For personal use only - ASXof the business of Resume Check. $4.31 million of funding was raised through a share placement (including $0.77 million placed with the Directors, contributed

CV Check Ltd Annual Report 2016

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CVCheck Annual Report 20161

Contents Page

1. Company Directory 02

2. Chairman’s Letter 03

3. Managing Director’s Report 04

4. Directors’ Report 05

5. Auditor’s Independence Declaration 25

6. Financial Statements 26

7. Notes to the Financial Statements 30

8. Directors’ Declaration 56

9. Independent Auditor’s Report 57

10. Shareholder and Other Information 59

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CVCheck Annual Report 2016 2

AUSTRALIAN COMPANY NUMBER 111 728 842

CV Check Ltd is a Public Company limited by shares, domiciled in Australia.

DIRECTORSNon-Executive:

Chris Brown Reina Nicholls (appointed 17 November 2015) Peter Sheppeard (resigned 13 November 2015)

Executive:

Steve Carolan Rod Sherwood Colin Boyan Craig Sharp

COMPANY SECRETARYJenny Cutri

WEBSITEwww.cvcheck.com

REGISTERED OFFICEThe Garden Office Park Level 2, Building E 355 Scarborough Beach Road Osborne Park, WA 6017 Telephone: (+ 61) 8 9388 3000 Facsimile:(+ 61) 8 6316 1435

Company Directory

SECURITIES QUOTED

Australian Securities Exchange - Ordinary Fully Paid Shares (Code: CV1)

SHARE REGISTRYAutomic Registry Services Pty Ltd Level 1, 7 Ventnor Avenue West Perth, WA, 6005 Australia

AUDITORSRSM Australia Partners 8 St Georges Terrace Perth, WA, 6000 Australia

SOLICITORSSteinepreis Paganin Level 4, 16 Milligan St The Read Buildings Perth, WA, 6000 Australia

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On behalf of the Board I present you with the Group’s Annual Report and Financial Statements for the financial year ended 30 June 2016.

We have had a successful year, meeting many of our key objectives including listing on the ASX, aggressively growing revenue and taking our product into new geographies. In our first year as an ASX listed company we have grown revenue to $7.09 million, up 170% from the FY2015 year. We have also secured further growth capital to execute our plans through recent institutional placings and a fully underwritten Rights Issue - a commendable achievement given considerable capital market volatility, reflecting, amongst other things, Brexit, the Australian Federal elections and the hype surrounding the United States Presidential election.

Our successful growth initiatives, as well as reduction in costs underpin the expectation that we will reach positive cash flow in the December quarter of 2017. Future growth is anticipated to come from increasing user numbers and corporate contracts in Australia, as well as building on our footprint in the New Zealand market.

I am grateful to all our staff for the huge effort made by each of them. Great efforts have also been made by the Company’s senior management and I thank them and my fellow Non-executive Director, Reina Nicholls, for their commitment to the success of the business.

I commend this report and the accompanying financial statements to you and thank you for your support over the last year. We look forward to working with you to grow CV Check Ltd into the market leader for personal trust and verification services.

Chris Brown Non-Executive Chairman

Chairman’s LetterF

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The 2016 Financial year was a breakthrough year for CV Check Ltd. Following the Company’s successful entry to the Official List of the Australian Securities Exchange in September 2015, CV Check Ltd has positioned itself amongst the leading Australian companies serving the verification market for personal and professional information.

The extensive first year advertising and marketing campaigns have created brand awareness amongst potential individual and corporate customers which has successfully converted into sales growth. Revenue increased to $7.09 million in the 2016 financial year ($2.60 million in the 2015 financial year). The strong sales response has reiterated our confidence in our product offerings and delivery mechanism.

As a result of the growth rates achieved during the first half of the 2016 financial year, a decision was taken to bring forward planned marketing and increase staffing of product sales and customer service teams to cater for further growth. Consequently, we soon outgrew our previous premises and relocated to larger premises in Osborne Park. Strong growth continued through the second half of the 2016 financial year before tapering as the political backdrop of the Brexit vote and Australia’s Federal Election affected general sentiment.

During May 2016, the Company announced the acquisition of the business of Resume Check. $4.31 million of funding was raised through a share placement (including $0.77 million placed with the Directors, contributed post financial year end) to support growth in Australia and to fund the acquisition. Subsequent to the end of the financial year, a placement of $4.00 million and a $1.60 million fully underwritten rights issue completed leaving the Group in a strong balance sheet position. As previously announced, the Group is now well funded and aims to achieve positive cash flows by the December 2017 quarter. This is based on assumptions of more modest revenue growth than experienced in FY 2016 and the reduction in expenses and marketing spend that were announced in late June 2016.

During the 2017 financial year, sales and promotion efforts will focus on three objectives: the continuing conversion of our organic customer sign ups into regular ongoing order streams, the building of our corporate revenue base through the roll out of our bundled packages to existing corporate accounts, and our geographical expansion following the successful completion of the acquisition of a full service screening and verification business; Resume Check, New Zealand.

We continue to strive to achieve the CVCheck vision, to make verifying information easy, so that people can exchange their verified personal or professional information safely and grow trusted relationships.

Steve Carolan Managing Director

Managing Director’s ReportF

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Directors’ Report

The Directors present their financial report of the consolidated entity (“the Group”), being CV Check Ltd (“the Company”) and its controlled entities, for the year ended 30 June 2016 and the auditor’s report.

DirectorsThe following persons were Directors of the Company for the entire financial year and up to the date of this report unless otherwise stated.

Appointed to the Board

22 June 2015

Qualifications

Bachelor of Laws degree from University of Adelaide and Member of the AICD.

Experience

Chris Brown is a Non-Executive Director of Nexvet Biopharma plc, (listed on NASDAQ), having previously served as its Independent Chairman. He is a Non-Executive Director of Preshafood Pty Ltd, a private (formerly public unlisted) fruit and vegetable juice company and served as its Chairman from December 2010 until July 2014.

Chris served as Director (Investment Banking) of Investec Wentworth, a financial services business from July 2002 to March 2006, a Director of Rothschild Australia, a financial services firm, from January 1994 to October 2000, and a Director of Merrill Lynch, a financial services firm, from July 1992 to January 1994.

Chris was a Director and Chairman of Senetas Corporation Ltd, an Australian-listed public information technology encryption company, from May 2011 to April 2013 and the Founding Chairman of The Conversation Media Group Ltd, a not-for profit academic news organisation, from April 2010 to September 2012.

Interest in shares, options and performance rights

Direct: no ordinary shares, no options over ordinary shares, and performance rights over 75,000 ordinary shares.

Indirect: 426,136 ordinary shares and 156,250 options over ordinary shares.

Directorships held in other public entities

Non-Executive Director of Nexvet Biopharma plc (NASDAQ: NVET - November 2013)

Other public company directorships held during the past 3 years

Senetas Corporation Ltd (ASX: SEN - May 2011 to April 2013), Nexvet Biopharma plc (NASDAQ: NVET - November 2013 to present)

Appointed as a director

9 November 2004

Qualifications

No formal qualifications, extensive business experience

Experience

Steve founded the Company in November 2004.

Steve has demonstrated experience in building successful businesses, commercialisation management, development of strategic partnerships, project and business management, and technology development.

Steve was one of two directors and a founding shareholder of Access Homes Loans. Access Home Loans and its subsidiary First National Home Loans were pioneers in the Australian mortgage broking industry, with offices nationwide and in New Zealand. BRW Magazine ranked the business as the 42nd fastest growing private company in 1999 and 31st in 2000. In 2001, the business was successfully sold to Homeloans Ltd.

Interest in shares and options

Direct: no ordinary shares and 4,062,500 options over ordinary shares.

Indirect: 87,234,043 ordinary shares and no options over ordinary shares.


No other public companies.



Chris BrownNon-Executive Chairman

Steve CarolanManaging Director

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Directors’ Report continued


1 July 2014

Qualifications

Bachelor of Business, Fellow of the Association of Corporate Treasurers

Experience

Rod has led and managed the corporate relations and finance areas for the Company since October 2011. Over that time, there has been a number of successful seed rounds and corporate raises, including the Company’s Initial Public Offering and admission to the Australian Securities Exchange’s Official List in September 2015.

On 1 July 2016, Rod was appointed acting Chief Executive Officer (Australia).

Rod’s career began in Australia with National Australia Bank in the early 1980s before moving to Europe where he was formative in the development of Elsevier Finance SA in Switzerland, which became Reed Elsevier’s principal corporate treasury centre globally with over $11 billion of assets. Rod left Elsevier Finance SA during 2009 and returned to Australia to establish his consultancy business, Hamelin34 Corporate Treasury Services.


Direct: 3,351,392 ordinary shares and 4,062,500 options over ordinary shares.







1 July 2014

Qualifications

Bachelor of Engineering

Experience

Colin began working with the Company in 2006, initially as the Company’s research and development information technology provider (through his related entity, Trilogy Systems Pty Ltd). Since July 2015, Colin has been engaged as the Company’s Chief Information Officer.

Colin led the development of the Company’s unique technology. In recent years, his portfolio responsibilities within the business have extended to include the marketing function.

Colin commenced his career as an Engineering Officer in the Royal Australian Air Force where he gained experience in project and military grade software development.

Subsequently Colin specialised in large client-server software platform development in Hong Kong and Switzerland for major financial institutions, including UBS and Credit Suisse First Boston. His roles included acting as the project lead of a multimillion dollar Global Securities Lending Management System, managing and trading assets worth almost 100 billion Swiss Francs.

Colin has significant skills and demonstrated experience in technology development, large project management and delivery and secure data management



Indirect: 75,000 ordinary shares and no options over ordinary shares.





Rod SherwoodDirector, Chief Financial Officer, Acting Chief Executive Officer (Australia)

Colin BoyanDirector, Chief Information Officer

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1 July 2014

Qualifications

Admitted Solicitor in Western Australia (B Juris; LLM), Graduate of the Australian Institute of Company Directors

Experience

Craig joined the Company in September 2012 after more than 20 years’ experience at top tier commercial law firm, Freehills (now Herbert Smith Freehills).

He provides concise and practical legal advice on contractual issues, the operation of regulatory regimes and general legal matters.







No other public companies


17 November 2015

Qualifications

Grad. Dip, Business Administration, Bachelor of Commerce (Hons), Economics

Experience

Reina has worked in senior management positions across a number of highly regarded investment banks and executive search firms including Credit Suisse First Boston, Hamilton James and Bruce, and Russell Reynolds Associates.

Reina has long been an advisor to a number of Australian public companies on Board and management composition, performance analysis, diversity, talent management, and other HR and people management functions.


Direct: no ordinary shares and no options over ordinary shares.

Indirect: 75,000 ordinary shares and no options over ordinary shares.





Craig SharpDirector, General Counsel

Reina NichollsNon-Executive Director

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1 July 2014

Qualifications

Bachelor of Business majoring in Finance, RG 146, ADA1 and Margin Lending accreditation

Experience

Peter is the principal and founder of Triple C Consulting Stockbrokers (founded 2006), a participant member of the National Stock Exchange.

Peter is a member of the Australian Institute of Company Directors (AICD) and the Stockbrokers Association of Australia (SAA).

Peter is a Director of Tribesta Pty Ltd (online Medical and Identification portal) and a Non-Executive Board member of Lexia Analytics based in Singapore.


Direct [1]: 100,000 ordinary shares and no options over ordinary shares.

