Annual Report • Apr 29, 2022
Annual Report
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| LINK in short | 04 |
|---|---|
| Message from the CEO | 06 |
| LINK and the digital messaging industry | 09 |
| LINK strategy overview | 14 |
| LINK expanding to the U.S. | 19 |
| Value creation and opportunities through M&A | 22 |
| Commercial update: Use cases and GTM | 31 |
| Product development: Roadmap | 38 |
| Sustainability | 42 |
| Social | |
| Environment | |
| Governance | |
| Report from the BoD | 58 |
| Financial statements | 78 |
LINK has 714 employees and 30 offices across 19 countries in Europe and the U.S.
Pro forma 2021 revenue NOK 4.6 billion, pro forma adjusted EBITDA NOK 619 million => EBITDA margin 13%
LINK's 47 200 customers worldwide last year sent 14.4 billion messages
6 Because every communication matters
LINK celebrated the one-year milestone of our public listing on the Oslo Stock Exchange by establishing ourselves as a rapidly growing, global communication-platform-as-a-service (CPaaS) player gaining market recognition in 2021. The digitalization of our economies and the focus on seamless customer experience along with new ways of working in so many industries increased use cases for mobile messaging, and LINK continued to push the envelope to deliver increasingly relevant products and services for all our customers.
In addition to expanding the footprint in Europe, LINK distinguished itself this past year by entering the U.S. market via the acquisition of Message Broadcast, a leading provider of mission-critical customer engagement solutions to blue chip enterprise customers. This was one of six acquisitions closed in 2021 that delivered on our targeted M&A strategy outlined in greater detail later in this report.
On the commercial front, we launched our new LINK Partner Community that focuses on providing the technology, software, and integrations to continually enhance customer value. Business-critical integrations now provide massive potential in partner sales for years to come. Two major deals were Salesforce Marketing Cloud, where LINK is now part of the Salesforce Journey Builder to deliver both SMS and rich landing pages, and Emarsys, the SAP company empowering digital marketing leaders and business owners with its popular omnichannel customer engagement platform.
Our completed integrations, 1,785 new signed business opportunities driving total gross margin, and expansion geographically and in product offerings shined an industry light on LINK. We were thrilled to be ranked as an established leader in Juniper Research's 2021 CPaaS Competitor Leaderboard, a major indicator in our journey towards becoming a global forerunner in this emerging technology.
In early February 2022, we rose above a record number of competitors when Juniper yet again acknowledged our contributions to the industry by awarding LINK the "Best RCS Provider" Platinum title in the Telco Innovation category of the 2022 Future Digital Awards. This was due to our innovative Rich Communication Services (RCS) product which is positioned to make a significant impact for global brands in promotional and transactional messaging.
Success and public recognition carry great responsibility for an organization. We have joined the world's largest corporate sustainability initiative by signing the United Nations Global Compact, committing to aligning LINK's strategies and operations with Ten Principles on human rights, labor, environment, and anti-corruption. Within social governance, LINK was one of 40 founding companies to make the Diversity, Equity, and Inclusion Pledge as part of the CEO Commitment, demonstrating that we value diversity as a lever for innovation, development, and profitability.
For 2022, we have added a focus on environmental sustainability and created the first role within LINK that is fully dedicated to our ESG efforts, which is of vital importance as the world faces escalating humanitarian and climate crises.
We have strong aspirations for our CPaaS product development and market positioning in the coming year and will work together as a united, dedicated, and enthusiastic team, with an eye on environmental and social responsibility, to deliver for our employees and customers around the world.
Oslo 28 April 2022 Guillaume Van Gaver CEO
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 01
LINK has been operating in the digital messaging industry for two decades. When the company was founded in Norway more than 20 years ago, short message service (SMS) from person-toperson (P2P) was well established, while application-to-person (A2P) SMS was just emerging.
LINK was instrumental in driving the development of the A2P market in Norway throughout the 2000s, which today is the most penetrated and mature A2P SMS messaging market in the world. From its foothold in Norway, LINK first expanded in Scandinavia, then throughout Europe from 2016, and to the U.S. in 2021. LINK is now the clear market leader for enterprise mobile digital messaging in Europe with a foothold in the U.S. for further growth.
A2P messaging is any type of messaging traffic sent by an application rather than another person. With enterprises and governments sending billions of A2P messaging traffic in Europe alone, mobile users will recognize both notifications and marketing types of messages.
A2P messaging includes but is not limited to marketing communication, notifications, reminders, chatbots, and one-time-passwords (OTP). The importance of digital messaging has naturally and exponentially grown with the increased penetration of mobile phones.
A2P SMS messaging traffic utilizes local and global telecommunications networks. To deliver A2P SMS messages, LINK orchestrates these SMS messages sent by enterprises or governments through relevant telecom operator networks to the end users. Therefore, the telecom operators are channel suppliers to LINK.
Until the shift from mobile phones to smart phones about 10 years ago, telecom networks were the only mobile digital messaging channel. However, with the rise of new internet-based mobile third-party messaging apps a multitude of new digital messaging possibilities have arisen. WhatsApp, Facebook Messenger, WeChat, Viber and many other over-the-top (OTT) channels are now the preferred way to communicate for many people. OTT refers to internet streamed content, historically devices that go "over-the-top" of the cable TV box.
* Instagram / Facebook Messenger Source: Mobilesquared
These new channels provide vast new opportunities for digital communication, but also greatly increase complexity for enterprises and governments. Orchestration is no longer just between telecom operators, but in addition the multitude of new internet-based, third-party messaging app companies. This emerging market landscape over the past 10 years has given rise to a new industry, communication-platform-as-a-service (CPaaS), to manage the complexity and facilitate the opportunities these new technologies present.
While standard SMS is limited to 160 characters in black and white, the new OTT channels have introduced full rich media experiences including images, videos, group chats, and interactions that smartphone users now take for granted in their person-to-person (P2P) communication with friends and family.
Enterprises and governments are therefore pushed to embrace newer rich media communication to meet more demanding customer expectations. Simultaneously they are experimenting with the newer rich media communication capabilities to increase engagement, conversations, customer satisfaction, and overall return on communication investment.
The telecommunication operators meanwhile are not standing still. They are taking steps to maintain relevance in the A2P messaging market and prevent the OTT third party messaging companies from gaining market share in the USD 60 billion global A2P messaging market. This market dynamic is driving the telecommunication companies' investment in Rich Communication Services (RCS), sometimes nicknamed SMS 2.0. RCS has been rolled out by telecommunication operators in dozens of European countries and hundreds of operators worldwide. RCS offers similar features to the new OTT channels but is orchestrated via the telecommunication operator data networks to Android mobile devices.
OTT and RCS have made digital messaging much more colorful and interesting. Richer content gives more user engagement. Engaged customers purchase more and are more loyal. Enterprises and governments increasingly see the importance of investing in a broader range of digital messaging solutions. The CPaaS industry is perfectly positioned to deliver these new and mature solutions as a single communications partner for enterprises and governments.
The new and colorful OTT and RCS solutions are just emerging for business purposes and are still a relatively small percentage of total volume when compared to SMS. The vast opportunities they represent, however, indicate why analysts have identified CPaaS as a rapid growth industry in the coming years.
Gartner projects the API-enabled CPaaS market to grow with a CAGR of 28.1% in the 2020-2025 time frame. Global expansion and the continued quest for enterprise digital adoption will fuel market growth. Key technology areas driving growth are A2P messaging, video and messaging apps.
Not to be left out, traditional A2P SMS messaging has also evolved during the last two decades to extend value and compete with these emerging technologies by including in the SMS an internet URL link to a landing page with rich content in mature markets like northern Europe. Advanced digital messaging solutions are therefore more adopted than the still relatively low OTT and RCS volumes would indicate.
Without doubt, the emerging CPaaS technologies will allow for seamless digital messaging communication, establishing two-way conversational messaging over the end users' preferred channels and will become the de facto standard for enterprise and government interactions with customers and citizens.
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 02
Because every communication matters, LINK constantly enhances how messages are delivered and conversations are created for our customers.
All customer communications, from the simplest one-way messages to rich conversations, must bring real value. The communication needs to be carried and delivered in the most appropriate channel depending on the type of message, profile and preference of the customer, and location or device. Such communication can also be omnichannel in the sense of enabling continuous communication across several channels.
At the heart of LINK's strategy is our continuous effort to offer enterprises and governments communication solutions that increase customer engagement, satisfaction, and loyalty. By implementing our solutions, companies can greatly improve their customer satisfaction.
From a history of being the leading enterprise business application-to-person (A2P) provider in Europe, focusing on one-way ubiquitous communication, LINK has evolved its strategy to become a worldwide communication-platform-as-a-service (CPaaS) provider. This omnichannel shift was the result of an extensive strategy process during 2020, further revised and refined during 2021.
In our renewed strategy, we have maintained the enterprise customer focus. We cover the requirements and needs of large corporations and multinationals, typically offering our solutions for worldwide deployment. We also serve large and medium enterprises as well as governments through dedicated sales teams at 30 sales branches. The needs of smaller enterprises are covered through multiple Self Sign-Up (SSU) portals, where onboarding can be done in minutes with off-the-shelf product offerings.
LINK's go-to-market (GTM) includes an extensive partner strategy, enabling our partners to embed LINK solutions in their own product offerings. From independent software vendors to large-scale software integration providers, resellers, and telecommunication operators, the LINK Partner Community has now grown to more than 750 partners.
Local market presence has always been and continues to be part of LINK's DNA. We are strengthening our local sales teams within enterprise and partner sales to ensure we fully understand the needs of our customers in each market. Additionally, we support local product adaptation/development where needed, and we provide local first line customer support in our customers' preferred language. Local presence in combination with advanced CPaaS solutions tuned to the needs of each enterprise customer improves loyalty and net retention rates while minimizing churn.
M&A is an important part of LINK 's growth history and continues to be a key vehicle in achieving our strategic targets. Acquisitions serve different purposes, including being an effective tool for acquiring key products or capabilities, expanding into new geographies, or achieving scale in existing markets.
During 2021, LINK started an international expansion beyond Europe. The acquisition of U.S. based Message Broadcast is the first step in our ambitious international expansion.
As a result of LINK 's strategy to become a major CPaaS player, we are aggressively rolling out extensive omnichannel and conversational offerings. We have also started to strengthen additional channels such as voice and email. In Mobile Messaging, we are completing the rollout of Rich Communication Services (RCS) across our footprint, and LINK is already covering more than 16 mobile messaging channels.
LINK's customers access our message channels and services through our extensive API offering as well as through our unique software offering, covering a wide range of use cases. For instance, we enable customers to build RCS campaigns towards their opted-in customer base, delivering the campaign through a richer channel which results in higher response rates. We also offer advanced software to support our customers in segmenting their customer base and tailoring the right communication messages.
LINK's solutions and software enable our customers to deliver excellent customer service every day, increase fraud prevention, and provide account verification. As an example, we are implementing omnichannel customer care solutions, enabling end-users to obtain support through their preferred channel. As customers change their behaviors, LINK is constantly adapting and enhancing how messages are delivered and conversations are created.
The dedicated, enthusiastic, and united employees who make up our organization are instrumental in delivering industry leading products and services to our customers. We strive to be an attractive employer for passionate and driven individuals who want to take part in our journey to become a worldwide CPaaS player. In our operational and strategic work and in our attitudes and behaviors towards colleagues, customers, and suppliers, we regard diversity, equity and inclusion as levers for innovation, development, and profitability.
Environmental, Social, and Governance (ESG) criteria to lead as a responsible company serve as an integral part of LINK 's strategy. Please refer to the "Sustainability" section of this report for more details on our initiatives in this area.
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 03
In June of last year, LINK expanded its foothold outside of Europe through the acquisition of Message Broadcast. Message Broadcast is headquartered in Newport Beach, California, and is a leading provider of mission-critical customer engagement solutions to large U.S. enterprise customers. The acquisition advanced LINK's global position and will significantly contribute to organic growth and profitability.
Message Broadcast was founded in 1998 by Bill Joiner and Bill Potter, leveraging innovative information technology to automate customer interactions.
Bill Joiner Bill Potter
Message Broadcast offers its proprietary CPaaS platform Enterprise Omnichannel Notification System (EONS) as well as API-driven communication for email, A2P SMS, and voice communication services. The company operates within large industry verticals such as utilities, healthcare, telecommunications, and financial services, all with operational and mission-critical communication needs.
The company is especially focused on helping businesses that need to comply with strict industry and government regulations related to customer communication. The company's software manages customer contact data and consent, supporting critical event messaging in full compliance with regulatory requirements. The value proposition for companies is significant as non-compliant communication is subject to severe regulatory fines.
Message Broadcast currently serves large U.S. brands, automating personalized conversations that increase customer engagement and satisfaction while reducing operational expenses. Notable clients include utility companies such as Duke Energy, Eversource, Southern California Edison, Pacific Gas & Electric, Florida Power & Light, as well as enterprise brands within other industries such as AT&T, McKesson, and IBM.
Message Broadcast has delivered outstanding organic growth and profitability. Reflecting its high value-added solutions, the EBITDA margin for the company is above 50%.
For its utility clients, extreme weather events demand highly scaled communications capabilities, resulting in Message Broadcast deploying millions of health and public safety communications to consumers during a single event. Moving forward and backed by the full suite of products that LINK offers, Message Broadcast is well-poised to expand further in supporting enterprise brands' operational communications needs.
The Message Broadcast acquisition provides excellent organic growth opportunities for LINK in the U.S., generates cross-selling revenue between the U.S. and European markets, and gives a foothold for further M&A in the U.S.
Message Broadcast is headquartered in Newport Beach, California
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 04
LINK has a distinct M&A strategy and proven track record in creating value beyond its organic growth. Since 2014, LINK has completed 31 acquisitions, including seven since the initial public offering (IPO) in October 2020, to become the clear market leader for enterprise messaging solutions in Europe. Last year, LINK expanded outside Europe for the first time with the acquisition of Message Broadcast in the U.S. The new overseas foothold provides opportunity for additional expansion in the low penetrated, high growth, and high margin U.S. market. In addition to the U.S. expansion, LINK completed five acquisitions in Europe during 2021, further consolidating its market leader position and adding new product capabilities.
