Hiremii : June 2022 Quarterly Activities and Cashflow Reports

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ASX Announcement

26 July 2022

Q4 FY22 Quarterly Activities Report & Appendix 4C

For personal use only

ASX Announcement

26 July 2022

Q4 FY22 Quarterly Activities Report & Appendix 4C

Hiremii positioned for further growth and focus on launch of Technology Platform

Technology-drivenfull-service recruitment company Hiremii Limited (ASX:HMI) ("Hiremii" or "the Company") is pleased to provide its Quarterly Activities Report and Appendix 4C cashflow statement for the quarter ended 30 June 2022 (Q4 FY22). Note - these results are unaudited as at this date.

Q4 FY22 Highlights

All figures A$ unless otherwise stated

• Q4 FY22 quarterly revenue of $4,213k increased significantly by 152% on the prior comparative period ("pcp") (Q4 FY21 revenue: $1,672k) and by 25.4% quarter-on-quarter ("Q- o-Q") (versus Q3 FY22 revenue: $3,360k);
• Revenue of $11,436k for the year ended Q4 FY22 also increased strongly by 65% on pcp (12 months ended Q4 FY21 revenue: $6,937k);
• Client base continues to grow in our core markets of Energy, Resources and Technology. Increasing demand on highly skilled workforce to help with decarbonisation and energy transition;
• Improved Gross Margin to 11.3% after insourcing of payroll and improved contractor mix;
• Run rate of overhead cash burn reduced by $208k per month by end Q4 FY22 compared to the second quarter FY22;
• Priority set on Technology marketing and launch as recruitment team in place to meet growth targets for FY23; and
• Cash receipts of $4,198k in the quarter combined with lower operating costs and the completion of the financing activities announced to ASX on 10 January 2022, resulted in a cash balance at 30 June 2022 of $2,387k.

Commenting on the achievements over the last quarter, Managing Director, Andrew Hornby,

"We remain buoyed by the demand on our technical recruitment capability which has been strong throughout the period, and we expect that will continue. We have invested in further strengthening our delivery team to meet continued demand with key personnel. The foundation is now in place to ensure we meet our goals over the next 12 months with continued focus on decarbonisation and energy transition.

Hiremii Limited | ACN 642 994 214 | Level 1, 251 St Georges Terrace, Perth WA 6017 | t. [phone]| e. [e-mail]

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In our technology division, our integrated project team have been diligently working with partners to incorporate the knowledge graph into our platform to enable world class AI matching and shortlisting capability. This is a unique and highly skilled process requiring close collaboration across the teams. Early discussions have resulted in positive feedback and interest in our technology and we now have a pathway to deploy this into the market on an initial trial basis.

With the underlying recruitment business set to remain strong throughout the year, our focus will shift to deployment opportunities for our technology. There has been a significant effort by the team since I took over the role in January to integrate our AI and we are excited to be able meet the growing needs of the market with this new product."

Financial Update

(Note - all financials for FY22 are unaudited)

Revenue in Q4 FY22 of $4,213k increased by 152% on pcp, driven by a combination of organic growth in candidate placements and Inverse revenues offsetting the reduction in Hiremii revenues incurred from the loss of the low-margin UGL meter reader contract in NSW (communicated on ASX on 18 November 2021).

Revenue in Q4 FY22 also increased Q-o-Q by 25% versus Q3 FY22 revenue of $3,360k. The 25% Q-o- Q increase was driven by organic growth in placed contractors and permanent placements, together with a greater number of billable work days and fewer public holidays in Q4 22.

Quarterly Revenue ($'k, unaudited)

							4,213
						3,360
					2,540
1,778	1,746	1,741	1,673	1,323
Q1 FY21	Q2 FY21	Q3 FY21	Q4 FY21	Q1 FY22	Q2 FY22	Q3 FY22	Q4 FY22

The strong growth in Q4 FY22 revenue helped lift total revenue for the year to 30 June 2022 by 65% versus the corresponding 12 months in FY21. The growth year on year was lifted by the Inverse Group acquisition.

