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Huddlestock Fintech
Annual Report • May 6, 2022
3624_10-k_2022-05-06_9ef080aa-b321-43f4-857a-1ed426ae4e9d.pdf
Annual Report
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(audited)
Democratizing access to capital markets
TABLE OF CONTENTS
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ABOUT HUDDLESTOCK
Huddlestock Fintech is an innovative technology software provider with a leading expert professional services business. We deliver innovative and sustainable technology solutions to the capital markets, treasury, and wealth management industries.
Through its technology offering, Huddlestock offers an innovative, compliant, and data-centric WealthTech SaaS, accelerating the digital transformation, and trends of hyper-personalization and ondemand banking within the wealth management industry. Huddlestock's SaaS empowers the embedding of low-cost, efficient white-label trading and investment services, underpinning Huddlestock's mission of delivering financial inclusion by democratizing access to capital markets.
Through its world-class expert professional services business, Huddlestock delivers strategic technology solutions and process automation for the financial services industry. This range of services has propelled Huddlestock into becoming the preferred supplier of financial consultancy services and technology solutions in the Nordic region. Huddlestock Fintech AS is regulated by Bafin and was listed on Euronext Growth Market 26 November 2020, as Norway's first fintech company to be publicly traded.
For more information, please visit www.huddlestock.com
PUROPOSE AND VALUES
Our mission is to deliver financial inclusion by democratizing access to capital markets. Our values are agility, collaboration, inclusion, ambition, innovation, and accountability.
Technology First.
Our values
UN Global Compact Signatory
Huddlestock Fintech AS signed up to the UN's Ten Principles on human rights, labour, environment, and anti-corruption in 2021. Delivering on the (UN) Sustainable Development Goals is an integral part of Huddlestock's corporate strategy, organizational culture, and ethos, and we remain committed to publish our sustainability targets and first report in 2022.
"We believe in technology as an important enabler in tackling the global challenges our world faces today. Through technology, business can create new and innovative solutions, contributing to the advancement of the Global Goals for our global and local communities in a sustainable and responsible way," says John E. Skajem, CEO, Huddlestock Fintech.
The United Nations Global Compact is a special initiative of the UN Secretary-General and is a call to companies everywhere to align their operations and strategies with ten universal principles in the areas of human rights, labour, environment, and anti-corruption. It is the largest corporate sustainability initiative in the world, with more than 9,500 companies and 3,000 non-business signatories based in over 160 countries, and more than 60 Local Networks.
Norway's first listed Fintech
Huddlestock Fintech is an innovative technology software provider with a leading expert professional services business. We deliver innovative and sustainable technology solutions to the capital markets, treasury and wealth management industries.
30 colleagues 5 global locations Norway, Sweden, Denmark, Malaysia, Germany
•
Huddlestock| Annual report 2021 Delivering above targets in FY 2021
Pro-forma* adjusted** numbers
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• **Adjustments are NOK2m one-off costs and NOK4.5m in goodwill depreciation linked to the acquisition of Visigon and NOK300K loss on the sale of Dovre Forvaltning.
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January 2021
*Proforma numbers include Visigon's accounts from 1st
HIGHLIGHTS IN 2021
LETTER FROM THE CEO
In 2021, Huddlestock Fintech AS positioned itself as a leading Fintech infrastructure provider for banks and financial institutions in Europe. In 2022, the Company is embarking on the next strategic steps, accelerating growth, scaling up operations and upgrading our regulatory license. Achieving a full investment banking license will enhance the Company's client service offering as an end-to-end provider of fully embedded trading and investment services, alongside its world-class expert professional services business.
The banking sector is in a state of flux. Undergoing enormous transformational change to bring core systems in line with the requirements of the 4th industrial revolution. With multiple trillions of financial assets moving to the hands of new generations in the next years, financial advisory in all its shapes and forms will become increasingly digitized. Offering real-time, hyper-personalised and value-based experiences to existing and future clients is no longer a choice. To stay ahead of the game and continue to attract increasing share of
customer wallets, managers need to act today. With our new colleagues at our expert capital markets consultancy Visigon on board, we can offer customized strategic and technical solutions across the entire value chain.
In 2021, we ramped up investment spend on our technology, organisation, and talent. We acquired the leading Nordic expert consultancy Visigon Nordic AB. Adding 20+ capital markets technology experts. A significant milestone for the company. Since inception, Visigon's expert consultants have established themselves as the leading player in the Nordics with significant multiyear relationships with most Swedish and Danish banking groups, disruptor neo banks and (innovative) platforms. We see multiple opportunities for growth, both at home in the Nordics and by exporting the Visigon experience globally, throughout our global footprint. The next steps are to build on Visigon's strong footprint and reputational excellence in the Nordic markets by introducing a customised local whitelabel trading solution based on Huddlestock's innovative technology.
The German market is a core focus for the group. Banks, financial platforms, and other financial intermediaries need innovative trading and investing solutions. Following the departure of the CEO of Huddlestock Systems GmbH at the end of 2021, followed by a thorough (re)assessment of Huddlestock's commercial portfolio, against both technology, profitability, and governance metrics, the process of rebuilding and growing the German operations has started. The global health pandemic, recent geopolitical events in Ukraine, and the reorganisation of our German operations delayed somewhat our delivery plans for Huddlestock Technology. An important step in the scaling up of our German operations has been the recruitment of a new and experienced management team. We are delighted that Robert Fuchsgruber agreed at the beginning of 2022 to become the Managing
Director of Huddlestock's German operations. With Robert at the helm, focused on ongoing client commitments, and in growing our footprint in our focus markets we are confident that the German market will become an important contributor to the group's profits.
A core pilar of our growth strategy is the creation of shareholder value through selective and accretive acquisitions, and we entered discussions to fully acquire the software developer F5 IT in an all-share deal. A term sheet was signed 30 March 2022. Going forward our M&A strategy will continue to stay focused on targets where we find significant synergies and which support Huddlestock's "technology first" focus.
Our employees are critical to our organisation and competition for talent is increasing. Employees with high levels of technical insight and expertise are in strong demand. Attracting the right people is key. Ensuring they stay committed to working with us for many years to come is a key focus for my management team and I am delighted that we have been able to attract so many talented employees to our organisation thus far. We are fortunate to have such an excellent team.
Working closely with the Board of Directors, we are lucky to have a board composed of serial entrepreneurs, with a strong passion for supporting new and innovative technology solutions that make a difference. This encourages us to continue to invest in research and development to grow our offering. Over the past year(s) we have enjoyed financial support from Innovation Norway and the Norwegian government's R&D support scheme (Skattefunn).
Together with our Board of Directors and our talented employees, we are ready to build a diverse and global company focused on innovation and remaining fully committed to serving our customers. Together with our global team, I look forward to the next steps of our exciting journey of delivering the Nordic spirit of inclusive growth globally.
Huddlestock Fintech - Democratizing capital markets
John E. Skajem
Chief Executive Officer
THE SHARE
Huddlestock is a company run by the shareholders for the benefit of all shareholders.
We are focused on creating value for our shareholders, customers, and society, while remaining an innovative and market leading fintech.
While our share has seen both all-time highs and lows during the past year, we are pleased to report that the performance has mirrored that of our closest peers in the First North Technology Index when adjusted for two capital dilutions, in June the company raised NOK 34.5 million in a rights issue for the acquisition of the Swedish expert consultancy Visigon Nordic and in December the company raised NOK 24.5 million in a private placement to extend its banking license to a full-service investment banking license. On April 26th, Huddlestock Fintech signed a Market Maker agreement with Norne Securities. The purpose of the agreement is to increase the liquidity of the shares of the company, traded on Euronext Oslo Stock Exchange, and we are pleased to report that we have seen a significant increase in the daily average liquidity since IPO.
Huddlestock Fintech AS was listed on Euronext Growth Market 26 November 2020, as Norway's first fintech company to be publicly traded. On 28 July 2021, we were admitted to trading on Tradegate Exchange, Deutsche Börse's securities exchange for private investors. The secondary listing opens up ownership of the company's equity to Euro denominated investors.
Trading on Oslo Stock Exchange – Euronext Growth continues to be the primary listing venue.
| Huddlestock total return (%) | 2021 | Since HUDL IPO 26/11 2020 |
|---|---|---|
| Annual share price return | -23% | 74% |
| Share price at year end (NOK) | 3,85 | 4,00 |
| Highest closing price during the year (NOK) | 8,19 | 4,00 |
| Lowest closing price during the year (NOK) | 2,70 | 2,10 |
| Annual return OBX | 25% | 4% |
| Annual return First North All-Share | -5% | 16% |
| Annual return First North Technology | -6% | 13% |
HUDDLESTOCK TOTAL RETURN – ABSOLUTE AND RELATIVE IN 2021
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HUDDLESTOCK SHARE PRICE AND VOLUME IN 2021
HUDDLESTOCK SHARE PRICE VS FIRST NORTH ALL-SHARE AND FIRST NORTH TECHNOLOGY
HUDDLESTOCK SHARE CAPITAL AND SHAREHOLDER STRUCTURE
At year-end 2021, Huddlestock's share capital was NOK 111.423 million, divided into 119 302 483 shares, each with a nominal value of NOK 0,0019.
The core shareholder group of Huddlestock's 20 largest shareholders, its founders, management, and employees, represented 65% of the total shareholders at end 2021.
1203 shareholders
end 2021
Top 20 shareholders
| Rank | Executive Shareholders | No shares | % shares |
|---|---|---|---|
| VISION INVEST STAVANGER (inlc.Huddle Holding) | 8 935 241 | 7.49% | |
| 2 | RETROPI LIMITED | 7 607 608 | 6.38% |
| 3 | BERKER GROUP AS | 6 597 665 | 5,53% |
| 4 | GRUNNFJELLET AS | 5 408 334 | 4,53% |
| 5 | SIX SIS AG | 4 997 603 | 4.19% |
| 6 | SAAMAND AS | 4 356 532 | 3.65% |
| 7 | GENTLE INVEST | 4 286 000 | 3,59% |
| 8 | SAA INVEST AS | 4 200 000 | 3,52% |
| ਰੇ | E HOLDING AS | 3 031 454 | 2,54% |
| 10 | STEIN HEGRE HOLDING AS | 2 995 000 | 2,51% |
| 11 | COLIBRI INVEST AS | 2 687 636 | 2.25% |
| 12 | NORDNET BANK AB MEGLERKONTO | 2 501 764 | 2,10% |
| 13 | HOGNAN INVEST | 2 494 512 | 2.09% |
| 14 | GJEDREM AS | 2 406 000 | 2.02% |
| 15 | EASYACCOUNTING OSLO AS | 2 123 077 | 1,78% |
| 16 | BILL INVEST AS | 1 966 847 | 1,65% |
| 17 | ØSTLANDSKE PARKERING AS | 1 923 077 | 1.61% |
| 18 | KT GLOBAL INVEST AS | 1 923 077 | 1,61% |
| 19 | :AVANZA BANK AB | 1 825 757 | 1,53% |
| 20 | :VALINOR AS | 1 563 852 | 1,31% |
Creating sustainable value for shareholders
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THE BOARD OF DIRECTORS HUDDLESTOCK FINTECH AS
Øyvind Hovland, Chairman.
Øyvind is a serial entrepreneur with more than 25 years of experience in starting and scaling companies in various industries. Notably Cyviz AS – with offices globally, and Vision IO AS, a leading optic camera provider to the Oil and gas industry.
Stig R. Myrseth, Board Member*
Stig Myrseth has a distinguished and long-standing career as a financial analyst, asset manager and founder of financial institutions among others a brokerage firm, a fund management company and a bank. He has a strong brand and reputation as one of Norway's leading financial experts.
Ramtin Matin, Board Member*
Ramtin Matin is Head of Innovation at Sparebank 1 SR-Bank. He has a strong track record in technology innovation within the financial services industry, applying AI and Blockchain. His previous roles include hands-on participation in portfolio companies within SR-Banks Venture Fund Finstart Nordic, regional lead and Senior Solutions Architect for SAS Institute, management consulting with PWC.
Murshid Ali, Board Member.
Murshid is a board member and co-founder of Huddlestock. He has a PhD degree in Economics, and holds a master's degree from Grenoble Ecole de Management, and a degree from NTNU. He has almost a decade of experience as an entrepreneur, primarily within the renewable energy and financial industry.
THE EXECUTIVE TEAM
John E. Skajem, Group CEO
John E. Skajem is the Group CEO of Huddlestock Fintech AS. Following a long career in international finance and working for global investment banks, asset managers and large universal banks, John has gained a thorough understanding of all aspects of the financial services industry. He holds an MBA from the University of Chicago.
Anders Peinert, Group CFO
Anders is the Chief Financial Officer to the Group. Anders brings deep understanding and experience of international businesses from a successful career in asset management. He comes with extensive experience from treasury, cash and liquidity management, financial strategy and M&A, capital and risk management, regulatory oversight, and compliance, from various CFO roles.
Cecilia Luras, Chief of Strategy & Investor Relations
Cecilia is responsible for Strategy and Investor Relations. She has a strong track record from leading global investment banks and asset managers in London, Paris and Bergen. She has an M.Litt in Management, Economics and Politics from the University of St Andrews, and an undergraduate degree from Durham University.
Gustav Ekeblad, Chief Technology Officer
Gustav is a co-founder of Visigon and has been Nordic Group CEO since 2011. He has a strong background from both the technical side as well as the consultancy side of the business and has studied Physical Engineering and Business at Uppsala University.
Petter Midtsian, CEO Sweden
Petter is a co-founder of Visigon with a M.Sc in Engineering and a B.Sc. in Business from Uppsala University. He has a strong background in consulting and the financial industry with experience from many banks and financial institutions in the Nordics.
Lars Stage Thomsen, CEO Denmark
Lars joined Visigon in 2017 and has been instrumental in growing the Danish business. Lars has a M.Sc degrees Economics from University of Southern Denmark. He has taken many relevant courses at Copenhagen Business School and from London School of Economics. He has also earned a CFA Charter. Lars has a broad experience from banks and financial institutions in Denmark.
Robert Fuchsgruber, CEO Germany
Robert is the CEO of Huddlestock's German business. He brings extensive experience from B2B business with independent wealth managers in Germany and digital solutions for private client platforms. While at DAB BNP, Robert was a member of BNP Paribas' Executive Committee for Private Investors overseeing Consorsbank, DAB and BNP Private Banking since 2016, and a member of BNP Paribas' Executive Committee for Germany. He joined DAB BNP Paribas in 2008.