The distinct M&A strategy drives value through acquisitions of companies that advance LINK's core business. Execution of the strategy follows a three-pillar approach depending on the type of acquisition target. Add-on or tuck-in acquisitions aim to increase the customer base and grow market share in local markets. Level-up cases refer to acquisitions of larger companies to gain access to new markets. Solutions acquisitions are defined as acquisitions of innovative software products to provide upselling opportunities across LINK's large customer base.
The M&A process follows a clear path from target identification through to integration and realization of synergies. To find the strategically most suitable targets, LINK runs a proprietary screening process that assesses the target's technical platform, business performance, and CPaaS capabilities. Targets considered suitable for acquisition by LINK must be either technically advanced or established and profitable with a very low customer churn. During 2021, a more structured manner of integrating newly acquired companies was implemented, in which the primary focus was operational efficiency and internal alignment. By establishing this process, more time is allowed for focusing on commercial and product strategies for driving LINK's growth in the short and long term. Through boosting operational efficiency, we allow for reduced operating expenses (OPEX) and lower cost of goods sold (COGS) while also taking away many of the operational and administrative burdens the company may have experienced before they became a part of the group.
LINK began its expansion outside Scandinavia in 2016 and continued to consolidate its European position as a privately owned company before its IPO in October 2020.
LINK first expanded outside Scandinavia in 2016 with the acquisition of WhateverMobile, a leading messaging provider in Germany. Since the acquisition, LINK has significantly increased the scale of the business by leveraging its advanced product portfolio and improved operational efficiency through best practices. Notably, DHL Express was onboarded, and gross margins increased through routing efficiencies. The acquisition shows LINK's ability to drive growth by combining industry and market knowledge with branding and financial expertise.
LINK entered the French market in 2019 by acquiring Netsize, a leading enterprise focused A2P player. At the time, Netsize had struggled with flat or declining revenue and gross profits for years. The LINK integration rekindled growth through implementation of best practices and streamlining of operations. The efficiency gains improved the cost position and revenue synergies were realized through increased commercial effectiveness.
Level-up
LINK has closed seven acquisitions in Europe and the U.S. since its IPO in October 2020: WebSMS in Austria, Tismi in the Netherlands, MarketingPlatform in Demark, AMM in Italy, Message Broadcast in the U.S., Xenioo in Italy, and Altiria in Spain.
LINK completed one level-up acquisition in 2021 with Message Broadcast, a leading provider of mission critical customer engagement solutions to large enterprise customers, in the U.S. The acquisition expanded LINK's footprint beyond Europe and will significantly contribute to the organic growth and profitability of the group. Please refer to the separate "LINK expanding to the U.S." section of this report.
Add-on
Add-on acquisitions aim to increase the customer base and grow market share in local markets.
LINK acquired WebSMS in Austria in October 2020 shortly after the IPO. WebSMS was and remains the leading messaging provider in Austria with significant additional business in the wider DACH region, including Germany and Switzerland. The acquisition consolidated LINK's business activities in the region. WebSMS has delivered solid growth across all client segments and gained an increased foothold within healthcare and the public sectors since the acquisition.
In April 2021, LINK acquired AMM in Italy. AMM operates within mobile-marketing and webadvertising and the product offering includes SMS A2P, email services, and chatbots. The company serves close to 3,500 enterprise and SME customers throughout Italy by direct sales and a self-sign-up (SSU) platform. The acquisition consolidated LINK's position as a leading CPaaS player in the Italian market
LINK acquired Altiria in December last year. The company is headquartered in Madrid and active in the A2P market in Spain in addition to some activity in other Spanish-speaking countries through its web-based go-to-market business model. Altiria is the market leader within nongovernmental organizations (NGOs) in the Spanish market. The acquisition enabled LINK to consolidate and further expand its position in Spain through upselling opportunities and a strengthening of its SSU offering.
Solutions refer to acquisitions of innovative software products to provide new upselling opportunities.
LINK completed its first solutions acquisitions in 2021 and has already executed several upsell opportunities to both European and U.S. customers from an extensive cross-sell pipeline.
In February last year, LINK acquired Tismi in the Netherlands. Tismi is a provider of telecommunication services and products and holds licensed operator status in eight European countries. The company's main business comprises of providing virtual mobile phone numbers, smart traffic routing, and signaling services to enterprise customers and CPaaS providers. The acquisition advanced LINK's technical infrastructure, adding voice and number masking capabilities to the product portfolio. The business expanded revenue generation to Austria and France in 2021, and reflecting a strong pipeline, more countries will be added during 2022.
Solutions
Solutions
Add-on
LINK acquired MarketingPlatform in Denmark in April 2021. The company has developed a topof-class modular omnichannel marketing platform with an integrated customer data platform (CDP) giving customers a unified profile view. Omnichannel output is to email, SMS A2P, app, web, and social media. The acquisition expanded LINK's CPaaS offering within multichannel marketing campaigns through customer data management and email. This advanced marketing offering is currently being rolled out in the Nordics.
In December 2021, LINK acquired the Italian conversational messaging and NLP/AI chatbot company Xenioo. The acquisition immediately strengthened LINK's omnichannel offering through enhanced conversational messaging capabilities with NLP/AI chatbot competencies, built-in marketing communication, notification messaging, and contact-center-as-a-service (CCaaS) capabilities. The chatbot is a cloud-based application with support for 16 messaging and voice channels, including SMS, RCS, WhatsApp, Facebook Messenger, Instagram, Google Business Messaging, Telegram, web channel, Discord, Slack, Microsoft Teams, Voice, Amazon Alexa, and Google Assistant. Xenioo is currently being included in CPaaS solutions for both European and U.S. customers.
LINK has a strong M&A pipeline consisting of solutions companies to advance product capabilities, local A2P players to gain further market share and level-up cases to open or win new regions. The digital messaging industry remains highly fragmented and as such opportunity rich for acquisitions at accretive valuations.
Bubble size illustrates number of opportunities
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 05
LINK focuses on three main go-to-market (GTM) strategies that allow for the acquisition of customers in an efficient way. The key to a successful GTM is applying the right tool for the job, ensuring the customer receives the right service with a frictionless experience to becoming a customer, onboarding, and using our services. GTM methodology drives revenue growth, reduces customer acquisition costs, and improves operational efficiencies
| Enterprise | Partners | Self-Sign-Up |
|---|---|---|
| Invest in critical localozed salesforce to maintain regional expertise and win new logos in both new and existing territories Buil direct relationships to deeply integrate with costomer systems, increase stickiness |
Expand number of partners within LINK ecosystem Ability to sacle quicky, as partnerships brind immediate cedibility and access to customers in new markets |
Leverage current LINK SSU brands and existing management "playbook" to expand intp other geographies Allows LINK to expand rapidly without sales reps; onine marketing & local customer support may be set up quickly to bootstrap markets |
| Nordics | ||
| Central Europe |
||
| Western Europe |
||
| Global messaging |
||
| Well Developed | Developed Opportunity |
Large growth opportunity |
LINK's biggest customer acquisition funnel is through a localized enterprise salesforce. LINK employs well over 100 salespeople within our local markets, each with a standardized way of working and being well equipped with local knowledge of the peculiarities of that market. A key differentiator for LINK is to be local so we know our market and know our customers. This unique insight enables LINK to provide superior value and levels of service to customers.
As a result of the extraordinary growth of CPaaS for several global customer accounts, in 2021 LINK increased focus and investments into its global sales initiatives, which primarily focus on large tech and logistics companies
The largest commercial investments during 2021 were made on the partner channel sales effort with roughly 20 partner sales managers recruited into LINK's local organizations. This was implemented based on LINK's Nordic blueprint where partners have been instrumental in the GTM success. In 2021, LINK launched a best-in-class Partner Program with three different tiers, providing multiple benefits to partners for successful cooperation.
LINK's third GTM category is the Self Sign-Up (SSU) approach. LINK has, in multiple markets, very strong local SSU brands in its portfolio that are champions on local customer acquisition. It is an important category to highlight as there is an increasing rate of enterprise customers and partner accounts being acquired through web channels. Just as the world is digitalizing, so are LINK's customer acquisition principles.
LINK does most of its business under the brand of LINK Mobility selling to enterprises and partners. Our SSU business is primarily conducted under local brands.
LINK sees the adaptation of services being driven by three main use cases: Transactions or notifications, marketing, and customer experience. Each of these use cases has different growth drivers, and LINK's efforts are continuously focused on these differences.
LINK's largest share of traffic comes from transaction or notification use cases. Large industries applying these include banks and financial institutions, and logistics companies who are continuously communicating with their customers regarding delivery notifications, transactional messaging for notification purposes, and verification and authentication including one-time password (OTP) use cases. Vast growth in OTP volumes has been driven by large global tech companies. CPaaS will over time bring further value, a trend already evident for some of the notification use cases, with new features and functionality such as chatbots, web experience landing pages, and logics being implemented.
The second most significant use case for LINK is marketing communications. In 2021, eCommerce-focused mobile messaging increased, especially among large retailers. Other growth use cases for marketing are the industries we see growing in a digital-only environment. Marketing is currently experiencing a boom with rich messaging optionality providing a rich experience through utilizing add-ons to the traditional SMS. LINK is in a good position to capitalize on this trend, with rich messaging now starting to come in many forms including Rich SMS, OTT channels, and RCS.
LINK is currently working with several high-profile global brands that are using RCS for both promotional and transactional messaging. These messaging needs include promotional marketing, showcasing product catalogs with personalized shopping assistance, presenting new products, and making appointments or confirming orders and deliveries. LINK's customers have experienced +400% increases in open rates, engagement scores, and click-through rates using RCS in comparison to the same campaigns on other channels.
I did not encounter such a well-knitted & complete RCS campaign, it is really a great piece of work.
Mathieu Dubois, SFR
Thirdly, the customer experience area is, over time, an area where CPaaS providers will have much to gain. CPaaS and CCaaS solutions provide a naturally good fit. LINK has mainly partnered with leading players in this space, building established partnerships inside CCaaS. These solutions come in various shapes and forms but almost all of them rely on a CPaaS vendor in an environment where customers become more and more channel-agnostic, with an omnichannel strategy allowing them to choose different channels depending on the customer preferences and experience.
80%
Of businesses think they provide 'superior' customer service
08%
Of customers believe they have experienced superior support
LINK created value in DNB's customer care department with 2,500 employees
Many of LINK's customers are turning to conversational messaging across all use cases, an area that is being adopted by most industries as the digitalization trend was expedited during the COVID pandemic, with consumer preferences and demands on big brands to communicate on the right channel and at the most convenient time.
Specsavers, a leader in optometry, audiology, and healthcare services, will work with LINK over the next five years to transform their digital customer communications
y Omnichannel engagement strategy which includes SMS, Rich SMS, and RCS
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 06
The A2P messaging and CPaaS industries are continuously evolving with new technologies enabling more advanced use cases. LINK develops products and solutions in readiness to these new market opportunities and currently drives digitalization with a product offering ahead of customers' expectations.
Innovation in the industry is typically led by large global customers' adoption of CPaaS solutions and adaptation to their specific needs. Enterprises and governments in general adopt technology and improve their services more incrementally. LINK is in this context seen as a key strategic partner, and combined with its extensive local presence, attracts strong customer relationships in developing innovative new CPaaS solutions. By delivering and enabling new CPaaS use cases for customers, LINK helps to accelerate the digitalization of business processes. The transition to more advanced CPaaS solutions provides additional SaaS license revenue for LINK on top of messaging volume revenue from A2P SMS.
Reflecting LINK's continuous development of A2P messaging and innovative CPaaS implementations, Juniper Research in 2021 positioned LINK as a leading CPaaS player. In this rapid growth market, LINK has the product portfolio and the critical customer base to facilitate accelerated adoption of CPaaS solutions.
LINK will evolve its core product portfolio to this emerging new market over the next two years. Horizontally, the product expansion will focus on expanding digital messaging capabilities in voice and video while further developing RCS, OTT, NLP & AI capabilities. Vertically, innovation will be focused upwards in expanding integrated SaaS solutions to address advanced solutions within the three CPaaS super use cases, notification, marketing, and customer care, and downwards into the value chain of delivering network layer capabilities needed to optimize the CPaaS value proposition.
Illustration adapted from Gartner's Market Guide for Communications Platform as a Service published September 2021
Demonstrating the lead in innovation, LINK won the 2022 Platinum Award for the "Best RCS provider" in the CPaaS industry. In the emerging RCS market, LINK has invested to take a market leader position for global RCS capabilities on GSMA standards, with integrated RCS NLP/AI chatbots for marketing automation, customer care, and notification traffic.
LINK took a position in the NLP/AI chatbot industry through the acquisition of the Xenioo conversational platform in 2021. This industry segment is estimated to grow from a total value of USD 20 billion in 2021 to USD 100 billion in 2026, according to Mordor Intelligence. The broad application of chatbots across the super use cases, notification, marketing, and customer care are seen as drivers of that growth.
Expanding further from LINK's A2P messaging roots, planned expansion and acquisition of voice and video capabilities will unlock new addressable markets, use cases, and revenue streams from new and existing customers. As Europe's leading digital messaging company with a foothold in the U.S., award winning CPaaS solutions, and a leading product development portfolio, LINK is positioned as a key player and contributor in the ever-advancing digital communication services industry.
LINK Mobility Group Holding ASA Annual report 2021
LINK's board of directors has adopted a policy to reflect the company's commitment to integrate environmental, social, and corporate governance (ESG) factors into its daily operations and as a part of its strategic processes. The board has considered these topics in relation to LINK's business operations and reviewed factors based on the UN Sustainable Development Goals (SDGs), the Ten Principles of the UN Global Compact, and the OECD Guidelines for Multinational Enterprises.
In 2021, LINK confirmed it committed to integrating the Ten Principles of the UN Global Compact in its operations by becoming a signatory. In line with the UN Global Compact, LINK is committed to continuously progress in the four focus areas: Anti-Corruption, Human Rights, Environment & Labor.
Our Sustainability report shows the key actions that we have implemented in these areas in 2021 and our ambitions for 2022. The report is published in accordance with the EU non-financial reporting directive and the Norwegian Accounting Act Section 3-3C.
As the global understanding of ESG as important factors affecting businesses across markets and industries gain ground, it is crucial for any business to understand and manage the risks and opportunities related to these topics, not only when making strategic decisions but also in its daily operations.
