Freelancer Limited
Annual Report 2023

Plain-text annual report

2023 A N N U A L R E P O R T F R E E L A N C E R L I M I T E D A C N 141 959 0 42 Index PAGE CONTENTS 002 Chairman’s Letter 038 Directors’ Report 064 Consolidated Statement of Profit or Loss and Other Comprehensive Income 065 Consolidated Statement of Financial Position 066 Consolidated Statement of Changes in Equity 067 Consolidated Statement of Cash Flows 068 Notes to the Financial Statements 109 Directors’ Declaration 110 Independent Auditor’s Report 116 Additional ASX Information 118 Corporate Directory INDEX 001 FREELANCER LIMITED ANNUAL REPORTFREEL ANCER LIMITED ANNUAL REPORT CH AIRM AN'S LE T TER Chairman’s Letter Dear Shareholders 2023 was a transformative year for Freelancer million, down 2.8% on pcp, whilst Escrow revenue Limited, marked by significant progress towards was $9.1 million, down 9.9% on pcp. Despite these profitability, a strong focus on operational efficiency, challenges, we achieved a momentous turnaround and exciting product developments. We have in profitability, with a positive Net Profit Before Tax successfully navigated the challenges of the past (NPBT) of $0.2 million, compared to a negative NPBT year and positioned ourselves for sustainable growth of $7.0 million in FY22. in the years to come. This remarkable improvement in profitability is In 2023, Freelancer Limited delivered a Gross a testament to our unwavering commitment to Marketplace Volume (GMV) of $1,020.7 million, a cost optimisation and operational efficiency. We slight decrease of 4.8% compared to the previous have made significant progress in extracting cost corresponding period (pcp). Freelancer, our flagship efficiencies across all functions of the business, marketplace, saw a GMV of $132.1 million, up 2.9% without compromising our ability to drive revenue on pcp, whilst Escrow, our secure payment platform, growth. As a result, overall costs were 18% lower recorded a GMV of $888.6 million, down 5.8% on pcp. than FY22, and the group achieved a positive EBITDA Group revenue for the full year was $53.3 million, down 4.1% on pcp. Freelancer revenue stood at $44.2 for FY23. With a structurally lower cost base, we are well-positioned to achieve sustainable profitability in FY24 and beyond. 002 003 003 CH AIRM AN’S LE T TER FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER LIMITED ANNUAL REPORT M ARKE TPL ACE STATISTICS On the product front, we have made significant We believe that our core customers, namely small strides in enhancing our platforms and offerings. We businesses and startups, will have a similar moment have introduced AI-powered personalisation to drive as their respective industries are transformed by the core marketplace conversion, collaborative features impact of AI. As their peers embrace AI, replacing to improve retention and engagement, and have support functions, sales teams, lead generation, taken our UX and design to the next level. These and more, there will be increasing competitive advancements, along with our focus on improving pressure on these businesses to enhance their acquisition through organic channels, have set the offerings and processes with generative AI products. stage for a promising future. Our work with NASA and the NIH on the US$6 million TARGETED Genome Editor Delivery Challenge showcases the versatility and capability of our platform, demonstrating that you can truly get anything done on Freelancer. We are proud to be at the forefront of innovation, pushing the boundaries We are uniquely positioned to provide and integrate these AI-powered business transformation services, which we anticipate will become an even larger category than web development. Every single business in the world will want to transform with AI. Where will they go to get these services done? Freelancer. of what is possible in the realm of crowdsourcing We remain focused on our core businesses – and freelancing. Looking ahead to 2024, we are excited about the numerous opportunities on the horizon. With several irons in the fire, we anticipate that some of these initiatives will come to fruition this year. It is time for us to execute on our plans and deliver the results that our shareholders expect. I would think that probably every Chairman's letter for FY23 will mention AI, but with over 72 million freelancers on our platform, Freelancer is possibly one of the world's largest users of generative AI Freelancer, the world's largest cloud workforce; Escrow.com, the world’s largest online escrow company; and Loadshift, Australia's largest online freight marketplace. These market-leading, broad, and horizontal service offerings cater to the needs of consumers and enterprises alike, and we are confident in their ability to drive long-term growth and value creation for our shareholders. A detailed analysis of the group's activities and performance can be found in the Review of Operations section of the Directors' Report. tooling. We are becoming recognised as this - with On behalf of the Board, I would like to thank our quite a number of keynotes, interviews, and podcasts talented team for their hard work and dedication, on the topic in the last 12 months. In the second and our shareholders for their continued support. half of FY23, I was flown to New York to present on We look forward to building on our achievements and the topic of Artificial Intelligence at the J.P. Morgan delivering sustainable growth in the years to come. Global Chief Investment Officer Summit, following Jensen Huang and Jamie Dimon on the topic. I'm old enough to remember the dotcom boom: 1994 was the year that only the geeks had email addresses, but 1995 was the year your grandmother had an email address as the browser took off. Every business in the world wanted to become an internet business, and to do that, they needed a website. This spawned an entire freelance economy for website development, and where did businesses go to get websites developed? Freelancer. Yours Sincerely, Matt Barrie Chairman 26 March 2024 Marketplace Statistics Freelancer is a game-changer for entrepreneurs, small businesses and large organisations. We provide easy access to talented freelancers from around the world, who offer a wide range of services at competitive prices. $9.7b+ TOTAL JOBS AWARDED IN USD 23m+ TOTAL JOBS POSTED 42 AVERAGE BIDS PER PROJECT $259 AVERAGE COMPLETED PROJECT IN USD 341 AVERAGE ENTRIES PER CONTEST 71% OF JOBS RECEIVE A BID WITHIN 60 SECONDS 004 005 2023FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM Freelancer is the world’s largest freelancing marketplace The world’s largest & lowest cost elastic cloud workforce, with an on-demand workforce of over 72 million users, no crowdsourcing platform globally has the liquidity of Freelancer. For clients it’s free to post your job, review obligation-free quotes, chat with freelancers and review samples of work & portfolios. For freelancers it’s free to view projects posted, bid on projects, chat to clients, fill in your profile, upload your portfolio & provide samples of work. 006 007 FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM Freelancer is changing lives around the world, whether it be for entrepreneurs, small businesses or large organizations. We provide easy access to talented freelancers from all around the world, who offer a wide range of services at competitive prices. Today, Matt Starky (@Brightdock) exemplifies freelance success as a million-dollar freelancer, sharing his secrets with others on the platform. 008 009 FREEL ANCER.COM FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER LIMITED ANNUAL REPORT 2023 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM FREEL ANCER.COM Freelancer helps small businesses, startups, entrepreneurs and large organizations turn that spark of an idea into reality. We provide easy access to talented freelancers from all around the world, who offer a wide range of services at competitive prices. Ahmed C. @ahmadcheni31 5.0 3D Artist and Animator 010 011 FREEL ANCER.COM Made real. Hire a Freelancer Aristomenis T. @menithings 5.0 Concept Designer 012 013 FREELANCER LIMITED ANNUAL REPORT2023CASE STUDIES FREEL ANCER LIMITED ANNUAL REPORT 2023 CASE STUDIES Tamworth Country Music Festival '24 Mobile App Adam Simon, an Aussie music entrepreneur from Sydney, envisioned a mobile app to enhance the Tamworth Country Music Festival. Turning to Freelancer, he sought a skilled developer. The project aimed to create an iOS and Android app for artist-fan connections. Tamworth '24 app launched successfully, amassing 3000 downloads and rave reviews. Throughout the project, my freelancer was professional, dedicated and patient working on this project with me and my team. Highly recommended and looking forward to working with them again in 2024 on our next project. Adam Simon @adamsimon Music entrepreneur 5.0 Raewyn Sleeman @raewyns Founder Stratagease Redefining Small Business Marketing Dr. Sleeman noticed a big problem among small business owners. "I saw how many small business owners were confused about how to grow their business," she recalls. Raewyn came up with the idea for the Marketing Strategy app, which gives personalized marketing plans for small businesses. With the basic screens for the app already made, Raewyn got help from Freelancer to make her idea real. The impact of Raewyn's teamwork with Freelancer has been huge. Since the app launched, it's been downloaded over 50,000 times and used by entrepreneurs in 176 countries across 150 different industries. It's amazing to see the difference my app is making. It's providing easy access to marketing expertise for those who need it most. 014 014 014 015 FREELANCER LIMITED ANNUAL REPORTM ARKE TPL ACE STATISTICS Projects Posting projects makes up the core of the Freelancer experiences, taking our clients hopes and dreams and making them real. Our clients simply describe what they need to get done, what skills they require and their budget, before posting it to millions of freelancers for free. Bids from our world-wide network of freelancers come in almost immediately, with 71% of projects in 2023 receiving a bid within 60 seconds. Once the client selects a freelancer, they set up payments using our secure Milestone Payment System, and watch as their dreams are transformed into reality. Freelancer offers over 3,000+ different categories of work on the platform, ranging from building simple websites or creating social content, through to complex and highly skilled areas such as fluid dynamics or quantum physics. No project is too large or small - they range from $10 through to $100,000+. $259 42 AVERAGE PROJECT SIZE 7% UP ON PCP AVERAGE BIDS PER PROJECT UX/UI design Afif is a very smart and driven expert developer. He is quick and efficient in getting the tasks done and great to work with all around. I highly recommend Afif. Jefferson Sauveur M. @jefferson1710 016 016 017 FREELANCER LIMITED ANNUAL REPORT2023FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM Contests Competition lies at the heart of innovation and ideation. Freelancer brings this concept into the digital age with its contest platform. Powered by millions of freelancers, contests deliver the perfect solution for any project through the magic of crowdsourcing. From visual design work through to idea generation, our skilled freelancers digest the brief and submit a variety of fully fleshed out solutions ready for production. Contests can be simple or complex, and NASA, alongside various other US government departments, use contests to help them source novel solutions to unique and complex problems, ranging from maternal health to gene editing. In 2023 alone, the platform generated over 13 million ideas to help contest holders find solutions quickly and collaboratively. 341 AVERAGE NUMBER OF ENTRIES PER CONTEST 13.9m ENTRIES CREATED IN 2023 018 018 019 019 FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM Unlock AI potential In 2023, we supercharged the marketplace with powerful AI innovations that increased personalisation throughout the funnel. From overhauling the job posting flow leading to an increase in client conversions, to integrating multiple AI tools that empower freelancers to perform their best work and have been used millions of times. We’ve already observed dramatic increases in not only quality of work, but overall productivity and speed of delivery. Entering 2024, we're focused on leading the AI revolution in the world of work. Our commitment to providing our freelancers with the best AI tooling will ensure they remain at the cutting edge, delivering unparalleled productivity and quality. Freelancer isn't just a marketplace, it's the launchpad for businesses and entrepreneurs to leverage AI and catapult into the future. 020 021 FREEL ANCER ENTERPRISE FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER LIMITED ANNUAL REPORT 2023 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER ENTERPRISE The world’s largest crowdsourcing marketplace Freelancer Enterprise provides enterprise-level clients with access to highly skilled, curated, vetted on-demand talent in the world's largest cloud workforce, instantly. In 2023, key highlights included finalising negotiations with a major player in the North American oil and gas industry, onboarding an international leading beauty company in EMEA, and successfully activating a pilot campaign for a major Chinese retailer. The Deloitte MyGigs program, a tailored version of the Freelancer InSource platform integrated with SAP Fieldglass, witnessed significant adoption within Deloitte. With over 50,000 Deloitte staff already onboarded, MyGigs facilitates project postings both internally and externally, leveraging the broader Freelancer marketplace. Our global fleet and field services division has seen remarkable progress, marked by a thriving partnership with a major computer company resulting in a three- year contract renewal and geographical expansion, totalling 46 cities across 5 countries. This year witnessed rapid scaling across major Indian cities, driving technology adoption and increasing total volumes by over 150%. 022 Bahrain Freelancer Accelerator Empowering Digital Skills Education in 2024 x Brightdock 023 FREEL ANCER ENTERPRISE FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER ENTERPRISE NASA and the US Government NASA and Freelancer have been working together since 2015 to crowdsource solutions to some of the most complex challenges imaginable, pushing the boundaries of innovation. In 2023, NASA and the National Institute of Health (NIH) launched our biggest challenge yet - the TARGETED Genome Editor Delivery Challenge with a US$6m prize pool. Entries into this marquee contest showcase the sophistication and depth of our freelance labour pool. Winners of the first phase ($1.375m) included teams from some of the top universities in the United States, including MIT, Harvard, University of Pennsylvania, Yale, Cornell and many more. With NASA recently announcing its new round of open innovation contests and our Enterprise team expanding our Contest product beyond just NASA and the US government to other organisations globally, the future of enterprise-grade crowdsourcing at Freelancer is bright. 024 025 FREEL ANCER.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT FREEL ANCER.COM This architectural 3D render was for a beachside family holiday house. $290 USD 16 DAYS This visually striking UX/UI design was for a video editing mobile app for visual storytellers. $500 USD 10 DAYS 026 027 Our Online Economy 028 029 This map illustrates the Freelancer online economy. The pink lines indicate where projects are being posted by clients 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. AWARDS FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT REACH NEW HEIGHTS Reach new heights We are thrilled to announce the launch of the International Freelancer Certification, a world class learning program for freelance talent, in partnership with Matt Starky (@brightdock), one of our top freelancers. In this annual subscription-based program, Matt Starky draws upon his years of experience to deliver critical insights and learnings, alongside personal guidance and mentoring, to budding freelancers eager to advance their freelance careers. 2022/23 Awards 2022 Stevie International Business Awards (IBA): Gold Stevie Award for Business or Professional Services Gold Stevie Award for Company of the Year - Transportation - Medium size 27th Annual Webby Awards 2023: Official Webby Honoree Websites and Mobile Sites Employment Stevie Awards The Stevie Awards are the world’s premier business awards, which were created in 2022 to honor and generate public recognition of the achievements and positive contributions of organizations and working professionals worldwide. There are seven Stevie Awards programs, each with its own focus, list of categories, and schedule. The Stevie International Business Awards are open to all organizations worldwide, and include categories to honor accomplishments in all aspects of work life. 030 031 RE: Trust Deedzz ESCROW.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT ESCROW.COM The world’s safest payment platform for high value transactions Escrow.com is the world’s largest and only multi- jurisdictional licensed online escrow company. It is the most secure payment method for high value transactions, safeguarding both the buyer and seller with all funds kept in trust that are transacted in escrow. The primary focus for the Escrow team in 2023 has been the integration of a checkout solution into a prominent SaaS shopping cart platform. As the leading online solution for high-value payments, Escrow is uniquely positioned to allow eCommerce companies to expand their total addressable markets into high-value goods and services, which were previously unable to be effectively and safely serviced by existing payment methods, such as credit cards. Escrow’s secure payment process can be applied to a large number of verticals, including real estate, import/export, asset sales and many more, disrupting existing transaction methods which are often archaic and risky by replacing them with a smooth, secure, online checkout experience. Median prices for certain Escrow.com, partnered with new domain categories, such as '.ai' M&A marketplaces and brokers, domain names, reached record expanding its presence in the highs in 4Q23. automotive sector. 