Indirect [1]: 3,370,000 ordinary shares and 5,950,000 options over ordinary shares.





[1] Holdings during period as a Director of CV Check Ltd

(resigned 13 November 2015)

Company Secretaries

Jenny CutriCompany Secretary (Appointed 23 March 2016)

Jenny was appointed Company Secretary in March 2016.

Jenny is an experienced compliance specialist and lawyer with over 20 years’ experience in both the private and public sectors. Jenny also serves as In-House Legal Counsel.

Jenny’s qualifications include a Grad Dip. In BA, BCom, LLB and B Juris.

Phillip HainsJoint Company Secretary (Resigned 23 March 2016)

Phil was Joint Company Secretary from February 2015 to March 2016.

Phil is a Chartered Accountant and specialist in the public company environment. He has provided company secretarial and governance services to a number of public company boards and related committees. He has over 21 years’ experience in providing accounting, administration, compliance and general management services. He holds a Masters of Business Administration from RMIT and a Public Practice Certificate from the Institute of Chartered Accountants.

Peter WebseJoint Company Secretary (Resigned 23 March 2016)

Peter was Joint Company Secretary from February 2015 to March 2016.

Peter has over 23 years’ company secretarial experience and is the managing director of Platinum Corporate Secretarial Pty Ltd, a company specializing in providing company secretarial, corporate governance and corporate advisory services. Peter’s qualifications include B. Bus, FGIA, FCIS, FCPA and MAICD.

Peter SheppeardNon-Executive Director (Resigned 13 November 2015)

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Meetings of DirectorsThe number of Director’s meetings and the number of meetings attended by each of the directors of the Company during the financial year are:

Board Meetings

Held [1] Attended [2]

Chris Brown 13 13

Steve Carolan 13 13

Rod Sherwood 13 12

Colin Boyan 13 13

Craig Sharp 13 13

Peter Sheppeard [3] 4 3

Reina Nicholls [4] 9 9

[1] Total meetings held during time Director held office

[2] Number of meetings attended

[3] Resigned from the Board on 13 November 2015

[4] Joined the Board on 17 November 2015

No Board Committees were appointed during the year. The full Board addresses all matters for Board consideration (including audit, risk, remuneration and appointments).

Principal ActivitiesThe principal activities of the consolidated entity during the year were the provision of screening and verification services globally.

The Company’s primary market is Australia. Through its online presence it offers in excess of 1,000 checks across 190 countries.

In July 2016, the consolidated entity expanded its primary market to New Zealand through the acquisition of a full service screening and verification business. This acquisition is disclosed as a Significant Event after Reporting Date in this Directors’ Report.

Operating and Financial Review

Operations Review

• Successful transition to listed public company status with Initial Public Offering (“IPO”) and admission to the Official List of the ASX

• Product sales expansion

• Successful geographic expansion into the important Australian markets of NSW and Victoria followed by the acquisition of a full service screening and verification business from Resume Check Ltd to provide services in the New Zealand market (completion of acquisition 1 July 2016)

• Excellent response from Consumer and Corporate customers to first year marketing campaigns

• Positioned for balanced growth in FY2017 following optimisation of spend for impact (in particular marketing), and positioning personnel to deliver customer focussed sales support

• Solid balance sheet position following recent funding initiatives

FY2016 was a breakout year for CV Check Ltd. It was the first opportunity for the Company to present its sophisticated business model on a national basis and to test this against market’s sensitivity to extensive brand and product marketing. The strong sales response has confirmed that there is market appetite for the Company’s products and for its delivery mechanism.

Highlights include significantly increased check revenues, expanded capacity to accompany rapid scaling of the client base and check orders, rebranding, launch of the first year marketing campaigns, successful geographic expansion across Australia, preparing for New Zealand coverage, and entering the Official List of the ASX.

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Operating and Financial Review continued

Sales and marketing

The Company’s sales performance is illustrated in the chart below.

1.2

1.0

0.8

0.6

0.4

0.2

0

Marketing spend by category

Mill

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January February March April MayOctober November DecemberSeptember June

Adwords Monthly RevenueDigitalRadioOutdoor

2.5

2.0

1.5

1.0

0.5

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CVCheck Ltd Revenue M

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↑25%↑59%

↑21%↑18%

↑48%↑18%

↑29%↑14%

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016Q1 2015 Q2 2015 Q3 2015

Sales grew to $7.09 million in the 2016 financial year (“FY2016”); an increase of 170% over the 2015 financial year (“FY2015”). Revenues for the year were $0.82 million ahead of IPO forecast, and in line with the Company’s revised guidance as issued in February 2016. Orders grew 241% in the year with customer growth reaching 215% on the back of strong conversion of increased visitor numbers to the Company’s website; across the year 19% of first time visitors signed up with 60% or more converting to paying customers. The Group attributes this performance to successful marketing campaigns that complemented refined user interfaces and customer support teams.

The Group’s marketing team successfully executed the re-branding of CVCheck, the launch of cvcheck.com and the implementation of digital and traditional marketing campaigns. Brand activation in Victoria and Western Australia coincided with the timing of the Company entering the Official List of the ASX. The immediate and positive response from this brand activation campaign prompted the Company to widen the campaign across the remainder of Australia’s capital cities during the October to December 2015 quarter, rather than in the January to March 2016 quarter as originally planned. While bringing forward this campaign extension accelerated spend in marketing (compared to that anticipated in the IPO Prospectus forecast), the earlier than scheduled initiation of a full national campaign enabled the Group to boost revenue and customer numbers, and also obtain and assess full campaign data. That data allowed the Group to optimise marketing spend and effectiveness far earlier than otherwise anticipated.

Comparing the post optimisation of spend of the final quarter of FY2016 to the final quarter of FY2015, the monthly average corporate sign up rates were over 2.5 times higher and individuals over 3.0 times higher. This user growth came amidst a very difficult economic and political backdrop with the Brexit vote affecting global sentiment and an unusually long Federal Election period in Australia. In all, the user growth achieved during this period of optimized marketing spend and a poor market backdrop is very encouraging for the Group’s future growth prospects.

Product and platform

During FY2016, the Group’s product range grew to over 1,000 checks across more than 190 countries. Additional platform features were introduced for use by clients. The CVCheck system now caters for specific user groups, such as risk and compliance, and, with all products available for instant online ordering, the order process has been further simplified. System automation delivered additional improvement to speed in which results are supplied.

CV Check’s new website was successfully released with incorporation of device adaptive technology during January 2016. Conversions in first time visitors signing up to use the Company averaged an impressive 20.2% across the second half of FY2016.

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Market

The highly fragmented Australian check market continues to provide opportunity to increase the Group’s revenues substantially in the short term. During FY2016 promotion efforts focused on two objectives: building brand awareness; and promoting a single product, the Australian National Police Check. As anticipated, this promotion resulted in a measurable but modest increase in the concentration of National Police Checks in the sales product mix. Of longer-term importance, the rate at which corporates and individuals engaged with the Company substantially exceeded our expectations; that take up is reflected in our revenue performance.

Geographic expansion across Australia proved successful and a decision was taken to move into the New Zealand market. On 1 July 2016, the Group completed the acquisition of a New Zealand full service screening and verification business; Resume Check.

Premises

With the strength of uptake and the positive customer response to our marketing campaign, staffing resource allocations to research and development, product sales and customer service teams were increased. The growth in staff numbers led to a requirement for larger premises. In February 2016, the Company moved to its new premises in Osborne Park. The Company was successful in securing good terms from a weakened Perth property market.

Corporate

CV Check Ltd successfully completed its IPO and entered the ASX’s Official List on 4 September 2015.

The $9.90 million raised from the IPO enabled the Company to execute on the business objectives of the IPO Prospectus. A further $3.54 million of funding was raised through a share placement on 3 June 2016 to support growth in Australia and to provide acquisition funds for New Zealand.

Following an intense period of dedicated work culminating in our successful IPO, Peter Sheppeard resigned as a Non-Executive Director on 13 November 2015. The Board and the Group thank him for his contribution, and in particular during CV Check’s path to listing on the ASX.

Reina Nicholls joined the Board as a Non-Executive Director on 17 November 2015.

Financial Review

Statement of Profit or Loss and Other Comprehensive Income

The Group reported a Statutory Net Loss after tax for FY2016 of $10.29 million, an increase from the statutory loss after tax of $2.55 million of FY2015. The Statutory after tax Loss included non-cash share-based payments (options and performance rights) of $1.27 million and pre-acquisition costs of $0.22 million for the New Zealand business (Resume Check business acquisition completed on 1 July 2016, and is disclosed as a Significant Event after Reporting Date).

Underlying loss of the Group for FY2016 was $8.71 million after adjustment for the significant and or non-recurring items discussed above, and also after including relocation costs of the Corporate Head Office in Perth.

Reconciliation of Statutory loss to Underlying loss

30 June 2016

$ million

30 June 2015

$ million

Net loss after tax attributable to members of CV Check Ltd (10.29) (2.55)

Add/(deduct) the following:

Pre-acquisition costs for New Zealand business 0.22 -

Relocation costs 0.09 -

Share-based Payments 1.27 -

Underlying Loss after tax attributable to members of CV Check Ltd (8.71) (2.55)

Underlying loss is a non-IFRS measure that has been used by Management to assess the performance of the business and to make decisions around resource

allocations operationally. This measure is unaudited and has been included in this report to provide an understanding of the underlying financial performance of the

consolidated entity’s operations.

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Total sales revenue for the year increased from $2.63 million in FY2015 to $7.09 million in FY2016. This growth was underpinned by marketing initiatives around re-branding and marketing campaigns across Australia. The ramp up in marketing activity saw expenses in this area increase to $6.68 million (FY2015: $1.24 million). Developing and maintaining scalability in human capital was vital to achieving the Group’s growth rates in FY2016. This saw employee benefits expense at $4.56 million for FY2016. Depreciation and amortisation increased to $0.42 million (FY2015: $0.31 million). Other expenses (FY2016: $2.50 million) included occupancy costs for the new and larger corporate head office in Perth.

The Group received a rebate under the Australian Government’s R&D Tax Incentive program in FY2016 of $0.77 million (FY2015: $0.46 million), which is reported in the financial statements as an income tax benefit (in the Statement of Profit or Loss and Comprehensive Income) and a recovery of capitalised Intangibles in the Statement of Financial Position.

The Group does not currently recognise any deferred tax asset that might arise from its accumulated tax losses.

Statement of Financial Position

At 30 June 2016 the Group’s cash position was $4.58 million (June 2015: $1.05 million). Trade and other receivables were $0.40 million (June 2015: $0.20 million). This receivables amount does not include any anticipated future receivables from the Australian Government under the R&D Tax Incentive program mentioned above.

During FY2016, the Group raised $13.38 million (before costs) through its Initial Public Offering in September 2015 and a placement announced in May 2016.

Statement of Cash Flows

Net operating cash outflow for FY2016 was $7.78 million (FY2015: $1.95 million). Receipts from Customers were $6.99 million (FY2015: $2.50 million). Of the $15.26 million Payments to suppliers and employees, marketing spend and staff costs contributed $6.46 million and $3.73 million respectively towards that total.

Net cash outflows from investing activities increased from $0.57 million from FY2015 to $1.10 million in the 2016 financial year, confirming the Group’s active engagement and commitment to research and development.

During the financial year, $0.77 million was received as an incentive rebate of the Group’s R&D programs (2015: $0.46 million).