In a context that is constantly evolving, LINK recognizes that the areas affected by ESG factors may vary over time. The topics listed below are the material risks and opportunities as identified during the last accounting year. The process of identification involved key department experts as well as other internal stakeholder such as the board members and employees.
| People | Customer & Employee Privacy Diversity and equal opportunities Non-discrimination Developing Skills & Employee engagement Human Rights |
|
|---|---|---|
| Planet | Energy management Carbon Emissions Supplier Environmental Assessment Material use |
|
| Profit | Rapidly changing technology context Anti-corruption Supplier Assessment |
The topics listed below are material for LINK as we believe we can have a positive impact on these factors. Our workforce is at the heart of our company, and we believe in growing together with our employees by empowering them.
LINK aims to have representation from all sections of society and for each employee to feel respected so they can perform at their best. At LINK, we do not tolerate any kind of discrimination based on origin, religion, gender or sexual orientation, state of health and/or disability, political opinions, religious beliefs, or family status. These values are clearly stated in our Code of Conduct and upheld in our daily actions.
Our permanent and freelance contract workforce combined has 66% male and 34% female representation, which exceeds the technology industry average reporting in 2021. We do not have any employees who self-designate as any other gender currently, but the option is available to all. Our greatest areas for representative improvement are in our Global Leadership Team (GLT) and Extended Leadership Team (ELT), where women made up 25% and 22% of the leadership groups in 2021, respectively.
In 2021, LINK implemented an organization-wide human resources and employment position categorization system which was required to gain a clear understanding of our worldwide workforce and connect our operations. With this system, we have been able to take the first steps toward quantitative data mapping on gender representation and compensation. We aim to have an actionable analysis of the gender pay gap at LINK completed in 2022.
Gender pay equality: The unadjusted gender pay gap for 2021 is 13.6%. The rate shows the difference between average male salaries over average female salaries in percent, irrespective of other variables, such as position level. The gender pay gap analysis refers to the workforce in Norway.
Parental leave: In 2021, the average number of days of parental leave for women was 121 days and for men was 48.5 days. The scope of this analysis is the workforce in Norway.
Our recruitment process includes new policy guidelines including strategies and hiring manager training to attract more diverse candidates, with an emphasis on women, across all levels of responsibility in the organization. LINK was an early signatory of the CEO Commitment's Diversity, Equity, and Inclusion Pledge, vowing to set diversity and inclusion as an integrated and strategic priority in our organization that is anchored in our top management.
LINK had operations in 19 countries in 2021, consisting of European nations and the U.S. National identification is optional based on office, but we know of 29 reported nationalities at LINK representing five of the seven continents of the world. Our global headquarters in Oslo has employees representing 12 different nationalities.
To accommodate our multinational workforce and foster an inclusive environment, the entire organization participated in an interactive workshop on cultural differences and cross-country collaboration in June 2021. This initiative is discussed in further detail under Employee Engagement in this report.
LINK does not tolerate discrimination of any kind based on state of health and/or disability, and we offer accommodation wherever possible to ensure a quality work environment for all employees. We currently have employees who self-report as working with a disability.
In 2022, LINK plans to conduct a detailed analysis of gender representation, compensation, and benefits to more clearly measure and identify opportunities to increase diversity and narrow the gender pay gap. The goal is to have a strategy in place to support this ambition by 2023 using the data and analysis produced in the current year.
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Remaining united with high employee engagement is an integral part of LINK's values and company culture even as we grow and add new affiliates each year. We hold several monthly, bimonthly, quarterly, and annual events to keep our employees informed about the latest developments and to present the results of our cooperative dedication.
We held our company-wide virtual gathering, called LINK Days, over two and a half days in June 2021. The goal of this event was to bring LINKers from around the world together to interact across country and department lines. One of the main themes for LINK Days 2021 was cultural differences and cross-country collaboration. We engaged an external speaker with expertise in bridging cultural differences to present new ways of working and interacting with awareness. LINKers used this new learning in break-out workshops on cross-country teamwork to discuss cross-cultural communication and challenges. They also reviewed what the LINK values – united, dedicated, and enthusiastic – mean in different cultures across all countries. Through this exercise, we examined our current and desired LINK culture, identifying gaps for improvement.
All Hands meetings are organized at the group, regional, and local levels for employees on regular schedules. These meetings are used to share business updates from the past months, celebrate milestones and new arrivals, and offer employees the opportunity to ask questions.
One department that continually innovates and develops new products and cases is Group Product. To keep all LINKers informed, this team also organizes optional bimonthly information sessions to showcase developments concerning LINK's products.
Twice per year, we conduct a company-wide survey for all LINKers to express satisfaction or areas for improvement across a spectrum of issues. The LINK Voice survey is critical to gauging our employee engagement and overall satisfaction, and managers also use the results to guide decision-making in their departments.
For the accounting year 2021, the sick leave rate was reported to be 2.2% for our workforce in Norway. This analysis includes short- and long-term sickness and does not consider childcare leave and/or parental leave.
LINK's strategic vision for 2025 includes securing an employee engagement score of 75 on the LINK Voice survey conducted through the Culture Amp® platform, as we seek to be a highly desirable workplace in our industry. For the concluding LINK Voice of 2021, we experienced an all-time high participation rate of 92% across the company (exceeding the Culture Amp® industry benchmark of 83%) and an employee engagement score of 65. This score trails the technology Europe benchmark of 71 by 6 points, but this was a marked improvement for LINK over the 10-point difference in our score and the Culture Amp® industry benchmark one year earlier in 2020. We aim to close the gap even further in 2022 as we steadily progress in our multi-year strategic plan.
Protecting personal data in line with the European General Data Protection Regulation (GDPR) and mitigating risks related to this subject is a material topic for LINK. In 2021, LINK has implemented several measures to mitigate risks related to personal data protection:
During 2021, LINK refreshed internal training on topics related to Personal Data Protection, Compliance, and Information Security. Each employee is required to complete the training on a yearly basis.
In 2021, LINK reviewed and published updated guidelines related to personal data protection including Privacy by Design Guidelines and Data Breach Policies, and delivered company-wide training on the topic. To help identify and minimize the data protection risks of a project, LINK has made available a refreshed Data Protection Impact Assessment handbook and Privacy by Design Guidelines that are available to all employees.
By 2021 all companies that were acquired by LINK before 2021 have approved and are in process of adopting the Personal Data Protection Policy directly and/or have implemented the policy or equivalent policies that are accepted by LINK as evidenced by the yearly audit process. Furthermore, LINK will send its first application for Binding Corporate Rules for its processing as Processor and as Controller under the GDPR article 47, which will significantly improve the transparency of LINK's processes to comply with the GDPR.
LINK is going beyond the initial GDPR Project and since 2018 focused on mitigation of the initial customer privacy and data protection risks and has put in place a continuous improvement process focused on the following areas
In 2022, we would like to prioritize data retention and increase the automation of data deletion processes. Roadmaps and action plans have been laid down by internal and business IT teams to focus on data retention in business IT systems
LINK will put in place monetary incentives to encourage employees to participate in groupwide training and achieve 100% participation
Managing access to critical systems is a priority for LINK in 2022 and several measures will be implemented in the next couple of years to gain a better ability for managing access.
To ensure that all managers and employees commit to operating consistently with the UN Guiding Principles on Business and Human Rights and the Ten Principles of the UN Global Compact, LINK has implemented the following measures
The values of human rights that we promote can be found in our Employee Code of Conduct signed by all new employees. Our code of conduct clearly states that we
LINK is aware of the environmental impact of its operations. In this regard, the material topics for LINK are energy management, climate change, and material use. As a business with high requirements for data storage, LINK can reduce our impact in several ways by implementing measures directly in its operations. LINK chooses well recognized international hosting providers that have efficient energy management systems in place. LINK goes beyond its direct impact on GHG emission and looks to contribute to global reduction of emissions. We can do so by helping customers reduce emissions from their operations.
In addition to working on our direct operations, it is our responsibility to educate our employees about environmental issues. In 2021, there were several actions carried out to raise awareness about this topic:
The LINK Days is a digital company-wide gathering bringing together employees from all affiliates to announce results and future strategy. One of the focus topics of the 2021 edition was innovation and sustainability. Sylvija Seres, an expert on these two topics, presented and shared knowledge with all employees all about how we can balance the triple bottom line: people, profit, and planet. She discussed how innovation and sustainability are things that everyone can take part of and aren't just dedicated to one day a year – they are meant to be a part of our day-to-day lives.
This talk led to another workshop: our employees were brought together to work in teams to find creative ways for LINK to be more environmentally friendly. The solutions proposed by our employees ranged from measures to improve direct emissions to working on our products to help our customers meet their climate goals.
After the LINK Days, to kick-off our dedication to climate action, LINK signed up for Challengize, a social platform for health and team building where companies can track employee teams and their workouts. We encouraged all employees to get out and exercise for an hour and a half during one of the LINK Days as part of the challenge to raise money. In just this short time, we raised 10,000 euros. The money raised through our LINK Challenge for Climate Action, was donated to a European NGO that works to preserve and restore forests around the world.
Even though groupwide operations will be implemented in 2022, some of LINK's subsidiaries are precursors in the domain of climate change. Our affiliates in the DACH region are one of these examples.
In 2021, with the help of external consultants specialized in sustainability transformation, LINK Mobility Austria and Germany implemented a comprehensive carbon footprint assessment. This carbon footprint covered Scope 1, 2 and 3 emissions which totalled to 328 tCO2. Emissions related to mobility contributed to 50% of the total carbon footprint.
Having assessed its carbon footprint in the last accounting year, in 2022, the DACH region will appoint a sustainability officer to implement measures to reduce to its carbon footprint, to name a few:
For areas in which direct emission reductions are not possible, globally standardized climate protection projects will be supported using carbon compensation. The next steps for LINK Austria and Germany are to assess the carbon footprint of its products and thereby help reduce their customers' carbon footprint.
LINK currently ensures that its providers can document their approach to energy efficiency and is in the process of implementing requirements towards its suppliers in procurement processes, and routines to document its assessments of providers. There are more details on this topic in the supplier assessment section.
With a business model that relies heavily on the use of IT infrastructure, we are aware that the materials used in manufacturing our IT infrastructure has an impact on the environment. The first step in evaluating the environmental impact of material and resource use will be implemented in 2022-203. This step consists of mapping of all IT equipment in data centers and offices.
To have a comprehensive idea of our energy consumption, LINK will assess primary energy and electricity consumption related directly to its operations. This assessment will allow LINK to understand its dependence on energy and electricity within our operations and will form a basis for the company to set future energy efficiency targets.
At LINK Mobility, we are aware that the first step to positively impacting climate issues is to evaluate our impact on the climate. Keeping this in mind and to begin its journey to positively contribute to climate change, LINK will calculate its GHG emission related to direct operations (Scope 1 & 2) using standard reporting frameworks such as GHG Protocol and ISO14064/14069.
In 2022, we will start assessing transition and physical risks related to climate. Our objective is not only to identify our impact on the environment and more specifically climate change but also verify our business' vulnerability to this topic.
We feel that it is our responsibility to help create awareness on climate change for our employees. For this reason, in 2022, each of LINK's affiliates will implement at least once action related to climate change in their local settings.
As part of an industry that is vulnerable to rapid technological change, with technology under constant development, and the market's expectations for messaging services to follow the development, LINK strives towards adaptability to technological changes as part of its strategy. Strategy assessments are therefore made annually for LINK's management to ensure a sufficient basis for setting its strategy to cope with changes in the industry. The assessments are a tool for measuring vulnerability going forward.
LINK's focus on adaptability is seen through multiple areas of its business, hereunder
LINK's strategy for product development is defined based on assessment of the market expectation and new developments, in order to ensure a product portfolio that is in line with technological development in the marketplace
As a business highly dependent upon data storage, LINK maintains and develops its processes to ensure availability, cost efficiency, climate adaptation, and risk mitigation expected for a company of its size and geographical presence. Migration of server sites, assessment of carbon footprint, and secure redundancy are examples of such processes
With the increased global understanding of Environmental, Social and Corporate Governance as important factors affecting business across markets and industries, it is crucial for any technology business to understand the effects on expectations for technology to meet and exceed requirements and make them part of strategic decisions and daily operations
A rapidly changing and complex industry requires the ability to attract and retain highly skilled employees. An important element of attracting and retaining skilled personnel is to retain its focus on diversity and inclusion as well as equal opportunities. Furthermore, a clear stand against harassment and intimidation, as well as focus on treating personnel with respect and tolerance are elements of importance for LINK's ability to retain skilled personnel. LINK will continue to ensure that its procedures in this area are upheld and enforced.
In addition to the above, LINK's core business of providing better digital communication for enterprises and governments directly forms part of how technological changes can improve and simplify processes in society.
Bribery and corruption undermine any legitimate business operations and therefore is an area of focus at LINK. In line with its values, laws, and regulations governing all areas where it operates, LINK is putting into practice its commitment, as outlined in its Anti-Corruption Policy and Code of Conduct, to fight against corruption in all its forms, by gradually introducing a comprehensive anti-corruption system.
LINK is committed to observe the laws and regulations that govern our operations wherever it operates. Compliance with anti-bribery and anti-corruption laws is of key importance to all of LINK's businesses.
At LINK, we do not tolerate corruption in any form, including bribery, facilitation payments, and trading in influence. Our employee code of conduct clearly states our commitment to anticorruption in business practices
One of the focus areas of our Supplier Due Diligence process that was put in place in 2021, is Anti-corruption. Like our Employee Code of Conduct, our Supplier Code of conduct states our non-tolerance of corruption in the context of our suppliers.
All LINK Mobility's employees and contractors complete an annual training program covering areas of key importance to perform their work at LINK. Anti-Corruption is one of the areas where all employees are measured annually. LINK's board of directors decided from the year 2022 to ensure incentives for completion of the program and approved completion as a KPI for bonus achievement for LINK employees.
LINK's current whistleblowing system was set up in May 2021 and is available to all LINK affiliates. It allows all employees, as well as external and temporary employees, to issue an alert securely and confidentially via an outsourced internet platform. These reports can relate to acts of corruption or other ethical issues (environment, security, fraud, personal data, human rights, etc.) and, more generally speaking, to any situation or conduct that may be contrary to the Code of Conduct. The overall system architecture was designed to provide a means of filing these reports and processing them internally while ensuring complete confidentiality. Rules governing the use of the Integrity Line set out the whistle-blowers' rights and responsibilities so that the system can operate smoothly in a climate of trust.
