F R E E L A N C E R L I M I T E D A C N 1 4 1 9 5 9 0 4 2
ANNUAL REPORT
2019
This radiation shield design for NASA
cost $500 USD and took 15 days
Albertus J.
@albertusjanuardy
A
N
N
U
A
L
R
E
P
O
R
T
2
0
1
9
F
R
E
E
L
A
N
C
E
R
L
I
M
I
T
E
D
A
C
N
1
4
1
9
5
9
0
4
2
Index
PAGE
CONTENTS
01
41
45
56
Chairman’s Letter
Directors’ Report
Review of Operations
Auditor’s Independence Declaration
57
Consolidated Statement of Profit or Loss and Other Comprehensive Income
58
59
60
61
99
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
100
Independent Auditor’s Report
105
Additional ASX Information
107
Corporate Directory
CHAIRMAN’S LETTER
Chairman’s
Letter
Dear Shareholders,
In 2019 the Freelancer Limited Group achieved all-time record
net revenue of $58.0 million (up 12% on pcp) and all-time Gross
Payment Volume (GPV) of $787.7m (up 6.4% on pcp). Breaking
down by segment, both Freelancer and Escrow hit an all-time
record GPV of $181.4m (up 6.7% on pcp) and $606.3m (up 6.4%
on pcp) respectively.
For the year, the company achieved positive operating cash flow
of $2.1 million, and was effectively break-even with Operating
EBITDA of $(1.1)m and Operating NPAT of $(1.3)m. As of 31
December 2019, the Company had $32.0 million in cash and
cash equivalents (down 3.6% on pcp).
Many countries are already in crisis over advanced technical
skills. Japan is estimated to be already short 500,000 engineers
by one ministry of internal affairs estimate. In Australia,
enrolments in IT are down 27% from 2002-15. Over the same
period, effective full time student load for Computer Science was
down 50%, Programming down 30%, and Artificial Intelligence
down 35% to 435 students. To bolster numbers, these countries
need to turn to foreign students. Of the 13,500 IT graduates in
Australia in 2015, 49% were foreign. In the same year the country
only produced 146 domestic computer science PhDs and 20
Masters by Research graduates4.
The United States faces similar issues, and while STEM grads
A detailed analysis of the activities of the group are provided in
are increasing as a percentage of all graduates, a dwindling
the Review of Operations in the Directors’ Report.
number of those students are Americans themselves. In 2017
foreign nationals accounted for 81% of electrical engineering
majors and grad students, 79% in computer science, 75% in
industrial engineering, 62% in mechanical engineering and 55%
in materials and metallurgical engineering.
Companies wishing to stay competitive at scale will increasingly
need to turn to cloud labor to attract skills and marshall these
resources. One company that has demonstrated this at scale is
Uber, which has used a network of two million freelance drivers
to transform the transportation industry. Enterprises in other
industries are now asking how crowdsourced resources can be
marshalled to take strategic advantage in their industry.
Freelancer
In FY19, revenue from Freelancer.com was $50.4m (up 13% on
pcp), and we added 9.1 million registered users and 1.9 million
jobs posted.
The defining characteristic of the 21st century will be the
competition for intellectual capital. Globally, birth rates are
dropping below replacement rates. The United States, United
Kingdom, Canada, Australia and New Zealand all have birth rates
that are below the replacement rate of 2.1. Even in Bangladesh,
the birth rate of 2.067 is now below the replacement rate. In
Poland it is 1.29 and in Portugal it is 1.24.
At the same time, supplemental education as a percentage of
income is dropping - in Asia it is 15%, but in the United States
it is 2%. Advanced economies are not naturally producing
enough people to sustain their populations, and the importance
of education in the household budget is falling. Increasingly
globalised companies are scrambling to attain the resources to
compete in the 21st century at scale.
1 FREELANCER LIMITED ANNUAL REPORT 2019
CHAIRMAN’S LETTER
Other signed customers in FY19 included, but was not limited
to an import/export marketplace, a commodities marketplace,
a vehicle inspection marketplace, two freelancing marketplaces,
three more motor vehicle and heavy equipment marketplaces
including TruckTrailerTractor, four more IPv4 address
marketplaces, eleven domain marketplaces & an equipment
marketplace.
Escrow.com's strategy of pursuing licensing in every state and
territory in the US and Canada continued to be recognised as a
key distinguishing feature by marketplace partners. Currently
Escrow.com is licensed in 48 US states with two further state
licenses in the final stages of processing. We aim to complete
our US program in 2020.
While we are at early days in enterprise adoption of organisation-
wide crowdsourcing at scale, we strongly believe that Fortune
In FY19 Escrow.com added Canadian dollar support and filed as
500 organisations have the mindset that in the future some
a Money Services Business in Quebec. With this filing achieved
percentage of their spend on headcount will be through cloud
it is our immediate priority to file our United Kingdom Payments
labour. We have been told by customers and seen internal
Institution Application.
benchmarks where future success is variously defined as 5%,
10% or 20% of global spend. The big question is how many years
StartCon
will it take to get there- five years, ten years or more? Over the
In 2019 we ran a great event with an exceptional line up of
last three or four years, enterprise has been asking the same
speakers including Australia’s 29th Prime Minister Malcolm
questions it asked Amazon about Cloud Computing in the early
Turnbull and famed security expert and libertarian John McAfee.
years: “Where will my data be? Who will have access? Will it be
Due to Covid-19 we will not be running Startcon in 2020 which
secure?”. Now that companies like Uber have demonstrated
will have a beneficial impact on earnings of approximately $0.5
success at scale, others are looking to take strategic advantage
million.
in their own industry by using Freelancer to efficiently locate,
marshall and manage cloud work at scale.
Summary
Freelancer Enterprise grew strongly, contributing $5.2 million
collectively undergoing a great work online experiment. Our
in enterprise services revenue in the year, over and above
enterprise product is now being touted internally by our
enterprise marketplace fees.
customers as part of their “Covid-19” response.
With Covid-19 the pandemic well underway, the world is
Escrow
In FY19 Escrow.com achieved an all-time record Gross Payment
Volume of $606.3m, up 6.4% on pcp.
The team is busy with our heads down focused on execution.
The Board and myself wish to thank our staff, shareholders and
41.7 million users across the group for their support.
Escrow.com continues to hold market dominant positions in
Regards,
established asset verticals including Internet domain names,
websites and intellectual property. In emerging verticals, Escrow.
com is now a leading technology platform for the exchange of
IPv4 addresses, servicing over 70% of all registered IPv4 brokers
in America. In the last two years GPV for IPv4 rose 530% to
US$51 million (unaudited).
Matt Barrie
Chairman
9 April 2020
We are highly optimistic about partner opportunities in our
API ecosystem as marketplace partners seek a licensed
escrow platform to integrate. In FY19 we signed and are in the
process of deploying into a major North American automotive
marketplace that is first in its category. There is no minimum
volume commitment for this customer. We will announce more
on their go-live date which is yet to be scheduled.
FREELANCER LIMITED ANNUAL REPORT 2019 2
MARKETPLACE STATISTICS
41.7m
TOTAL REGISTERED USERS
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
3 FREELANCER LIMITED ANNUAL REPORT 2019
42
40
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
0
17m
TOTAL JOBS POSTED
MARKETPLACE STATISTICS
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FREELANCER LIMITED ANNUAL REPORT 2019 4
ABOUT FREELANCER
Freelancer.com
is the world’s
largest
freelancing
marketplace
With over 41.7 million registered users Freelancer is
the world’s largest freelancing and crowdsourcing
marketplace by total number of users and jobs posted.
We’re changing lives in the developing world by providing
opportunity and income.
Five billion people on the planet live on $10 a day or less.
On Freelancer they can earn $10 an hour or more, as they
develop their skills, education and reputation.
5 FREELANCER LIMITED ANNUAL REPORT 2019
ABOUT FREELANCER
FREELANCER LIMITED ANNUAL REPORT 2019 6
FREELANCER CASE STUDIES
We're helping founders,
entrepreneurs and
startups around
the world take their
businesses to new
heights
“After launching our website, we quickly realized the need to establish a
reputable brand that could be easily recognized online. Hiring a professional
freelancer to do our branding allowed our team to focus on tasks that were
more impactful for our customers and our revenue. The freelancer team
was very patient with us throughout our many requested revisions. They
were always professional and happy to make sure that we were satisfied
with their work.”
Ryan Donk
CEO, Roomsteals
United States of America
7 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER CASE STUDIES
FREELANCER LIMITED ANNUAL REPORT 2019 8
FREELANCER CASE STUDIES
9 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER CASE STUDIES
We help our customers
grow their revenue,
their reach and their
possibilities
“I met one of my best and most valuable freelancers here. We've been
working together for almost a year, and it’s a pure pleasure. He’s always on
time, and the quality of his writing is impeccable. The number of visitors
and, therefore, sales increased on my site after I published the content.
That’s why we're still cooperating. He’s writing lots of quality articles for
me. I’m thinking about hiring an SEO specialist and SMM manager soon.
I’ve checked lots of profiles, and have already selected a few candidates.
In awhile, I’ll need their services, and of course, I’ll use freelancer.com to
cooperate with them”.
Sonia Novakivska
Writer
Ukraine
FREELANCER LIMITED ANNUAL REPORT 2019 10
FREELANCER CASE STUDIES
We change lives by
opening up global
markets to small
businesses
“I knew that the skills needed to translate my ebook from German to Dutch
and Japanese were not in my wheelhouse. My experience with Sanjay was
fantastic! At first I had only hired him to translate one document from German
into Dutch, but he saw that I had another project and was able to complete the
English to Dutch and Dutch to Japanese translations. The end product helped
me sell more ebooks and expand my audience to a global one.”
Monica Wappel
University Lecturer
Canada
11 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER CASE STUDIES
FREELANCER LIMITED ANNUAL REPORT 2019 12
FREELANCER CONTESTS
This radiation
shield design for
NASA cost $500
USD and took
15 days
Albertus J.
@albertusjanuardy
13 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER CONTESTS
NASA Contest: Develop an Origami/Folding Concept
for Radiation Shield Packing/Deploying
“Albertus J. did an outstanding job developing a spacecraft
radiation shielding design based on origami design
methods. This was a contest and this design concept was
selected as 1st place from 159 entries. Albertus J. provided
a design that was very well thought through. It took an
origami concept and adapted it to a thick material while
taking into account a honeycomb material and how one
would package that (most realistic from that perspective).
It also had an additional benefits of being advantageous
for Micro-Meteoroid & Orbital Debris (MMOD) shielding.
Albertus J. was very responsive to our feedback and worked
hard to provide a high quality product.”
- NASA Tournament Lab
FREELANCER LIMITED ANNUAL REPORT 2019 14
MARKETPLACE STATISTICS
Marketplace
Statistics
Freelancer is a game-changer for entrepreneurs, small
businesses, and large organisations. We provide easy
access to talented freelancers from all around the world,
who offer a wide range of services at competitive prices.
$208
AVERAGE COMPLETED
PROJECT SIZE IN USD
74%
OF JOBS RECEIVE A BID
WITHIN 60 SECONDS
610k+
MESSAGES SENT
PER DAY
41.7m+
TOTAL REGISTERED
USERS
17m+
TOTAL JOBS POSTED
$5.6b+
TOTAL JOBS POSTED
IN USD
15 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER CONTESTS
FREELANCER CONTESTS
Get the perfect design by
crowdsourcing your ideas.
The best ideas come about from casting your net far and wide.
Running a contest on Freelancer is the most effective way of crowdsourcing
ideas from millions of creative individuals. Ideation is no longer limited by
geographic reach or your professional network.
Safety-critical companies like NASA and Airbus rely on freelancers to
provide them with fresh and innovative ideas. In 2019, these companies
have launched dozens of contests, and awarded tens of thousands of
dollars for the best ideas put forward.
Thousands of individuals have launched successful freelancing careers
from winning a contest. In 2019, more than half of all contest winners were
first time winners.
115
AVERAGE ENTRIES
PER CONTEST
60%
OF CONTESTS
RECEIVE ENTRIES
WITHIN 1 HOUR
FREELANCER LIMITED ANNUAL REPORT 2019 16
FREELANCE ENTERPRISE
FREELANCER ENTERPRISE
Access a global workforce to
innovate at scale, faster and
for a fraction of the price.
At Freelancer, our vision is to transform the concept of work. We built a platform
that provides equal opportunities to any freelancer in the world. As a result, we have
gathered the largest global talent pool, with unparalleled liquidity.
Enterprises today face a serious skills shortage. With technology advancing at an
accelerating pace, organisations need to rapidly deploy an elastic workforce.
