F R E E L A N C E R L I M I T E D
2015
A N N U A L R E P O R T
ACN 141 959 042
TABLE OF
CONTENTS
Chairman’s Letter
Directors’ Report
Review of Operations
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Corporate Directory
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FREELANCER LIMITED 2015 ANNUAL REPORT
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FREELANCER LIMITED 2015 ANNUAL REPORT Freelancer is the world’s largest
freelancing and crowdsourcing marketplace
by total number of users and jobs posted
We help small businesses, startups
and entrepreneurs turn that spark
of an idea into reality
We are changing lives in
the developing world by
providing opportunity and income
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FREELANCER LIMITED 2015 ANNUAL REPORT CHAIRMAN’S LETTER
Dear Shareholder,
In 2015, the Company delivered exceptional financial results
with a 48% increase in net revenue on the prior year to $38.6
skills and availability for local work. Local jobs expands
Freelancer’s Total Addressable Market to several hundred
billions of dollars per year of potential gross volume.
million. Gross Payment Volume (GPV) in FY15 was $229.3
We acquired Escrow.com, the leading provider of secure
million (+120% on the prior year). As at 31 December 2015,
online payments on the Internet. Escrow had 2015 gross
the Company had a strong balance sheet with cash and
payment volume of US$430 million, with over US$2.7 billion
equivalents of $32.2 million.
Freelancer is a high growth Internet company and this
reflects consistently with high growth in net revenues
of gross payment volume to date. As at 31 December
2015, Escrow.com’s off-balance sheet trust accounts had
balances of over $27 million.
each year (FY10 +129%, FY11 +37%, FY12 +64%, FY13
Freelancer is a very rare and exceptional company. What
+77%, FY14 +39% and FY15 +48%, 5-year CAGR 52%).
we do actually makes a difference. We change lives. We
This revenue growth is achieved by strong growth in
help lift people out of poverty. We help people feed their
marketplace projects and contests posted, increased
families. We help entrepreneurs build businesses. We
efficiency and marketplace quality, and increased sales of
help people build products and services that change the
value added services.
world. Freelancer makes a real difference in the world and
Over the 2015 financial year, the Company experienced
changes lives.
significant growth in users, projects and contests posted,
Freelancer is not just driving a global revolution in the
bringing 4.4 million new users, and 1.7 million new projects
way we do work; it is also at the nexus of a series of
and contests to the platform. This further affirmed our
powerful global macroeconomic trends. 55% of the
leading global position as the world’s largest freelancing
world’s population, or 4 billion people, are yet to connect
and crowdsourcing marketplace with more than 18 million
to the Internet. More and more industries will be eaten
users.
Over 8 million projects & contests have been posted to date-
from something as simple as a logo design to something
as complex as designing a robotic arm for the International
Space Station, which our freelancers are currently doing for
NASA.
In 2015, our focus was growing project & contest volume,
and continuing our international growth across countries
and languages. We achieved 27% growth in projects &
contests posted, and grew our registered user base by
30%. Our focus was on increasing revenue growth through
marketplace efficiency. Key contributors to this included
significant development in mobile - where now 26% of
engaged users touch Freelancer mobile products.
We also launched Freelancer Local Jobs. This has added
100 additional categories of location specific work, and to
date more than 700,000 freelancers have registered their
by software, and more and more jobs will be performed
with a computer and will move into the cloud. The world is
becoming more and more flat as everything increasingly
becomes hyperconnected. Finally, the structural imbalances
and skills crunch between the aging western world
workforce and once in a lifetime boom of people entering
the workforce in the developing world are a powerful
tailwind to our business.
Freelancer is the platform that aims to connect all of
this together. The sheer scale of the Company’s
operations is becoming apparent. Pro-forma from
January 1st 2015, including the acquisition of Escrow.com,
the Company’s Gross Payment Volume was in excess
of $700 million- this is cash physically through the
group bank accounts.
The Board and myself personally wish to thank and
acknowledge the support of all of our staff, shareholders
and our 18+ million users around the world. None of
this would have been possible without your hard
work and encouragement.
Matt Barrie
Executive Chairman
Freelancer Limited
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FREELANCER LIMITED 2015 ANNUAL REPORT 18.5
MILLION U SERS
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16
14
12
10
8
6
4
2
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Registered Users1 (millions)
1. User data includes all users from acquired marketplaces. Prior to May 2009, all data is from acquired marketplaces.
6
8.0
MILLION JOBS P OSTED
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7
6
5
4
3
2
1
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Number of Jobs Posted1 (Filtered)
1. Total Projects and Contests Posted was redefined in January 2016 to Total Jobs Posted (Filtered). Jobs Posted (Filtered) is defined as the sum of Total Posted Projects
and Total Posted Contests, filtered for spam, advertising, test projects, unawardable or otherwise projects that are deemed bad and unable to be fulfilled.
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FREELANCER LIMITED 2015 ANNUAL REPORT 88
FREELANCER LIMITED 2015 ANNUAL REPORT NASA IS USING FREELANCER.COM
TO DESIGN A ROBOTIC ARM FOR THE
INTERNATIONAL SPACE STATION
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FREELANCER LIMITED 2015 ANNUAL REPORTCHALLENGES NASA’S NEW
ROBOTIC ARM
NASA and Freelancer have
teamed up to build a robotic arm
for the Astrobee, a free flying
robot designed to help perform
mission critical tasks aboard the
International Space Station.
In the first phase, freelancers were
asked to break down the tasks
associated with building the arm.
In the second phase, contests will
be run, where freelancers will create
designs of all the different pieces
required to build the robotic arm.
4900+
Participants
116
Countries Contributing
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FREELANCER LIMITED 2015 ANNUAL REPORT ROBONAUT R2
CHALLENGES
Meet Robonaut R2, the humanoid
robot who takes on the most
dangerous tasks in space. For these
challenges freelancers created 3D
models of tools R2 uses to train its
image recognition system.
EVA Handrail
3D Cordless Drill
450+
3D Models Created
81
Countries Contributing
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FREELANCER LIMITED 2015 ANNUAL REPORT Stephen Hibberd
NASA Scope Challenge Winner
5.0/5.0 rating | 2 reviews
Member since January 2016
Brackley, United Kingdom
“
The inspiration for me during this
project was simply the fact that this
was NASA! Offering to the public
a chance to get involved in one of
the most inspirational institutions in
the world, this alone was my driving
force to do the best I could.”
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FREELANCER LIMITED 2015 ANNUAL REPORT Balazs & Gergo Szatmari
Brothers & NASA RFID
Challenge Winners
5.0/5.0 rating | 18 reviews
Member since January 2016
Göd, Hungary
“
It was a great honor to work
with NASA. When we were kids,
Gergo and I dreamt to work for
NASA and it came true, thanks
to Freelancer.com.”
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FREELANCER LIMITED 2015 ANNUAL REPORT 141414
FREELANCER LIMITED 2015 ANNUAL REPORT 8
Webby
Awards
23
Stevie
Awards
2 Best Employment Website Awards
2015 Company of the Year, Internet / New Media
1 Best Professional Services Website Award
4 Gold Stevies, International Business Awards
5 People’s Voice Awards
9 Silver Stevies, International Business Awards
7 Bronze Stevies, International Business Awards
2 People’s Choice Awards
ASIA-PACIFIC
AIMIA Winner of 4 AIMIA Awards
ANTHILL Winner of 4 Anthill Awards
BRW Winner of 2 BRW Awards
PREMIER’S EXPORT AWARDS
Winner of 1 Export Award
STEVIES
Winner of 2 Silver Asia-Pacific Stevie Awards
EUROPE
CHIEF STRATEGY OFFICER AWARDS
Best Disruptive Strategy
LATIN AMERICA
EIKON Winner of 2 Eikon Awards
NORTH AMERICA
DELOITTE Winner of 2 Deloitte Awards
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FREELANCER LIMITED 2015 ANNUAL REPORT 16
FREELANCER LIMITED 2015 ANNUAL REPORT 17
FREELANCER LIMITED 2015 ANNUAL REPORT 1818
FREELANCER LIMITED 2015 ANNUAL REPORT Yuleidy Tovar
& Ignacio Flores
Web Developer & Designer
5.0/5.0 rating | 57 reviews
Member since January 2014
Medellin, Colombia
“
Travelling and working can be quite
challenging, but they keep us going.
Freelancing gave us a taste of freedom.
We can’t go back.”
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FREELANCER LIMITED 2015 ANNUAL REPORT
We’re
defining
the future
of work
US$3.0 billion+
8,000,000+
18,500,000+
IN JOBS POSTED
JOBS POSTED
MILLION USERS
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FREELANCER LIMITED 2015 ANNUAL REPORT HIRE
WORK
Freelancer is a game-changer for entrepreneurs, small
We’re changing lives in the developing world by giving
businesses, and large organisations. We provide
hard-working people access to better jobs. Freelancers
easy access to talented freelancers from all around
who once struggled to earn $10 a day can now earn
the world, who offer a wide range of services at
$10+ an hour, all while choosing when and how they
competitive prices.
work.
US$156
AVERAGE JOB SIZE
IN 2016
65%
OF JOBS RECEIVE A BID
WITHIN 60 SECONDS
900+
AVAILABLE
SKILLS
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SUPPORTED
LANGUAGES
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FREELANCER LIMITED 2015 ANNUAL REPORT FREELANCER MOBILE
Stay in Touch, Manage Your Projects and
More. It’s Freelancer... Anywhere You Go.
700,000+
14,500,000+
500+
DOWNLOADS
MESSAGES SENT
PROJECTS POSTED DAILY
2222
FREELANCER LIMITED 2015 ANNUAL REPORT CONTESTS
You Bring the Idea, the Crowd Brings
You a Result You Love. Guaranteed.
51%
266,000+
8,600,000+
GROWTH IN CONTESTS
CONTESTS POSTED
CONTEST ENTRIES
2323
FREELANCER LIMITED 2015 ANNUAL REPORT FREELANCER LOCAL JOBS
With the World’s Largest Freelancing Site,
Good Help is Just Around the Corner.
700,000+
LOCAL FREELANCERS
2,000+
DAILY SIGNUPS
2424
FREELANCER LIMITED 2015 ANNUAL REPORT Featuring
Rand Fishkin
SEO Expert & Co-Founder of Moz.com
WARRIOR FORUM
The World’s #1 Internet Marketing
Community & Marketplace Since 1997.
1,000,000+
9,500,000+
845,000+
WARRIORS
CONTRIBUTIONS
DISCUSSIONS
2525
FREELANCER LIMITED 2015 ANNUAL REPORT The Global Leader in Secure Online
Payments. No Chargebacks, Guaranteed.
$2,700,000,000+
928,000+
USD PAYMENTS TRANSFERRED
REGISTERED CUSTOMERS
2626
FREELANCER LIMITED 2015 ANNUAL REPORT Oli Gardner
CEO of Unbounce
STARTCON
Australia’s Biggest Startup & Growth
Conference. Sold Out 6 Years in a Row.
2,000+
20
100s
ATTENDEES
INTERNATIONAL SPEAKERS
OF EXHIBITORS
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FREELANCER LIMITED 2015 ANNUAL REPORT OUR ONLINE ECONOMY
The below diagram illustrates the Freelancer online economy. The pink lines indicate where
projects are being posted by employers, and the blue lines indicate where the projects are being
performed by freelancers. Thicker lines indicate a higher dollar volume of work. White dots indicate
the location of Freelancer’s users. Edges are sampled data from awarded projects in 2015.
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FREELANCER LIMITED 2015 ANNUAL REPORT 2929
FREELANCER LIMITED 2015 ANNUAL REPORT 3030
FREELANCER LIMITED 2015 ANNUAL REPORT DIRECTORS’
REPORT
Your Directors submit the financial report of Freelancer
Limited (the Company) for the year ended 31 December
2015. In order to comply with the provisions of the
Corporations Act 2001, the Directors report as follows.
The names and particulars of the directors of the
Company during or since the end of the financial year
(Directors) are:
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MATT
BARRIE
Executive Chairman
(appointed 10 April 2010)
BE (Hons I) BSc (Hons I) GDipAppFin
MAppFin MSEE (Stanford) GAICD
SEP FIEAust
• Founder and Executive Chairman
of the Company.
• Serial entrepreneur with extensive
experience and knowledge in the
technology sector. Previously
co-founded and was CEO of Sensory
Networks Inc., a vendor of high
performance network security
Program at the Graduate School of
Business, Fellow of the Institute of
Engineers Australia and Councillor
of the Electrical and Information
Engineering Foundation at the
University of Sydney.
• Relevant interest in 201,125,697 fully
paid ordinary shares, including a
processors, which was acquired by Intel
relevant interest in 9,162,238 fully paid
Corporation Inc. in 2013.
• Formerly Adjunct Associate Professor
at the Department of Electrical
and Information Engineering at the
University of Sydney. Co-author of over
20 US patent applications.
• Qualifications include first class
honours degrees in Electrical
Engineering and Computer Science
from the University of Sydney, Masters
in Applied Finance from Macquarie
ordinary shares by virtue of having
a voting power of over 20% in the
Company, which has a relevant interest
as a result of trading restrictions over
shares issued under the Employee
Share Plan.
• Beneficial interest in 191,963,459 fully
paid ordinary shares (representing
42.0% of issued capital).
• Member of the Nomination and
Remuneration Committee and Audit
University, Masters in Electrical
Committee.
Engineering from Stanford, California,
Graduate of the Stanford Executive
32
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT DARREN
WILLIAMS
Non-Executive Director
from 1 November 2015.
Executive Director until
31 October 2015
(appointed 10 April 2010)
BSc (Hons I) PhD
(Computer Science)
• Non-Executive Director of Company.
• Qualifications include first class
Was the Chief Technology Officer and
honours degree in Computer Science
Executive Director of the Company until
and a Ph.D. in Computer Science
31 October 2015.
• Extensive experience in computer
specialising in computer networking
from the University of Sydney.
security, protocols, networking and
• Beneficial and relevant interest in
software. Previously co-founded and
11,127,165 fully paid ordinary shares
was CTO (and subsequently CEO) of
(representing 2.4% of issued capital).
• Member of the Nomination and
Remuneration Committee and Audit
Committee.
Sensory Networks Inc., a vendor of
high performance network security
processors, which was acquired by Intel
Corporation Inc. in 2013.
• Previously lectured Computer Science
at the University of Sydney. Author of
numerous articles, patents and papers
relating to security technology, software
and networking
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT SIMON
CLAUSEN
Non-Executive Director
(appointed 10 April 2010)
• Founding investor and Non-Executive
• Relevant interest in 165,633,667
Director of the Company.
• Extensive experience in operating and
investing in high growth technology
businesses in both Australia and the
United States. Previously founded and
was CEO of WinGuides, which later
became PC Tools and was acquired by
Symantec Corporation in October 2008.
• Currently the sole director of Startive
Ventures, a specialised technology
venture fund that actively maintains
investments in a number of companies
globally. Other directorships include
LatAm Autos Limited since 2014.
fully paid ordinary shares,
including a relevant interest in
9,562,238 fully paid ordinary
shares by virtue of having a
voting power of over 20% in the
Company, which has a relevant
interest as a result of trading
restrictions over shares issued
under the Employee Share Plan.
• Beneficial interest in 156,071,429
fully paid ordinary shares
(representing 34.1% of issued
capital).
• Member of the Nomination and
Remuneration Committee and
Audit Committee.
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Company Secretary
Mr Neil Katz held the position of Company Secretary during and at the end of the financial year (appointed 9 March 2012). He has
been with the Group since 2009 and is also the Chief Financial Officer.
Principal activities
The principal activity of the consolidated entity (the Group) during the financial year was the provision of an online outsourcing
marketplace. On 1 November 2015, the group completed the acquisition of the business of Escrow.com, a provider of online
escrow payment services.
There were no other significant changes in the nature of the principal activities during the financial year.
Review of operations
The Group’s loss attributable to equity holders of the Company, after providing for income tax, amounted to
$2,805,000 (2014 loss: $1,847,000).