LINK has committed to avoid causing adverse impacts on people, the environment, and society in its daily operations, as well as to avoid contributing to such adverse impacts within its relations with stakeholders, including suppliers.
LINK depends on several suppliers, including entities operating in the telecommunication industry (mobile network operators (MNO), aggregators, and over-the-top (OTT) providers), certain IT vendors (hosting, server and storage solution providers, software vendors), as well as a variety of other supply-side partners.
LINK has taken up certain actions aimed at identifying and organizing its relations with suppliers, enabling the company to act responsibly and to create added value throughout its value chain. In 2021, LINK has introduced a basic supplier-due-diligence (SDD) process, based on the methodology proposed by OECD Due Diligence Guidance for Responsible Business Conduct. The focus areas for LINK Mobility in supplier assessment are
In 2021, the supplier assessment process has included suppliers' mapping, risk assessment, and proposal of mitigation measures. After having mapped the entirety of its suppliers, LINK has implemented the following measures
Embedding LINK core values into corporate policies and subsequently developing relevant codes of conduct has been a first step in raising employees' and stakeholders' awareness. Introduced in 2021, our codes of conduct convey a clear message of LINK's expectations within areas covered by ESG, anti-corruption, competition, and privacy policies, and hence, they contribute to improving sustainability through LINK's value chain.
Compliance training is a measure of raising employees' awareness of various compliance issues, including the required conduct towards third parties. Privacy training (GDPR and IT security) has been obligatory for all LINK employees for several years now, and in 2021 the company additionally launched a general compliance training, covering sustainability, anticorruption, and competition policies. All new employees are expected to complete both training courses upon commencement of their employment at LINK and subsequently every year.
The questionnaires are aimed at mitigating risks related to the processing of personal data in vendors' systems. LINK has used questionnaires for several years now.
To continue our efforts to reduce risks associated with suppliers, the following measures will be implemented in 2022.
In 2021 the suppliers' mapping covered telecommunication vendors. In 2022, LINK will increase its supplier assessment scope to certain IT suppliers.
The general SDD questionnaire, developed in 2021, is expected to act as a primary guidance tool during the SDD process in 2022. The questionnaire has been identified as an effective tool to raise employees' awareness of compliance issues, and to collect relevant knowledge on suppliers' entities.
LINK expects its suppliers to adhere to standards set out in the Supplier Code of Conduct and it will therefore introduce relevant clauses in the supplier contracts.
Audits have been identified as an effective tool for periodical evaluation of the actual performance against corporate policies. Internal audits relevant to the implementation of supplier assessment measures will be introduced in 2022.
In 2022, material environmental issues will be analyzed with respect to suppliers.
LINK believes that information security is not a one-time exercise, but a continuous effort. All of our digital channels serve a business purpose. To assure that the assets we provide to customers are safe to use, we employ a standardized approach to information security, from both internal and external vectors. LINK is currently in the process of obtaining ISO 270001 compliance for its major software portfolio lines. One main policy regarding IT Security has been implemented.
The Information Security Policy is an overarching document that contains all major directions, as well as several sub-policies. The overall guidelines to follow are based on ISO 27K frameworks, as well as GDPR.
There are two prevalent approaches that are being instilled in our daily development and processing workflows. Privacy by design and zero trust. The purpose of the security policy is to establish a framework for the protection of information at LINK and all subsidiaries, so that critical or sensitive information and systems preserve their confidentiality, integrity, and availability. It is the policy to permit the use, access, and disclosure of information in accordance with the company's guidelines and with due regard to applicable laws at any time. Based on risk assessment, the company establishes a level of safety that corresponds to the importance of the information in question. LINK carries out frequent risk assessments to determine the current "threatscape" and subsequently react based on the final evaluation. The document also describes the security strategy, which consists of elements such as responsibilities and organizational levels, training, collection, and management of information, etc. The Information Security Policy document is updated on a regular basis, and it is approved by the top-level management of the company, preceded by a wide review of specialists.
LINK Mobility Group Holding ASA Annual report 2021
CHAPTER 08
LINK Mobility Group Holding ASA (LINK) is the Oslo Stock Exchange-listed parent company of the group. LINK is headquartered in Oslo and has 714 employees across Europe and in the U.S. with 30 offices located in 19 countries.
LINK has more than 20 years of experience in providing mobile messaging services and mobile solutions for companies, public services, and organizations. LINK has decades-long experience in the Nordics, the world's most innovative market for digital mobile solutions, and has in recent years leveraged its knowledge and capabilities throughout Europe to become the clear market leader within enterprise mobile messaging solutions. Including the new foothold in the U.S., LINK is uniquely positioned to benefit from the increased usage of mobile messaging solutions globally.
The overall market trend towards digital conversations continued through 2021. The new channels with richer content and conversational features, RCS (SMS 2.0) and OTT (internet streaming) are increasingly a required addition to the core SMS product. Multichannel and conversational solutions are the definition of communication-platform-as-a-service (CPaaS). The market growth is driven by a broader adoption of digital messaging from private companies, public services, and organizations as a central part of their communication strategy. In 2021, LINK sent 14.4 billion messages (including the full-year effect of acquired entities), compared to 10.7 billion messages the previous year, on behalf of its 47 200 (40 600) customers. The market for mobile messaging solutions is expected to continue to expand with the vast opportunities presented by new CPaaS solutions.
LINK has an exceptionally low customer churn (2% in 2021) securing recurring and growing revenue from existing clients. Most customers increase their use of LINK's mobile services and include more advanced solutions as they realize high returns on investment (ROI). ROI is driven by higher revenue from better communication with their end-users and lower costs through more efficient internal processes.
LINK has a clearly stated twofold strategy for growth. The company drives organic growth through an increased market share in existing markets and enters new markets through acquisitions. M&A is also supportive to the product offering through acquisitions of solutions companies. Last year LINK acquired Timsi in the Netherlands (voice and number masking), MarketingPlatform in Denmark (email and customer data platform), and Xenioo in Italy (chatbot). The new solutions advance the CPaaS offering and create value for LINK's large customer base.
Organic growth in the various markets is supported by LINK's unique threefold go-to-market (GTM) strategy. Larger enterprise customers are approached directly by dedicated salespeople, small and medium-sized enterprises (SMEs) are acquired through self-sign-up (SSU) portals and the partner model expands the customer base and product offering. LINK delivers tailored CPaaS solutions to its enterprise customers. These tailored innovations are then standardized to SaaS solutions and offered through LINK's SSU portals. Partners further scale the business as LINK solutions are sold to partner customers and partner applications are offered to LINK customers.
LINK's extensive experience and a large customer base in the most innovative and advanced markets for digital messaging in the world give it a clear competitive advantage. The unique threefold GTM strategy provides scalability to the highly competitive business model.
In accordance with the Norwegian Accounting Act §3.3.a the board confirms that the company fulfills the requirements necessary to operate as a going concern and the 2021 financial statements have been prepared based on that assumption. As a listed company, LINK Mobility Group Holding ASA prepared the consolidated financial statements for the financial year 2021 in accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union.
On 12th February 2021, LINK entered into a definitive agreement to acquire Tismi in the Netherlands. Tismi is a provider of telecommunication services and products and holds licensed operator status in 8 European countries. The company's main business comprises of providing virtual mobile phone numbers, smart traffic routing, and signalling services to Enterprise customers and CPaaS providers.
On 15th April 2021, LINK entered into a definitive agreement to acquire MarketingPlatform in Denmark. The company has developed an omnichannel marketing platform with an integrated customer data platform (CDP) giving customers a unified profile view. Software development is in Macedonia and revenue is primarily related to software licenses.
On 26th April 2021, LINK entered into an agreement to acquire approximately 81% of AMM, a mobile communications company listed on the AIM list of the Italian Stock Exchange. LINK launched a mandatory offer for the remaining shares in June and exercised the squeeze-out right pursuant to Italian rules in July. All shares were transferred to LINK on 27th July 2021 and AMM was delisted from AIM Italia. AMM operates within mobile-marketing and web-advertising and the product offering includes A2P SMS, email services, and chatbots.
On 16th June 2021, LINK entered into a definitive agreement to acquire Message Broadcast in the U.S. The company offers its proprietary CPaaS platform EONS (Emergency Outage Notification System) as well as API-driven communication for email, A2P SMS, and voice communication. Message Broadcast operates within large US industry verticals like utilities, health care, and financial institutions, all with mission-critical communication needs.
On 16th November 2021, LINK entered into a definitive agreement to acquire Italian-based Matelab. The company's core offerings are proprietary conversational AI and NLP-driven software, including advanced conversational chatbot Xenioo, and the customer support software system xDesk.
On 14th December 2021, LINK acquired the Spanish self sign-up (SSU) company Altiria. The company is active in the A2P market in Spain and has some activity in other Spanish-speaking countries through its web-based go-to-market business model. Altiria is the market leader within NGOs in Spain.
LINK reported revenue of NOK 4 410 million in 2021, an increase of 25% from NOK 3 539 million in 2020. LINK's gross profit was NOK 1 200 million (NOK 899 million).
Operating costs (including payroll and related services and other operating expenses) were NOK 896 million (NOK 606 million) and include non-recurring costs of NOK 252 million. The non-recurring costs included a pre-IPO restricted share unit (RSU) share-based compensation program of NOK 149 million (cash effect only NOK 6 million), restructuring costs of NOK 27 million, and expenses related to acquisitions of NOK 76 million. Depreciation and amortization were NOK 338 million (NOK 271 million).
Net financial items amounted to a negative NOK 14 million (negative NOK 427 million due to a senior facility agreement (SFA) which was refinanced in December 2020) and constituted a net interest expense of NOK 128 million linked to an outstanding bond, net other financial expenses of NOK 13 million and a positive currency effect of NOK 100 million. LINK's outstanding bond was issued at EUR 200 million in December 2020 to refinance the SFA and a tap issue of EUR 170 million, related to the acquisition of Message Broadcast in the U.S., was completed in June 2021. The bond carries a fixed coupon of 3.375% and matures in December 2025.
Income tax was NOK 30 million (positive NOK 77 million), resulting in a net loss for LINK of NOK 78 million (negative NOK 328 million) in 2021.
The board proposes that the 2021 net loss will be transferred to accumulated losses.
As of 31 December 2021, LINK's total assets amounted to NOK 10 540 million (NOK 7 700 million), of which intangible assets were NOK 8 561 million (NOK 5 806 million). Intangible assets are mainly comprised of goodwill equal to NOK 5 615 million (NOK 3 983 million). Trade receivables and other receivables amounted to NOK 905 million (NOK 749 million) and cash and cash equivalents to NOK 844 million (NOK 952 million). Total equity was NOK 5 090 million (NOK 4 304 million) and constituted of NOK 1 million in share capital, a share premium of NOK 5 802 million, and NOK 714 million in accumulated losses and translation differences. Long-term liabilities were NOK 4 317 million (NOK 2 425 million) and consisted mainly of a EUR 370 million bond maturing in December 2025.
LINK's cash flow from operating activities during 2021 was NOK 341 million (NOK 364 million) and significantly better than the net loss reported for the year mainly due to non-recurring costs with a limited cash effect and non-cash depreciation and amortization expenses. Cash flow from investing activities was NOK 2009 million (NOK 660 million) of which the acquisition of Message Broadcast in the U.S. in June 2021 was the main element. Cash flows from financing activities amounted to NOK 1 583 million (NOK 1 135 million), largely stemming from a tap issue of EUR 170 million in June 2021.
The Group has defined six risk areas under which risks are identified that can prevent the successful implementation of LINK's business strategy or manage its growth effectively. Market risk, financial risk, acquisition risk, IT risk, legal & compliance risk, and operational risk.
The below section describes how the Global Leadership Team (GLT) evaluates and mitigates these risks and includes comments on the risks related to the global pandemic, and the geopolitical uncertainty that has evolved in 2022.
LINK's risks related to its customers and competition, hereunder loss of contracts and opportunities, are managed under the headline of market risk.
LINK is operating in the CPaaS market which is transitioning from the A2P SMS market via multichannel offerings to omnichannel solutions. The evolution of SMS to RCS and new OTT options like WhatsApp, Facebook Messenger, or Viber enables brands to communicate with their customers on many channels in a richer format. An omnichannel offering hands the channel choice to the customer as the brands facilitate all types of customer-originated communication.
The A2P SMS market has traditionally grown by more than 10% annually and continues to do so through adoption in new markets and industries and increased usage in more mature segments. As the new channel technologies offer vast new opportunities for value creation, the new CPaaS industry is likely to exhibit significant growth through an S-curve evolution in use cases. Before reaching critical mass, the CPaaS market will however be small in comparison to the more penetrated A2P SMS market. The timeline to reach critical mass remains uncertain and a risk for overall high growth in the industry. A channel-agnostic approach limits this risk for LINK as the company is versatile to adopt channels and solutions as they mature and gain traction in the market.
LINK's activities expose it to financial risks, such as price, currency, liquidity, interest rate, and credit. Overall, these risks are regarded as low and manageable.
LINK's revenue, costs, and profits are subject to the risk of changes in customer and supplier prices. As expected, some margin pressure is observed for simple use cases like one-time passwords (OTP), wholesale SMS, and basic mobile payment services. LINK is only to a limited degree exposed to simple use cases as the company's strategy has always been towards enterprise solutions. This strategy results in a very low customer churn and growing recurring revenue. LINK did not experience material margin pressure for enterprise solutions in 2021 and will continue its enterprise customer focus on innovative CPaaS solutions to increase margins.
By being the leading provider and thus the largest buyer of SMS in its markets. LINK can purchase SMS from telecom operators at favorable prices. Additionally, LINK's position ensures priority from the operators, which secures high quality in terms of deliverability.
LINK's subsidiaries operate using their local currencies. Revenue and cost for transactions are usually carried out in the same currency. This natural hedge reduces the currency risk and protects margins. There is, however, a translation effect to LINK's reporting currency NOK as changes in NOK to underlying currencies will impact reported figures. LINK is also exposed to exchange rate risk in relation to its 5-year EUR 370 million outstanding bond. The bond was issued at an original size of EUR 200 million on 15 December 2020 and upsized by EUR 170 million through a tap issue on 16 June 2021. The bond carries a fixed coupon of 3.375% p.a. LINK's significant operational cash flow in EUR lessens this foreign exchange (FX) risk. The bond is listed on the Oslo Stock Exchange and LINK considers its liquidity risk to be limited and has sufficient liquidity available on bank accounts as of year-end 2021 to fund operations and future M&A agenda. LINK saw marginal losses on trade receivables in 2021 and has established efficient routines to monitor and handle overdue trade receivables across its footprint.