032 033 ESCROW.COM FREEL ANCER LIMITED ANNUAL REPORT 2023 FREEL ANCER LIMITED ANNUAL REPORT ESCROW.COM + Escrow.com is the only online payment method for eBay Motors listings in the United States 2000 2019 2023 EBAY PARTNERS WITH EBAY MOTORS INTEGRATES THE RELATIONSHIP ESCROW.COM TO PROVIDE ESCROW.COM AS THE EXCLUSIVE BETWEEN EBAY MOTORS ESCROW SERVICES AS PART OF ONLINE PAYMENT OPTION FOR AND ESCROW.COM EXPANDS. EBAY’S ASSURANCE PROGRAM. THE WEBSITE AND MOBILE APPS. Escrow.com and eBay Motors enabled the secure sale of a 1930 Ford Model A from Poway, California to Farmington, New York - a distance that would normally be complicated to transact over. 034 + Escrow.com ensures the safety of startup acquisitions As soon as a letter of intent or an asset purchase agreement is signed, Escrow.com ensures the acquisition deal proceeds safely and smoothly for both parties. 035 LOADSHIF T FREEL ANCER LIMITED ANNUAL REPORT LOADSHIF T Australia’s largest freight marketplace Building upon our legacy since 2007, Loadshift remains at the forefront of Australia's digital freight industry, reshaping the landscape of transportation solutions for individuals and businesses alike. In 2023, our platform continued to thrive, showcasing remarkable growth and adaptation to evolving market needs. 238% GROSS MARKETPLACE VOLUME ON PCP 273% AWARDED JOBS ON PCP 036 037 FREELANCER LIMITED ANNUAL REPORT2023DIRECTORS’ REPORT DIRECTORS’ REPORT Executive Chairman BE (Hons I) GDipAppFin MAppFin HonDlitt Macq (appointed 10 April 2010) BSc (Hons I) Syd MSEE (Stanford) GAICD FIEAust Directors’ Report Your Directors submit the financial report of Freelancer Limited (the Company) for the year ended 31 December 2023. 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: Matt Barrie Founder and Executive Chairman of the Company. Serial entrepreneur with extensive experience and knowledge in the technology sector. Previously co-founded and was CEO of Sensory Networks Inc., a vendor of high performance network security processors, which was acquired by Intel Corporation Inc. in 2013. Formerly Adjunct Associate Professor at the Department of Electrical and Information Engineering at the University of Sydney. Co-author of over 20 US patent applications. Qualifications include first class honours degrees in Electrical Engineering and Computer Science from the University of Sydney, Masters in Applied Finance from Macquarie University, Masters in Electrical Engineering from Stanford, California, Graduate of the Stanford 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. Relevant interest in 196,584,607 fully paid ordinary shares, including a relevant interest in 809,528 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 195,775,079 fully paid ordinary shares (representing 43.34% of issued capital). Member of the Nomination and Remuneration Committee and Audit Committee. 038 039 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS’ REPORT DIRECTORS’ REPORT Non-Executive Director Executive Director BSc (Hons I) from 1 November 2015 until 31 October 2015 PhD (Computer Science) Non-Executive Director (appointed 10 April 2010) (appointed 10 April 2010) Darren Williams Non-Executive Director of Company. Was the Chief Technology Officer and Executive Director of the Company until 31 October 2015. Extensive experience in computer security, protocols, networking and 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 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. Qualifications include first class honours degree in Computer Science and a Ph.D. in Computer Science specialising in computer networking from the University of Sydney. Beneficial and relevant interest in 10,627,165 fully paid ordinary shares (representing 2.35% of issued capital). Member of the Nomination and Remuneration Committee and Audit Committee. Simon Clausen Founding investor and Non- Executive Director of the Company. Extensive experience in operating and investing in high growth technology businesses in both Australia and the United States. Previously founded and was CEO of PC Tools which was acquired by Symantec Corporation in October 2008. Currently the sole director of Startive Ventures, a specialised technology venture fund that actively maintains investments in a number of companies globally. Relevant interest in 161,309,528 fully paid ordinary shares, including a relevant interest in 809,528 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 160,500,000 fully paid ordinary shares (representing 35.53% of issued capital). Member of the Nomination and Remuneration Committee and Audit Committee. 040 041 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023DIRECTORS' REPORT DIRECTORS' REPORT Company Secretary Freelancer.com 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 Marketplace In 4Q23 we added 1.4m new users and 201k new projects to the marketplace. The average project size was online outsourcing marketplace and escrow payment services. There were no significant changes in the nature of the principal activities during the financial year. US$259, down 2.6% on pcp in the quarter. This average project size includes all enterprise customers and the Loadshift division. Large number of small value projects from our Freelancer Global Fleet are counterbalanced by the large values of Loadshift loads. Freelancer revenue was $44.2m (down 2.8% on pcp). Freelancer GMV was $132.1m (up 2.9% on pcp). The segment was Operating EBITDA positive in the year. Review of Results and Operations The Group’s profit / (loss) attributable to equity holders of the Company, after providing for income tax, was $189,000 (2022 loss: $5,413,000). Key Performance Highlights Year ended 31 December Financial metrics: Gross Marketplace Volume1 Net Revenue2 Gross Profit Gross margin (%) Operating EBITDA3,4 Operating EBIT3 Operating NPAT3 Operating Cash Flow Operational metrics: New Jobs5 (millions) Total Jobs Posted (millions) New Registered Users (excluding Escrow, millions) Total Registered Users6 (millions) Notes: 1 Gross Marketplace Volume (GMV) represents the underlying transaction value between third parties which is the basis for Freelancer's revenue, i.e. the value of services performed (Freelancer); goods shipped (Loadshift) or goods / services exchanged (Escrow). GMV is an unaudited metric. Marketplace segment FY23 GMV A$132.1 million (up 2.9% on prior corresponding period), Payments segment GMV A$888.6 million (down 5.8% on prior corresponding period). 2 Net Revenue excluding Escrow.com for FY23 was $44.2m (down 2.8% on prior corresponding period). 3 Excludes non-cash share based payments expense of $115k in FY23 and $159k in FY22. FY23 $m 1,021 53.3 44.2 83.0% 0.6 0.3 0.3 1.9 1.1 23.3 6.9 72.1 FY22 $m % Change 1,072 55.7 46.9 84.3% (6.6) (6.9) (5.3) (4.2) 1.2 22.2 6.7 65.1 -4.8% -4.2% -5.7% -1.6% +109% +105% +106% +145% -10% +5% +3% +11% 4 From 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 depreciation on the right of use asset and interest paid on the corresponding lease liability. Depreciation of $4.5m (FY22:$4.2m) and finance costs of $1.7m (FY22:$1.7m) relating to office leases (accounted for in accordance with AASB 16 Leases) are included in the EBITDA calculation. 5 Total Projects and Contests Posted was redefined in January 2016 to Total Jobs Posted (filtered). Jobs Posted (Filtered) is defined as the sum of Total Posted Projects and Total Posted Contests, filtered for spam, advertising, test projects, unawardable or otherwise projects that are deemed bad and unable to be fulfilled. 6 User and project/contest data includes all users and projects/contests from acquired marketplaces. Includes Escrow.com unique users. FIG.1  AVERAGE PROJECT SIZE (US$) INCL. ENTERPRISE & LOADSHIFT Marketplace liquidity remains strong, with the average bids per project remaining at 42 (~ flat on pcp), and average entries per contest now an astounding 341 (up 11.1% on pcp). Product & Engineering Our focus for FY23 was on user-facing product, including: 1. Personalisation to drive core marketplace conversion via AI, 2. Collaborative features to drive retention, engagement and growth 3. Improve acquisition through organic channels 4. Taking UX & design to the next level: from consistent to delight 042 043 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS' REPORT Personalisation to Throughout FY23, the product team had a major focus on personalising the product via the introduction drive core marketplace and optimisation of AI throughout the funnel. This included an overhaul of the job posting process to take conversion advantage of enhanced personalisation via AI, integration of AI tooling for use by freelancers, and much more. In 4Q23 we released a completely new design for our job posting flow, alongside updates to the underlying AI model, resulting in new client conversion uplifts exceeding 5%. FIG.3  SERVICES LANDING PAGE Improve acquisition Acquisition remained an important pillar of our FY23 product strategy, with the primary focus being on through organic developing new organic (free) marketing channels, whilst continuing to lift the ROAS (Return On Ad Spend) of channels our existing paid channels. We’ve continued our investment in viral acquisition, with distinct active referring users up 70% in 4Q23 as compared to 4Q22. We also began to roll out a rebuild of the logged-out project listings page, with a focus on performance and quality. Whilst the primary focus was on development of new organic channels, we also continued to work hard on improving our paid channels. Throughout the year our ROAS lifted by around 25% for our primary SEM channel, driven by incremental improvements to conversion. NDE REVENUE (30 DAYS EXCL. ENTERPRISE) AMOUNT/COST (USD) FIG.2  NEW POST PROJECTS EXPERIENCE We also launched a new series of AI-related landing pages, helping companies and individuals understand the potential of AI, and introducing a new AI powered consultant. Finally, we continued to improve the ability of freelancers to personalise their profile pages, allowing them to create specific profiles for each skill. Since release, nearly half a million bids have been created from thousands of new profiles. Collaborative features Collaboration featured heavily in our FY23 product strategy, with the bulk of our efforts focused on improving to drive retention, our Groups product. With thousands of users making tens of thousands comments every month, this has now engagement and growth become the centrepiece of our collaboration strategy. FY24 will be focused primarily on integrating this product into the project workflow. We continue to focus heavily on collaboration, with a new “Project Updates” feature focused around lifting client-freelancer communication & engagement released into beta testing in the last week. Additionally, in 4Q23 we launched the ability for freelancers to create commoditised services, powered by our quotations & subscriptions products, in preparation for a major launch in FY24. Since then thousands of services have been created, and we look forward to discussing this further in future reports. 044 045 FIG.4  ACQUISITION 30 DAY REVENUE FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023DIRECTORS' REPORT DIRECTORS' REPORT Taking UX & design In FY23 our UX improved leaps and bounds, with the focus gradually shifting from consistency & basic Our Product Focus As we move into 2024, our product focus will shift slightly. Many of the same themes will remain in some form. to the next level: useability to delight. We believe that despite UX improvements being difficult to measure, they underpin the for 2024 from consistent to delight success of all of our product development efforts, and subsequently are critical to our long term success. In 4Q23, we released a series of significant updates. We introduced dark mode navigation and a new homepage design for a clearer, more user-friendly experience. We made substantial improvements to the mobile interface, especially on management and start pages, to streamline project postings and quotes creation. Innovations like micro animations, a smarter navigation bar, and a revamped system status messaging system enhanced interactivity, screen usability, and overall clarity. We also fixed numerous UI bugs, making the platform smoother and more reliable for everyone. 1. Turn Freelancer from a painkiller into a narcotic Ensuring our clients come back time and time again, making regular repeat purchases from our huge base of freelance talent. 2. Reinvent the world of work in the AI revolution The economic landscape made a major paradigm shift in 2023, with generative AI products increasingly going mainstream. In 2024, we will focus on ensuring our freelancers stay at the forefront of this revolution, substantially enhancing their productivity and quality of output. 3. Rethink client acquisition in a world without google With the introduction of generative AI, existing organic acquisition channels will change substantially in nature, and new channels will rise. Our focus in 2024 will be on ensuring we take full advantage of this changing landscape. 4. World leading UX and design that wins awards Our UI/UX improved significantly in FY23, and our focus moving into FY24 is to move towards a position of leadership in this space. We look forward to reporting on each of these goals as FY24 progresses. Trust & Safety Marketplace spam activity continues to drop, with the number of activated spam projects in the past 30 days now below 5%. We will continue to fight spam & scams wherever we find them as we continue our efforts to ensure Freelancer.com remains a trusted place for global commerce. FIG.5  OVERHAULED EXPERIENCE FIG.6  MOBILE EXPERIENCE 046 047 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023DIRECTORS' REPORT Enterprise The Freelancer Enterprise division deepened a number of strategic engagements with our Enterprise partners in 2023. During 4Q23 we delivered 55% revenue growth on pcp, resulting in overall growth for the year of 12% on pcp. Key Highlights of 4Q23: Oil and Gas: We finalised negotiations with one of the world’s largest publicly traded oil and gas companies, in direct partnership with their preferred managed service provider in the United States. The scope of work was defined and is set to be rolled out in the first half of 2024. We are currently exploring deeper integration into the platform. FMCG: In November, we finalised commercials with and on boarded one of the leading beauty companies in the world, composed of several iconic brands. They selected Freelancer as they are looking for an alternative talent sourcing strategy and more flexibility in their hiring initiatives. During the quarter, we signed the agreement, completed the vendor onboarding process and prepared to activate the pilot campaign in Q1 of 2024. In-Flight Proposals: Ended the quarter with proposals in progress for engineering services and ongoing project management including a strategic platform-based transformation opportunity with a global BPO leader. New Partners: With a positive outlook for H12024, we’re taking the opportunity to make further inroads into the future of global talent management via new agreements with outsourcing solution specialists in the US, EMEA and APAC. These partnerships will unlock our potential by increasing our scope to enter new markets such as countries in the LATAM region. Activation Program: Freelancer’s new client Activation Program went through a redesign to ensure partners at all stages of growth are appropriately serviced. This three-fold approach starts with educating partners on how they can leverage Freelancer in their day-to-day operations and progresses through the full customer lifecycle journey. The overarching goal of this initiative is to make Freelancer a habit-forming product for major corporations internationally. Government Engagements: We are seeing a continuation of strong demand from Governments. During the quarter, we progressed commercials with several Labor/Economic/Human Resource Ministries who are looking to grow freelancing in the region as a key economic driver over the next 5 to 10 years. As we enter 2024, two of these State Sponsored opportunities have reached the final stages of negotiation. Deloitte MyGigs: Deloitte member firms across EMEA and APAC have expressed renewed interest in deploying their own instances of MyGigs based on new initiatives driven by the Innovation and Learning and Development teams. They are in the process of assessing the feasibility of respective pilots ahead of their budget planning for the next fiscal year. DIRECTORS' REPORT Global Fleet/ Field Services This year we continued to scale rapidly across the major cities in India with the global computer and printer company, expanding our scope and driving adoption of our technology to increase total volumes by over 150%. Our technical integration continues to improve and provide better operational efficiency. This consistent commitment to advancements in the technology was pivotal in enabling our growth and expansion, not only this quarter but right across the entire year. We had a 25% increase in volumes in 4Q23 compared to 3Q23 and a 