THE ORGANISATION
The Company's head office is located at Forus in Stavanger municipality, Norway.
In addition to the parent entity, Huddlestock Fintech AS, headquartered in Stavanger, Norway, the group includes the subsidiaries Huddlestock Technologies AS, Oslo, Norway; Huddlestock Systems GmbH, Munich, Germany; Visigon Nordic AB and Visigon Sweden AB, Stockholm, Sweden; Visigon Denmark ApS, Copenhagen, Denmark; and Huddlestock Asia Sdn Bhd, Kuala Lumpur, Malaysia.
It has offices in Norway, Germany, Sweden, Denmark and Malaysia, respectively.
2021
Board of Directors Report
|19|
REPORT FROM THE BOARD OF DIRECTORS – 2021 FINANCIAL PERFORMANCE
2021 was transformational year for Huddlestock Fintech AS. The year started with the launch of our collaboration with BNP Paribas, signing up several new clients and collaboration partners and continued work to complete our various technology solutions. In June Huddlestock completed the acquisition of the leading Nordic expert consultancy for financial institutions, Visigon Nordic AB, followed by a full reorganization of the German operations during the fall. While the global health pandemic slowed down testing, implementation, and customization of contracts during 2021, it was a year of decisive investment in technology, operations, and talent.
During 2021, the company ramped up investment spend. The combination of Huddlestock's modern, scalable, and secure wealth tech SaaS solution and Visigon's world class expert consultants delivering strategic technology solutions and process automation for the financial services industry, allows it to deliver customized strategic and technical solutions across the entire value chain. With its suite of ground-breaking technology solutions for digitizing processes for wealth managers, custody banks and trading venues, Huddlestock has a strong pipeline of projects for its Bedrock SaaS white label trading solution.
The integration of the Visigon teams allowed for stronger investments in our Nordic operations. Establishing a strong Nordic base is not only part of our DNA but essential for doing business in the region. The reorganization of the German operations and decision to extend our regulatory license to a full investment banking license, solidifies the company's client service offering as an end-to-end provider of fully embedded trading and investment services, alongside our world-class expert professional services business.
A key priority for the company is to remain an attractive employer. 2021 was an important year for our teams. We started the year with only two full time employees. Through the acquisition of Visigon we added 20+ capital markets technology expert consultants. We added 5 more colleagues in 2021. At the publication of this report, we count 39 team members. It has been an important part of our development to have quality professionals serve our clients and to operate the company based on best practice.
Huddlestock Fintech was awarded the "FinTech Innovator of the Year" award in the 2021 Technology Innovator Awards.
Operations in 2021
Group revenue for 2021 was NOK 23.4 million (pro-forma at NOK 41.9 million), of which NOK 2.7 million is attributed to Technology and NOK 20.7 million to Professional business services. Visigon is consolidated from the closing of the transaction in June 2021, while full year 2021 revenues for the consulting division were at NOK 39.2 million.
Group operating expenses were NOK 30.9 million (excl. depreciation) for 2021, of which NOK 10.6 million were attributable to Technology operations, NOK 18.4 million to Professional business services and the company had NOK 2 million as non-recurring costs related to the acquisition of Visigon. Proforma costs for full 2021 were at NOK 47.5 million (excl. depreciation).
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This led to an EBITDA of NOK -7.6 million in 2021. Adjusted for one-off costs related to the acquisition of NOK 2m, the adj. EBITDA was NOK -5.6 million for full 2021. Group pro-forma adj. EBITDA stood at NOK -5.6 million for 2021 and adjusted for non-recurring costs at NOK -5.1 million.
The expenses are investments to accelerate growth and scale up the German and Nordic operations, upgrading the regulatory license, increasing the organisational support and customization of software in conjunction with the onboarding of new contracted clients.
Funding, liquidity, and balance sheet.
Huddlestock Fintech has successfully completed several private placements in the last 12 months to support its growth plans and M&A activity. The company and the Group consider the liquidity to be manageable due to cash in accounts of NOK 16.2m as of end-2021. The company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarily large, fixed operating and development costs.
The company's priorities for 2022 include:
- Prioritize profitable growth and recurring revenues
- Creation of a Nordic white label solution
- Scale up Nordic operations. Add talent
- Prepare and scale German operations for growth
- Extend German banking license
- Strategic acquisitions
HIGHLIGHTS IN 2021 AND SUBSEQUENT EVENTS
Huddlestock Fintech acquired Visigon Nordic AB
Visigon Nordic AB, established in 2010 by three entrepreneurs, is a leading financial technology company with offices in Stockholm and Copenhagen. The company has since inception grown into becoming the preferred supplier of financial consultancy services and technology providers in the Nordic region, with a wide range of Nordic financial services companies as their clients.
The combination of Huddlestock and Visigon is the perfect symphony for delivering cutting edge digital solutions and direct market access to asset managers, custody banks, and trading platforms around the world. Visigon has team of 20+ highly skilled capital markets and technical software consultants with excellent track record in consultancy services for the financial services industry. The company offers a wide range of services including business analysis, software design, development, and project management. The transaction firmly establishes Huddlestock's Nordic footprint, complementary technological solutions and provides an expert platform for global growth.
Huddlestock x Visigon: Creating sustainable value for shareholders:
- Significant potential to roll-out consultancy services across Huddlestock's existing footprint
- Significant potential to roll-out Huddlestock's technological solutions at a much greater pace and with greater global reach
- Strengthens Huddlestock's Nordic footprint by adding two new geographies
- Improves cash flow from joint operations with solid positive net profit.
- Scalable, profitable, and capital-light business
The transaction implied an enterprise value of Visigon of NOK 56 million implying a valuation of 1.4x on 2020 sales and 6.0x on 2020 EBITDA. The transaction was settled through a combination of cash and Huddlestock shares, where 60% was paid in cash and 40% in shares at a price of NOK 6.00 per share. Huddlestock expects the acquisition of Visigon to create substantial shareholder value. It is forecasted to be financially accretive to Huddlestock and is expected to help accelerate the commercialization of Huddlestock's two primary technologies, Apex and Bedrock.
Case study: Denmark's Export Credit Agency (EKF)
Working with our partners to deliver and host a full suite of treasury management services. Huddlestock Fintech AS through its leading fintech technology consultancy Visigon, and in partnership with Adenza (formerly known as Calypso), entered a collaboration with EKF, Denmark's Export Credit Agency, to deliver and host a full suite of treasury management services.
In close collaboration with Adenza, Huddlestock's expert fintech consultancy Visigon won the tender to implement a cross-asset, front-to-back and fully integrated treasury platform based on Adenza's Calypso for the Danish Export Credit Agency, EKF. EKF is now fully live with its new treasury solution after the last project delivery in the beginning of June 2021.
The platform provides EKF with real-time information on critical banking and trading activities to make informed decisions about funding, liquidity, and risk management across asset classes, including FX, FXD, MM, Interest Rate Derivatives (IRD) and Fixed Income. The system enables EKF to optimize their balance sheet, automate workflows and realize operational efficiencies.
During the summer months the integration of the 20 plus new colleagues from the newly acquired Visigon began. While Q2 was somewhat impacted by the summer holidays and a one-off NOK 0.5 million integration charge was booked in Q2, subsequent months have confirmed a strong pick up in the consulting business and its consultants were completely sold out; existing clients extended and added new tasks to ongoing projects; new clients were added. The consulting business is fully booked for Q1 2022 and fully booked for Q2 2022.
Reorganising Germany.
In November 2021, Huddlestock terminated the contract with its German CEO. This has caused delays in some of our commercial offerings but allowed Huddlestock to focus and prioritize the most profitable and largest projects in its pipeline. These projects are game-changing in nature and will be delivered in the near future. As a result, less profitable projects have been put on halt, or terminated. This includes, Aledius and MakeImpact, where the former German CEO also has an ownership stake. Last year Huddlestock launched the first stage of the Qinfen platform together with DAB BNP (Apex). The phase two roll-out would create an all-in-one marketplace for asset managers but has been put on pause due to internal organizational issues at DAB BNP. Due to this, Pecunia, the first fund onboarded Apex, has chosen not to proceed as a client. These developments do not affect growth, product delivery or the estimated revenue development from products in the coming year.
Accelerating growth to deliver end-to-end services.
In 2022, the company is embarking on its next strategic step, accelerating growth, scaling up operations and upgrading its regulatory license. A full Investment Banking license, regulated throughout Europe, will position the company uniquely as one of a few Fintech's providing end-toend solutions for trading and investment infrastructure. The company will be able to onboard more end clients, much faster, more efficient, and hold client assets in the company's own custody. It will give the company full control of our proprietary ecosystem and geographical expansion plans. This is a big step up for a European Fintech and will increase the company's margins significantly in the medium to long-term.
Capital raise to acquire Visigon Nordic AB in June 2021.
In connection with the acquisition of Visigon Nordic AB, Huddlestock completed a capital raise with gross proceeds amounting to NOK 34,771,836 and 5,795,306 newly issued Huddlestock ordinary shares. The subscription price was NOK 6.00 pershare. After these transactions, the new share capital of Huddlestock Fintech AS is NOK 226,674,7177 comprising 119,302,483 shares, each with a nominal value of NOK 0.0019.
Private placement supports scale up and extension of regulatory license in December 2021.
To support the company's growth plans to scale up its German and Nordic operations, and achieve a full investment banking license, the Board of Directors of Huddlestock Fintech AS completed a private placement for the subscription of 9.440.465 newly issued Huddlestock ordinary. The Private Placement was underwritten by a guaranteed consortium of investors for NOK 15.000.000. As consideration for the guarantee, the consortium has been issued one unregistered warrant per share subscribed to in the Private Placement free of charge, valid for a duration of 12 months and with a strike price of NOK 3,50 per share. The gross proceeds amount to NOK 24.545.207. The subscription price was NOK 2.60 per share.
The gross proceeds of approximately NOK 25 million provides Huddlestock with adequate funds to accelerate growth and scale up its German and Nordic operations, proceed with the application of a full investment banking license in Germany, and sufficient working capital, liquidity, and growth capital for the foreseeable future.
Change in Huddlestock treasury shares.
A consequence of the agreed organisational change in our German operations was the return of 10,666,873 shares in Huddlestock Fintech AS by former CEO of Huddlestock Systems. The shares are kept in treasury with the intention to use them towards future shareholders as payment for acquisitions and potential investments in talent and technology. At the time of this report, some shares have been used for investment in talent.
Sale of Dovre Forvaltning UAB
The sale of Dovre Forvaltning UAB to DTSocialize Holding was completed in 2021.
Stig Myrseth joins the Board of Directors.
In December, the company announced that Stig Myrseth would join the Board of Directors of Huddlestock Fintech AS. Following a distinguished and long-standing career as a financial analyst and fund manager with his own weekly feature column on personal investments for more than a decade in the leading Norwegian financial newspaper Finansavisen, Stig founded the ECB regulated Fjord Bank, and the Norwegian full-service brokerage firm, Orion Securities, which is now part of Norne Securities. He later co-founded the blockchain infrastructure group gateway.fm and was Huddlestock Fintech's CEO until 2020. He currently acts as an advisor to the private equity group SPEAR Capital and sits on the investment committees of Drangsland Kapital and Pensum Asset Management.
After more than three years as a board member, Per Øyvind Berge retired from the Board of Directors, effective December 10th 2021.
Events after the reporting period
Our teams are relentlessly focused on growing our business; we remain completely sold out within our consulting business and have, since the beginning of the year, expanded our team with 4 new hires to meet increased demand from existing clients. We are also seeing increased demand for our capital markets expertise from new potential clients; in February 2022, our leading fintech consultancy business won a first mandate with Danish fintech company Lunar.
The ongoing war in Ukraine has somewhat affected the roll-out of our technology. We are monitoring the situation for both direct and indirect consequences, as well as any increased cyber risks, and are working closely with our local partners. At the time of this report, our partners are unharmed and continue to operate, though in challenging conditions. Huddlestock Fintech and its daughter companies have no direct investments in Ukraine. While the situation, if prolonged for an extended period, would somewhat affect the implementation timelines and ongoing deliveries for existing client commitments, we continue to see high demand for our SaaS white label trading solution. We remain focused on implementing existing client contracts and have, since the beginning of the year, signed agreements with a leading Nordic investor news site counting more than 25.000 users, and a Northern European investment club of sophisticated retail traders, to launch a retail trading offer by implementing Huddlestock's Bedrock Software-as-a-Service solution.
M&A remains a core part of Huddlestock's strategy, and at the end of March, a term sheet was signed with the intention to acquire 100% of F5 IT, a software developer focused on customised application and integration solutions within Fintech, Proptech and IoT, for a total consideration of NOK 32 million paid in Huddlestock Fintech shares and in two tranches of NOK 20 million and NOK 12 million. The latter payment is tied to F5 IT meeting mutually agreed performance targets and agreed paid over a period of three years in equal instalments. The company is highly complementary with existing Huddlestock operations, will further the company's onshoring strategy, and accelerate our plan to become a leading Fintech in Europe.
Signatures
Øyvind Hovland Chairman of the Board
Murshid Hugberg-Ali Board member
John Egil Skajem
CEO
Stavanger, May 6, 2022 The Board of Directors of Huddlestock
Risks
Regulatory risk
The Company is subject to financial services laws, regulations and administrative actions and policies. Changes in supervision and regulation in Germany, Norway and in the European Union ("EU")/the EEA could materially affect the Company's business, its products, and services and/or the value of its assets. Areas where changes could have a material adverse effect include, but are not limited to (i) changes in monetary, interest rate and other policies, (ii) general changes in government and regulatory policies or regimes which may significantly influence investor decisions or increase the costs of doing business (iii) changes in competition and pricing environments, (iv) increased financial reporting requirements and (v) changes in regulations affecting the Company's structure of operations, in particular any changes to wealth management regulations restricting or introducing new requirements.
Risk of failure or inadequacy in IT systems
The Company relies heavily on the uninterrupted operation of its IT systems for the efficient running of its business and operations. In addition, the Company will depend on a few third-party providers for the supply of important IT services. The Company's ability to conduct its business may be adversely affected by a disruption in the infrastructure that supports the business of the Company.
Technology
The introduction of new technologies, digitalisation and changing consumer behaviours in the wealth tech sector opens opportunities for new business models leading to structural changes and increased industry dynamics. Failure to respond to and meet the demands developing in the marketplace could have a negative impact on customer relationships, value chain position and service offerings.
