XREF

Dear Shareholder

Xref has achieved much over calendar year 2021, both from an operational and financial perspective. The period saw your company successfully broaden and deepen its suite of technology-driven human resources-related services, which pleasingly continued to gain traction in the recruitment sectors both in Australia and overseas. This market acceptance ensured Xref’s earnings performance went from strength to strength over the course of the year.

A key highlight was Xref announcing its first-ever annual net profit after tax in our 2021 financial year, powered by continued strong growth in revenues and the successful implementation of targeted cost initiatives. Your company achieved strong double-digit gains in both sales (+56%) and usage rates (+32%) over its financial year. We also turned cash flow surplus (operating level, including all development, acquisition and interest costs) for the first time since becoming a publicly listed back in 2007.

And I am pleased to say this excellent momentum has extended into the early part of our 2022 financial year. The first quarter of this year saw a further strong uplift in sales growth on a previous corresponding period basis. We also achieved a cash surplus of $1.2m in the September 2021 quarter, an excellent result given this three-month period is traditionally a seasonal low-point for human resources-related businesses like Xref. We also added to our list of high value clients over the quarter. The Arnotts Group, Fortescue Future Industries and Ozcare in Australia. Kiwibank in New Zealand, Maybourne Hotels and H&M Group in the UK, UEFA in Switzerland, The University of Pittsburgh in The United States and Home and Community Care services in Canada all came on board during this period.

The final part of calendar 2021 saw the announcement of two exciting partnership arrangements that demonstrate your company’s commitment to maintaining its growth momentum over the months ahead. Importantly, such agreements do more than just increase Xref’s addressable market. They represent part of our efforts to ensure Xref retains its status as a ‘best of breed’ reference checking services provider both in Australia and overseas.

The first of these announcements was the signing of an integration agreement with First Advantage, a leading global provider of technology solutions for screening, verifications, safety and compliance related to human capital. This arrangement will see Xref and First Advantage, who have mutual customers, cross-promote services through the integration of their platforms. It reflects your company’s commitment to lowering the barriers to verification services and is a clear win for both service providers and their respective client bases.

The second initiative sees CheckSocial, which uses artificial intelligence technology, combined with expert human analysts, to thoroughly vet candidates using a digital footprint check. become a marketplace partner via its integration into the Xref platform. Our ‘Additional Checking Marketplace’ will now provide social checking services from checking partners around the world that offer a variety of pre-employment checks. This opens the way for Xref clients to complement their reference checks with additional checks vital for roles being hired.

To the future, we look forward to soon updating you on further exciting developments now in the pipeline. These upcoming initiatives will accelerate your company’s strategy of delivering profitable scale over financial year 2022 and beyond.

Lee-Martin Seymour

Founder and CEO