156% increase for FY23 to FY22. As of the time of writing this report, we are now live and operational in 46 cities across 5 countries globally, servicing multiple product types varying from repairing laptops to installing printers. To date, we’ve completed over 44,000 jobs globally, showing our commitment to leading the market in innovative global fleet and field services. FIG.7  FREELANCER GLOBAL FLEET ENGINEERS AND CUSTOMERS IN INDIA Balaraga Johor MALAYSIA Jakarta Selangor Pahang Serang INDONESIA Tangerang Depok Bogor Woolner Bendigo AUSTRALIA Ballarat Geelong Hervey Bay Brisbane Wodonga Wollongong Surat Auckland Warragul NEW ZEALAND Wellington Indore Bhopal Vadodara Gurugram Bharuch Ahmedabad Pune Mumbai Bengaluru Sivaganga Theni Madurai Ramanathapuram Delhi Noida Lucknow INDIA Jamshedpur Kolkata Bhubaneswar Karimnagar Visakhapatnam Hyderabad Puducherry Dindigul Chennai Vellore Nizamabad FIG.8  OUR GLOBAL FOOTPRINT ACROSS FIVE COUNTRIES COVERING 46 CITIES 048 049 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023DIRECTORS' REPORT DIRECTORS' REPORT NASA & 2023 was another excellent year for the NASA and US Government operations team. Once again through this U.S. Government engagement Freelancer continues to deliver high end, complex projects to major agencies. Escrow.com In Q4 we deepened our strategic relationship with NASA through a site visit to the NASA Johnson Space Center in Houston, TX, USA, facilitating face-to-face meetings with key stakeholders including the Manager and Deputy Manager of The Center of Excellence for Collaborative Innovation (CoECI). This visit provided valuable insights into the current NOIS2 contract and the future NOIS3 engagement for 2025 and beyond. The US government contract owners provided important feedback on our existing processes and offered recommendations for enhancement. In 2023, this engagement generated over $1,050M USD in revenue, with a tick over $340k USD generated in Q4 alone. Throughout the year, the team secured projects totaling $805,000 USD and we maintained our commitment to service delivery for 9 projects. Looking forward, we are proactively planning to diversify our client base beyond NASA by developing collateral, strategies and processes to pursue new government and enterprise opportunities in APAC and North America. Deloitte MyGigs MyGigs is a Deloitte-branded version of the Freelancer InSource platform tailored to meet the needs of Deloitte practitioners and tightly integrated with SAP Fieldglass. Projects are posted both “internally” (to Deloitte practitioners) and “externally” to the greater Freelancer.com marketplace. Over 50,000 Deloitte staff have been onboarded to the platform already. A dedicated team of product managers and engineers have been working closely with Deloitte to further tailor and enhance product and integration capabilities. Freelancer will also continue to collaborate with Deloitte’s internal marketing and adoption teams to drive activation throughout the coming year. Freelancer has commenced negotiations to expand the MyGigs program to additional Deloitte business units in APAC and Europe in FY24. Escrow.com is the world’s largest and only multi-jurisdictional licensed online escrow company. Escrow.com Gross Payment Volume (GPV) in 4Q23 was AU$217.9 million, up by 15.1% on pcp (US$142.1 million, up by 14.2% on pcp). For FY23, Escrow GPV was AU$897.7m, down 5.9% on pcp (US$596.8m, down 10.7% on pcp). Despite this dip from the peaks of late 2021, Escrow's growth trajectory remains consistent with pre-pandemic trends and 4Q23 was in the top 10 all-time for Gross Payment Volume. Venture capital investment has significantly impacted the aftermarket domain market, with a dynamic shift from a peak in funding activity in 2021 to a slowdown by late 2022 and continuing into 2023. Looking ahead, venture funding levels are expected to stabilise in 2024, with a particular rebound in AI. Escrow.com is aiming to widen its customer base by incorporating its checkout solution into a leading SaaS shopping cart platform, scheduled for launch in the second quarter of 2024. This development represents a strategic move towards broader diversification and enhanced service offerings. In the quarter, Escrow.com also bid on a major government tender in the automotive space. FIG.10  ESCROW GROSS PAYMENT VOLUME (USD) BY QUARTER SINCE INCEPTION FIG.9  EESCROW GROSS PAYMENT VOLUME (USD) BY QUARTER SINCE INCEPTION. 050 051 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS' REPORT Loadshift In 4Q23, Loadshift continued to shape the landscape of Australia's heavy haulage transport market. Loadshift has exhibited remarkable growth in several key areas, notably in the volume of quotes and awarded jobs, which underscores the company's expanding market presence and operational efficiency. In CY23, GMV saw a significant increase of 238.4% pcp, indicating healthy business growth and an effective revenue model after transitioning to the marketplace model. Q4 Performance • Loads Posted: There was a decrease in the number of loads posted, moving from 15,295 in Q4 2022 to Highlights 13,015 in Q4 2023, marking a 14.9% decline. This drop is a result of reduced reposts as more loads become awarded and the load expiry time was increased, removing duplicate postings. Additionally some low award rate abusers of the platform were removed. • Quotes: The company saw a substantial increase in quotes, from 22,815 in Q4 2022 to 73,017 in Q4 2023, translating to a 220.0% growth. This significant rise in quotes per job, from 1.5 to 5.6 (273.3%), suggests an increase in carrier engagement and competitive bidding within the Loadshift platform. • Awarded Jobs: There was an impressive 272.7% increase in awarded jobs, from 796 in Q4 2022 to 2,967 in Q4 2023. The award rate also improved dramatically, from 5.2% to 22.8% (338.0%), indicating a higher conversion rate of quotes to awarded jobs. This award rate is anticipated to continue to risk in CY24. Total kilometres posted were 17,510,304, representing ~$70m Notional Gross Load Value (NGLV) and an annual NGLV of approximately $280m. FIG.12  NUMBER OF QUOTES PLACED PER WEEK IN THE LAST 12 MONTHS FIG.11  VENTURE CAPITAL FUNDING Product In 4Q23, building upon the initiatives outlined in 3Q23, Escrow.com maintained its focus on enhancing automation and streamlining operational processes to further strengthen scalability. Key advancements included: • • • Refining ACH payment processes, Integrating additional automation into due diligence reviews, and Enhancing payment processing mechanisms. Partner Activity In 4Q23, Escrow.com actively pursued the e-commerce vertical, while continuing to support a variety of marketplaces and brokers, extending across both existing and new partners. Within the e-commerce space, during 4Q23 Escrow.com signed partner agreements with a Fortune 500 company e-commerce platform, and one with NASDAQ listede-commerce platform. Both these companies provide software as a service to online retailers. The pursuit of additional partnerships in this sector is planned for 1Q24 and 2Q24. In addition to this, Escrow.com partnered with three new M&A marketplaces and brokers throughout 4Q23, growing our M&A client portfolio and increasing our presence within this vertical. In automotive, Escrow.com focused on solidifying its relationship with eBay Motors and discussed potential expansion of our current integration that will be explored further within 1Q24 & 2Q24. Escrow also signed one new global automotive marketplace, specialising in worldwide overland vehicles. Capitalising on this, Escrow.com attended the NADA Show convention event in 1Q24, allowing the team to meet with both new and existing clients and continue to position Escrow.com as the secure high-value payment method for online automotive marketplaces. Domain Names In the second half of the year, the total domain name volume on Escrow.com eased slightly from $85M in 3Q23 down to $79M in 4Q23. For most domain categories, prices were steady quarter on quarter. Escrow.com’s domain name partner portfolio grew during 4Q23 with the addition of two new partners and notably, the value of ‘.ai’ domain names hit another record high in 4Q23. The median price of a four character .com domain increased by 30% in 4Q23 compared to 3Q23, also hitting a record high. To solidify our international standing, Escrow will again have a presence at NamesCon, the #1 domaining event in the world, bringing together the people who build the domain name industry. Held in Texas in June, preparations and planning are underway at the time of writing this report. 052 053 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS' REPORT Balance Sheet As at 31 December 2023, the Company held cash and equivalents of $21.2 million and no net debt, down 9.4% on FY22. Trade and other receivables include receivables from various payment gateways and enterprise customers. These decreased by 17% from FY22 Trade and other payables includes user obligations (user balances and milestone payments held on balance sheet). These decreased by 8% from FY22 Continued operating cost efficiencies are expected to maintain profitability, which will strengthen the balance sheet in FY24. Dividends paid or recommended There have been no dividends paid or provided for the financial year ended 31 December 2023 (2022: 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. FIG.13  DEMOBILISATION FROM KALGOORLIE WA TO EAGLE FARM QLD VIA LOADSHIFT Review of Financial Performance Significant changes in state of affairs The Company achieved Net Revenue of $53.3 million in FY23 (down 4.1% on the previous corresponding period), and Gross Marketplace Volume of $1,020.7 million (down 4.8% on the previous corresponding period). Revenue excluding Escrow.com was $44.2 million (down 2.8% on the previous corresponding period). Escrow.com revenue was $9.1 million (down 9.9% on the previous corresponding period). The Company achieved a gross margin of 83.0% in FY23 compared to the previous corresponding period of 84.3%. The lower margin was primarily driven by increased costs associated with fraud prevention tooling, however the gross margin remains within a consistent range since 2011. The Company’s cost of sales predominantly consists of transaction costs incurred from the various gateways relied upon to process user payments, various provisions taken for credit card chargebacks and fraud risks. Cost of sales also includes direct labour costs incurred in servicing enterprise customers. The Company reported a NPBT of $0.2 million in FY23 (FY22: $(7.0) million). This represents a major turnaround in profitability compared to the previous corresponding period. The Company has made significant progress on extracting cost efficiencies across all functions of the business and continues its focus to optimise costs wherever possible, without compromising revenue growth. Overall costs were 18% lower than FY22 and as a result the group was EBITDA positive for FY23. The group now has a structurally lower cost base, which has it well placed to achieve sustainable profitability in FY24 and beyond. As of 31 January 2024, the company had 318 FTE staff. The Company posted a positive operating cash flow of $1.9 million in FY23 (FY22: ($4.2) million). Operating cash flow excludes $4.2 million (FY22: $3.8 million) of lease payments associated with office premises, which have been reflected as finance costs in accordance with AASB 16 Leases. 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 2023 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. 054 055 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS' REPORT Insurance and indemnification of Directors and Officers Non-audit services 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. 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 $26,000 (2022: $20,000). 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 The Company has in place Deeds of Indemnity, Insurance and Access with each of its current Directors and of independence for auditors imposed by the Corporations Act. 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 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: • • 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. During the financial year six meetings of Directors were held. Other matters arising during the year were resolved by circular resolutions. The following persons acted as Directors of the Company during the financial year, with attendances to meetings of Directors as follows: 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. Director meetings Audit Committee meetings Nomination and Remuneration meetings Auditor’s independence declaration Eligible to attend Attended Eligible to attend Attended Eligible to attend Attended the year ended 31 December 2023. The auditor’s independence declaration is included on page 65 and forms part of the Directors’ Report for R.M. Barrie S.A. Clausen D.N.J. Williams 6 6 6 6 6 6 2 2 2 2 2 2 - - - - - - Shares issued under Employee Share Plan (ESP) or Long Term Incentive Plan (LTIP) No ESP shares or LTIP share options have been granted to Directors during the financial year. No ESP shares or LTIP share options 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 056 057 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS' REPORT N.L. Katz – Chief Financial Officer and Company Secretary Non-Executive Directors $ Remuneration Report This audited Remuneration Report for the Group which forms part of the Directors’ Report for the financial year ended 31 December 2023, details the nature and amount of remuneration for each Director and the Executives. Key management personnel (KMP) comprise: R.M. Barrie – Executive Chairman S.A. Clausen – Non-Executive Director D.N.J. Williams – Non-Executive Director • • • • 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 Fees and payments to Non-Executive Directors reflect the demands which are made of the Directors in fulfilling Director remuneration their responsibilities. 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 (2022:$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 Performance based remuneration is at the discretion of the Nomination and Remuneration Committee. These based remuneration can take the form of cash bonuses, invitations to participate in the Company’s Employee Share Plan (ESP) or invitations to participate in the Company’s Long Term Incentive Plan (LTIP). Remuneration of Directors and Executives Remuneration shown below relates to the period in which the Director or Executive was a member of key management personnel. Amounts below have either been paid out or accrued in the period. Short-term benefits Post employment benefits Share based payments Total Directors’ fees Cash salary and fees Other Superannuation Shares Executive Directors S.A. Clausen 2023 2022 D.N.J. Williams 2023 2022 Executive Directors R.M. Barrie 2023 2022 Other KMP N.L. Katz 2023 2022 Total 2023 2022 $ - - - - $ - - - - 581,492 26,312 569,096 23,078 $ - - 2,460 2,288 25,904 25,904 $ $ - - - - - - 25,000 25,000 25,344 25,172 633,708 618,078 372,400 24,787 27,600 94,497 519,284 378,319 21,512 27,600 94,500 521,931 25,000 25,000 22,884 22,884 - - - - 47,884 953,892 47,884 947,415 51,099 44,590 55,964 55,792 94,497 1,203,336 94,500 1,190,181 The remuneration of key management personnel in the years ended 31 December 2023 and 2022 were 100% fixed, and there is no link between remuneration and the market price of the Company’s shares. 058 059 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023DIRECTORS' REPORT DIRECTORS' REPORT ESP shares Details of ESP shares in the Company held directly, indirectly or beneficially, by KMP, including their related Ordinary share capital Details of ordinary shares in the Company held directly, indirectly or beneficially, by KMP, parties, is as follows: including their related parties, is as follows: 2023 Other KMP N.L. Katz Total 2022 Other KMP N.L. Katz Total 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 440,539 440,539 440,539 440,539 - - - - - - - - - - - - 440,539 176,216 264,323 440,539 176,216 264,323 440,539 308,378 132,161 440,539 308,378 132,161 Ordinary share Details of ordinary shares options in Payments Pty Ltd held directly, indirectly or beneficially, by KMP, options in subsidiary including their related parties, is as follows: (Payments Pty Ltd) 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 2023 Other KMP 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 2022 Directors R.M. Barrie1 S.A. Clausen 195,914,801 160,500,000 D.N.J. Williams2 10,758,165 Other KMP N.L. Katz3 Total 2021 Directors R.M. Barrie1 S.A. Clausen 595,000 367,767,966 195,281,931 160,500,000 D.N.J. Williams2 10,758,165 Other KMP N.L. Katz3 Total 595,000 367,135,096 - - - - - - - - - - 1,139,778 - - - 1,139,778 632,870 - - - 632,870 - - - - - - - - - - 197,054,579 160,500,000 10,758,165 595,000 368,907,744 195,914,801 160,500,000 10,758,165 595,000 367,767,966 N.L. Katz 10,000,000 10,000,000 Total 2022 Other KMP N.L. Katz 10,000,000 Total 10,000,000 - - - - - - - - - - - - 10,000,000 7,000,000 3,000,000 Loans to The following loan balances are outstanding at the reporting date in relation to remuneration arrangements 10,000,000 7,000,000 3,000,000 directors and key with Executive Directors and KMP in respect of fully paid shares and shares issued under the Employee Share management personnel Plan (ESP). 