Key Performance Highlights
Year ended 31 December
Financial metrics:
Gross Payment Volume1
Net Revenue2
Gross Profit
Gross margin (%)
Operating EBITDA3
Operating EBIT3
Operating NPAT3
Operating Cash Flow
Operational metrics:
New Registered Users4 (millions)
Number of Total Jobs Posted (filtered)5 (millions)
FY15
$m
229.3
38.6
33.5
86.7%
(2.0)
(2.5)
(1.6)
1.5
4.4
1.7
FY14
$m % Change
+120%
+48%
+47%
(0.5%)
+5%
(3%)
(13%)
nm
103.8
26.1
22.8
87.1%
(2.1)
(2.4)
(1.5)
(0.1)
4.6
1.4
1. Gross Payment Volume (GPV) is calculated as the total payments to Freelancer users for products and services transacted through the Freelancer website plus total
Freelancer revenue and Escrow.com revenue. GPV is an unaudited metric.
2. Escrow.com contributed to the Company’s results from 1 November 2015 to 31 December 2015. Net Revenue excluding Escrow.com for FY15 was $36.8m (up 41% on
pcp). GPV excluding Escrow.com for FY15 was $138.2m (up 33% on pcp).
3. Excludes non-cash share based payments expense of $1,164k in FY15 and $388k in FY14.
4. User and project/contest data includes all users and projects/contests from acquired marketplaces. Prior to May 2009, all data is from acquired marketplaces.
Includes Escrow.com unique users.
5. Total Projects and Contests Posted was redefined in January 2015 to Total Jobs Posted (filtered). Jobs Posted (Filtered) is defined as the sum of Total Posted Projects
and Total Posted Contests, filtered for spam, advertising, test projects, unawardable or otherwise projects that are deemed bad and unable to be fulfilled.
The Company experienced outstanding growth in its online businesses in the 12 months ended 31 December 2015 (FY15),
resulting in a revenue increase of 48% year on year, 41% excluding the contribution from Escrow.com.
The Company raised capital in two transactions during 2015 - principally to fund the purchase of Escrow.com, and also to
accelerate its investment in product, staffing and infrastructure globally. As a result of the continued focus on reinvesting for top
line growth, the Company delivered an operating EBITDA of $(2.0) million (improved from $(2.1) million in FY14) and despite the
increase in expenditure on talent, generated positive operating cash flow of $1.46 million in FY15.
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Marketplace Growth
The Company’s revenue is primarily generated from new and existing users posting and fulfilling projects and contests in the
Freelancer.com marketplace.
Freelancer’s registered user base (including both employers and freelancers) grew exceptionally well, increasing by 3.2 million
new users in FY15. Users are acquired from a variety of sources including search engine optimisation (SEO), search engine
marketing (SEM), media and public relations work, events, user referrals, competitions, traditional advertising, email marketing
and business combinations.
The Company’s main user acquisition focus is on attracting new employers, being those users who post projects and contests,
and, therefore create demand in the online marketplace. However, the Company also seeks to ensure that there is a sufficient
supply of freelancers across regional, language and skill specific segments of the marketplace in order to maximise marketplace
liquidity and network effects.
Employers accomplish work by posting projects or contests into the Freelancer marketplace, or hiring directly via the Company’s
freelancer directory. The total number of projects and contests posted on Freelancer.com increased by 1.7 million in FY15 (new
projects and contests in the year).
Total Projects and Contests Posted was redefined in January 2016 to Total Jobs Posted (filtered). Jobs Posted (Filtered) is
defined as the sum of Total Posted Projects and Total Posted Contests, filtered for spam, advertising, test projects, unawardable
or otherwise projects that are deemed bad and unable to be fulfilled. This new metric has been restated for historical years.
Review of Financial Performance
Gross Payment Volume1 (A$m)
and Marketplace Take Rate2 (%)
GPV
Marketplace Take Rate
20.9%
18.1%
16.8%
229.3
+120%
26.6%
25.1%
22.2%
91.1
84.4
103.7
+23%
138.2
+33%
50.8
35.6
+67%
28.0
+36%
+26%
FY10
FY11
FY12
FY13
FY14
FY15
1.
2.
Gross Payment Volume (GPV) is calculated as the total payments to Freelancer or Escrow users for products and services transacted through the Freelancer or
Escrow websites plus total Revenue. Based on Freelancer’s unaudited management accounts which have not been subject to an auditors review.
Take rate is calculated as Online Marketplace Segment Net Revenue divided by Gross Payment Volume
(excluding Escrow.com GPV and Net Revenue)
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Review of Financial Performance
Net Revenue (A$m) and
Gross Margin (%)
Net Revenue
Gross Margin
38.6
+48%
26.1%
87.1%
82.6%
86.7%
87.4%
87.6%
18.8
86.7%
10.6
6.5
4.7
FY10
FY11
FY12
FY13
FY14
FY15
The Company achieved Net Revenue of $38.6 million in FY15 (up 48% on the previous corresponding period), and Gross Payment
Volume of $229.3 million (up 120% on the previous corresponding period). Revenue excluding Escrow.com amounts to $36.8
million and a 41% growth rate on the previous corresponding period, GPV excluding Escrow.com amounts to $138.2 million and a
33% growth rate on the previous corresponding period.
Contributing factors to the growth in Net Revenue for FY15 included both overall growth in marketplace volumes, increased
efficiency and quality of the marketplace and increased sales of value added services (non-commission based revenues) which
have further boosted the take rate in the core business.
The Company’s gross margin of 86.7% in FY15 remained in line with the previous corresponding period (FY14: 87.1%). The
Company’s cost of sales predominantly consists of transaction costs that are incurred from the various gateways relied upon to
process user payments, as well as various provisions taken for credit card chargebacks and fraud risks. The cost of sales in the
Escrow.com business is slightly higher than in the core Freelancer marketplace business.
Operating Performance
Expansion of International Offices and Staffing
In line with its strategy of reinvesting for top line growth, the Company expanded its international footprint and increased its
investment in talent in FY15.
In FY15 the Company grew its staff across offices in Sydney, Manila and London. As part of the Escrow.com acquisition,
the Company acquired 12 staff based in California. Hiring growth was focused on engineering, data science and product
management teams. The support function, based in Manila, grew at a significantly slower rate than total headcount,
as this team has reached operational scale to support the Company’s operations.
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT NPAT and EBITDA
As a result of the accelerated investment for future growth, the Company reported an operating net loss after tax of ($1.6) million
(FY14 Operating NPAT: ($1.5) million) and Operating EBITDA of ($2.0) million (FY14 Operating EBITDA: ($2.1) million).
Reported Net Loss After Tax of ($2.8) million in FY15 included a tax benefit of $0.9 million (FY14 NPAT: ($1.9) million).
Cash Flow and Balance Sheet Strength
Despite the increased investment in staff and its international expansion to increase future growth, the Company posted a
positive operating cash flow of $1.46 million in FY15 (FY14: $0.1 million outflow). This balances the Company’s aim to maximise
re-investment in product development and top-line growth with maintaining a secure and stable balance sheet and P&L.
As at 31 December 2015, the Company held cash and equivalents of $32.2 million, providing the Company with sufficient
flexibility to pursue further growth via both organic and inorganic channels.
Key Product & Operational Innovation Highlights
In 2015, we embarked on a number of key initiatives:
Escrow.com
The Company announced the acquisition of Escrow.com in April 2015, this acquisition reached financial close on 1 November
2015. Headquartered in California, Escrow.com provides online escrow services that facilitate and accelerate e-commerce by
assuring secure settlement.
Escrow.com is the leading provider of secure online payments and online transaction management for consumers and
businesses on the Internet, with FY15 gross payment volume of US$430 million. Escrow.com reduces the risk of fraud by acting
as a trusted third party that collects, holds and disburses funds according to buyer and seller instructions.
Growth in Mobile Usage
In 2015 Freelancer’s mobile apps across iOS and Android passed more than half a million total downloads. To offer mobile users
a better experience, during 2015 we dedicated significant resources to increasing the sophistication of our mobile apps and
presence. 26% percent of engaged users touch Freelancer Mobile products, up 114% from December 2014 to December 2015.
Major Improvements in Project Management, Communication and Collaboration
The new project management page intelligently ranks and surfaces bids in real time. Improved design on the new page makes
it easier to manage multiple freelancers on the same project. We made a major improvement to our messaging service by
offering video chat on web. Our desktop client now supports time-tracking in offline mode for our users with unreliable internet
connections in developing countries. Time-tracked invoices can now be automatically generated and paid.
Local Jobs
The Company launched Freelancer Local Jobs®, adding several hundred billion dollars per annum to the Company’s total
addressable market. After selecting “hire” on the homepage, users are now prompted to choose if their job is location-specific
or can be done anywhere online. If location specific information is selected, then they will be matched only with freelancers
in their local area.
This allows the Company to expand its services marketplace into over 100 new location specific skills, related to
location-based tasks (such as pick up & delivery), trades (including electricians, plumbers and builders), and professions
(such as event management and catering). To date, over 700,000 freelancers are available to work on local projects.
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DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Showcase
The Company launched Freelancer Showcase™, a cross-platform design gallery of millions of portfolio items in an easily
discoverable format, allowing freelancers to show off their quality work to employers. Showcase helps users by allowing them to
browse items by category, search using keywords, or filter based on a number of criteria, such as price.
Small businesses and startups who are looking for ideas on how to improve their business can browse, while those with
something more specific in mind can see exactly what can be done within their budget. Showcase has resulted in more projects
and contests being posted on the site.
Freelancer Contests
Freelancer contests gives employers the ability to crowdsource work and see the results before they pay across any of our
almost 900 categories. In 2015, changes across the platform helped push posted contests to 51% year on year growth. Product
improvements included expansion onto mobile devices, giving our users unprecedented control over their contest experience
wherever they are in the world. We also continued our partnership with NASA, with our freelancers being tasked to build a robotic
arm for astronauts aboard the International Space Station. Additionally, we vastly overhauled the user experience by allowing
users to get their deliverables as text, video or image as well as being able to annotate their contest entries for better results.
Improvements to Memberships
In 2015 all membership funnels were significantly restructured, improving conversion rates and added more features to the
offering. This drove a significant increase in paying subscribers and membership revenue.
Customer Experience
The Customer experience team responds to questions or queries from freelancers or employers for assistance. A major goal
for 2015 which was achieved was eliminating the backlog of all support tickets and moving onto dynamic chat for all customer
experience interactions going forward. This has been achieved, and represents a step change in the level of excellence offered
to the Company’s users in navigating technical support questions. The Customer experience team experienced only moderate
growth in headcount, as this function reaches operational maturity and a proven track record in supporting the Company’s
operations.
Warrior Forum
In 2015 Warrior Forum passed through one million users, and has had an overhaul on its user interface. In 2015 Warrior
Forum sent some of the most successful daily deal emails to date, breaking the previous records and demonstrating depth of
engagement with its user base.
StartCon
Freelancer managed the SydStart conference for the first time in 2015. The event was attended by over 2,000 people including
startup founders, small business owners, marketers, and sponsors. For the first time, Sydstart ran over 2 days, with 22 expert
speakers on the main stage and a further 22 speakers taking part in workshops. Speakers came from as far afield as the USA,
Indonesia, and Hong Kong.
Following on from the success of the conference, Sydstart rebranded to become StartCon with the aim of providing a more
regular calendar of events in FY16.
Dividends paid or recommended
There have been no dividends paid or provided for the financial year ended 31 December 2015 (2014: nil).
The Company has established a Dividend Reinvestment Plan (DRP). The full terms and conditions of the DRP are
available on the Company’s website, www.freelancer.com.
39
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Significant changes in state of affairs
On 31 October 2015 the Group completed the acquisition of the business of Escrow.com, the leading provider of secure online
payments and online transaction management for consumers and businesses on the Internet. There have been no other
significant changes in the state of affairs for the current financial year.
Subsequent Events
As at the date of this report, the Directors are not aware of any circumstance that has arisen since 31 December 2015 that has
significantly affected, or may significantly affect the Group’s operations in future financial years, the results of those operations in
future financial years, or the Group’s state of affairs in future financial years.
Future developments
In future financial years, the Group expects to further its growth through expansions to other territories organically and by
acquisition, and forming strategic alliances and partnerships.
Environmental regulations
The operations of the Group do not involve any activities that have a marked influence on the environment. As such, the Directors
are not aware of any material issues affecting the Group or its compliance with the relevant environment agencies or regulatory
authorities.
Indemnification of officers and auditors
During the financial year, the Group paid premiums based on normal commercial terms and conditions to insure all directors,
officers and employees of the Group against the costs and expenses in defending claims brought against the individual while
performing services for the Group. The premium paid has not been disclosed as it is subject to the confidentiality provisions
of the insurance policy. The Company has not otherwise, during or since the financial year, except to the extent permitted by
law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability
incurred as such an officer or auditor.
The Company has previously entered into a Deed of Indemnity, Insurance and Access with each of its current Directors: R.M.
Barrie, S.A. Clausen and D.N.J. Williams. The purpose of the Deed is to:
• confirm and supplement, to the extent permitted by section 199A of the Corporations Act 2001, the indemnity provided by the
Company in favour of Directors under the Company’s Constitution;
• include an obligation, to the extent permitted by section 199B of the Corporations Act 2001, upon the Company to maintain
adequate directors and officers’ liability insurance; and
• confirm and supplement the right of access to certain documents under the Corporations Act.
Rounding off of amounts
The Company is an entity to which ASIC Class Order 98/100 applies. Accordingly amounts in the financial report have been
rounded off to the nearest thousand dollars, unless otherwise stated.
40
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Meetings of Directors
During the financial year six meetings of Directors were held. Other matters arising during the year were resolved by circular
resolutions.
The following persons acted as Directors of the Company during the financial year, with attendances to meetings of Directors as
follows:
Director’s Meetings
Audit Committee meetings
Nomination and
Remuneration meetings
Eligible to attend
Attended
Eligible to attend
Attended
Eligible to attend
Attended
R.M. Barrie
S.A. Clausen
D.N.J. Williams
6
6
6
6
6
6
3
3
3
3
3
3
1
1
1
1
1
1
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor and its related
parties amounted to $24,000 (2014: $38,000).
The Directors are satisfied that the provision of non-audit services in the form of tax compliance services during the year by the
auditor (or another person or firm on the auditors’ behalf) is compatible with the general standard of independence for auditors
imposed by the Corporations Act.
The Directors are of the opinion that the services as disclosed in Note 18 to the financial statements do not compromise the
external auditor’s independence, based on advice received from the Audit Committee, for the following reasons:
• all non-audit services have been reviewed and approved 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 Code of Conduct APES
110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including
reviewing or auditing the auditors 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.
Officers of the Company who are former audit partners of the auditor
There are no officers of the Company who are former audit partners of Hall Chadwick.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 42 and forms part of the Directors’ Report for the year ended
31 December 2015.
Shares issued under Employee Share Plan (ESP)
No ESP shares have been granted to Directors during the financial year. No ESP shares have been granted to Directors since the
end of the financial year.
Proceedings on behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the
Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group
was not a party to any such proceedings during the year.
41
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Remuneration Report – audited
This audited Remuneration Report for the Group which forms part of the Directors’ Report for the financial year ended 31
December 2015, details the nature and amount of remuneration for each Director and the Executives.
Key management personnel (KMP) comprise:
• R.M. Barrie – Executive Chairman
• S.A. Clausen – Non-Executive Director
• D.N.J. Williams – Non-Executive Director from 1 November 2015 (Executive director until 31 October 2015)
• N.L. Katz – Chief Financial Officer and Company Secretary
Remuneration policy
The performance of the Group depends upon the quality of its directors and executives. The Group recognises the need to attract,
motivate and retain highly skilled directors and executives.
The Board of Directors, through its Nomination and Remuneration Committee, accepts responsibility for determining and
reviewing remuneration arrangements for the Directors and Executives. The Nomination and Remuneration Committee assesses
the appropriateness of the nature and amount of remuneration of Directors and Executives on a periodic basis by reference to
relevant employment market conditions, giving due consideration to the overall profitability and financial resources of the Group,
with the objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.
Non-Executive Director remuneration
Fees and payments to Non-Executive Directors reflect the demands which are made of the Directors in fulfilling their
responsibilities. Non-Executive Director fees are reviewed annually by the Board. The Constitution of the Company provides
that the Non-Executive Directors of the Company are entitled to such remuneration, as determined by the Board, which must
not exceed in aggregate the maximum amount determined by the Company in general meeting. The most recent determination
was at a General Meeting held on 9 October 2013 where the shareholders approved an aggregate remuneration of $300,000.