The Group received net cash inflows from financing activities of $12.42 million in FY2016 (2015: $2.44 million). The proceeds from the issue of shares for the 2016 financial year were $13.38 million before costs ($12.43 million net of issue transaction costs).

Cash burn is monitored on a continuous and ongoing basis by management and the cash burn rate actively managed to reflect the Group’s available funding.

The Group continues to use the cash and assets in a form readily convertible to cash in a manner consistent with its business objectives.

Looking Ahead

The Group expects continuing new corporate and individual customers across its wider geography coupled with a broadening of bundled product package sales to support further revenue growth over FY2017; forecast revenue of $12.50 million to $13.00 million reflects this expectation. Focus remains on continued improvement for the technology platform and service model across all markets, and in successfully integrating the Resume Check business.

DividendsThe Directors do not recommend the payment of a dividend. No dividends were paid or declared since the end of the previous financial year.

Significant Changes in State of AffairsOn 10 May 2016, the Company acquired a subsidiary in New Zealand, CVCheck Ltd (renamed to CV Check (NZ) Ltd on 27 May 2016). CV Check (NZ) Ltd entered into a purchase agreement on 13 May 2016 with Resume Check Ltd to acquire Resume Check Ltd’s full service screening and verification business. The completion date for acquisition was 1 July 2016.

Other than as disclosed elsewhere in this Annual Report, herein, there have been no other significant changes in the state of affairs of the consolidated entity during the financial year.

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Events after the Reporting DateCV Check (NZ) Ltd successfully completed the acquisition of the screening and verification business from Resume Check Ltd on 1 July 2016. The purchase consideration settled on completion date comprised upfront cash of New Zealand dollars $1.356 million (gross cash upfront of $1.375 million netted against completion adjustments of $19,529) and the issue of 787,056 fully paid ordinary shares in the capital of the Company at a deemed consideration of 29.6 cents per share. The balance of the purchase consideration is structured as an earn-out (aggregate of New Zealand dollars $375,000) over the 2017 and 2018 financial years, subject to the acquired business meeting forecast revenue thresholds.

On 27 May 2016, the Company announced a share placement at 22 cents per share with a 1 for 2 option exercisable at 30 cents (12-month term); options subject to shareholder approval which occurred at a General Meeting of the Company on 10 August 2016. The first tranche (16,079,089 shares) were issued on 3 June 2016. The balance of the placement 3,490,909 shares (Directors’ Participation) were issued on 12 August 2016, following approval at the General Meeting.

Further on 27 July 2016, the Company announced a $5.6 million capital raising; comprising a $4 million placement at 13 cents per share and a $1.6 million 1 for 17 fully underwritten non-renounceable rights issue. 5,093,230 shares ($662,120) were allotted on 29 July 2016, and 25,419,703 shares ($3,304,561) were allotted on 16 August 2016. $1,567,814 has been underwritten under the rights issue. The rights issue is expected to close on 26 August 2016.

There have not been any other matters or circumstances that have arisen since the end of the financial year, which significantly affected, or may significantly affect, the operations, the results of those operations or the state of affairs in future financial years.

Likely DevelopmentsFurther information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years have not been included in this report. Disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity.

Material Business RisksThe business strategies, assets and future performance of the consolidated entity is subject to various risk, including the material risks summarised below.

The Group identifies, assesses and manages these risks (as described in the Corporate Governance Statement) and operates under the Board approved Risk Management Review Procedure and Internal Compliance and Control Policy.

The summary below refers to material risks identified from a whole of entity perspective. These risks are not exhaustive of all the risks to which the consolidated entity is exposed to. The list is not in order of precedence and or importance.

Business Model (Financial, Regulatory, Market)

There is a risk of not being able to respond to market conditions, the rate of technological change, and to customers’ expectations of service delivery. Attracting business-to-business customers to online ordering/buying of screening and verification checks is relatively recent for the corporate sector. While the sign up rates have been positive, corporate sector engagement requires continuing development of customer interfaces through its technology platform. As a developing company still very much in growth mode, access to continued, funding remains a risk while the Group works towards achieving profitability.

Reputational Risks The Company operates in an online and fast-changing environment that is regulated. Negative publicity can spread quickly, whether true or false. Disgruntled users posting negative comments about the Group in public forums may have a disproportionate effect on reputation and ability to generate revenues and profits.

Data Management and Security

There is a risk that the collection, usage and management of customer data is not consistent with the regulatory obligations or that it does not meet the expectations of customers. With growth in volume of orders and traffic to the Company’s website, cyber infiltration or attack is a risk. Data security is critical to the Group.

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Material Business Risks continued

Reliance on Third Party Contractors

While all care is taken to contract with third parties that have appropriate expertise and experience (using competitive pricing bases and service level monitoring), there are no guarantees that those third parties will perform as expected or required. Non-performance by third party contractors may have a material adverse effect on the Group.

Reliance on Third Party Infrastructure

Reliance upon telecommunications systems collectively supplied by government and third party providers is an integral feature of providing services over the internet. As such, the Group places reliance on the proper operation and maintenance of those facilities outside of its direct control in order to deliver its product to market. Non-performance of, or the lack of availability of, third party infrastructure may have a material adverse effect on the Group.

Management of Growth The Group has experienced a period of substantial, but variable growth. This fluctuating growth rate has placed pressure on resourcing. Building scalability (in infrastructure systems and processes) and people capability are vital to managing the growth. The Group continues to implement initiatives in a timely manner to manage that growth. Management of the growth is critical to the business.

Project Risks A significant element of the Group’s growth strategy is predicated on continuing to increase the level of automation used in the business. Increasing automation occurs through on-going research and development. Failure to sustain or a delay in development and implementation may result in lower than expected growth.

Technology and Intellectual Property Risks

Ability to compete may be compromised if the Group’s proprietary rights are not adequately protected. There are risks associated with disruption to technology platform and systems, as these could affect the Group’s reputation and financial performance.

Environmental RegulationThe consolidated entity’s operations are not subject to any significant environmental regulation and legislation. The Group intends to conduct its activities in compliance with all environmental laws and regulations, should these apply to the group’s activities.

Remuneration Report (Audited)This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company as required by the Corporations Act 2001 and its Regulations. That legislation requires this report to detail the nature and amount of remuneration of each Director of the Company and all other Key Management Personnel.

For the purposes of this report, Key Management Personnel (“KMP”) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether Executive or otherwise) of the Company. The term ‘Executive’ encompasses the Managing Director and Executive Directors of the Company.

The Company has determined that during the reporting period, the KMP were the directors of the Company. There were no other KMP for the financial year.

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Remuneration Report (Audited) continued

The Directors of the Company during the year were:

Person Position Period in position during the year

Directors: Non-executive

Chris Brown Chairman Full year

Reina Nicholls Director Appointed 17 November 2015

Peter Sheppeard Director Resigned 13 November 2015

Directors: Executive

Steve Carolan Managing Director Full year

Rod Sherwood Executive Director Full year

Colin Boyan Executive Director Full year

Craig Sharp Executive Director Full year

Section A: Principles used to determine the nature and amount of Remuneration

Remuneration Policy

The remuneration policy ensures that Non-Executive Directors and executives are appropriately remunerated having regard to their relevant experience, their performance, the performance of the Group, industry norms and standards, the financial position of the Group as a whole and the general pay environment as appropriate. The remuneration policy has the aim of attracting, motivating and retaining suitably qualified Directors and executives who will create value for shareholders.

Remuneration Policy versus Group Performance

Due to the size and nature of the Group’s operations, the Group’s remuneration policy is not directly linked to shareholder wealth, or based on the Group’s earnings. It is not appropriate at this time to evaluate the Group’s performance under generally accepted measures such as profitability and EBITDA. This assessment will be developed as the Group moves towards achieving profitability. Further, shareholder wealth reflects the speculative and volatile nature of the market sector. No dividends have been declared by the Company. The Group continues to focus on the research and development of its intellectual property portfolio with the objective of achieving key development and commercial milestones in order to add further Shareholder value.

Remuneration Committee

The full Board is responsible for matters normally attended to by a Remuneration Committee including overseeing the remuneration policy and for recommending or making such changes to the policy, as it deems appropriate.

There was no Remuneration Committee during the year.

Non-Executive Directors

Objective

The remuneration policy ensures that Non-Executive Directors are appropriately remunerated having regard to their relevant experience, their performance, the performance of the Group, industry norms and standards and the general pay environment as appropriate.

The Chair’s fees are determined independently to the fees of the Non-Executive Directors based on comparative roles in the external market.

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Structure

Non-Executive Directors are remunerated by way of fixed cash fees paid plus superannuation. Other than superannuation under the Superannuation Guarantee Contribution Act, there are no retirement benefits payable to Non-Executive Directors.

Performance based incentives are not available to Non-Executive Directors.

An issue of equity may occur if the Board believes it is in the best interest of the Group to do so, particularly where the cash remuneration otherwise required to be paid to attract the appropriate calibre of Directors is reduced, or where there are exceptional circumstances. During the financial year, the Chairman was granted a performance right to receive 75,000 fully paid ordinary shares in the Company on the first anniversary of the Company successfully listing on the Australian Securities Exchange (subject to meeting certain criteria).

The maximum aggregate amount that can be paid to Non-Executive Directors is currently $250,000 per annum plus superannuation which has been determined in accordance with the Company’s Constitution and which may be varied by approval by shareholders at a general meeting. The apportionment of the aggregate remuneration amongst Non-Executive Directors is reviewed periodically.

For the year ended 30 June 2016, the Non-Executive Directors were remunerated an aggregate $134,841 per annum, plus statutory superannuation. Details of the fees paid to Non-Executive Directors for the 2016 and 2015 financial years are set out in Section C of this Remuneration Report.

The Board is responsible for reviewing its own performance. Board and Board Committee performance is monitored on an informal basis throughout the year, with a formal review conducted during the subsequent financial year.

Executive Directors and other Key Management Personnel

Objective

The remuneration policy ensures that the Executive Directors and other KMP are appropriately remunerated to their relevant experience, their performance, the performance of the Group, industry norms and standards and the general pay environment as appropriate.

Structure

The Non-Executive Directors are responsible for evaluating the performance of the Managing Director who in turn evaluates the performance of the Executive Directors (in their capacity as executives of the Company).

The evaluation process is intended to assess the Group’s business performance, and whether long-term strategic and individual performance objectives are achieved.

The performance of the Managing Director and Executive Directors are monitored on an informal basis throughout the year. A formal evaluation is performed annually.

The pay and reward framework for Executive Directors, may consist of the following:

(a) Fixed Remuneration – Base Salary and Directors’ Fees

(b) Variable Short Term Incentives

(c) Variable Long Term Incentives

Fixed Annual Remuneration and Directors’ Fees

Executives’ fixed remuneration comprises salary, Directors’ Fees and statutory superannuation. An annual review is conducted by the Managing Director, and in turn, the Board. This review takes into account the Executives’ experience, performance in achieving agreed objectives and market factors as appropriate.

Variable Remuneration – Short Term Incentives

Discretionary cash bonuses may be paid to KMP and senior executives subject to Board approval following the recommendations of the Managing Director (based on a review of the performance of the KMP and senior executives and or the Group as a whole).