Airbus, Unilever and Deloitte are among the 80% of Fortune 500s that thrive on
Freelancer. The world’s most innovative companies use Freelancer as a growth
engine to free up budget, innovate faster and accelerate their time to market.
Freelancer Enterprise provides a solution that is fully embeddable into the
organisation’s workflow. Global organisations use Freelancer to access specialised
skills on demand at scale, while having assurance over hiring and procurement
processes.
17 FREELANCER LIMITED ANNUAL REPORT 2019
80%+
FORTUNE 500
COMPANIES
CURRENTLY USE
FREELANCER
50%
OF U.S. FULL-TIME
WORKFORCE WILL
BE FREELANCERS
BY 2025 (FORBES)
FREELANCE ENTERPRISE
FREELANCER ENTERPRISE
Freelancer powers the
workforce of the future.
This was a pivotal year for the Freelancer Enterprise group. In 2019 we embarked on multiple exciting projects with Fortune
500 multinational organisations. These included engagements providing field services in the European and South East Asian
regions for the telecommunications and computer hardware industries. These engagements are designed to disrupt the
traditional field services business models via crowdsourcing.
The Freelancer ecosystem is an extension of an enterprise's workforce - the elastic workforce. Freelancer is delivering tools
that allow large organisations to easily integrate their workforce into the cloud, discover talent around the world and manage
globally distributed work with a high level of assurance.
Companies need the agility to respond to shifting demands within their organisation. Freelancer has designed a platform
which rapidly deploys in-house talent to the most urgent and critical areas of the business. The matchmaking and resource
management platform enables businesses to increase staff utilisation or client billable hours, fast.
13000+
USERS ON
THE DELOITTE
PLATFORM
BY APRIL 2020
FREELANCER LIMITED ANNUAL REPORT 2019 18
FREELANCER MOBILE
FREELANCER MOBILE
The world’s largest freelancing
site in your pocket.
Work is no longer restricted to a physical office, or a computer sitting at a desk.
Freelancer understands the importance of mobile platforms in the world of remote work.
Our customers have access to the Freelancer experience from the convenience of their
mobile devices. The mobile app, available on iOS and Android, empowers our customers to
hire, communicate with and pay freelancers from a device that is always nearby.
In 2019, Freelancer experienced a 38% growth in iOS and Android app downloads,
as the global workforce goes mobile.
1.6m+
DOWNLOADS OF iOS
AND ANDROID APPS,
A 38% INCREASE
IN FY19
55%
INCREASE IN
WEEKLY ACTIVE
MOBILE USERS IN
FY19
19 FREELANCER LIMITED ANNUAL REPORT 2019
WORKING IN THE CLOUD
WORKING IN THE CLOUD
We provide a platform that
lets you work the way you’d
like to work.
On Freelancer you can begin a project with a fixed scope and price in mind - the
best option for projects that have a well-defined scope and deliverables.
Alternatively, you can work on an ongoing basis. Payments are based on the
freelancer’s time spent working, at a clear and transparent hourly rate. You
can review the outcomes and billings for the project on a weekly basis, and a
summary of all your project’s activity is automatically sent to you.
Hourly projects are a great choice for building long-term, open-ended working
relationships with freelancers.
$332
AVERAGE VALUE OF
HOURLY PROJECTS
IN USD
32
AVERAGE LENGTH
OF ENGAGEMENT
IN DAYS
FREELANCER LIMITED ANNUAL REPORT 2019 20
FREELANCER API
FREELANCER API
Add the power and depth of the world’s largest
global cloud workforce to your website, app
or software with a Freelancer API integration.
The Freelancer API is the foundation of the Freelancer ecosystem. Web and mobile applications alike share the same backend
code and infrastructure which third parties can now use to power their applications.
In 2019 Airbus launched an internal platform to facilitate crowdsourcing throughout their organisation using the freelancer.com
API. Using this platform, Airbus has procured talented freelancers for projects requiring hard-to-fill skills such as machine learning
and robotics.
Organisations looking to adapt to a changing world and capitalise on the future of work can directly source talent and expertise
through the Freelancer API. The Freelancer API allows workforce automation at scale with unparalleled speed and savings
through elastic cloud labour.
21 FREELANCER LIMITED ANNUAL REPORT 2019
LOCATION-BASED JOBS AND FIELD SERVICES
LOCATION-BASED JOBS AND FIELD SERVICES
The world largest marketplace
for online jobs is now the best
marketplace for local jobs.
In 2019, freelancer.com underwent a platform-wide, end-to-end upgrade
for location-based projects, from simple delivery projects to field services
deployments for large enterprises. Enhanced posting and job management
experiences help users get bids faster and get location-based jobs done
anywhere - on time, on budget.
42m+
GLOBAL USERS
100k
CITIES AROUND
THE WORLD HAVE
FREELANCERS IN OUR
NETWORK
FREELANCER LIMITED ANNUAL REPORT 2019 22
RECRUITER
RECRUITER
With 42 million options, why
not let one of our experts find
you the perfect freelancer?
Recruiter is Freelancer's flagship managed service. With a global presence,
our recruiters provide 24x7 coverage to ensure that we can assist our
clients anytime, anywhere. Utilising custom tooling optimised on top of our
matchmaking algorithm, our team works with our clients to clarify budget and
27%
GROWTH IN
RECRUITER
PROJECTS IN FY19
50k
RECRUITER
requirements before conducting an extensive search and interview process from
PROJECTS IN FY19
our curated talent pool of vetted preferred freelancers.
Our recruiters work closely with the top 1% of freelancers on the platform, the
Preferred Freelancer Program, to ensure that you’ll always have the perfect
talent for the job.
33%
GROWTH IN OUR
PREFERRED TALENT
COMMUNITY
23 FREELANCER LIMITED ANNUAL REPORT 2019
FREIGHTLANCER
FREIGHTLANCER
Freight anything, anywhere
with Freightlancer.com
Freightlancer is a combination of a marketplace and management system with
global reach. It’s simplifying the supply chain for freight owners and transport
companies, with major customers in the mining, construction, tunnelling, rail,
oil & gas industries. Powered by the Freelancer network, it also facilitates
rapid metro delivery with the network of 42 million freelancers. Freightlancer
7500+
LICENSED
TRANSPORT
OPERATORS
2700+
REGISTERED FREIGHT
facilitates the fast, reliable and cost efficient transport of freight while ensuring
OWNERS
a high standard of compliance.
Major freight owners such as Newcrest Mining and Boart Longyear use
Freightlancer to reduce the cost while assuring the security of freight deliveries
at scale. Transport operators, large and small, trust Freightlancer with their
fleet capacities and use our app to manage freight end to end.
1700+
LOADS CREATED
IN FY19
FREELANCER LIMITED ANNUAL REPORT 2019 24
ESCROW.COM
Never buy or sell online
without using Escrow.com
Escrow.com is the world’s most secure payment method from a counterparty risk perspective.
All funds transacted using Escrow.com are kept in trust, safeguarding both buyer and seller.
Escrow Pay is the simplest way to add escrow payments to your website, mobile app, online store,
classified site or marketplace.
The Escrow Platform API provides payments for your website, marketplace, classified site, shopping
cart or mobile app with no chargebacks, ever.
Escrow Offer allows buyers and sellers to negotiate a price for domain names, cars, boats, aircraft,
fine art or any high-value item on any website or mobile app through a Make Offer button or API call.
In 2019 Escrow.com extended its regulatory footprint to money transmission and escrow licences
across 48 U.S. states. We also extended our support into Canadian Dollars, adding to US Dollars,
Australian Dollars and Euros.
$606m
SECURELY TRANSACTED
IN 2019
$4b+
IN USD SECURELY
TRANSACTED SINCE
1999
300
PARTNERS USE THE
ESCROW.COM API
25 FREELANCER LIMITED ANNUAL REPORT 2019
ESCROW.COM
Escrow.com is used to secure
a wide range of valuable or
complex transactions
Personal Protective Equipment
Intellectual Property
Domain Names
Electronics
IPv4
Cars
Boats
Antiques
Airplanes
Motorcycles
Collectables
Import / Export
Business Assets
Network Equipment
Gemstones & Jewellery
Industrial Equipment
Space Station Deposits
FREELANCER LIMITED ANNUAL REPORT 2019 26
STARTCON
Malcolm Turnbull
29th Prime Minister of Australia
Keynote at Startcon
STARTCON
Australia’s largest startup &
growth conference. Sold out
10 years in a row.
In 2019, StartCon hosted its 10th and largest conference to date with more
than 4,300 attendees over two days. The conference also featured a wide
range of high profile speakers, including a widely reported on appearance
by former Prime Minister of Australia the Hon. Malcolm Turnbull, Director
of NASA's Goddard Space Center Dr Christyl Johnson and US Libertarian
Presidential Candidate John McAfee.
4,300
ATTENDEES
160+
EXHIBITORS
750+
PITCHING STARTUPS
27 FREELANCER LIMITED ANNUAL REPORT 2019
WARRIOR FORUM
WARRIORFORUM.COM
The world’s #1 Internet
marketing community &
marketplace since 1997.
Warrior Forum is the world's top internet marketing community and
marketplace where marketers can find the latest news, trends, discussions
and daily deals. Whether you're an agency owner, CMO or entrepreneur just
starting out - we have content suitable for every level ready for you to learn
from. We've partnered up with industry experts like Larry Kim, Dan Lok, Eric
Siu and more to deliver high-quality content and products to the forum.
1.5m+
REGISTERED USERS
10.4m+
POSTS
1.02m+
DISCUSSIONS
FREELANCER LIMITED ANNUAL REPORT 2019 28
This website
design cost
$200 USD
Real project completed at
freelancer.com Have an idea? Post your
project today and get free quotes!
29 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER LIMITED ANNUAL REPORT 2019 30
This app
design cost
$100 USD
Real project completed at
freelancer.com Have an idea? Post your
project today and get free quotes!
31 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER LIMITED ANNUAL REPORT 2019 32
This app
design cost
$150 USD
Real project completed at
freelancer.com Have an idea? Post your
project today and get free quotes!
33 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER LIMITED ANNUAL REPORT 2019 34
This label
design cost
$20 USD
Real project completed at
freelancer.com Have an idea? Post your
project today and get free quotes!
35 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER LIMITED ANNUAL REPORT 2019 36
2018 AWARDS
2019
Awards
In terms of awards and recognition, Freelancer.com won
a total of 11 awards in 2019 including 1 Webby Award,
6 Stevie International Business Awards, 4 APAC Stevie
Awards. Escrow.com also won a total of 2 awards - all
were in the 2019 Stevie International Business Awards.
The Webby Awards
Stevie Awards
The 23rd annual Webby Awards were held at Cipriani Wall Street
The Stevie Awards are the world’s premier business
in New York City, the United States (U.S.) on May 13, 2019, and
awards, which were created in 2002 to honor and
hosted by actress Jenny Slate. The Webby Awards have been
generate public recognition of the achievements and
dubbed the “internet’s highest honor” and, in 2019, received more
positive contributions of organizations and working
than 13,000 entries from nearly all 50 states and 70 countries
professionals worldwide. There are seven Stevie Awards
worldwide. Freelancer.com won People’s Voice Award in the 23rd
programs, each with its own focus, list of categories, and
Webby Awards for the category of Best Employment Website.
schedule; such as the International Business Awards
that are open to all organizations worldwide, and include
categories to honor accomplishments in all aspects of
work life; and the Asia-Pacific Stevie Awards that are
open to all organizations in the 29 nations of the Asia-
Pacific region. In 2019, freelancer.com won a total of 10
Stevie Awards, including 6 Stevie International Business
Awards (IBA) and 4 Asia Pacific Stevies. Escrow took out
2 Stevie International Business Awards in total: 1 silver
and 1 bronze.
37 FREELANCER LIMITED ANNUAL REPORT 2019
2018 AWARDS
Stevie Awards
Stevie International Business Awards (IBA): Stevie International Business
Awards (IBA): For Escrow.com, we won Silver Award for Company of the Year:
Financial Services - Small; and Bronze Award for FinTech Solution Category.
Meanwhile, for freelancer.com, we won 3 Gold Awards for Communications,
Investor Relations or PR Executive of the Year : Sebastian Siseles; for Executive
of the Year : Matt Barrie - Business or Professional Services; and for Technical
Innovation of the Year - at Organizations with up to 1,000 Employees.
Freelancer.com also won 3 Silver Awards for Company of the Year : Business
or Professional Services - Large; for Communications Team of the Year; and
for Most Innovative Tech Company of the Year - up to 2,500 Employees.