Objectives and strategy
The Company and the Group are exposed to financial risk in very limited areas. The current strategy does not include the use of financial instruments, but this is subject of ongoing assessment by the administration and the board. The Company and the Group have conducted extensive research and developed a suite of unique licensed software as a service-solutions for banks, asset managers and retail trading venues.
Market risk
The Company and the Group have no equity market investments. However, negative equity markets could affect the company's share price adversely and as such temporarily increase the company's cost of capital. The Company and the Group have foreign exchange exposures, mainly through normal international business to Euro, Swedish Kronor, and Danish Kroner, which is considered manageable.
The Company and the Group have debt of NOK 3.86 million, respectively NOK 6.28 million. The Company has a revolving overdraft facility of NOK4 million. Increases in interest rates will affect the Company. Should this be prolonged and substantially permanently higher, this could affect the Company's profitability.
With regards to other market risks, there is the possibility of increased competition for winning clients. However, this is viewed as a normal business operating environment and the risk is viewed as low due to the significant number of potential clients and the secular growth in the Company's target market.
In order to quantify the risk of not achieving the company plans and goals, we view this as low to medium risk. There are always risks in achieving plans, however the company has good visibility for existing contracts and with the view of our pipeline going forward. There are always risks in achieving plans, however, the company has good visibility for existing contracts and with a positive view of our pipeline going forward.
Credit risk
The risk of losses on receivables is considered low. To date, the Company and the Group has not incurred significant losses on receivables.
Liquidity risk
The Company and the Group considers the liquidity to be manageable due to cash in accounts and budget for 2022. For variable costs, the company has the option to efficiently scale up or down as required and on an opportunistic basis. The company has also proven to have favourable possibilities to efficiently raise equity and debt funding and establishing ongoing lending facilities in the form of short- and long-term bank loans, revolving credit lines and overdraft facilities.
Environmental reporting
The activities of the Company and the Group do not cause environmental damages at the time of the writing of this report.
Strategy risk
The Company faces risks associated with the implementation of its strategy. For the majority of its business, risks would be considered normal business risk. For some parts of the current business, the company has limited operating history and implementation of the strategy requires management to make complex judgments, including anticipating customer needs across a range of offered products, anticipating competitor activity and the likely direction of macroeconomic assumptions.
Risk that capital in the future may not be available on attractive terms, or at all
It cannot be ruled out that the Company may need to obtain additional capital in the future. Such capital, whether in the form of subordinated debt, hybrid capital or additional equity, may not be available on attractive terms, or at all. Further, any such development may expose the Company to additional costs and liabilities and require it to change the manner in which it conducts its business or otherwise have a material adverse effect on the Company's financial position, results of operations and/or prospects. Since the beginning of the year, global equity markets have been volatile. Higher levels of inflation have resulted in Central Bank action raising interest rates across most developed markets. Forward markets increasingly reflecting the more hawkish attitude to interest rates taken by Central Banks and the impact on global equity markets has been one of rotation away from investment into growth stocks, with monies prioritizing investment in value stocks. This has resulted in stock market losses for investors invested in growth stocks, and could result in lower appetite for stocks with a growth profile in the future. Negative equity markets and a negative perception of growth stocks as an asset class, could affect the company's share price adversely, and as such temporarily increase the company's cost of capital.
Environment, gender equality and employee matters
As of 31 December 2021 the Company and Group had 30 permanent employees, twenty-seven men and three women. The work environment in the Company is considered good. No serious injuries, work-related wear / strain injuries or property damage was recorded during 2021. There has been no sick leave in 2021.The Board of Directors (the "Board") consists of two men. The Board has not found it necessary to take special measures with regards to gender equality.
Forward-looking statements
Matters discussed in this report may constitute forward-looking statements. The forward-looking statements in this report are based on various assumptions, including without limitation, management's examination of future operating trends and other information or expectations available from the third parties. The company believes that these assumptions were reasonable when made, but the assumptions are inherently subject to significant uncertainties, which are difficult to predict and might prove to be beyond the company's control. As a result, no representation or warranty is given as to the completeness or accuracy of any forward-looking statement contained in this report or the accuracy of any of the underlying assumptions.
Audited Annual Accounts 2021
|30|
CONSOLIDATED INCOME STATEMENT (AUDITED)
| Consolidated income statement (in NOK) | Note | 2021 | 2021 | 2020 |
|---|---|---|---|---|
| Audited | Pro-forma | |||
| Operating income | ||||
| Other operating income | 2 | 23,363,188 | 41,890,188 | 225,000 |
| Total operating income | 23,363,188 | 41,890,188 | 225,000 | |
| Operating expenses | ||||
| Cost of materials/subcontractors | 2,931,122 | 7,427,122 | ||
| Personnel costs | 4,5 | 17,406,300 | 26,986,300 | 432,000 |
| Depreciation and amortisation | 6 | 10,594,597 | 10,594,597 | |
| Other operating expenses | 5 | 10,626,087 | 13,095,087 | 8,267,000 |
| Total operating expenses | 41,558,105 | 58,103,105 | 8,699,000 | |
| EBITDA | -7,600,320 | -5,618,320 | -8,474,000 | |
| EBIT | -18,194,917 | -16,212,917 | -8,474,000 | |
| Financial income | ||||
| Interest income | 0 | 2,000 | 9,000 | |
| Other financial income | 221,357 | 221,357 | 142,000 | |
| Total financial income | 221,357 | 223,357 | 151,000 | |
| Financial expenses | ||||
| Interest expenses | 2,022,537 | 2,022,537 | 39,000 | |
| Other financial expenses | 201,370 | 201,370 | 33,000 | |
| Total financial expenses | 2,223,907 | 2,223,907 | 72,000 | |
| Net financial items | -2,002,550 | -2,000,550 | 79,000 | |
| Net profit (loss) from discontinued operations | 12 | -84,778 | -84,778 | -4,033,000 |
| Profit (loss) before tax | -20,282,245 | -18,298,245 | -12,428,000 | |
| Income tax | 9 | 656,653 | 656,653 | 0 |
| Net profit (loss) | -19,625,592 | -17,641,592 | -12,428,000 |
* Visigon accounts included for 9M 2021 only from June 11, 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (AUDITED)
| Consolidated Financial position (in NOK) | Note | 2021 | 2020 |
|---|---|---|---|
| ASSETS | |||
| Intangible assets | |||
| Research and development | 6 | 23,333,391 | 19,308,254 |
| Goodwill | 42,473,747 | - | |
| Technology | 2,650,000 | - | |
| Customer contracts and relationships | 22,314,424 | - | |
| Licenses | 6 | 32,182,204 | 45,952,204 |
| Total intangible assets | 122,953,766 | 65,260,458 | |
| Fixed assets | |||
| Property, plant & equipment | 0 | 0 | |
| Total fixed assets | 0 | 0 | |
| Total non-current assets | 122,953,766 | 65,260,458 | |
| Receivables | |||
| Trade receivables | 7 | 8,854,063 | 0 |
| Other short-term receivables | 9,433,022 | 762,438 | |
| Total receivables | 18,287,085 | 762,438 | |
| Bank deposits, cash and cash equivalents | 8 | 16,222,128 | 2,958,433 |
| Net assets discontinued operations | 12 | 0 | 2,232,823 |
| Total current assets | 34,509,213 | 5,191,256 | |
| Total assets | 157,462,979 | 71,214,151 |
| Consolidated Financial position (in NOK) | Note | 2021 | 2020 |
|---|---|---|---|
| EQUITY | |||
| Paid-in capital | |||
| Share capital | 11 | 244,612 | 208,371 |
| Own shares | -20,457 | 0 | |
| Share capital - not registered | |||
| Share premium | 114,085,130 | 66,964,874 | |
| Share premium- not registered | |||
| Total paid-in capital | 114,309,285 | 67,173,245 | |
| Retained earnings | |||
| Other equity | 0 | 0 | |
| Total retained earnings | 0 | 0 | |
| Non-controlling interest | 0 | ||
| Total equity | 10 | 114,309,285 | 67,173,435 |
| LIABILITIES | |||
| Other long-term liabilities | |||
| Liabilities at financial institutions | 13 | 6,283,333 | 0 |
| Deferred tax | 5,492,173 | 0 | |
| Short-term liabilities | |||
| Accounts payable | 2,829,085 | 1,205,892 | |
| Payroll taxes, VAT etc. | 2,832,639 | 168,992 | |
| Liabilities at financial institutions | 13 | 216,667 | |
| Other short-term liabilities | 14 | 25,497,280 | 2,455,232 |
| Total short-term liabilities | 31,375,670 | 3,830,116 | |
| Net liabilities discontinued operations | 12 | 0 | 210,600 |
| Total liabilities | 43,151,177 | 4,040,716 | |
| Total equity and liabilities | 157,462,979 | 71,214,151 |
CONSOLIDATED STATEMENT OF CASH FLOWS (AUDITED)
| Consolidated statement of cash flows (in NOK) | Note | 2021 | 2020 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit (loss) before tax | -20,282,245 -12,427,633 | ||
| Depreciation and amortisation | 10,594,597 | 4,032,934 | |
| Net result discontinued operations | 84,778 | 0 | |
| Changes to accounts receivable | -2,490,783 | 551,847 | |
| Changes to accounts payable | -1,595,942 | 348,967 | |
| Changes to other accruals and prepayments | 6,853,009 | 679,341 | |
| Net cash flow from operating activities from continuing operations | -6,836,586 | -6,814,544 | |
| Net cash flow from operating activities from discontinued operations | 12 | 0 | -474,949 |
| Cash flows from investment activities | |||
| Additions intangible assets | 6 | -5,014,282 | -3,519,332 |
| Aquisition of subsidiaries, net of cash aquired | 15 | -30,927,835 | 0 |
| Transaction cost | 15 | -2,623,527 | 0 |
| Short term loan | 0 | -2,169,303 | |
| Received government grants | 3 | 0 | 0 |
| Net cash flow from investment activities from continuing operations | -38,565,643 | -5,688,635 | |
| Net cash flow from investing activities from discontinued operations | 12 | 0 | 0 |
| Cash flows from financing activities | |||
| Proceeds from capital increase | 10 | 54,165,925 | 6,784,968 |
| Cost of capital increase | 10 | -2,000,000 | 0 |
| Loans obtained | 13 | 6,500,000 | 0 |
| Net cash flow from financing activities from continuing operations | 58,665,925 | 6,784,968 | |
| Net cash flow from financing activities from discontinued operations | 12 | -2,184,660 | 0 |
| Net changes to cash and cash equivalents from continuing operations | 13,263,695 | -5,718,211 | |
| Net changes to cash from discontinued operations | -2,184,660 | -474,949 | |
| Continued operations | |||
| Bank deposits, cash and cash equivalents per 1.1. | 2,958,433 | 8,676,644 | |
| Bank deposits, cash and cash equivalents per 31.12. | 9 | 16,222,128 | 2,958,433 |
| - Hereof restricted bank deposits | 142,856 | 68,000 |
NOTES TO THE CONDENSED FINANCIAL INFORMATION
Note 1 – General accounting policies
Basis for preparation
The consolidated financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway (NGAAP) for smaller Companies and NRS 8. The financial statements have been prepared on a going concern basis.
The Company listed on Euronext Growth as of November 2020 and is therefore required to prepare consolidated financial statements.
All amounts are presented in thousands of NOK, unless otherwise clearly stated.
Group composition
The Company's head office is located at Forus in Stavanger municipality, Norway. In addition to the parent entity, Huddlestock Fintech AS, headquartered in Stavanger, Norway, the group includes the subsidiaries Huddlestock Technologies AS, Oslo, Norway; Huddlestock Systems GmbH, Munich, Germany; Visigon Nordic AB and Visigon Sweden AB, Stockholm, Sweden; Visigon Denmark ApS, Copenhagen, Denmark; and Huddlestock Asia Sdn Bhd, Kuala Lumpur, Malaysia. It has offices in Norway, Germany, Sweden, Denmark, and Malaysia, respectively.
Classification of items in the statement of financial position
Assets intended for long-term ownership or use, are classified as non-current assets. Assets associated with the normal operating cycle are classified as current assets. Receivables are classified as current assets if they fall due within one year. Analogue criteria are applied to liabilities. Unless otherwise stated, long-term liabilities include next year's instalments.
Foreign currency translation
The functional currency of the parent entity is NOK. For consolidation purposes, the results and financial position of all the Group's entities that have a functional currency other than NOK are translated at the closing rate at the reporting date of each month. Income and expenses for each income statement are translated to the average exchange rate for the period, this being a reasonable approximation for estimating actual rate. Exchange rate differences are recognized directly against equity.
Note 2 – Revenues
Significant accounting policies
Revenues in 2020/2021 is services provided and is recognized when the service is rendered.
| Revenues by nature | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Other revenue | 23,363 | 225 |
| Total | 23,363 | 225 |
| Revenues by country | |
|---|---|
| (amounts in NOK 1000) | 2021 |
| Norway | 76 |
| Sweden | 11,887 |
| Denmark | 10,024 |
| Malaysia | 103 |
| Germany | 1,273 |
| Total | 23,363 |
Note 3 – Government grants
Significant accounting policies
The group receives government grants in relation to its research and development activities. When such grants are received to carry out certain activities or compensate specific expenses, the grant is recognized in the income statement over the same period as the associated costs. Grants that compensate the group for the cost of an asset are recognized as a reduction in the carrying value of the related asset and recognized as reduced depreciation over the useful life of the asset.
Skattefunn
The current Skattefunn-project is approved from 2019 to 2021 and relates to the development of a platform that makes investment in the share- and blockchain market understandable and available to the public. Internally, the project is named "Marketplace for Investing" (MiF).
| December 31, 2021 | ||
|---|---|---|
| Licenses | Research and development |
|
| Development cost | 33,036 | 33,199 |
| Received government grants | -854 | -9,865 |
| Carrying value 31.12 | 32,182 | 23,333 |
Note 4 – Personnel costs
Significant accounting policies
Personnel costs are expensed as the employees earn the right to the payment of wages for hours worked. Payments to defined contribution pension schemes are expensed over the period in which the employees earn the right to the deposit. Personnel costs related to research and development projects are capitalized to the extent that the conditions for this are met.
| Specification of personnel costs | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Wages | 11,645 | 407 |
| Pension contributions | 696 | 0 |
| Social security tax | 2,454 | 24 |
| Capitalised development costs | 0 | 0 |
| Other personnel costs | 2,611 | 0 |
| Total | 17,406 | 432 |
| Number of employees | ||
|---|---|---|
| (average FTE for the period) | 2021 | 2020 |
| Norway | 2 | 0 |
| Sweden | 9 | 0 |
| Denmark | 6 | 0 |
| Germany | 2 | 2 |
| Malaysia | 1 | 1 |
| Lithuania | 3 | 5 |
Note 5 – Remuneration of management
The Group CEO has an annual salary of NOK 1.45 million. He is not entitled to severance pay and has no loans from the Company.