Annual Non-Executive Directors’ fees currently agreed to be paid by the Company are $25,000 to S.A. Clausen and D.N.J. Williams
inclusive of superannuation.
Executive and Executive Director remuneration
Fixed remuneration consists of base remuneration (which is calculated on a total cost basis and includes any fringe benefits tax
charges related to employee benefits, including motor vehicles), as well as employer contributions to superannuation funds.
Executive and Executive Director remuneration levels are reviewed annually by the Nomination and Remuneration Committee
through a process that considers the overall performance of the Group. The Executive Directors are not paid any director fees in
addition to their fixed remuneration as Executives.
Performance based remuneration
Performance based remuneration is at the discretion of the Nomination and Remuneration Committee. These can take the form
of cash bonuses or invitations to participate in the Company’s Employee Share Plan (ESP).
42
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Remuneration of Directors and Executives
Remuneration shown below relates to the period in which the Director or Executive was a member of key management personnel.
Amounts below have either been paid out or accrued in the period.
Short Term benefits
Post
employment
benefits
Share
based
payments
Director’s
fees
$
Cash salary
and fees
$
Other
$
Super
Annuation
$
Shares
$
Total
$
Non-executive Directors:
S.A Clausen
2015
2014
Executive Directors:
R.M Barrie
2015
2014
D.N.J Williams1
2015
2014
Other Key Management Personnel:
N.L Katz
2015
2014
22,884
22,619
-
-
3,814
-
-
-
-
-
-
-
2,172
2,410
-
-
25,056
25,029
486,139
368,593
26,466
32,376
231,650
274,600
12,450
11,136
25,904
26,859
22,102
25,744
16,038
554,547
16,038
443,866
20,047
290,063
20,047
331,527
292,610
262,225
15,182
11,136
25,575
18,095
33,260
366,627
19,459
310,915
1Darren Williams was an executive director until 31 October 2015.
The remuneration of key management personnel in the years ended 31 December 2015 and 2014 were 100% fixed, and there is
no link between remuneration and the market price of the Company’s shares.
43
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT ESP shares
Details of ESP shares in the Company held directly, indirectly or beneficially, by KMP, including their related parties, is as follows:
Balance
at the
start of
the year
Granted /
issued
Released
from
restrictions
Forfeited /
cancelled
Balance at
the end of
the year
Balance
of
unvested
ESP
shares
Balance
of vested
ESP
shares
2015
Directors:
R.M. Barrie
D.N.J. Williams
Other KMP:
N.L. Katz
Total
2014
Directors:
R.M. Barrie
D.N.J. Williams
Other KMP:
N.L. Katz
Total
400,000
500,000
-
-
459,461
200,000
1,359,461
200,000
400,000
500,000
-
-
359,461
1,259,461
200,000
200,000
-
-
-
-
-
-
-
-
-
-
400,000
500,000
183,334
229,167
216,666
270,833
(100,000)
559,461
372,242
(100,000)
1,459,461
784,743
187,219
674,718
-
-
400,000
500,000
283,334
354,167
116,666
145,833
(100,000)
459,461
(100,000)
1,359,461
362,107
999,608
97,354
359,853
44
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Ordinary share capital
Details of ordinary shares in the Company held directly, indirectly or beneficially, by KMP, including their related parties, is as
follows:
2015
Directors:
R.M. Barrie1
S.A. Clausen
D.N.J. Williams2
Other KMP:
N.L. Katz3
Total
2014
Directors:
R.M. Barrie1
S.A. Clausen
D.N.J. Williams2
Other KMP:
N.L. Katz3
Total
Balance at
the start of
the year
Received as
part of
remuneration
Purchase
of
shares
Sale
of
shares
Balance
at the end
of the year
201,414,387
171,422,413
12,258,165
440,000
385,534,965
201,330,078
169,939,739
12,236,660
440,000
383,946,477
-
-
-
-
-
-
-
-
-
-
-
(8,571,428)
192,842,959
1,077,587
(16,428,571)
156,071,429
-
-
(1,500,000)
10,758,165
(20,000)
420,000
1,077,587
(26,519,999)
360,092,553
84,309
1,482,674
21,505
-
1,588,488
-
-
-
-
-
201,414,387
171,422,413
12,258,165
440,000
385,534,965
Loans to directors and key management personnel
The following loan balances are outstanding at the reporting date in relation to remuneration arrangements with Executive
Directors and KMP in respect of shares issued under the Employee Share Plan (ESP).
As the ESP is considered in substance a share option, the ESP shares issued and corresponding loan receivable are not
recognised by the Group in its financial statements. The ESP shares will not be considered issued to participants until the
corresponding loan has been repaid, at which time there will be an increase in the issued capital and increase in cash. Further
information relating to the ESP is set out in the Note 21 to the financial statements.
Directors:
R.M. Barrie
S.A. Clausen
D.N.J. Williams
Other KMP:
N.L. Katz
Total loans to Directors and KMP
1.
2.
3.
1,279,500 shares as at 31 December 2015 (2014: 1,279,500) are held directly or indirectly by related parties.
131,000 shares as at 31 December 2015 (2014: 131,000) are held directly or indirectly by related parties.
270,000 shares as at 31 December 2015 (2014: 290,000) are held directly or indirectly by related parties.
2015
$000
200
-
250
311
761
2014
$000
200
-
250
180
630
45
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Executive service agreements
The employment terms and conditions of Group Executives and KMP are formalised in service agreements.
Position
Key terms of service agreements
• Term: unspecified.
Chief
Executive
Officer
• Base remuneration: Reviewed annually by the Nomination and Remuneration Committee.
• Bonus entitlements: Determined annually by the Nomination and Remuneration Committee
(capped at 50% of the base remuneration).
• Termination notice period: 6 months notice or alternatively in Freelancer’s case, payment in
lieu of notice.
• Restraint of trade period: 12 months.
Other Executives are employed under individual executive services agreements.
These establish, amongst other things:
Other
Executives
• total compensation;
• eligibility to participate in the ESP;
• variable notice and termination provisions of up to 3 months, or by the Group without notice
in the event of serious misconduct; and
• restraint and confidentiality provisions.
Other transactions with KMP or their related parties
There were no other transactions conducted between the Group and KMP or their related parties, other than those disclosed
above relating to equity, compensation and loans, that were conducted other than in accordance with normal employee, customer
or supplier relationships on terms no more favourable than those reasonably expected under arm’s length dealings with unrelated
persons, apart from related party transactions disclosed in Note 22 to the financial statements.
This concludes the Remuneration Report.
Additional information
The following table shows the net revenue, profits/(losses) and dividends for the last six years of the Company, as well as the
share prices at the end of the respective financial years.
Revenue ($000s)
Net profit / (loss) ($000s)
Share price at year end ($)
Dividends paid (cps)
2010
4,702
555
n/a
Nil
2011
6,460
(476)
n/a
Nil
2012
10,627
728
n/a
Nil
2013
18,761
753
$1.38
Nil
2014
26,087
(1,847)
$0.65
Nil
2015
38,604
(2,805)
$1.80
Nil
The Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a resolution of the directors made
pursuant to s298(2) of the Corporations Act 2001.
On behalf of the Directors
Matt Barrie
Chairman
23 February 2016
46
DIRECTORS’ REPORTFREELANCER LIMITED 2015 ANNUAL REPORT Auditor’s Independence Declaration
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITIES
I declare that, to the best of my knowledge and belief, during the year
ended 31 December 2015 there have been:
(a) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit, and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
Hall Chadwick
Hall Chadwick
Level 40, 2 Park Street
Sydney NSW 2000
GRAHAM WEBB
Partner
Dated: 23 February 2016
47
AUDITOR’S INDEPENDENCE DECLARATIONFREELANCER LIMITED 2015 ANNUAL REPORT CORPORATE GOVERNANCE STATEMENT
Freelancer Limited (the Company) is committed to implementing the highest possible standards of corporate governance and
ensures, wherever possible, that its practices are consistent with the Third Edition of the Australian Securities Exchange (ASX)
Corporate Governance Council’s Principles and Recommendations.
Each of the eight principles is listed in turn. In certain circumstances, due to the size and stage of development of the Company
and its operations, it may not be practicable or necessary to implement the ASX Principles in their entirety. As such, the Company
has identified the areas of divergence. The Policies and Charters referred to in this Corporate Governance Statement are available
on the Company’s website, www.freelancer.com.
Principle 1 – Lay solid foundations for management and oversight
The Board’s responsibilities are encompassed in a Charter which is available on the Company’s website, www.freelancer.com.
The Board is responsible for, and has the authority to determine, all matters relating to the strategic direction, policies, practices,
establishing goals for management and the operation of the Company. Without intending to limit this general role of the Board,
the specific functions and responsibilities of the Board include:
1. oversight of the Company, including its control and accountability systems;
2. appointing and removing the Managing Director;
3. appointing and removing the Company Secretary;
4. board and executive management development and succession planning;
5.
input into and final approval of corporate strategy;
6.
input into and final approval of the annual operating budget (including the capital management budget);
7. approving and monitoring the progress of major capital expenditure, capital management and acquisitions/divestitures;
8. monitoring compliance with all relevant legal, tax and regulatory obligations;
9.
reviewing and monitoring systems of risk management, internal compliance and controls;
10. codes of conduct, continuous disclosure, legal compliance and other significant corporate policies;
11. at least annually, reviewing the effectiveness of the Company’s implementation of its risk management system and internal
control framework;
12. monitoring executive management’s performance and implementation of strategy and policies, including assessing whether
appropriate resources are available;
13. approving and monitoring financial and other reporting to the market, shareholders, employees and other stakeholders; and
14. appointment, reappointment or replacement of the external auditor.
Key responsibilities of the Board include the overseeing of the strategic direction of the Company, determining its policies and
objectives and monitoring executive management performance.
Other matters are within the responsibility of management. The management function is conducted by, or under the supervision
of, the Chief Executive Officer as directed by the Board (and by officers to whom the management function is properly delegated
by the Chief Executive Officer). Management must supply the Board with information in a form, timeframe and quality that will
enable the Board to discharge its duties effectively. Directors are entitled to request additional information at any time they
consider it appropriate.
48
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT To assist in carrying out its responsibilities, the Board has established the following committees of its members. They are:
1. Audit Committee; and
2. Nomination and Remuneration Committee.
The Chief Executive Officer and Senior Executive management have service contracts and position descriptions, setting out their
duties, responsibilities, and conditions of service and termination entitlements. Any new Directors appointed will receive formal
letters of appointment setting out the key terms, conditions and expectations of their appointment. In addition, the Nomination
and Remuneration Committee will engage external consultants to perform appropriate background checks on candidates for
appointment as a director.
The Chief Executive Officer and Senior Executive management are subject to a formal performance review process on an
annual basis. The Nomination and Remuneration Committee reviews the performance of the Chief Executive Officer and Senior
Executive management against clear performance objectives. A performance review was undertaken in 2015.
The Company Secretary of the Company plays an important role in supporting the effectiveness of the Board and its Committees.
The role of the Company Secretary includes:
1. advising the Board and its Committees on governance matters;
2. monitoring that Board and Committee Policy and Procedures are followed;
3. coordinating the timely completion and despatch of Board and Committee papers
4. ensuring that the business at Board and Committee meetings is accurately captured in the minutes; and
5. helping to organise and facilitate the induction and professional development of directors.
Each director is able to communicate directly with the Company Secretary and vice versa. The decision to appoint or remove a
Company Secretary is made or approved by the Board.
Diversity Policy
In accordance with the ASX Recommendations on diversity, the Board established a Diversity Policy in 2013 which includes:
1.
the establishment of measurable objectives for achieving diversity; and
2. a requirement for the Board to assess annually both these objectives and the progress in achieving them.
The Policy is available on the Company’s website, www.freelancer.com, and the assessments will be reported in future Annual
Reports.
The Company understands that encouraging diversity in our organisation is not just a socially responsible necessity and that it is
essential to our continued growth and vital to a successful future.
Given the size and nature of the current Board, the business and the industry in which we operate and therefore compete for
talent, we determined not to establish measurable objectives for achieving diversity for the 2015 financial year. We assess the
need for measurable objectives at least annually. Once measurable objectives are established, the internal diversity team will
oversee the implementation of any new initiatives and regularly review existing initiatives to ensure and promote diversity.
As at 31 December 2015, the proportion of women employed by the Company was as follows:
•
•
•
Board of Directors: 0%
Senior Executive positions: 0%
Total Company workforce: 34%
49
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT Workplace Gender Equality
The Workplace Gender Equality Act 2012 (WGE Act) puts a focus on promoting and improving gender equality and outcomes
for both women and men in the workplace. All non-public sector employers with 100 or more employees are required to report
annually under the WGE Act.
A copy of the Company’s 2015 report to the Workplace Gender Equality Agency is available on the Company’s website, www.
freelancer.com/investor.
Principle 2 – Structure the Board to add value
The Board has established a Nomination and Remuneration Committee which is responsible for:
1. assisting the Board with establishing a board of effective composition, size, diversity and commitment to adequately
discharge its responsibilities and duties, and assist the Board with discharging its responsibilities to shareholders and other
stakeholders to seek to ensure that the Company has policies to evaluate the performance of the Board, individual Directors
and executives on (at least) an annual basis;
2. ensuring that the Company’s remuneration policies, practices and structures are coherent, equitable and aligned with the
long-term interests of the Company and its shareholders, having regard to relevant policies in attracting and retaining skilled
executives that are challenging and will create value for shareholders;
3.
the review and monitoring of the Company’s remuneration and incentive framework applying to Non-Executive Directors,
Executive Directors and Senior Executives and the associated strategies, systems, policies and processes implemented, and
reported on, by management;
4. ensuring that the Company fairly and responsibly remunerates Directors and executives, having regard to the performance of
the Company, the performance of the executives and the general remuneration environment;
5. ensuring that the Company has policies and procedures to attract, motivate and retain appropriately skilled and diverse
persons to meet the Company’s needs;
6. approving the remuneration and incentive awards of Senior Executives based on the recommendations of the Managing
Director;
7. approval of pools of annual grants of equity and any other individual equity offers to Senior Executives and other Executives;
and
8.
identifying suitable candidates to complement the existing Board and to make recommendations to the Board on their
appointment.
Where a candidate is recommended by the Nomination and Remuneration Committee, the Board will assess that candidate
against a range of criteria including background, experience, professional qualifications, personal qualities and cultural fit with
the Board and the Company, as well as the potential for the candidate’s skills to augment the skills of the existing Board. If
these criteria are met and the Board appoints the candidate as a director, that director must have their appointment confirmed
at the next Annual General Meeting. Before appointing a director, the Company undertakes comprehensive checks including
employment, character reference, criminal record, experience, education and bankruptcy history.
The Committee’s functions are to review and make recommendations to the Board on:
1.
the review and monitoring and recommendation of changes to the remuneration and incentive framework (including
the equity plan framework and any diversity considerations) for Non-Executive Directors, Executive Directors and Senior
Executives;
2.
the remuneration of Non-Executive Directors;
3.
the fixed remuneration levels and incentive awards for the Managing Director and any other Executive Directors;
50
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT 4. performance based measures (financial and non-financial), targets and performance outcomes under incentive plans for the
Executive Directors and Senior Executives; and
5. whether the directors as a group have the skills, knowledge and familiarity with the Company and its operating environment
required to fulfil their role on the Board and on Board Committees effectively and, where any gaps are identified, consider
what training or development could be undertaken to fill those gaps.
The Company provides resources to help develop and maintain its directors’ skills and knowledge. This includes, in the case of
a director who does not have specialist accounting skills or knowledge, ensuring that he or she has a sufficient understanding
of accounting matters to fulfil his or her responsibilities in relation to the entity’s financial statements. It also includes, for all
directors, ensuring that they receive ongoing briefings on developments in accounting standards.
The Board reviews its performance and composition on an annual basis to ensure that it has the appropriate mix of expertise and
experience. The Board also reviews the performance and composition of its committees on an annual basis.
