CONVERSATION 147:

How CV Check is prepareing for the post virus environment.

In just three days, global employment screening and verification services company CV Check [ASX:CV1] shifted its entire business to become a 100% remote workforce operation.

This major change to the business is not the only effect of the pandemic. "We've seen a dramatic shift in the mix of sectors that CV Checks revenue is coming from with a huge surge in government and Human Resources recruitment of health care workers" CEO Rod Sherwood told me from his WA home.

"We're in front of this [pandemic], we have plenty of cash and we are comfortable" he said. In its third quarter results posted today the company reported $3.3M revenue in Q3FY20, an increase on PCP despite Australian natural disasters and COVID-19 and has $4.9 million in the bank.

The company also recently announced an integration of its reference checking platform with LinkedIn, making it the first background screening company in the APAC region to integrate with LinkedIn Talent Hub.

Just how big the effect from the integration will be is not yet clear. However Sherwood told me that as a result of the radical shift to government and health, there will be a "one off" effect on cash flow.

This is due to the increase of 30 day plus accounts for government and healthcare as distinct from small business, which traditionally pays virtually immediately using credit cards.

The headline items from CV Checks Q3 results [0604/2020] are listed below.

CONVERSATION CHAPTER GUIDE N/A

$3.3M revenue in Q3FY20, an increase on PCP despite Australian natural disasters and COVID-19

• First revenues booked from Northern Star Resources, the AICD and 427 clients new to CV1

• First revenues booked through integration with strategic alliance partner Xref

• $0.9M cash burn, performance affected by COVID-19 and $560K of carried over creditors from Q2FY20 paid later than normal

• COVID-19 status – worker safety prioritised, cash savings already made provide revenue buffer

• Director fees cut by 50% with Board to reduce to statutory compliance of three members

• Cash at bank $4.9M as at 31 March 2020 and no debt leaves the Company in a strong financial position.

THE RECENT MARKET ANNOUNCEMENTS BY CV CHECK:

CVCHECK HR TECHNOLOGY INTEGRATIONS GO LIVE ON LIVEHIRE & XREF PHASE 2

AMENDED - CVCHECK ARR GROWS TO EXCEED $10M, COVID-19 STATUS, MARCH

QUARTERLY

CV Check Reports Negative Cash Flow of $908,000 for the March 2020 Quarter

A SAMPLE OF RATINGS FOR ARCHER

[CURRENT ON THURSDAY JUNE 26TH 2020]

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