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Variable Remuneration – Long Term Incentives

Employee Incentive Option Plan

KMP and senior executives may also be provided with longer-term incentives through the Company’s Employee Incentive Option Plan (EIOP). The EIOP was approved by shareholders at an Extraordinary General Meeting on 23 March 2015. Under the EIOP, the Board at its discretion may grant Incentive Options to a Director (whether executive or non-executive) of the Company, a full or part time employee of the Company, a casual employee or contractor of a the Company to the extent permitted by the Class Order, or, a prospective participant, being a person to whom the Offer is made but who can only accept the Offer if an arrangement has been entered into that will result in the person becoming an Eligible Participant under the preceding categories. Participation in this plan may only occur where such person is declared by the Board to be eligible to receive grants of Options under the Scheme.

Offers under the Plan are at the discretion of the Company with the objective of the plan being to assist in the recruitment, reward, retention and motivation of employees of the Company.

No options were issued under this plan in the year 2016 (2015: None).

Other Incentive Options

Options were granted to Executive Directors as a result of performance for the Company’s Seed Capital Raise (April 2015) and its subsequent successful Initial Public Offering and admission to the Official List of the Australian Securities Exchange. These incentive options are disclosed in Section C of this Remuneration Report.

Voting and comments made at the Company’s 2015 Annual General Meeting (AGM)

At the 2015 AGM, 100% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2015. The Company did not receive any specific feedback at the AGM regarding it’s remuneration practices.

Section B: Contractual arrangements for Directors and KMP

Remuneration and other terms of employment for Key Management Personnel are formalised in service agreements, as summarised below.

ExecutiveTerm of Agreement

Fixed Remuneration [1]

Others

Notice of Termination required by Company (other than dismissal for serious misconduct)

Notice required for resignation by Executive

S Carolan Managing Director

Ongoing term

$220,000 Base salary per annum plus superannuation, provision of motor vehicle for the year ended 30 June 2016

Income Protection policy paid by Company (policy owner the individual)

7 weeks’ notice 6 weeks’ notice

R Sherwood Chief Financial Officer, Director

Ongoing term

$131,735 Base salary per annum plus superannuation, vehicle allowance for the year ended 30 June 2016



C Boyan Chief Information Officer, Director

Ongoing term

$150,000 Base salary per annum plus superannuation

Income Protection policy paid by Company (policy owner the individual).


C Sharp General Counsel, Director {2]

Ongoing term

$150,000 Base salary per annum full time (pro-rata part time based on work hours) plus superannuation



[1] Base annual salaries are quoted as at the year ended 30 June 2016, based on full time unless otherwise indicated.

[2] Craig Sharp’s arrangements were part-time during the financial year, with work hours based on requirements of the Company.

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There were no other Key Management Personnel to be disclosed.

Non-Executive Directors

On appointment to the Board, all Non-Executive Directors enter into a service agreement with the company in the form of a letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office of director.

Section C: Details of Remuneration for the years ended 30 June 2016 and 30 June 2015

The remuneration for each Director and each of the other Key Management Personnel of the Group (as defined in AASB 124 Related Party Disclosure) are set out in the following tables.

30 June 2016

Short-term Employment Benefits Post-Employment

Benefits

Long-term benefits

Share-based payment -

Equity settled

Total $

Fixed Remuneration

%

Short-Term

Incentive %

Long- Term

Incentive %

Cash salary

and fees $

Short-term incentives

Non- monetary

$Superannuation

$

Long service leave

$

Options and Rights

$Cash

$

Non- Executive Directors

Chris Brown 60,000 - - 5,700 - 15,000 80,700 81.41 - 18.59

Reina Nicholls [1] 30,972 - - 2,942 - - 33,914 100.00 - -

Peter Sheppeard [2], [5] 18,472 - - 1,755 - - 20,227 100.00 - -

Executive Directors

Steve Carolan [3] 270,000 - 35,327 19,308 23,991 144,650 493,276 65.81 - 34.19

Rod Sherwood 201,735 - 5,095 17,265 - 144,650 368,745 60.77 - 39.23

Colin Boyan [4] 200,000 50,000 [6] 3,831 19,308 - 144,650 417,789 53.41 11.97 34.62

Craig Sharp 155,000 - 3,285 14,725 - 48,217 221,227 78.20 - 21.80

TOTALS 936,179 50,000 47,538 81,003 23,991 497,167 1,635,878

[1] Appointed 17 November 2015

[2] Resigned 13 November 2015

[3] Refer Related Party disclosure in Note 26, BR Carolan

[4] Refer Related Party disclosure in Note 26, Trilogy Systems Pty Ltd

[5] Refer Related Party disclosure in Note 26, Triple C Consulting Pty Ltd

[6] Cash bonus is a sign on payment

30 June 2015

Short-term Employment Benefits Post-Employment

Benefits

Share-based payment -

Equity settled

Total $

Fixed Remuneration

%

Short-Term

Incentive %

Long- Term

Incentive %

Cash salary

and fees $

Short-term incentives

Other $

Non- monetary

$Superannuation

$

Options and Rights

$Cash

$

Non- Executive Directors

Chris Brown [1] - - - - - - - - - -

Peter Sheppeard [2] 14,400 - - - 1,368 - 15,768 100.00 - -

Executive Directors

Steve Carolan [3] 150,000 - - 16,151 14,250 - 180,401 100.00 - -

Rod Sherwood 120,335 - - - 9,532 - 129,867 100.00 - -

Colin Boyan [4] 14,400 - - - - - 14,400 100.00 - -

Craig Sharp 63,452 - - - 6,028 - 69,480 100.00 - -

TOTALS 362,587 - - 16,151 31,178 - 409,916

[1] Appointed 22 June 2015. No remuneration paid in the year ended 30 June 2015.

[2] Refer Related Party disclosure in Note 26, Triple C Consulting Pty Ltd

[3] Refer Related Party disclosure in Note 26, BR Carolan

[4] Refer Related Party disclosure in Note 26, Trilogy Systems Pty Ltd

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Performance Based Compensation

Performance based remuneration for Directors or other Key Management Personnel during the year (2015: Nil) were as follows:

(i) Share-based payments: Shares

There were no shares awarded to Key Management Personnel of the Company, including their personally related parties.

No shares were granted to Directors in relation to remuneration during the year (2015: Nil).

(ii) Share-based payments: Options

On 24 August 2015, the Company issued to Key Management Personnel the following options as Share-based payments as a result of performance for the Company’s successful Seed Capital Raise (April 2015), Initial Public Offering and admission to the Official List of the Australian Securities Exchange. The table below discloses the number of share options granted and vested to Key Management Personnel during the year. Options granted are unlisted.

Tranche

Options awarded

during the year No.

Grant date Vesting date Expiry dateNo. vested during year

Value of options granted

$

Executive Directors

Steve Carolan A 1,562,500 24/08/2015 24/08/2015 30/04/2018 1,562,500 61,815

B 1,250,000 24/08/2015 24/08/2015 24/08/2017 1,250,000 38,370

C 1,250,000 24/08/2015 24/08/2015 24/08/2018 1,250,000 44,465

Rod Sherwood A 1,562,500 24/08/2015 24/08/2015 30/04/2018 1,562,500 61,815

B 1,250,000 24/08/2015 24/08/2015 24/08/2017 1,250,000 38,370

C 1,250,000 24/08/2015 24/08/2015 24/08/2018 1,250,000 44,465

Colin Boyan A 1,562,500 24/08/2015 24/08/2015 30/04/2018 1,562,500 61,815

B 1,250,000 24/08/2015 24/08/2015 24/08/2017 1,250,000 38,370

C 1,250,000 24/08/2015 24/08/2015 24/08/2018 1,250,000 44,465

Craig Sharp A 520,834 24/08/2015 24/08/2015 30/04/2018 520,834 20,605

B 416,667 24/08/2015 24/08/2015 24/08/2017 416,667 12,790

C 416,667 24/08/2015 24/08/2015 24/08/2018 416,667 14,822

13,541,668 13,541,668 482,167

Notes:

Tranche A – part of the 6,250,000 options issued to Management following completion of Seed Capital Raise of 12,500,000 shares at $0.16 per share together

with one free option for every 2 shares raised. Strike price of $0.25 expiry date 30 April 2018.

Tranche B – part of the 5,000,000 options issued to Management (strike price of $0.25 expiry date 24 August 2017) as a result of the Company’s Initial Public Offering.

Tranche C – part of the 5,000,000 options issued to Management (a strike price of $0.30 expiry date 24 August 2018) as a result of the Company’s Initial

Public Offering.

Share options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until their expiry date. When exercisable, each option is convertible into one ordinary fully paid share of the Company.

There were no further options issued to Directors other than disclosed above (2015: Nil).

(iii) Share-based payments – Performance Rights

As a term of Chris Brown’s appointment, the Company, prior to listing issued 75,000 unlisted Performance Rights to him. Each performance right will convert into one share 12 months after completion of the listing (2015: Nil). The Performance Rights were valued at fair value of the ordinary shares at the time of the grant.

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Section D: Share, Option and Rights Holdings

Shareholding

The number of shares held by each Director and other Key Management Personnel (and their related parties) in the Company during the financial year is as follows:

Balance at 1 July 2015

Received as part of remuneration

AdditionsDisposals/

otherBalance at

30 June 2016

Ordinary shares

Chris Brown 312,500 - - - 312,500

Steve Carolan 87,234,043 - - - 87,234,043

Rod Sherwood 5,319,148 - 110,000 - 5,429,148

Colin Boyan - - - - -

Craig Sharp 2,127,660 - - - 2,127,660

Reina Nicholls - - - - -

Peter Sheppeard 3,470,000 - - - 3,470,000[1]

98,463,351 - 110,000 - 98,573,351

[1] Interest in shares held while a Director of CV Check Ltd (Resigned 13 November 2015).

Option holding

The number of options over ordinary shares in the Company held during the financial year by each Director and other Key Management Personnel (and their related parties) during the financial year is as follows:

Balance at 1 July 2015

Acquired ExercisedExpired/

forfeited/other

Balance at 30 June 2016

Options over ordinary shares

Chris Brown 156,250 - - - 156,250

Steve Carolan - 4,062,500 - - 4,062,500

Rod Sherwood - 4,062,500 - - 4,062,500

Colin Boyan - 4,062,500 - - 4,062,500

Craig Sharp - 1,354,168 - - 1,354,168

Reina Nicholls - - - - -

Peter Sheppeard 100,000 5,850,000 - - 5,950,000[1]

256,250 19,391,668 - - 19,647,918

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Performance Rights

Details of Performance Rights granted to each Director and other Key Management Personnel (and their related parties) during the financial year is outlined below:

Grant date Number granted

Balance at 30 June 2016

Chris Brown 24/08/2015 75,000 75,000

Section E: Other transactions with Directors, and their related parties

i) Transactions with related parties

30 June 2016 $

30 June 2015 $

BR Carolan - related party to Steve Carolan

Acquisition of CV Check (NZ) Ltd (2) -

Salary and post-employment benefits (88,914) (152,974)

Long service leave entitlements earned during the year (2,571) (2,610)

Redemption of preference shares at face value - (344,000)

Redemption of preference shares at redemption premium - (85,847)

4th Watch Trust – related entity to Steve Carolan

Lease of motor vehicle from 4th Watch Trust - (6,641)

Receipt of receivable from UPE 4th Watch Trust - 50,862

Triple C Consulting Pty Ltd – related entity to Peter Sheppeard

Professional fees brokerage (shares issued) (68,000)[2] (75,000)[1]

Professional fees brokerage (options issued) (331,340)[3] -

Professional fees brokerage (556,074) (150,000)

Trilogy Systems Pty Ltd – related entity to Colin Boyan

Software development and maintenance (707,882) (668,459)

Total (paid by)/received from during the year (1,754,783) (1,434,669)

[1] Share issue of 750,000 ordinary shares at $0.10 issue price.