The Nomination and Remuneration Committee meets as frequently as required and at least once a year. The quorum for such
meetings is two members. Details of the Committee members’ attendance at Committee meetings are set out in the Directors’
Report.
The Board determines the Board’s size and composition, subject to limits imposed by the Company’s Constitution. The
Constitution provides for a minimum of three Directors and a maximum of ten. At this time the Board comprises of three
Directors, one of whom is an executive director and two of whom who are non-executive directors and all are not independent
directors, including the Chairman.
A Director is deemed to be independent if he or she is a Non-Executive Director and:
1.
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial
shareholder of the Company;
2. has not been employed in an executive capacity in the Company in the last three years, or has not been a director after
ceasing to hold such employment;
3. within the last three years has not been a partner or a senior management executive with audit responsibilities of a firm
which has acted in the capacity of statutory auditor of the Company;
4. has not acted as a material consultant, or an employee materially associated with the service provided, to the Company in
the last three years;
5.
is not a material supplier or customer of the Company, or an officer of or otherwise associated directly or indirectly with a
material supplier or customer;
6. has no material contractual relationship with the Company other than as a Director; and
7.
is free from any interest or business or other relationship which could materially interfere with his or her ability to act in the
best interests of the Company and independently of management.
The test of independence for Directors is set out in detail under section 8 of the Board Charter, which is available on the
Company’s website, www.freelancer.com. Materiality thresholds referred to above are assessed on a case-by-case basis.
The Board does not consist of a majority of independent Directors and the Chairman is not an Independent Director. The Board
acknowledges the ASX Recommendation that a majority of the Board should be Independent Directors and that the Chairman
should be an Independent Director. The Board believes that the Directors are able, and do make, quality and independent
judgement in the best interests of the Company on all relevant issues before the Board. The Board considers that the Company
is not currently of a size, nor are its affairs of such complexity, to justify the expense of the appointment of a majority of
independent Directors. The Board also believes that each of the Directors brings objective and independent judgement to
the Board’s deliberations and that each of the Directors makes invaluable contributions to the Company through their deep
understanding of the Company’s business.
51
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT The Board aims to attract and maintain a Board which has an appropriate mix of skills, experience, expertise and diversity. For the
names and particulars of the Directors of the Company during or since the end of the financial year, refer to the Directors’ Report.
In order to facilitate independent judgement in decision making, each Director may seek independent professional advice at
the Company’s expense. If advice is sought by the Chairman, he must obtain Board approval if the fees for such advice exceed
$50,000 (exclusive of GST), such approval is not to be unreasonably withheld. Where advice is sought by the other Directors,
prior written approval by the Chairman is required but approval will not be unreasonably withheld. If the Chairman refuses to give
approval, the matter must be referred to the Board. All Directors are made aware of the professional advice sought and obtained.
Matt Barrie exercises both the role of Chairman and Chief Executive Officer of the Company. The Board acknowledges the ASX
Recommendation that these roles should not be exercised by the same individual. The Board believes that Matt Barrie is the
most appropriate person to lead the Board as Executive Chairman and that he is able to and does bring quality and independent
judgement to all relevant issues falling within the scope of the role of Chairman and that the Company as a whole benefits from
his long standing experience of its operations and business relationships.
The Nomination and Remuneration Committee of the Board comprises of an Executive Director and two Non-Executive Directors,
Messrs. R.M. Barrie, D.N.J. Williams and S.A. Clausen. None of the committee members are independent. Mr Clausen, who is a
Non-Executive Director, is the Committee Chairman. The Committee Charter which is available on the Company’s website, www.
freelancer.com, details the process and timing for re-election of directors. The Board’s policy for nomination and appointment of
Directors also forms part of the Charter.
The Company Constitution states that at each Annual General Meeting (AGM) one-third of the Directors for the time being, or if
their number is not three or a multiple of three, then the nearest number greater than one-third, shall retire from office. A retiring
Director shall be eligible for re-election. No Director (other than a Managing Director) may hold office without re-election past the
third annual general meeting following their appointment or three years, whichever is longer or, in the case of a Director appointed
by the Directors as an additional Director or to fill a casual vacancy, past the next annual general meeting of the Company. Any
Director appointed by the Board since the last AGM must stand for election at the next AGM.
Subject to normal privacy requirements, each Director has the right of access to all of the Company’s records, information and
Senior Executives. They receive regular detailed reports on financial and operational aspects of the Company’s business and
may request elaboration or explanation of these reports at any time. Directors and Executives are encouraged to broaden their
knowledge of the Company’s business and to keep abreast of developments in business more generally by attendance at relevant
courses, seminars, conferences, etc. The Company meets expenses involved in such activities.
Principle 3 – Act Ethically and Responsibly
The Board recognises the need to observe high standards of corporate practice and business conduct. Accordingly, the Board
of Directors has adopted a formal Code of Conduct to be followed by all personnel and officers. The Code of Conduct also sets
out the Company’s policies on various matters including ethical conduct, business conduct, compliance, privacy, security of
information, bribery and corruption, and conflicts of interest.
The Code of Conduct is to be followed by all Directors, officers, employees, consultants of the Company and any entity related
to or owned by the Company, and any other person when they represent the Company or any entity related to or owned by the
Company. A copy of the Code is made available to Directors, officers, employees, consultants and relevant personnel and is
available on our website, www.freelancer.com.
The Board has also implemented a range of procedures designed to oversee that the Company complies with the law and
achieves high ethical standards in identifying and resolving or managing conflicts of interest.
As a part of active promotion of high standards of corporate practice and business conduct, behaviour that does not comply with
the Code is encouraged to be reported. Protection is afforded to those who report violations in good faith.
52
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT The Company’s Securities Trading Policy generally allows all Key Management Personnel and other employees of the Company or
a related body corporate of the Company, consultants and advisers, and any other person designated by the Board to deal in the
Company’s securities other than:
1. during a Blackout Period (the period from the close of trading on the ASX at the end of each half year and full year until the
close of trading on the day following the announcement to the ASX of the half year or full year results, or any other period
that the Board specifies from time to time); or
2. while in possession of inside information concerning the Company (whether or not it is a Blackout Period) either:
a. buy or sell the Company’s securities at any time;
b. procure another person to deal in the Company’s securities in any way; or
c. directly or indirectly, communicate the information, or cause the information to be communicated, to another person if the
person knows, or ought reasonably to know, that the other person would, or would be likely to:
i. deal in the Company’s securities in any way;
ii. procure a third person to deal in the Company’s securities in any way; or
iii. pass that information onto another person.
All Key Management Personnel and other employees are prohibited from dealing in the securities of outside companies about
which they acquire inside information through their position with the Company (whether or not it is a Blackout Period).
Principle 4 – Safeguard integrity in corporate reporting
The Board has established an Audit Committee comprising one Executive Director and two Non-Executive Directors, with
appropriate experience.
Each Committee Member must be financially literate, have familiarity with financial management and an understanding of the
industry in which the Company operates. At least one Committee Member should have financial expertise (that is, be a qualified
accountant or other financial professional with financial and accounting experience).
Currently, the Committee comprises of Mr R.M. Barrie, Mr D.N.J. Williams (Chairman) and Mr S.A. Clausen. The members of the
Committee are not independent Directors. The Chairman of the Committee is not Chairman of the Board.
The Board acknowledges the ASX Recommendations that the Audit Committee should consist only of non-executive Directors,
have a majority of independent Directors and be chaired by an independent chair.
Due to the structure of the Board, the Company is not currently able to comply with this Recommendation. However, the
Board believes that the experience and industry knowledge of the members of the Audit Committee will ensure objective and
independent judgement in carrying out their responsibilities on this Committee. The Board will review the composition of the
Audit Committee at an appropriate time in the future.
Appropriate management and representatives of the external auditor are to attend Committee meetings, at the invitation of the
Committee Chairman, to provide reports and periodic presentations to the Committee.
The external auditors have a direct line of communication at any time to either the Chairman of the Audit Committee or the
Chairman of the Board.
The Audit Committee is responsible for:
1. overseeing the process of financial reporting, internal control, continuous disclosure, financial and non-financial risk
management, compliance and external audit;
2. encouraging effective relationships with, and communication between, the Board, Management and the Company’s external
auditor;
53
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT 3. evaluating the adequacy of processes and controls established to identify and manage areas of potential financial risk and to
seek to safeguard the assets of the Company;
4. overseeing that all proper remedial action is undertaken to redress areas of weakness;
5. overseeing the Company’s compliance with prescribed policies;
6.
reporting to the Board on any of the above responsibilities and functions;
7.
recommending to the Board the appointment, reappointment or replacement of the external auditor;
8. approving rotation of partners of the external auditor;
9.
reviewing and approving the audit plans and engagement letters of the external auditor, including payment of annual fees and
variations to approved fees;
10. reviewing the overall scope of the external audit, including identified risk areas and any additional agreed-upon procedures;
11. considering the overall effectiveness and independence of the external auditor; and
12. resolving any disagreements between management and the external auditor regarding financial reporting.
The Committee has a formal Charter which is available on the Company’s website, www.freelancer.com. The Committee meets
as frequently as required and will meet at least twice a year. The quorum for such meetings is two members.
Details of the Committee members’ attendance at Committee meetings are set out in the Directors’ Report. The minutes of each
Committee meeting are reviewed at the subsequent Board meeting and signed as an accurate record of proceedings. At the
subsequent Board meeting, the Chairman of the Committee reports on the Committee’s conclusions and recommendations.
The Directors’ Declarations are set out in the Directors’ Declaration section approving the Company’s financial statements for the
financial period of 2015, received from the CEO and CFO.
The Company also requests the external auditor attend the Annual General Meeting and be available to answer shareholder
questions about the audit and the preparation and content of the audit reports.
Principle 5 – Make timely and balanced disclosure
The Company has established a Continuous Disclosure Policy which applies to and is to be followed by all directors, officers,
employees, consultants of the Company and any entity related to or owned by the Company, and any other person when they
represent the Company or any entity related to or owned by the Company.
The Policy outlines the Company’s commitment to complying with the continuous disclosure obligations contained in the ASX
Listing Rules (Listing Rules) and the Corporations Act 2001 (Cth) (the Act).
The Policy is designed to provide a practical guide to the Company and its directors, officers, employees and consultants with
practical guidance on the continuous disclosure obligations and to assess whether any particular information or event is required
to be disclosed to the ASX.
The Board recognizes the need to ensure that the management and dissemination of accurate market sensitive information is
made in accordance with the requirements of the Listing Rules and the Act so that all shareholders and market participants have
an equal opportunity to participate in a fair, orderly and transparent market in the securities of the Company.
Type of information that needs to be disclosed
The Company must immediately notify the ASX of any information that a reasonable person would expect to have a material
effect on the price of value of the Company’s securities, unless that information is within the exceptions to the disclosure
requirement as set out in the Listing Rules and the Act. Examples of such information include a change in financial forecasts,
revenue, significant changes in asset values or significant transactions. All information disclosed to the ASX is provided to
Directors as soon as possible after the ASX has confirmed receipt of same.
54
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT ASX Communications Officer
The Board has appointed the Company Secretary as the principle officer for communicating with the ASX in relation to all Listing
Rule matters, overseeing the disclosure of information to the ASX and coordinating the review process for deciding whether any
information or event is required to be disclosed monitoring the disclosure practices of the Company.
Principle 6 – Respect the rights of security holders
The Board’s aim is to ensure that Shareholders are provided with sufficient information to assess the performance of the
Company and that they are informed of all major developments affecting the state of affairs of the Company relevant to
Shareholders in accordance with all applicable laws. Information will be communicated to Shareholders through the lodgement of
all relevant financial and other information with ASX and publishing information on the Company’s website, www.freelancer.com.
In particular, the Company’s website will contain information about it, including media releases, key policies and the terms of
reference of its Board committees. A link to all relevant announcements made to the market and any other relevant information
will be available on the Company’s website as soon as they have been released to the ASX.
The Company also communicates with shareholders through the:
1. Annual Reports and Financial Statements which are available to all shareholders;
2.
invitation to the annual general meeting and all accompanying papers;
3. Company’s website, www.freelancer.com;
4.
reports to the ASX and the press;
5. half year and full year profit announcements; and
6.
information and presentations to analysts (which are released to the ASX).
Shareholders may send communications to the Company and its share registry provider electronically. The relevant contact
details are under “Shareholder Information” in the Investor section of the Company’s website.
Shareholders who do not currently receive electronic communications may update their communication preferences via a secure,
online service offered by the Company’s share registry provider.
The Annual General Meeting also provides an important opportunity for shareholders to express their views and respond to
initiatives being proposed by the Board.
In accordance with Principle 6 of the ASX Principles, the Company has established a Communications Policy, incorporating
matters disclosed above. The Policy is available on the Company’s website, www.freelancer.com.
Principle 7 – Recognise and manage risk
Risk oversight and management policies
The identification and proper management of the Company’s risks are an important priority of the Board. The Company has
adopted a Risk Management Policy appropriate for its business. The Policy highlights the risks relevant to the Company’s
operations and the Company’s commitment to designing and implementing systems and methods appropriate to minimise and
control its risks. The Board is responsible for overseeing and approving risk management strategy and policies.
55
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT The Board acknowledges the ASX recommendation that the Company should have a Risk Committee. Due to the size and scale
of operations of the Company, a Risk Committee is not established and the Board oversees the risk management framework.
Management is responsible for identifying major risk areas and monitoring risk management to provide assurance that major
business risks are identified, consistently assessed and appropriately addressed and must report on these matters to the Board.
The Company will regularly undertake reviews of its risk management procedures to ensure that it complies with its legal
obligations, including assisting the Managing Director and Chief Financial Officer to provide the required declarations under
section 295A of the Corporations Act. The Company has in place a system whereby management is required to report as to its
adherence to policies and guidelines approved by the Board for the management of risks.
The key aspects of this Risk Management Policy are:
1. Establishing the context;
2. Risk identification;
3. Risk analysis;
4. Risk evaluation;
5. Risk treatment;
6. Communication & consultation; and
7. Monitoring and review.
As required by the ASX Principles, Executive management has reported to the Board on the effectiveness of the management of
its material business risks. The ultimate responsibility for risk oversight and management rests with the Board.
Due to the size and scale of operations of the Company, there is no separate internal audit function.
The Company monitors its exposure to risks to the business including economic, social, governance, and environmental
sustainability risks. Material business risks are described in the Company FY2015 Annual Report, which also outlines the
Company’s key business activities and performance during the year, as well as its key strategies.
Principle 8 – Remunerate fairly and responsibly
The Board has established a Nomination and Remuneration Committee to consider and report on, among other matters,
remuneration policies and packages applicable to Board members and to Senior Executives of the Company.
Currently, the Committee comprises of Mr R.M. Barrie, Mr D.N.J. Williams and Mr S.A. Clausen (Chairman). The members of the
Committee are not independent Directors. The Chairman of the Committee is not Chairman of the Board.
The objectives of the Company’s Nomination and Remuneration Committee (Committee) are to assist the Board in fulfilling its
corporate governance responsibilities in relation to:
a. remuneration matters, including:
i.
the remuneration framework for Non-Executive Directors;
ii.
the remuneration and incentive framework, including any proposed equity incentive awards, for the Managing Director,
any other Executive Directors and all executives that report directly to the Managing Director (Senior Executives);
iii. recommendations and decisions (as relevant) on remuneration and incentive awards for the Managing Director, any
other Executive Directors and Senior Executives; and
iv. strategic human resources policies; and
56
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT b. nomination matters, including:
i. Board appointments, re-elections and performance;
ii. Directors’ induction programs and continuing development;
iii. Committee membership;
iv. endorsement of Senior Executive appointments; and
v. diversity obligations.
The Managing Director, appropriate management and representatives of any external adviser are to attend such portion of each
meeting as requested by the Committee Chairman. An Executive is not to be present when the Committee discusses issues
relating to that Executive.
The Committee will review and make recommendations to the Board on remuneration matters, including:
a. the review and monitoring and recommendation of changes to the remuneration and incentive framework (including
the equity plan framework and any diversity considerations) for Non-Executive Directors, Executive Directors and Senior
Executives;
b. the remuneration of Non-Executive Directors;
c. the fixed remuneration levels and incentive awards for the Managing Director and any other Executive Directors; and
d. performance based measures (financial and non-financial), targets and performance outcomes under incentive plans for
the Executive Directors and Senior Executives.