The Board of Directors have not been paid any regular fees.
| Specification of auditors remuneration |
||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Statutory audit fee | 298 | 321 |
| Other certification services | 12 | 84 |
| Tax advisory services | 0 | 48 |
| Other non-auditing services | 209 | 219 |
| Total | 519 | 672 |
Note 6 – Intangible assets, research and development
Significant accounting policies
Expenditures on research and development are capitalized to the extent that they are part of projects generating identifiable intangible assets, of which future economic benefits can be attributed. Expenses related to projects not meeting these criteria are charged to the income statement as they accrue.
Capitalised development costs
For the year 2021, the Company invested further resources and funding into the technology. Huddlestock is a "technology first" company and spends much of the resources on the development and creating enchantments. In order to stay with the developments in the market and continue to have a leading role, Huddlestock prioritizes to continue to develop our platform. The platforms have been designed for "multi tenants" and easy implementation. Scalability is of essence with quick roll out, which the company has achieved.
Both Apex and Bedrock solutions have now been completed and the company are mostly focusing on tailor making the solutions to custom fit our contracted clients.
For 2021, the most significant project for the Company has been the completion of the Bedrock platform. This work has now been completed and is in full implementation with several customers. Furthermore, the Company continues to finalise the wealth management platform APEX, which was originally developed for BNP Paribas DAB. Qinfen is a digital platform where fund managers can offer their clients strategies and several other services in one place. Qinfen is based on Huddlestock Technology.
Licences
| Specification | |||||
|---|---|---|---|---|---|
| (amounts in NOK 1000) | Research and develop ment assets |
Licenses | Technology | Goodwill | Customer contracts and relations |
| Cost 01.01. | 19,308 | 45,952 | 0 | 0 | 0 |
| Additions | 4,025 | 0 | 3,000 | 45,105 | 29,928 |
| Disposals | 0 | -13,770 | 0 | 0 | 0 |
| Cost 31.12. | 23,333 | 32,182 | 3,000 | 45,105 | 29,928 |
| Accumulated depreciation 01.01. | 0 | 0 | 0 | 0 | 0 |
| Depreciations and amortisation | 0 | 0 | 350 | 2,631 | 7,613 |
| for the year Disposals |
0 | 0 | 0 | 0 | 0 |
| Accumulated depreciation 31.12. | 0 | 0 | 350 | 2,631 | 7,613 |
| Book value 31.12. | 23,333 | 32,182 | 2,650 | 42,474 | 22,314 |
The Group, through its parent Company, holds licenses that are licensed perpetual from Blue Ocean. The licenses are for the use of the technology Apex and Bedrock.
*At December 31, 2021 the intangible asset is not ready for its intended use. When ready for its intended use, Management will assess the amortisation plan for the intangible assets.
Note 7 – Trade and other receivables
Significant accounting policies
Trade and other receivables are recognized at face value, less provisions for expected credit losses. Provisions for expected credit losses are made on the basis of a specific assessment of the individual receivables. For trade receivables, a general provision is also made based on historical losses.
| Specification of trade receivables | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Trade receivables at face value | 8,854 | 0 |
| Provision for expected credit losses | 0 | 0 |
| Net trade receivables |
8,854 | 12 |
Note 8 – Bank deposits, overdraft facility and restricted cash
Significant accounting policies
Bank deposits, cash and cash equivalents includes all cash, bank deposits and other liquid investments that can be immediately converted into cash, with negligible exchange rate risk.
| Restricted cash | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Payroll tax account | 143 | 68 |
Note 9 – Income tax
Significant accounting policies
The income tax expense in the income statement includes the tax payable for the period and changes in deferred tax. Tax payable and deferred tax is calculated using tax rates and tax legislation that have been enacted at the end of the reporting period. Deferred tax is calculated on all temporary differences between tax base and amount recognised in the statement of financial position. In addition, deferred tax is also calculated on tax loss carry forward at the end of the reporting period. Deferred tax is only recognised to the extent that it is probable that future taxable income will be generated, against which it can be utilized. Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset them.
Basis for recognition of deferred tax asset
The deferred tax asset has not been recognised, in line with the exemption under NGAAP for smaller companies.
| Specification of income tax expense | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Tax payable | -1,095 | 0 |
| Change in deferred tax | 1,752 | 0 |
| Income tax expense | 657 | 0 |
| Reconciliation of tax expense with tax calculated at nominal rate | |||
|---|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 | |
| Result before tax | -20,282 | -12,428 | |
| Tax at nominal rate (22 %) | -4,462 | -2,734 | |
| Permanent differences | 2,331 | 0 | |
| Effect of different tax rates | 0 | 0 | |
| Change in deferred tax not recognised | 2,131 | 2,734 | |
| Income tax expense | -0 | 0 |
| Specification of deferred tax | |||
|---|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 | Change |
| Fixed assets | 0 | 0 | 0 |
| Intangible assets | 5,492 | 0 | -5,492 |
| Receivables | 0 | 0 | 0 |
| Deferred government grants | 0 | 0 | 0 |
| Net deferred tax on temporary | |||
| differences | 5,492 | 0 | -5,492 |
| Tax loss carry forward | -7,012 | -5,281 | 1,731 |
| Total deferred tax | -1,520 | -5,281 | -3,761 |
| Deferred tax recognised | 5,492 | 0 | 0 |
Note 10 – Equity
| Specification of equity | |||||
|---|---|---|---|---|---|
| (amounts in NOK 1000) | Share capital |
Own shares |
Share premium |
Other equity |
Sum |
| Equity as per 31.12.2020 |
208 | 0 | 66,965 | 0 | 67,173 |
| Net profit (loss) | 0 | 0 | 0 | -22,460 | -19,626 |
| Purchase of own shares | 0 | -20 | -13,350 | 0 | -13,370 |
| Currency translation differences |
0 | 0 | 0 | -194 | -214 |
| Contribution in kind | 8 | 0 | 26,122 | 0 | 26,130 |
| Capital increase | 10 | 0 | 56,190 | 0 | 56,218 |
| Costs associated with capital increase |
0 | 0 | -2,000 | -2,000 | |
| Reclassification | -19,839 | 22,654 | 0 | ||
| Equity as per 31.12.2021 | 245 | -20 | 114,085 | 0 | 114,309 |
As of 31 December 2021, NOK 17 000 of the share capital and NOK 24 527 of the share premium was paid in, but not registered. The capital increase was registered on 25 March 2022. Of the total amount, NOK 2.052 million was paid in January / February.
The Company has acquired own shares to an extent higher than the power of attorney from the General Assembly. As such, the Board of Directors did not act in Compliance with the Norwegian Limited Companies Act. The Board of Director's are seeking to correct the issue and has used part of the shares as consideration in the transaction described in note 16. In addition, the Board of Director's are seeking to increase the Power of Attorney in the General Assembly.
The Company has entered into a loan agreement in total of NOK 10.2 million to fund the acquisition of its own shares. The transaction is not in accordance with the Norwegian Limited Companies Act § 9-5, ref. § 8-7. The Company has entered into a repayment agreement where the receivable should be repaid within 3 months from the signing of the financial statements. As of year-end, NOK 5.1 million was paid out under the loan agreement and are included as part of short-term receivables.
Note 11 – Share capital and shareholder information
Share capital
The parent entity, Huddlestock Fintech AS, has 119 302 483 shares outstanding, each with a nominal value of NOK 0,0019. All shares have equal voting and dividend rights.
| Significant shareholders | ||
|---|---|---|
| Shares | Ownership | |
| Vision Invest Stavanger AS | 8,286,715 | 6.9% |
| Retropi Limited | 7,607,608 | 6.4% |
| Berker Group AS | 6,597,665 | 5.5% |
| Grunnfjellet AS | 5,408,334 | 4.5% |
| Total (shareholders holding > 4.5%) | 27,900,322 | 42.8% |
| Other shareholders | 91,402,161 | 57.2% |
| Total | 119,302,483 | 100.0% |
Shareholders associated with leading roles
| Related party | Transactions | ||
|---|---|---|---|
| transactions | Representative | Role | during 2021* |
| Berker Group AS | Murshid Hugberg-Ali | Board member | 0 |
| Vision Invest Stavanger AS | Øyvind Hovland | Chairman of the Board | 853 |
| Orion Oslo AS | John E. Skajem | CEO | 274 |
* Included in other operating cost
John E. Skajem is Chairman of the board of Lerke Gård AS (previously Orion Oslo AS)
Note 12 – Discontinued operations
The Group entered into a Share Purchase Agreement with Opera Financial Technologies Limited on 22 September 2020, regarding sale and purchase of all issued shares in Dovre Forvaltning UAB. The transaction was dependent on approval from Bank of Lithuania. Opera Financial Technologies Limited never received an approval, so the deal was cancelled at the 'long stop date'. Thereafter did the Group enter into a new sales agreement with DTSocialize Holding. All the proceeds from the sale have been received.
| The net asset position in the Group accounts is derived as the following |
||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Fixed assets | 0 | 15 |
| Trade receivables | 0 | 0 |
| Other receivables | 0 | 33 |
| Cash and cash equivalents | 0 | 2,185 |
| Public duties payable | 0 | 0 |
| Net asset positions | 0 | 2,233 |
Note 13 – Loans and borrowings
Significant accounting policies
Other short-term liabilities are mainly related to services received or wages to employees, for which payment is due within the next twelve months. These liabilities are measured at nominal amounts.
| Loans and borrowings, December 31, 2021 | Drawn amount |
Due within |
Due between |
Due there |
|
|---|---|---|---|---|---|
| (amounts in NOK 1000) | Limit | 31.12 | one year | 2-5 yrs | after |
| Long term loan | 4,000 | 4,000 | 200 | 3,800 | 0 |
| Long term loan Innovasjon Norge | 2,500 | 2,500 | 375 | 2,125 | |
| Overdraft facility | 4,000 | 0 | 0 | 0 | 0 |
| Total | 10,500 | 6,500 | 575 | 5,925 | 0 |
| The following assets are pledged as security | |
|---|---|
| (amounts in NOK 1000) | 2021 |
| Trade receivables | 8,854 |
| Total | 8,854 |
The long-term loan has a covenant that the drawn amount should not exceed 70 % of the trade receivables. As of 31.12.2021 the Group is in compliance with its loan covenants.
Note 14 – Provisions and other short-term liabilities
Significant accounting policies
Other short-term liabilities are mainly related to services received or wages to employees, for which payment is due within the next twelve months. These liabilities are measured at nominal amounts.
| Provisions and other short-term liabilities | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Accrued holiday pay | 1,751 | 23 |
| Other short-term liabilities | 23,746 | 2,432 |
| Income tax expense | 25,497 | 2,455 |
Note 15 – Business combination
Description of business combination
Huddlestock Fintech AS was listed on Euronext Growth Market Oslo - 26 November 2020, as Norway's first fintech company to be publicly traded. Huddlestock Fintech is a company that develops and implements unique software as a service-solutions for digitizing work processes for custody banks, asset managers and trading venues.
The open, compliance-optimized and data centric WealthTech platform allows our customers to offer a differentiated real-time product that reduces cost and increases efficiency. Huddlestock Fintech's technology enables end-to-end digital services such as onboarding, client communication, reporting, order execution and portfolio management, all executed on the same platform.
Huddlestock has developed two technology solutions, Apex (Custody) and Bedrock (Connectivity). Apex is a software as a service-solution that links custody services with asset managers and individual investors. Bedrock provides a white label solution that is primarily a product for financial services firms wanting to add low cost-efficient trading and investing services to their client web and app offerings.
Through its world-class expert consultancy division - Visigon, Huddlestock delivers strategic technology solutions and process automation for the financial services industry. Founded in 2008, Visigon has grown into becoming the preferred supplier of financial consultancy services and technology providers in the Nordic region. Visigon became part of the Huddlestock Fintech family in 2021.
| Transaction details of Visigon | ||
|---|---|---|
| Cash consideration | 34,653 | |
| Share exchange | 23,031 | |
| Transaction cost | 2,624 | |
| Transaction price | 60,307 |
| 11/06/2021 | |
|---|---|
| Identified intangible assets | 32,928 |
| Other fixed and current assets | 13,424 |
| Cash and cash equivalents | 3,725 |
| Total assets | 50,076 |
| Deferred tax | 7,244 |
| Other short term labilities | 25,230 |
| Total liabilities | 32,474 |
| Total identifiable net assets acquired | 17,602 |
Measurement of fair values
The valuations techniques used for measuring the fair value of acquired assets were as follows
Developed technology
Fair value of acquired technology has been calculated based on a reproduction cost from an analysis of the relevant cost components used in developing
Customer relationships
Fair value of customer relationships is calculated by using the excess earnings method, takes into account the rate of customer attrition, revenue growth, and increase in estimated operating margins. The calculations are based on discussion with management, management estimates and long-term growth rates.
Order backlog
Fair value of order backlog has been calculated using the firm contracts as of the acquisition date with an estimated margin.
Other
For remaining assets and liabilities fair values are assumed to equal book values.
Goodwill
Goodwill arising from acquisitions have been recognised as follows
| Goodwill | 45,105 | |
|---|---|---|
| Fair value of identifiable net assets | 15,203 | |
| Transaction price | 60,307 |
Goodwill reflects economies of scale, geographic presentence, Huddlestock's established market position and potential for continuous growth.
Note 16 – Events after the reporting period and effect of Covid-19
Our teams are relentlessly focused on growing our business; we remain completely sold out within our consulting business and have, since the beginning of the year, expanded our team with 4 new hires to meet increased demand from existing clients. We are also seeing increased demand for our capital markets expertise from new potential clients; in February 2022, our leading fintech consultancy business won a mandate with Danish fintech company Lunar.
The ongoing war in Ukraine has somewhat affected the roll-out of our technology. We are monitoring the situation for both direct and indirect consequences, as well as any increased cyber risks, and are working closely with our local partner. At the time of this report, our partners are unharmed and continue to operate under suboptimal conditions. Huddlestock Fintech and its daughter companies have no direct investments in Ukraine. While the situation, if prolonged for an extended period, would somewhat affect the implementation timelines and ongoing deliveries for existing client commitments, we continue to see high demand for our SaaS white label trading solution. Since the beginning of the year we have signed agreements with a leading Nordic investor news site counting more than 25.000 users, and a Northern European investment club of sophisticated retail traders, to launch a retail trading offer by implementing/based on Huddlestock's Bedrock Software-as-a-Service solution.
