Hiremii : March 2022 Quarterly Activities and Cashflow Reports

ASX Announcement

28 April 2022

Q3 FY22 Quarterly Activities Report & Appendix 4C

Hiremii delivers strong growth in quarterly revenues while completing integration of Inverse Group

Technology-driven full-service labour hire and 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 31 March 2022 (Q3 FY22).

Q3 FY22 Highlights

All figures A$ unless otherwise stated

• • Q3 FY22 quarterly revenue of $3,360k increased significantly by 93% on the prior comparative period ("pcp") (Q3 FY21 revenue: $1,741k) and by 32% quarter-on-quarter ("Q-o-Q") (versus Q2 FY22 revenue: $2,540k);

• • Revenue of $7,223k for the nine months ended Q3 FY22 also increased strongly by 37% on pcp (nine months ended Q3 FY21 revenue: $5,265k);

• • Recruitment client base steady at 100 clients, 40 of whom are active, providing strong opportunity for growth as Covid restrictions now ease;

• • Approximately 80 active recruited contractors in place at clients as of today after a reduction in blue-collar shorter term contracts which are rapidly being replaced by managerial and professional longer term contractors;

• • Successful completion of integration of Inverse Group Pty Ltd ("Inverse") with Hiremii realising cash cost savings of $114k in Q3 FY22 versus prior quarterly run rate. A portion of these savings relates to lower cost of sales that will help lift gross margin by 1% in Q4 FY22;

• • Executive leadership team now well placed to drive continued organic growth into Q4FY22 and beyond;

• • Cash receipts of $3,771k in the quarter combined with lower operating costs and the part-completion of the financing activities announced to ASX on 10 January 2022, resulted in a cash balance at 31 March 2022 of $2,472k; and

• • Following approval at the Company's recent EGM on 11 April 2022, a further $585k cash was raised from the placement of the remaining shortfall of the Company's ongoing Share Purchase Plan ("SPP") to existing Hiremii shareholders on 28 April 2022, strengthening the Company's cash reserves for growth in FY23.

Hiremii Limited ACN 642 994 214 - Level 1, 251 St Georges Terrace, Perth WA 6017

t. 1300 280 061

[e-mail] 1

Commenting on the achievements over the last quarter, Managing Director, Andrew Hornby, highlighted that "Despite tough ongoing restrictions on labour movement and candidate supply, Hiremii delivered a second quarter of strong revenue Q-o-Q growth of 32% since the acquisition of Inverse.

We completed the integration of our two recruitment businesses in the quarter as promised, releasing substantial cost savings and resetting the organisation to focus on placing much-needed high-quality candidates for our clients going forward into Q4 and beyond.

The development of our Hiremii AI-driven recruitment platform continues with the focus for the next quarter on finalising the customer user environment for Shortlistmii, ready for first customer trials in early FY23.

With attractive employment opportunities in WA coupled with Covid restrictions now easing across Australia, we are expecting a gradual improvement in the supply of potential new candidates for our clients in the coming months too."

Financial Update

(Note - all financials for FY22 are unaudited)

Revenue in Q3 FY22 of $3,360k increased by 93% on pcp, driven by a combination of organic growth in candidate placements and a full quarter of Inverse revenues offsetting the significant 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 Q3 FY22 also increased Q-o-Q by 32% versus Q2 FY22 revenue of $2,452k. The inclusion of an additional two months of consolidated revenues from Inverse together with ongoing growth offset a near-full quarter of lost revenue of the UGL meter reader contract in Q3 FY22.

Quarterly Revenue ($'k, unaudited)

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Q1 FY21

Q2 FY21

Q3 FY21

Q4 FY21

Q1 FY22

Q2 FY22

Q3 FY22

The strong growth in Q3 FY22 revenue helped lift total revenue for the nine months to 31 March 2022 by 37% versus the corresponding nine months in FY21.

The main driver for revenue growth going forward will be increases in active recruited contractors for the Company's clients. There are now approximately 80 contractors actively employeed by Hiremii group clients after a reduction in blue-collar shorter term contracts which are rapidly being replaced by managerial and professional longer term contractors. Hiremii's diversified client base of over 100 clients, 40 of whom are active, provides a significant opportunity to grow contractors as previous Covid related labour supply restrictions continue to ease in the remainder of 2022.

One major integration project initiated in the quarter was the transition from an historic outsourced payroll provider for contractors to inhouse processing. This is resulting in lower cash costs of sales and will lift the total average gross margin by 1% to above 10% for Q4 FY22.

The increased revenue in Q3 FY22 resulted in an increase of 18% in cash receipts from customers for the quarter versus Q2 FY22.

The Company's operating cash outflows for the quarter totalled $211k but included $179k of non-recurring acquisition and integration cash costs (as highlighted in the prior Q2 FY22 Activity Report for the Company) and receipt of an R&D incentive of $347k. Excluding these once-off costs, underlying operating cash outflows totalled $378k for the quarter versus $507k in Q2 FY22 highlighting a focus on reducing the underlying cost base. The staff costs are expected to moderate as the team has been rationalised to focus on target growth areas over the last quarter.