57
CORPORATE GOVERNANCE STATEMENTFREELANCER LIMITED 2015 ANNUAL REPORT Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2015
Revenue
Cost of sales
Gross profit
Employee expenses
Administrative expenses
Marketing related expenses
Occupancy expenses
Foreign exchange losses
Depreciation and amortisation expenses
Share based payments expense
Finance costs
Loss before income tax
Income tax benefit
Loss after tax
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
5
6
6
6
6
21
6
7
28
28
2015
$000
38,604
(5,125)
33,479
2014
$000
26,087
(3,360)
22,727
(17,857)
(14,307)
(7,908)
(6,919)
(2,660)
(126)
(511)
(1,164)
-
(5,398)
(2,803)
(2,077)
(241)
(338)
(388)
(1)
(3,666)
(2,826)
861
(2,805)
980
(1,847)
(54)
(2,859)
Cents
(0.64)
(0.62)
(83)
(1,930)
Cents
(0.43)
(0.42)
The above Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.
58
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFREELANCER LIMITED 2015 ANNUAL REPORT Consolidated Statement of Financial Position
As at 31 December 2015
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Other assets
Total current assets
Non-current assets
Trade and other receivables
Plant and equipment
Intangible assets
Other assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Deferred revenue
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2015
$000
2014
$000
8
9
7
10
9
11
12
10
7
13
7
14
7
14
15
16
32,246
3,359
3
823
20,210
2,750
-
661
36,431
23,621
214
1,652
23,850
601
2,865
29,182
191
1,113
12,953
488
1,822
16,567
65,613
40,188
28,423
51
1,173
808
30,455
3
248
251
21,759
4
1,120
388
23,271
1
104
105
30,706
23,376
34,907
16,812
37,310
1,218
(3,621)
34,907
17,520
108
(816)
16,812
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
59
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONFREELANCER LIMITED 2015 ANNUAL REPORT Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Contributed
equity
$000
Note
Share
based
payments
$000
Foreign
currency
translation
reserve
$000
Retained
earnings
(accumulated
losses)
$000
Total
equity
$000
Balance at 1 January 2014
17,556
33
(230)
1,031
18,389
Loss for the year
Exchange differences on translation
of foreign operations
Total comprehensive loss for the year
Transactions with owners in their capacity
as owners:
Contributions of equity arising from
repayment of ESP loans
Equity raising costs (net of tax)
relating to prior year shares issued
Share based payments
Balance at 31 December 2014
16
15
15
21
-
-
-
14
(50)
-
17,520
-
-
-
-
388
421
-
(83)
(83)
-
-
-
(1,847)
(1,847)
-
(83)
(1,847)
(1,930)
-
-
-
14
(50)
388
(313)
(816)
16,812
Contributed
equity
$000
Note
Share
based
payments
$000
Foreign
currency
translation
reserve
$000
Accumulated
losses
$000
Total
equity
$000
Balance at 1 January 2015
17,520
421
(313)
(816)
16,812
Loss for the year
Exchange differences on translation
of foreign operations
16
Total comprehensive loss for the
year
Transactions with owners in their capacity
as owners:
Contributions of equity arising from
repayment of ESP loans
Issue of ordinary shares
Equity raising costs (net of tax)
Share based payments
Balance at 31 December 2015
15
15
15
21
-
-
-
118
20,000
(328)
-
37,310
-
-
-
-
-
1,164
1,585
-
(54)
(54)
-
-
-
-
(2,805)
(2,805)
-
(54)
(2,805)
(2,859)
-
-
-
-
118
20,000
(328)
1,164
(367)
(3,621)
34,907
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
60
CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFREELANCER LIMITED 2015 ANNUAL REPORT Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Note
2015
$000
2014
$000
Cash flows from operating activities
Receipts from customers (inclusive of GST and VAT)
Payments to suppliers and employees (inclusive of GST and VAT)
Interest received
Interest paid
Income taxes refunded / (paid)
38,511
(37,228)
170
-
5
Net cash inflow / (outflow) from operating activities
27
1,458
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Payments for other assets
Payments for acquisition of subsidiary, net of cash acquired
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Contributions of equity arising from repayment of ESP loans
Equity raising costs
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
24
15
16
8
(967)
(8)
-
(10,258)
(11,233)
20,000
118
(468)
19,650
9,875
(5,150)
20,210
2,161
32,246
24,387
974
20,210
26,105
(26,210)
206
(1)
(195)
(94)
(890)
(43)
(374)
(3,691)
(4,998)
-
14
(71)
(57)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
61
CONSOLIDATED STATEMENT OF CASH FLOWSFREELANCER LIMITED 2015 ANNUAL REPORT Notes to the financial statements for the financial year ended 31 December 2015
TABLE OF
CONTENTS
1. Reporting entity
2. Basis of preparation
3. Financial risk management
4. Operating segments
5. Revenue
6. Expenses
7. Income tax
8. Cash and cash equivalents
9. Trade and other receivables
10. Other Assets
11. Plant and equipment
12. Intangible assets
13. Trade and other payables
14. Provisions
15. Contributed entity
63
63
64
68
69
70
71
74
74
75
75
77
79
79
80
16. Equity - Reserves
17. Key management
personnel disclosures
18. Remuneration of auditors
19. Contingent liabilities
20. Commitments for expenditure
21. Share based payments
22. Related party transactions
23. Parent entity information
24. Business combinations
25. Interests in controlled entities
26. Events occuring after
the reporting date
27. Reconciliation of loss after tax
to net cash flow from
operating activities
28. Earnings per share (EPS)
29. Other significant
accounting policies
81
81
82
83
83
84
87
88
89
90
91
91
91
92
6262
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 1. Reporting entity
Freelancer Limited (the Company) is a company domiciled in Australia. The address of the Company’s registered office is Level
20, 680 George Street, Sydney, NSW, 2000. The consolidated financial statements of the Company as at and for the year ended 31
December 2015 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities).
The Group is a for-profit entity and primarily is involved in operating an online marketplace for services and providing escrow
payment services. The separate financial statements of the parent entity, Freelancer Limited, have not been presented within this
financial report as permitted by the Corporations Act 2001.
The consolidated financial statements were authorised for issue by the Board on 23 February 2016.
2. Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001.
(a) Compliance with International Financial Reporting Standards
The consolidated financial statements of the Group comply with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB).
(b) Historical cost convention
The consolidated financial statements have been prepared on the historical cost basis unless otherwise stated in the notes.
Except for the cash flow information, the financial statements have been prepared on an accrual basis, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency.
(d) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in
Note 28(g).
(e) Significant accounting policies
The principal accounting policies adopted in the presentation of these consolidated financial statements are set out in the
relevant notes. The policies have been consistently applied to all the years presented, unless otherwise stated.
(f) Rounding of amounts
The Company has applied the relief available to it under ASIC Class Order 98/100. Accordingly, amounts in the financial
statements and Directors’ Report have been rounded off to the nearest $1,000.
63
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 3. Financial risk management
Financial risk management policies
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk and liquidity risk. The
Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk
to which it is exposed. These methods include sensitivity analysis in the case of interest rate and other price risks and ageing
analysis for credit risk.
Risk management is carried out by senior finance executives (Finance) under policies approved by the Board of Directors (Board).
These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk
limits. Finance identifies, evaluates and hedges financial risks within the Group’s operating units.
The Group holds the following financial instruments:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Total financial liabilities
Note
2015
$000
2014
$000
8
9
13
32,246
3,573
35,819
20,210
2,941
23,151
28,423
28,423
21,759
21,759
The carrying value of the assets and liabilities disclosed in the table above closely approximates or equals their fair value. The
carrying amounts of trade receivables and trade and other payables are assumed to approximate their fair values due to their
short-term nature.
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the
instrument. For financial assets, this is equivalent to the date that the Group commits itself to either purchase or sell the asset
(i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair
value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost. Where
available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are
adopted.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less
principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between
that initial amount and the maturity amount calculated using the effective interest method.
64
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to
the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums
or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument
to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate
an adjustment to the carrying amount with a consequential recognition of an income or expense item in profit or loss.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the
fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing
models.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of Accounting Standards specifically applicable to financial instruments.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the
amortisation process and when the financial asset is derecognised.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments,
and it is the Company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses
are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been
impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future cash
flows of the financial asset(s).
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Company
recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been
renegotiated so that the loss events that have occurred are duly considered.
65
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (a) Market risk
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currencies.
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The Group has not entered into forward foreign exchange contracts to protect against exchange rate movements. The Directors
are of the view that the cost of hedging the Group’s short-term foreign exchange exposure outweighs the risk of adverse currency
movements.
The Group’s exposure to foreign currency exchange risk at the reporting date, expressed in each currency, was as follows:
2015
Currency
Exposure:
Denominated in:
Cash
Trade
receivables
Other
financial
assets
Payables
User
obligations
AUD
AUD
000’s
USD
USD
000’s
9,722
11,785
363
1,572
99
40
(220)
(1,852)
NZD
GBP
NZD
000’s
148
18
-
-
GBP
000’s
926
133
6
(10)
HKD
HKD
000’s
1235
301
-
-
SGD
SGD
000’s
PHP
PHP
000’s
EUR
CAD
EUR
000’s
340
18,667
1,115
61
4,897
187
INR
INR
000’s
38,678
6,890
Other
AUD
000’s
148
88
CAD
000’s
619
92
5
14,441
9
-
-
(7)
(5,951)
(3)
(227)
(6)
(1,692)
(13,802)
(114)
(593)
(470)
(214)
(903)
(1,234)
(529)
(25,599)
(276)
Net exposure
8,272
(2,257)
52
462
1,066
185
31,151
68
188
19,742
(46)
2014
Currency
Exposure:
Denominated in:
Cash
Trade
receivables
Other
financial
assets
Payables
User
obligations
NZD
GBP
HKD
SGD
AUD
AUD
000’s
USD
USD
000’s
2,182
12,371
352
1,694
79
-
(553)
(882)
NZD
000’s
181
15
-
-
GBP
000’s
401
60
6
(5)
HKD
000’s
578
50
-
-
PHP
PHP
000’s
7,739
2,992
EUR
CAD
EUR
000’s
498
114
CAD
000’s
308
42
SGD
000’s
215
29
5
19,145
(6)
(4,882)
-
-
9
-
INR
INR
000’s
Other
AUD
000’s
15,688
2,504
-
79
9
-
(401)
(6)
(1,359)
(12,750)
(87)
(444)
(238)
(142)
(597)
(727)
(349)
(16,166)
(127)
Net exposure
700
433
110
17
390
101
24,397
(115)
10
1,625
(45)
The Group had net liabilities of $185,000 denominated in foreign currencies as at 31 December 2015 (comprising assets of
$26,310,000 less liabilities of $26,495,000). The Group had net assets of $1,801,000 denominated in foreign currencies as at 31
December 2014 (comprising assets of $21,648,000 less liabilities of $19,847,000).
The analysis below reflects management’s view of possible movements in relevant foreign currencies against the Australian
dollar in the short term subsequent to 31 December 2015. The table summarises the range of possible outcomes that would
affect the Group’s net profit and equity as a result of foreign currency movements on year end foreign denominated assets and
liabilities.
66
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT The impact of potential movements in exchange rates on the profit or loss is as follows:
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
(Range +5% to -5%)
2015 $000
2014 $000
High
147
(2)
(44)
(9)
(9)
(43)
(5)
(9)
(19)
7
Low
(163)
3
49
10
9
48
5
10
22
(7)
High
(25)
(5)
(2)
(3)
(5)
(54)
8
-
(1)
(88)
Low
28
6
2
3
5
59
(9)
-
2
97
AUD to USD
AUD to NZD
AUD to GBP
AUD to HKD
AUD to SGD
AUD to PHP
AUD to EUR
AUD to CAD
AUD to INR
Net movement
Price risk
The Group is not exposed to significant equities price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk.
Cash balances
As at 31 December 2015 the Group had $32,246,000 (2014: $20,210,000) held in bank accounts and online wallets. The
Group’s cash balances are predominantly held in interest bearing bank accounts. Funds that are excess to short term liquidity
requirements are generally invested in short term deposits.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net
of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
Credit risk is managed by a risk assessment process for all customers, which takes into account past experience.
(c) Liquidity risk
Liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to
pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash
flows and matching the maturity profiles of financial assets and liabilities.
Financing arrangements
The Group does not have any borrowing facilities in place at the reporting date.
67
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Maturities of financial liabilities
The following table details the Group’s remaining contractual maturity for its financial instrument liabilities. The table has been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities
are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities
and therefore these totals may differ from their carrying amount in the statement of financial position.
2015
Non-derivatives
Non-interest bearing
Trade and other payables
2014
Non-derivatives
Non-interest bearing
Trade and other payables
1 year or
less
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
Over
5 years
$000
Note
Remaining
contractual
maturities
$000
13
13
28,423
28,423
21,759
21,759
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Trade and other payables are payable as and when they are due. The cash flows in the maturity analysis above are not expected
to occur significantly earlier than disclosed.
4. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. These include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly corporate assets (primarily the Company’s headquarters), head office expenses, and income
tax assets and liabilities. The Board of Directors are identified as the chief operating decision makers (CODM).
Identification of reportable operating segments
Until 31 October 2015, the Group was organised into one operating segment, namely an online marketplace. From 1 November
2015, on the completion of the acquisition of the business of Escrow.com, the Group is organised into two operating segments:
namely an online marketplace and online payment services. These segments are based on the internal reports that are reviewed
and used by the CODM in assessing performance and in determining the allocation of resources (AASB 8 para. 5(b)).
The CODM assess the performance of the operating segments based on a measure of revenue and operating EBITDA (earnings
before share based payments, 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 Group operates predominantly in Australia, where substantially all online revenues and expenses are incurred. Although
the Group has staff and operations in Philippines, United Kingdom, United States and Canada in addition to Australia, these
geographic operations are considered, based on internal management reporting and the allocation of resources by the Group’s
CODM, as one geographic segment.
The information reported to the CODM is at least on a monthly basis.
68
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Year end 31 December 2015
Segment revenue
Segment revenue
Total segment revenue
Segment result
Segment loss
Share based payments
Depreciation and amortisation expenses
Loss before income tax
Income tax benefit
Loss for year
Segment Assets
At 31 December 2015
Segment assets
Intergroup eliminations
Deferred tax assets
Intangibles
Total assets
Segment liabilities
At 31 December 2015
Segment liabilities
Intergroup eliminations
Deferred tax liabilities
Total Liabilities
Online
Marketplace
Online
payment
services
Total
36,769
36,769
1,835
1,835
38,604
38,604
(1,886)
(106)
38,632
(1,432)
3,098
37,200
3,098
(1,992)
(1,164)
(510)
(3,666)
861
(2,805)
41,730
(1,432)
2,865
22,450
65,613
(29,943)
(2,192)
(32,135)
1,432
1,432
(3)
(29,943)
(760)
(30,706)
No segment reporting is provided for 2014 as the Group was organised into one operating segment, namely an online
marketplace.
5. Revenue
The Company’s net revenues result from transaction and other fees generated in its online marketplaces and in providing online
escrow payment services. Revenues are recognised when evidence of an arrangement exists, the fee is fixed and determinable,
no significant obligation remains and collection of the receivable is reasonably assured. Amounts disclosed as revenue are net of
refunds and amounts collected on behalf of third parties. Where services have not been provided but the Company is obligated
to provide the services in the future, revenue recognition is deferred. Provision for doubtful accounts and transaction losses are
made at the time of revenue recognition based on the Company’s historical experience. The provision for doubtful accounts and
transaction losses are recorded as charges to cost of sales.
69
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Revenue is recognised for the major business activities as follows:
Marketplace and payment services
Marketplace and escrow fees are recognised once the services have been completed and no significant obligation remains.
Interest income
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent
in the instrument.
Government grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant
conditions will be met.
All revenue is stated net of the amount of goods and services tax (GST) and Valued Added Tax (VAT).