[2] 340,000 share issued at $0.20 issue price relating to IPO.

[3] 5,000,000 options expiring 24 August 2017 (exercise price $0.25) and 5,000,000 options expiring 24 August 2018 (exercise price $0.30).

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ii) Outstanding balances arising from sales/purchases of goods and services:

30 June 2016 $

30 June 2015 $


Long service leave payable (18,037) (15,466)

Total (payable to) during the year (18,037) (15,466)

iii) Loan to Directors and their related parties

No loans have been made to any Director or any of their related parties, during the year (2015: Nil).

There were no further transactions with Directors including their related parties, not disclosed above or in Note 26.

End of Audited Remuneration Report

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Indemnification and Insurance of Directors and other OfficersUnder the Company’s constitution and to the extent permitted by law (subject to the restrictions in section 199A and 199B of the Corporations Act 2001), the Company indemnifies every person who is or has been an officer of the Company against:

(a) any liability (other than for legal costs) incurred by that person as an officer of the Company where the Company requested the officer to accept appointment as Director.

(b) reasonable legal costs incurred in defending an action for a liability incurred by that person as an officer of the Company.

The Company has insured its Directors, the Company Secretaries and executive officers. Under the Company’s Directors’ and Officers’ Liability Insurance Policy, the Company cannot release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium. Accordingly, the Company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of the relevant policy.

The Company also has in place a Deed of Indemnity, Access and Insurance with each of the Directors. This Deed:

(i) indemnifies the Director to the extent permitted by law and the Constitution against certain liabilities and legal costs incurred by the Director as an officer of any Group Company;

(ii) requires the Company to maintain, and pay the premium for, a D&O Policy in respect of the Director; and

(iii) provides the Director with access to particular papers and documents requested by the Director for a Permitted Purpose;

both during the time that the Director holds office and for a seven year period after the Director ceases to be an officer of any Group Company, on the terms and conditions contained in the Deed.

AuditorsRSM Australia Partners (“RSM”) continues in office in accordance with Section 327 of the Corporations Act 2001.

The Company has not entered into any agreement to indemnify its auditors against any claims made by third parties arising from their report on the financial statements.

Share Options on issue As at the date of this report, the unissued ordinary shares of the Company under option are:

Class Date of Expiry Exercise Price No. Under Option

Unlisted 30 April 2018 $0.25 12,656,250

Unlisted 24 August 2017 $0.25 10,000,000

Unlisted 24 August 2018 $0.30 10,000,000

Unlisted 3 December 2018 $0.75 5,500,000

Shares Issued as a Result of the Exercise of OptionsNo shares were issued as a result of the exercise of options over ordinary shares this financial year (2015: Nil).

Proceedings on Behalf of the CompanyNo person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

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Non-Audit ServicesRSM may be employed on assignments additional to their audit services.

Details of the amounts paid or payable to RSM for audit and non-audit services provided during the financial year are outlined in Note 7 to the financial statements.

The directors are satisfied that where such services are provided, the provision of non-audit services during the financial year, by the auditor, is compatible with, and did not compromise the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:

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

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

The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included within the financial statements and forms part of this Directors’ Report.

Corporate GovernanceIn recognising the need for the highest standards of corporate behaviour and accountability, the Directors support and adhere to good corporate governance practices. The Company’s 2016 Corporate Governance Statement is contained in the ‘Corporate Governance’ section of the Company’s website at www.cvcheck.com/investors.

DeclarationThis directors’ report is made in accordance with a resolution of directors made pursuant to Section 298(2)(a) of the Corporations Act 2001.

Chris Brown Steve Carolan Non-Executive Chairman Managing Director

24 August 2016 24 August 2016

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Auditor’s Independence Declaration

AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of CV Check Ltd for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS Perth, WA TUTU PHONG Dated: 24 August 2016 Partner

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FOR THE YEAR ENDED 30 JUNE 2016

NoteConsolidated 30 June 2016

$

Company 30 June 2015

$

Revenue 2 7,093,130 2,629,225

Other income 29,518 162,160

Interest income 93,948 31,398

Expenses 3

Cost of sales (3,826,907) (1,135,628)

Director and employee benefits expense (4,560,932) (2,198,624)

Depreciation and amortisation expense (422,564) (310,189)

Finance costs (4,768) (88,463)

Marketing expenses (6,683,580) (1,235,953)

Other expenses (2,497,827) (713,456)

Loss before income tax (10,779,982) (2,859,530)

Income tax benefit 4 489,602 310,533

Loss for the year attributable to members of CV Check Ltd (10,290,380) (2,548,997)

Other comprehensive loss, net of income tax

Items that may be classified subsequently to profit or loss

Exchange differences arising on translation of foreign operations (8,175) -

Other comprehensive loss for the year (net of tax) (8,175) -

Total comprehensive loss for the year attributable to owners of the parent entity

(10,298,555) (2,548,997)

Basic Loss per Share (Cents per Share) 6 (5.88) (2.11)

Diluted Loss per Share (Cents per Share) 6 (5.88) (2.11)

The accompanying notes form part of these financial statements.

Statement of Profit or Loss and Other Comprehensive Income

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Statement of Financial Position

AS AT 30 JUNE 2016

NoteConsolidated 30 June 2016

$


$

CURRENT ASSETS

Cash and cash equivalents 8 4,580,784 1,048,645

Trade and other receivables 9 397,588 196,025

Other 10 430,702 68,900

Total Current Assets 5,409,074 1,313,570

NON-CURRENT ASSETS

Plant and equipment 11 273,812 131,050

Intangibles 12 1,435,799 949,800

Other 13 813,849 20,127

Total Non-Current Assets 2,523,460 1,100,977

TOTAL ASSETS 7,932,534 2,414,547

CURRENT LIABILITIES

Trade and other payables 14 1,879,995 717,154

Employee benefits 15 325,635 172,291

Deferred income 16 188,962 -

Finance lease liability 17 14,990 14,253

Total Current Liabilities 2,409,582 903,698

NON-CURRENT LIABILTIES

Deferred income 16 666,598 -

Finance lease liability 17 72,676 87,667

Total Non-Current Liabilities 739,274 87,667

TOTAL LIABILITIES 3,148,856 991,365

NET ASSETS 4,783,678 1,423,182

EQUITY

Issued capital 18 17,179,483 5,131,790

Reserves 19 1,603,183 -

Accumulated Losses 20 (13,998,988) (3,708,608)

TOTAL EQUITY 4,783,678 1,423,182


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Statement of Changes in Equity


Issued Capital $

Share Payments Reserve

$

Foreign Currency Translation

Reserve $

Accumulated Losses

$Total

$

Balance at 1 July 2014 2,767,127 - - (1,159,611) 1,607,516

Total comprehensive loss for the year

- - - (2,548,997) (2,548,997)

Transactions with Equity holders in their capacity as Equity holders:

Preference shares redeemed during the year

(344,000) - - - (344,000)

Shares issued net of issue costs 2,708,663 - - - 2,708,663

Balance at 1 July 2015 5,131,790 - - (3,708,608) 1,423,182

Loss for the year - - - (10,290,380) (10,290,380)

Exchange differences arising on translation of foreign operations

- - (8,175) - (8,175)

Total comprehensive loss for the year

- - (8,175) (10,290,380) (10,298,555)

Shares issued net of issue costs 12,379,033 - - - 12,379,033

Premium on options issued - 10,000 - - 10,000

Share-based payments (refer note 19)

(331,340) 1,601,358 - - 1,270,018

Balance at 30 June 2016 17,179,483 1,611,358 (8,175) (13,998,988) 4,783,678


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Statement of Cash Flows


Note Consolidated 30 June 2016

$


$

Cash flows from operating activities

Receipts from customers 6,987,385 2,502,543

Payments to suppliers and employees (15,260,822) (4,873,790)

Finance costs paid (4,768) (88,463)

Interest received 93,948 31,398

Other revenue 208,268 170,272

Payment of rental bonds (295,391) -

Receipt of income tax refund 489,602 310,533

Net cash flows used in operating activities 23 (7,781,778) (1,947,507)

Cash flows from investing activities

Payment for purchases of plant and equipment (207,981) (11,850)

Payment for intangible assets (1,179,034) (711,666)

Receipt of income tax refund 285,344 153,850

Net cash flows used in investing activities (1,101,671) (569,666)

Cash flows from financing activities

Net repayments of borrowings (14,254) (6,894)

Proceeds from issue of shares 13,379,400 3,050,000

Redemption of preference shares - (344,000)

Share issue transaction costs (949,119) (255,345)

Net cash flows from financing activities 12,416,027 2,443,761

Net increase/(decrease) in cash and cash equivalents 3,532,578 (73,412)

Cash and cash equivalents at the beginning of the year 1,048,645 1,122,057

Effects of exchange rate changes on the balance of cash held in foreign currencies

(439) -

Cash and cash equivalents at the end of the year 8 4,580,784 1,048,645

The accompanying notes form part of these financial statements.For

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Notes to the Financial Statements

General Information

CV Check Ltd (“the Company”) was admitted to the Official List of the Australian Securities Exchange (‘ASX’) on 4 September 2015. The Company is incorporated in Western Australia and operates in Australia.

The principal activities of the consolidated entity are services relating to screening and verification checks globally.

The financial statements include the consolidated entity comprising CV Check Ltd and its subsidiaries.

The financial statements for the consolidated entity were authorised for issue by the Directors on August 24, 2016.

Basis of Preparation

This section sets out the basis of preparation and the consolidated entity’s accounting policies that relate to the consolidated financial statements as a whole.

Significant and other accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial report are provided throughout the notes to the financial statements to which it relates.

The financial report is a general purpose financial report which:

• has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for for-profit oriented entities. This financial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’);

• has been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments;

• is presented in Australian dollars, which is the Company’s functional and presentation currency. All values are rounded to the nearest dollar unless otherwise stated;

• presents reclassified comparative information where appropriate to enhance comparability with the current period presentation;

• adopts all new and amended Accounting Standards and Interpretations issued by the AASB that are relevant to the operations of the consolidated entity and effective for reporting periods beginning on or after 1 July 2015;

• does not early adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective; and

• has applied the consolidated entity accounting policies consistently to all periods presented.

The comparatives for the year ended 30 June 2015 were for the Company only as the consolidated entity, CVCheck (NZ) Ltd, became a controlled entity on 10 May 2016.

Basis of Consolidation

The consolidated financial statements comprise the financial statements of the Company and its controlled entity. Details of the controlled entities of the Company are contained in Note 21. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Note 1. Statement of significant accounting polices

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Notes to the Financial Statements continued

Note 1. Statement of significant accounting polices (continued)

Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

New, revised or amending Accounting Standards and Interpretations adopted

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

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

The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Company.

Standards and interpretations issued but not yet effective

The following new or amended accounting standards issued by the AASB are relevant to current operations and may impact the company in the period of initial application. They are available for early adoption but have not been applied in preparing this Financial Report. The Company has not fully considered the impact of the new standards.

Standard/InterpretationEffective for annual reporting periods beginning on or after

Expected to be initially applied in the financial year ending

AASB 9 ‘Financial Instruments’, and the relevant amending standards

1 January 2018 30 June 2019

AASB 15 ‘Revenue from Contracts with Customers’, AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’ and AASB 2015-8 ‘Amendments to Australian Accounting Standards


AASB 16 ‘Leases’ 1 January 2019 30 June 2020

AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’


AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’


a) Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Rendering of services

Rendering of services revenue is recognised at the point of sale. Amounts disclosed as revenue are net of sales returns and trade discounts.