M&A remains a core part of Huddlestock's strategy, and at the end of March, a term sheet was signed with the intention to acquire 100% of F5 IT, a software developer focused on customised application and integration solutions within Fintech, Proptech and IoT, for a total consideration of NOK 32m paid in Huddlestock Fintech shares, to be paid in two tranches of NOK 20m and NOK 12m. The latter payment is tied to mutually agreed performance targets and agreed paid over a period of three years in 3 instalments. The company is highly complementary with existing Huddlestock operations, will further the company onshoring strategy, and accelerate our plan to become a leading Fintech in Europe.
Revenues were lower in 2021 than expected with Covid-19 playing a key role. Regardless of this, the Huddlestock Group is well capitalised and will have capital going forward. The company is also experiencing strong interest in its products and technology. The company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarily large, fixed operating and development costs. Furthermore, the company has sufficient liquidity to manage without income in the next 12 months and the Board has no qualms about presenting the annual accounts under the assumption of continued operations.
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To the General Meeting of Huddlestock Fintech AS
Independent Auditor's Report
Opinion
We have audited the financial statements of Huddlestock Fintech AS, which comprise:
- The financial statements of the parent company Huddlestock Fintech AS (the Company), which comprise the statement of financial position as at 31 December 2021, the income statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and
- The consolidated financial statements of Huddlestock Fintech AS and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2021, the consolidated income statement and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion:
- the financial statements comply with applicable statutory requirements,
- the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and
- the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The Board of Directors and the Managing Director (management) are responsible for the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the information in the other information accompanying the financial statements.
PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
Independent Auditor's Report - Huddlestock Fintech AS
In connection with our audit of the financial statements, our responsibility is to read the other information. The purpose is to consider if there is material inconsistency between the other information and the financial statements or our knowledge obtained in the audit, or whether the other information appears to be materially misstated. We are required to report if there is a material misstatement in the other information. We have nothing to report in this regard.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are 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 ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
For further description of Auditor's Responsibilities for the Audit of the Financial Statements reference is made to https://revisorforeningen.no/revisjonsberetninger
Other Matters
The Company has purchased own shares above the limits set out in the power of attorney from the general assembly. In addition, the Company has financed a purchase of its own shares. The purchase was not done in accordance with the Norwegian Limited Companies Act § 9-5, ref. § 8-7. Reference is made to note 9 in the parent Company's financial statement for further description.
Stavanger, 5 May 2022 PricewaterhouseCoopers AS
Roy Henrik Heggelund State Authorised Public Accountant
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HUDDLESTOCK FINTECH AS (͞the Company͟)
DIRECTORS REPORT FOR 2021 (AMOUNTS IN NOK 1000)
Purpose
The parent entity is Huddlestock Fintech AS, headquartered in Stavanger, Norway. The groups subsidiaries include, Huddlestock Technologies AS, Huddlestock Systems GmbH, Visigon Nordic AB and Visigon Sweden AB, Visigon Denmark ApS, and Huddlestock Asia Sdn Bhd.
Huddlestock Fintech AS is headquartered in Stavanger, Norway. The group͛s subsidiaries are located as follows: Huddlestock Technologies AS in Oslo, Norway; Huddlestock Systems GmbH in Munich, Germany; Visigon Nordic AB and Visigon Sweden AB in Stockholm, Sweden; Visigon Denmark ApS in Copenhagen, Denmark; and Huddlestock Asia Sdn Bhd in Kuala Lumpur, Malaysia.
The Group has developed a suite of unique software as a service solutions for banks, wealth managers, and retail trading venues. During 2021 and following the acquisition of Visigon Nordic AB and its daughter companies, the Group has a significant IT and management consulting business.
The Company͛s head office is located at Forus in Stavanger municipality, Norway. The group has offices in Norway, Germany, Sweden, Denmark and Malaysia, respectively.
Continued operation
For the preparation of the financial statements, the Company and Group is continuing to be in operations and is in good standing.
The parent Company and the Group has the share capital intact.
The Company and the Group has a budget for 2022 with an annual positive net income and ŚĂƐƐƵĨĨŝĐŝĞŶƚůŝƋƵŝĚŝƚLJƚŽĐŽŶƚŝŶƵĞŽƉĞƌĂƚŝŽŶƐĨŽƌ the next 12 months. dŚĞŽĂƌĚŽĨŝƌĞĐƚŽƌƐĂƌĞƉƌĞƐĞŶƚŝŶŐƚŚĞĂŶŶƵĂůĂĐĐŽƵŶƚƐƵŶĚĞƌƚŚĞĂƐƐƵŵƉƚŝŽŶŽĨŐŽŝŶŐ concern.
Future development
The Company and the Group signed several new client agreements in 2021 and early 2022, which will secure the Company and the Group with increased revenues and will ensure a basis for continued growth and profitable development.
Statement of the annual accounts
The Companys turnover was NOK 76 in 2021 and NOK 370 in 2020. The Company͛s annual result was a loss of NOK ϭϭϵϭϴŝŶϮϬϮϭ, compared with a loss of NOK 15 598 in 2020. The Group͛s turnover was NOK ϮϮϯϲϯŝŶϮϬϮϭĂŶĚEK<225 in 2020. The Group͛s annual result was a loss of NOK ϭϵϲϮϲŝŶϮϬϮϭ, compared with a loss of NOK 12 428 in 2020.
The Company and the Group has until late 2021 been doing research and development, and management and IT consulting. The Company has now a finished version 1 of the core product which has been introduced to the market. During 2022 the product will be upgraded and a version 2.0 will be introduced. Other, new, products are under development.
Total cash flow from operating activies in the Group was a loss of NOK 6 837 in 2021 and EK<ϲϴϭϱŝŶϮϬϮϬ͘
The operating loss for the Group was NOK 19 626ŝŶϮϬϮϭĂŶĚEK<ϭϮϰϮϴŝŶϮϬϮϬ͘
The total investment in the Company in 2021 were NOK 92 519, compared with NOK 48 390 the year before.
The total investment in the Group in 2021 were NOK 122 954, compared with NOK 65 260 the year before.
The total cash and cash equivalents in the Company as of 31.12 2021 is NOK 7 728 at the end of the year, compared with NOK 2 246 the year before.
The equity ratio in the Company was 92,6%, compared to 94,1% by 31.12.2020. The total cash and cash equivalents in the Group as of 31.12.2021 is NOK 16 222 at the end of the year, compared with NOK 2 958 the year before. The equity ratio in the Group was 72,6%, compared to 94,3% by 31.12.2020.
The company has invested more in technology development and products during 2021, which is reflected in the financial accounts. The investments are now bearing fruits, with key projects set to be delivered in 2022. In addition, the M&A activities has strengthened the groups core capabilities, and will help accelerate the company͛s vision in becoming the leading B2B Fintech provider in Europe. Our backbone will be scalable and proprietary ƚĞĐŚŶŽůŽŐLJ͕ƐĞƚƚŽŝŶĐƌĞĂƐĞĐŽŵƉĂŶLJƌĞǀĞŶƵĞƐĂŶĚƌĞĚƵĐĞĐŽƐƚƐŐŽŝŶŐĨŽƌǁĂƌĚ͘
The company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarily large operating and development cost.
Environment, gender equality and employee matters
As of December 31, 2021 the Company and Group had 30 permanent employees, twentyseven men and three women.
The work environment in the Company is considered good. No serious injuries, work-related wear / strain injuries or property damage was recorded during 2021.
There has been no sick leave in 2021.
The Board of Directors (the ͞Board͟) consists of two men.
The Board has not found it necessary to take special measures with regards to gender equality.
Risks
Overall on objectives and strategy
The Company and the Group is exposed to financial risk in very limited areas. The current strategy does not include the use of financial instruments, but this is subject of ongoing assessment by the administration and the board.
The Company and the Group has conducted extensive research and developed into technology solutions and has developed a suite of unique software as a service-solutions for banks, asset managers and retail trading venues. It has a portfolio of licenses for these technology solutions.
Market risk
The Company and the Group have debt of NOK 3.867, respectively NOK 6.283. The Company has a revolving overdraft facility of NOK4.000. Increases in intereste rates will affect the Company. Should these be prolonged and substantially permanently higher, this could affect the Company͛s profitability.
The Company and the Group has no equity market investments, so it is not exposed to changes in equity markets. The Company and the Group have foreign exchange exposures, mainly through normal international business to Euro, Swedish Kronor, and Danish Kroner, which is considered to be manageable.
With regards to other market risks, there are the possibility of increased competition for winning clients, however this risk is viewed as low due to the significant number of potential clients and the secular growth of the Company͛s target market.
In order to quantify the risk of not achieving the company plans and goals, we view this as low to medium risk. There are always risks in achieving plans, however the company has good visibility for existing contracts and with the view of our pipeline going forward.
Credit risk
The risk of losses on receivables is considered low. To date, the Company and the Group has not incurred significant losses on receivables.
Liquidy risk
The Company and the Group considers the liquidy to be manageable due to cash in accounts and budget for 2022. The company is structured with low fixed cost and with short term contracts. For variable costs, the company has the ability to efficiently scale up or down as it sees the opportunities. The company has also proven to have favourable possibilities to efficiently raise equity and debt funding, and establishing ongoing lending facitlities in the form of short- and long term bank loans, revolving credit lines and overdraft facilities.
Environmental reporting
The activities of the Company and the Group do not cause environmental damages.
Insurance
The company has set up an insurance for the board and the general manager for their possible liability to the company and third parties.
Annual Result
The result for the year for the Company and Group were respectively a loss after tax of NOK 11 918 and NOK 19 626. These will be allocated to Share Premium.
The Board and CEO is of the opinion that the profit & loss statement and balance sheet, including the explanatory notes contained therein, includes a fair description of the 2021 operations and the financial status at the end of the year, December 31, 2021.
Events after the reporting period and going concern
The Huddlestock teams are relentlessly focused on growing our business; we remain completely sold out within our consulting business and have, since the beginning of the year, expanded our team with 4 new hires to meet increased demand from existing clients. We are also seeing increased demand for our capital markets expertise from new potential clients; in February 2022, our leading fintech consultancy business won a mandate with Danish fintech company Lunar.
The ongoing war in Ukraine has somewhat affected the roll- out of our technology. We are monitoring the situation for both direct and indirect consequences, as well as any increased cyber risks, and are working closely with our local partner. At the time of this report, our partners are unharmed and continue to operate under suboptimal conditions. Huddlestock Fintech and its daughter companies have no direct investments in Ukraine. While the situation, if prolonged for an extended period, would somewhat affect the implementation timelines and ongoing deliveries for existing client commitments, we continue to see high demand for our SaaS white label trading solution. Since the beginning of the year we have signed agreements with a leading Nordic investor news site counting more than 25.000 users, and a Northern European investment club of sophisticated retail traders, to launch a retail trading offer by implementing Huddlestock's Bedrock Software- as- a- Servicesolution.
M&A remains a core part of Huddlestock's strategy, and at the end of March, a term sheet was signed with the intention to acquire 100% of F5 IT, a software developer focused on customised application and integration solutions within Fintech, Proptech and loT, for a total consideration of NOK 32m paid in Huddlestock Fintech shares, to be paid in two tranches of NOK 20m and NOK 12m. The latter payment is tied to mutually agreed performance targets and agreed paid over a period of three years in 3 instalments. The company is highly complementary with existing Huddlestock operations and will further the company onshoring strategy. This aquistion will also accelerate our ambition to become a leading Fintech in Europe.
Revenues were lower in 2021 than expected, with Covid- 19 playing a key role. Regardless of this, the Huddlestock Group is well capitalized, and will have capital going forward. The company is also experiencing strong interest in its products and technology. The Company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarily large operating and development costs. Furthermore, the company has sufficient liquidity to manage without income in the next 12 months and the board has no qualms about presenting the annual accounts under the assumption of continued operations.