Asia Pacific Stevies: We won 2 Gold Awards for Innovative Management in
Technology Industries (more than 100 Employees); and Award for Innovation
in Technology Management, Planning & Implementation (Other Service
Industries); as well as 2 Bronze Awards for Excellence in Innovation in Technology
Industries (more than 100 Employees); and award for Most Innovative
Communications Team of the Year.and Innovation in Technology Development.
FREELANCER LIMITED ANNUAL REPORT 2019 38
OUR ONLINE ECONOMY
Our Online
Economy
This map 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 December 2019.
39 FREELANCER LIMITED ANNUAL REPORT 2019
OUR ONLINE ECONOMY
FREELANCER LIMITED ANNUAL REPORT 2019 40
DIRECTORS’ REPORT
Directors’
Report
Your Directors submit the financial report of Freelancer Limited
(the Company) for the year ended 31 December 2019. 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:
41 FREELANCER LIMITED ANNUAL REPORT 2019
DIRECTORS’ REPORT
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
California, Graduate of the Stanford
Company.
Serial entrepreneur with extensive
experience and knowledge in the
technology sector. Previously co-founded
and was CEO of Sensory Networks Inc.,
Executive 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.
a vendor of high performance network
security processors, which was acquired
by Intel Corporation Inc. in 2013.
Relevant interest in 196,209,032 fully
paid ordinary shares, including a relevant
interest in 2,792,101 fully paid ordinary
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
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 193,416,931 fully
paid ordinary shares (representing 42.72%
of issued capital).
of Sydney, Masters in Applied Finance
from Macquarie University, Masters in
Member of the Nomination and
Remuneration Committee and Audit
Electrical Engineering from Stanford,
Committee.
FREELANCER LIMITED ANNUAL REPORT 2019 42
DIRECTORS’ 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 honours
Was the Chief Technology Officer and
degree in Computer Science and a Ph.D.
Executive Director of the Company until
in Computer Science specialising in
31 October 2015.
computer networking from the University
Extensive experience in computer
of Sydney.
security, protocols, networking and
Beneficial and relevant interest in
software. Previously co-founded and
was CTO (and subsequently CEO) of
Sensory Networks Inc., a vendor of high
performance network security processors,
which was acquired by Intel Corporation
10,627,165 fully paid ordinary shares
(representing 2.35% of issued capital).
Member of the Nomination and
Remuneration Committee and Audit
Committee.
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.
43 FREELANCER LIMITED ANNUAL REPORT 2019
DIRECTORS’ REPORT
Simon
Clausen
Non-Executive Director
(appointed 10 April 2010)
Founding investor and Non-Executive
Relevant interest in 163,142,101 fully
Director of the Company.
paid ordinary shares, including a relevant
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
interest in 2,792,101 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 160,350,000 fully
paid ordinary shares (representing 35.42%
of issued capital).
venture fund that actively maintains
Member of the Nomination and
investments in a number of companies
Remuneration Committee and Audit
globally. Other directorships include
Committee.
LatAm Autos Limited since 2014.
FREELANCER LIMITED ANNUAL REPORT 2019 44
DIRECTORS’ 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 and 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, was nearing breakeven at $1,591,000
(2018 loss: $1,484,000).
Key Performance Highlights
Year ended 31 December
Financial metrics:
Gross Payment Volume1
Net Revenue2
Gross Profit
Gross margin (%)6
Operating EBITDA3,4
Operating EBIT3
Operating NPAT3
Operating Cash Flow5
Operational metrics:
New Jobs6 (millions)
Total Jobs Posted (millions)
New Registered Users (excluding Escrow, millions)
Total Registered Users5 (millions)
FY19
$m
788
58.0
48.9
83.7%
(1.1)
(1.4)
(1.3)
2.1
1.9
17
9.1
41.7
FY18
$m
741
51.9
44.2
85.2%
(0.7)
(1.2)
(0.9)
(0.9)
2.1
15.1
4.7
32.5
% Change
+6%
+12%
+11%
-1.8%
nm
nm
nm
nm
-13%
+12%
+94%
+28%
Notes:
1.
2.
3.
4.
5.
6.
7.
Gross Payment Volume (GPV) is calculated as the total payments to Freelancer and Escrow users for productsand services transacted through the Freelancer and Escrow
websites plus total Freelancer and Escrow revenue.GPV is an unaudited metric. Marketplace segment FY19 GPV A$181.4 million (up 6.7% on prior correspondingperiod),
Payments segment GPV A$606.3 million (up 6.3% on prior corresponding period).
Net Revenue excluding Escrow.com for FY19 was $50.4m (up 13% on prior corresponding period).
Excludes non-cash share based payments expense of $329k in FY19 and $559k in FY18.
In FY19 lease expenses in respect of office leases have been accounted for in accordance with AASB 16 Leases.The impact is that lease expenses are no longer reflected in
the P&L but are brought into account as depreciationon the right of use asset and interest paid on the corresponding lease liability. Depreciation of $2.9m and financecosts of
$0.2m relating to office leases (accounted for in accordance with AASB 16 Leases) are included in theEBITDA calculation.
In FY19 lease payments in respect of office leases have been accounted for in accordance with AASB 16 Leases.The impact is that lease payments are are now recorded in
the cash flow statement as interest payments, disclosed in operating activities and capital payments, disclosed in financing activities. The FY18 comparatives have notbeen
restated.
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.
User and project/contest data includes all users and projects/contests from acquired marketplaces. Prior to May2009, all data was from acquired marketplaces. Includes
Escrow.com unique users.
45 FREELANCER LIMITED ANNUAL REPORT 2019
DIRECTORS’ REPORT
Total Registered Users
Total Jobs Posted (Filtered)
15,000,000
12,000,000
10,000,000
7,500,000
5,000,000
2,500,000
0
Freelancer.com
42,000,000
33,600,000
25,200,000
16,800,000
8,400,000
0
FY00
FY01 FY02 FY03 FY04 FY05 FY06
FY07 FY08 FY09 FY10
FY11 FY12 FY13 FY14 FY15
FY16 FY17
FY18 FY19
FY00
FY01 FY02 FY03 FY04 FY05 FY06
FY07 FY08 FY09 FY10
FY11 FY12 FY13 FY14 FY15
FY16 FY17
FY18 FY19
TOTAL REGISTERED USERS AND JOBS ¹ (FILTERED) BY YEAR ON FREELANCER.COM
The Company’s revenue is primarily generated from new and existing users posting and fulfilling projects and contests in the
freelancer.com marketplace.
In FY19, freelancer.com ended the year with 41.7 million users, adding 9.1 million users. The number of jobs posted (filtered) totalled
17 million at 31 December 2019, adding 1.9 million for the year.
In the year, Freelancer Gross Payment Volume hit an all-time record of $181.4m, up 6.7% on the previous corresponding period. Net
revenue for freelancer.com was $50.4m (up 13% on pcp).
Freelancer Enterprise continued to grow, achieving $5.2m of enterprise services revenue in FY19. In the year, we signed Master
Services Agreements with major brands in the technology, aerospace, telecommunications, field services, professional services,
advertising, defense and healthcare industries. Our default agreements do not include a minimum volume commitment.
“ Research can be very time consuming and intricate, but it doesn’t require a
Deloitte specific skillset.
We’ve found that if we develop comprehensive template or research guides that we get
phenomenal products back from Freelancer that frequently exceed the breadth and depth
of information of what we would have been able to produce on our own. “
Senior Manager @ Deloitte Consulting
¹ filtered for spam, advertising, test projects, unawardable or otherwise projects that are deemed bad an unable to be fulfilled
FREELANCER LIMITED ANNUAL REPORT 2019 46
DIRECTORS’ REPORT
Freelancer.com
Of note, in FY19 we delivered ArrowPlus powered by Freelancer for Arrow Electronics, a custom marketplace for electrical and
electronic engineering and Deloitte MyGigs, a talent marketplace to enable Deloitte consultants globally to more efficiently match
skills with opportunities and provide greater visibility into projects and resource needs. In 4Q19 Airbus launched an internal
crowdsourcing platform that was built on the Freelancer API.
Figure 2: Deloitte research project for US Federal Consulting
Of note, towards the end of the year the company commenced pilots in field services for technology & telecommunications in multiple
countries.
To the downside, as a technology company operating in 247 countries, regions and territories, we increasingly need to make changes to
the website to keep up with regulatory change. This has included, but is not limited to the General Data Protection Regulation and Payment
Services Directive 2 in Europe, the California Consumer Privacy Act and California Department of Business Oversight regulation in the
United States, Tax Collected at Source in India, and so forth. This continues to consume engineering resources.
Through FY19 engineering continued to deploy a new front-end technical stack for the website. The goal of this work is to improve the user
experience, product velocity and site speed. This effort pays off a large amount of technical debt that has accrued over the years and will
bring the front-end architecture to the state of the art, which should improve the user experience and retention. Furthermore, the new front-
end stack is fully responsive, allowing for a significant upgrade in user experience when viewing the site through a mobile browser.
Another major focus for the company was quality, with the year seeing the release of a new staging environment and production testing
framework to ensure that changes are shipped to the website bug-free. The company also hired a new Director of Quality Assurance to lead
this initiative.
The year also saw a number of other product enhancements, including improvements to the hourly payments process and associated
time tracking system, the introduction of a number of measures to reduce spam, and the addition of number of new engagement-focused
features to our mobile apps resulting in a 55% increase in weekly active app users year on year. Our Recruiter offering continued to
perform strongly, with an increase in volume of projects of 27% year on year.
Freelancer
Reviews 3,768 • Excellent
Jan 2016
Jul 2016
Jan 2017
Jul 2017
Jan 2018
Jul 2018
Jan 2019
July 2019
Jan 2020
SOURCE: TRUSTPILOT
FIGURE 3: ACTIVE FEES (USD EQUIV.).
NOTE Y-AXIS ORIGIN IS NOT ZERO (DIPS ARE CHRISTMAS/NEW YEAR HOLIDAYS)
FIGURE 4: TRUSTPILOT SCORE FOR FREELANCER.COM
47 FREELANCER LIMITED ANNUAL REPORT 2019
DIRECTORS’ REPORT
Escrow.com
In FY19 Escrow.com achieved an all-time record Gross Payment Volume of $606.3m, up 6.4% on pcp.
Escrow.com continues to hold market dominant positions in established asset verticals including Internet domain names, websites
and intellectual property. In emerging verticals, Escrow.com is now a leading technology platform for the exchange of IPv4
addresses, servicing over 70% of all registered IPv4 brokers in America. In the last two years GPV for IPv4 rose 530% to US$51 million
(unaudited).
ROW
CHINA
$150,000,000
$100,000,000
$50,000,000
$0
2
Q
0
0
0
2
4
Q
0
0
0
2
2
Q
1
0
0
2
4
Q
1
0
0
2
2
Q
2
0
0
2
4
Q
2
0
0
2
2
Q
3
0
0
2
4
Q
3
0
0
2
2
Q
4
0
0
2
4
Q
4
0
0
2
2
Q
5
0
0
2
4
Q
5
0
0
2
2
Q
6
0
0
2
4
Q
6
0
0
2
2
Q
7
0
0
2
4
Q
7
0
0
2
2
Q
8
0
0
2
4
Q
8
0
0
2
2
Q
9
0
0
2
4
Q
9
0
0
2
2
Q
0
1
0
2
4
Q
0
1
0
2
2
Q
1
1
0
2
4
Q
1
1
0
2
2
Q
2
1
0
2
4
Q
2
1
0
2
2
Q
3
1
0
2
4
Q
3
1
0
2
2
Q
4
1
0
2
4
Q
4
1
0
2
2
Q
5
1
0
2
4
Q
5
1
0
2
2
Q
6
1
0
2
4
Q
6
1
0
2
2
Q
7
1
0
2
4
Q
7
1
0
2
2
Q
8
1
0
2
4
Q
8
1
0
2
2
Q
9
1
0
2
4
Q
9
1
0
2
FIGURE 5: TOTAL GROSS PAYMENT VOLUME CONTRIBUTION (US$) FOR ESCROW.COM
We are highly optimistic about partner opportunities in our API ecosystem as marketplace partners seek a licensed escrow platform
to integrate. In FY19 we signed and are in the process of deploying into a major North American automotive marketplace that is first
in its category. There is no minimum volume commitment for this customer. We will announce more on their go-live date which is yet
to be scheduled.
Other signed customers in FY19 included, but was not limited to an import/export marketplace, a commodities marketplace, a
vehicle inspection marketplace, two freelancing marketplaces, three more motor vehicle and heavy equipment marketplaces including
TruckTrailerTractor, four more IPv4 address marketplaces, eleven domain marketplaces & an equipment marketplace.