Management of financial risk is performed with the emphasis on keeping the financial risk at a minimum and the main principle is to minimize exposure to financial risk. LINK holds no financial assets or liabilities for speculative purposes.
Value creation through the acquisition of businesses requires the successful purchase of suitable companies at sound multiples and well-managed integrations to realize synergies and scale advantages. Failure to realize synergies or winner's curse through overpayment for acquired companies may lead to significant value destruction. The results of the prior year's acquisitions confirm that LINK has such expertise. In 2021, the organizational structure and key functions were further developed to ensure even more efficient integration of new businesses. Please refer to the section "LINK grows fast and creates value through core business M&A" in this report.
The board has established routines and procedures regarding possible takeovers. This procedure does not include any content regarding countermeasures like poison pills or other defense measures to hinder a possible takeover of the group.
IT risk includes risks related to LINK's architecture, data management, information security, software development, internal infrastructure and IT Services, business IT and processes, and external threats, hereunder cyber incidents. IT risk is managed by central IT functions under the authority of LINK's Chief Technology Officer.
LINK's processes are based on a top-down approach, where LINK defines policies and procedures for subsidiaries to implement locally. The central IT function provides support and counseling to local entities depending on requirements in the covered areas.
LINK is taking steps to enhance and increase focus on the efforts to minimize the potential loss caused by inadequate or failed internal processes, or from external or internal incidents. Processes to manage the causes or mitigating the impacts of risks in these areas are therefore continuously implemented. In 2021, the following actions should be noticed
Legal & compliance risk includes financial or reputational damage that can result from a lack of awareness or misunderstanding of, ambiguity in, or indifference to, the way laws, regulations, and commitments apply to LINK. Legal & compliance risk at LINK is managed by a group function under the authority of the CEO. LINK's processes are based on a top-down approach, where LINK defines policies and procedures for subsidiaries to implement locally. The group function provides support and counseling to local entities depending on requirements in the covered areas, hereunder areas such as contract alignment and negotiation, GDPR compliance, compliance with anti-money laundering regulations, fair competition, and supplier due diligence.
LINK's ESG approach is managed as part of the function, and the specific ESG risks can be seen in the material topics under the "Sustainability" section of this report.
Internal annual audits are performed for compliance with GDPR. Policies are accessible to employees at the LINK Intranet, and training is provided.
Operational risks at LINK include risks related to human rights, health and safety, security, and leadership and organization. The area thus covers people, buildings, assets, internal structures, and external events.
The safety of all employees is a key priority throughout LINK from headquarters to every local subsidiary.
The development of a skilled organization with regards to leadership and key area competence is crucial for LINK's competitiveness, and therefore a top priority.
Recruitment, training, and people management, as well as dedication to equality and diversity, are areas that are continuously developed to ensure growth and robustness in the organization.
LINK is taking steps to enhance and increase focus on its efforts to minimize potential losses from inadequate or failed internal processes or from external events. Processes to manage the causes or mitigate the impacts of risks in these areas are continuously implemented. In 2021, the following actions should be noticed.
The coronavirus pandemic continued to be a challenge last year and led to numerous government restrictions and lockdowns across LINK's footprint. This was particularly challenging for the retail sector and negative effects were observed throughout the year. LINK's growth rates will vary between quarters in 2022 as the lockdowns in 2021 resulted in high and low comparables. LINK's diversified portfolio of customers in various industries across Europe and in the U.S. was however an asset and helped to reduce the effect of lower retail volumes.
Longer-term, the pandemic is likely to have accelerated the secular digitalization trend with numerous new use cases created especially within public services and healthcare. Successful mass vaccinations have enabled most European countries to reduce or remove restrictions fully as of the end April 2022, which gives hope for more normal activity levels throughout this year.
LINK has no direct business activities in Ukraine and Russia but did terminate a certain volume of messages on behalf of customers in these markets. The revenue shortfall, as most customers now have ceased operations in Ukraine and Russia, is immaterial compared to total group revenues.
The heightened global uncertainty and the unprecedented economic sanction imposed on Russia are likely to be negative for world economic growth. This could have an indirect negative effect on LINK's global operations. LINK is however well-diversified with close to fifty thousand customers of all sizes in numerous industries and geographies. As the various industries and markets are likely to experience different effects from these global shifts, the impact on LINK is likely to be mitigated.
LINK's IT security team has assessed its exposure to cyber incidents because of the heightened geopolitical uncertainty, taking operations and stakeholders into account. The conclusion as of April 2022 is no major risk increase for LINK.
As of the end of April 2022, LINK has observed a modest negative impact from reduced business activity in Poland. No direct negative effect from the unprecedented economic sanctions, affecting global energy and raw material markets, has been experienced by LINK.
LINK issued new shares in 2021 related to acquisitions and a share-based remuneration program. Throughout the year, the number of shares in the company increased from 270,911,039 shares to 294,252,254 shares, of which 22,105,791 shares, or 95% were related to acquisitions.
On 12th February 2021, LINK entered into a definitive agreement to acquire Tismi in the Netherlands. In connection with the acquisition, the company issued a total of 1,226,637 new shares at a subscription price of NOK 54.76 per share.
Following the issuance, the share capital of the company was NOK 1,360,688.38, comprising 272,137,676 shares, each with a nominal value of NOK 0.005.
On 15th April 2021, LINK entered into a definitive agreement to acquire MarketingPlatform in Denmark. In connection with the acquisition, the company issued a total of 1,723,310 new shares at a subscription price of NOK 43.70 per share. Following the issuance, the share capital of the company was NOK 1,377,742.875, comprising 275,548,575 shares, each with a nominal value of NOK 0.005. The acquisition of MarketingPlatform closed after the AMM acquisition below.
On 26th April 2021, LINK entered into an agreement to acquire approximately 81% of AMM, a mobile communications company listed on the AIM list of the Italian Stock Exchange. In connection with the acquisition, the company issued a total of 1,687,589 new shares at a subscription price of NOK 36.78 per share. Following the issuance, the share capital of the company was NOK 1,369,126.325, comprising 273,825,265 shares, each with a nominal value of NOK 0.005. The acquisition of AMM closed before the MarketingPlatform acquisition above.
On 16th June 2021, LINK entered into a definitive agreement to acquire Message Broadcast in the U.S. In connection with the acquisition, the company issued a total of 16,755,069 new shares. Following the issuance, the share capital of the company was NOK 1,461,518.22, comprising 292,303,644 shares, each with a nominal value of NOK 0.005.
In November 2021, 1,235,424 new shares were issued as part of the share-based restricted stock units (RSUs) program. At year-end 2021, 2,261,444 new shares included in the program remained to be issued during 2022 and 2023.
On 14th December 2021, LINK acquired the Spanish self sign-up (SSU) company Altiria. In connection with the acquisition, the company issued a total of 713,186 new shares at a subscription price of NOK 20.37 per share. Following the issuance, the share capital of the company was NOK 1,471,261.270, comprising 294,252,254 shares, each with a nominal value of NOK 0.005.
At an extraordinary general meeting (EGM) on December 7th, the board was given the authorization to issue shares amounting to up to 10% of the share capital of the company to strengthen the equity position in relation to acquisitions. The board was also granted the option to acquire treasury shares up to a total of 5% of the share capital and in addition, provided the right to issue shares in relation to a management incentive program (MIP). The authorizations are valid until the annual general meeting in 2022. For shares relating to the MIP programs, please refer to note 8.
A LINK share represents one vote at the company's general meeting. LINK does not have multiple share classes. The shares are freely tradable and to the knowledge of the board, there are no shareholders' agreements in the company regarding the exercise of voting power or limiting trading in the shares in general. However, in connection with company acquisitions, major shareholders and shares issued to majority sellers can be subject to customary 12 – 18 months lockups from the time of completion.
The company at year-end 2021 had close to 3,000 shareholders, of which the largest 10 shareholders combined controlled 2/3 of the company. Abry Partners, represented by Citibank as nominee, was the largest single shareholder with a 31.8% stake through subsidiary holdings.
The LINK Mobility Group Holding ASA share closed at NOK 19.27 on the Oslo Stock Exchange at year-end 2021, depreciating 59% mainly reflecting a general repricing of growth and technology stocks.
LINK's workforce, coupled with its technology, is the most important asset both in terms of serving LINK's customers of today and for the future development of the company. LINK continues to strengthen strategic functions within the finance, legal, ESG, project management, sales, and technology departments through reorganizing internal competencies and by recruiting new employees.
Regional segments have also been restructured to maximize synergies. By the end of 2021, LINK had 714 employees. 34% of the total LINK workforce is women, compared to 34.6% in 2020. The Global Leadership Team (GLT) consists of 8 people, 2 women and 6 men. The working environment is regarded as positive . None of LINK's subsidiaries or the parent company recorded work-related accidents that resulted in personal injury or property damage.
This statement forms part of the board of directors' report and describes the foundation and principles for LINK's corporate governance structure. Further information can be found at LINK 's website (linkmobility.com) and in the "Sustainability" section of this report.
LINK believes in transparent corporate governance processes, and that good corporate governance will strengthen confidence, and help to ensure sustainable value creation in the best interests of shareholders, employees, and other stakeholders.
LINK is subject to corporate governance reporting requirements according to the Norwegian Accounting Act, section 3-3b, Issuer Rules by the Oslo Stock Exchange (Oslo Rulebook II – Issuer Rules, Chapter 4.4), and the Norwegian Code of Practice for Corporate Governance ("Code"). The regulations are openly available on www.lovdata.no, www.oslobors.no, and www. nues.no, respectively.
The structure of this statement shall follow the structure of the Code and will specify under each section either how the board of LINK adheres to the Code or provide explanations in areas where it does not fully comply.
LINK has adopted and implemented a corporate governance policy to safeguard the interests of the company's shareholders, employees, customers, and other stakeholders. These policies and associated rules and practices are intended to create increased predictability and transparency and thus reduce uncertainty related to the business. LINK's Corporate Governance Policy as adopted by the board on September 7th, 2020, with revisions made on December 7th, and the Code of Conduct for the Nomination Committee is presented in the annual report.
As described in its Articles of Association, LINK itself or through its group of subsidiaries, develop and operate software for mobile telephone services to private and public businesses. Please refer to "Market position and development" in the board of directors report above for more on LINK's business.
LINK's Articles of Association are published in full on the company's website (linkmobility.com).
The board of directors defines objectives, strategies, and risk profiles for LINK's business through deep dives into the strategy and business throughout the year, in order to ensure that the company creates value for shareholders in a sustainable manner. The board takes financial, social, and environmental considerations into account when performing such deep dives.
The board of directors evaluates objectives, strategies, and risk profiles annually.
LINK fully complies with the Code.
LINK has a capital structure appropriate to the company's objective, strategy, and risk profile. Dividend Policy is published on LINK's homepage under corporate governance, key documents.
LINK fully complies with the Code.
All LINK shareholders are treated equally. If the board of directors was to carry out an increase in share capital and waive the pre-emption rights of existing shareholders, the reasoning would be fully transparent and publicly disclosed in a stock exchange announcement. Any transactions the company carries out in its own shares will be carried out either through the stock exchange or at prevailing stock exchange prices. In the case of limited liquidity in the company's shares, LINK will consider other ways to ensure equal treatment of all shareholders.
LINK fully complies with the Code.
LINK does not limit any party's ability to own, trade, or vote for shares in the company. In the unlikely event that this was not to be the case, LINK will provide an account of any restrictions on owning, trading or voting for shares in the company.
LINK fully complies with the Code.
In accordance with LINK's Articles of Association, all shareholders with shares acquired before the fifth business day ahead of the general meeting have a right to attend.
The annual general meeting shall resolve the annual accounts and other matters that the general meeting is required by law or the articles of association to resolve.
All shareholders are invited to the general meeting within the deadlines that follow from law and regulations, and all documentation required for the shareholders to sufficiently prepare for the general meeting is shared in the invitation and/or by reference to the documents publicly available at LINK's website.
Deadlines for shareholders to give notice of their intention to attend the meeting are set as close to the date of the meeting as possible.
Members of the board of directors attend the general meeting to the extent it is practically possible and in accordance with the goal of minimizing travel. The chairman of the board of directors, or a board member who represents the chairman, shall in all cases attend the general meeting.
The chairman of the nomination committee shall attend the general meeting in person or by representative.
The general meeting elects a chairman for the general meeting and shall be able to elect an independent chairman.
Shareholders can vote on each individual matter, including on each individual candidate nominated for election.
Shareholders who cannot attend the meeting in person are given the opportunity to vote beforehand or give proxy to do so, through a form provided with the invitation, where each individual matter can be voted over separately.
LINK has not adopted any special procedures regarding the general meeting that deviates from provisions applicable for Norwegian public limited liability companies that are listed on the Oslo Stock Exchange.
LINK fully complies with the Code except for the board of directors and nomination committee attendance. As LINK has a goal of reducing all its travel to the largest extent possible, board members shall attend the general meeting only to the extent necessary.
LINK's Articles of Association provides that LINK shall have a nomination committee comprising of two to three members elected for two years by the general meeting of LINK, which shall be independent of the board and executive management to ensure that all shareholders' interests are taken into account. The current members of the nomination committee are Tor Malmo (Chairman) and Oddny Svergja. The members are not part of LINK's board or personnel.
The general meeting sets guidelines for the duties of the nomination committee, as well as its remuneration. A code of conduct for the nomination committee was defined by an extraordinary general meeting (EGM) in LINK on September 7th, 2020. The nomination committee's duties are to propose candidates for election to the board and to propose remuneration to be paid to such members. The justification for the committee's proposal is provided separately.
The nomination committee is in contact with shareholders, the board of directors and the company's executive personnel as part of its work on proposing candidates for election to the board.
LINK fully complies with the Code.
The composition of the board of directors shall ensure that the board can attend to the common interests of all shareholders and meet the company's need for expertise, capacity, and diversity.
LINK's Articles of Association stipulate that the company shall have a board consisting of 5 to 9 members elected by the general meeting. The Articles of Association further determine that the chairman of the board shall be elected for two years by the general meeting.