Sales revenue
Marketplace and payment services
Other revenue
Interest income
Government grants
Other
Total revenue
6. Expenses
Loss before income tax benefit includes the following specific net losses and expenses:
Employee expense
Wages and salaries (including superannuation)
Other employment costs
Total employee expenses
Depreciation and amortisation
Plant and equipment
Leasehold improvements
Total depreciation and amortisation expenses
Rental expense relating to operating leases
Minimum lease payments
Rent recovery from sub-lease agreement
Net rental expense relating to operating leases
2015
$000
2014
$000
38,222
25,726
181
159
42
179
150
32
38,604
26,087
2015
$000
2014
$000
15,527
2,330
17,857
12,375
1,932
14,307
361
150
511
2,924
(264)
2,660
234
104
338
2,187
(110)
2,077
Net foreign exchange losses
126
241
Finance costs
Interest expense
-
1
70
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Total employee benefits expenses are inclusive of:
Short-term obligations
Employee benefits that are expected to be settled within 12 months have been measured at the amounts expected to be paid
when the liabilities are settled, plus related on-costs. The liability for annual leave is recognised in the provision for employee
benefits. All other short-term employee benefit obligations are presented as payables.
Other long–term employee benefit obligations
Employee benefits payable later than 12 months have been measured at the present value of the estimated future cash outflows
to be made for those benefits. In determining the liability, consideration is given to employee wages increases and the probability
that the employee may satisfy any vesting requirements. Those cash flows are discounted using market yields on national
government bonds with terms to maturity that match the expected timing of cash flows attributable to employee benefits.
Short term incentive plans
The Group recognises a liability and an expense for bonuses payable under short term incentive plans. Short term incentive
plans are based on the achievement of targeted performance levels that may be set at the beginning of each financial year. The
Group recognises a liability to pay out short term incentives when contractually obliged based on the achievement of the stated
performance levels, or where there is a past practice that has created a constructive obligation.
7. Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
applicable tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company’s subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss
• temporary differences related to investments in subsidiaries, associates and jointly controlled entities to the extent that the
Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future
• taxable temporary differences arising on the initial recognition of goodwill.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the
end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
71
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and
whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a
series of judgements about future events. New information may become available that causes the Group to change its judgement
regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the tax expense in the period that such
a determination is made.
The Company and its wholly-owned Australian resident entities are part of a tax consolidated group. As a consequence, all
members of the tax-consolidated group are taxed as a single entity. The head entity within the tax-consolidated group is
Freelancer Limited.
(a) Income tax
Current tax
Deferred tax
Under provision in prior years
Income tax (benefit)
Deferred income tax expense included in income tax benefit comprises:
(Increase) in deferred tax assets
Increase / (Decrease) in deferred tax liability
Total deferred income tax
(b) Numerical reconciliation of income tax benefit to prima facie income tax payable
Loss from ordinary activities before income tax expense
Tax at the Australian rate of 30%
Tax effect amounts which are not deductible / (taxable) in calculating taxable income:
R&D tax incentive
Difference in tax rate
Share based payments
Over provision in prior years
Future benefit of foreign losses
Other non allowable items
Income tax (benefit)
(c) Amounts recognised directly in equity
Deferred tax associated with capital raising
2015
$000
2014
$000
40
(901)
-
(637)
(337)
(6)
(861)
(980)
(902)
1
(901)
(323)
(14)
(337)
(3,666)
(2,826)
(1,100)
(848)
(259)
(163)
349
49
16
247
(861)
(250)
55
117
(6)
(83)
36
(980)
183
104
72
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (d) Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Provision for user disputes & refunds
Legal fees
Capital raising costs
Foreign exchange losses
Intangible assets
Provision for impairment of receivables
Audit fees
Future benefit of tax losses
Future benefit of foreign tax losses
Total amounts recognised in profit or loss
Amounts recognised directly in equity:
Capital Raising Costs
Total amounts recognised in equity
Net deferred tax assets
Movements:
Opening balance at beginning of year
Credited to the profit or loss statement
Credited to equity
Closing balance at end of year
(e) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Fixed assets
Net deferred tax liabilities
Movements:
Opening balance at beginning of year
Credited to the profit or loss statement
Closing balance at end of year
(f) Current tax liabilities
Current tax liabilities
(g) Current tax assets
Current tax assets
(h) Franking credits
Franking credits available at the reporting date based on a tax rate of 30%
2015
$000
2014
$000
221
152
24
47
(15)
129
464
67
1,540
53
195
75
85
71
36
101
368
73
632
83
2,682
1,718
183
183
104
104
2,865
1,822
1,822
964
79
806
995
21
2,865
1,822
3
3
1
2
3
3
51
121
1
1
15
(14)
1
-
4
-
73
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Freelancer Limited and its wholly-owned Australian entities elected to form an income tax consolidated group as of 12 April 2010.
8. Cash and cash equivalents
For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with
banks, 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, and bank overdrafts.
Current
Cash at bank on hand
Term deposits
Total cash and cash equivalents
9. Trade and other receivables
2015
$000
2014
$000
24,883
18,966
7,363
1,245
32,246
20,210
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment. This provision includes amounts that are not considered to be recoverable from debtors
and amounts that are expected to be credited to debtors. Trade receivables are generally due for settlement no more than 30 days
from the date of recognition. They are presented as current assets unless collection is not expected for more than 12 months
after the reporting date.
Collectability of trade receivables is reviewed on an ongoing basis. A provision for impairment of trade receivables is established
when there is objective evidence that the Group 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 is impaired. In addition,
the trade receivables balances are considered for credit notes that are expected to be raised against individual and collective
balances.
Current
Trade receivables
Less: provisions for impairment of trade receivables
Current trade receivables net of provisions for impairment
Payment gateway receivables
Other receivables
Total current trade and other receivables
Non-Current
Payment gateway receivables
Total trade and other receivables
2015
$000
2014
$000
1,900
1,456
(1,545)
(1,205)
355
251
2,981
2,489
23
10
3,359
2,750
214
191
3,573
2,941
74
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (a) Provision for impaired trade receivables
Opening balance
(Decrease)/Increase in provisions for impairment during the year
Exchange differences
Closing balance
(b) Ageing of current trade receivables
1-30 days
31-60 days
61-90 days
90+ days
Provision for impairment
Total trade receivables net of provision for impairment
10. Other Assets
Current
Prepayments
Security deposits
Other
Total current other assets
Non-Current
Security deposits
Total non-current other assets
Total other assets
11. Plant and equipment
2015
$000
2014
$000
1,205
(79)
419
701
283
221
1,545
1,205
273
168
175
1,284
220
170
139
927
(1,545)
(1,205)
355
251
2015
$000
2014
$000
720
-
103
823
601
601
513
73
75
661
488
488
1,424
1,149
Plant and equipment is stated at historical cost less depreciation, amortisation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received
from the asset’s employment and subsequent disposal. The expected net cash flows have not been discounted in determining
recoverable amounts.
Depreciation of all fixed assets is calculated using the straight-line method to allocate their cost, net of their residual values, over
their estimated useful lives, as follows:
Fixes and fittings
Motor vehicles
Office and computer equipment
Software
Leasehold improvements
4-5 years
4 years
4-5 years
3 years
shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements
75
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are
recognised in the profit and loss in the period in which they arise. When revalued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to retained earnings.
Non-current
Office and computer equipment – at cost
Accumulated depreciation
Carrying value of office and computer equipment
Fixtures and fittings – at cost
Accumulated depreciation
Carrying value of fixtures and fittings
Motor vehicles – at cost
Accumulated depreciation
Carrying value of motor vehicles
Software – at cost
Accumulated depreciation
Carrying value of software
Leasehold improvements – at cost
Accumulated amortisation
Carrying value of leasehold improvements
Total carrying value of plant and equipment
2015
$000
2014
$000
1,632
(736)
896
439
(233)
206
42
(42)
-
19
(7)
12
809
(245)
564
330
(108)
222
42
(42)
-
6
(6)
-
876
(338)
538
462
(135)
328
1,652
1,113
76
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Reconciliations
Reconciliations of the carrying amount of plant and equipment and leasehold improvements at the beginning and end of the
current financial year are set out below:
Office &
computer
equipment
$000
Fixtures and
fittings
$000
Motor
Vehicles
$000
Software
$000
Leasehold
improvements
$000
324
394
(2)
(152)
564
600
(15)
(253)
896
172
132
(9)
(74)
222
91
-
(107)
206
8
-
-
(8)
-
-
-
-
-
1
-
-
-
-
14
-
(2)
12
Balance at 1 January 2014
Additions
Disposals
Depreciation and amortisation
Balance at 31 December 2014
Additions
Disposals
Depreciation and amortisation
Balance at 31 December 2015
12. Intangible assets
Goodwill
Total
$000
561
919
(28)
(339)
1,113
57
393
(18)
(104)
328
360
1,065
-
(150)
538
(15)
(511)
1,652
Goodwill is initially recorded at the amount by which the purchase price for a business combination exceeds the fair value
attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities acquired at date of
acquisition. Goodwill is not amortised. Instead goodwill is tested for impairment annually or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
Domain Names
Domain names are valued at cost of acquisition. Domain names are tested for impairment annually or more frequently if events
or changes in circumstances indicate that it might be impaired, either individually or at the cash generating unit level. Useful lives
are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Intellectual Property
Intellectual property is valued at cost of acquisition. Intellectual property is tested for impairment annually or more frequently
if events or changes in circumstances indicate that it might be impaired, either individually or at the cash generating unit level.
Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Trademarks
Trademarks are valued at cost of acquisition and are amortised on a straight line basis over the period in which the benefits are
expected to be realised. Trademarks are tested for impairment where an indicator of impairment exists, either individually or at
the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on
a prospective basis.
77
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Non-current
Domain names - at cost
Accumulated impairment
Carrying value of domain names
Intellectual property – at cost
Accumulated impairment
Carrying value of intellectual property
Goodwill
Accumulated impairment
Carrying value of goodwill
Total carrying value of intangible assets
Reconciliations
2015
$000
2014
$000
3,083
(28)
3,055
1,400
-
1,400
3,075
(28)
3,047
-
-
-
19,395
9,906
-
-
19,395
9,906
23,850
12,953
Reconciliations of the carrying amount of intangible assets at the beginning and end of the current and previous financial year are
set out below:
Balance at 1 January 2014
Additions
Impairment
Amortisation
Balance at 31 December 2014
Additions
Additions and acquisitions through
business combinations
Impairment
Amortisation
Domain
names
$000
2,824
223
-
-
3,047
8
-
-
-
Intellectual
Property
$000
-
-
-
-
-
-
1,400
-
-
Goodwill
$000
6,062
3,843
-
-
Total
$000
8,886
4,067
-
-
9,906
12,953
9,489
9,497
-
-
-
1,400
-
-
Balance at 31 December 2015
3,055
1,400
19,395
23,850
The Directors have determined the useful life of domain names is indefinite and subject to an annual test for impairment of the
fair value of the domain names. The Directors have assessed the recoverability of domain names and goodwill based on value in
use calculations.
The recoverable amount of the Group’s intangible assets has been determined by a value-in-use calculation using a discounted
cash flow model, based on a 12 month projection period for the Group approved by management and extrapolated for a further 5
years with a discounted terminal value.
Key assumptions used in the discounted cash flow model in relation to the intangibles included a 30% pre-tax discount rate and
2.5% terminal growth rate. The discount rate of 30% pre-tax reflects management’s estimate of the time value of money and
the Group’s weighted average cost of capital adjusted for the risk free rate and the volatility of the share price relative to market
movements.
78
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Based on the above, management is satisfied that there are no indicators of impairment to the current carrying value of intangible
assets.
13. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group and amounts outstanding to users of the
Company’s websites at the end of financial year which are unpaid. The amounts are unsecured and are payable as and when
they are due. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the
reporting date.
Current
Trade payables
Sundry payables and accrued expenses
User obligations
Total trade and other payables
14. Provisions
2015
$000
2014
$000
2,375
1,383
617
412
25,431
19,965
28,423
21,759
Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions recognised
represent the best estimate of the amounts required to settle the obligation at reporting date.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower
than the unavoidable cost of meeting the obligations under the contract. The provision is stated at the present value of the future
net cash outflows expected to be incurred in respect of the contract.
Current
Provision for user disputes and refunds
Employee benefits
Other
Total current provisions
Non-Current
Make good provisions
Employee benefits
Total non-current provisions
Total provisions
2015
$000
2014
$000
508
665
-
250
734
137
1,173
1,120
140
108
248
57
48
104
1,421
1,225
79
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 15. Contributed Equity
(a) Share Capital
Note
2015
Number
2014
Number
2015
$000
2014
$000
Ordinary shares
Fully paid
Total share capital
15(b)
457,294,618
436,330,004
37,310
17,520
37,310
17,520
(b) Movements in ordinary share capital
Reconciliation to 31 December 2014
Balance at 1 January 2014
Capitalised equity raising costs (net of tax)
Issue/(cancellation) of ordinary shares:
Issue of ESP shares1
Buy-back and cancellation of ESP shares
Contributed equity arising from repayment of ESP loans
Balance at 31 December 2014
Reconciliation to 31 December 2015
Balance at 31 December 2014
Capitalised equity raising costs (net of tax)
Issue / (cancellation) of ordinary shares:
Issue of ordinary shares - placement
Issue of ordinary shares - placement
Issue of ordinary shares under incentive plan
Issue of ESP shares1
Buy-back and cancellation of ESP shares
Number of
Shares
Average
Price
$000
436,000,000
-
2,675,000
(2,344,996)
-
436,330,004
17,556
-
(50)
$1.25
$1.03
-
-
-
14
17,520
Number of
Shares
Average
Price
$000
436,330,004
-
10,000,000
7,142,857
325,000
5,855,000
(2,358,243)
17,520
-
(328)
$1.00
$1.40
$0.00
$1.03
$0.82
10,000
10,000
-
-
-
Contributed equity arising from repayment of ESP loans
-
-
118
Balance at 31 December 2015
457,294,618
37,310
1. As the ESP is considered in substance a share option, the ESP shares issued and corresponding loan receivables are not recognised by the Group in its financial
statements. The loan receivable does not satisfy the “probable future benefits following to the entity” criteria on the basis that the loan is non-recourse. The ESP shares
will not be considered issued to participants until the corresponding loan has been repaid, at which time there will be an increase in the issued capital and increase in
cash.
(c) Ordinary shares
Ordinary shares have the right to receive dividends as declared, and, in the event of winding up the Company, to participate in the
proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares
entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(d) Employee Share Plan (ESP)
Information relating to the ESP, including details of shares issued under the plan, is set out in Note 21.
80
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (e) Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide
returns to shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt. The Group would look to raise capital when an opportunity
to invest in a business or company was seen as value adding relative to the current parent entity’s share price at the time of the
investment. The Group actively pursues additional investments as part of its growth strategy.
The capital risk management policy remains unchanged from the 2014 Annual Report.
16. Equity Reserves
(a) Movements
Share based payment reserve movements
Balance at the beginning of the period
Share based payment expense
Balance at the end of the period
Foreign currency translation reserve movements
Balance at the beginning of the period
Currency translation differences arising during the period
Balance at the end of the period
Total reserves
(b) Nature and purpose of reserves
Share-based payments reserve
2015
$000
2014
$000
421
1,164
1,585
(313)
(54)
(367)
33
388
421
(230)
(83)
(313)
1,218
108
This amount represents the value of the ESP share grants to employees under the Freelancer Employee Share Plan and other
compensation granted in the form of equity.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of its overseas subsidiaries.
17. Key management personnel disclosures
(a) Directors
The following persons were Directors of Freelancer Limited during the financial year:
• Mr Robert Matthew Barrie – Executive Chairman
• Mr Darren Nicholas John Williams – Non-Executive Director (Executive Director until 31 October 2015)
• Mr Simon Alvin Clausen – Non-Executive Director
81
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (b) Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of the
Group, directly or indirectly, during the financial year:
• Mr Neil Leonard Katz – Chief Financial Officer and Company Secretary
(c) Key management personnel compensation
Short-term employee benefits
Share based employee benefits
Other long term benefits
Total benefits
Short-term employee benefits
2015
$000
1,091
69
76
2014
$000
982
56
73
1,236
1,111
These amount include fees and benefits paid to the Non-Executive Directors as well as all salary, paid leave benefits, fringe
benefits and cash bonuses awarded to Executive Directors and other KMP.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year, long-term disability benefits and deferred bonus
payments.