The pipeline also has a number of customers of scale that we are progressing well with including a second major automotive
marketplace.
Escrow.com’s strategy of pursuing licensing in every state and territory in the US and Canada continued to be recognised as a key
distinguishing feature by marketplace partners. Currently Escrow is licensed or otherwise approved to operate in 48 states, with two
further state licenses in the final stages of processing. We aim to complete our US program in 2020.
In FY19 Escrow.com added Canadian dollar support and filed as a Money Services Business in Quebec. With this filing achieved it is
our immediate priority to file our United Kingdom Payments Institution Application.
FREELANCER LIMITED ANNUAL REPORT 2019 48
DIRECTORS’ REPORT
Review of Financial Performance
The Company achieved Net Revenue of $58.0 million in FY19 (up 6% on the previous corresponding period), and an all-time record
Gross Payment Volume of $787.7 million (up 12% on the previous corresponding period). Revenue excluding Escrow.com amounts to
$50.4 million (up 13% on the previous corresponding period), GPV excluding Escrow.com was an all-time record at $181.4 million (up
6.77% on the previous corresponding period).
60
40
20
0
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
Revenue (A$m)
4.7
6.5
10.6
18.8
26.1
38.6
52.7
50.3
51.9
58.5
100%
75%
50%
25%
0%
400
400
400
200
Freelancer.com
Escrow.com
606.3
570.6
506.2
438.1
91.3
138
160
159.4
181.4
170.1
28
35.6
50.8
0
103.7
84.4
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
Growth pcp
-
37%
64%
77%
39%
48%
37%
(5%)
3.2%
12%
Gross margin
83%
87%
87%
88%
87%
86%
86%
88%
85%
84%
GPV (A$m)
Growth pcp
28
-
35.6
50.8
84.4
103.7
229.3
666.2
587.6
740.7
788
27%
43%
66%
23%
120%
290%
-12%
-26%
6%
FIGURE 6: NET REVENUE BY YEAR FOR THE FREELANCER GROUP
FIGURE 7: GROSS PAYMENT VOLUME (GPV) FOR
THE FREELANCER GROUP BY YEAR
Notes:
1. 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 Net Revenue. Based on Freelancer’s unaudited managementaccounts
which have not been subject to an auditor’s review.
2. Take rate for the Marketplace segment is 3% employer commission and 10% freelancer commission, which has not changedsince 2010.
3. Core Freelancer FY19 GPV of A$181.4m. Escrow FY19 GPV of US$422m, average AUD/USD FX of 0.6956= A$606.3m
The Company’s gross margin of 83.7% in FY19 decreased by 1.8% compared to the previous corresponding period (FY18: 85.2%), but remains
within a consistent range since 2011. 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.
Cost of sales also includes direct labour costs incurred in generating enterprise services revenue. The fall in gross margins in FY19 is mainly
attributable to lower margins generated from enterprise consulting services.
The Company reported an Operating NPAT (loss) of $(1.3) million in FY19 (FY18: $(0.9) million).
Operating NBPT (loss) was $(1.7) million in FY19 (FY18: $(1.8) million)).
Operating expenses were 10.5% higher than the prior corresponding period. Payroll costs, which represent 45% of operating costs were higher
by 10%. Higher costs were substantially attributable to additional resourcing of the enterprise division. As of 31 December 2019, the company
had 478 FTE staff (up 4.4% on FY18).
Overall NPAT (loss) was $(1.6) million in FY19, which included a tax benefit of $0.1 million (FY18: $(1.5) million).
Cash Flow and Balance Sheet Strength
The Company posted a positive operating cash flow of $2.1 million in FY19 up from (FY18 of $(1.0) million). Operating cash excludes $3.1
million of lease payments associated with office premises, which have been reflected as finance costs in accordance with AASB 16 Leases.
Trade and other receivables include receivables from various payment gateways in relation to partially completed transactions as well as
amounts due from enterprise customers.
As at 31 December 2019, the Company held cash and equivalents of $32 million and no net debt.
49 FREELANCER LIMITED ANNUAL REPORT 2019
DIRECTORS’ REPORT
Dividends paid or recommended
There have been no dividends paid or provided for the financial year ended 31 December 2019 (2018: 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
Significant changes in state of affairs
There have been no 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 2019 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.
Insurance and indemnification of Directors and Officers
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 in place Deeds of Indemnity, Insurance and Access with each of its current Directors and such other officers that the
Directors determine are entitled to receive the benefit of an indemnity.
Rounding off of amounts
The Company is an entity to which ASIC Corporations Instrument 2016/191 applies. Accordingly amounts in the financial report have been
rounded off to the nearest thousand dollars, unless otherwise stated.
Meetings of Directors
During the financial year five 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 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
2
2
2
2
2
2
-
-
-
-
-
-
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 $29,000 (2018: $37,000).
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 21 to the financial statements do not compromise the external
auditor’s independence, based on advice received from the Audit Committee, for the following reasons:
FREELANCER LIMITED ANNUAL REPORT 2019 50
DIRECTORS’ REPORT
•
•
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 51 and forms part of the Directors’ Report for the year ended 31
December 2019.
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 proceedings have been brought or intervened in on behalf of the Company, nor have any applications for leave to do so been made
in respect of the Company, under section 237 of the Corporations Act 2001.
New Accounting Standards
The Group adopted AASB 16 Leases on 1 January 2019, resulting in the recognition of right-of-use assets and lease liabilities.
Details of the carrying amounts of these items and the related movements during the period are disclosed in Note 13 to the financial
statements.
51 FREELANCER LIMITED ANNUAL REPORT 2019
Remuneration Report
This audited Remuneration Report for the Group which forms part of the Directors’ Report for the financial year ended 31 December
2019, details the nature and amount of remuneration for each Director and the Executives.
DIRECTORS’ REPORT
• R.M. Barrie – Executive Chairman
• S.A. Clausen – Non-Executive Director
• D.N.J. Williams – Non-Executive Director
• 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 (2018:$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).
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.
FREELANCER LIMITED ANNUAL REPORT 2019 52
DIRECTORS’ 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.
Non-Executive Directors
S.A. Clausen
2019
2018
D.N.J. Williams
2019
2018
Executive Directors
R.M. Barrie
2019
2018
Other KMP
N.L. Katz
2019
2018
Total
2019
2018
Short-term benefits
Post-employ-
ment benefits
Share based
payments
Directors’
fees
Cash salary
and fees
Other
Superannuation
Shares
$
-
-
-
-
$
-
-
-
-
$
-
-
2,174
2,174
569,096
569,096
7,289
9,257
25,904
25,904
$
-
-
-
-
-
-
Total
$
25,000
25,000
25,058
25,058
602,289
604,257
317,400
310,200
7,023
6,324
27,600
34,800
93,422
110,820
445,445
462,144
47,884
47,884
886,496
879,296
14,312
15,581
55,678
62,878
93,422
110,820
1,097,792
1,116,459
$
25,000
25,000
22,884
22,884
-
-
-
-
The remuneration of key management personnel in the years ended 31 December 2019 and 2018 were 100% fixed, and there is no link between remuneration
and the market price of the Company’s shares.
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
2019
Directors
R.M. Barrie
D.N.J. Williams
Other KMP
N.L. Katz
Total
2018
Directors
R.M. Barrie
D.N.J. Williams
Other KMP
N.L. Katz
Total
-
-
885,539
885,539
-
-
885,539
885,539
-
-
-
-
-
-
-
-
-
-
(200,000)
(200,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
685,539
685,539
232,635
232,635
452,904
452,904
-
-
-
-
-
-
885,539
885,539
412,355
412,355
473,184
473,184
53 FREELANCER LIMITED ANNUAL REPORT 2019
Ordinary share capital
Details of ordinary 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
Received as part
of remuneration Purchase of shares
Sale of shares
Balance at the end of
the year
DIRECTORS’ REPORT
2019
Directors
R.M. Barrie1
S.A. Clausen
D.N.J. Williams2
Other KMP
N.L. Katz3
Total
2018
Directors
R.M. Barrie1
S.A. Clausen
D.N.J. Williams2
Other KMP
N.L. Katz3
Total
194,696,431
160,000,000
10,758,165
150,000
365,604,596
194,075,686
159,717,351
10,758,165
150,000
364,701,202
-
-
-
-
-
-
-
-
-
350,000
-
200,000
550,000
620,745
282,649
-
-
903,394
-
-
-
-
-
-
-
-
-
194,696,431
160,350,000
10,758,165
350,000
366,154,596
194,696,431
160,000,000
10,758,165
150,000
365,604,596
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 Note 24 of 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
2019
$000
-
-
-
828
828
2018
$000
-
-
-
960
960
¹ 1,279,500 shares as at 31 December 2019 (2018: 1,279,500) are held directly or indirectly by related parties.
² 131,000 shares as at 31 December 2018 (2017: 131,000) are held directly or indirectly by related parties.
³ 40,000 shares as at 31 December 2019 (2018: 40,000) are held directly or indirectly by related parties.
FREELANCER LIMITED ANNUAL REPORT 2019 54
DIRECTORS’ 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
Chief Executive
Officer
• Term: unspecified.
• 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
Other Executives are employed under individual executive services agreements. These establish, amongst
other things:
•
•
•
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 25 of the financial statements.
This concludes the Remuneration Report.
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
Chairman
18th February 2020
55 FREELANCER LIMITED ANNUAL REPORT 2019
AUDITOR’S INDEPENDENCE DECLARATION
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS
OF FREELANCER LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to
provide the following declaration of independence to the directors of Freelancer
Limited. As the lead audit partner for the audit of the financial report of Freelancer
Limited for the year ended 31 December 2019, I declare that, to the best of my
knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation
to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Hall Chadwick
Level 40, 2 Park Street
Sydney NSW 2000
SANDEEP KUMAR
Partner
Date: 18 February 2020
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
FREELANCER LIMITED ANNUAL REPORT 2019 56
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 31 December 2019
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
Loss is attributable to:
Owners of Freelancer Limited
Non-controlling interests
Total comprehensive income for the year is attributable to:
Owners of Freelancer Limited
Non-controlling interests
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
5
6
6
6
6
24
6
7
19
32
32
2019
$000
58,009
(9,455)
48,554
(22,295)
(12,764)
(10,080)
(285)
(1,086)
(3,214)
(329)
(219)
(1,718)
127
(1,591)
128
(1,463)
(1,591)
-
(1,591)
(1,463)
-
(1,463)
Cents
(0.35)
(0.35)
2018
$000
51,851
(7,651)
44,200
(20,217)
(11,678)
(8,922)
(2,702)
(1,353)
(530)
(558)
(33)
(1,793)
309
(1,484)
1
(1,483)
(1,484)
-
(1,484)
(1483)
-
(1483)
Cents
(0.33)
(0.33)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
57 FREELANCER LIMITED ANNUAL REPORT 2019
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
As at 31 December 2019
Note
2019
$000
2018
$000
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Trade and other receivables
Plant and equipment
Intangible assets
Right of use assets
Other assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Current tax liabilities
Provisions
Contract liabilities
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Lease liabilities
Contract liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Non-controlling interests
Total equity
8
9
10
9
11
12
13
10
7
14
13
15
7
16
17
7
16
13
17
18
19
32,014
4,003
1,309
37,326
1,103
482
26,429
26,964
592
5,129
60,699
98,025
36,607
3,248
121
57
2,322
629
42,984
443
1,030
23,134
495
25,102
68,086
29,939
33,211
3,474
972
37,657
1,103
557
26,429
-
696
4,674
33,459
71,116
35,898
-
121
71
1,918
620
38,628
246
639
-
528
1,413
40,041
31,075
38,446
4,457
(12,984)
20
29,939
38,106
4,000
(11,051)
20
31,075
The above statement of financial position should be read in conjunction with the accompanying notes.