The main driver for revenue growth going forward will be increases in active recruited contractors for the Company's clients and new revenue from technology solutions, although the latter will not be material to start with in FY23.

Hiremii's diversified client base of over 100 clients, 40 of whom are active, provides a significant opportunity for the Technology platform and to grow contractors as labour supply restrictions continue to ease in the remainder of 2022.

Hiremii Limited | ACN 642 994 214 | Level 1, 251 St Georges Terrace, Perth WA 6017 | t. [phone]| e. [e-mail]

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The integration project to move from outsourced payroll providers to in-house processing was completed in the quarter. This has resulted in lower cash costs of sales and lifted the total average gross margin by 1.6% to 11.3% for Q4 FY22.

The increased revenue in Q4 FY22 resulted in an increase of 11.3% in cash receipts from customers for the quarter versus Q3 FY22. Growing the permanent placements is expected to sustain and improve this level.

The Company's operating cash outflows before one offs and non operating items for the quarter totaled $219k for the quarter versus $239k in Q3 FY22. Net cash outflows from operating activities of $496k included $276k of non operating items related to payment plans for Inverse preacquisition tax liabilities. Staff, admin and corporate cashflow reduction continued as a focus, resulting in an improvement of $77k quarter on quarter.

Cash flows used in investing activities was $106k for the quarter versus $243k In Q3 FY22. The current quarter focused on deploying and refining the AI knowledge graph to prepare for bringing the shortlisting product to market in FY23.

Fundraising activities generated cash flows of $517k in the quarter from $759k cash raised before costs. The cash raised includes $159k raised previously and held as borrowings until shareholder approval was obtained at an EGM on 11 April 2022.

Hiremii's cash balance on 30 June 2022 was $2,387k. As a result of a one off change in paying BAS quarterly in arrears to monthly payment, the company will incur an increase in the cash outflow for the quarter of approximately $500k in Q1 FY23.

Business Activities Update

The Company continues to focus on the strategic initiatives as set out in its IPO Prospectus in 2021 and more recently in its market updates to the ASX in Q4 FY22.

Recruiting business continuing to improve

• Strong growth in revenue across contracting and permanent placements for clients.
• Contractor book remains strong and growing with our existing and new clients. Strong relationships have been established across a suite of global tier one organisations. The focus going forward is to continue expanding the breadth of work for this base.
• Transition from blue collar to white collar which has reduced risk and improved contract durations.
• Margin has improved with the increase in permanent placements and completion of insourcing of payroll activities. Insourcing will also result in better service and communications with customers and contractors.
• To underpin growth, the recruiting and support teams have been bolstered with a strong team lead and recruiters with proven industry experience.

Hiremii Limited | ACN 642 994 214 | Level 1, 251 St Georges Terrace, Perth WA 6017 | t. [phone]| e. [e-mail]

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Shortlistmii SaaS product in soft launch

Hiremii is working to disrupt the recruitment industry using artificial intelligence powered by the deep industry experience of the recruitment team.

With initial integration of the AI knowledge graphs into the platform achieved, attention is increasing on the marketing of the product and testing the solution against the target customer segments. The value proposition is focused on automating shortlisting to improve efficiencies of low value adding processes in candidate sourcing, while improving quality of sourcing in a challenging talent environment.

Hiremii's Shortlistmii, the AI-driven SaaS product, is being promoted to both existing and new clients to pilot the product offering.

Corporate overhead rationalised

• Restructured leadership team at start of 2022 with clear growth plan to focus on in FY22 and F23;
• Successfully completed the integration of the recently acquired Inverse business into the Hiremii group in Q3 FY22, resulting in improved revenue and margin;
• In total, run-rate cost savings worth approximately $208k per month were delivered by the end of Q4 FY22 compared to Q2 of FY22. As a result, Q4 FY22 underlying net operating cash burn down to $219k; and
• Successful fundraising was completed in Q4 FY22 to increase the cash balance and provide a long runway for growth based on current underlying burn rate.

Hiremii Limited | ACN 642 994 214 | Level 1, 251 St Georges Terrace, Perth WA 6017 | t. [phone]| e. [e-mail]

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