Share based payments
These amounts represent the expense related to the participation of KMP in equity-settled schemes as measured by the fair value
of the options rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the Remuneration Report, which is included in the Director’s
Report.
18. Remuneration of auditors
During the year the following fees were paid for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
(a) Hall Chadwick
Audit and other assurance services
Audit and review of financial reports
Taxation services
Tax compliance services, including review of Company income tax returns
Total remuneration of Hall Chadwick
(b) Audit firms other than Hall Chadwick
Audit and other assurance services
Audit and review of financial reports
Taxation services
Tax compliance services, including review of subsidiary income tax returns
Total remuneration of audit firms other than Hall Chadwick
Total auditors remuneration
2015
$000
2014
$000
104
101
24
128
38
139
44
22
66
29
11
39
194
178
82
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 19. Contingent liabilities
Except for the items listed below, there are no other contingent liabilities as at 31 December 2015:
• a collateral amount of USD100,000 (2014: USD100,000) is in place in one of the Group’s PayPal accounts in favour of PayPal
Australia Pty Ltd;
• term deposits of $47,488 (2014: $20,000) are secured for corporate credit card facilities in place;
• deposits of $756,000 (2014: $567,000) are held by various credit card processing providers, as security for any contractual
compensation arising under these agreements;
• included in cash is an amount of $724,000 on term deposit, which is secured against a bank guarantee that has been provided
to the lessor in respect of premises occupied by the Company at Level 20, 680 George Street Sydney.
• included in cash is an amount of USD455,000, which is secured in connection with surety bonds in place with certain regulators
in the US.
• Included in cash is an amount of USD180,000, which is held as a reserve to satisfy escrow regulatory requirements in respect
of credit card transactions.
20. Commitments for expenditure
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are
classified as operating leases. Leases are made up of operating leases of property. Payments made under operating leases (net
of any incentives received from the lessor) are charged to the consolidated profit or loss statement on a straight-line basis over
the period of the lease. Benefits that are provided to the Group as an incentive to enter into a lease arrangement are recognised as
a liability and amortised on a straight-line basis over the life of the lease.
Where the Group acts as lessor in an operating lease arrangement, rental income from operating leases is accounted for on a
straight-line basis over the period of the lease. Lease incentives provided are recognised over the lease term on a straight-line
basis.
(a) Non-cancellable operating leases
The Group has entered into commercial leases for office property. As at 31 December 2015 these leases had remaining lives
ranging from 3 months up to 52 months. Rentals paid under operating leases are charged to the income statement on a
straight line basis over the period of the lease. Future minimum rentals payable under non-cancellable operating leases as at 31
December are as follows:
Less than one year
Between one and five years
More than five years
Total operating lease commitments
(b) Other capital commitments
There were no capital commitments as at 31 December 2015
2015
$000
2,216
5,725
-
2014
$000
2,338
6,998
372
7,941
9,709
83
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 21. Share based payments
The Group operates an employee share plan. The fair value of the effective option over the shares granted under the Company’s
Employee Share Plan (ESP) is recognised as an employee benefit expense with a corresponding increase in equity. The fair value
is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the ESP
shares.
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the
exercise price, the term of the ESP shares, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of
the ESP share, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and
the risk-free interest rate for the term of the ESP share.
The fair value of share grants issued outside of the ESP is independently determined based on the value of the shares at grant
date less the present value of dividends expected to be distributed between the grant date and the vesting dates.
During the year ended 31 December 2013, the Company established a share based payment plan, the Employee Share Plan (ESP)
to assist the Company in retaining and attracting current and future employees by providing them with the opportunity to own
shares in the Company.
The key terms of the ESP are as follows:
• the Board may invite a person who is employed or engaged by or holds an office with the Group (whether on a full or part-time
basis) and who is declared by the Board to be eligible to participate in the ESP from time to time (Eligible Employee) to apply for
fully paid ordinary shares under the plan from time to time (ESP shares);
• invitations to apply for ESP shares offered to Eligible Employees subsequent to the Company’s initial public offering are to be
made on the basis of the market price per share defined as the volume weighted average price at which the Company’s shares
have traded during the 30 days immediately preceding the date of the invitation;
• invitations to apply for ESP shares under the ESP will be made on a basis determined by the Board (including as to the
conditionality on the achievement of any key performance indicators) and notified to Eligible Employees in the invitation, or if no
such determination is made by the Board, on the basis that ESP shares will be subject to a 4 year vesting period, with:
•
•
25% of ESP shares applied for vesting on the date that is the first anniversary of the issue date of the ESP shares; and
1/36th of the remaining number of ESP shares vesting on the last day of each calendar month commencing in the
following calendar month.
• Eligible Employees who accept an invitation (ESP Participants) may be offered an interest free loan from the Company to
finance the whole of the purchase of the ESP shares they are invited to apply for (ESP Loan). ESP Loans will have a term of 4
years and become repayable in full on the earlier of:
•
•
the fourth anniversary of the issue date of the Employee Offer Shares; and
if the ESP Participant ceases to be an Eligible Employee, either:
•
•
the date 30 days after the date of cessation, if the Eligible Employee is a good leaver (as defined in the ESP); or
that date of cessation, if the Eligible Employee is a bad leaver (as defined in the ESP).
• if the ESP Participant does not repay the outstanding ESP Loan, or it notifies the Company that it cannot, then such number of
ESP shares that equal by value (using the price at which the ESP shares were issued) the outstanding amount of the ESP Loan
will become the subject of a buy-back notice from the Company which the ESP Participant must accept. The buy-back of such
number of ESP shares will be considered full and final satisfaction of the ESP Loan and the Company will not have any further
recourse against the ESP Participant;
• any dividends received by the ESP Participant whilst the whole or part of the ESP Loan remains outstanding must be applied to
the repayment of the ESP Loan. In addition, an ESP Participant may make pre-payments at any time;
84
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT • the maximum number of ESP shares for which invitations may be issued under the ESP together with the number of ESP
shares still to be issued in respect of already accepted invitations and that have already been issued in response to invitations
in the previous 5 years (but disregarding ESP shares that are or were issued following invitations to non-residents, that did
not require a disclosure document under the Corporations Act, or that were issued under a disclosure document under
the Corporations Act) must not exceed 5% of the total number of ordinary shares on issue in the Company at the time the
invitations are made;
• in the event of a corporate reconstruction, the Board will adjust, subject to the Listing Rules (if applicable), any one or more of
the maximum number of Shares that may be issued under the ESP (if applicable), the subscription price, the buy-back price and
the number of ESP shares to be vested at any future vesting date (if applicable), as it deems appropriate so that the benefits
conferred on ESP Participants after a corporate reconstruction are the same as the benefits enjoyed by the ESP Participants
before the corporate reconstruction. On conferring the benefit of any corporate reconstruction, any fractional entitlements to
shares will be rounded down to the nearest whole share;
• ESP Participants will continue to have the right to participate in dividends paid by the Company despite some or all of their ESP
shares not having vested yet or being subject to an ESP Loan. If an ESP Loan has been made to the ESP Participant, then any
dividend due must first be applied to reducing any outstanding ESP Loan amount applicable to the ESP shares on which the
dividend is paid;
• ESP shares which have not vested and/or are subject to repayment of the ESP Loan will be restricted (escrowed) from trading;
• the Company may buy-back at the issue price any ESP shares which:
•
have not vested, or are incapable of vesting at any time (including as a result of the ESP Participant failing to meet any key
performance indicators on which vesting of ESP shares is conditional); or
•
remain in escrow and/or are the subject of an ESP Loan, on the occurrence of:
•
the ESP Participant ceasing to be an Eligible Employee (unless the Board, in its sole and absolute discretion
determines otherwise, subject to any conditions that it may apply, including the repayment of any outstanding
ESP Loan); or
•
the expiration of the term of the ESP Loan.
• any bonus securities issued in relation to ESP shares which remain unvested or are subject to an ESP Loan which becomes
repayable in full will be the subject of a buy-back by the Company at the issue price for no consideration;
• on the death or permanent disability of an ESP Participant, all ESP shares held by the ESP Participant or their estate will
immediately vest subject to the repayment of any outstanding ESP Loan by the curator, executor or nominated beneficiary(ies)
(as the case may be) within 30 days of their appointment (or such longer period as the Company in its discretion may allow).
Failing such repayment, the Company will buy-back all ESP shares in respect of which there is an outstanding ESP Loan;
• the rules of the ESP and any amendment to the rules of the ESP must be in accordance with the Listing Rules and the
Corporations Act;
• if, while the Company’s shares are traded on the ASX or any other stock exchange, there is any inconsistency between the
terms of the ESP and the Listing Rules, the Listing Rules will prevail; and
• the ESP is governed by the laws of the State of New South Wales, Australia.
The full terms of the ESP are available on the Company’s website, www.freelancer.com.
85
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT
(a) ESP share grants
Set out below are summaries of ESP shares granted and issued under the plan:
Balance
at the
start of
the year
900,000
3,926,317
1,050,000
425,000
Granted /
issued
Released
from
restrictions
Forfeited /
cancelled
Balance
at the end
of the
year
Balance
of
unvested
ESP
shares
Balance
of
vested
ESP
shares
(235,836)
(883,243)
2,807,238
1,427,749
1,379,489
900,000
412,501
487,499
-
-
-
-
-
-
-
-
-
-
(1,050,000)
(425,000)
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
1,200,000
1,500,000
1,500,000
950,000
950,000
400,000
400,000
1,065,000
1,065,000
375,000
375,000
125,000
125,000
240,000
240,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
1,500,000
950,000
400,000
1,065,000
375,000
125,000
240,000
6,301,317
5,855,000
(235,836)
(2,358,243)
9,562,238
7,695,250
1,866,988
Issue
price
$0.66
$0.77
$1.01
$1.08
$1.40
$1.45
$1.76
$1.76
Grant Date
2015
14 October 2013
13 November 2013
22 May 2014
3 November 2014
20 February 2015
10 March 2015
10 April 2015
3 June 2015
12 August 2015
15 October 2015
24 November 2015
21 December 2015
Total
2014
14 October 2013
$0.50
900,000
13 November 2013
$0.50
5,100,000
-
-
-
-
900,000
637,501
262,499
(28,687)
(1,144,996)
3,926,317
2,976,211
950,106
28 February 2014
22 May 2014
3 November 2014
Total
$1.54
$1.14
$0.70
-
-
-
1,200,000
1,050,000
425,000
-
-
-
(1,200,000)
-
-
-
-
1,050,000
1,050,000
425,000
325,000
100,000
-
-
6,000,000
2,675,000
(28,687)
(2,344,996)
6,301,317
4,988,712
1,312,605
All Eligible Employees who accepted an offer of ESP shares were given an interest free loan from the Company to finance the
whole of the purchase of the ESP shares they were invited to apply for (ESP Loan).
The ESP Loans are provided to participants on a non-recourse basis and upon vesting must be repaid in order to remove trading
restrictions on vested ESP shares. The term of the ESP Loan is four years, however participants may forfeit their ESP shares if
they do not repay the ESP Loan or leave the Company. As the ESP removes the risk to participants from decreases in the share
price by limiting the maximum loan amount repayable to the value of the ESP shares disposed and waiving the ESP Loan should
the participant forfeit their ESP shares, whilst still allowing participants the rewards of any increase in share price, the Company
has effectively granted the participants an option to the ESP shares due to the ESP Loans being non-recourse. As such, this
arrangement is accounted for under AASB 2.
The assessed weighted average fair value at grant date of the effective share options granted during the financial year is $0.51
per option (2014: $0.24). Options were priced using a Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the option. The expected price volatility
of the Company’s shares is based on the historical volatility of ASX listed companies considered to be comparable
to Freelancer Limited.
86
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (b) Share grants
On 29 October 2014, the Company agreed to issue a maximum of 1,733,333 fully paid ordinary shares to certain employees. The
agreement to issue shares was made outside of the ESP.
The issue of the incentive shares will occur in several tranches, with each tranche conditional only upon the respective personnel
being in on-going employment on the respective issue dates. The issue of shares in each tranche will occur as follows:
• 325,000 shares to be issued on 1 July 2015;
• 433,333 shares to be issued on 1 July 2016;
• 433,333 shares to be issued on 1 July 2017;
• 433,333 shares to be issued on 1 July 2018; and
• 108,334 shares to be issued on 1 October 2018.
The new shares will rank equally with existing ordinary shares in the Company and the issue price of each tranche will be the 5
day volume weighted average price of the Company’s shares on the date of issue of the incentive shares.
The assessed weighted average fair value at grant date of the share grants issued is $0.705 per share (2014: $0.705). The
fair value of the share grants is determined based on the value of the shares at grant date less the present value of dividends
expected to be distributed between the grant date and the issue dates.
22. Related party transactions
(a) Parent entity
Freelancer Limited is the parent entity and ultimate controlling entity.
(b) Interests in controlled entities
Interests in subsidiaries are set out in Note 25.
(c) Transactions with key management personnel
Disclosures relating to key management personnel are set out in Note 17 and the Remuneration Report.
(d) Transactions with related parties
Receivable from and payable to related parties
There were no receivables from or payable to related parties at reporting date in relation to transactions with
related parties detailed above.
Loans to / from related parties
There were no loans to or from related parties at the reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
87
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 23. Parent entity information
The financial information for the parent entity, Freelancer Limited has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Freelancer Limited. Investments in
subsidiaries are tested for impairment whenever changes in events or circumstances indicate that the carrying amount may not
be recoverable.
Income tax consolidation legislation
Freelancer Limited and its wholly-owned Australian entities have elected to form an income tax consolidated group.
Freelancer Limited (as the head entity) and its wholly-owned Australian entities (as members of the Freelancer income tax
consolidated group) account for their own current and deferred tax amounts. These tax amounts are measured as if each entity
in the income tax consolidated group continues to be a standalone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Freelancer Limited also recognises the current tax liabilities (or assets)
assumed from its wholly-owned entities in the income tax consolidated group.
Set out below is the supplementary information about the parent entity.
Statement of comprehensive income
Loss after tax
Total comprehensive loss
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated losses
Total equity
Contingent liabilities
Parent
2015
$000
2014
$000
(572)
(572)
(339)
(339)
9,977
1,045
27,729
16,312
37,706
17,357
16
-
16
3
-
3
37,690
17,354
37,310
17,520
1,585
(1,205)
421
(587)
37,690
17,354
The parent entity had no contingent liabilities at 31 December 2015 and 31 December 2014.
Capital commitments – plant and equipment
The parent entity had no capital commitments for plant and equipment as at 31 December 2015 and 31 December 2014.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, except for investments in subsidiaries which
are accounted for at cost, less any impairment.
88
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 24. Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The business combination will be accounted for from the date that control is attained,
whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised
(subject to certain limited exceptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is
not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or
liability is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change
in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the statement of profit or loss and
comprehensive income. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
(a) Acquisition of Escrow.com group
On 24 April 2015, the Group entered into a stock and asset purchase agreement to acquire:
1. 100% of the shares in Westmor Management, Inc. a California corporation, which owns and operates the business of Escrow.
com and
2. certain intellectual property assets owned by the Westmor group.
The total purchase price was US$7.5 million and the acquisition was subject to US regulatory approvals, which were completed
on 15 October 2015, at which date the Group assumed control of the business. Escrow.com is a provider of secure online
payments. Escrow.com contributed revenues of $1.8 million for the period 1 November 2015 to 31 December 2015.
The Group has determined it impracticable to disclose the revenue and net profit/loss included in the consolidated statement of
profit or loss and other comprehensive income had the acquisition of the shares of Westmor Management, Inc. occurred at the
beginning of the reporting period. The Group has assessed that an objective determination of the revenue and net profit since the
beginning of the reporting period was not able to be made due to the integrated nature of the Group’s website operations and as
such disclosure has not been made.