FREELANCER LIMITED ANNUAL REPORT 2019 58
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
For the year ended 31 December 2019
Attributable to owners of Freelancer Limited
Contributed
Equity
$000
Share Based
Payments
$000
Note
Foreign
currency
translation
reserve
$000
(Accumulated
losses)
$000
Non-
controlling
interests
$000
Balance at 1 January 2018
38,049
3,824
(383)
(9,567)
Loss for the year
Exchange differences on
translation of foreign operations
19
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Contributions of equity arising
from repayment of ESP loans
Share capital contributed by
non-controlling interests
Share based payments
18
-
24
-
-
-
57
-
-
Balance at 31 December 2018
38,106
-
-
-
-
-
558
4,382
-
1
1
-
-
-
(1,484)
-
(1,484)
-
-
-
(382)
(11,051)
-
-
-
-
-
-
20
-
20
Total Equity
$000
31,923
(1,484)
1
(1,483)
57
20
558
31,075
Attributable to owners of Freelancer Limited
Contributed
Equity
$000
Share Based
Payments
$000
Note
Foreign
currency
translation
reserve
$000
(Accumulated
losses)
$000
Non-
controlling
interests
$000
Total Equity
$000
Balance at 1 January 2019
38,106
4,382
(382)
(11,051)
20
31,075
Cumulative adjustment upon
change in accounting policies –
AASB 16 Leases
Balance at 1 January 2019
Restated
Loss for the year
Exchange differences on transla-
tion of foreign operations
-
19
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners:
-
-
-
(342)
-
(342)
38,106
4,382
(382)
(11,393)
20
31,733
-
-
-
-
-
-
-
-
-
(1,591)
128
-
128
(1,591)
128
(1,591)
-
-
-
-
-
-
(1,591)
128
(1,463)
(1,463)
340
329
Contributions of equity arising
from repayment of ESP loans
Share based payments
18
24
340
-
-
329
-
-
-
-
Balance at 31 December 2019
38,446
4,711
(254)
(12,984)
20
29,939
The above statement of changes in equity should be read in conjunction with the accompanying notes.
59 FREELANCER LIMITED ANNUAL REPORT 2019
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Note
2019
$000
2018
$000
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Income taxes paid
Net cash / (outflow) from operating activities
31
Cash flows from investing activities
Payments for plant and equipment
Payments for intangible assets
Proceeds from disposal of plant and equiptment
Proceeds from goodwill adjustment on acquistion of Nubelo
Net cash (outflow) from investing activities
Cash flows from financing activities
Contributions of equity arising from repayment of ESP loans
Proceeds from brorrowings
Repayments of lease liabilities
Net cash (outflow) / inflow from financing activities
Net (decrease) / increase 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
18
15
-
8
56,972
(54,668)
38
(195)
(91)
2,056
(226)
(1)
-
-
(227)
340
-
(3,091)
(2,751)
(922)
33,211
(275)
32,014
51,296
(52,317)
22
-
20
(979)
(83)
(52)
23
86
(26)
57
121
-
178
(827)
31,908
2,130
33,211
The above statement of cash flows should be read in conjunction with the accompanying notes.
Notes to the financial statements
FREELANCER LIMITED ANNUAL REPORT 2019 60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Contents of the notes to the
consolidated financial statements
NOTE
CONTENTS
PAGE
1.
2.
3.
4.
5.
6.
7.
8.
9.
Reporting entity.................................................................................................................................................
62
Basis of preparation.........................................................................................................................................
62
Financial risk management.............................................................................................................................
63
Operating segments.........................................................................................................................................
66
Revenue..............................................................................................................................................................
68
Expenses............................................................................................................................................................
69
Income tax.........................................................................................................................................................
70
Cash and cash equivalents.............................................................................................................................
73
Trade and other receivables............................................................................................................................
73
10.
Other assets......................................................................................................................................................
74
11.
Plant and equipment........................................................................................................................................
75
12.
Intangible assets..............................................................................................................................................
76
13.
Leases................................................................................................................................................................
78
14.
Trade and other payables...............................................................................................................................
80
15.
Borrowings........................................................................................................................................................
80
16.
Provisions.........................................................................................................................................................
80
17.
Contract liabilities............................................................................................................................................
81
18.
Contributed equity............................................................................................................................................
82
19.
Equity - reserves...............................................................................................................................................
83
20.
Key management personnel disclosures....................................................................................................
84
21.
Remuneration of auditors...............................................................................................................................
85
22.
Contingent Liabilities.......................................................................................................................................
85
23.
Commitments for expenditure......................................................................................................................
85
24.
Share based payments...................................................................................................................................
86
25.
Related party transactions..............................................................................................................................
89
26.
Parent entity information................................................................................................................................
90
27.
Business Combinations.................................................................................................................................
91
28.
Interests in controlled entities.......................................................................................................................
91
29.
Fair value measurements..............................................................................................................................
92
30.
Events occurring after the reporting date....................................................................................................
92
31.
Reconcilliation of loss after tax to net cash flow from operating activities..........................................
92
32.
33.
Earnings per share (EPS)................................................................................................................................
93
Other significant accounting policies...........................................................................................................
94
61 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 2019
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 18 February 2020.
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.
The Directors believe that there are reasonable grounds that the company is able to pay its debts as and when they fall due. The Group has a
significant cash balance at year end and has projected a profitable financial year for the period ending 31 December 2020 based on increased
revenue and a planned reduction in expenses.
(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 33(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 Corporations Instrument 2016/191. Accordingly, amounts in the financial
statements and Directors’ Report have been rounded off to the nearest $1,000.
(g) New Accounting Standards
i. AASB 16: Leases
The Group has adopted AASB 16 Leases Note 13 describes the nature and effect of the adoption of AASB 16: Leases on the Group’s financial
statements and discloses the new accounting policies that have been applied from 1 January 2019, where they are different to those applied
in prior periods.
(h) Materiality
These consolidated financial statements have included information that is deemed to be material and relevant to the understanding of the
financial statements. Disclosure may be considered material and relevant if the dollar amount is significant due to size or nature, or the
information is important to understand the:
• Group’s current year results;
• impact of significant changes in the Group’s business; or
• aspects of the Group’s operations that are important to future performance.
FREELANCER LIMITED ANNUAL REPORT 2019 62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Lease liabilities
Total financial liabilities
Note
8
9
14
13
2019
$000
32,014
5,106
37,120
36,607
26,382
62,989
2018
$000
33,211
4,577
37,788
35,898
-
35,898
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.
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.
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.
63 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
(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:
2019
Currency exposure:
Denominated in:
Cash
Trade receivables
Other financial assets
Payables
AUD
000’s
2,403
1,339
1,037
(854)
AUD
USD
NZD
GBP
HKD
SGD
PHP
EUR
CAD
INR
Other
USD
000’s
NZD
000’s
GBP
000’s
HKD
000’s
SGD
000’s
PHP
000’s
EUR
000’s
CAD
000’s
INR
000’s
AUD
000’s
15,565
1,705
109
(1,990)
108
26
-
-
858
144
9
(24)
882
279
-
-
(984)
177
359
18,850
1,393
27
-
1,021
14,284
(19)
(3,390)
298
-
-
975
201
19
(13)
58,328
21,287
99
(1,552)
(292)
(2,676)
(2,438)
(840)
(50,767)
75
28,089
(747)
342
27,395
255
278
-
(13)
(473)
(47)
AUD
USD
NZD
GBP
HKD
SGD
PHP
EUR
CAD
INR
Other
User obligations
(2,222)
(15,093)
(173)
(1,059)
Net exposure
1,703
296
(39)
(72)
2018
Currency exposure:
Denominated in:
Cash
Trade receivables
Other financial assets
USD
000’s
NZD
000’s
AUD
000’s
2,619
1,075
656
16,501
1,381
164
116
23
-
-
GBP
000’s
1,073
184
8
(5)
Payables
(697)
(1,681)
User obligations
(2,097)
(15,704)
(160)
(1,005)
Net exposure
1,556
661
(21)
255
HKD
000’s
SGD
000’s
PHP
000’s
EUR
000’s
CAD
000’s
INR
000’s
AUD
000’s
767
224
-
-
896
95
275
72
-
5
21,168
1,292
968
262
21,959
(1,994)
-
-
750
139
4
-
51,287
16,436
93
(633)
(314)
(3,078)
(2,176)
(779)
(40,310)
28
39,023
(622)
114
26,873
161
356
-
(28)
(540)
(51)
FREELANCER LIMITED ANNUAL REPORT 2019 64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group had net assets of $705,000 denominated in foreign currencies as at 31 December 2019 (comprising assets of
$34,751,000 less liabilities of $34,046,000). The Group had net assets of $2,084,000 denominated in foreign currencies as at 31
December 2018 (comprising assets of $35,160,000 less liabilities of $33,076,000).
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 2019. 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.
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%)
2019 $000
2018 $000
High
35
2
22
(2)
(4)
(52)
56
(7)
(26)
24
Low
(39)
(2)
(24)
2
4
58
(62)
7
29
(27)
High
(45)
1
(22)
(1)
(1)
(50)
(48)
(6)
(26)
(102)
Low
49
(1)
24
1
2
56
(53)
6
29
113
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 2019 the Group had $32,014,000 (2018: $33,211,000) 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.
65 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
2019
Non-derivatives
Non-interest bearing
Trade and other payables
Lease liabilities
Total
2018
Non-derivatives
Non-interest bearing
Trade and other payables
Total
1 year
or less
$000
Between 1
and 2 years
Between 2
and 5 years
$000
$000
Over 5
years
$000
Remaining
contractual
maturities
$000
36,607
3,248
39,855
-
5,652
5,652
-
14,308
14,308
-
3,174
3,174
35,898
35,898
-
-
-
-
-
-
-
-
-
-
Note
14
13
14
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
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 the majority of online revenues and expenses are incurred. Although the
Group has staff and operations in Philippines, United Kingdom, Argentina, the 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.
FREELANCER LIMITED ANNUAL REPORT 2019 66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year end 31 December 2019
Segment revenue
Segment revenue
Total segment revenue
Segment result
Segment profit
Share based payments
Depreciation and amortisation expenses
Loss before income tax
Income tax benefit
Loss for year
Segment Assets
At 31 December 2019
Segment assets
Intergroup eliminations
Deferred tax assets
Intangibles
Total assets
Segment liabilities
At 31 December 2019
Segment liabilities
Intergroup eliminations
Deferred tax liabilities
Total liabilities
Year end 31 December 2018
Segment revenue
Segment revenue
Total segment revenue
Segment result
Segment profit
Share based payments
Depreciation and amortisation expenses
Loss before income tax
Income tax benefit
Loss for year
Segment Assets
At 31 December 2018
Segment assets
Intergroup eliminations
Deferred tax assets
Intangibles
Total assets
Segment liabilities
At 31 December 2018
Segment liabilities
Intergroup eliminations
Deferred tax liabilities
Total liabilities
67 FREELANCER LIMITED ANNUAL REPORT 2019
Online
Marketplace
Online
Payments
Total
58,009
58,009
1,825
(329)
(3,214)
(1,718)
127
(1,591)
70,982
(2,898)
5,128
25,028
98,240
7,563
7,563
96
-
(230)
(326)
-
5,577
-
-
-
5,577
50,446
50,446
1,921
(329)
(2,984)
(1,392)
-
65,405
(2,898)
-
-
62,507
(66,183)
-
-
(4,574)
2,898
-
(70,757)
2,898
(443)
(66,183)
(1,676)
(68,302)
Online Marketplace
$000
Online Payments
$000
Total
$000
44,667
44,667
7,184
7,184
(1,248)
(543)
-
-
-
40,351
(5,322)
-
-
-
-
-
6,385
-
-
-
35,029
6,385
51,851
51,851
(705)
(558)
(530)
(1,793)
309
(1,484)
46,736
(5,322)
4,674
25,028
71,116
(37,984)
-
-
(7,133)
5,322
-
(45,117)
5,322
(246)
(37,984)
(1,812)
(40,041)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. Revenue
The Company’s net revenues result from transaction and other fees generated in its online marketplaces and in providing online
escrow 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.
Revenue is recognised for the major business activities as follows:
Marketplace Services
The Group enters into short-term contracts with customers for marketplace and payment services. Such contracts are entered into
before the delivery of the service which is paid in advance of receipt of the service. The performance obligation is the delivery of
the service which is recognized by the system controls. The system does not draw fees from the customer until the delivery of the
service. Therefore, revenue is recognised at a point in time upon delivery of the service when the system recognizes that the service
has completed. No rebates or volume discounts are provided to customers.
Payment Services
The Group enters into both long-term and short-term contracts with customers for payment services. In respect of long- term
contracts, revenue is recognised over the period of the contract. In respect of short-term contracts, revenue is recognised by
reference to stage of completion of the services as this is consistent to the pattern of performance obligation i.e. availability of the
open transaction to be executed progressively in the future and on the Escrow.com platform.
Enterprise Services
The enterprise services revenue stream focuses on projects negotiated with customers to meet their needs on short to long-term
contracts. Revenue is recognised when milestones as determined in the contact are completed. Under AASB 15: Revenue from
Contracts with Customers, this happens over time. The Group has an enforceable right to payment for work completed to date and
therefore, revenue is recognised over time. The Group considers the cost-to-cost method an appropriate measure of progress for the
completion of the performance obligation. The cost-to-cost method is based on the proportion of costs incurred for work performed
to date relative to the estimated total contract costs.