Interest

Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

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b) Income tax

The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entity’s which intend to settle simultaneously.

c) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position.

d) Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

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

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e) Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a diminishing value or straight line basis as appropriate to write off the net cost of each item of plant and equipment over their expected useful lives as follows:

Computer equipment 1-3 years

Plant and equipment 2-10 years

Furniture and fittings 2-50 years

Motor vehicle 8 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

f) Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost.

Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Research and development

Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Company is able to use or sell the asset; the Company has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 2.5 years.

Software

Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 4 years.

g) Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

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h) Trade and other payables

Trade and other payables represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

i) Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are recognised in current liabilities in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

j) Goods and Services Tax (‘GST’) and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

k) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Finance leases

Assets held that transfer substantially all the risks and rewards of ownership are classified as finance leases. Leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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Operating leases

Operating leases payments, net of any incentives received from the lessor, under which the lessor effectively retains substantially all such risks and benefits, are charged to profit or loss on a straight-line basis over the term of the lease.

l) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

m) Dividends

Dividends are recognised when declared.

n) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of CV Check Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

o) Foreign Currency Translation

The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

p) Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed on the subsequent page.

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Share-based Payments

Equity- settled and cash-settled share-based compensation benefits are provided to employees and third party service providers.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees and third party service providers in exchange for the rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. The value attributed to share options and remunerations shares issued is an estimate calculated using an appropriate mathematical formula based on either the Binomial or Black-Scholes option pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the likelihood and timing of the conversion of the options to shares and the value of volatility of the price of the underlying shares.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

q) Comparative figures

Where necessary, comparative figures have been re stated to conform with changes in presentation for the current year.

Note 2. Revenue and other income

Consolidated 30 June 2016

$


$

Revenue

Rendering of services 7,093,130 2,629,225

Other Income

Grant income 11,087 161,865

Other 18,431 295

Interest income 93,948 31,398

Total Other Income 123,466 193,558

Total Revenue and Other Income 7,216,596 2,822,783


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Note 3. Expenses


$


$

Expenses

Consulting expenses

Professional and legal fees 1,032,828 107,324

Foreign exchange loss 5,249 2,244

Marketing expenses 6,683,580 1,235,953

Occupancy expense relating to operating lease

Rental expenses 298,002 83,972

Superannuation expense [1]

Defined contribution superannuation expense 329,042 162,574

Website expenses 312,092 260,697

Share-based payments 1,270,018 -

Pre-acquisition costs for New Zealand business 224,541 -

[1] Director and employee benefit expense includes defined contribution superannuation expenses (refer to the Remuneration Report in the Directors’ Report)

Note 4. Income Tax Benefit

a. Income tax expense

No income tax payable is payable by the Company as it incurred losses for income tax purposes for the year.

b. Reconciliation of income tax benefit to prima facie tax benefit


$


$

Loss from continuing operations before income tax expense (10,779,982) (2,859,530)

Prima facie income tax benefit at 30% (2015: 30%) (3,233,995) (857,859)

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Other non-deductible expenses 420,409 4,935

Effect of different tax rates of subsidiaries operating in other tax jurisdictions 32,962 -

Research and development tax offset (refundable) 489,602 310,533

Deferred tax asset not recognised 2,780,624 852,924

Income tax benefit 489,602 310,533

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Note 4. Income Tax Benefit (continued)

c. Unrecognised deferred tax balances

The Company does not currently recognise any deferred tax asset arising from its accumulated losses. The Directors estimate that the potential deferred tax assets at 30% not brought to account attributable to tax losses carried forward at reporting date is approximately $3,120,132 (2015: $1,062,901).

The losses have not been brought to account because the Directors do not believe it is appropriate to regard realisation of those deferred tax assets as being probable. The benefit of these deferred tax assets will only be obtained if:

(1) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the temporary differences to be realised;

(2) the Company continues to comply with the conditions for deductibility imposed by tax legislation; and

(3) no changes in tax legislation adversely affect the entity in realising the benefit from the deductions for the temporary differences.

Note 5. Key Management Personnel CompensationRefer to the remuneration report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the consolidated entity’s Key Management Personnel.

The aggregate compensation made to Directors and Key Management Personnel is set out below:


$


$

Short-term employee benefits 1,033,717 378,738

Post-employment benefits 81,003 31,178

Long-term benefits 23,991 -

Share-based payments 497,167 -

1,635,878 409,916

Note 6. Loss per Share



Basic loss per share (cents) (5.88) (2.11)

Diluted loss per share (cents) (5.88) (2.11)

a) Net loss used in the calculation of basic and diluted loss per share (10,298,555) (2,548,997)

b) Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share

175,074,046 120,533,390

c) Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted loss per share

175,074,046 120,533,390

As the consolidated entity is in a loss position, the diluted loss per share calculation excludes the dilutive effect of the performance rights and options issued during the year ended 30 June 2016.

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Note 7. Auditor’s Remuneration


$


$

Remuneration of the current auditor of the consolidated entity, RSM Australia Partners and its overseas affiliates for:

Audit services

Audit or review of the financial statements 49,500 35,000

Other services

Taxation advisory and compliance 56,050 26,438

Advice on employee share scheme 3,750 -

Preparation of Investigative Accountant’s reports - 45,000

Other - 1,390

109,300 107,828

Note 8. Current Assets - Cash and Cash Equivalents


$


$

Cash on hand 4,346 647

Cash at bank 3,212,332 1,047,998

Cash held in trust 1,364,106 -

4,580,784 1,048,645

The interest rate on cash at bank at 30 June 2016 was 1.8% (2015: 2.2%).

A total of $1,364,106 was held in a trust account for the Company in preparation for the acquisition of the business of Resume Check.

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Note 9. Current Assets - Trade and Other Receivables


$


$

Trade receivables 277,110 167,307

Less: Provision for impairment of receivables (2,600) -

274,510 167,307

Other receivables (GST) 116,075 28,403

Other receivables 7,003 315

397,588 196,025

All trade receivables are non-interest bearing. Refer to Note 27 for further information on financial instruments.

Note 10. Current Assets – Other


$


$

Prepayments 252,132 68,900

Lease incentive receivable 147,027 -

Rental bond 31,543 -

430,702 68,900

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Note 11. Non-Current Assets – Plant and Equipment


$


$

Computer equipment - at cost 94,089 55,582

Less: Accumulated depreciation (53,149) (30,684)

Net carrying amount 40,940 24,898

Plant and equipment - at cost 88,239 29,765



Leasehold improvements - at cost 6,963 -

Less: Accumulated depreciation (584) -

Net carrying amount 6,379 -

Furniture and fittings - 1,011

Less: Accumulated depreciation - (29)

Net carrying amount - 982

Low value pool - at cost 104,035 -

Less: Accumulated depreciation (19,506) -

Net carrying amount 84,529 -

Leased assets - at cost 104,113 104,113



Total 273,812 131,050

Reconciliations

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

Computer equipment

$

Plant & equipment

$

Leasehold improvements

$

Furniture & fittings

$

Low value pool

$

Leased assets

$Total

Balance as at 1 July 2014

25,567 11,589 - 1,002 - - 38,158

Additions 11, 852 - - - - 104,113 115,965

Depreciation expense (12,521) (4,025) - (20) - (6,507) (23,073)

Disposals of assets - - - - - - -

Carrying amount as at 30 June 2015

24,898 7,564 - 982 - 97,606 131,050

Additions 38,507 58,475 6,963 - 104,035 - 207,980

Depreciation expense (22,465) (8,667) (584) (16) (19,506) (13,014) (64,252)

Disposal of assets - - - (966) - - (966)

Carrying amount as at 30 June 2016

40,940 57,372 6,379 - 84,529 84,592 273,812

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Note 12. Non-Current Assets – Intangibles


$


$

Website development - at cost 2,575,981 1,812,982

Less: Accumulated amortisation (1,239,389) (911,609)

Net carrying amount 1,336,592 901,373

Software - at cost 168,542 87,230

Less: Accumulated amortisation (69,335) (38,803)


Total 1,435,799 949,800

Reconciliations

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

Website Development $

Software $

Total $

Balance as at 1 July 2014 636,077 43,023 679,100

Additions 689,897 21,769 711,666

Amortisation expense (270,751) (16,365) (287,116)

R & D tax offset recognised (153,850) - (153,850)

Carrying amount as at 30 June 2015 901,373 48,427 949,800

Additions 1,048,343 81,312 1,129,655

Amortisation expense (327,780) (30,532) (358,312)

R&D tax offset recognised (285,344) - (285,344)

Carrying amount as at 30 June 2016 1,336,592 99,207 1,435,799

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Note 13. Non-Current Assets - Other Consolidated 30 June 2016

$


$

Lease incentive receivable 526,847 -

Security bonds 287,002 20,127

813,849 20,127

Lease incentive relate to office premises and is amortised over the term of the lease.

Note 14. Current Liabilities – Trade and Other Payables


$


$

Trade payables 983,271 327,899

Accrued expenses 688,928 317,115

Other payables 207,796 72,140

1,879,995 717,154

Refer to Note 27 for further information on financial instruments.

Note 15. Current Liabilities – Employee benefitsConsolidated 30 June 2016

$


$

Employee benefits 325,635 172,291

325,635 172,291

Provision for employee benefits represents amounts accrued for annual leave and long service leave.

The current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service. Based on past experience, the consolidated entity does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the consolidated entity does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

Note 16. Deferred Income


$


$

Current portion of lease incentive 186,027 -

Current portion of unearned revenue 2,935 -

Non-current portion of lease incentive 666,598 -

855,560 -

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Note 17. Lease Liability Consolidated 30 June 2016

$


$

Current portion of finance lease liability 14,990 14,253

Non-current portion of finance lease liability 72,676 87,667

87,666 101,920

The financial lease liability is payable as follows: Future minimum lease payments

Interest Present value of minimum lease payments

Less than one year 19,019 (4,029) 14,990

Between one and five years 77,285 (4,609) 72,676

96,304 (8,638) 87,666

The finance lease liability is secured by a charge over the underlying finance leased asset.

Note 18. Equity – Issued Capital Consolidated 30 June 2016


No. $ No. $

Fully Paid Ordinary Shares

Balance at beginning of year 133,562,500 5,131,790 110,000,000 2,423,127

Shares issued during the year

Shares issued at Initial Public Offering on 4 September 2015 49,500,000 9,900,000 - -

Shares issued at Placement on 3 June 2016 16,079,089 3,537,400 - -

Shares issued at seed capital raising on 19 June 2015 - - 312,500 50,000

Shares issued at seed capital raising on 5 May 2015 - - 12,500,000 2,000,000

Shares issued at seed capital raising on 8 September 2014 - - 10,000,000 1,000,000

Shares issued in lieu of capital raising fees on 13 October 2014 - - 750,000 75,000

Shares Issued 65,579,089 13,437,400 23,562,500 3,125,000

Issue costs, options (Non cash) - (331,340) - -

Transaction costs relating to share issues (Cash-based) - (990,367) - (341,337)

Transaction costs relating to share issues (Non-cash) [1]) - (68,000) - (75,000)

Transaction Costs - (1,389,707) - (416,337)

Total Fully Paid Ordinary Shares 199,141,589 17,179,483 133,562,500 5,131,790

Fully Paid Preference Shares

Balance at beginning of year - - 344,000 344,000

Shares redeemed during the year - - (344,000) (344,000)

Total Fully Paid Preference Shares - - - -

Total Issued Capital 199,141,589 17,179,483 133,562,500 5,131,790

[1] 340 000 shares (2015: 750,000) were issued at a price of $0.20 (2015: $0.10) to brokers/corporate advisors $68,000 (2015: $75,000) pertaining to the IPO

(2015: seed issue).