10,000,000 9,000,000 1,000,000 10,000,000 9,000,000 1,000,000 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 willnot 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. Loans provided in respect of fully paid shares are recognized in the financial statements. Other KMP: N.L. Katz* Total loans to Directors and KMP 2022 $000 324 324 2022 $000 334 334 *The loans comprise a non-recourse component of $207,053, which is secured by the corresponding ESP shares in issue to the employee and a full recourse loan of $117,000. The full recourse loan is unsecured, interest free, repayable within 14 days of termination of employment or 10 years, whichever is earlier, repayable in part or full by employee at any time, and an undertaking from the employee that should they dispose of any Freelancer Limited shares, they will in the first instance use the proceeds from such a sale to repay some or all of the loan obligation. 1 1,279,500 shares as at 31 December 2023 (2022: 1,279,500) are held directly or indirectly by related parties. 2 131,000 shares as at 31 December 2023 (2022: 131,000) are held directly or indirectly by related parties.. 3 40,000 shares as at 31 December 2023 (2022: 40,000) are held directly or indirectly by related parties.. 060 061 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 DIRECTORS' REPORT DIRECTORS’ DECL ARATION Executive The employment terms and conditions of Group Executives and KMP are formalised in service agreements. 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 6 months, or by the Group without notice in the event of serious misconduct; and Restraint and confidentiality provisions. Other transactions There were no other transactions conducted between the Group and KMP or their related parties, other than with KMP or their those disclosed above relating to equity, compensation and loans, that were conducted other than in accordance related parties 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 Matt Barrie Chairman 27 February 2024 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 S307C 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 review of the financial report of Freelancer Limited for the year ended 31 December 2023, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (a) (b) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review, and any applicable code of professional conduct in relation to the review Hall Chadwick (NSW) Level 40, 2 Park Street Sydney, NSW 2000 Stewart Thompson Partner Dated: 27 February 2024 SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au 062 063 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 CONSOLIDATED STATEMENT CONSOLIDATED STATEMENT Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position For the year ended 31 December 2023 Revenue Cost of sales Gross profit Other income Employee expenses Administrative expenses Marketing related expenses Occupancy expenses Foreign exchange losses Depreciation and amortisation expenses Share based payments expense Finance costs Profit / (Loss) before income tax Income tax (expense) / benefit Profit / (Loss) after tax Exchange differences on translation of foreign operations Total comprehensive income / (loss) for the year Profit (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 5 6 6 6 6 6 19 6 7 19 32 32 2023 $000 53,334 (9,093) 44,241 2,103 (21,431) (11,756) (5,503) (642) (228) (4,733) (115) (1,717) 219 (30) 189 56 245 189 - 189 245 - 245 Cents 0.04 0.04 2022 $000 55,660 (8,740) 46,920 1,993 (27,315) (11,602) (8,573) (878) (1,291) (4,470) (159) (1,655) (7,030) 1,617 (5,413) 250 (5,163) (5,413) - (5,413) (5,163) - (5,163) Cents (1.20) (1.20) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. As at 31 December 2023 Assets Note 2023 $000 2022 $000 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 21,153 3,927 3,102 28,182 742 280 34,120 13,471 439 11,450 60,502 23,358 4,825 2,614 30,797 794 491 34,120 17,832 491 12,520 66,248 88,684 97,045 36,529 4,842 121 4 2,887 626 45,009 3,377 614 12,187 672 16,850 61,859 26,825 38,918 1,295 39,647 5,562 121 18 2,798 685 48,831 4,622 960 15,519 648 21,749 70,580 26,465 38,918 1,288 (17,062) (17,415) 3,674 26,825 3,674 26,465 The above statement of financial position should be read in conjunction with the accompanying notes.. 064 065 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 CONSOLIDATED STATEMENT CONSOLIDATED STATEMENT Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows For the year ended 31 December 2023 Attributable to owners of Freelancer Limited For the year ended 31 December 2023 Contributed Equity $000 Note Share Based Payments $000 Foreign currency translation reserve $000 (Accumulated losses) $000 Non- controlling interests $000 Total Equity $000 Balance at 1 January 2022 38,779 5,059 (295) (15,887) 3,674 31,330 Loss for the year Exchange differences on translation of foreign operations Total comprehensive loss for the year 19 - - - Transactions with owners in their capacity as owners: - - - - 139 - - (3,885) 159 - (5,413) 250 - 250 (5,413) - - - - 3,885 - - - - - - - (5,413) 250 (5,163) 139 - 159 38,918 1,333 (45) (17,415) 3,674 26,465 Shares issued during the year Share based payments reserve no longer required Share based payments Balance at 31 December 2022 Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Interest paid Income taxes paid Net cash inflow / (outflow) /from operating activities 31 Cash flows from investing activities Payments for plant and equipment Payments for intangible assets Net cash (outflow) from investing activities Cash flows from financing activities Repayment of lease liabilities Net cash (outflow) / inflow from financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Note 2023 $000 2022 $000 55,681 58,128 (52,052) (60,458) 148 (1,717) (189) 1,871 (53) - (53) (4,201) (4,201) (2,383) 23,358 178 21,153 99 (1,653) (295) (4,179) (148) (1) (149) (3,845) (3,845) (8,173) 30,316 1,215 23,358 Attributable to owners of Freelancer Limited Cash and cash equivalents at end of year 8 Contributed Equity $000 Note Share Based Payments $000 Foreign currency translation reserve $000 (Accumulated losses) $000 Non- controlling interests $000 Total Equity $000 The above statement of cash flows should be read in conjunction with the accompanying notes. Balance at 1 January 2023 38,918 1,333 Profit / (Loss) for the year Exchange differences on translation of foreign operations Total comprehensive profit / (loss) for the year 19 - - - - - - Transactions with owners in their capacity as owners: Share based payments reserve no longer required Share based payments Balance at 31 December 2023 - - (164) 115 (45) - 56 56 - - (17,415) 3,674 26,465 189 - 189 164 - - - - - - 189 56 245 - 115 38,918 1,284 11 (17,062) 3,674 26,825 The above statement of changes in equity should be read in conjunction with the accompanying notes. 066 067 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT Notes to the Financial Statements 01. Reporting entity For the year ended 31 December 2023 Contents of the notes to the consolidated financial statements NOTE CONTENTS 01. Reporting entity 02. Basis of preparation PAGE 069 069 03. Financial risk management 070 04. Operating segments 05. Revenue 06. Expenses 07. Income tax 074 076 078 079 NOTE CONTENTS 19. Equity – reserves PAGE 091 20. Key management personnel disclosures 092 21. Remuneration of auditors 093 22. Contingent liabilities 093 23. Commitments for expenditure 24. Share based payments 094 094 08. Cash and cash equivalents 081 25. Related party transactions 101 09. Trade and other receivables 081 26. Parent entity information 101 10. Other assets 11. Plant and equipment 12. Intangible assets 13. Leases 083 083 085 087 14. Trade and other payables 088 15. Borrowings 16. Provisions 17. Contract liabilities 18. Contributed equity 088 089 090 090 27. Business Combinations 102 28. Interests in controlled entities 103 29. Fair value measurements 104 30. Events occurring after the reporting date 104 31. Reconciliation of loss after tax to net cash flow from operating activities 104 32. Earnings per share (EPS) 105 33. Other significant accounting policies 106 068 Freelancer Limited (the Company) is a company The Group is a for-profit entity and primarily is involved domiciled in Australia. The address of the Company’s in operating an online marketplace for services and registered office is Level 37, Grosvenor Place, 225 providing escrow payment services. The separate George Street, Sydney, NSW, 2000. The consolidated financial statements of the parent entity, Freelancer financial statements of the Company as at and for the Limited, have not been presented within this financial year ended 31 December 2023 comprise the Company report as permitted by the Corporations Act 2001. and its subsidiaries (together referred to as the Group and individually as Group entities). The consolidated financial statements were authorised for issue by the Board on 27 February 2024. 02. Basis of preparation These general purpose financial statements have been involving a higher degree of judgement or complexity, or prepared in accordance with Australian Accounting areas where assumptions and estimates are significant Standards and Interpretations issued by the Australian to the financial statements are disclosed in Note 33(g). Accounting Standards Board and the Corporations Act 2001. (e) Significant accounting policies 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 2024 based on increased revenue and reduced expenses. 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 (a) Compliance with International Financial The Company has applied the relief available to it 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. 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 The Group has not adopted any new or amended Accounting Standards and Interpretations this year that have had a material impact on the Group or the Company.. (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 (c) Functional and presentation currency the dollar amount is significant due to size or nature, or 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 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 of certain critical accounting estimates. It also requires important to future performance. management to exercise its judgement in the process of applying the Group’s accounting policies. The areas 069 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 03. Financial risk management Financial risk The Group’s activities expose it to a variety of financial Risk management is carried out by senior finance management policies risks: market risk (including currency risk), credit risk executives (Finance) under policies approved by the and liquidity risk. The Group’s overall risk management Board of Directors (Board). These policies include program focuses on the unpredictability of financial identification and analysis of the risk exposure of markets and seeks to minimise potential adverse the Group and appropriate procedures, controls and effects on the financial performance of the Group. The risk limits. Finance identifies, evaluates and hedges Group uses different methods to measure different financial risks within the Group’s operating units. 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. 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 2023 $000 2021 $000 8 9 14 13 21,153 4,669 25,822 36,529 17,029 53,558 23,358 5,619 28,977 39,647 21,081 60,728 The carrying value of the assets and liabilities any reduction for impairment, and adjusted for any disclosed in the table above closely approximates cumulative amortisation of the difference between or equals their fair value. The carrying amounts of that initial amount and the maturity amount calculated trade receivables and trade and other payables are using the effective interest method. assumed to approximate their fair values due to their short-term nature. The effective interest method is used to allocate interest income or interest expense over the relevant Initial recognition and measurement period and is equivalent to the rate that exactly 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 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 Financial instruments are subsequently measured at Accounting Standards specifically applicable to fair value, amortised cost using the effective interest financial instruments. 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 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are 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). not quoted in an active market and are subsequently When the terms of financial assets that would otherwise measured at amortised cost. Gains or losses are have been past due or impaired have been renegotiated, recognised in profit or loss through the amortisation the Company recognises the impairment for such process and when the financial asset is derecognised. financial assets by taking into account the original terms Held-to-maturity investments as if the terms have not been renegotiated so that the loss events that have occurred are duly considered. Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed (a) Market risk 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 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: 2023 Currency exposure: AUD USD NZD GBP HKD SGD PHP EUR CAD INR Other Denominated in: AUD 000’s 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 Cash 4,042 7,611 Trade receivables 1,285 722 130 32 579 163 1,172 488 8,022 1,204 296 5 544 409 453 252 61,073 27,577 227 470 Other financial assets 139 2,037 - 42 - 10 11,000 - 24 - - Payables (353) (1,768) (10) (90) (3) (5) (7,569) (12) (20) (1,941) (55) User obligations (3,275) (14,575) (168) (868) (615) (227) (2,169) (2,359) (891) (61,276) (283) Net exposure 1,838 (5,973) (16) (174) 850 271 9,828 (758) (182) 25,433 359 070 071 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 2022 Currency exposure: AUD USD NZD GBP HKD SGD PHP EUR CAD INR Other Denominated in: AUD 000’s 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 Cash 4,282 9,487 109 Trade receivables 1,368 1,142 43 648 175 1,093 302 8,133 1,015 309 14 523 437 Other financial assets 2,174 207 - 26 - - 14,352 - 347 263 10 54,099 44,060 193 377 221 - Payables (2,067) (1,566) (1) (155) (3) (12) (8,482) (15) (238) 5,022 29 User obligations (2,636) (15,586) (168) (968) (829) (253) (2,590) (2,587) (1,011) (64,345) (305) Net exposure 3,121 (6,316) (17) (274) 570 51 11,936 (1,150) (629) 39,057 294 The Group had net liabilities of $9,009,000 against the Australian dollar in the short term denominated in foreign currencies as at 31 December subsequent to 31 December 2023. The table 2023 (comprising assets of $23,876,000 less liabilities summarises the range of possible outcomes that of $32,885,000). The Group had net liabilities of would affect the Group’s net profit and equity as a $10,809,000 denominated in foreign currencies as at result of foreign currency movements on year end 31 December 2022 (comprising assets of $24,070,000 foreign denominated assets and liabilities. less liabilities of $34,880,000). The impact of potential movements in exchange rates The analysis below reflects management’s view of on the profit or loss is as follows: possible movements in relevant foreign currencies AUD to USD (Range +5% to -5%) AUD to NZD (Range +5% to -5%) AUD to GBP AUD to HKD AUD to SGD AUD to PHP AUD to EUR AUD to CAD AUD to INR Net movement (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%) 2023 $000 2022 $000 High 418 1 15 (8) (14) (12) 58 10 (21) 447 Low (461) (1) (17) 8 16 14 (65) (11) 24 (493) High 442 1 23 (5) (3) (15) 86 32 (33) 528 Low (489) (1) (26) 6 3 17 (95) (36) 37 (584) Price risk Cash balances The Group is not exposed to significant equities As at 31 December 2023 the Group had $21,153,000 price risk. Interest rate risk (2022: $23,358,000) held in bank accounts and online wallets. The Group’s cash balances are predominantly held in interest bearing bank accounts. Funds that The Group is not exposed to any significant interest are excess to short term liquidity requirements are rate risk. 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 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. the financial statements. The Group does not hold Maturities of financial assets any collateral. Credit risk is managed by a risk assessment process for all customers, which takes into account past experience. (c) Liquidity risk The following table details the Group’s remaining contractual maturity for its financial instrument assets. The table has been drawn up based on the undiscounted cash flows of financial assets based on the earliest date on which the financial assets are required to be paid. The tables include both interest Liquidity risk management requires the Group to and principal cash flows disclosed as remaining maintain sufficient liquid assets (mainly cash and contractual maturities and therefore these totals may cash equivalents) to be able to pay debts as and when differ from their carrying amount in the statement of they become due and payable. financial position. 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years 2023 Note $000 $000 $000 $000 Non-derivatives Non-interest bearing Trade Receivables 9 2022 Non-derivatives Non-interest bearing Trade Receivables 9 Maturities of financial liabilities 7,909 7,909 742 742 - - 2,008 2,008 1,648 1,648 4,408 4,408 - - - - Remaining contractual maturities $000 8,651 8,651 8,064 8,064 The following table details the Group’s remaining contractual maturities and therefore these totals may contractual maturity for its financial instrument differ from their carrying amount in the statement of liabilities. The table has been drawn up based on the financial position. 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 072 073 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 1 year or less Between 1 and 2 years Between 2 and 5 years Over 5 years 2023 Note $000 $000 $000 $000 Non-derivatives Non-interest bearing Trade Receivables 14 Lease liabilities 2022 Non-derivatives Non-interest bearing Trade Receivables Lease liabilities 14 13 36,529 4,842 41,371 39,649 5,562 45,209 - 5,340 5,340 - 6,033 6,033 - 6,847 6,847 - 13,446 13,446 - - - - - - Remaining contractual maturities $000 36,529 17,029 53,558 39,647 25,041 64,688 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. 