Stavanger, 5 May 2022
TLJǀŝŶĚ,ŽǀůĂŶĚ Murshid Hugberg-Ali Chairman of the Board Board member
John Egil Skajem CEO
Huddlestock Fintech AS Group accounts 2021
Consolidated income statement
| (amounts in NOK 1000) | Note | 2021 | 2020 |
|---|---|---|---|
| Operating income | |||
| Other operating income | 2 | 23 363 | 225 |
| Total operating income | 23 363 | 225 | |
| Operating expenses | |||
| Cost of materials/subcontractors | 2 931 | 0 | |
| Personnel costs | 4,5 | 17 406 | 432 |
| Depreciation and amortisation | 6 | 10 595 | 0 |
| Other operating expenses | 5 | 10 626 | 8 267 |
| Total operating expenses | 41 558 | 8 699 | |
| Operating profit (loss) | -18 195 | -8 474 | |
| Financial income | |||
| Interest income | 0 | 9 | |
| Other financial income | 221 | 142 | |
| Total financial income | 221 | 151 | |
| Financial expenses | |||
| Interest expenses | 2 023 | 39 | |
| Other financial expenses | 201 | 33 | |
| Total financial expenses | 2 224 | 72 | |
| Net financial items | -2 003 | 79 | |
| Net profit (loss) from discontinued operations | 12 | -85 | -4 033 |
| Profit (loss) before tax | -20 282 | -12 428 | |
| Income tax | 9 | 657 | 0 |
| Net profit (loss) | -19 626 | -12 428 | |
Huddlestock Fintech AS Group accounts 2021
Consolidated statement of financial position
| (amounts in NOK 1000) | Note | 2021 | 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Research and development | 23 333 | 19 308 | |
| Goodwill | 42 474 | 0 | |
| Technology | 2 650 | 0 | |
| Customer contracts and relationships | 22 314 | 0 | |
| Licenses | 32 182 | 45 952 | |
| Total intangible assets | 6 | 122 954 | 65 260 |
| Current assets | |||
| Receivables | |||
| Trade receivables | 7 | 8 854 | 0 |
| Other short-term receivables | 9 433 | 762 | |
| Total receivables | 18 287 | 762 | |
| Bank deposits, cash and cash equivalents | 8 | 16 222 | 2 958 |
| Net assets discontinued operations | 12 | 0 | 2 233 |
| Total current assets | 34 509 | 5 954 | |
| Total assets | 157 463 | 71 214 |
Huddlestock Fintech AS Group accounts 2021
EQUITY AND LIABILITIES
| Equity | 2021 | 2020 | |
|---|---|---|---|
| Paid-in capital | |||
| Share capital | 11 | 245 | 208 |
| Own shares | -20 | 0 | |
| Share premium | 114 085 | 66 965 | |
| Total paid-in capital | 114 309 | 67 173 | |
| Retained earnings | |||
| Other equity | 0 | 0 | |
| Total retained earnings | 0 | 0 | |
| Non-controlling interest | 0 | 0 | |
| Total equity | 10 | 114 309 | 67 173 |
| Liabilities | |||
| Deferred tax | 5 492 | 0 | |
| Loans and borrowings | 13 | 6 283 | 0 |
| Total long-term liabilities and provisions | 11 776 | 0 | |
| Short-term liabilities | |||
| Accounts payable | 2 829 | 1 206 | |
| Payroll taxes, VAT etc. | 2 833 | 169 | |
| Loans and borrowings | 13 | 217 | 0 |
| Other short-term liabilities | 14 | 25 497 | 2 455 |
| Total short-term liabilities | 31 376 | 3 830 | |
| Net liabilities discontinued operations | 12 | 0 | 211 |
| Total liabilities | 43 151 | 4 041 | |
| Total equity and liabilities | 157 463 | 71 214 |
Stavanger, May 5, 2022
Øyvind Hovland Murshid Hugberg-Ali Chairman of the Board
Boardmember
John Egil Skajem CEO
Huddlestock Fintech AS Group accounts 2021
Consolidated statement of cash flows
| (amounts in NOK 1000) | Note | 2021 | 2020 |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit (loss) before tax | -20 282 | -12 428 | |
| Depreciation and amortisation | 10 595 | 4 033 | |
| Net result discontinued operations | 85 | 0 | |
| Changes to accounts receivable | -2 491 | 552 | |
| Changes to accounts payable | -1 596 | 349 | |
| Changes to other accruals and prepayments | 6 853 | 679 | |
| Net cash flow from operating activities from continuing operations | -6 837 | -6 815 | |
| Net cash flow from operating activities from discontinued operations | 12 | 0 | -475 |
| Cash flows from investment activities | |||
| Additions intangible assets | 6 | -5 014 | -3 519 |
| Aquisition of subsidiaries, net of cash aquired | 15 | -30 928 | 0 |
| Transaction cost | 15 | -2 624 | 0 |
| Short term loan | 0 | -2 169 | |
| Received government grants | 3 | 0 | 0 |
| Net cash flow from investment activities from continuing operations | -38 566 | -5 689 | |
| Net cash flow from investing activities from discontinued operations | 12 | 0 | 0 |
| Cash flows from financing activities | |||
| Proceeds from capital increase | 10 | 54 166 | 6 785 |
| Costs of capital increase | 10 | -2 000 | 0 |
| Loans obtained | 13 | 6 500 | 0 |
| Net cash flow from financing activities from continuing operations | 58 666 | 6 785 | |
| Net cash flow from financing activities from discontinued operations | 12 | -2 185 | 0 |
| Net changes to cash and cash equivalents from continuing operations | 13 264 | -5 718 | |
| Net changes to cash from discontinued operations | -2 185 | -475 | |
| C t i d t i on nu e op e ra on s |
|||
| Bank deposits, cash and cash equivalents per 1.1. | 2 958 | 8 677 | |
| Bank deposits, cash and cash equivalents per 31.12. | 9 | 16 222 | 2 958 |
| - Hereof restricted bank deposits | 143 | 68 | |
| D i t i d t i s c on nu e e ra on s |
|||
| op Bank deposits, cash and cash equivalents per 1.1. |
2 185 | 2 660 | |
| Bank deposits, cash and cash equivalents per 31.12. | 9 | 0 | 2 185 |
| - Hereof restricted bank deposits | 0 | 0 | |
Huddlestock Fintech AS Group accounts 2021
Note 1 – General accounting policies
Basis for preparation
The consolidated financial statements have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway (NGAAP) for smaller Companies and NRS 8. The financial statements have been prepared on the going concern basis.
The Company is listed on Euronext Growth, and is therefore required to prepare consolidated financial statements.
All amounts are presented in thousands of NOK, unless otherwise clearly stated.
Group composition
The Company's head office is located at Forus in Stavanger municipality, Norway. In addition to the parent entity, Huddlestock Fintech AS, headquartered in Stavanger, Norway, the group includes the subsidiaries Huddlestock Technologies AS, Oslo, Norway; Huddlestock Systems GmbH, Munich, Germany; Visigon Nordic AB and Visigon Sweden AB, Stockholm, Sweden; Visigon Denmark ApS, Copenhagen, Denmark; and Huddlestock Asia Sdn Bhd, Kuala Lumpur, Malaysia. It has offices in Norway, Germany, Sweden, Denmark and Asia, respectively.
The Group entered into a Share Purchase Agreement with Opera Financial Technologies Limited on 22 September 2020, regarding sale and purchase of all issued shares in Dovre Forvaltning UAB. The transaction was dependent on approval from Bank of Lithuania. Opera Financial Technologies Limited never received an approval, so the deal was cancelled at the 'long stop date'. Thereafter did the Group enter into a new sales agreement with DTSocialize Holding. All the proceeds from the sale has been received. The associated assets and liabilities were consequently presented as discontinued operations in the consolidated consolidated financial statements in 2020.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co‐ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale.
The results of discontinued operations are presented separately in the statement of profit or loss.
The consolidated financial statements have been prepared in accordance with uniform policies by converting the subsidiaries to the same principles as the parent company.
Classification of items in the statement of financial position
Assets intended for long-term ownership or use are classified as non-current assets. Assets associated with the normal operating cycle are classified as current assets. Receivables are classified as current assets if they fall due within one year. Analogue criteria are applied to liablilites. Unless otherwise stated, long-term liabilities also includes next year's installments.
Foreign currency translation
The functional currency of the parent entity is NOK. For consolidation purposes, the results and financial position of all the Group's entities that have a functional currency other than NOK are translated to the closing rate at the reporting date of each month. Income and expenses for each income statement are translated to the average exchange rate for the period, this being a reasonable approximation for estimating actual rate. Exchange differences are recognized directly against equity.
Huddlestock Fintech AS Group accounts 2021
Note 2 – Revenues
Significant accounting policies Revenues is services provided, and is recognised when the service is rendered.
Revenues by nature
| 2021 | 2020 |
|---|---|
| 225 | |
| 23 363 | 225 |
| 2021 | 2021 |
| 76 | 102 |
| 123 | |
| - | |
| - | |
| - | |
| 225 | |
| 23 363 11 887 10 024 103 1 273 23 363 |
Note 3 – Government grants
Significant accounting policies
The group receives government grants in relation to its research and development activities. When such grants are received to carry out certain activities or compensate specific expenses, the grant is recognised in the income statement over the same period as the associated costs. Grants that compensate the group for the cost of an asset are recognised as a reduction in the carrying value of the related asset and recognised as reduced depreciation over the useful life of the asset.
SkatteFUNN
The current Skattefunn-project is approved from 2019 to 2021 og relates to the development of a platform that makes investment in the share- and blockchain market understandable and available for the public. Internally, the project is named "Marketplace for Investing" (MiF).
Huddlestock Fintech AS Group accounts 2021
Note 4 – Personnel costs
Significant accounting policies Personnel costs are expensed as the employees earn the right to the payment of wages for hours worked. Payments to defined contribution pension are expensed over the period in which the employees earn the right to the deposit. Personnel costs related to research and development projects are capitalised to the extent that the conditions for this are met.
| Specification of personnel costs | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Wages | 11 645 | 407 |
| Pension contributions | 696 | 0 |
| Social security tax | 2 454 | 24 |
| Capitalised development costs | 0 | 0 |
| Other personnel costs | 2 611 | 0 |
| Total | 17 406 | 432 |
| Number of employees (average FTE for the period) |
2021 | 2020 |
| Norway | 2 | 0 |
| Sweden | 9 | 0 |
| Denmark | 6 | 0 |
| Germany Malaysia |
2 1 |
2 1 |
Note 5 – Remuneration of management and auditor
The current CEO has a yearly salary of 1,2 mNOK. He is not entitled to severance pay, and has no loans from the Company.
There has not been paid fees to The Board of Directors.
Specification of auditors remuneration
| (amounts in NOK 1000) | 2021 | 2020 | |
|---|---|---|---|
| Statutory audit fee | 298 | 321 | |
| Other certification services | 12 | 84 | |
| Tax advisory services | 0 | 48 | |
| Other non-auditing services | 209 | 219 | |
| Total | 519 | 672 |
Reported amounts are exclusive of VAT.
Huddlestock Fintech AS Group accounts 2021
Note 6 – Intangible assets, research and development
Significant accounting policies
Expenditures on research and development are capitalized to the extent that they are part of projects generating identifiable intangible assets, of which future economic benefits can be attributed. Expenses related to projects not meeting theese criterias are charged to the income statement as they accrue.
Capitalised development costs
For the year 2021, the Company invested further resources and funding into our technology. Huddlestock is a " technology first" company and spend much of the resourses on development and creating enhancements. In order to stay with the developements in the market and continue to have a leading role, Huddlestock prioritizes to continue to develop our platform. The platforms have been designed for " multi tennants" and easy implementation. Scalability is of essence with quick roll out, which the company has achieved. The company's most important technology, Bedrock solutions, have completed version 1.0 and at the current time we are mostly focusing on tailor making the solutions to custom fit our contracted clients. For 2021, the most significant project the Company has been to completing the Bedrock 1.0 version, while in 2022 the company will continue to develope the platform for version 2.0 and 3.0.
Furthermore, we have also continued to finalize the wealth managmentplatform APEX, which was originally developed for BNP Paribas DAB. Qinfen is a digital platform where fund managers can offer their clients strategies and several other services in one place. Qinfen is based on Huddlestock technology.
Licences
The Group, through its parent Company, holds licenses that are licensed perpetual from Blue Ocean. The licenses are for the use of the technologyApex and Bedrock.
Specification
| (amounts in NOK 1000) | Research and development assets |
Licenses | Technology | Goodwill | Customer contracts and relations |
|---|---|---|---|---|---|
| Cost 01.01. | 19 308 | 45 952 | 0 | 0 | 0 |
| Additions | 4 025 | 0 | 3 000 | 45 105 | 29 928 |
| Disposals | 0 | -13 770 | 0 | 0 | 0 |
| Cost 31.12. | 23 333 | 32 182 | 3 000 | 45 105 | 29 928 |
| Accumulated depreciation 01.01. | 0 | 0 | 0 | 0 | 0 |
| Depreciations and amortisation for the year | 0 | 0 | 350 | 2 631 | 7 613 |
| Disposals | 0 | 0 | 0 | 0 | 0 |
| Accumulated depreciation 31.12. | 0 | 0 | 350 | 2 631 | 7 613 |
| Book value 31.12. | 23 333 | 32 182 | 2 650 | 42 474 | 22 314 |
| Amortisation period | * | * | 6 yrs | 10 yrs | 10 yrs |
*At December 31, 2021 the intangible asset is not ready for its intended use. When ready for its intented use, Management will assess the
amortisation plan for the intangible assets.
As part of the transaction to repurchase the Company's own shares, part of the license was returned to the Company.
Huddlestock Fintech AS Group accounts 2021
Note 7 – Trade and other receivables
Significant accounting policies
Trade and other receivables are recognised at face value, less provisions for expected credit losses. Provisions for expected credit losses are made on the basis of a specific assessment of the individual receivables. For trade receivables, a general provision is also made based on historical losses.
Specification of trade receivables
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Trade receivables at face value | 8 854 | 0 |
| Provision for expected credit losses | 0 | 0 |
| Net trade receivables | 8 854 | 12 |
Note 8 – Bank deposits, overdraft facility and restricted cash
Significant accounting policies
Bank deposits, cash and cash equivalents includes all cash, bank deposits and other liquid investments that can be immediately converted into cash, with negligible exchange rate risk.
Restricted cash
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Payroll tax account | 143 | 68 |
Huddlestock Fintech AS Group accounts 2021
Note 9 – Income tax
Significant accounting policies The income tax expense in the income statement includes the tax payable for the period and changes in deferred tax. Tax payable and deferred tax is calculated using tax rates and tax legislation that have been enacted at the end of the reporting period. Deferred tax is calculated on all temporary differences between tax base and amount recognised in the statement of financial position. In addition deferred tax is also calculated on tax loss carryforward at the end of the reporting period. Deferred tax is only recognised to the extent that it is probable that future taxable income will be generated against which it can be utilized. Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset them.
Basis for recognition of deferred tax asset
The deferred tax asset has not been recognised, in line with the excemption under NGAAP for smaller companies.
| Specification of income tax expense | |||
|---|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 | |
| Tax payable | -1 095 | 0 | |
| Change in deferred tax | 1 752 | 0 | |
| Income tax expense | 657 | 0 | |
| Reconciliation of tax expense with tax calculated at nominal rate | |||
| (amounts in NOK 1000) | 2021 | 2020 | |
| Result before tax | -20 282 | -12 428 | |
| Tax at nominal rate (22 %) | -4 462 | -2 734 | |
| Permanent differences | 2 331 | 878 | |
| Effect of different tax rates | 0 | 0 | |
| Change in deferred tax not recognised | 2 131 | 1 856 | |
| Income tax expense | 0 | 0 | |
| Specification of deferred tax | |||
| (amounts in NOK 1000) | 2021 | 2020 | Change |
| Fixed assets | 0 | 0 | 0 |
| Intangible assets | 5 492 | 0 | -5 492 |
| Receivables | 0 | 0 | 0 |
| Deferred government grants | 0 | 0 | 0 |
| Net deferred tax on temporary differences | 5 492 | 0 | -5 492 |
| Tax loss carryforward | -7 012 | -5 281 | 1 731 |
| Total deferred tax | -1 520 | -5 281 | -3 761 |
| Deferred tax recognised | 5 492 | 0 | 0 |
Huddlestock Fintech AS Group accounts 2021
Note 10 – Equity
| Specification of equity | |||||
|---|---|---|---|---|---|
| Share | |||||
| (amounts in NOK 1000) | Share capital | Own shares | premium | Other equity | Sum |
| Equity as per 31.12.2020 | 208 | 0 | 66 965 | 0 | 67 173 |
| Net profit (loss) | 0 | 0 | 0 | -19 626 | -19 626 |
| Purchase of own shares | 0 | -20 | -13 350 | 0 | -13 370 |
| Currency translation differences | 0 | 0 | 0 | -214 | -214 |
| Contribution in kind | 8 | 0 | 26 122 | 0 | 26 130 |
| Capital increase | 28 | 0 | 56 190 | 0 | 56 218 |
| Costs associated with capital increase | 0 | 0 | -2 000 | 0 | -2 000 |
| Reclassification | 0 | 0 | -19 839 | 19 839 | 0 |
| Equity as per 31.12.2021 | 245 | -20 | 114 085 | 0 | 114 309 |
As of 31 December 2021 17 tNOK of the share capital and 24 527 NOK of the share premium was paid in
The Company has aquired own shares to an extent higher then the power of attorney from the General Assembly. As such, the Board of Directors
but not registered. The capital increase was registered 25 March 2022. Of the total amount 2,052 tNOK was paid in January / February.
did not act in Compliance with the Norwegian Limited Companies Act. The Board of Director's are seeking to correct the issue and has used part of the shares as consideration in the transaction described in note 16. In addition, the Board of Director's are seeking to increase the Power of Attorney in the General Assembly.