The composition of the board of directors shall ensure that it can operate independently of any special interests. The majority of the shareholder-elected members of the board of directors
shall thus be independent of the company's executive personnel and material business connections. In addition, at least two of the members of the board must be independent of the company's major shareholders. For the purposes of the LINK Corporate Governance Policy, a major shareholder shall mean a shareholder that controls 10% or more of the company's shares or votes. Members of the board are, however, encouraged to own shares in the company.
The board of directors does not include executive personnel.
There were 6 members on the board through 2021, 3 women and 4 men. With the exception of the chairman, who is elected for two years, each board member is elected for one year at the annual general meeting.
The names and positions of the Board members are set out in the table below.
| Name | Position | Served since | Term expires | Independence |
|---|---|---|---|---|
| Jens Rugseth | Chairman | 2005 | 2022 | - |
| Robert Joseph Nicewicz Jr | Board member | 2018 | 2022 | - |
| Charles Joseph Brucato III | Board member | 2019 | 2022 | - |
| Ralph Paul Choufani | Board member | 2019 | 2022 | - |
| Katherine Ji-Young Woo | Board member | 2020 | 2022 | - |
| Grethe Viksaas | Board member | 2020 | 2022 | Yes |
| Sara Murby Forste | Board member | 2020 | 2022 | Yes |
LINK fully complies with the Code.
The board of directors has issued instructions for its own work and the CEO's work, the current version is dated December 7th, 2021. The board and CEO instructions have a particular emphasis on clear internal allocation of responsibilities and duties.
The instructions state how the board of directors and executive management handle agreements with related parties, including whether an independent valuation must be obtained, and that any such agreement will be presented in the annual report.
The board of directors considers any material interests held by board members or executive personnel. If the chairman should be personally involved in a matter, another board member would chair the consideration of such matter. No such matters have been managed in 2021.
The board of directors evaluates its performance and expertise annually.
The board held 31 meetings in 2021 and arranged two general meetings. The average board meeting attendance by members was 100%.
The Board of directors has set out three sub-committees, as described below. The table shows the board members' memberships in the committees
| Name | Audit committee members |
Remuneration committee members |
M&A Committee members |
|---|---|---|---|
| Jens Rugseth | |||
| Robert Joseph Nicewicz Jr | |||
| Charles Joseph Brucato III | |||
| Ralph Paul Choufani | |||
| Katherine Ji-Young Woo | |||
| Grethe Viksaas | |||
| Sara Murby Forste |
In accordance with the Public Companies Act, LINK has established an audit committee consisting of board members who are independent of management, and who are appointed for a two-year term. The audit committee's obligations are defined in instructions defined by the board. The current version of the audit committee's instructions is from December 7th, 2021. The committee follows up the financial report process, monitors the systems for internal control and risk, maintains ongoing contact with LINK's elected auditor regarding the audit of the annual accounts and evaluates and monitors the auditor's independence, and monitors compliance with legal and regulatory requirements.
LINK has a remuneration committee that consists of board members who are independent of management, and who are appointed for a two-year term. The remuneration committee's obligations are defined in instructions defined by the board. The current version of the remuneration committee's instructions is from September 7th, 2020. The remuneration committee prepares remuneration guidelines for executive personnel including the main principles for the company's remuneration policy. The guidelines are communicated to the annual general meeting (AGM). The remuneration committee may liaise with external compensation consultants. The remuneration of senior executives is currently threefold. An individual fixed salary, variable salary elements based on a group-wide set of KPIs, and incentives linked to share price performance.
LINK has an M&A committee that consists of board members and members of the company's management. The M&A Committee's obligations are defined in instructions defined by the board, and it acts as a preparatory and advisory body to support the board in the process of mergers and acquisitions.
LINK fully complies with the Code.
LINK's risk management and internal control activities are integrated with its corporate strategy and part of the business planning processes in all areas. The Global Leadership Team (GLT) is responsible for risk management at LINK, subject to directions and approval from the board of directors.
Risk management is an integral part of LINK's business, and it is therefore performed in cooperation with operative teams in all parts of the organization. The daily management activities that form part of, and follow, the risk management processes are held by the operative teams in LINK.
LINK's audit committee and board are informed of the processes, and the board annually approves the risk profile for each of the six risk areas defined by LINK. LINK's risk profile defines the level acceptable in order to reach its goals as defined in by the strategy. The definition forms the basis for management execution, controls, and resource allocation within each risk area.
LINK is in the process of strengthening its internal control as part of its strategy #LINK25, to ensure compliance in the group, hereunder by extending its abilities to provide support through tools and resources, and by increasing training and internal audits. LINK's operative processes for risk management are based on an approach where the group organization defines policies and procedures enabling entities to implement locally or within a specific area.
Internal controls are implemented by the functional areas, market, M&A, finance, operational, IT and legal & compliance, and each area provides support and information from group level to local entities or specific areas depending on requirements. Internal annual audits are performed for some areas. Policies are accessible to employees at the LINK Intranet, and training is provided by area.
Please refer to "Risks" in the board of directors report above for an overview of the risk areas.
LINK fully complies with the Code.
The remuneration of the board of directors reflects the board's responsibility, expertise, time commitment, and the complexity of the company's activities. The specific remuneration is listed in note 8 payroll.
The remuneration of the board of directors is not linked to the company's performance, and share options are not granted to members of the board.
LINK fully complies with the Code.
The current guidelines for remuneration of executive management were proposed to the general meeting in December 2021 and adopted by the board. The guidelines are published and available on LINK's website under LINK-ASA-Guidelines-rem-exec-mngmt.pdf (linkmobility.com).
LINK's performance-related remuneration is defined annually by the board and is subject to an absolute limit.
LINK fully complies with the Code.
The board of directors has established guidelines for LINK's reporting of financial and other information based on openness and equal treatment of all stakeholders. The board has established guidelines for LINK's contact with shareholders beyond general meetings, including a dedicated investor relations professional and management meetings in relation to quarterly reporting.
LINK fully complies with the Code.
The board of directors has established guidelines for the event of a take-over bid. In the case of a bid, the board has an independent responsibility to ensure that shareholders are treated equally and that business activities are not disrupted unnecessarily. If an offer were to be made for LINK's shares, the board would issue a statement making a recommendation as to whether shareholders should or should not accept the offer. The board will ensure shareholders are given sufficient information and time to form a view of the offer. The board's statement on the offer will make it clear whether the views expressed are unanimous or specify the basis on which specific members excluded themselves. Any final decision to go ahead with a potential offer will be made by the shareholders in an extraordinary general meeting (EGM).
LINK fully complies with the Code.
The auditor submits the main features of the plan for the audit of the company to the audit committee annually, in time for the committee to review before processing by the board.
The auditor is invited to board meetings where the annual accounts are dealt with. At these meetings, the auditor reports on any material changes in the company's accounting principles and key aspects of the audit, comment on any material estimated accounting figures, and report all material matters on which there has been disagreement between the auditor and the executive management of the company.
The board of directors reviews the company's internal control procedures with the auditor annually, including weaknesses identified by the auditor and proposals for improvement.
The board of directors has guidelines in respect of the use of the auditor by the company's executive management for services other than the audit.
PWC has been the auditor of LINK since 2019. In the last decade, the group has had 2 auditors.
LINK fully complies with the Code.
LINK Mobility has a Directors and Officers Liability Insurance in place. The insurance covers the members of the Board of Directors, the CEO and group management, in addition to any employee acting in a managerial capacity. The insurance includes LINK Mobility's subsidiaries.
The insurance policy is issued by a reputable, specialized insurer with appropriate rating, and protects LINK Mobility's directors, officers and any employees that can incur personal liability from claims made against them in respect of actual or alleged acts in their capacity as directors and officers.
LINK is committed to maintaining high ethical standards with regard to values and ethics in order to secure a sound corporate culture and to preserve LINK by helping the employees to promote standards of good business practice. LINK aspires to be a responsible company in terms of labor standards and equality and to become leading in terms of ESG. Please refer to the "Sustainability" section earlier in this report.
LINK benefits from strong long-term market trends with increased demand for advanced CPaaS solutions and products. As LINK expands its go-to-market (GTM) initiatives and launches new products, demand is expected to support even higher growth. LINK is also executing on its M&A strategy with several acquisitions closed in Europe and expansion to the U.S. last year.
The global pandemic has been a particular challenge for the retail sector and negative effects were still observed in the fourth quarter of last year with moderate volumes from retail in France.
This has directly reduced LINK's medium-term growth rate and the pandemic has also delayed the GTM expansion across the footprint. The adoption of CPaaS products has also been more incremental in this period than initially assumed.
LINK has confidence in the medium-term revenue growth range in the forward-looking statement of 14-17% based on current market adoption of CPaaS solutions and GTM roll-out. Growth rates may however vary between quarters in 2022 as 2021 was impacted by lockdowns, resulting in high and low comparables. For full-year 2022, the net retention rate is expected to remain above 110% for the Enterprise segment, and gross profits are expected to trend upwards in H2 2022 with a normal season for high margin critical events messaging in the US. Potential additional growth through M&A will be accretive to LINK's valuation and deleveraging or at least neutral to leverage. A significant deleveraging effect from organic growth is expected to bring leverage closer to the financial policy target of <3.5x by end of 2022.
LINK retains its long-term 2024 forward-looking revenue and margin statement and commitment to its 20% annual growth target in a mature CPaaS market with S-curve adoption of omnichannel solutions.
| Forward looking statement Amounts are in million NOK |
2024 |
|---|---|
| Pro forma revenue | 10,000 |
| Pro forma adjusted EBITDA margin | 15-17% |
The board of directors appreciates and emphasizes uncertainty in relation to assessments of expected future development.
Ralph Paul Choufani Board member Jens Rugseth Chairman of the board Charles Joseph Brucato III Board member Robert Joseph Nicewicz Jr Board member Grethe Helene Viksaas Board member
Sara Murby Forste Board member
Katherine Ji-Young Woo Board member
Guillaume Alain Van Gaver Chief Executive Officer
For the period ended 31 December (Amounts in NOK 1000)
| Note | 2021 | 2020 | |
|---|---|---|---|
| Revenue | 6 | 4,410,136 | 3,539,231 |
| Total operating revenue | 4,410,136 | 3,539,231 | |
| Direct cost of services rendered | -3,209,707 | -2,640,012 | |
| Payroll and related expenses | 8 | -579,045 | -404,060 |
| Other operating expenses | 9 | -316,867 | -201,553 |
| Depreciation and amortization | 7, 13, 14 | -337,706 | -271,389 |
| Total operating expenses | -4,443,325 | -3,517,013 | |
| Operating profit (loss) | -33,189 | 22,218 | |
| Finance income and finance expenses | |||
| Net currency exchange gains (losses) | 10 | 99,745 | -101,218 |
| Net interest expense | 10 | -127,518 | -207,093 |
| Net other financial expenses | 10 | 13,291 | -118,735 |
| Total finance income (expense) | -14,481 | -427,047 | |
| Loss before income tax | -47,670 | -404,829 | |
| Income tax | 22 | -29,891 | 76,823 |
| Loss for the period | -77,561 | -328,006 | |
| Loss attributable to: | |||
| Owners of the company | -77,561 | -328,006 | |
| Earnings per share (NOK/share): | |||
| Earnings per share (NOK/share): | 11 | -0.26 | -1.21 |
| Diluted earnings per share | 11 | -0.26 | -1.21 |
The accompanying notes are an integral part of these financial statements.
For the period ended 31 December (Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Profit (loss) for the period | -77,561 | -328,006 |
| Other comprehensive income | ||
| Items that may be reclassified to profit or loss | ||
| Translation differences of foreign operations | -113,432 | 134,373 |
| Gains and losses net investment hedge | 45,743 | |
| Tax on OCI that may be reclassified to P&L | -10,063 | |
| Other comprehensive income for the period | -77,753 | 134,373 |
| Total comprehensive income for the period | -155,314 | -193,632 |
(Amounts in NOK 1000)
| 2021 | 2020 | ||
|---|---|---|---|
| ASSETS | Note | ||
| Goodwill | 5, 13 | 5,614,510 | 3,982,843 |
| Other intangible assets | 5, 13 | 2,946,506 | 1,823,494 |
| Deferred tax asset | 22 | 142,944 | 140,551 |
| Equipment and fixtures | 14 | 20,485 | 25,083 |
| Right-of-use assets | 7 | 64,398 | 26,513 |
| Other non-current assets | 3,011 | 1,313 | |
| Total non-current assets | 8,791,854 | 5,999,796 | |
| Trade and other receivables | 15, 18 | 904,923 | 748,547 |
| Cash and cash equivalents | 16, 18 | 843,618 | 952,144 |
| Total current assets | 1,748,540 | 1,700,691 | |
| TOTAL ASSETS | 10,540,394 | 7,700,487 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 1,471 | 1,355 | |
| Share premium and other reserves | 5,802,356 | 4,882,513 | |
| Accumulated translation differences | 181,994 | 259,748 | |
| Retained earnings (accumulated losses) | -896,264 | -839,718 | |
| Total equity | 17 | 5,089,557 | 4,303,897 |
| Liabilities | |||
| Long-term borrowings | 18, 19 | 3,696,470 | 2,078,515 |
| Lease liabilities | 7, 18, 19 | 45,040 | 30,624 |
| Deferred tax liabilities | 22 | 556,961 | 313,090 |
| Other long-term liabilities | 18,792 | 2,398 | |
| Total non-current liabilities | 4,317,263 | 2,424,628 | |
| Short-term borrowings | 18, 19 | 24,423 | 27,244 |
| Lease liabilities | 7, 18, 19 | 16,906 | 8,619 |
| Trade and other payables | 18, 21 | 1,062,618 | 927,171 |
| Income tax payable | 22 | 29,627 | 8,928 |
| Total current liabilities | 1,133,574 | 971,963 | |
| Total liabilities | 5,450,837 | 3,396,590 | |
| TOTAL EQUITY AND LIABILITIES | 10,540,394 | 7,700,487 | |
| The accompanying notes are an integral part of these financial statements. |
Oslo, 28 April 2022
Jens Rugseth Chairman of the board
Charles Joseph Brucato Board member
Robert Joseph Nicewicz Jr
Board member
Sara Katarina Murby Forste Board member
Katherine Ji-Young Woo Board member
Grethe Helene Viksaas Board member
Guillaume Alain Van Gaver Chief Executive Officer
Ralph Paul Choufani Board member
For the period ended 31 December (Amounts in NOK 1000)
| Note | Share capital |
Share premium |
Currency translation reserve |
Retained earnings (accumulated losses) |
Total equity |
|
|---|---|---|---|---|---|---|
| Balance at 01 January 2020 | 1,081 | 2,725,406 | 125,374 | -511,713 | 2,340,149 | |
| Profit (loss) for the period | - | - | - | -328,006 | -328,006 | |
| Other comprehensive income (loss) for the period, net of income tax |
- | - | 134,373 | - | 134,373 | |
| Total comprehensive income for the period |
- | - | 134,373 | -328,006 | -193,632 | |
| Issue of ordinary shares | 286 | 2,538,146 | - | - | 2,538,432 | |
| Redemption of preference shares | -13 | -411,744 | - | - | -411,757 | |
| Share based payment | - | 30,704 | - | - | 30,704 | |
| Balance at 31 December 2020 | 17 | 1,355 | 4,882,513 | 259,748 | -839,718 | 4,303,897 |
| Balance at 01 January 2021 | 1,355 | 4,882,513 | 259,748 | -839,718 | 4,303,897 | |
| Profit (loss) for the period | - | - | - | -77,561 | -77,561 | |
| Other comprehensive income (loss) for the period, net of income tax |
- | - | -77,753 | - | -77,753 | |
| Total comprehensive income for the period |
- | - | -77,753 | -77,561 | -155,314 | |
| Issue of ordinary shares | 117 | 785,339 | - | - | 785,455 | |
| Redemption of preference shares | - | - | - | - | - | |
| Share based payment | - | 134,505 | - | - | 134,505 | |
| Other adjustments | - | - | - | 21,015 | 21,015 | |
| Balance at 31 December 2021 | 17 | 1,471 | 5,802,356 | 181,994 | -896,264 | 5,089,557 |
The accompanying notes are an integral part of these financial statements.