A customer is billed for the project services when a certain series of milestones have been achieved. A contract asset is recognised
for revenue recognised but not yet billed due to the milestone billing arrangement. Once an invoice is issued, the corresponding
contract asset is reclassified to trade receivables. A contract liability is recognised if the milestone payment exceeds the revenue
recognised to date under the cost-to-cost method. No significant financing components have been identified in the contracts with
customers, as the period between the payment and the recognition of revenue (cost-to-cost method) is always less than 12 months.
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. Grants relating to expense items are recognised as income over the periods necessary to match the grant to
the costs it is compensating.
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
Payment services
Enterprise services
Other revenue
Interest income
Government grants
Other
Total revenue
2019
$000
45,171
7,563
5,177
39
-
59
2018
$000
43,901
7,184
590
26
72
78
58,009
51,851
FREELANCER LIMITED ANNUAL REPORT 2019 68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6. Expenses
Loss before income tax benefit includes the following specific net losses and expenses:
Employee expenses
Wages and salaries (including superannuation)
Other employment costs
Total employee expenses1
Depreciation and amortisation
Plant and equipment
Right of use assets2
Leasehold improvements
Total depreciation and amortisation expenses
Rental expense relating to operating leases
Minimum lease payments
Utilities and other related costs
Total rental expense relating to operating leases
Net foreign exchange losses
Finance costs
Interest expense
Interest expense on lease liability2
2019
$000
21,035
2,331
23,366
282
2,909
23
3,214
-
285
285
1,086
24
195
2018
$000
18,587
1,883
20,470
416
-
114
530
2,413
289
2,702
1,353
-
1 Inclusive of employee expenses included in cost of sales
2 In FY19 lease expenses in respect of office leases have been accounted for in accordance with AASB 16 Leases. The impact is that lease expenses are no longer reflected
in the P&L and are brought into account as depreciation on the right of use asset and interest paid on the corresponding lease liability. The FY18 comparatives have not been restated.
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.
69 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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.
FREELANCER LIMITED ANNUAL REPORT 2019 70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(a) Income tax
Current tax
Deferred tax
Income tax (benefit)
Deferred income tax expense included in income tax benefit comprises:
Decrease / (Increase) in deferred tax assets
(Decrease) / Increase 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
Timing differences not recognized as deferred tax asset
Other non-allowable items
Income tax (benefit)
(c) Amounts recognised directly in equity
Deferred tax associated with capital raising
(d) Deferred tax assets
The balance comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Employee benefits
Provision for user disputes & refunds
Prepayments
Legal fees
Foreign exchange losses
Provision for impairment of receivables
Audit fees
Lease liabilities
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
Opening balance adjustment upon change in accounting policies – AASB 16
(Debited) / Credited to the profit or loss statement
Exchange differences
Closing balance at end of year
71 FREELANCER LIMITED ANNUAL REPORT 2019
2019
$000
107
(234)
(127)
(333)
567
(234)
(1,718)
(515)
(26)
115
99
31
117
(22)
30
(127)
-
303
175
(9)
-
285
1,063
46
398
2,492
376
5,129
-
-
5,129
4,674
788
(333)
-
5,129
2018
$000
90
(399)
(309)
(646)
237
(409)
(1,793)
(538)
(53)
46
168
16
(73)
(97)
220
(311)
28
311
77
(9)
22
603
829
82
-
2,199
532
4,646
28
28
4,674
4,003
-
646
25
4,674
(e) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Foreign exchange gains
Right of use assets
Fixed assets
Net deferred tax liabilities
Movements:
Opening balance at beginning of year
Opening balance adjustment upon change in accounting policies – AASB 16
(Debited) / Credited to the profit or loss statement
Exchange differences
Closing balance at end of year
(f) Current tax assets
Current tax assets
(g) Current tax liabilities
Current tax liabilities
(h) Franking credits
Franking credits available at the reporting date based on a tax rate of 30%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2019
$000
135
308
-
443
246
764
(567)
-
443
-
57
66
2018
$000
241
-
5
246
5
-
237
4
246
-
71
66
Freelancer Limited and its wholly-owned Australian entities elected to form an income tax consolidated group as of 12 April 2010.
FREELANCER LIMITED ANNUAL REPORT 2019 72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 and on hand
Term deposits
Total cash and cash equivalents
9. Trade and other receivables
2019
$000
31,210
804
32,014
2018
$000
32,407
804
33,211
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.
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits the use of
the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been
grouped based on shared credit risk characteristics and the days past due. The loss allowance provision as at 31 December 2019 is
determined as follows; the expected credit losses also incorporate forward-looking information.
The "amounts written off" are all due to customers declaring bankruptcy, or term receivables that have now become unrecoverable.
Current
Trade receivables
Payment gateway receivables
Less: provisions for impairment of trade receivables
Current trade receivables net of provisions for impairment
Other receivables
Total current trade and other receivables
Non-Current
Payment gateway receivables
Total trade and other receivables
(a) Provision for impaired trade receivables
Opening balance
Increase / (Decrease) in provisions for impairment during the year
Exchange differences
Closing balance
73 FREELANCER LIMITED ANNUAL REPORT 2019
2019
$000
2018
$000
5,725
1,704
(3,543)
3,886
117
4,003
1,103
5,106
2,814
737
(8)
3,543
3,743
2,545
(2,814)
3,474
-
3,474
1,103
4,577
2,331
209
274
2,814
1 – 30
days
$000
1.02%
27
27
1 – 30
days
$000
-
-
-
31 – 60
days
$000
0.28%
2
2
31 – 60
days
$000
-
-
-
61 – 90
days
$000
0.45%
4
4
61 – 90
days
$000
-
-
-
(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
(c) Expected losses
2019
Expected loss rate
Gross carrying amount
Loss allowing provision
2018
Expected loss rate
Gross carrying amount
Loss allowing provision
10. Other assets
Current
Prepayments
Other
Total current other assets
Non-current
Security deposits
Total non-current other assets
Total other assets
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2,685
769
862
3,113
(3,543)
3,886
90+
days
$000
82.73%
2,757
2,757
90+
days
$000
91.8%
2,250
2,250
2019
$000
1,292
17
1,309
592
592
1,901
3,187
394
256
2,451
(2,814)
3,474
Total
$000
84.48%
2,608
2,608
Total
$000
91.8%
2,250
2,250
2018
$000
969
3
972
696
696
1,668
FREELANCER LIMITED ANNUAL REPORT 2019 74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. Plant and equipment
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:
• Fixtures and fittings
• Motor vehicles
4 - 5 years
4 years
• Office and computer equipment
4 - 5 years
• Software
3 years
• Leasehold improvements
shorter of either the unexpired period of the lease or the estimated
useful lives of the improvements
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.
2019
$000
2,619
(2,166)
453
527
(499)
28
19
(19)
-
768
(767)
1
482
2018
$000
2,406
(1,925)
481
507
(456)
51
19
(18)
1
753
(729)
24
557
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
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
75 FREELANCER LIMITED ANNUAL REPORT 2019
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:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Office and
computer
equipment
$000
Fixtures and
fittings
$000
Software
$000
Leasehold
improvements
$000
759
81
-
(359)
481
217
-
(245)
453
100
3
-
(52)
51
12
-
(35)
28
3
-
-
(2)
1
-
-
(1)
-
51
90
-
(117)
24
-
-
(23)
1
Total
$000
913
174
-
(530)
557
230
-
(305)
482
Balance at 1 January 2018
Additions
Disposals
Depreciation and amortisation
Balance at 31 December 2018
Additions
Disposals
Depreciation and amortisation
Balance at 31 December 2019
12. Intangible assets
Goodwill
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.
FREELANCER LIMITED ANNUAL REPORT 2019 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2019
$000
4,910
(28)
4,882
2,198
-
2,198
19,349
-
19,349
26,429
2018
$000
4,910
(28)
4,882
2,198
-
2,198
19,349
-
19,349
26,429
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 2018
Additions
Adjustment to goodwiil from aquisition
Impairment
Amortisation
Domain names
$000
Intellectual property
$000
4,849
33
-
-
-
2,198
-
-
-
-
Goodwill
$000
19,395
40
(86)
-
-
Total
$000
26,442
73
(86)
-
-
Balance at 31 December 2018
4,882
2,198
19,349
26,429
Additions
Impairment
Amortisation
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2019
4,882
2,198
19,349
26,429
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, intellectual property 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.
77 FREELANCER LIMITED ANNUAL REPORT 2019
Goodwill and other intangibles are allocated to cash-generating units which are based on the Group’s reporting segments:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Online marketplace
Online payments
Total
2019
$000
14,780
11,649
26,429
2018
$000
14,780
11,649
26,429
The recoverable amount of each cash-generating unit above is determined based on value-in-use calculations. Value- in-use is
calculated based on the present value of cash flow projections over a 5 year period with the period extending beyond 5 years
extrapolated using a 2% terminal growth rate. The cash flows are discounted based on 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.
The following key assumptions were used in the value-in-use calculations:
Online marketplace
Online payments
CAGR
Rate
11%
16%
Discount
Rate
15%
15%
Management has based the value-in-use calculations on budgets for each reporting segment. These budgets use historical weighted
average growth rates to project revenue. Costs are calculated taking into account historical gross margins as well as estimated
weighted average inflation rates over the period, which are consistent with inflation rates applicable to the locations in which the
segments operate. Discount rates are pre-tax and are adjusted to incorporate risks associated with a particular segment.
Based on the above, management is satisfied that there are no indicators of impairment to the current carrying value of intangible
assets.
13. Leases
(a) Leases
The Group as lessee
At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right- of-use asset and a
corresponding lease liability are recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-
term leases (ie leases with a remaining term of 12 months or less) and leases of low value assets are recognised as operating expenses
on a straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement date. The
lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the
incremental borrowing rate.
Lease payments included in the measurement of the lease liability is as follows:
– fixed lease payments less any lease incentives;
– variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
– the amount expected to be payable by the lessee under residual value guarantees;
– the exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
– payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before the
commencement day and any initial direct costs. The subsequent measurement of the right-of- use assets is at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to
exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.
(b) Initial Application of AASB 16: Leases
The Group has adopted AASB 16: Leases retrospectively from 1 January 2019. In accordance with AASB 16.C7 the comparatives for the
2018 reporting period have not been restated.
The Group has recognised a lease liability and right-of-use asset for all leases recognised as operating leases under
AASB 117: Leases where the Group is the lessee.
Lease liabilities are shown at the present value of the remaining lease payments. The Group’s incremental borrowing rate as at 1
January 2019 has been used to discount the lease payments.
FREELANCER LIMITED ANNUAL REPORT 2019 78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following practical expedients have been used by the Group in applying AASB 16 for the first time:
– For a portfolio of leases that have reasonably similar characteristics, a single discount rate has been applied.
– Leases that have remaining lease term of less than 12 months as at 1 January 2019 have been accounted for in the same way
as short-term leases.
– The use of hindsight to determine lease terms on contracts that have options to extend or terminate.
–Applying AASB 16 to leases previously identified as leases under AASB 117: Leases and Interpretation 4: Determining whether an
arrangement contains a lease without reassessing whether they are, or contain, a lease at the date of initial application.
– Not applying AASB 16 to leases previously not identified as containing a lease under AASB 117 and Interpretation 4.
The difference is $762,754 between the lease liability ($4,287,259) as at 1 January 2019 and the discounted operating lease commitments
as at 31 December 2018 ($3,524,505).
The difference between the undiscounted amount of operating lease commitments at 31 December 2018 of $3,810,695 and the discounted
operating lease commitments as at 1 January 2019 of $3,524,505 was $286,190 which is due to discounting the operating lease
commitments at the Group’s incremental borrowing rate.
The Group’s lease portfolio comprises commercial leases for office property. As at 31 December 2019 these leases had remaining lives
ranging from 2.5 months up to 90 months.
Options to Extend or Terminate
The options to extend or terminate are contained in several of the Group’s property leases. These clauses provide the Group opportunities
to manage leases in order to align with its strategies. All of the extension or termination options are only exercisable by the Group. The
extension options or termination options which were probable to be exercised have been included in the calculation of the right-of-use asset.