The Company has entered into a loan agreement in total of 10,2 mNOK to fund aquisition of its own shares. The transaction is not in accordance with the Norwegian Limited Companies Act § 9-5, ref. § 8-7. The Company has entered into a repayment agreement where the receivable should be repaid within 3 months from the signing of the financial statements. As of year end, 5,1 mNOK was paid out under the loan agreement and are included as part of short term receivables.
Note 11 – Share capital and shareholder information
Share capital
The parent entity, Huddlestock Fintech AS, has 119 302 483 shares outstanding, each with a nominal value of NOK 0,0019. All shares have equal voting and dividend rights.
Significant shareholders
| Shares | Ownership | |
|---|---|---|
| VISION INVEST STAVANGER AS | 8 286 715 | 6,9 % |
| RETROPI LIMITED | 7 607 608 | 6,4 % |
| BERKER GROUP AS | 6 597 665 | 5,5 % |
| GRUNNFJELLET AS | 5 408 334 | 4,5 % |
| Total (shareholders holding > 4,5 %) | 27 900 322 | 23,4 % |
| Other shareholders | 91 402 161 | 76,6 % |
| Total | 119 302 483 | 100,0 % |
Huddlestock Fintech AS Group accounts 2021
Shareholders associated with leading roles
| Representative | Role in Huddlestock Fintech AS |
Transactions during 2021* |
|
|---|---|---|---|
| Berker Group AS | Murshid Hugberg-Ali | Board member | 0 |
| Vision Invest Stavanger AS | Øyvind Hovland | Chairman of the Board | 853 |
| Lerke Gård AS | John E. Skajem | Chairman of the Board | 274 |
operating Note 12 – Discontinued operations
cost
* Included in other
The Group entered into a Share Purchase Agreement with Opera Financial Technologies Limited on 22 September 2020, regarding sale and purchase of all issued shares in Dovre Forvaltning UAB. The transaction was dependent on approval from Bank of Lithuania. Opera Financial Technologies Limited never received an approval, so the deal was cancelled at the 'long stop date'. Thereafter did the Group enter into a new sales agreement with DTSocialize Holding. All the proceeds from the sale has been received.
The transactions resulted in a loss of 85 tNOK
The net asset position in the Group accounts is derived as the following:
| 31.12.2021 | 31.12.2020 | |
|---|---|---|
| Fixed assets | 0 | 15 |
| Trade receivables | 0 | 0 |
| Other receivables | 0 | 33 |
| Cash and cash equivalents | 0 | 2 185 |
| Public duties payable | 0 | 0 |
| Net asset position | 0 | 2 233 |
Huddlestock Fintech AS Group accounts 2021
Note 13 – Loans and borrowings
| The Group holds the following loans as of December 31, 2021: | Nom i l moun t s n a a |
|||||
|---|---|---|---|---|---|---|
| Limit | Drawn amount 31.12 | Due within one year |
Due between 2- 5 yrs |
Due thereafter | ||
| Long term loan | 4 000 | 4 000 | 133 | 3 867 | 0 | |
| Long term loan Innovasjon Norge | 2 500 | 2 500 | 83 | 2 417 | 0 | |
| Overdraft facility | 4 000 | 0 | 0 | 0 | 0 | |
| The following assets are pledged as security | ||||||
| 31.12.2021 | ||||||
| Trade receivables | 8 854 | |||||
| The long term loan has a covenant that the drawn amount should not exceed 70 % of the trade receivables. As of 31.12.2021 the Group is in compliance with its loan covenants. |
||||||
Note 14 – Provisions and other short-term liabilities
Significant accounting policies Other short-term liabilities are mainly related to services received or wages to employees, for which
payment is due within the next twelve months. These liabilities are measured at nominal amounts.
| Specification of other short-term liabilities | ||
|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 |
| Accrued holiday pay | 1 751 | 23 |
| Other short-term liabilities | 23 746 | 2 432 |
Total 25 497 2 455
Huddlestock Fintech AS Group accounts 2021
Note 15 – Business combination Description of business combination
Huddlestock Fintech AS was listed on Euronext Growth Market Oslo - 26 November 2020, as Norway's first fintech company to be publicly traded. Huddlestock Fintech is a company that develops and implements unique software as a service-solutions for digitizing work processes for custody banks, asset managers and trading venues.
The open, compliance-optimized and data centric wealthtech platform allows our customers to offer a differentiated real-time product that reduces cost and increases efficiency. Huddlestock Fintech's technology enables end-to-end digital services such as onboarding, client communication, reporting, order execution and portfolio management, all executed on the same platform.
Huddlestock has developed two technology solutions, Apex (Custody) and Bedrock (Connectivity). Apex is a software as a service-solution that links custody services with asset managers and individual investors. Bedrock provides a white label solution that is primarily a product for financial services firms wanting to add low cost-efficient trading and investing services to their client web and app offerings.
Through its world-class expert consultancy division - Visigon, Huddlestock delivers strategic technology solutions and process automation for the financial services industry. Founded in 2008, Visigon has grown into becoming the preferred supplier of financial consultancy services and technology providers in the Nordic region. Visigon became part of the Huddlestock Fintech family in 2021
| 60 307 | |
|---|---|
| Transaction cost | 2 624 |
| Share exchange | 23 031 |
| Cash consideration | 34 653 |
| 11.06.2021 | |
|---|---|
| Identified intangible assets | 32 928 |
| Other fixed and current assets | 13 424 |
| Cash and cash equivalents | 3 725 |
| Total assets | 50 076 |
| Deferred tax | 7 244 |
| Other short term labilities | 27 629 |
| Total liabilities | 34 873 |
| Total identifiable net assets aquired | 15 203 |
Huddlestock Fintech AS Group accounts 2021
Measurement of fair values The valuations techniques used for measuring the fair value of aquired assets were as follows
Developed technology
Fair value of aquired technology has been calculated based on a reproduction cost from an analysis of the relevant cost components used in developing the technology.
Customer relationships
Fair value of customer relationships are calculated by usineg the excess earnings method, taken into account the rate of customer attrition, revenue growth, and increase in estimated operating margins. The calculations are based on discussion with management, management estimates and long-term growth rates.
Order backlog
Fair value of order backlog has been calculated using the firm contracts as of the aquisition date with an estimated margin.
Other
Goodwill Goodwill arising from the aquisition has been recognised as follows
For remaining assets and liabilities fair values are assumed to equal book values.
Transaction price 60 307 Fair value of identifiable net assets 15 203 Goodwill 45 105
Goodwill reflects economiesof scale, geographic presentence, Huddlestock's established market position and potential for continous growth.
Note 16 – Events after the reporting period and going concern
The Huddlestock teams are relentlessly focused on growing our business; we remain completely sold out within our consulting business and have, since the beginning of the year, expanded our team with 4 new hires to meet increased demand from existing clients. We are also seeing increased demand for our capital markets expertise from new potential clients; in February 2022, our leading fintech consultancy business won a mandate with Danish fintech company Lunar.
The ongoing war in Ukraine has somewhat affected the roll- out of our technology. We are monitoring the situation for both direct and indirect consequences, as well as any increased cyber risks, and are working closely with our local partner. At the time of this report, our partners are unharmed and continue to operate under suboptimal conditions. Huddlestock Fintech and its daughter companies have no direct investments in Ukraine. While the situation, if prolonged for an extended period, would somewhat affect the implementation timelines and ongoing deliveries for existing client commitments, we continue to see high demand for our SaaS white label trading solution. Since the beginning of the year we have signed agreements with a leading Nordic investor news site counting more than 25.000 users, and a Northern European investment club of sophisticated retail traders, to launch a retail trading offer by implementing Huddlestock's Bedrock Software- as- a- Servicesolution.
M&A remains a core part of Huddlestock's strategy, and at the end of March, a term sheet was signed with the intention to acquire 100% of F5 IT, a software developer focused on customised application and integration solutions within Fintech, Proptech and loT, for a total consideration of NOK 32m paid in Huddlestock Fintech shares, to be paid in two tranches of NOK 20m and NOK 12m. The latter payment is tied to mutually agreed performance targets and agreed paid over a period of three years in 3 instalments. The company is highly complementary with existing Huddlestock operations and will further the company onshoring strategy. This aquistion will also accelerate our ambition to become a leading Fintech in Europe.
Revenues has become lower in 2021 than expected, with Covid- 19 playing a key role. Regardless of this, the Huddlestock Group is well capitalized, and will have capital going forward. The company is also experiencing strong interest in our products and technology. The company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarilylarge operating and development costs. Furthermore, the company has sufficient liquidity to manage without income in the next 12 months and the board has no qualms about presenting the annual accounts under the assumption of continued operations.
Huddlestock Fintech AS financial statements 2021
Income statement
| (amounts in NOK 1000) | Note | 2021 | 2020 |
|---|---|---|---|
| Operating income | |||
| Other operating income | 2 | 76 | 370 |
| Total operating income | 76 | 370 | |
| Operating expenses | |||
| Personnel costs | 4,5 | 3 795 | 192 |
| Other operating expenses | 5 | 5 943 | 7 533 |
| Total operating expenses | 9 738 | 7 725 | |
| Operating profit (loss) | -9 662 | -7 356 | |
| Financial income | |||
| Interest income | 0 | 9 | |
| Other financial income | 22 | 14 | |
| Total financial income | 22 | 23 | |
| Financial expenses | |||
| Write down of financial assets | 0 | 8 207 | |
| Interest expenses | 1 924 | 39 | |
| Other financial expenses | 354 | 20 | |
| Total financial expenses | 2 278 | 8 265 | |
| Net financial items | -2 256 | -8 242 | |
| Profit (loss) before tax | -11 918 | -15 598 | |
| Income tax | 8 | 0 | 0 |
| Net profit (loss) | -11 918 | -15 598 |
Huddlestock Fintech AS financial statements 2021
Statement of financial position
| (amounts in NOK 1000) | Note | 2021 | 2020 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | |||
| Licenses | 6 | 32 182 | 45 952 |
| Total intangible assets | 32 182 | 45 952 | |
| Financial assets | |||
| Investment in subsidiary | 11 | 60 337 | 2 438 |
| Total financial assets | 60 337 | 2 438 | |
| Total non-current assets | 92 519 | 48 390 | |
| Current assets | |||
| Receivables | |||
| Receivables with group companies | 11 | 12 589 | 9 604 |
| Other short-term receivables | 8 185 | 382 | |
| Total receivables | 20 773 | 9 986 | |
| Bank deposits, cash and cash equivalents | 7 | 7 728 | 2 246 |
| Total current assets | 28 502 | 12 232 | |
| Total assets | 121 021 | 60 623 |
Huddlestock Fintech AS financial statements 2021
EQUITY AND LIABILITIES
| Equity | 2021 | 2020 | |
|---|---|---|---|
| Paid-in capital | |||
| Share capital | 10 | 245 | 208 |
| Own shares | -20 | 0 | |
| Share premium | 111 872 | 56 847 | |
| Share premium- not registered | 0 | 0 | |
| Total paid-in capital | 112 096 | 57 055 | |
| Total equity | 9 | 112 096 | 57 055 |
| Liabilities | |||
| Loans and borrowings | 13 | 3 867 | 0 |
| Total long-term liabilties | 3 867 | 0 | |
| Short-term liabilities | |||
| Accounts payable | 1 424 | 1 206 | |
| Payroll taxes, VAT etc. | 125 | 169 | |
| Loans and borrowings | 13 | 133 | 0 |
| Other short-term liabilities | 12 | 3 376 | 2 192 |
| Total short-term liabilities | 5 058 | 3 567 | |
| Total liabilities | 8 925 | 3 567 | |
| Total equity and liabilities | 121 021 | 60 623 |
Stavanger, May 5, 2022
Øyvind Hovland Murshid Hugberg-Ali Chairman of the Board
Boardmember
John Egil Skajem CEO
Huddlestock Fintech AS financial statements 2021
Note 1 – General accounting policies
Basis for preparation
The financial statements of the parent company have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting principles in Norway (NGAAP) for smaller Companies and NRS 8. The financial statements have been prepared on the going concern basis.
All amounts are presented in thousands of NOK, unless otherwise clearly stated.
Group composition
The Company's head office is located at Forus in Stavanger municipality, Norway. In addition to the parent entity, Huddlestock Fintech AS, headquartered in Stavanger, Norway, the group includes the subsidiaries Huddlestock Technologies AS, Oslo, Norway; Huddlestock Systems GmbH, Munich, Germany; Huddlestock Visigon Nordic AB and Huddlestock Visigon Sweden AB, Stockholm, Sweden; Huddlestock Visigon Denmark ApS, Copenhagen, Denmark; and Huddlestock Asia Sdn Bhd, Kuala Lumpur, Malaysia. It has offices in Norway, Germany, Lithuania, Sweden, Denmark and Asia, respectively.
Classification of items in the statement of financial position
Assets intended for long-term ownership or use are classified as non-current assets. Assets associated with the normal operating cycle are classified as current assets. Receivables are classified as current assets if they fall due within one year. Analogue criteria are applied to liablilites. Unless otherwise stated, long-term liabilities also includes next year's installments.
Note 2 – Revenues
Significant accounting policies
Revenues is services provided, and is recognised when the service is rendered.