For the period ended 31 December (Amounts in NOK 1000)
| Note | 2021 | 2020 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Loss before income tax | -47,670 | -404,829 | |
| Adjustments for: | |||
| Taxes paid | -57,224 | -41,431 | |
| Finance income (expense) | 10 | 14,483 | 427,047 |
| Depreciation and amortization | 7, 13, 14 | 337,706 | 271,389 |
| Share based payment expense | 134,505 | 34,711 | |
| Net gain from disposals | -88 | - | |
| Change in trade and other receivables | -115,968 | -8,383 | |
| Change in trade and other payables | 93,529 | 104,513 | |
| Change in other provisions | -3,328 | -19,185 | |
| Net cash flows from operating activities | 355,944 | 363,832 | |
| Cash flows from investing activities | |||
| Payment for equipment and fixtures | 14 | -2,506 | -9,255 |
| Payment for intangible assets | 13 | -137,453 | -105,817 |
| Payment for acquisition of subsidiary, net of cash acquired | 5 | -1,869,208 | -397,234 |
| Disposal of subsidiary | 62 | - | |
| Purchase price adjustment acquisition of subsidiary | 10 | - | -147,902 |
| Net cash flows from investing activities | -2,009,105 | -660,209 | |
| Cash flows from financing activities |
| 60,807 | 2,373,513 | |
|---|---|---|
| - | -411,757 | |
| 19 | - | - |
| 19 | 1,670,021 | 2,687,634 |
| 19 | -40,898 | -3,259,081 |
| -110,076 | -243,386 | |
| -11,379 | -11,615 | |
| 1,568,476 | 1,135,309 | |
| -23,840 | -33,987 | |
| -108,525 | 804,946 | |
| 952,144 | 147,198 | |
| 843,618 | 952,144 | |
The accompanying notes are an integral part of these financial statements.
| 1 | General information |
|---|---|
| 2 | Adoption of new and revised International Financial Reporting Standards (IFRS) |
| 3 | Summary of significant accounting policies |
| 4 | Critical accounting judgments and key sources of estimation variances |
| 5 | Business combinations |
| 6 | Segment reporting |
| 7 | Leases |
| 8 | Payroll and related expenses |
| 9 | Other operating expenses |
| 10 | Net finance income and finance expense |
| 11 | Earnings per share |
| 12 | Transactions with related parties |
| 13 | Intangible assets |
| 14 | Equipment and fixtures |
| 15 | Trade and other receivables |
| 16 | Cash and cash equivalents |
| 17 | Share capital and shareholder information |
| 18 | Classes and categories of financial instruments |
| 19 | Interest-bearing liabilities |
| 20 | Financial instruments, risk management objectives, and policies |
| 21 | Trade and other payables |
| 22 | Income tax |
| 23 | Contingencies and legal claims |
| 24 | Events after the reporting date |
LINK Mobility Group Holding ASA is the parent company of LINK Mobility Group AS, and is headhquartered in Oslo, Norway. LINK is Europe's leading provider of mobile and CPaaS solutions specializing in messaging, digital services, and intelligent data usage.
LINK Mobility Group Holding ASA owns 100% of LINK Mobility Group AS, which in turn owns 100% the LINK subsidiaries. The Group's subsidiaries as at 31 December 2021 are listed below.
| Name of entity | Date of acquisition |
Place of business / country of registration |
Ownership interest |
|---|---|---|---|
| LINK Mobility Group AS | 09/10/2018 | Oslo, Norway | 100 % |
| LINK Mobility AS | 09/10/2018 | Oslo, Norway | 100 % |
| LINK Mobility USA AS | 27/05/2021 | Oslo, Norway | 100 % |
| BK Invest Alpha GmbH¹ | 16/11/2020 | Vienna, Austria | 100 % |
| LINK Mobility Austria GmbH¹ | 16/11/2020 | Graz, Austria | 100 % |
| Simple SMS GmbH | 09/10/2018 | Wels, Austria | 100 % |
| Allterpay EOOD | 29/07/2019 | Sofia, Bulgaria | 100 % |
| Tera Communications AD6 | 29/07/2019 | Sofia, Bulgaria | 100 % |
| Teravoice EAD6 | 29/07/2019 | Sofia, Bulgaria | 100 % |
| Link Mobility Development Hub EOOD | 30/9/2016 | Sofia, Bulgaria | 100 % |
| LINK Mobility EAD6 | 09/10/2018 | Sofia, Bulgaria | 100 % |
| LINK Mobility Holding Aps | 11/03/2020 | Copenhagen, Denmark | 100 % |
| LINK Mobility A/S | 09/10/2018 | Copenhagen, Denmark | 100 % |
| LINK Mobile A/S | 09/10/2018 | Copenhagen, Denmark | 100 % |
| MarketingPlatform Aps | 07/06/2021 | Vejen, Denmark | 100 % |
| LINK Mobility SIA | 17/03/2020 | Tallinn, Estonia | 100 % |
| LINK Mobility Oy | 09/10/2018 | Tampere, Finland | 100 % |
| Labyrintti International Oy | 09/10/2018 | Tampere, Finland | 100 % |
| Inwave SAS | 30/08/2019 | Le Coteau, France | 100 % |
| LINK Mobility SAS | 09/10/2018 | Paris, France | 100 % |
| Multiwizz SAS | 20/11/2018 | Marseille, France | 100 % |
| Netsize S.A. | 09/01/2019 | Boulogne- Billancourt, France | 100 % |
| LINK Mobility GmbH | 09/10/2018 | Hamburg, Germany | 100 % |
| GfMB Gesellschaft für Mobiles Bezahlen | 09/10/2018 | Hamburg, Germany | 100 % |
| LINK Mobility Hungary Kft.² | 08/12/2018 | Budapest, Hungary | 100 % |
| LINK Mobility Italia Srl³ | 09/10/2018 | Milan, Italy | 100 % |
| Netsize Societa' A Responsabilita' Limitada7 | 09/01/2019 | Rome, Italy | 100 % |
| AMM S.p.A. | 31/05/2021 | Arezzo, Italy | 100 % |
| Matelab Srl | 15/12/2021 | Lecco, Italy | 100 % |
| LINK Mobility SIA | 09/10/2018 | Riga, Latvia | 100 % |
| Name of entity | Date of acquisition |
Place of business / country of registration |
Ownership interest |
|---|---|---|---|
| Tismi B.V. | 10/03/2021 | Bunnik, Netherlands | 100 % |
| Tismi Mobile B.V. | 10/03/2021 | Bunnik, Netherlands | 100 % |
| LINK Mobility Sp.z.o.o | 09/10/2018 | Gliwize, Poland | 100 % |
| Razvoen Centar na eMailPlatfor DOOEL | 07/06/2021 | Kumanovo, Republic of North Macedonia |
100 % |
| Tera Communications DOOEL | 29/07/2019 | Skopje, Republic of North Macedonia |
100 % |
| LINK Mobility SRL | 02/10/2017 | Bucharest, Romania | 100 % |
| Teracomm RO SRL | 29/07/2019 | Bucharest, Romania | 100 % |
| LINK Mobility Spain S.L.U.5 | 09/10/2018 | Madrid, Spain | 100 % |
| Altiria TIC Sociedad Limitada | 14/12/2021 | Madrid, Spain | 100 % |
| LINK Mobility AB | 09/10/2018 | Stockholm, Sweden | 100 % |
| Netsize Internet Payment Exchange AB | 09/01/2019 | Stockholm, Sweden | 100 % |
| Horisen Messaging AG | 09/10/2018 | Rorschash, Switzerland | 100 % |
| LINK Mobility UK Limited4 | 14/12/2018 | Edinburgh, Scotland | 100 % |
| Netsize UK Ltd. | 09/01/2019 | London, United Kingdom | 100 % |
| Message Broadcast LLC | 24/06/2021 | Newport Beach, USA | 100 % |
¹ Collectively referred to as the WebSMS group or WebSMS. Sms.at Mobile Internet Services GmbH has become LINK Mobility Austria GmbH.
A number of amended IFRS standards issued by the International Accounting Standards Board (IASB) and IFRS interpretations issued by the IFRS Interpretations Committee (IFRS IC) are effective for accounting periods commencing on or after 01 January 2021. The requirements arising from revised IFRSs or IFRIC interpretations are embedded in the recognition, measurement and disclosures relevant to the consolidated financial statements of the Group from the date of establishment. The accounting policies adopted are described in Note 3 Summary of significant accounting policies.
The accounting policies adopted, and methods of computation followed are consistent with those of the previous financial year, except for items disclosed below. The adoption of the following standards and interpretations has not had any material impact on the disclosures or on the amounts reported in these financial statements:
As at the date of authorisation of these financial statements, Standards and Interpretations had been issued by the IASB but were not effective for the financial year ended 31 December 2021. At the date of these financial statements, it is not foreseable that these changes will not have a material impact on the financial reporting for the Group.
New or amended standards that have effective date on 1 January 2023 or later have not been assessed if these will have any impact on Link Mobility Groups financial statements in the period of initial application. Management will continue to follow the development of changes to Standards and Interpretations issued by the IASB throughout 2022.
LINK Mobility Group Holding ASA ("the Company") is a limited liability Company incorporated and domiciled in Norway. The address of the registered office is Universitetsgata 2, 0164 Oslo, Norway. LINK Mobility Group Holding ASA is the parent company of the LINK Mobility Group AS. LINK Mobility Group AS provides services in mobile communication and specialises in mobile messaging services, mobile solutions, and mobile intelligence. LINK Mobility Group Holding ASA and its subsidiaries are regarded as "the Group".
These financial statements were approved for issue by the Board of Directors on date 28 April 2022. Minor rounding differences may be present, and the total may deviate from the total of the individual amounts. This is due to the rounding of whole figures to thousands for presentation purposes.
The financial statements of the Company and the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union. The financial statements have been prepared on the historical cost basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgments in applying the Group's accounting policies. Areas involving a high degree of judgment or complexity, and areas in which assumptions and estimates are significant to the financial statements are disclosed in Note 4 Critical accounting judgements and key sources of estimation variances. The financial statements have been prepared on a going-concern basis.
The presentation currency of the financial statement is Norwegian kroner (NOK). Amounts are rounded to nearest thousand, unless otherwise stated.
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, which are entities controlled by the Company. Control is achieved when the Group has power over the investee, is exposed, or has rights to, variable returns from its involvement with the investee, and has the ability to use its power to affect its returns through its power over the investee. The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control noted above.
The financial statements of the subsidiaries are prepared for the same reporting periods as the parent company and consistent accounting policies are applied. The results of subsidiaries acquired or disposed of during the year are included in the income statement from the date when control is obtained and until control ceases, respectively. Intercompany transactions, balances, revenues, expenses and unrealised Group internal gains or losses are eliminated on consolidation.
The presentation currency of the financial statement is Norwegian kroner (NOK). Amounts are rounded to nearest thousand, unless otherwise stated.
Business combinations are accounted for using the acquisition method. The consideration transferred and all the identifiable assets and liabilities of acquired entities are, with limited exceptions measured at fair values at the date of acquisition. Acquisition-related costs are recognised in the income statement as incurred.
Goodwill arising from an acquisition is recognised as an asset measured as the excess of the sum of the consideration transferred, the fair value of any previous held equity interest and the amount of any non-controlling interest in the investee over the net amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Group's interest in the net fair value of the investee's identifiable assets, liabilities and contingent liabilities exceeds the total consideration of the business combination, the excess is immediately recognised in the income statement. Goodwill is allocated to each of the Group's cash-generating units (or groups of cash generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit is the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
When the consideration transferred by the Company in a business combination includes contingent consideration arrangements, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments recognised in goodwill. Measurement period adjustments arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
An asset is classified as current when it is expected to be realised, or is intended for sale or consumption, in the Group's normal operating cycle, it is expected/due to be realised or settled within next twelve month after the reporting date. Other assets are classified as non-current. A liability is classified as current when it is expected to be settled in the Group's normal operating cycle, the liability is due to be settled within twelve months after the reporting period or if the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
Revenues are recognised when services are rendered and measured based on the consideration to which the Group expects to be entitled in a contract with a customer net of discounts and sales related taxes. The Group recognises revenue when it transfers control of a product or service to a customer.