(i) AASB 16 related amounts recognised in the balance sheet
2019
$000
2018
$000
Right of use assets
Leased office property:
Opening balance
Addition to right-of-use asset
Depreciation expense for the year ended
Exchange differences
Net carrying amount
Lease liabilities
Current
Non – current
Total
(ii) AASB 16 related amounts recognised in the statement of profit or loss
Depreciation charge related to right-of-use assets
Interest expense on lease liabilities (under finance costs)
(iii) AASB 16 related amounts recognised as cash outflows in the statement of cash
Interest expense on lease liabilities (under finance costs)
Repayment of lease liabilities
79 FREELANCER LIMITED ANNUAL REPORT 2019
-
29,845
(2,909)
28
26,964
3,248
23,134
26,382
2019
$000
2,909
195
2019
$000
195
3,091
-
-
-
-
-
-
-
-
2018
$000
-
-
2018
$000
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. 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
15. Borrowings
Current
Working capital loan
Total borrowings
2019
$000
3,155
785
32,677
36,607
2019
$000
121
121
2018
$000
2,491
730
32,677
35,898
2018
$000
121
121
This loan has been provided from non-controlling shareholders of Freightlancer Holdings Pty Limited to provide working capital
funding. The loan is unsecured, interest free and has no fixed date of repayment.
16. Provisions
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
Provision for indirect taxes
Provision for penalties*
Total current provisions
Non-current
Make-good provisions
Employee benefits
Total non-current provisions
Total provisions
2019
$000
584
1,265
103
370
2,322
720
310
1,030
3,352
2018
$000
256
1,012
252
398
1,918
300
339
639
2,557
*At the time of the acquisition of the Escrow.com business in November 2015, it held eight money transmission and/or escrow
licences in the US. After the acquisition, the Company has pursued an aggressive program of applying for money transmission and/or
escrow licenses in the remaining states in the US. At 31 December 2019, Forty three licences were in place. As part of this process, in
FY19 the division incurred one-off regulatory penalties of nil (FY18: $0.8 million) for unlicensed activity (substantially pre- acquisition).
In addition, the Company has further made provision of $0.4 million as an estimate of probable penalties.
FREELANCER LIMITED ANNUAL REPORT 2019 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Movements
Provision for
User Disputes/
Refunds
Provision for
Indirect Taxes
Employee
Benefits
Provision for
Penalties
Provision for
Make-good
Total Provisions
$000
$000
192
81
-
(41)
24
256
256
482
(57)
(86)
(11)
584
-
248
-
-
4
252
252
270
(353)
-
(66)
103
$000
1,174
591
(227)
(208)
21
1,351
1,351
864
(409)
(244)
13
1,575
$000
897
313
(829)
(80)
97
398
398
-
-
(28)
-
370
$000
$000
266
41
-
(17)
10
300
300
994
-
(579)
5
720
2,529
1274
(1,056)
(346)
156
2,557
2,557
2,610
(819)
(937)
(59)
3,352
Balance at 1 January 2018
Additional provisions
Amounts used
Unused amounts reversed
Foreign exchange differences
Balance at 31 December 2018
Balance at 1 January 2019
Additional provisions
Amounts used
Unused amounts reversed
Foreign exchange differences
Balance at 31 December 2019
17. Contract liabilities
Refer to Note 5 for the accounting policy on marketplace and payment services revenue recognition policy. Revenue is recognised
when these conditions are met.
Amounts received in advance of delivery for services
Total contract liabilities
Current
Non-current
Total contract liabilities
There were no significant changes in the contract liability balances during the 2019 year.
2019
$000
1,124
1,124
629
495
1,124
2018
$000
1,148
1,148
620
528
1,148
81 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. Contributed equity
(a) Share capital
Ordinary shares
Fully paid
Total share capital
Note
2019
Number
2018
Number
18(b)
452,756,722
455,197,935
2019
$000
38,446
38,446
(b) Movements in ordinary share capital
Reconciliation to 31 December 2018
Balance at 1 January 2018
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 2018
Reconciliation to 31 December 2019
Balance at 1 January 2019
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 2019
Number of shares
Average price
456,835,488
1,115,150
(2,752,703)
-
455,197,935
$0.54
$1.06
-
Number of shares
Average price
455,197,935
520, 560
(2,961,773)
-
455,756,722
$0.71
$0.95
-
2018
$000
38,106
38,106
$000
38,049
-
-
57
38,106
$000
38,106
-
-
340
38,446
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 24.
(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 2018 Annual Report.
FREELANCER LIMITED ANNUAL REPORT 2019 82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. 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
2019
$000
4,382
329
4,711
(382)
128
(254)
4,457
2018
$000
3,824
558
4,382
(383)
1
(382)
4000
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.
83 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20. 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
Mr Simon Alvin Clausen – Non-Executive Director
(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
2019
$000
949
93
56
1,098
2018
$000
943
111
62
1,116
These amounts 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.
FREELANCER LIMITED ANNUAL REPORT 2019 84
21. 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-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Accounting Services
Total remuneration of audit firms other than Hall Chadwick
Total auditors’ remuneration
22. Contingent liabilities
2019
$000
2018
$000
119
2
29
150
62
22
104
188
338
113
2
37
152
32
8
-
40
192
Except for the items listed below, there are no other contingent liabilities as at 31 December 2019:
• a collateral amount of USD450,000 (2018: USD100,000) is in place in one of the Group’s PayPal accounts in favour of PayPal
Australia Pty Ltd;
•
term deposits of $76,852 (2018: $76,822) are secured for corporate credit card facilities in place;
• deposits of $1,177,000 (2018: $1,200,000) 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 (2018: $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 nil (2018: 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 USD94,000 (2018: USD104,000), which is held as a reserve to satisfy escrow regulatory
requirements in respect of credit card transactions.
23. 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 are accounted for
in accordance with AASB 16 Leases and are brought into account as depreciation on the right of use asset and interest paid on the
corresponding lease liability. In 2018 rentals paid under operating leases were charged to the income statement on a straight line
basis over the period 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.
Non-cancellable operating leases
The Group has entered into commercial leases for office property. As at 31 December 2019 these leases had remaining lives ranging
from 2.5 months up to 90 months. Lease expenses in respect of office leases have been accounted for in accordance with AASB 16
Leases and are brought into account as depreciation on the right of use asset and interest paid on the corresponding lease liability. In
2018 rentals paid under operating leases were 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:
85 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Less than one year
Between one and five years
More than five years
Total operating lease commitments
(a) Non-cancellable operating services
2019
$000
-
-
-
-
2018
$000
2,626
1,185
-
3,811
The Group has entered into a commercial agreement for web hosting services with an annual fee commitment for 2 years
commencing on 1 January 2020 (2018: 1 January 2018). Fees paid under this agreement are charged to the income statement on
a usage basis over the period of the agreement. This commitment is fixed in USD. The future minimum fee commitment under this
agreement has been calculated using the spot exchange rate at 31 December 2019 and may be subject to variation due to changes in
exchange rates. The amounts 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 2019
24. Share based payments
2019
$000
4,264
4,264
-
8,528
20178
$000
5,657
-
-
5,657
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. Resolutions to amend and approve the ESP were passed at the AGM held on 17 May 2016.
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:
»
»
»
»
10% of ESP shares applied for vesting on the date that is the first anniversary of the issue date of the ESP shares;
20% of ESP shares applied for vesting on the date that is the second anniversary of the issue date of the ESP shares;
30% of ESP shares applied for vesting on the date that is the third anniversary of the issue date of the ESP shares; and
40% of ESP shares applied for vesting on the date that is the fourth anniversary of the issue date of the ESP shares.
FREELANCER LIMITED ANNUAL REPORT 2019 86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
• 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 suchnumber of
ESP shares that equal by value (using the price at which the ESP shares were issued) the outstandingamount of the ESP Loan
will become the subject of a buy-back notice from the Company which the ESP Participantmust accept. The buy-back of such
number of ESP shares will be considered full and final satisfaction of the ESPLoan 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;
•
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
87 FREELANCER LIMITED ANNUAL REPORT 2019
(a) ESP share grants
Set out below are summaries of ESP shares granted, issued and that have balances or movement during the year under the plan:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Grant date
2019
20 February 2015
10 April 2015
3 June 2015
12 August 2015
15 October 2015
24 November 2015
21 December 2015
7 March 2016
26 April 2016
22 June 2016
27 July 2016
4 November 2016
30 October 2017
8 December 2017
19 December 2017
2 March 2018
18 October 2018
12 November 2018
20 February 2019
6 May 2019
Total
2018
20 February 2015
10 March 2015
10 April 2015
3 June 2015
12 August 2015
15 October 2015
24 November 2015
21 December 2015
7 March 2016
26 April 2016
22 June 2016
27 July 2016
4 November 2016
30 October 2017
8 December 2017
19 December 2017
2 March 2018
18 October 2018
12 November 2018
Total
Issue
price
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
$0.66
$1.01
$1.08
$1.40
$1.45
$1.76
$1.76
$1.53
$1.38
$1.55
$1.59
$1.34
$0.48
$0.52
$0.52
$0.40
$0.53
$0.65
$0.53
$0.65
$0.66
$0.77
$1.01
$1.08
$1.40
$1.45
$1.76
$1.76
$1.53
$1.38
$1.55
$1.59
$1.34
$0.48
$0.52
$0.52
$0.40
$0.53
$0.65
940,000
200,000
150,000)
560,000
200,000
75,000
100,000
30,000
50,000
735,000
440,539
330,000
-
756,007
825,000
15,150
1,000,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
407,226
113,334
(425,000)
-
-
-
-
-
-
-
-
-
-
-
-
(78,382)
(15,000)
-
(20,000)
-
-
-
(515,000)
(200,000)
(150,000)
(560,000)
(200,000)
(25,000)
(100,000)
-
-
-
-
(230,000)
-
(171,773)
(810,000)
-
-
-
-
-
-
-
-
-
-
50,000
-
30,000
50,000
-
440,539
100,000
-
-
-
-
-
-
-
-
7,500
12,500
-
-
-
-
-
-
50,000
-
22,500
37,500
-
110,135
330,404
40,000
60,000
-
-
505,852
270,431
235,421
-
15,150
980,000
100,000
407,226
113.334
-
-
902,000
90,000
407,226
113,334
-
15,150
78,000
10,000
135,000
-
5,771,696
520,560
(538,382)
(2,961,773)
2,792,101
1,953,126
838,975
1,000,000
1,250,000
250,000
150,000
735,000
375,000
75,000
100,000
30,000
70,000
300,000
765,539
530,000
50,000
835,928
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,150
1,000,000
100,000
(10,000)
(50,000)
940,000
39,587
900,413
-
-
-
-
-
-
-
-
-
-
-
-
-
(22,218)
(75,000)
-
-
-
(1,250,000)
(50,000)
-
(175,000)
(175,000)
-
-
-
(20,000)
(300,000)
(325,000)
(200,000)
(50,000)
(57,703)
(100,000)
-
-
-
-
200,000
150,000
560,000
200,000
75,000
100,000
30,000
50,000
-
440,539
330,000
-
756,007
825,000
15,150
-
16,668
60,000
224,000
80,000
30,000
40,000
15,000
25,000
-
220,270
195,000
-
588,117
810,000
-
1,000,000
1,000,000
100,000
100,000
-
133,332
90,000
336,000
120,000
45,000
60,000
15,000
25,000
-
220,269
135,000
-
167,890
15,000
15,150
-
-
7,516,467
1,115,1500
(107,218)
(2,752,703)
5,771,686
3,443,642
2,378,054
FREELANCER LIMITED ANNUAL REPORT 2019 88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 $0.27 per
option (2018: $0.27). 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.
25. 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 28.
(c) Transactions with key management personnel
Disclosures relating to key management personnel are set out in Note 20 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.
89 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. 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
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated losses
Total equity
Contingent liabilities
2019
$000
(655)
(655)
3,619
33,224
36,843
112
112
36,731
38,446
4,712
(6,427)
36,731
2018
$000
(564)
(564)
3,575
33,114
36,719
2
2
36,717
38,106
4,382
(5,771)
36,717
The parent entity had no contingent liabilities at 31 December 2019 and 31 December 2018.
Capital commitments
The parent entity had no capital commitments as at 31 December 2019 and 31 December 2018.
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.
FREELANCER LIMITED ANNUAL REPORT 2019 90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. 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.
28. 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 33:
NAME OF ENTITY
COUNTRY OF INCORPORTATION
2019
2018
PERCENTAGE OWNED (%)
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
StartCon Pty Ltd
Freightlancer Holdings Pty Ltd **
Freightlancer Technology Pty Ltd **
Freightlancer Pty Ltd **
Freelancer Networks (Canada), Inc.
Freelancer Outsourcing, Inc.
Canadian Payments, Inc
Freelancer.com Pte Limited
Freelancer International GmbH
Freemarket (Switzerland) GmbH
Freelancer Online India Private Limited
Freelancer.com Philippines, Inc.
Freelancer Outsourcing UK Limited
Payments Europe Limited
Freelancer (Shanghai) Information Technology Co., Ltd.