Revenues by nature
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Other revenue | 76 | 370 |
| Total | 76 | 370 |
Note 3 – Government grants
Significant accounting policies
The group receives government grants in relation to its research and development activities. When such grants are received to carry out certain activities or compensate specific expenses, the grant is recognised in the income statement over the same period as the associated costs. Grants that compensate the group for the cost of an asset are recognised as a reduction in the carrying value of the related asset and recognised as reduced depreciation over the useful life of the asset.
SkatteFUNN
The current Skattefunn-project is approved from 2019 to 2021 og relates to the development of a platform that makes investment in the share- and blockchain market understandable and available for the public. Internally, the project is named "Marketplace for Investing" (MiF).
| Development cost | 33 036 |
|---|---|
| Received government grants | -854 |
| Carrying value 31.12 | 32 182 |
Huddlestock Fintech AS financial statements 2021
Note 4 – Personnel costs
Significant accounting policies
Personnel costs are expensed as the employees earn the right to the payment of wages for hours worked. Payments to defined contribution pension are expensed over the period in which the employees earn the right to the deposit. Personnel costs related to research and development projects are capitalised to the extent that the conditions for this are met.
Specification of personnel costs
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Wages | 3 223 | 168 |
| Pension contributions | 76 | 0 |
| Social security tax | 464 | 24 |
| Capitalised development costs | 0 | 0 |
| Other personnel costs | 31 | 0 |
| Total | 3 794 | 192 |
| Number of employees | ||
| (average FTE for the period) | 2021 | 2020 |
| Norway | 2 | 0 |
The Company has claimed a total amount of 834 tNOK as government grant under "Skattefunn". 209 tNOK has reduced salary cost, whilst 625 tNOK reduced other operating expenses.
Note 5 – Remuneration of management and auditor
The current CEO has a yearly salary of 1,2 mNOK. He is not entitled to severance pay, and has no loans from the Company.
There has not been paid fees to The Board of Directors.
Specification of auditors remuneration
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Statutory audit fee | 223 | 256 |
| Other certification services | 12 | 84 |
| Tax advisory services | 0 | 24 |
| Other non-auditing services | 184 | 219 |
| Total | 419 | 582 |
Reported amounts are exclusive of VAT.
Huddlestock Fintech AS financial statements 2021
Note 6 – Intangible assets, research and development
Significant accounting policies Expenditures on research and development are capitalized to the extent that they are part of projects generating identifiable intangible assets, of which future economic benefits can be attributed. Expenses related to projects not meeting theese criterias are charged to the income statement as they accrue.
Capitalised development costs
For the year 2021, the Company invested further resources and funding into our technology. Huddlestock is a " technology first" company and spend much of the resourses on development and creating enhancements. In order to stay with the developements in the market and continue to have a leading role, Huddlestock prioritizes to continue to develop our platform. The platforms have been designed for " multi tennants" and easy implementation. Scalability is of essence with quick roll out, which the company has achieved. The company's most important technology, Bedrock solutions, have been completed and we are mostly focusing on tailor making the solutions to custom fit our contracted clients. For 2021, the most significant project the Company has been to completing the Bedrock platform. This work has been completed and is in full implementation with several customers.
Furthermore, we have also continued to finalize the wealth managmentplatform APEX, which was originally developed for BNP Paribas DAB. Qinfen is a digital platform where fund managers can offer their clients strategies and several other services in one place. Qinfen is based on Huddlestock technology.
Licences
The Group, throughits parent Company, holds licenses that are licensed perpetual from Blue Ocean. The licenses are for the use of the technologyApex and Bedrock.
Specification
| (amounts in NOK 1000) | Licenses |
|---|---|
| Cost 01.01. | 45 952 |
| Additions | 0 |
| Disposals | -13 770 |
| Cost 31.12. | 32 182 |
| Accumulated depreciation 01.01. | 0 |
| Depreciations for the year | 0 |
| Disposals | 0 |
| Accumulated depreciation 31.12. | 0 |
| Book value 31.12. | 32 182 |
At December 31, 2021 the intangible asset is not ready for its intended use. When ready for its intented use, Management will assess the amortisation plan for the intangible assets.
As part of the transaction to repurchase the Company's own shares, part of the license was returned to the Company.
Huddlestock Fintech AS financial statements 2021
Note 7 – Bank deposits, overdraft facility and restricted cash
Significant accounting policies
Bank deposits, cash and cash equivalents includes all cash, bank deposits and other liquid investments that can be immediately converted into cash, with negligible exchange rate risk.
Restricted cash
| (amounts in NOK 1000) | 2021 | 2020 |
|---|---|---|
| Payroll tax account | 143 | 68 |
Note 8 – Income tax
Significant accounting policies The income tax expense in the income statement includes the tax payable for the period and changes in deferred tax. Tax payable and deferred tax is calculated using tax rates and tax legislation that have been enacted at the end of the reporting period. Deferred tax is calculated on all temporary differences between tax base and amount recognised in the statement of financial position. In addition deferred tax is also calculated on tax loss carryforward at the end of the reporting period. Deferred tax is only recognised to the extent that it is probable that future taxable income will be generated against which it can be utilized. Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset them.
| Specification of income tax expense | |||
|---|---|---|---|
| (amounts in NOK 1000) | 2021 | 2020 | |
| Tax payable | 0 | 0 | |
| Change in deferred tax | 0 | 0 | |
| Income tax expense | 0 | 0 | |
| Reconciliation of tax expense with tax calculated at nominal rate | |||
| (amounts in NOK 1000) | 2021 | 2020 | |
| Result before tax | -11 918 | -15 598 | |
| Tax at nominal rate (22 %) | -2 622 | -3 431 | |
| Permanent differences | 0 | 1 806 | |
| Effect of different tax rates | 0 | 0 | |
| Change in deferred tax not recognised | 2 622 | 1 625 | |
| Income tax expense | 0 | 0 | |
| Specification of deferred tax | |||
| (amounts in NOK 1000) | 2021 | 2020 | Change |
| Intangible assets | 0 | 0 | 0 |
| Net deferred tax on temporary differences | 0 | 0 | 0 |
| Tax loss carryforward | -4 996 | -2 374 | 2 622 |
| Total deferred tax | -4 996 | -2 374 | 2 622 |
| Deferred tax recognised | 0 | 0 | 0 |
Huddlestock Fintech AS financial statements 2021
Note 9 – Equity
Specification of equity
| (amounts in NOK 1000) | Share capital | Own shares | Share premium | Sum |
|---|---|---|---|---|
| Equity as per 31.12.2020 | 208 | 0 | 56 847 | 57 055 |
| Net profit (loss) | 0 | 0 | -11 918 | -11 918 |
| Purchase of own shares | 0 | -20 | -13 350 | -13 370 |
| Contribution in kind | 8 | 0 | 26 122 | 26 130 |
| Capital increase | 28 | 0 | 56 190 | 56 218 |
| Costs associated with capital increase | 0 | 0 | -2 000 | -2 000 |
| Other changes | 0 | 0 | -19 | -19 |
| Equity as per 31.12.2021 | 245 | -20 | 111 872 | 112 096 |
As of 31 December 2021 17 tNOK of the share capital and 24 527 NOK of the share premium was paid in
but not registered. The capital increase was registered 25 March 2022. Of the total amount 2,052 tNOK was paid in January / February.
The Company has aquired own shares to an extent higher then the power of attorney from the General Assembly. As such, the Board of Directors did not act in Compliance with the Norwegian Limited Companies Act. The Board of Director's are seeking to correct the issue and has used part of the shares as consideration in the transaction described in note 16. In addition, the Board of Director's are seeking to increase the Power of Attorney in the General Assembly.
The Company has entered into a loan agreement in total of 10,2 mNOK to fund aquisition of its own shares. The transaction is not in accordance with the Norwegian Limited Companies Act § 9-5, ref. § 8-7. The Company has entered into a repayment agreement where the receivable should be repaid within 3 months from the signing of the financial statements. As of year end, 5,1 mNOK was paid out under the loan agreement and are included as part of short term receivables.
Note 10 – Share capital and shareholder information
Share capital
The parent entity, Huddlestock Fintech AS, has 119 302 483 shares outstanding, each with a nominal value of NOK 0,0019. All shares have equal voting and dividend rights.
| Significant shareholders | |||
|---|---|---|---|
| Shares | Ownership | ||
| VISION INVEST STAVANGER AS | 8 286 715 | 6,9 % | |
| RETROPI LIMITED | 7 607 608 | 6,4 % | |
| BERKER GROUP AS | 6 597 665 | 5,5 % | |
| GRUNNFJELLET AS | 5 408 334 | 4,5 % | |
| Total (shareholders holding > 5 %) | 27 900 322 | 23,4 % | |
| Other shareholders | 91 402 161 | 76,6 % | |
| Total | 119 302 483 | 100,0 % |
Shareholders associated with leading roles
t
| Representative | Role in Huddlestock Fintech AS |
Transactions during 2021* |
||
|---|---|---|---|---|
| Berker Group AS | Murshid Hugberg-Ali | Board member | 0 | |
| Vision Invest Stavanger AS | Øyvind Hovland | Chairman of the Board | 853 | |
| Lerke Gård AS | John E. Skajem | Chairman of the Board | 274 |
*Includedin other operatingcos
Huddlestock Fintech AS financial statements 2021
Note 11 – Investment in and balances with subsidiary and associated companies
| Company name | Ownership share |
Carrying value | Equity (100%) | Net result (100%) payable) |
Balance (+receivable/- |
|---|---|---|---|---|---|
| Huddlestock Technologies AS | 100 % | 30 | 10 488 | -905 | 12 116 |
| Huddlestock Asia SDN. BHD. | 100 % | - | - | - | 76 |
| Visigion | 100 % | 60 307 | -7 829 | 2 467 | - |
| Total | 60 337 |
In addition to the above balance, 396 tNOK is recognised as a receivable against the indirect subsidiary Huddlestock Systems gmbh.
Note 12 – Provisions and other short-term liabilities
Significant accounting policies
Other short-term liabilities are mainly related to services received or wages to employees, for which payment is due within the next twelve months. These liabilities are measured at nominal amounts.
Specification of other short-term liabilities
| (amounts in NOK 1000) | 2021 | 2020 | |
|---|---|---|---|
| Accrued holiday pay | 221 | 23 | |
| Other short term debt | 3 154 | 2 169 | |
| Total | 3 376 | 2 192 |
31.12.2021
Note 13 – Loans and borrowings
The Group holds the following loans as of December 31, 2021:
| Limit | Drawn amount | Due within one year |
Due between 2-5 yrs | Due thereafter |
||
|---|---|---|---|---|---|---|
| Long term loan | 4 000 | 4 000 | 133 | 3 867 | 0 | |
| Overdraft facility | 4 000 | 0 | 0 | 0 | 0 | |
| The following assets are pledged as security |
Nominal amounts
Investment in subsidiaries 60 337
The long term loan has a covenant that the drawn amount should not exceed 70 % of the Group's trade receivables. As of 31.12.2021 the Group is in compliance with its loan covenants.
Note 14 – Events after the reporting period and going concern
The Huddlestock teams are relentlessly focused on growing our business; we remain completely sold out within our consulting business and have, since the beginning of the year, expanded our team with 4 new hires to meet increased demand from existing clients. We are also seeing increased demand for our capital markets expertise from new potential clients; in February 2022, our leading fintech consultancy business won a mandate with Danish fintech company Lunar.
The ongoing war in Ukraine has somewhat affected the roll- out of our technology. We are monitoring the situation for both direct and indirect consequences, as well as any increased cyber risks, and are working closely with our local partner. At the time of this report, our partners are unharmed and continue to operate under suboptimal conditions. Huddlestock Fintech and its daughter companies have no direct investments in Ukraine. While the situation, if prolonged for an extended period, would somewhat affect the implementation timelines and ongoing deliveries for existing client commitments, we continue to see high demand for our SaaS white label trading solution. Since the beginning of the year we have signed agreements with a leading Nordic investor news site counting more than 25.000 users, and a Northern European investment club of sophisticated retail traders, to launch a retail trading offer by implementing Huddlestock's Bedrock Software- as- a- Servicesolution.
M&A remains a core part of Huddlestock's strategy, and at the end of March, a term sheet was signed with the intention to acquire 100% of F5 IT, a software developer focused on customised application and integration solutions within Fintech, Proptech and loT, for a total consideration of NOK 32m paid in Huddlestock Fintech shares, to be paid in two tranches of NOK 20m and NOK 12m. The latter payment is tied to mutually agreed performance targets and agreed paid over a period of three years in 3 instalments. The company is highly complementary with existing Huddlestock operations and will further the company onshoring strategy. This aquistion will also accelerate our ambition to become a leading Fintech in Europe.
Revenues has become lower in 2021 than expected, with Covid- 19 playing a key role. Regardless of this, the Huddlestock Group is well capitalized, and will have capital going forward. The company is also experiencing strong interest in our products and technology. The company has taken the necessary steps to cut costs during 2021 so that the company does not incur unnecessarilylarge operating and development costs. Furthermore, the company has sufficient liquidity to manage without income in the next 12 months and the board has no qualms about presenting the annual accounts under the assumption of continued operations.
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Financial Calendar 2022
| Quarterly results | Other events |
|---|---|
| Q1: 12 May 2022 | AGM: 12 May 2022 |
| Q2: 18 August 2022 | |
| Q3: 10 November 2022 | |
| Q4: 9 February 2023 |
Annual General Meeting
The Annual General Meeting of Huddlestock Fintech AS will be held digitally on 12 May 2022 at 14:00. Information on how to register attendance and items on the agenda can be found at https://www.huddlestock.com/agm/
Shareholders registered as owners in Huddlestock Fintech AS with the Norwegian Central Securities Depository (VPS) may opt to receive annual reports and the notice of the Annual General Meeting electronically. For more information about Investor Account Services, please contact your VPS registrar. Shareholders wishing to receive a hardcopy of the annual report may contact the company secretary in writing. The address is The Company Secretary, Huddlestock Fintech AS, Gamle Forusveien 53b, 4031 Stavanger, Norway
Cautionary statement and information on estimation uncertainty
This report contains statements regarding future prospects of Huddlestock Fintech, including estimates, strategies and objectives. The risks and uncertainties inherent in all forward looking statements can lead to actual developments and profits differing materially from what has been expressed or implied.
Key Contacts CEO John E. Skajem [email protected]
Director of Strategy and Investor Relations
Cecilia Luras
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PHOTO)
Huddlestock Fintech AS Gamle Forusveien 53b 4031 Stavanger Norway www.huddlestock.com
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