xref Exit Surveys allows organisations to survey retrospectively for informed people analytics. The number of past exitees and potential future leavers, especially in the context of The Great Resignation, is unlimited. Commentary on significant features of the operating performance, results of segments, trends in performance and other factors affecting the results for the period are contained in the Chairman’s Report on page 7 and in the CEO’s Report on page 8. 12 | Xref Limited | Annual Report 2022 Directors’ Report Matters subsequent to the end of the financial year On August 1, 2022, the Board approved the issue of 880,000 fully paid ordinary shares to the Xref Employee Share Trust. The trust was established to administer the Xref Limited Employee Option Plan. Xref uses its Employee Option Plan to attract and motivate high performing team members to further the growth of the business globally. On August 15, 2022, the Board approved the issue of 7,060,100 Options across three tranches with varying exercises prices and vesting periods to 71 eligible employees as part of the Xref Employee Option plan. Please refer to the announcement released to the market on 19 August 2022 for further details. No other matter or circumstances have arisen since the end of FY22, which could have had a notable impact on operations. Likely developments and expected results of operations The first half of FY23 will see Xref preparing to launch products to grow the marketplace and platform subscriptions. It is a very exciting period in our growth journey. Environmental regulation The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law. Information on directors  Name: Lee-Martin Seymour Title: Managing Director and Chief Executive Officer Qualifications: None Experience and expertise: Lee-Martin Seymour is a co-founder of Xref. He has 22 years recruitment experience across many geographic and market sectors. For 14 years Lee worked for one of the world’s largest specialist recruitment companies. As a result, he understands the demands of the employment market and is passionate about pioneering positive change for the long term. As a serial entrepreneur Lee has identified and successfully leveraged market opportunities to aid innovation in the employment sector. Date of appointment as a director 18 January 2016 Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of the Remuneration and Nomination Committee (until 8 July 2021) Interests in shares: 31,730,108 Interests in options: None Contractual rights to shares: None Xref Limited | Annual Report 2022 | 13 Directors’ Report Name: Thomas Stianos Title: Non-Executive Chairman Qualifications: B. App Sc Experience and expertise: Mr Stianos is widely recognised as one of the most successful and experienced leaders in the IT industry. He is currently a non-executive director of Gale Pacific Limited. (ASX: GAP) and Chairman of Escient. Mr Stianos was also previously a non-executive director of Inabox Group Limited and the Managing Director of SMS Management & Technology Limited. Mr Stianos has also previously held senior positions with the Department of Premier and Cabinet, Department of Justice, and Department of Treasury & Finance. He holds a Bachelor of Applied Science from the University of Melbourne and is a Fellow of the Australian Institute of Company Directors. Date of appointment as a director 14 October 2021 Other current directorships: Non-Executive director of Gale Pacific Limited Chairman of Escient Former directorships (last 3 years): Non-Executive director of Inabox Group Limited Chairman of Empired Limited (ASX: EPD) Special responsibilities: Member of the Audit and Risk Committee (commenced 14 February 2022), Member and Chairman of the Remuneration and Nomination Committee (commenced 16 May 2022). Interests in shares: None Interests in options: 1,800,000 Contractual rights to shares: None Name: Nigel Heap Title: Non-Executive Director Qualifications: LLB, AMP Experience and expertise: Nigel Heap is the Regional Managing Director of EMEA and ANZ for Hays PLC and is a member of their group Management Board. He joined Hays in 1988 in the UK and served as Managing Director of ANZ from 1997-2012. He also launched Hays operations in Asia and served as the Regional Managing Director of APAC from 2005 -2012. In 2012 he was appointed Managing Director of the UK & Ireland and served in this role until 2018. Date of appointment as a director 18 August 2016 Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Chairman of the Audit and Risk Committee and member of the Remuneration and Nomination Committee Interests in shares: 32,103 Interests in options: 900,000 Contractual rights to shares: None 14 | Xref Limited | Annual Report 2022 Directors’ Report Name: Lija Wilson Title: Non-Executive Director Qualifications: BCom Experience and expertise: Lija Wilson is the CEO and Founder of award-winning digital talent platform, Puffling, which launched in 2017 to design solutions to support diverse hiring and flexible work best practices. Prior to this, she held CMO-level roles at various organisations, including TEDx, Qantas Group and Fairfax Media. She is also a global ambassador for Flexible Work Day. Through her current work in Puffling, Lija has worked as a senior level career coach and advisor, further crediting her passion for developing and mentoring top female talent, particularly in tech. Date of appointment as a director 2 June 2021 Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Became a member of the Remuneration and Nomination Committee on 8 July 2021 and became a member of the Audit and Risk Committee on 1 September 2021 Interests in shares: None Interests in options: 900,000 Contractual rights to shares: None Name: Brad Rosser (ceased to be a director 26 November 2021) Title: Non-Executive Chairman Qualifications: B.Com, MBA Experience and expertise: Brad Rosser is a business builder and entrepreneur who worked for McKinsey and Co from 1992 to 1995 before working directly for Richard Branson as Director of Corporate Development for Virgin from 1995 to 1999, helping to identify and implement start-up businesses. He holds an MBA from Cornell University’s Johnson Graduate School of Management and a Bachelor of Commerce (Honors) from the University of Western Australia. Date of appointment as a director 18 August 2016 Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Ceased to be a member of the Audit and Risk Committee, and ceased to be the Chairman of the Remuneration and Nomination Committee on 26 November 2021 Interests in shares: 393,607 Interests in options: 2,500,000 Contractual rights to shares: None ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. ‘Former directorships (last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.  Xref Limited | Annual Report 2022 | 15 Directors’ Report Key Management Personnel Chief Financial Officer / Chief Operating Officer Mr. James Solomons, BCom, FCA, CTA, GAICD James is a chartered accountant with over 21 years of experience within the accounting and corporate finance industry. He has held various roles within the sector and has positioned himself as a leader in the accounting technology space brining with him to Xref over 5 years of experiences as Xero Australia’s Head of accounting. A successful entrepreneur in his own right James has a deep understanding of the need to find a balance between investing for growth whilst maintaining strong corporate governance processes across the business. Chief Technology Officer Mrs. Sharon Blesson Recognised for her ability to bridge the gap between IT and business, Sharon has a rich history of program management in both delivery and operational environments. She has developed excellent leadership skills and expertise in managing diverse teams while providing motivation and strategic vision. Prior to joining Xref, Sharon spent over a year as director of the project management office at the Ivy College in Sydney, earlier she was a major corporate client manager at Sqware Peg, and also a IT&T Project Manager for recruitment specialists Hays. Company Secretary Mr. Robert Waring, BEc, ACA, FCIS, ASIA, FAICD Robert has more than 43 years of experience in financial and corporate roles, including more than 27 years in company secretarial and director roles for ASX-listed companies. He is a director of Oakhill Hamilton Pty Ltd, a company that provides secretarial and corporate advisory services to a range of listed and unlisted companies. He is also the Company Secretary of ASX-listed companies Aeris Environmental Ltd and Vectus Biosystems Limited. Meetings of directors The number of meetings of the company’s Board of Directors and of each Board committee held during the 2021-22 financial year, and the number of meetings attended by each Director were as follows: Board meetings held 11 Audit and Risk Committee meetings held 3 Remuneration and Nomination Committee meeting