Purchase consideration:
Cash
Fair value of net identifiable assets and liabilities acquired:
Cash
Deposits
Other assets
Fixed assets
Intellectual property
Payables
Deferred revenue
Provisions
Fair value of net assets and liabilities acquired:
Goodwill on acquisition
Total purchase consideration
A$000
10,501
243
56
78
82
1,400
(341)
(337)
(169)
1,012
9,489
10,501
89
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT In addition to the net identifiable assets acquired, Escrow.com held cash balance in trust amounting to A$28,270,000 at 31
October 2015, which had a corresponding liability of the same amount owing to its users. The Group has determined that trust
cash is not a resource controlled by the Group, nor does the Group derive any economic benefit from these user funds, and
therefore the Group does not have the risks and rewards of ownership of the funds. Consequently, trust assets are not recognised
as an asset in the Group’s financial statements, and neither is the corresponding trust liability recognised as a liability in the
Group’s financial statements.
25. Interests in controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in Note 29:
Name of Entity
Subsidiaries of Freelancer Limited:
Freelancer International Pty Ltd
Freelancer Technology Pty Ltd
Freelancer India Pty Ltd
Warrior Forum Pty Ltd
Warrior Technology Pty Ltd
Payments Pty Ltd
Payments International Pty Ltd
Payments Australia Pty Ltd
Payments IP Pty Ltd
Freelancer Networks (Canada) Inc.
Freelancer Outsourcing Inc
Freelancer.com Pte Limited
Freelancer Belize Limited
Freelancer International GmbH
Freemarket (Switzerland) GmbH
Freelancer Online India Private Limited
Freelancer.com Philippines, Inc.
Freelancer Outsourcing UK Limited
Freelancer (Shanghai) Information Technology Co., Ltd.
Westmor Management, Inc. *
Escrow.com, Inc. *
EC Services Corporation*
IES International, Inc. *
Internet Escrow Services, Inc. *
* Escrow.com group
Percentage
Owned (%)
Country of
incorporation
2015
2014
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Singapore
Belize
Switzerland
Switzerland
India
Philippines
United Kingdom
China
United States
United States
United States
United States
United States
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
-
-
-
-
-
90
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT 26. Events occurring after the reporting date
There are no other matters or circumstances that have arisen since 31 December 2015 that have significantly affected, or may
significantly affect:
• the aggregated entity’s operations in the future financial years, or
• the results of those operations in future financial years, or
• the aggregated entity’s state of affairs in the future financial affairs.
27. Reconciliation of loss after tax to net cash flow from operating activities
Loss for the year
Non-cash items in operating loss:
Depreciation and amortisation
Share based payments expense
Net exchange differences
Changes in operating assets and liabilities:
(Increase) in trade and other receivables
(Increase) in deferred tax assets
(Increase) in other assets
Increase in trade and other creditors
Increase / (decrease) in provision for income tax
Increase / (decrease) in deferred tax liabilities
(Decrease) / Increase in provisions for employee benefits
Increase in other provisions
Net cash inflow / (outflow) from operating activities
28. Earnings per share (EPS)
Basic earnings per share
Basic earnings per share is calculated by dividing:
2015
$000
2014
$000
(2,805)
(1,847)
511
1,164
(399)
(482)
(902)
(142)
4,440
43
2
(176)
204
1,458
338
388
38
(352)
(995)
(373)
2,149
(165)
(14)
404
334
(94)
• the profit attributable to owners of the Company, 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 year and excluding treasury shares.
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.
91
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT (a) Basic earnings per share
From operations attributable to the ordinary equity of the Com-pany
Total basic earnings per share attributable to the ordinary equity holders of the Company
(b) Diluted earnings per share
From operations attributable to the ordinary equity of the Com-pany
Total basic earnings per share attributable to the ordinary equity holders of the Company
2015
Cents
(0.64)
(0.64)
(0.62)
(0.62)
2014
Cents
(0.43)
(0.43)
(0.42)
(0.42)
(c) Reconciliation of earnings used in calculating earnings per share
$000
$000
Basic earnings per share:
Loss from continuing operations
Diluted earnings per share:
(2,805)
(1,847)
Loss attributable to the ordinary equity holders of the Company
(2,805)
(1,847)
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of ordinary
shares used in calculating diluted earnings per share:
ESP shares
Share grants
Weighted average number of ordinary shares used
in calculating diluted earnings per share
(e) Information on the classification of securities
ESP shares and share grants
2015
Shares
2014
Shares
439,834,541
430,003,380
8,282,006
1,569,497
6,640,872
299,178
449,686,044
436,943,430
ESP shares granted to employees under the ESP and shares granted to employees outside of the ESP are considered to be
potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are
dilutive. The ESP shares and share grants have not been included in the determination of basic earnings per share. Details relating
to the ESP shares are set out in Note 21.
29. Other significant accounting policies
(a) Principles of consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of Freelancer Limited and all
subsidiaries. Subsidiaries are all entities over which the Group has control. The Group controls an entity when it 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. A list of the subsidiaries is provided in Note 25.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated
on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure
uniformity of the accounting policies adopted by the Group.
92
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled
to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’
proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their
share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately
within the equity section of the statement of financial position and statement of comprehensive income.
(b) Goods and Services Tax (GST) and Valued Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST and VAT, except where the amount of GST
and VAT incurred is not recoverable from the relevant taxation authority. In these circumstances, the GST and VAT is recognised
as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated inclusive
of the amount of GST and VAT receivable or payable. The net amount of GST and VAT recoverable from, or payable to, the relevant
taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented in the cash flow statement on a gross basis. The GST and VAT components of cash flows arising from
investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash
flows included in receipts from customers or payments to suppliers.
Commitments and contingencies are disclosed net of the amount of GST and VAT recoverable from, or payable to, the relevant
taxation authority.
(c) Research & development
Costs relating to research and development of new software products are expensed as incurred until technological feasibility
in the form of a working model has been established. At such time costs may be capitalised, subject to recoverability. Software
development costs incurred subsequent to the establishment of technological feasibility have not been significant, and the Group
has not capitalised any software development costs to date.
(d) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group entities is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars, which is the parent entity’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income
to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is
recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s presentation
currency is translated as follows:
• Assets and liabilities are translated at period end exchange rates prevailing at that reporting date.
• Income and expenses are translated at average exchange rates for the period.
• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
93
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
position. The cumulative amount of these differences is reclassified into profit or loss in the period in which the operation is
disposed of.
(e) Impairment of assets
At the end of each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether
there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset,
being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess
of the asset’s carrying value over its recoverable amount is recognised immediately in the profit or loss.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of
the cash generating unit to which the asset belongs.
(f) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the
current financial year.
Where the Group has retrospectively applied an accounting policy, made a retrospective restatement or reclassified items in its
financial statements, an additional statement of financial position as at the beginning of the earliest comparative period will be
disclosed.
(g) Critical accounting estimates and judgments
The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group. The resulting accounting estimates will, by definition, seldom equal
the related actual results. The estimates and judgements that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
Business Combinations
Following the guidance in AASB 3: Business Combinations, the Group has made assumptions and estimates to determine the
purchase price of businesses acquired as well as its allocation to acquired assets and liabilities. To do so, the Group is required
to determine at the acquisition date fair value of the identifiable net assets acquired, including intangible assets such as brand,
customer relationships and liabilities assumed. Goodwill is measured as the excess of the fair value of the consideration
transferred including the recognised amount of any non-controlling interest over the net recognised amount of the identifiable
assets and liabilities.
The assumptions and estimates made by the Group have an impact on the asset and liability amounts recorded in the financial
statements. In addition, the estimated useful lives of the acquired amortisable assets, the identification of intangible assets and
the determination of the indefinite or finite useful lives of intangible assets acquired will have an impact on the Group’s future
profit or loss.
Impairment of intangible assets
The Group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to
impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use
calculations performed in assessing recoverable amounts incorporate a number of key estimates. During the year ended 31
December 2015, no impairment has been recognised in respect of intangible assets. The Group assessed recoverability of
goodwill based on the present value of cash flow projections over a 6 year period. Should any of the intangible assets fail to
perform, an impairment loss would be recognised up to the maximum carrying value of intangible assets at 31 December 2015 of
$23,850,000 (2014: $12,953,000).
94
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT Provisions for doubtful accounts and transaction losses
Provision is made in respect of the Group’s best estimate of doubtful accounts and transaction losses based on historical
experience.
Share based payments
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined with the assistance of an external valuation with
the assumptions detailed in Note 21. The accounting estimates and assumptions relating to equity settled share based payments
would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact
expenses and equity.
Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Judgment is required in
determining the worldwide provision for income taxes. There are transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the
Group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is
made.
Deferred tax assets
Deferred tax assets are recognised for deductible temporary differences and unused tax losses as management considers that
it is probable that future taxable profits will be available to utilise those temporary differences and unused tax losses. Significant
management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits.
Trust assets and liabilities
The Group’s online payment services segment, namely the business of Escrow.com, is a regulated entity that holds funds on
behalf of its users in trust bank accounts. At 31 December 2015 the cash balance in trust amounted to A$26,952,000, which has a
corresponding liability of the same amount owing to its users.
The Group has determined that trust cash is not a resource controlled by the Group, nor does the Group derive any economic
benefit from these user funds, and therefore the Group does not have the risks and rewards of ownership of the funds.
Consequently, trust assets are not recognised as an asset in the Group’s financial statements, and neither is the corresponding
trust liability recognised as a liability in the Group’s financial statements.
(h) Changes in accounting policies
The accounting policies applied by the Group in this consolidated financial report are the same as those applied by the Group in
its consolidated financial report for the year ended 31 December 2014.
(i) New Accounting Standards for application in future periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group, together with
an assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed
below:
• AASB 9: Financial Instruments and associated Amending Standards (applicable for annual reporting periods commencing on or
after 1 January 2018).
The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments and simplified requirements for hedge accounting.
95
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT The key changes made to the Standard that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election
to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive
income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk,
particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the
new hedge accounting requirements of AASB 9, the application of such accounting would be largely prospective.
The directors do not anticipate that the adoption of AASB 9 will have any significant impact on the Group’s financial
instruments.
• AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January
2018).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-
based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all
contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales
to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods
or services. To achieve this objective, AASB 15 provides the following five-step process:
•
•
•
•
•
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented as per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of
initial application. There are also enhanced disclosure requirements regarding revenue.
The directors do not anticipate that the adoption of AASB 15 will have any significant impact on the Group’s financial
statements.
96
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT DIRECTOR’S DECLARATION
In the Directors’ opinion:
(a) the Financial Statements and notes of the consolidated entity set out on pages 53 to 91 are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its
performance for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(b) Note 2(a) confirms that the Financial Statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board;
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
(d) the Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by
section 295A of the Corporations Act 2001 for the financial year ending 31 December 2015.
This declaration is made in accordance with as resolution of the Directors.
On behalf of the directors
Matt Barrie
Chairman
23 February 2016
97
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITIES
Report on the Financial Report
We have audited the accompanying financial report of Freelancer Limited, which comprises the
consolidated statement of financial position as at 31 December 2015, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated 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 2, 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 (IFRS).
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. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance 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 judgment, 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.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
98
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITIES
Auditor’s Opinion In our opinion:
a) the financial report of Freelancer Limited 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
31 December 2015 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 2.
Report on the Remuneration Report
We have audited the remuneration report included in pages 42 to 46 of the directors’ report for the
year ended 31 December 2015. The directors of the company are responsible for the preparation
and presentation of the remuneration report in accordance with s 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.
Auditor’s Opinion
In our opinion the remuneration report of Freelancer Limited for the year ended 31 December
2015 complies with s 300A of the Corporations Act 2001.
Hall Chadwick
Hall Chadwick
Level 40, 2 Park Street
Sydney NSW 2000
GRAHAM WEBB
Partner
Dated: 23 February 2016
99
NOTES TO THE FINANCIAL STATEMENTSFREELANCER LIMITED 2015 ANNUAL REPORT
Additional ASX Information
Shareholder information
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this
report. This additional information was applicable as at 29 February 2016.
Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Robert Matthew Barrie1
Simon Clausen and Startive Holdings Limited and its related bodies2
Top 20 Shareholders as at 29 February 2016
Rank Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
MATT BARRIE
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
NATIONAL NOMINEES LIMITED
MR DARREN WILLIAMS
CITICORP NOMINEES PTY LIMITED
NICHOLAS P DE JONG
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
BRISPOT NOMINEES PTY LTD
UBS NOMINEES PTY LTD
MR RODNEY JOHN SELLICK
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
MAROBAR HOLDINGS PTY LIMITED
MR MICHAEL JOHN RUHFUS
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
CS FOURTH NOMINEES PTY LIMITED
PLASMA EQUITIES RESEARCH PTY LTD
MR JONATHON SEALLY
VIKRAM SHARMA
Total top 20 holders
Total remaining holders
Number of
Shares
199,417,131
163,925,101
Number of
ordinary
shares held
% of ordinary
shares
held
191,435,150
168,207,248
12,244,940
11,259,288
10,605,660
10,368,584
3,006,164
2,745,905
2,564,808
2,151,360
1,220,833
1,050,000
837,977
789,500
789,500
788,790
701,932
600,000
525,135
500,000
42.8
37.6
2.7
2.5
2.4
2.3
0.7
0.6
0.6
0.5
0.3
0.2
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
422,392,774
25,359,769
94.3
5.7
1.
2.
Notified 10 August 2015. Included a relevant interest in 7,853,672 fully paid ordinary shares by virtue of the Director having had a voting power of over
20% in the Company, which had a relevant interest as a result of trading restrictions over shares issued under the ESP.
Notified 10 August 2015. Included a relevant interest in 7,853,672 fully paid ordinary shares by virtue of the Director having had a voting power of over
20% in the Company, which had a relevant interest as a result of trading restrictions over shares issued under the ESP.
100
ADDITIONAL ASX INFORMATIONFREELANCER LIMITED 2015 ANNUAL REPORT Distribution of ordinary shareholders as at 29 February 2016
Number of shareholders
Number of Shares
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
618
1,001
324
378
62
2,383
Restricted securities as at 29 February 2016
There are no restricted securities on issue for the purpose of the ASX Listing Rules.
Class of restricted
securities
Quoted ESP shares
Unquoted ESP shares
Total shares subjected to trading restrictions
Voting Rights
Nature of
restriction
Various dates ending no later
than 13 November 2017
Various dates ending no later
than 21 December 2019
364,807
2,941,615
2,644,431
11,202,931
430,598,759
447,752,543
Number of
Shares
3,687,075
5,855,000
The voting rights attaching to ordinary shares, set out in the Company’s Constitution are:
a. at meetings of members, each member is entitled to vote in person or by proxy, attorney or representative; and
b. on a show of hands, every person present who is a member has one vote, and on a poll every member present has a vote
for each fully paid share owned.
There are no voting rights attached to unlisted options, voting rights will be attached to unlisted ordinary shares once issued and
to options upon exercise.
On-market Buy Back
There is no current on-market buy back.
101
ADDITIONAL ASX INFORMATIONFREELANCER LIMITED 2015 ANNUAL REPORT CORPORATE DIRECTORY
Company Directors
Mr Robert Matthew Barrie
Chairman and Chief Executive Officer
Mr Darren Nicholas John Williams
Non Executive Director
Mr Simon Alvin Clausen
Non Executive Director
Company Secretary
Neil Leonard Katz
Registered Office
Share Registry
External Auditors
Freelancer Limited
Level 20
680 George Street
Sydney NSW 2000
Australia
Boardroom Limited
Grosvenor Place, Level 12
225 George Street
Sydney NSW 2000
Australia
Hall Chadwick
Level 40
2 Park Street
Sydney NSW 2000
Australia
Securities Exchange Listing
Freelancer Limited shares are
listed on the Australian Securities Exchange
Listing code: FLN
102
ADDITIONAL ASX INFORMATIONFREELANCER LIMITED 2015 ANNUAL REPORT Masaharu Hayataki
Japanese Translator
5.0/5.0 rating | 58 reviews
Member since March 2013
Prague, Czech Republic
Freelancer.com lets me work anywhere
I want – I have the choice to stay home
or go out and travel the world.
“
In the coming months, I’m visiting
Nuremberg, München, Innsbruck,
Venezia, Lyon, and Madrid.”
103
103
FREELANCER LIMITED 2015 ANNUAL REPORT
ACN 141 959 042