Ordinary shares participate in dividends and the proceeds on winding up of the consolidated entity in proportion to the number of and amounts paid on the shares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. The ordinary shares have no par value and the consolidated entity does not have a limited amount of authorised capital.

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Note 19. Equity – Reserves Consolidated 30 June 2016

$


$

Share-based payments reserve 1,611,358 -

Foreign currency translation reserve (8,175) -

Total reserves 1,603,183 -

Nature and purpose of reserves

Share-based payments reserve arises on the grant of performance rights and options to the Chairman, management and the Company’s corporate advisors.

Foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of a foreign subsidiary.

Share-based payments

Options (as set out in the table below) were issued to Key Management Personnel, other management and corporate advisors in respect of the Company’s Seed Capital raise (April 2015) and its Initial Public Offering and the listing on the Australian Securities Exchange Official List.

Issue Date Tranche Number of Options

Vesting Date Expiry Date Exercise Price $

24 August 2015 A 6,250,000 24 August 2015 30 April 2018 $0.25

24 August 2015 B 10,000,000 24 August 2015 24 August 2017 $0.25

24 August 2015 C 10,000,000 24 August 2015 24 August 2018 $0.30

3 December 2015 D 5,500,000 3 December 2015 3 December 2018 $0.75

The value attributed to share options issued is an estimate calculated using an appropriate mathematical formula based on an option pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the likelihood and timing of the conversion of the options to shares and the value of volatility of the price of the underlying shares.

The Binomial Model was used to determine the estimated fair value of options granted during the year ended 30 June 2016. The following assumptions were used:

Tranche A Tranche B Tranche C Tranche D

Expected volatility (%) 58.26 58.26 58.26 80.15

Risk-free interest rate (%) 1.73 1.73 1.73 2.11

Expected life of share options (years) 2.68 2 3 3

Weighted average share price ($) 0.16 0.16 0.16 0.355

Option value per option ($) 0.0396 0.0307 0.0356 0.1230

The 75,000 Performance Rights granted to the Chairman were valued at fair value of the rights of the ordinary shares at time of the grant.F

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Note 19. Equity – Reserves (continued)

Information on the movement of Share Payments Reserves are set out below:



No. $ No. $

Options over fully paid ordinary shares

Balance at beginning of year 6,406,250 - - -

Recognised directly in equity

Options issued during the period in respect of IPO with an exercise price of 25c

5,000,000 153,480 6,406,250 -

Options issued during the period in respect of IPO with an exercise price of 30c

5,000,000 177,860 - -

Option premium received - 10,000 - -

Total recognised directly in equity 10,000,000 341,340 6,406,250 -

Recognised in income statement

Options issued to management with an exercise price of 25c

11,250,000 400,739 - -

Options issued to management with an exercise price of 30c

5,000,000 177,860 - -

Options issued to Corporate Advisor with an exercise price of 75c

5,500,000 676,419 - -

Total recognised in income statement 21,750,000 1,255,018 - -

Shares issued from the exercise of options - - - -

Options lapsed - - - -

Balance at end of year 38,156,250 1,596,358 6,406,250 -

Weighted average exercise price of outstanding options (Cents)

0.34 0.25

Weighted average remaining life of outstanding options (Years)

1.82 2.84

Performance Rights

Recognised in income statement

Performance Rights granted 75,000 15,000 - -

Balance at end of year 75,000 15,000 - -

Total share based payment reserves 1,611,358 -For

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Note 20. Equity – Accumulated Losses


$


$

Accumulated losses at the beginning of the year (3,708,608) (1,159,611)

Loss after income tax benefit for the year (10,290,380) (2,548,997)

Accumulated losses at the end of the year (13,998,988) (3,708,608)

Note 21. Controlled EntitiesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the consolidated entity’s accounting policy described in Note 1.

Name of Entity Country of Incorporation Class of Shares Equity Holding

2016 2015

CV Check (NZ) Ltd New Zealand Ordinary 100% -

CV Check Ltd acquired 100% of CV Check (NZ) Ltd for a cash consideration of $2 on 10 May 2016.

Note 22. Segment ReportingPrimary Reporting Format - Business Segments

The entity has one geographical operating location which is Australia and provides screening and verification checks across the globe from that location.

Identification of reportable operating segments

The operating segment identified is based on the internal reports that are reviewed and used by the Executive Directors of the Board (who are identified as the Chief Operating Decision Makers (‘CODM’) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on at least a monthly basis.

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Note 23. Cashflow information


$


$

(a) Reconciliation of cash flow from operations with loss after tax

Net loss for the year (10,290,380) (2,548,997)

Non-Cash

Add back amortisation expense 358,310 287,116

Add back depreciation expense 64,254 23,073

Add loss on disposal of plant and equipment 966 -

Add back share based payments 1,270,018 -

Add back provision for doubtful debts 2,600 -

Less unrealised gain on foreign exchange (8,858) -

Changes in Working Capital

(Increase)/decrease in assets

Trade and other receivables (203,041) (106,679)

Prepayments and other assets (432,267) 44,701

Increase in liabilities

Trade and other payables 1,303,276 324,761

Employee benefits 153,344 28,518

Net cash flows used in operating activities (7,781,778) (1,947,507)

(b) Non-cash financing and investing activities

Refer Note 19 for details regarding issues of options to employees and Note 18 for details surrounding the issue of shares to suppliers.

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Note 24. Parent entity disclosuresThe accounting policies of the Parent entity, which have been applied in determining the financial information shown below, are the same as those applied in these consolidated financial statements.

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

Financial Position

30 June 2016 $

30 June 2015 $

Assets

Current assets 5,516,673 1,313,570

Non-Current assets 2,531,852 1,100,977

Total assets 8,048,525 2,414,547

Liabilities

Current liabilities 2,407,535 903,698

Non-Current liabilities 739,274 87,667

Total liabilities 3,146,809 991,365

Net assets 4,901,716 1,423,182

Equity

Issued capital 17,179,483 5,131,790

Reserves 1,611,358 -

Accumulated losses (13,889,125) (3,708,608)

Total equity 4,901,716 1,423,182

Financial Performance

Loss for the year (10,180,517) (2,548,997)

Other comprehensive income - -

Total comprehensive loss (10,180,517) (2,548,997)

Guarantees of the Parent Entity

There are no guarantees provided by the parent entity other that disclosed in Note 25.

Contingent liabilities of the Parent Entity

There are no contingent liabilities of the parent entity other than disclosed in Note 25.

Capital commitments of the Parent Entity

There are no capital commitments of the parent entity other than disclosed in Note 25.For

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Note 25. Commitments and Contingencies

Commitments

Operating leases relate to office and short-term residential premises, with lease terms not exceeding 5 years. The office leases have options to extend for further periods.


$


$

Not longer than one year:

Lease commitments 414,130 -

Longer than one year, but no longer than five years

Lease commitments 1,416,641 -

Total commitments 1,830,771 -

Finance lease liability commitments are as disclosed in Note 17.

There are no other material commitments as at 30 June 2016 (2015: Nil).

Contingent assets

There are no contingent assets as at 30 June 2016 (2015: Nil).

Contingent liabilities

There are no contingent liabilities as at 30 June 2016. At 30 June 2015, Chris Brown had a performance right entitling him to recieve 75,000 fully paid ordinary shares subject to satisfaction of certain conditions 12 months after the Company enters the official List of the Australian Securities Exchange.

Note 26. Related Party Transactions

Parent entity

CV Check Ltd is the parent entity.

Subsidiary

Interests in subsidiary are set out in Note 21.

Key Management Personnel

Disclosures relating to Key Management Personnel are set out in Note 5 and the Remuneration Report included in the Directors’ Report.

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.F

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Note 26. Related Party Transactions (continued)

i) Transactions with related parties


$


$


Acquisition of shares in CV Check (NZ) Ltd (2) -

Salary and post-employment benefits (88,914) (152,974)

Long service leave entitlements earned during the year (2,571) (2,610)

Redemption of preference shares at face value - (344,000)

Redemption of preference shares at redemption premium - (85,847)

4th Watch Trust – related entity to Steve Carolan

Lease of motor vehicle from 4th Watch Trust - (6,641)

Receipt of receivable from UPE 4th Watch Trust - 50,862

Triple C Consulting Pty Ltd – related entity to Peter Sheppeard

Professional fees brokerage (shares issued) (68,000)[2] (75,000)[1]

Professional fees brokerage (options issued) (331,340)[3] -

Professional fees brokerage (556,074) (150,000)

Trilogy Systems Pty Ltd – related entity to Colin Boyan

Software development and maintenance (707,882) (668,459)

Total (paid by )/received from during the year (1,754,783) (1,434,669)

[1] Share issue of 750,000 ordinary shares at $0.10 issue price.

[2] 340,000 share issued at $0.20 issue price relating to IPO.

[3] 5,000,000 options expiring 24 August 2017 (exercise price $0.25) and 5,000,000 options expiring 24 August 2018 (exercise price $0.30).

ii) Outstanding balances arising from sales/purchases of goods and services, transactions:


$


$


Long service leave balance payable (18,037) (15,466)

Total (payable to) during the year (18,037) (15,466)

iii) Loan to Directors and their related parties

No loans have been made to any Director or any of their related parties, during the year (2015: Nil).

There were no further transactions with Directors including their related parties, not disclosed above.

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Note 27. Financial Risk Management Objectives and Policies

(a) Financial Instruments

The consolidated entity’s financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other payables and finance lease liability. The carrying amounts of financial instruments reflect their fair value:


$


$

Cash and cash equivalents 4,580,784 1,048,645

Trade and other receivables 397,588 196,025

Trade and other payables 1,879,995 717,154

Finance lease liability 87,666 101,920

(b) Risk Management Policy

The Board is responsible for overseeing the establishment and implementation of the risk management system, and reviews and assesses the effectiveness of the implementation of that system on a regular basis.

The Board and Senior Management identify the general areas of risk and their impact on the activities of the consolidated entity, with Management performing a regular review of:

è the major risks that occur within the business;

è the degree of risk involved;

è the current approach to managing the risk; and

è if appropriate, determine:

• any inadequacies of the current approach; and

• possible new approaches that more efficiently and effectively address the risk.

Management report risks identified to the Managing Director through their reports at management meetings.

The consolidated entity seeks to ensure that its exposure to undue risk which is likely to impact its financial performance, continued growth and survival is minimised in a cost effective manner.

(c) Significant Accounting Policy

Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis for measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and financial liabilities represents their fair values determined in accordance with their accounting policies. Interest revenue on cash and cash equivalents is disclosed in Note 2 and the return thereon as at each financial year end is disclosed in Note 8.

(d) Capital Risk Management

The consolidated entity’s objectives when managing capital are to safeguard the consolidated entity’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value.

In order to maintain or achieve an optimal capital structure, the Company may issue new shares or reduce its capital, subject to the provisions of the Company’s constitution. The capital structure of the Company consists of equity attributed to equity holders of the Company, comprising contributed equity, reserves and accumulated losses disclosed in Notes 18,19 and 20.