04. Operating segments Operating segments are reported in a manner EBITDA (earnings before share based payments, consistent with the internal reporting provided to the interest, tax, depreciation and amortisation). The chief operating decision maker. These include items accounting policies adopted for internal reporting to directly attributable to a segment as well as those that the CODM are consistent with those adopted in the can be allocated on a reasonable basis. Unallocated financial statements. 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). 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 Identification of reportable operating segments geographic operations are considered, based on internal The Group is organised into two operating segments: namely an online marketplace and online payment management reporting and the allocation of resources by the Group's CODM, as one geographic segment. services. These segments are based on the internal The information reported to the CODM is at least on a reports that are reviewed and used by the CODM in monthly basis.. 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 074 Year end 31 December 2023 Online Marketplace Online Payments Total Segment revenue Segment revenue Total segment revenue Segment result Segment profit Share based payments Depreciation and amortisation expenses Interest paid Profit / (Loss) before income tax Income tax benefit Profit for year Segment Assets At 31 December 2023 Segment assets Intergroup eliminations Deferred tax assets Intangibles Total assets Segment liabilities At 31 December 2023 Segment liabilities Intergroup eliminations Deferred tax liabilities Total liabilities 44,264 44,264 6,201 (42) (4,542) (1,679) (62) 40,197 (1,794) - - 9,070 9,070 583 (73) (191) (38) 281 6,111 - - - 38,403 6,111 (56,494) - - (56,477) (3,782) 1,794 - (1,988) 53,334 53,334 6,784 (115) (4,733) (1,717) 219 (30) 189 46,308 (1,794) 11,450 32,720 88,684 (60,276) 1,794 (3,377) (61,859) Year end 31 December 2022 Online Marketplace Online Payments Total Segment revenue Segment revenue Total segment revenue Segment result Segment profit/(loss) Share based payments Depreciation and amortisation expenses Interest paid Loss before income tax Income tax benefit Loss for year Segment Assets At 31 December 2022 Segment assets Intergroup eliminations Deferred tax assets Intangibles Total assets Segment Assets At 31 December 2022 Segment liabilities Intergroup eliminations Deferred tax liabilities Total liabilities 45,591 45,591 (1,459) (159) (4,224) (1,607) (7,449) 46,760 (1,497) - 45,263 (63,225) - - (63,225) 10,069 10,069 713 - (248) (46) 419 6,542 - - - 6,542 (4,231) 1,497 - (2,734) 55,660 55,660 (746) (159) (4,472) (1,653) (7,030) 1,617 (5,413) 53,302 (1,497) 12,520 32,720 97,045 (67,456) 1,497 (4,621) (70,580) 075 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT Sales revenue Marketplace and payment services Payment services Enterprise services Other revenue Interest income Sublease rent Other Total revenue 2023 $000 2022 $000 40,592 9,070 3,672 53,334 148 1,798 157 2,103 42,305 10,069 3,286 55,660 99 1,834 60 1,993 55,437 57,653 05. Revenue The Company’s net revenues result from transaction Enterprise Services 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 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 recognised 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 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. service when the system recognizes that the service Interest income has completed. No rebates or volume discounts are provided to customers. Payment services. Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. The Group enters into both long-term and short-term Sublease rent 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 Sublease rental income of office space is recognised on a straightline basis over the term of the sub-lease. The Company recognises the right-of-use asset resulting from the head lease. Refer to Note 13. as this is consistent to the pattern of performance All revenue is stated net of the amount of goods and obligation i.e. availability of the open transaction to services tax (GST) and Valued Added Tax (VAT). The be executed progressively in the future and on the timing of revenue recognition is when the products Escrow.com platform. and services are transferred to customers. 076 077 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 06. Expenses Profit / (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 Administrative expenses Hosting Subscriptions Professional fees Insurances Office Expenses Other Total Administrative expenses Marketing related expenses Search marketing Advertising Other marketing costs Total marketing related expenses Depreciation and amortization Plant and equipment Right of use assets Total depreciation and amortisation expenses Rental expense relating to operating leases Utilities and other related costs Total rental expense relating to operating leases Net foreign exchange losses Finance costs Interest expense Interest expense on lease liability 1 Inclusive of employee expenses included in cost of sales Total employee benefits expenses are inclusive of: 2023 $000 18,928 2,503 21,431 5,939 1,351 1,604 1,231 574 1,057 2022 $000 24,771 2,974 27,745 6,051 1,478 1,477 1,156 723 717 11,756 11,602 5,366 137 - 5,503 274 4,459 4,733 640 640 228 - 1,717 7,780 686 107 8,573 292 4,178 4,470 878 878 1,291 1 1,654 Short-term obligations Other long-term employee benefit obligations Employee benefits that are expected to be settled Employee benefits payable later than 12 months have within 12 months have been measured at the amounts been measured at the present value of the estimated expected to be paid when the liabilities are settled, future cash outflows to be made for those benefits. plus related on-costs. The liability for annual leave In determining the liability, consideration is given to is recognised in the provision for employee benefits. employee wages increases and the probability that All other short-term employee benefit obligations are the employee may satisfy any vesting requirements. presented as payables. 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. 07. Income tax The income tax expense or revenue for the period is Deferred tax is measured at the tax rates that are the tax payable on the current period’s taxable income expected to be applied to temporary differences when based on the applicable tax rate for each jurisdiction they reverse, using tax rates enacted or substantively adjusted by changes in deferred tax assets and enacted at the reporting date. liabilities attributable to temporary differences and to unused tax losses. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities The current income tax charge is calculated on the and assets, and they relate to taxes levied by the same basis of the tax laws enacted or substantively enacted tax authority on the same taxable entity, or on different at the end of the reporting period in the countries tax entities, but they intend to settle current tax where the Company’s subsidiaries operate and liabilities and assets on a net basis or their tax assets generate taxable income. Management periodically and liabilities will be realised simultaneously. 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. 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 Deferred tax is recognised in respect of temporary reporting date and are reduced to the extent that it differences between the carrying amounts of assets is no longer probable that the related tax benefit will and liabilities for financial reporting purposes and the be realised. amounts used for taxation purposes. Deferred tax is not recognised for: In determining the amount of current and deferred tax the Group takes into account the impact of uncertain • temporary differences on the initial recognition tax positions and whether additional taxes and interest of assets or liabilities in a transaction that is not may be due. This assessment relies on estimates and a business combination and that affects neither assumptions and may involve a series of judgements accounting nor taxable profit or loss. about future events. New information may become • 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 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. will not reverse in the foreseeable future. The Company and its wholly-owned Australian • taxable temporary differences arising on the initial recognition of goodwill. 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 measurement of deferred tax reflects the tax The head entity within the tax-consolidated group consequences that would follow the manner in which is Freelancer Limited. the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 078 079 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT (a) Income tax Current tax Deferred tax Income tax (benefit) Deferred income tax expense included in income tax benefit comprises: (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 Profit / (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: Difference in tax rate Share based payments Under/(Over) provision in prior years Non Taxable income Other non-allowable items Income tax expense/ (benefit) (c) Deferred tax assets The balance comprises temporary differences attributable to: Employee benefits Provision for user disputes & refunds Foreign exchange losses Provision for impairment of receivables Audit fees Lease liabilities Future benefit of tax losses Future benefit of foreign tax losses Net deferred tax assets Movements: Opening balance at beginning of year Credited to the profit or loss statement Exchange differences Closing balance at end of year (d) Deferred tax liabilities 2023 $000 210 (180) 30 1,069 (1,249) (180) 219 66 70 35 (189) 48 - 30 494 171 18 1,162 40 4,468 4,838 259 2022 $000 249 (1,866) (1,617) (854) (1,012) (1,866) (7,030) (2,109) 38 48 325 81 - (1,617) 429 178 576 1,138 28 5,401 4,565 205 11,450 12,520 12,520 (1,069) (1) 11,633 855 32 11,450 12,520 Foreign exchange gains Right of use assets Net deferred tax liabilities Movements: Opening balance at beginning of year (Credited) to the profit or loss statement Exchange differences Closing balance at end of year (e) Current tax liabilities Current tax liabilities (f) Franking credits Franking credits available at the reporting date based on a tax rate of 30% (7) (3,322) (3,377) 4,622 (1,249) 4 3,377 4 66 (242) (4,271) (4,622) 5,605 (1,012) 29 4,622 18 66 Freelancer Limited and its wholly-owned Australian entities elected to form an income tax consolidated group as of 12 April 2010. 08. Cash and cash equivalents For cash flow statement presentation purposes, cash or less that are readily convertible to known amounts and cash equivalents includes cash on hand, deposits of cash and which are subject to an insignificant risk held at call with banks, other short term highly liquid of changes in value, and bank overdrafts. investments with original maturities of three months Current Cash at bank and on hand Term deposits Total cash and cash equivalents 2023 $000 2022 $000 18,312 2,841 21,153 20,623 2,735 23,358 The balance comprises temporary differences attributable to: Accrued revenue (48) (109) 09. Trade and other receivables 080 081 Trade receivables are recognised initially at fair value no more than 30 days from the date of recognition. and subsequently measured at amortised cost using They are presented as current assets unless collection the effective interest method, less provision for is not expected for more than 12 months after the impairment. This provision includes amounts that are reporting date. not considered to be recoverable from debtors and amounts that are expected to be credited to debtors. Trade receivables are generally due for settlement FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT Collectability of trade receivables is reviewed on an The Group applies the simplified approach to providing ongoing basis. A provision for impairment of trade for expected credit losses prescribed by AASB 9, which receivables is established when there is objective permits the use of the lifetime expected loss provision evidence that the Group will not be able to collect all for all trade receivables. To measure the expected credit amounts due according to the original terms of the losses, trade receivables have been grouped based on receivables. Significant financial difficulties of the shared credit risk characteristics and the days past due. debtor, probability that the debtor will enter bankruptcy The loss allowance provision as at 31 December 2023 or financial reorganisation, and default or delinquency is determined as follows; the expected credit losses in payments are considered indicators that the also incorporate forward-looking information. 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 "amounts written off" are all due to customers declaring bankruptcy, or term receivables that have now become unrecoverable. 2023 $000 2022 $000 Current Trade receivables Payment gateway receivables Less: provisions for impairment of 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 (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 5,837 1,678 (3,982) 3,533 394 3,927 742 4,669 3,795 192 (5) 3,982 3,301 834 165 4,351 (3,982) 4,669 (c) Expected losses 2023 Expected loss rate (% of Aged Receivables) Gross carrying amount Loss allowing provision 2022 1–30 days $000 31–60 days $000 31–60 days $000 90+ days $000 0% 3,301 - 3.9% 834 (33) 13.0% 165 (21) 90.3% 4,351 (3,928) (3,982) 1–30 days $000 31–60 days $000 31–60 days $000 90+ days $000 Total $000 Expected loss rate (% of Aged Receivables) 5% 33.79% 58.79% 91.25% Gross carrying amount Loss allowing provision 4,194 (228) 358 (121) 182 (107) 3,659 8,393 (3,339) (3,795) 6,534 1,859 (3,795) 4,598 227 4,825 794 5,619 3,669 (107) 233 3,795 4,194 358 182 3,659 (3,795) 4,598 Total $000 8,651 10. Other assets Current Prepayments Other Total current other assets Non-current Security deposits Total non-current other assets Total other assets 11. Plant and equipment 2023 $000 2022 $000 2,629 473 3,102 439 439 2,276 338 2,614 491 491 3,541 3,105 Plant and equipment is stated at historical cost less The recoverable amount is assessed on the basis of depreciation, amortisation and impairment losses. the expected net cash flows that will be received from Historical cost includes expenditure that is directly the asset’s employment and subsequent disposal. The attributable to the acquisition of the items. expected net cash flows have not been discounted in The carrying amount of plant and equipment is determining recoverable amounts. reviewed annually by directors to ensure it is not in Depreciation of all fixed assets is calculated using excess of the recoverable amount from these assets. the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives, Fixtures and fittings Office and computer equipment Software Leasehold improvements as follows: 4–5 years 4–5 years 3 years 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 and loss in the period in which they arise. When reviewed, and adjusted if appropriate, at the end of revalued assets are sold, amounts included in each reporting period. the revaluation surplus relating to that asset are transferred to retained earnings. 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 082 083 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 2023 $000 2022 $000 12. Intangible assets 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 amortization Carrying value of leasehold improvements Total carrying value of plant and equipment 3,268 (2,995) 273 511 (504) 7 1 (1) - 440 (440) - 280 Reconciliations Reconciliations of the carrying amount of plant and equipment and leasehold improvements at the beginning and end of the current financial year are set out below: Office and computer equipment $000 Fixtures and fittings $000 Software $000 Leasehold improvements $000 Balance at 1 January 2022 Additions Disposals Depreciation and amortization Balance at 31 December 2022 Additions Disposals Depreciation and amortization Balance at 31 December 2023 629 140 - (284) 485 51 - (263) 273 7 4 - (7) 4 7 - (4) 7 2 - - (1) 1 - - (1) - 1 - - - 1 - - (1) - 3,221 (2,736) 485 503 (499) 4 2 (1) 1 440 (439) 1 491 Total $000 639 144 - (292) 491 58 - (269) 280 084 Goodwill Intellectual Property Goodwill is initially recorded at the amount by which Intellectual property is valued at cost of acquisition. the purchase price for a business combination exceeds Intellectual property is tested for impairment annually or the fair value attributed to the interest in the net fair more frequently if events or changes in circumstances value of identifiable assets, liabilities and contingent indicate that it might be impaired, either individually or liabilities acquired at date of acquisition. Goodwill is not at the cash generating unit level. Useful lives are also amortised. Instead goodwill is tested for impairment examined on an annual basis and adjustments, where annually or more frequently if events or changes in applicable, are made on a prospective basis. circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Trademarks Domain Names Trademarks are valued at cost of acquisition and are amortised on a straight-line basis over the period Domain names are valued at cost of acquisition. in which the benefits are expected to be realised. Domain names are tested for impairment annually or Trademarks are tested for impairment where an more frequently if events or changes in circumstances indicator of impairment exists, either individually or indicate that it might be impaired, either individually or at the cash generating unit level. Useful lives are also at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where examined on an annual basis and adjustments, where applicable, are made on a prospective basis. applicable, are made on a prospective basis. 