Cash flows used in investing activities was $243k for the quarter versus $545k In Q2 FY22. The current quarrter closed out the AI knowledge graph development commenced in Q2 FY22 and is expected to be offset by R&D incentives, while the prior quarter cashflows related to the acquisition of Inverse Group and a rental bond.

Fund raising activities generated cash flows of $1.24m in the quarter, $640k of which was allocated to share capital, and the remainder was held as borrowings until shareholder approval of further placement capacity to allow the issue of shares for the remainder. This was obtained at an EGM on 11 April 2022.

Hiremii's cash balance at 31 March 2022 was $2,472k, benefitting from a reducing cash burn from operations and boosted by the part-completion of the capital raising initiatives announced to the ASX on 10 January 2022. A further $585k cash was raised from the final placement of the remaining shortfall of the Company's Share Purchase Plan ("SPP") to existing Hiremii shareholders on 28 April 2022.

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 Q3 FY22.

Integration Completed

The Company successfully completed the integration of the recently acquired Inverse business into the Hiremii group in Q3 FY22. The major projects completed in the integration included:

• • The consolidation and reorganisation of the two employee recruitment and support teams to one centralised team. The reorganised account management team will focus predominantly on providing ongoing recruitment services to existing active and inactive clients through the Inverse brand in 2022;

• • Property consolidation of unused offices, reducing from three historic sites to one central office close to recruitment clients in the CBD of Perth;

• • Removal of an historic outsourced payroll supplier arrangement for contractors to inhouse provision creating a 2% higher gross margin for the Company;

• • The review and restructure of the ongoing Hiremii platform development program to enable a more customer-focused product launch later in 2022; and

• • The review and restructure of corporate costs including office support costs, marketing and PR costs and Board director fees.

Research & Development	1,650,000	1,134,194	In line with expectation
Recruitment staff investment
Sales & Marketing	525,000	739,902	was ahead of plan in prior
quarters
Operational Activities & Support	825,000	299,515	In line with expectation
Data Security & Compliance	260,000	176,907	In line with expectation
General & Administration	1,500,000	838,516	In line with expectation
Cost of the Offer	673,082	670,803	In line with expectation
Cash Reserve & Working Capital	566,918	780,468	Above expectation

In total, run-rate cost savings worth approximately $114k per month were delivered by the end of Q3 FY22.

Development of Shortlistmii SaaS Product

Hiremii is working to disrupt the recruitment industry using artificial intelligence powered by the deep industry experience of the recruitment team. An important milestone has been the integration of ground-breaking knowledge graphs into the platform. The knowledge graphs provide industry, company, role, skill, and qualification context using over 7m career profiles that allows the system to outperform human matching processes, especially for high demand roles. This approach automates up to date shortlisting processes and minimizes risk of bias from machine learning algorithms trained on historic hiring practices.

Hiremii's Shortlistmii, the AI-driven SaaS product, will begin to be promoted to both existing and new clients at the back end of this quarter, initially piloted with a small number of clients to live-test and fine-tune the product offer.

Use of Funds

Hiremii Limited was admitted to the official list of the ASX on 11 May 2021 following completion of an Initial Public Offering (IPO), raising $6 million. A comparison of the Company's actual expenditure from the listing date to 31 March 2022 against the estimated expenditure in the use of funds statement is set out below, as required by ASX Listing Rule 4.7C.2:

Use of Funds

Prospectus ($)

Actual Funds Expended Between Admission and 31 March 2022 ($)

Comments

Total expenditure

6,000,000

4,640,305

Related Party Transactions

Total

$ 184,400

During Q3 FY22 the following payments were made to related parties as disclosed in Item 6 of Appendix 4C. Payments include those to resigned directors holding office in previous quarters.

SALARIES AND SUPERANNUATION PAID TO DIRECTORS

AMOUNT

Andrew Hornby, Managing Director

• $ 64,167

  Alison Gaines, Non-executive Chair

• $ 17,315

  David Buckingham, Non-executive Director

• $ 13,327

  Conor O'Brien, Non-executive Director

• $ 11,000

  Chris Brophy, Managinng Director (resigned 31 December 2021)

• $ 78,722

This announcement has been approved by The Board of Directors of Hiremii.

Ends

About

Hiremii Limited (ASX:HMI) is a technology-driven full-service recruitment company with two core business components; Hiremii Technology, a cloud-based platform which uses machine learning and artificial intelligence to remove the tedious manual tasks associated with the recruitment and onboarding process, pre-vetting and shortlisting candidates based on employers' specific requirements, and Inverse Group, a growing recruitment business that provides specialist white collar recruitment services to the energy, resources and technology sectors.

To learn more please visit:www.hiremiigroup.comInvestor Enquiries:[e-mail]