By monitoring undiscounted cash flow forecasts and actual cash flows provided to the Board by Management, the Board monitors the need to raise additional equity from the equity markets.

Taking account of the consolidated entity’s current stage of development and the inherent business risks therein, the Board considers it inappropriate to add financial risk by introducing material levels of debt into the capital structure.

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Note 27. Financial Risk Management Objectives and Policies (continued)

(e) Financial Risk Management

The main risks the consolidated entity is exposed to through its operations are interest rate risk, foreign exchange risk, credit risk and liquidity risk.

Interest Rate Risk

The consolidated entity is exposed to interest rate risks via the cash and cash equivalents that it holds. Interest rate risk is the risk that a financial instruments value will fluctuate as a result of changes in market interest rates. The objective of managing interest rate risk is to minimise the consolidated entity’s exposure to fluctuations in interest rate that might impact its interest revenue and cash flow.

The consolidated entity has a bias to ensuring high availability of liquidity to ensure underlying business opportunities are maximised. Term deposits may be utilised from time to time to enhance interest returns over at call bank accounts; the consolidated entity’s cash flow forecast forms the key consideration to the term adopted.

Interest rate risk is considered when managing consolidated entity funds. The consolidated entity considers the interest rate received by retaining cash and cash equivalents in the consolidated entity’s operating account compared to placing funds into a term deposit; in recent times interest rates available to the consolidated entity for at call or near call accounts have been more attractive than those available in the term deposit market.

The consolidated entity’s exposure to interest rate risk and the weighted average interest rates on the consolidated entity’s financial assets and financial liabilities is as follows:

Weighted average interest rate

%

30 June 2016 $

Weighted average interest rate

%

30 June 2015 $

Cash and cash equivalents 1.80 4,580,784 2.2 1,048,645

Finance lease liability 4.99 87,666 5.1 101,920

There has been no material change to the consolidated entity’s exposure to interest rate risk or the manner in which it manages and measures its risk in the year ended 30 June 2016; the finance lease liability is a fixed rate instrument with the interest serviced on a reducing balance basis.

Sensitivity analysis – interest rates

The sensitivity effect of possible interest rate movements have not been disclosed as they are immaterial.

Foreign Currency Risk

The consolidated entity is exposed to foreign currency risk via the trade and other receivables and trade and other payables that it holds. Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The consolidated entity does not have a policy to hedge overseas payments or receivables as they are highly variable in amount and timing. To date the annual total value of transactions subject to foreign currency risk has been immaterial and is monitored with monthly reporting cycles.

The following financial assets and liabilities are subject to foreign currency risk:

30 June 2016 $

30 June 2015 $

Trade payables (AUD/GBP) 1,738 426

Trade payables (AUD/USD) 651 7,632

Trade payables (AUD/NZD) 7,964 77

Foreign currency risk is measured by regular review of cash forecasts, monitoring the dollar amount and currencies that payment are anticipated to be paid in. The consolidated entity also considers the market fluctuations in relevant currencies to determine the level of exposure. If the level of exposure is considered by Management to be too high, then Management has authority to take steps to reduce the risk.

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Note 27. Financial Risk Management Objectives and Policies (continued)

Steps to reduce risk may include the acquisition of foreign currency ahead of the anticipated due date of an invoice, or may include negotiations with suppliers to make payment in our functional currency, or may include holding receipted foreign currency funds in a foreign currency denominated bank account to make future payments denominated in that same currency. Should Management determine that the consolidated entity consider taking out a hedge to reduce the foreign currency risk, they would need to seek Board approval.

The consolidated entity conducts activities outside of Australia that expose it to transactional currency movements, where the consolidated entity is required to pay in a currency other than its functional currency.

There has been no change in the manner the consolidated entity manages and measures its risk in the year ended 30 June 2016.

Credit Risk

The consolidated entity is exposed to credit risk via its cash and cash equivalents and trade and other receivables. Credit risk is the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the consolidated entity. To reduce risk exposure for the consolidated entity’s cash and cash equivalents, it places them with a range of high credit quality financial institutions.

The major credit risk pertains to Government bodies for the receipt of GST refunds (Australian Tax Office).

The consolidated entity has a policy that limits the credit exposure to customers and regularly monitors its credit exposure. The Board believes that the consolidated entity does not have significant credit risk at this time in respect of its trade and other receivables.

The consolidated entity has analysed its trade and other receivables below:

0-30 days $

31-60 days $

61-90 days $

90+ days $

2016 Trade and other receivables 226,915 40,357 8,449 1,389

2015 Trade and other receivables 147,520 46,514 2,242 (251)

Liquidity Risk

The consolidated entity is exposed to liquidity risk via its trade and other payables.

Liquidity risk is the risk that the consolidated entity will encounter difficulty in raising funds to meet the commitments associated with its financial instruments. Responsibility for liquidity risk rests with the Board who manage liquidity risk by monitoring undiscounted cash flow forecasts and actual cash flows provided to them by the consolidated entity’s Management at Board meetings to ensure that the consolidated entity continues to be able to meet its debts as and when they fall due.

Contracts are not entered into unless the Board believes that there is sufficient cash flow to fund the additional activity. The Board considers when reviewing its undiscounted cash flow forecasts whether the consolidated entity needs to raise additional funding from the equity markets.

The consolidated entity has analysed its trade and other payables below:

0-30 days $

31-60 days $

61-90 days $

90+ days $

2016 Trade and other payables 981,457 1 - 1,813

2015 Trade and other payables 715,963 41 1,150 -

There is no material risk on fair values as trade and other payables are assumed to approximate their fair values due to their short-term nature.

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Note 28. Events after the Reporting DateCV Check (NZ) Ltd successfully completed the acquisition of the screening and verification business from Resume Check Ltd on 1 July 2016. The purchase consideration settled on completion date comprised upfront cash of New Zealand dollars $1.356 million (gross cash upfront of $1.375 million netted against completion adjustments of $19,529) and the issue of 787,056 fully paid ordinary shares in the capital of the Company at a deemed consideration of 29.6 cents per share. The balance of the purchase consideration is structured as an earn-out (aggregate of New Zealand dollars $375,000) over the 2017 and 2018 financial years, subject to the acquired business meeting forecast revenue thresholds.

On 27 May 2016, the Company announced a share placement at 22 cents per share with a 1 for 2 option exercisable at 30 cents (12-month term); options subject to shareholder approval which occurred at a General Meeting of the Company on 10 August 2016. The first tranche (16,079,089 shares) were issued on 3 June 2016. The balance of the placement 3,490,909 shares (Directors’ Participation) were issued on 12 August 2016, following approval at the General Meeting.

Further on 27 July 2016, the Company announced a $5.6 million capital raising; comprising a $4 million placement at 13 cents per share and a $1.6 million 1 for 17 fully underwritten non-renounceable rights issue. 5,093,230 shares ($662,120) were allotted on 29 July 2016, and 25,419,703 shares ($3,304,561) were allotted on 16 August 2016. $1,567,814 has been underwritten under the rights issue. The rights issue is expected to close on 26 August 2016.

There have not been any other matters or circumstances that have arisen since the end of the financial year, which significantly affected, or may significantly affect, the operations, the results of those operations or the state of affairs in future financial years.

Note 29. Company DetailsThe registered office and principal place of business of the Company is:

The Garden Office Park, Level 2, Building E, 355 Scarborough Beach Road, Osborne Park WA 6017.

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Directors’ Declaration

The Directors declare that:

a. In the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position as at 30 June 2016 and performance for the year ended 30 June 2016 of the consolidated entity; and

b. In the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 1.

c. The directors have been given the declaration required by s.295A of the Corporations Act 2001.

In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act. On behalf of the Board:

Chris Brown Steve Carolan Non-Executive Chairman Managing Director

24 August 2016 24 August 2016

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Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CV CHECK LTD

Report on the Financial Report We have audited the accompanying financial report of CV Check Ltd, which comprises the statement of financial position as at 30 June 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. F

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Independent Auditor’s Report continued

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of CV Check Ltd, would be in the same terms if given to the directors as at the time of this auditor's report. Opinion In our opinion: (a) the financial report of CV Check Ltd is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of CV Check Ltd for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. RSM AUSTRALIA PARTNERS Perth, WA TUTU PHONG Dated: 24 August 2016 Partner

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Shareholder and Other Information

The following details of shareholders of CV Check Limited have been taken from the Share Register on 8 September 2016.

Number of Holders of Equity Securities

Ordinary Share Capital

246,067,597 fully paid Ordinary Shares are held by 1,119 individual shareholders.

Voting Rights

The voting rights attached to ordinary shares are set out below:

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Unquoted Securities

Number on issue Number of holders

Options over ordinary shares issued 38,156,250 205

Distribution of Equitable Securities

Analysis of number of equitable security holders by size of holding:

Number of holders of ordinary shares

Total units

1 to 1,000 24 12,901

1,001 to 5,000 122 365,951

5,001 to 10,000 109 965,720

10,001 to 100,000 510 23,808,999

100,001 and over 354 220,914,026

1,119 246,067,597

Holding less than a marketable parcel 111 216,564

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Shareholder and Other Information continued

Equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest security holders of quoted equity securities are listed below:

Number of Ordinary Shares Held

% of Listed Shares

Beverley Ruth Carolan 84,042,554 34.15%

Dr Richard Ernest Hill 3,418,762 1.39%

Rodney Cameron Sherwood 3,351,392 1.36%


<Fourth Watch A/C>

Stewart Alexander Pty Ltd 2,752,817 1.12%

<Sharp Family A/C>

Gaynor Gardiner-Sherwood 2,659,574 1.08%

Mr Bernard Owen Stephens & Mrs Erin Josephine Stephens 2,223,530 0.90%

<Stephens Group Super A/C>

Nireb Nominees Pty Ltd 2,200,000 0.89%

<Nireb A/C>

Mr Rodney Cameron Sherwood & Mrs Gaynor Louise Gardiner-Sherwood 2,145,455 0.87%

Shaw And Partners Limited 2,000,000 0.81%

Mr Johannes Rudolf De Back 1,776,120 0.72%

The Stephens Group Pty Ltd 1,741,765 0.71%

Mr Craig Anthony Lubich & Mrs Leeanne Kelly Lubich 1,722,609 0.70%

<C&L Lubich Fam Pension A/C>

Garsind Pty Ltd 1,666,983 0.68%

<Ruth Ross Super Fund A/C>

The Stephens Group Pty Ltd 1,638,713 0.67%

ABN Amro Clearing Sydney Nominees Pty Ltd 1,421,057 0.58%

<Custodian A/C>

Mr Michael Mcpherson Stewart & Mrs Judith Stewart 1,404,118 0.57%

<The Stewart Family S/F A/C>

Merriwee Pty Ltd 1,344,616 0.55%

<Merriwee Super Fund A/C>

Mr Anthonius Maria Kolenberg 1,219,500 0.50%

Mr Dean Robert Starkie 1,150,000 0.47%

Total 123,071,054 50.02%

Total Balance of Remaining Holders 122,996,543 49.98%

Total on Issue 246,067,597 100.00%

Substantial holders

Substantial holders in the company are set out below:

Ordinary Shares

Number held %


Shares subject to ASX escrow

Class Expiry date Number of shares

Ordinary Shares 8 September 2017 92,025,841

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CV Check Ltd ABN 25 111 728 842

PO Box 140 Osborne Park WA 6917 Australia

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Documents

For personal use only - ASXof the business of Resume Check. $4.31 million of funding was raised through a share placement (including $0.77 million placed with the Directors, contributed