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 2023 $000 2022 $000 4,938 (28) 4,910 2,112 - 2,112 27,087 - 27,098 4,938 (28) 4,910 2,198 - 2,198 27,012 - 27,012 Total carrying value of intangible assets 34,120 34,120 Reconciliations Reconciliations of the carrying amount of intangible assets at the beginning and end of the current and previous financial year are set out below: Domain names $000 Intellectual property $000 Goodwill $000 Total $000 Balance at 1 January 2022 Additions Balance at 31 December 2022 4,910 - 4,910 2,198 - 2,198 27,011 34,119 1 1 27,012 34,120 Domain names $000 Intellectual property $000 Goodwill $000 Re-allocation Balance at 31 December 2023 - 4,910 (86) 2,112 86 27,098 Total $000 - 34,120 085 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT The Directors have determined the useful life of calculation using a discounted cash flow model, domain names is indefinite and subject to an annual based on a 12 month projection period for the Group test for impairment of the fair value of the domain approved by management and extrapolated for a names. The Directors have assessed the recoverability further 5 years with a discounted terminal value. of domain names, intellectual property and goodwill based on value in use calculations. Goodwill and other intangibles are allocated to cash- generating units which are based on the Group’s The recoverable amount of the Group’s intangible reporting segments: assets has been determined by a value-in-use Online marketplace Online payments Total 2023 $000 22,386 11,734 34,120 2022 $000 22,385 11,734 34,120 The recoverable amount of each cash-generating estimate of the time value of money and the Group’s unit above is determined based on value-in-use weighted average cost of capital adjusted for the risk calculations. Value- in-use is calculated based on free rate and the volatility of the share price relative to the present value of cash flow projections over a 5 market movements. 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 The following key assumptions were used in the value-in-use calculations: Online marketplace Online payments CAGR Rate 9.3% 7.8% Discount Rate 16% 16% Management has based the value-in-use calculations Based on the above, management is satisfied that on budgets for each reporting segment. These there are no indicators of impairment to the current budgets use historical weighted average growth rates carrying value of intangible assets. 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. 086 13. Leases The Group as lessee At inception of a contract, the Group assesses if the – the exercise price of purchase options, if the lessee contract contains or is a lease. If there is a lease is reasonably certain to exercise the options; and 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. – 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 Initially the lease liability is measured at the present measurement of the right-of-use assets is at cost less value of the lease payments still to be paid at the accumulated depreciation and impairment losses. 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: 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 – – fixed lease payments less any lease incentives; specific asset is depreciated over the useful life of the variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date; underlying asset. The Group's lease portfolio comprises commercial leases for office property. As at 31 December 2023 – the amount expected to be payable by the lessee these leases had remaining lives ranging from 1 month under residual value guarantees; up to 78 months. Options to Extend The options to extend or terminate are contained in The extension options or termination options which or Terminate several of the Group’s property leases. These clauses were probable to be exercised have been included in provide the Group opportunities to manage leases in the calculation of the right-of-use asset. order to align with its strategies. All of the extension or termination options are only exercisable by the Group. (i) AASB 16 related amounts recognised in the balance sheet 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 2023 $000 2022 $000 17,832 47 (4,460) 52 13,471 4,842 12,187 17,029 18,753 3,426 (4,178) (169) 17,832 5,562 15,519 21,081 087 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT (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 flow Interest expense on lease liabilities (under finance costs) Repayment of lease liabilities 2023 $000 4,466 1,681 2023 $000 1,681 4,212 2022 $000 4,178 1,654 2022 $000 1,654 3,845 14. Trade and other payables These amounts represent liabilities for goods The amounts are unsecured and are payable as and and services provided to the Group and amounts when they are due. Trade and other payables are outstanding to users of the Company’s websites at the presented as current liabilities unless payment is not end of financial year which are unpaid. 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 2023 $000 2022 $000 2,744 736 33,049 36,529 2,740 603 36,304 39,647 2023 $000 121 121 2022 $000 121 121 The working capital loan has been provided from The loan is unsecured, interest free and has no fixed non-controlling shareholders of Loadshift Holdings Pty date of repayment. Limited to provide working capital funding. 088 16. Provisions Provisions are recognised when the Company has A provision for onerous contracts is recognised when a legal or constructive obligation, as a result of past the expected benefits to be derived by the Group events, for which it is probable that an outflow of from a contract are lower than the unavoidable cost economic benefits will result, and that outflow can be of meeting the obligations under the contract. The reliably measured. Provisions recognised represent provision is stated at the present value of the future the best estimate of the amounts required to settle the net cash outflows expected to be incurred in respect obligation at reporting date. of the contract. Current Provision for user disputes and refunds Provision for indirect taxes Employee benefits Total current provisions Non-current Make-good provisions Employee benefits Total non-current provisions Total provisions 2023 $000 569 347 1,971 2,887 454 160 614 2022 $000 594 320 1,884 2,798 551 409 960 3,501 3,758 Movements For the year ended 31 December 2023 Provision for User Disputes /Refunds $000 Provision for Indirect Taxes $000 Employee Benefits $000 Provision for Penalties $000 Provision for Make-good $000 Balance at 1 January 2022 Additional provisions Amounts used Unused amounts reversed Foreign exchange differences Balance at 31 December 2022 Additional provisions Amounts used Unused amounts reversed Foreign exchange differences Balance at 31 December 2023 503 50 - - 41 594 112 397 1,830 (1,904) - (3) 320 1,712 - (1,686) 1,994 1,072 (876) (20) 123 2,293 1,040 (801) (406) 5 (139) 2 569 - 1 347 2,131 288 - - (308) 20 - - - - - - 511 34 - - 6 551 - - (99) 2 454 Total Provisions $000 3,693 2,986 (2,780) (328) 187 3,758 2,864 (2,487) (644) 10 3,501 089 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 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 2023 $000 1,298 1,298 626 672 1,298 2022 $000 1,333 1,333 846 639 1,485 There were no significant changes in the contract liability balances during the 2023 year. 18. Contributed equity (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. 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. (d) Employee Share Plan (ESP) The capital risk management policy remains Information relating to the ESP, including details of unchanged from the 2022 Annual Report. 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. 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. (a) Share capital Ordinary shares Fully paid Total share capital Note 2023 Number 2022 Number 2023 $000 18(b) 452,331,410 452,331,636 38,918 38,918 (b) Movements in ordinary share capital Reconciliation to 31 December 2022 Number of shares Average price Balance at 1 January 2022 Issue/(cancellation) of ordinary shares: Issue of ordinary shares Buy-back and cancellation of ESP shares Balance at 31 December 2022 452,516,636 315,000 (500,000) 452,331,636 $0.44 $0.67 Reconciliation to 31 December 2023 Number of shares Average price Balance at 1 January 2023 Issue/(cancellation) of ordinary shares: Buy-back and cancellation of ESP shares 452,331,636 (607,226) $0.64 Balance at 31 December 2023 451,724,410 2022 $000 38,918 38,918 $000 38,779 139 - 38,918 $000 38,918 - 38,918 19. Equity – reserves (a) Movements Current Share based payment reserve movements Balance at the beginning of the period Share based payments reserve no longer required 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 2023 $000 1,333 (164) 115 1,284 2022 $000 5,059 (3,885) 159 1,333 (45) (295) 56 11 250 (45) 1,295 1,288 Share-based payments reserve Foreign currency translation reserve This amount represents the value of the ESP share The foreign currency translation reserve is used grants to employees under the Freelancer Employee to record exchange differences arising from Share Plan and other compensation granted in the the translation of the financial statements of its form of equity. overseas subsidiaries. 090 091 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 20. Key management personnel disclosures 21. Remuneration of auditors (a) Directors (b) Other key management personnel The following persons were Directors The following persons also had the authority and of Freelancer Limited during the financial year: responsibility for planning, directing and controlling During the year the following fees were paid for services provided by the auditor of the parent entity, its related practices and non-related audit firms: Mr Robert Matthew Barrie – Executive Chairman Mr Darren Nicholas John Williams – Non-Executive Director Mr Simon Alvin Clausen – Non-Executive Director (c) Key management personnel compensation Short-term employee benefits Share based employee benefits Other long-term benefits Total benefits the major activities of the Group, directly or indirectly, during the financial year: Mr Neil Leonard Katz – Chief Financial Officer and Company Secretary 2023 $000 1,052 95 56 1,203 2022 $000 1,039 95 56 1,190 Short-term employee benefits Share based payments These amounts include fees and benefits paid to the These amounts represent the expense related to the Non-Executive Directors as well as all salary, paid leave participation of KMP in equity-settled schemes as benefits, fringe benefits and cash bonuses awarded to measured by the fair value of the options rights and Executive Directors and other KMP. shares granted on grant date. Other long-term benefits These amounts represent long service leave benefits accruing during the year, long-term disability benefits and deferred bonus payments. Further information in relation to KMP remuneration can be found in the Remuneration Report, which is included in the Director’s Report. (a) Hall Chadwick Audit and other assurance services Audit and review of financial reports Due diligence services 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 Other non-audit services Accounting services Total remuneration of audit firms other than Hall Chadwick 2023 $000 2022 $000 146 4 26 176 80 68 - 148 130 3 20 153 78 85 34 197 22. Contingent liabilities Except for the items listed below, there are no other • included in cash is an amount of $2,608,647 on contingent liabilities as at 31 December 2023: term deposits (31 December 2022: $2,608,647), • a collateral amount of USD300,000 (2022: USD300,000) is in place in one of the Group’s PayPal accounts in favour of PayPal Australia Pty Ltd; • term deposits of $49,360 (2022: $78,780) are secured for corporate credit card facilities in place; • deposits of $742,162 (2022: $788,509) are held by various credit card processing providers, as security for any contractual compensation arising under these agreements; which is secured against bank guarantees that have been provided to lessors in respect of premises occupied by the Company in Sydney. • included in cash is an amount of $36,867 (31 December 2022: $36,901), which is secured against ACH bank facilities • included in cash is an amount of USD234,000 (2022: USD187,000), which is held as a reserve to satisfy escrow regulatory requirements in respect of credit card transactions. 092 093 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 23. Commitments for expenditure Leases in which a significant portion of the risks and (a) Non-cancellable operating services 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. 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. The Group has entered into a commercial agreement for web hosting services with an annual fee commitment for 2 years commencing on 1 February 2022. 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 2023 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 service commitments (b) Other capital commitments There were no other capital commitments as at 31 December 2023. 2023 $000 428 - - 428 2022 $000 4,679 428 - 5,107 24. Share based payments Employee Share Plan The Group operates an employee share plan. The dividends expected to be distributed between the fair value of the effective option over the shares grant date and the vesting dates. 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. 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 The fair value at grant date is independently and approve the ESP were passed at the AGM held on determined using a Black-Scholes option pricing 17 May 2016. model that takes into account the exercise price, the term of the ESP shares, the vesting and performance The key terms of the ESP are as follows: criteria, the impact of dilution, the non-tradeable nature • the Board may invite a person who is employed of the ESP share, the share price at grant date and or engaged by or holds an office with the Group expected price volatility of the underlying share, the (whether on a full or part-time basis) and who is expected dividend yield and the risk-free interest rate declared by the Board to be eligible to participate 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 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 such number of ESP shares will be considered Eligible Employees subsequent to the Company’s full and final satisfaction of the ESP Loan and initial public offering are to be made on the the Company will not have any further recourse basis of the market price per share defined as against the ESP Participant; the volume weighted average price at which the Company’s shares have traded during the 30 days immediately preceding the date of the invitation; • 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 • invitations to apply for ESP shares under the make pre-payments at any time; 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: • 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 – 10% of ESP shares applied for vesting on the date issued following invitations to non-residents, that is the first anniversary of the issue date of that did not require a disclosure document under 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 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; that is the third anniversary of the issue date of • in the event of a corporate reconstruction, the 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. • 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: 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 – the fourth anniversary of the issue date of the fractional entitlements to shares will be rounded Employee Offer Shares; and down to the nearest whole share; – if the ESP Participant ceases to be an Eligible Employee, either: • ESP Participants will continue to have the right to participate in dividends paid by the Company › the date 30 days after the date of cessation, despite some or all of their ESP shares not if the Eligible Employee is a good leaver (as having vested yet or being subject to an ESP 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 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; outstanding ESP Loan, or it notifies the Company • ESP shares which have not vested and/or are that it cannot, then such number of ESP shares subject to repayment of the ESP Loan will be that equal by value (using the price at which the restricted (escrowed) from trading; ESP shares were issued) the outstanding amount of the ESP Loan will become the subject of a buy-back notice from the Company which the ESP Participant must accept. The buy-back of 094 095 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT • the Company may buy-back at the issue price any • on the death or permanent disability of an ESP • Exercise and allocation of Share Rights – Upon • Cessation of employment – If a participant 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: 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- › the ESP Participant ceasing to be an Eligible back all ESP shares in respect of which there is an Employee (unless the Board, in its sole and outstanding ESP Loan; absolute discretion determines otherwise, subject to any conditions that it may apply, including the repayment of any outstanding ESP Loan); or • he 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; › the expiration of the term of the ESP Loan.. • if, while the Company’s shares are traded on the • 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 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 be the subject of a buy-back by the Company at • the ESP is governed by the laws of the State of the issue price for no consideration; New South Wales, Australia. The full terms of the ESP are available on the Company’s website, www.freelancer.com. Long Term Incentive Plan The Group operates a long term incentive plan through The key terms of the LTIP are as follows: the grant of equity incentives in the form of Share Rights . The fair value of the effective option over the equity incentives in the form of Share Rights granted under the Company’s Long Term Incentive Plan (LTIP) are 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 Share Rights. The fair value at grant date is independently • A Share Right includes (without limitation): › › Performance Rights (i.e. Share Rights with no exercise price); Options (i.e. Share Rights generally with an exercise price equal to the market value of a Share on the date of grant or such other exercise price determined by the Board); and › Premium Priced Options (i.e. Share Rights with an exercise price that is greater than determined using a Black-Scholes option pricing model the market value of a Share on the date that takes into account the exercise price, the term of of grant). the Share Rights, the vesting and performance criteria, • Eligibility and grant of securities – Employees the impact of dilution, the non-tradeable nature of the Share Rights, 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 Share Rights. During the year ended 31 December 2021, the Company established a long term incentive plan, the Long Term Incentive Plan (LTIP) 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 implement the LTIP was passed at the AGM held on 28 July 2021. who are in full-time or permanent part-time employment of a Group Company who the Board determines is to receive an offer under the Plan. • Offer and Conditions – The Board may, in its absolute discretion and subject to the Plan, offer eligible employees the opportunity to participate in the Plan. • Vesting – Share Rights may be subject to certain Performance Criteria or other vesting conditions as determined by the Board and set out in each participant’s plan offer letter. Following testing of any relevant Performance Criteria / vesting conditions, Share Rights that do not vest will lapse (unless otherwise determined by the Board). Performance Criteria / vesting conditions can be waived by the Board in its absolute discretion. 