Westmor Management, Inc. *
Escrow.com, Inc. *
EC Services Corporation*
IES International, Inc. *
Internet Escrow Services, Inc. *
Freightlancer, Inc. **
* Escrow.com group
** Freightlancer group
91 FREELANCER LIMITED ANNUAL REPORT 2019
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Canada
Canada
Singapore
Switzerland
Switzerland
India
Philippines
United Kingdom
United Kingdom
China
United States
United States
United States
United States
United States
United States
100
100
100
100
100
100
100
100
100
100
50
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
50
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
29. Fair value measurements
All assets and liabilities are recorded at their fair value.
30. Events occurring after the reporting date
There are no other matters or circumstances that have arisen since 31 December 2019 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.
31. 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
Profit on disposal of fixed assets
Share based payments expense
Net exchange differences
Changes in operating assets and liabilities:
(Increase) / Decrease in trade and other receivables
Decrease / (Increase) in deferred tax assets
(Increase) in other assets
Increase in trade and other creditors
(Decrease) / Increase in provision for income tax
Increase in deferred tax liabilities
Increase in provisions for employee benefits
(Decrease) / Increase in other provisions
Net cash inflow / (outflow) from operating activities
a)
Non-cash Financing
i. Share issue:
2019
$000
2018
$000
(1,591)
(1484)
3,214
-
329
(196)
152
333
(544)
573
(13)
(564)
224
149
2,056
530
(23)
558
100
(283)
(649)
(283)
(407)
115
-
177
(149)
(979)
100 ordinary shares were issued in Freightlancer Holdings Pty Limited at $200 per share in 2018 as part of the consideration
consideration for the purchase of the business and assets of Channel 40 Pty Ltd. The share issue was on an arms' length
basis.
FREELANCER LIMITED ANNUAL REPORT 2019 92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. Earnings per share (EPS)
Basic earnings per share
Basic earnings per share is calculated by dividing:
•
•
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 bonuselements 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.
(a) Basic earnings per share
From operations attributable to the ordinary equity of the Company
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 Company
Total basic earnings per share attributable to the ordinary equity holders of the Company
(c) Reconciliation of earnings used in calculating earnings per share
Basic earnings per share:
Loss from continuing operations
Diluted earnings per share:
2019
Cents
2018
Cents
(0.35)
(0.35)
(0.35)
(0.35)
$000
(0.33)
(0.33)
(0.33)
(0.33)
$000
(1,591)
(1,484)
Loss attributable to the ordinary equity holders of the Company
(1,591)
(1,484)
(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
2019
Shares
2018
Shares
449,827,061
449,326,669
4,961,048
5,591,286
-
-
454,788,109
454,917,955
93 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Information on the classification of securities
ESP shares and share grants
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 24.
33. 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 28.
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.
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.
FREELANCER LIMITED ANNUAL REPORT 2019 94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(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.
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.
95 FREELANCER LIMITED ANNUAL REPORT 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(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 2019, 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 2019 of $26,429,000 (2018: $26,429,000).
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 24. 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.
Lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised. After initial recognition, the Group reassesses the lease term if there is a significant event or change in
circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew.
FREELANCER LIMITED ANNUAL REPORT 2019 96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 Payments 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 2019 the cash balance in trust amounted to A$40,222,000 (2018: A$32,157,000), 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 2018, other than for the initial application of AASB 16: Leases (Refer
note 13).
(i) New Accounting Standards for application in future periods
A number of new accounting standards (including amendments and interpretations) have been issued but were not effective in FY20.
The Group has not elected to early adopt any of these new accounting standards in these financial statements. Certain amendments
were made to the definition of materiality, which were applicable to AASB 101 Presentation of Financial Statements and AASB
108 Accounting Policies, Changes in Accounting Estimates and Errors and consequential amendments to other AASBs, which: i)
use a consistent definition of materiality throughout AASBs and the Conceptual Framework for Financial Reporting; ii) clarify when
information is material; and iii) incorporate some of the guidance in AASB 101 about immaterial information. These amendments are
in issue but are applicable to the Group in future financial periods.
97 FREELANCER LIMITED ANNUAL REPORT 2019
FREELANCER LIMITED ANNUAL REPORT 2019 98
DIRECTORS’ DECLARATION
Directors’ Declaration
In the Directors’ opinion:
(a)
the Financial Statements and notes of the consolidated entity set out on pages 57 to 97
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 2019 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 2019.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the directors
Matt Barrie
Chairman
18 February 2020
99 FREELANCER LIMITED ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITES
Opinion
We have audited the accompanying financial report of Freelancer Limited (the Group),
which comprises the consolidated statement of financial position as at 31 December 2019,
the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity, the consolidated statement of cash flows for
the year ended and notes comprising a summary of significant accounting policies and
other explanatory information, and the directors’ declaration.
In our opinion:
(a) the accompanying financial report of the Consolidated Entity 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 2019 and of its performance for the year ended on that
date; and
complying with Australian Accounting Standards and the Corporations
Regulations 2001
ii.
(b) the financial report also complies with International Financial Reporting Standards
as disclosed in Note 2(a).
Basis of Opinion
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 about
whether the financial report is free from material misstatement. Our responsibilities under
those standards are further described in the Auditor’s responsibility section of our report.
We are independent of the Consolidated Entity in accordance with the Corporations Act
2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001 has
been given to the directors of the group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN
Liability limited by a scheme approved under Professional Standards Legislation
www.hallchadwick.com.au
FREELANCER LIMITED ANNUAL REPORT 2019 100
INDEPENDENT AUDITOR’S REPORT
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITITES
Key Audit Matter
Procedures
Our procedures included, amongst others:
We understood and tested management’s controls over its
systems relevant to financial reporting.
We involved our IT specialist to conduct general IT controls tests
that related to applications that support the effective functioning of
application controls. This included a review of the policies and
procedures, change management and access security.
Our IT specialist performed application controls testing over the
three main applications. The testing included procedures used to
initiate, record, process and report transactions and other financial
data, with particular focus on recognition and measurement of fee
income, transactions including payment gateways and exception
report testing.
When testing controls was not considered an appropriate or
efficient testing approach, alternative audit procedures were
performed on the financial information.
Our procedures included, amongst others:
We evaluated management’s goodwill and intangible assets
impairment assessment.
Key inputs in the value in use model included forecast revenue,
costs, discount rates and terminal growth rates. We corroborated
those assumptions by comparing forecasts to historical actuals.
our
involved
valuation
recalculate
We
management’s discount rates based on external data where
available. The valuation specialist was also involved in assessing
the value in use model used for valuation methodology including
treatment of the net present value calculations.
specialists
to
We performed sensitivity analysis on the fee income; terminal
growth rate; and discount rate inputs.
We assessed the Group’s disclosures of the quantitative and
qualitative considerations in relation to the carrying value of
goodwill and intangible assets, by comparing these disclosures to
our understanding of this matter.
the Group’s
Reliance on automated process and
controls
Freelancer’s revenue is primarily generated
from new and existing users posting and
the
fulfilling projects and contests on
therefore a
Freelancer.com website and
significant part of
financial
reporting processes are heavily reliant on IT
systems with automated processes and
controls over the capturing, valuing and
recording of transactions. Similarly, other IT
platforms of
includes
the business
Escrow.Com and Warrior Forum are also
heavily reliant on IT systems. This is a key
audit matter because of the:
• Complex IT environment supporting the
that
Group’s business processes
• Mix of manual and automated controls
• Multiple internal and outsource support
arrangements
• Large volume of low value transactions
Impairment of Goodwill and Intangible
Assets
Refer to Note 12 – Intangible Assets and
Note 2 (h) - Critical Accounting Estimates
and Judgements
The Group has recognised intangible assets
of $26.4 million at 31 December 2019
resulting from business combinations and
asset acquisitions.
impairment of
the
The assessment of
Group’s
balances
intangible
incorporated significant judgement in respect
of factors such as general market conditions,
discount rates, revenue growth and cost
assumptions.
asset
to amounts
We have focussed on this area as a key audit
involved being
matter due
material; the inherent subjectivity associated
with critical
in
relation to forecast future revenue and costs;
discount rates; and terminal growth rates.
judgements being made
101 FREELANCER LIMITED ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITITES
Other Information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2019, but does not
include the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of the other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australia Accounting Standards and the Corporations Act
2001 and for such internal control as directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Consolidated
Entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Consolidated Entity or to cease operations, or have no realistic alternative but to do
so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
–
–
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
FREELANCER LIMITED ANNUAL REPORT 2019 102
INDEPENDENT AUDITOR’S REPORT
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITITES
–
–
–
–
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
103 FREELANCER LIMITED ANNUAL REPORT 2019
INDEPENDENT AUDITOR’S REPORT
FREELANCER LIMITED
ABN 66 141 959 042
AND CONTROLLED ENTITIES
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
FREELANCER LIMITED AND CONTROLLED ENTITITES
Report on the Remuneration Report
We have audited the remuneration report included in pages 52 to 55 of the directors’ report for
the year ended 31 December 2019.
The directors of the Group 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.
Opinion
In our opinion the remuneration report of Freelancer Limited for the year ended 31 December
2019 complies with s 300A of the Corporations Act 2001.
Hall Chadwick
Level 40, 2 Park Street
Sydney NSW 2000
SANDEEP KUMAR
Partner
Dated: 18 February 2020
FREELANCER LIMITED ANNUAL REPORT 2019 104
ADDITIONAL ASX INFORMATION
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 8 April 2020.
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 bodies1
Top 20 Shareholders as at 8 April 2020
Rank Name
1 MATT BARRIE
2 CITICORP NOMINEES PTY LIMITED
3 HSBC CUSTODY NOMINEES
4 MR DARREN WILLIAMS
5 J P MORGAN NOMINEES AUSTRALIA
8 BNP PARIBAS NOMS (NZ) LTD
7 BNP PARIBAS NOMINEES PTY LTD
8 CS THIRD NOMINEES PTY LIMITED
9 MRS RIKA WESTWOOD
10 MR NICHOLAS PETER DE JONG
11 NATIONAL NOMINEES
12 3RD WAVE INVESTORS LTD
13 MR RODNEY JOHN SELLICK
14 MR RAM SHANKER KANGATHARAN
15 CUSTODIAL SERVICES LIMITED
16 MR NEIL LEONARD KATZ
17 INFILSEC PTY LTD
18 DUNRAY NOMINEES PTY LTD
19 FRETENSIS PTY LTD
20 MAROBAR HOLDINGS PTY
Total Top 20
Total Remaining
Total of Securities
Number of Shares
196,237,467
163,170,536
Number of ordinary
shares held
% of ordinary
shares held
191,435,150
101,331,181
80,284,025
10,605,660
10,012,964
6,409,615
3,802,700
1,553,094
1,550,000
1,501,849
1,475,939
1,250,000
1,109,833
1,080,000
1,049,365
995,539
978,727
800,000
800,000
789,500
418,815,141
33,970,016
452,785,157
42.3%
22.4%
17.7%
2.3%
2.2%
1.4%
0.8%
0.3%
0.3%
0.3%
0.3%
0.3%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
0.2%
92.5%
7.5%
1. Includes a relevant interest in 2,820,536 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.
105 FREELANCER LIMITED ANNUAL REPORT 2019
Distribution of ordinary shareholders as at 8 April 2020
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-1,000,000
100,001-99,999,999,999
Totals
ADDITIONAL ASX INFORMATION
Number of shareholders
Number of Shares
540
885
316
408
68
15
2,232
316,475
2,490,569
2,497,287
12,775,818
20,253,633
414,451,375
452,785,157
Restricted securities as at 8 April 2020
There are no restricted securities on issue for the purpose of the ASX Listing Rules.
There are ordinary shares on issue that are subject to trading restrictions pursuant to the ESP. The table below sets out the number
of shares subject to trading restrictions.
Class of restricted securities
Nature of restriction
Quoted ESP shares
Unquoted ESP shares
Various dates ending no later than 5 May 2023
Various dates ending no later than 1 March 2024
Total shares subjected to trading restrictions
Number of Shares
1,879,997
940,539
2,820,536
Voting Rights
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.
FREELANCER LIMITED ANNUAL REPORT 2019 106
CORPORATE DIRECTORY
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
Mr Neil Leonard Katz
Registered Office
Level 37 Grosvenor Place
225 George Street
Sydney NSW 2000
Telephone: +61 (02) 8599 2700
Share Registry
Boardroom Limited
Level 12
225 George Street
Sydney NSW 2000
External Auditors
Hall Chadwick
Level 40
2 Park Street
Sydney NSW 2000
Securities exchange listing
Freelancer Limited shares are listed on the Australian Securities Exchange (Listing code: FLN)
107 FREELANCER LIMITED ANNUAL REPORT 2019