096 vesting of the Share Rights, subject to the Plan, ceases their employment with the Group those Share Rights will become exercisable. before the end of the Performance Period, their Share Rights must be exercised within the unvested Share Rights will ordinarily lapse exercise period as advised by the Board. Upon (unless otherwise determined by the Board). exercise of Share Rights for the exercise price However, if a participant ceases employment (if any), the participant will receive one Share for with the Group due to a ‘Good Leaver Event’ and each Share Right that is exercised (subject to at least six months of the Performance Period adjustment in accordance with the Plan) either has elapsed at that time, a pro rata number by way of the issue of new Shares or a transfer of their unvested Share Rights (based on the of Shares acquired on-market or an allocation portion of the Performance Period that has of Shares. The corresponding number of Shares elapsed as at that time) will generally be retained will be delivered and registered, or allocated, in and will be tested following the end of the the participant’s name (as applicable) as soon Performance Period in accordance with the Plan. as practicable after a participant has exercised A ‘Good Leaver Event’ means death, permanent their Share Rights and paid the exercise price disablement, retirement, redundancy (as those (if any) to the Company. Notwithstanding the terms are defined in the Plan) or such other above, upon exercise of Share Rights, the Board circumstances that result in a participant leaving may determine, in accordance with the Plan, to the employment of the Group and that the Board instead pay a cash amount to the participant in determines is a Good Leaver Event. The Board respect of a vested Share Right in lieu of an issue retains the discretion to determine a different of new Shares. The Board may, in its discretion, treatment of any unvested Share Rights. If prior also determine to accept a cashless exercise of to cessation of employment, the participant held any Share Rights (in accordance with the Rules), any exercisable Share Rights, then subject to the which will involve the number of Shares allocated Plan rules, the relevant exercise period, in respect to the relevant participant being reduced by such of those Share Rights will end on the earlier of number of Shares determined by the Board equal (i) the date that is three months (or other such to the aggregate exercise price (if any) in respect period as determined by the Board) following the of those Share Rights. date of the participant’s cessation of employment • Shares issued under the Plan or the date on which those Share Rights become vested Share Rights; › Shares that are registered or allocated or (ii) the expiry date. (as applicable) in the participant’s name will carry the same voting and dividend rights as all other Shares from the date of registration or allocation (as applicable). › Shares issued under the Plan will rank equally with all other existing Shares as at the time of issue in all respects, including with respect to voting rights and rights to • Lapsing of Share Rights – The Board may determine that some or all of a participant’s Share Rights (whether vested or unvested) lapse, if a participant: – commits any act of fraud or defalcation or gross misconduct in relation to the affairs of any Group Company; receive dividends and bonus shares and to – materially breaches their obligations to the Group participate in rights issues. Companies, including by failing to comply with a › A participant may only participate in a Group Company’s policies; new issue of Shares or other securities – hedges the value of, or enter into a derivative to holders of Shares if Shares have been arrangement in respect of, any unvested Share allocated to the participant and registered Rights; or or allocated (as applicable) in the name of the participant in accordance with the Plan rules before the record date for determining entitlements to the issue. – purports to dispose of or otherwise deal with (including by granting any security interest over) their Share Rights other than as permitted under the Plan. › Shares allocated to a participant following exercise of their Share Rights will not be subject to any further restrictions on dealing, other than to the extent prohibited by the Freelancer Securities Trading Policy. 097 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT The Plan rules contain other circumstances the time of the reorganisation. If the Company where such Share Rights may lapse. In addition, makes a bonus issue of Shares to existing the Board may determine in the above and other holders of Shares (other than an issue of Shares circumstances that any Shares acquired by in lieu or in satisfaction of dividends or by way (or cash paid to) a participant following the of dividend reinvestment) and no Share has vesting of Share Rights for the after tax value of been issued in respect of a Share Right before the Share Rights at the time they converted into the record date for determining entitlements to Shares (or at such other time determined by the the bonus issue, then the number of underlying Board) be paid to the Company. Shares over which the Share Right is convertible • No transfer – Except in respect of the transmission of a Share Right to a participant's legal representative upon death or legal incapacity, and unless the Board determines otherwise, a participant may not dispose of or will be increased by the number of Shares which the participant would have received if the participant had exercised the Share Right before the record date for the bonus issue. No adjustment will be made to the exercise price. otherwise deal with (including by granting any • Plan Trustee – The Plan may be administered security interest over) a Share Right. in conjunction with an employee share trust, • Change of control – If a Change of Control Event occurs, or the Board determines that such may occur, the Board has the discretion to determine that any one or more of the following apply: the trustee of which may acquire Shares for the purposes of transfer to Participants or to be held for Participants (whether on an unallocated and/ or allocated basis). The transfer of a Share by the trustee of such a trust to a Participant, or the – the Performance Criteria applicable to some or allocation of a Share in the Participant’s name all unvested Share Rights will be assessed as at a which continues to be held by the trustee for date determined by the Board or are waived; that Participant, will satisfy the obligation of the – the exercise period in respect of some or all Company to allocate a Share to the Participant Share Rights that are or become vested Share Rights (including as a result of the exercise of the Board’s discretion above) is abridged to end on a date determined by the Board (subject to earlier lapse in accordance with the Plan rules); under the Plan. • Other – The Plan will be administered by the Board, which has broad powers in respect of the Plan including to exercise discretions, amend the Plan rules or any offer letter at any time in any – some or all Share Rights are to be replaced by manner the Board thinks fit (subject to prescribed rights to shares of the new controlling company limitations in the Plan rules) and/or to waive any on substantially the same terms and subject terms or conditions (including any Performance to substantially the same conditions as the Criteria / vesting conditions) in relation to any Share Rights with any appropriate amendments, Share Rights. including to Performance Criteria; – some or all unvested Share Rights lapse as at a date determined by the Board. • Foreign participants – The Board may adopt amended rules of the Plan applicable in any jurisdiction under which Share Rights are offered • Reorganisation of Capital and Bonus Issues under the Plan and the way in which the Plan – In the event of any reorganisation of the is operated may be subject to additional or share capital of the Company (including any modified terms, having regard to any securities, sub-division, consolidation, reduction or return exchange control or taxation laws or regulations of the share capital of the Company), the or similar factors that may apply to a Participant number of Share Rights, and/or the number of or to any member of the Group in relation to the Shares subject to the Share Rights, and/or the Share Rights or any of the provisions of the Plan. exercise price (if any) of Share Rights, will be reconstructed to the extent necessary to comply with, and in accordance with, the ASX Listing Rules applying to a reorganisation of capital at (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: 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 Grant date 2023 18 October 2018 20 February 2019 19 February 2020 2 March 2020 $0.53 $0.70 $0.47 $0.45 11 December 2020 $0.52 14 April 2021 28 May 2021 Total 2022 18 October 2018 20 February 2019 19 February 2020 2 March 2020 30 July 2020 $0.62 $0.95 $0.53 $0.70 $0.47 $0.45 $0.53 11 December 2020 $0.52 14 April 2021 28 May 2021 Total $0.62 $0.95 200,000 407,226 440,539 200,000 38,462 120,000 10,527 1,416,754 200,000 407,226 640,539 200,000 100,000 38,462 120,000 210,527 1,916,754 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (200,000) (407,226) - - - - - - - 440,539 200,000 38,462 120,000 10,527 - - 176,216 80,000 - 84,000 - - - 264,323 120,000 38,462 36,000 10,527 (607,226) 809,528 340,216 469,312 - - (200,000) - (100,000) - - 200,000 407,226 440,539 200,000 - 38,462 - 162,891 308,378 140,000 - - 120,000 108,000 (200,000) 10,527 - 200,000 244,335 132,161 60,000 - 38,462 12,000 10,527 (500,000) 1,416,754 719,269 697,485 All Eligible Employees who accepted an offer of ESP The assessed weighted average fair value at grant shares were given an interest free loan from the date of the effective share options granted during the Company to finance the whole of the purchase of the financial year is n/a (2022: n/a. Options were priced ESP shares they were invited to apply for (ESP Loan). 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. 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. 098 099 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT (b) LTIP share option grants Set out below are summaries of LTIP options granted, issued and that have balances or movement 25. Related party transactions during the year under the plan: 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 Grant date 2023 22 October 2021 $0.72 21 December 2021 $0.73 63,889 13,699 - - 28 August 2023 $0.25 - 357,226 Total 2022 77,588 357,226 22 October 2021 $0.72 21 December 2021 $0.73 Total 63,889 13,699 77,588 - - - - - - - - - - (50,000) 13,889 (13,699) - - - - 357,226 357,226 13,889 - - (63,699) 371,115 357,226 13,889 - - - 63,889 13,699 50,000 - 13,889 13,699 77,588 50,000 27,588 The assessed weighted average fair value at grant date and expected price volatility of the underlying date of the effective Share Rights granted during the share, the expected dividend yield and the risk free financial year is $0.19 (2022: n/a). Options were priced interest rate for the term of the option. The expected using a Black-Scholes option pricing model that takes price volatility of the Company’s shares is based into account the exercise price, the term of the Share on the historical volatility of ASX listed companies Rights, the impact of dilution, the share price at grant considered to be comparable to Freelancer Limited. (c) LTIP share option grants in subsidiary (Payments Pty Ltd) Set out below are summaries of LTIP options granted, issued and that have balances or movement during the year under the plan: 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 Grant date 2023 16 November 2021 $0.057672 15,000,000 Total 2022 15,000,000 16 November 2021 $0.057672 15,000,000 Total 15,000,000 - - - - - - - - (4,5000,000) 10,500,000 7,450,000 3,050,000 (4,5000,000) 10,500,000 7,450,000 3,050,000 - - 15,000,000 13,500,000 1,500,000 15,000,000 13,500,000 1,500,000 Options were priced using a Black-Scholes option pricing free interest rate for the term of the option. The expected model that takes into account the exercise price, the term price volatility of the subsidiary’s shares is based on the of the Share Rights, the impact of dilution, the market historical volatility of ASX listed companies considered to price at grant date and expected price volatility of the be comparable to Payments Pty Ltd. underlying share, the expected dividend yield and the risk 100 (a) Parent entity (d) Transactions with related parties Freelancer Limited is the parent entity and ultimate Receivable from and payable to related parties controlling entity. (b) Interests in controlled entities Interests in subsidiaries are set out in Note 28. 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 (c) Transactions with key management personnel There were no loans to or from related parties at the Disclosures relating to key management personnel are reporting date. set out in Note 20 and the Remuneration Report. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. 26. Parent entity information The financial information for the parent entity, Freelancer Limited (as the head entity) and its Freelancer Limited has been prepared on the same wholly-owned Australian entities (as members of the basis as the consolidated financial statements, except Freelancer income tax consolidated group) account for as set out below. Investments in subsidiaries 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 Investments in subsidiaries are accounted for at cost taxpayer in its own right. 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 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 Freelancer Limited and its wholly-owned Australian the parent entity. entities have elected to form an income tax consolidated group. Statement of comprehensive income (Loss) / Profit after tax Total comprehensive (loss) / profit Statement of financial position Current assets Non-current assets Total assets Current liabilities Total liabilities Net assets Contributed equity Reserves Accumulated losses Total equity 2023 $000 (1,126) (1,126) 9,315 30,259 39,574 3,319 3,319 36,255 38,918 1,121 (3,784) 36,255 2022 $000 553 553 10,485 31,071 41,556 4,218 4,218 37,338 38,918 1,234 (2,814) 37,338 101 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT Contingent liabilities Significant accounting policies The parent entity had no contingent liabilities at 31 The accounting policies of the parent entity are December 2023 and 31 December 2022 consistent with those of the Group, except for Capital commitments The parent entity had no capital commitments as at 31 December 2023 and 31 December 2022. investments in subsidiaries which are accounted for at cost, less any impairment. 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: Country of Incorporation Percentage Owned (%) 2022 Percentage Owned (%) 2021 27. Business Combinations Business combinations occur where an acquirer and its subsequent settlement is accounted for within obtains control over one or more businesses. equity. Contingent consideration classified as an asset 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 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. for from the date that control is attained, whereby All transaction costs incurred in relation to the the fair value of the identifiable assets acquired and business combination are expensed to the statement liabilities (including contingent liabilities) assumed is of profit or loss and comprehensive income. The recognised (subject to certain limited exceptions). acquisition of a business may result in the recognition When measuring the consideration transferred in the of goodwill or a gain from a bargain purchase. 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 Name of entity Subsidiaries of Freelancer Limited: Freelancer International Pty Ltd Freelancer Technology Pty Ltd Freelancer India Pty Ltd Warrior Forum Pty Ltd Warrior Technology Pty Ltd Payments Pty Ltd Payments International Pty Ltd Payments Australia Pty Ltd Payments IP Pty Ltd StartCon Pty Ltd Loadshift Holdings Pty Ltd ** Loadshift Technology Pty Ltd ** Loadshift Pty Ltd ** Photo Anywhere Holdings Pty Ltd Photo Anywhere Pty Ltd Photo Anywhere Technology 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 Internet Escrow Services UK Limited Australia Australia Australia 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 Freelancer (Shanghai) Information Technology Co., Ltd. China Westmor Management, Inc. * Escrow.com, Inc. * EC Services Corporation* Internet Escrow Services, Inc. * Freightlancer, Inc. ** * Escrow.com group ** Loadshift group United States United States United States United States United States 102 100 100 100 100 100 100 100 100 100 100 53 53 53 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 53 100 100 100 100 100 100 100 100 100 100 53 53 53 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 53 103 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 29. Fair value measurements 32. Earnings per share (EPS) All assets and liabilities are recorded at their fair value. Basic earnings per share Diluted earnings per share 30. Events occurring after the reporting date There are no other matters or circumstances that have • the aggregated entity’s operations in the future arisen since 31 December 2023 that have significantly financial years, or affected, or may significantly affect: • • 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 Profit / (Loss) for the year Non-cash items in operating profit / (loss): Depreciation and amortisation Share based payments expense Net exchange differences Changes in operating assets and liabilities: Decrease in trade and other receivables Decrease / (Increase) in deferred tax assets (Increase) in other assets (Decrease) in trade and other creditors (Decrease) in provision for income tax (Decrease) in deferred tax liabilities (Decrease) / Increase in provisions for employee benefits Increase/ (Decrease) in other provisions Net cash inflow / (outflow) from operating activities Non cash information 2023 $000 2022 $000 189 (5,413) 4,733 4,470 115 339 815 1,069 (446) 159 535 2,018 (924) (419) (3,522) (3,592) (15) (26) (1,245) (1,013) 163 2 299 (273) 1,871 (4,179) During the period, the group recognised $1.68 million of interest charge relating to rent under AASB 16: Leases. Basic earnings per share is calculated by dividing: Diluted earnings per share adjusts the figures used in • 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, 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 adjusted for bonus elements in ordinary • the weighted average number of shares assumed shares issued during the year and excluding to have been issued for no consideration in treasury shares. 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: Profit / (Loss) from continuing operations Diluted earnings per share: 2023 Cents 0.04 0.04 0.04 0.04 $000 2022 Cents (1.20) (1.20) (1.20) (1.20) $000 189 (5,413) Profit / (Loss) attributable to the ordinary equity holders of the Company 189 (5,413) (d) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used in calculating basic earnings per share 2023 Shares 2022 Shares 450,914,882 450,765,581 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 1,060,737 1,885,247 - 451,975,619 452,650,828 (e) Information on the classification of securities ESP shares and share grants ESP shares granted to employees under the ESP and Note 24. 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 104 105 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 NOTES TO THE FIN ANCI AL STATEMENT NOTES TO THE FIN ANCI AL STATEMENT 33. Other significant accounting policies (a) Principles of consolidation Cash flows are presented in the cash flow statement on 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. 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. The assets, liabilities and results of all subsidiaries (c) Research & development are fully consolidated into the financial statements of Costs relating to research and development of new the Group from the date on which control is obtained software products are expensed as incurred until by the Group. The consolidation of a subsidiary is technological feasibility in the form of a working discontinued from the date that control ceases. model has been established. At such time costs may Intercompany transactions, balances and unrealised be capitalised, subject to recoverability. Software gains or losses on transactions between group entities development costs incurred subsequent to the are fully eliminated on consolidation. Accounting establishment of technological feasibility have not policies of subsidiaries have been changed and been significant, and the Group has not capitalised any adjustments made where necessary to ensure software development costs to date. 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 (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 recognises non-controlling interests that are present economic environment in which that entity operates. ownership interests in subsidiaries and are entitled to The consolidated financial statements are presented a proportionate share of the subsidiary’s net assets on in Australian dollars, which is the parent entity’s liquidation at either fair value or at the non- controlling functional and presentation currency. 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 Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing comprehensive income. Non-controlling interests at the date of the transaction. Foreign currency monetary are shown separately within the equity section of items are translated at the period-end exchange rate. the statement of financial position and statement of Non-monetary items measured at historical cost comprehensive income. (b) Goods and Services Tax (GST) and Valued 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 Added Tax (VAT) fair values were determined. 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 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 with other receivables or payables in the statement of in profit or loss. financial position. Group companies (g) Critical accounting estimates and judgments 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. 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 Exchange differences arising on translation of assets and liabilities within the next financial year are foreign operations with functional currencies other discussed below. 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 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. over its recoverable amount is recognised immediately The assumptions and estimates made by the Group 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. 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 (f) Comparative figures When required by Accounting Standards, comparative The Group assesses impairment at each reporting date by evaluating conditions specific to the group figures have been adjusted to conform to changes in that may lead to impairment of assets. Where an presentation for the current financial year. impairment trigger exists, the recoverable amount 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. 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 2023, 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 ranging from 5 to 7 year periods. 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 2023 of $34,120,179 (2022: $34,120,179). 106 107 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023NOTES TO THE FIN ANCI AL STATEMENT DIRECTORS’ DECL ARATION Provisions for doubtful accounts and Deferred tax assets transaction losses Deferred tax assets are recognised for deductible Provision is made in respect of the Group’s best temporary differences and unused tax losses as estimate of doubtful accounts and transaction losses management considers that it is probable that based on historical experience. future taxable profits will be available to utilise Share based payments those temporary differences and unused tax losses. Significant management judgement is required to The Group measures the cost of equity settled determine the amount of deferred tax assets that can transactions with employees by reference to the be recognised, based upon the likely timing and the fair value of the equity instruments at the date at level of future taxable profits. which they are granted. The fair value is determined with the assistance of an external valuation with the Trust assets and liabilities assumptions detailed in Note 24. The accounting The Group’s Online Payments segment, namely estimates and assumptions relating to equity settled the business of Escrow.com, is a regulated entity share based payments would have no impact on the that holds funds on behalf of its users in trust bank carrying amounts of assets and liabilities within the accounts. At 31 December 2023 the cash balance in next annual reporting period but may impact expenses trust amounted to A$38,343,852 (2022: A$54,768,004), 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 2023. 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. 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. DIRECTORS’ DECLARATION In the Directors’ opinion: (a) the Financial Statements and notes of the consolidated entity set out on pages 64 to 108 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 2023 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 2023. This declaration is made in accordance with a resolution of the Directors. On behalf of the directors Matt Barrie Chairman 27 February 2024 108 109 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 INDEPENDENT AUDITOR’S REPORT 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 ENTITIES 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 2023, the consolidated statement of profit or 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: loss and other comprehensive income, (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 2023 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 provide a basis for our opinion. the audit evidence we have obtained is sufficient and appropriate to FREELANCER LIMITED ABN 66 141 959 042 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FREELANCER LIMITED AND CONTROLLED ENTITIES Key Audit Matter Procedures the Group’s financial Reliance on automated process and controls Freelancer’s revenue is primarily generated from new and existing users posting and fulfilling projects and contests on the Freelancer.com website and therefore a significant part of 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 the business that includes Escrow.Com and Loadshift are also heavily reliant on IT systems. This is a key audit matter because of the: ● Complex IT environment supporting the Group’s business processes ● Mix of manual and automated controls ● Multiple internal and outsource support arrangements ● Large volume of low value transactions Recoverability of Intangible Assets Refer to Note 12 – Intangible Assets and Note 2 (d) - Critical Accounting Estimates. The Group has recognised intangible assets of $34.1 million at 31 December 2023 resulting from The business combinations and asset acquisitions. intangibles are compromised of domain names, intellectual property and goodwill. asset balances recoverability of the Group’s The assessment of incorporated significant intangible judgement in respect of factors such as general market conditions, discount rates, revenue growth and cost assumptions. We have focussed on this area as a key audit matter due to amounts involved being material; the inherent subjectivity associated with critical judgements being made in relation to forecast future revenue and costs; discount rates; and terminal growth rates. Our procedures included, amongst others: We understood and tested management’s controls over its systems relevant to financial reporting. We conducted general IT controls tests. This included a review of the policies, procedures, change management. Password protocol, access security and other relevant controls. We 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 IT 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 of use model included forecast revenue, costs, discount rates and terminal growth rates. We corroborated those assumptions by comparing forecasts to historical actuals where applicable. We involved our valuation specialists to recalculate 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. We performed sensitivity analysis on the revenue forecast, 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. SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au 110 111 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 INDEPENDENT AUDITOR’S REPORT 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 ENTITIES 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 2023 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 SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au FREELANCER LIMITED ABN 66 141 959 042 AND CONTROLLED ENTITIES INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FREELANCER LIMITED AND CONTROLLED ENTITIES – – – – – 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. 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. SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au 112 113 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 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 ENTITIES Report on the Remuneration Report We have audited the remuneration report included in pages 36 to 40 of the directors’ report for the year ended 31 December 2023. 62 58 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 2023 complies with s 300A of the Corporations Act 2001. Hall Chadwick (NSW) Level 40, 2 Park Street Sydney NSW 2000 Stewart Thompson Partner Dated: 27 February 2024 SYDNEY · PENRITH · MELBOURNE · BRISBANE · PERTH · DARWIN Liability limited by a scheme approved under Professional Standards Legislation www.hallchadwick.com.au 114 115 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 ADDITION AL ASX INFORM ATION ADDITION AL ASX INFORM ATION 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 22 March 2024. 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 bodies 1 1 Includes a relevant interest in 809,528 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. Number of Shares 196,584,607 161,309,528 Top 20 Shareholders as at 22 March 2024 Rank Name Number of ordinary shares held % of ordinary shares held 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MATT BARRIE CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMS MR DARREN WILLIAMS BNP PARIBAS NOMINEES PTY LTD HSBC CUSTODY NOMINEES CUSTODIAL SERVICES LIMITED TAIPAN INVESTMENT MANAGEMENT J P MORGAN NOMINEES AUSTRALIA MRS RIKA WESTWOOD JOHN GORDON PHIPPS MR RODNEY JOHN SELLICK MR CRAIG RONALD TINDALE STUART JOHN NATTRASS MR NEIL LEONARD KATZ INFILSEC PTY LTD DUNRAY NOMINEES PTY LTD MAROBAR HOLDINGS PTY MR GREGORY JAMES WARD MR MICHAEL JOHN RUHFUS Total Top 20 Total Remaining Total of Securities 191,435,150 168,910,682 15,522,618 10,605,660 9,949,862 5,502,032 2,534,730 2,063,162 2,056,891 1,800,000 1,580,932 1,109,833 1,100,000 1,000,000 995,539 978,727 850,000 789,500 726,112 694,831 420,206,261 31,889,264 452,095,525 42.3% 37.4% 3.4% 2.3% 2.2% 1.2% 0.6% 0.5% 0.5% 0.4% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 92.9% 7.1% Analysis of Holdings as at 22 March 2024 Holdings Ranges Holders Total Units 1–1,000 1,001–5,000 5,001–10,000 10,001–100,000 100,001–500,000 500,001–1,000,000 1,000,001–5,000,000 5,000,001–9,999,999,999 Totals 503 691 220 340 65 12 7 6 1,844 272,424 1,936,531 1,692,072 10,697,370 14,773,066 8,552,510 12,245,548 401,926,004 452,095,525 Restricted securities as at 22 March 2023 Class of restricted securities Nature of restriction Number of Shares Unquoted ESP shares Various dates ending no later than 27 May 2025 LTIP share options Various dates ending no later than 27 August 2027 Total securities subjected to trading restrictions 809,528 371,115 1,180,643 Voting Rights The voting rights attaching to ordinary shares, There are no voting rights attached to unlisted options, set out in the Company’s Constitution are: voting rights will be attached to unlisted ordinary shares once issued and to options upon exercise. (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. On-market Buy Back There is no current on-market buy back. 116 117 FREELANCER LIMITED ANNUAL REPORTFREELANCER LIMITED ANNUAL REPORT2023 Corporate Directory Company Directors Registered Office 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 Level 37 Grosvenor Place 225 George Street Sydney NSW 2000 Telephone: +61 (02) 8599 2700 Share Registry Boardroom Limited Level 8 210 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) 118 

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