When another party is involved in providing goods or services to a customer, the Group evaluates whether it has an obligation to provide the specified service itself (i.e. the Group is the principle) or to arrange for those services to be provided by the other party (i.e. the Group is the agent). Where the Group does not control the service, the Group is considered an agent in the transaction.
Revenues primarily comprise sale of services that enable customers to communicate by mobile phone with their customers. To be able to render these services, the Group needs to obtain services from one or more telecommunication operators. Cost incurred that are directly related to fulfilling a specified contract with a customer are regarded as a contract fulfilment cost and are expensed in the period in which the related revenue is recognised.
| Type of service | Timing of recognition | Measurement of revenue |
|---|---|---|
| Mobile messaging transactions |
The Group provides mobile messaging services via SMS and other messaging channels such as Apps, Facebook, Messenger, WhatsApp and email. Revenue from messaging is recognised when the message service has been provided; when the messages are delivered to the recipient. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
| Payment services | The Group offers payment solutions where the customer can get their customers (the end users) to pay for services by charging their mobile phone account or credit/debit card. As payment for these services, the Group is entitled to remuneration related to the processed transactions/payment. Revenue is recognised when the payment service is rendered. |
The Group acts as an agent for this type of service and the performance obligation is to arrange for the provision of services by another party. Consequently, only the income from the processed transactions is recognised as revenue. |
| Licences | License revenue consists of revenue from monthly fees paid by customers for access to Group platforms and solutions. No proprietary rights are transferred to the customer. The revenue is recognised throughout the duration of the license agreement. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
| Consulting services | Revenue from consulting services is recognised in the accounting period during which the services are rendered. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
The services rendered are split into the following groups:
The consolidated financial statements are presented in NOK, which is the Group's functional currency. In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rate of exchange on the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the balance sheet date. Non-monetary items carried at fair value in foreign currencies are translated using the exchange rate at the date when the fair value was measured. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated after the transaction date.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement as financial items. All other foreign exchange gains and losses are presented on a net basis in the income statement as other operating expenses. Exchange differences are recognised in the income statement in the period in which they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated to NOK at exchange rates on the reporting date. Income and expense items are translated to NOK at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity.
Goodwill and fair value adjustments arising from the acquisition of a foreign entity are considered as assets and liabilities of the foreign entity and translated at the closing rate. These exchange differences are recognised in other comprehensive income.
On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation), or a disposal involving loss of control over a subsidiary that includes a foreign operation, all of the exchange differences accumulated in a separate component of equity in respect of that operation attributable to the owners of the foreign operation are reclassified to the income statement. In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests and are not recognised in profit or loss.
Goodwill and intangible assets acquired in a business combination are recognised initially as set out in 3.4 Business Combinations above.
Amortisation of intangible assets are based on the following estimated useful lives:
| Goodwill | Indefinite |
|---|---|
| Tradename | 25 year |
| Customer relations/contracts | 7-10 |
| Technology | 3-10 years |
Goodwill is not amortised but is reviewed for impairment at least annually, or more frequently when there is an indication that the cash-generating unit to which goodwill has been allocated, may be impaired. Goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash generating unit, the attributable amount of goodwill is included in the determination of the gain or loss on disposal in the income statement.
Intangible assets acquired in a business combination and recognised separately from goodwill, such as Tradename and Customer relations are recognised initially at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses.
Intangible assets with finite useful lives such as Technology, that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Subsequent to initial recognition, separately acquired intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired in a business combination.
Expenditure on research and development activities is recognised as an expense in the period in which it is incurred. An internally generated intangible asset arising from development of the Group's technical platforms and products is recognised if, and only if, all the following conditions have been demonstrated:
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditures are expensed as incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired in a business combination.
Equipment and fixtures are initially recognised at cost, which includes the purchase price (including duties and non-refundable purchase taxes) and any directly attributable costs of bringing the asset to the location and condition necessary for it to be able to operate in the intended manner. Equipment and fixtures are subsequently recognised at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is recognised using the straight-line method to reduce the cost of assets less their residual values over their useful lives. Depreciation commences when the assets are ready for their intended use.
Estimated useful life, depreciation method and residual values are reviewed at least annually. The straight-line depreciation method is used as this best reflects the consumption of the assets, which often is the passage of time. Residual value is estimated to be zero for all assets.
Repair and maintenance are expensed as incurred. If new parts are capitalised, replaced parts are derecognised and any remaining net carrying amount is recognised in operating profit (loss) as loss on disposal.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an item of equipment and fixtures is determined as the difference between the sales proceeds and the carrying amount of the asset and is presented as other income or other expenses in the income statement.
At each reporting date, the Group reviews if there are any indicators that the carrying amounts of its tangible and intangible assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Goodwill and intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Any impairment loss recognised for goodwill is not reversed in a subsequent period.
At the inception of a contract, the company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease liability is recognized at the commencement date and measured at the present value of the remaining lease payments, discounted using the company's incremental borrowing rate at the commencement date. The lessee's incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with similar security, the funds necessary to obtain an asset of a similar value of the right-of-use asset in a similar economic environment.
The Group has chosen to measure the Right-of-Use asset (RoU assets) at an amount equal to the lease liability for all leases by using the lessee's incremental borrowing rate; the rate may differ from country to country. RoU assets are depreciated over the lease term as this is ordinarily shorter than the useful life of the assets. The lease term represents the noncancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the company is reasonably certain to exercise this option. The Group applies the exemption for short term leases (12 months or less) and low value leases. As such, related lease payments are not recognized in the balance sheet but expensed or capitalized in line with the accounting treatment for other non-lease expenses. The inclusion of non-lease components may vary across different lease categories.
The Group receives Government grant as part of the "Skattefunn" arrangement in Norway, which is an arrangement to stimulate research and development in Norway. The government grant is initially recognised as a deduction to the carrying amount of the relevant asset. The amount is subsequently recognised to the income statement on a straight-line basis over the estimated useful life of the related asset.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. The Group has classified the financial instruments into the following categories of financial assets and liabilities: Financial assets and liabilities at fair value through profit and loss (FVTPL), financial assets at amortised cost (FAAC), financial assets at fair value through other comprehensive income (FVTOCI) and Financial liability at cost (FLAC). Currently the Group does not have any assets in the classification of FVTOCI.
The categorisation of financial instruments (financial assets and liabilities) for measurement purposes is based on the nature and purpose of the financial instrument and is determined on initial recognition. The Group presents financial assets and liabilities in the following classes: trade and other receivables (FAAC), cash and cash equivalents, trade and other payables (FLAC), and borrowings (FLAC).
The financial assets held by the Group, primarily trade and other receivables, are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and are thus measured subsequently at amortised cost less loss allowances. The impairment model in IFRS 9 Financial Instruments requires the recognition of impairment provisions based on expected credit losses (ECL). The Group recognises an allowance for expected credit losses on trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition. The impairment is calculated by taking into account the historic evidence of the level of credit losses experienced and the ageing profile of the trade receivables. Individual trade receivables are impaired when management assesses them not to be wholly or partially collectible.
Cash and cash equivalents include cash, bank deposits and commercial papers with original maturities of three months or less.
Trade and other payables include trade payables and other current and non-current, noninterest-bearing financial liabilities. Borrowings (non-current and current) include bank loans and overdrafts. These liabilities are initially recognised in the statement of financial position at fair value (net of any transaction costs), and subsequently measured at amortised cost using the effective interest rate method.
The effective interest method calculates the amortised cost of a financial liability and the allocation of interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments, including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts, through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled, or have expired. The difference between the carrying amount of the financial liability derecognised, and the consideration paid and payable is recognised in profit or loss.
The Group presents the statement of cash flows using the indirect method. Cash inflows and outflows are shown separately for investing and financing activities, while operating activities include both cash and non-cash line items. Interest received and paid, and dividends received, are reported as a part of operating activities. Dividends distributed are included as a part of financing activities. Value Added Tax and other similar taxes are regarded as collection of tax on behalf of authorities.
The Group operates a defined contribution plan (DCP) for post-retirement benefits. A defined contribution plan is a pension plan under which the Group pays fixed contributions to a separate entity (insurance company). The Group has no legal or constructive obligations to pay further contributions to the pension plan for benefits relating to employee service in the current and prior periods. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Income tax expense represents the sum of the current and deferred income tax. The income tax expense is recognised in the income statement unless the tax effect relates to items recognised in other comprehensive income or directly in equity, in which case the tax effect is recognised in other comprehensive income or in equity, respectively.
Current tax is the expected tax expense on the taxable income for the year, using tax rates and laws which have been enacted or substantively enacted at the balance sheet date.
Deferred tax assets and liabilities are recognised, using the balance sheet method, for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. Deferred tax assets are recognised for the carry forward of unused tax losses and unused tax credits. Deferred tax is not recognised for temporary differences arising on initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits, nor for differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted. A deferred tax asset is recognised only to the extent that it is probable that the future taxable profits will be available against which the temporary differences, tax losses carried forward and unused tax credits can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be realised.
Tax positions are regularly reviewed to identify situations where it is not probable that the relevant tax authorities will accept the treatment used in the tax filings. Uncertain tax positions are considered independently or as a group, depending on which approach better predicts re resolution of uncertainty. If the Group concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, the effect of uncertainty is reflected when determining tax treatment. This is done by using either the most likely amount or the expected value, depending on which method better predicts the outcome of the uncertainty. Uncertain tax treatment can affect both current tax and deferred tax.
Current tax assets and current tax liabilities are offset when the legal right to offset exists and the Group intends to either settle the tax assets and the tax liability net or recover the asset and settle the liability simultaneously. Deferred tax assets and deferred tax liabilities are generally offset if there is a legally enforceable right to offset current tax assets and current tax liabilities.
Current tax payable is based on taxable profit for the year. Taxable profit differs from profit before tax because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's current tax liability is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
A provision is recognised for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
Deferred tax is recognized based on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets arising from deductible temporary differences are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
In the application of the Group's accounting policies, as described in note 3 (summary of significant accounting policies), management is required to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. Estimates and judgements are evaluated on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are considered to be relevant. Future events may cause these estimates to change and actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Changes in accounting estimates are recognised in the period when the changes occurred, if they apply to that period. If the changes also apply to future periods, the effect will be distributed between the current period and future periods.
The Group has finalised certain acquisitions in FY2021; refer to note 5 (business combinations) for further details. In order to account for the business combinations and determine the fair value of the underlying assets and liabilities in accordance with IFRS 3, management has used significant judgement. In order to calculate the fair value of the intangible assets in the acquired companies, the expected future cash flows have been reconciled to the purchase price of the acquired companies. The reconciliation is performed via a Business Enterprise Valuation (BEV). Intangible assets have been valued using the Multi Excess Earnings Method ("MEEM") and Relief From Royalty Method ("RFR"). The methods are considered to be appropriate for the type of assets being valued (MEEM for customer relationships and RFR for technology and trade name). The excess of the consideration over the fair value of the net identifiable assets acquired is recognised as goodwill.
Significant input used in the estimation of fair values utilising the above methods are as follows:
The carrying amounts of non-current tangible and intangible assets are assessed by means of impairment tests whenever there is an indication of impairment. Any impairment of goodwill is assessed at least annually. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. As of 31 December 2021, the amount of goodwill tested for impairment amounted to KNOK 5 614 510 (FY2020 - KNOK 3 982 843). No impairment losses were recognised in FY2021 (FY2020 - nil). Please refer to notes 3 (summary of significant accounting policies) and 13 (intangible assets) for further details related to the impairment testing methodology and results.
Management judgment is required in determining provisions for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be recognized. The Group is also subject to income taxes in various jurisdictions. Judgment is required in determining the Group's provision for income taxes. There may be transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax liability and expense in the period in which such determination is made.
Periodically, the Group acquires subsidiaries where the preliminary purchase price is based on an assumption that the acquired company will achieve a target EBITDA for the current financial year. The final purchase price is subject to an upwards or downwards earn-out adjustment based on the company's actual achieved EBITDA. The earn-out adjustment is accounted for in the income statement as finance income or expense.
| Acquisitions during the period 2021 |
Main business activity | Date of business combination |
Proportion of voting equity acquired |
Acquiring entity |
|---|---|---|---|---|
| Tismi B.V. Tismi Mobile B.V. |
Provider of mobile messaging services and mobile solutions |
10 March 2021 | 100% | LINK Mobility Group AS |
| AMM S.p.A. LeadBI Srl |
Provider of mobile messaging services and mobile solutions |
31 May 2021 | 100% | LINK Mobility Group AS |
| MarketingPlatform Aps | Provider of mobile messaging services and mobile solutions |
07 June 2021 | 100% | LINK Mobility Group AS |
| Message Broadcast LLP | Provider of mobile messaging services and mobile solutions |
24 June 2021 | 100% | LINK Mobility Group AS |
| Altiria TIC, S.L. | Provider of mobile messaging services and mobile solutions |
14 December 2021 | 100% | LINK Mobility Group AS |
| Matelab Srl | Provider of mobile messaging services and mobile solutions |
15 December 2021 | 100% | LINK Mobility Group AS |
On 10 March 2021, LINK Mobility Group AS acquired 100% of the voting equity instruments of Tismi B.V. and Tismi Mobile B.V. These entities are headquartered in Bunnik, Netherlands and are collectively referred to as Tismi.
The purchase price is a combination of cash upon closing, shares upon closing, and seller's credit.
Tismi is a provider of telecommunications services and products and holds licensed operator status in 8 European countries. The company's main business is comprised of providing virtual mobile numbers, smart traffic routing, and signaling services to enterprise customers and CPaaS providers.
On 31 May 2021, LINK Mobility Group AS acquired approximately 81.4% of the shares in AMM S.p.A. (AMM) and immediately exercised a squeeze-out process, pursuant to Italian rules, for the remaining ordinary shares. All outstanding shares were acquired in Q3 2021. AMM is headquartered in Arezzo, Italy.
The purchase price is settled in cash and shares upon closing. There is no earn-out amount related to this acquisition.
AMM operates within mobile marketing and web advertising, and the product offering includes SMS A2P, email services, and chatbots. AMM serves close to 3500 enterprise and SME customers throughout Italy through direct sales and a self sign-up (SSU) platform.
On 07 June 2021, LINK Mobility Group AS acquired 100% of the voting equity instruments of MarketingPlatform Aps (MarketingPlatform). This entity is headquartered in Vejen, Denmark.
The purchase price is settled in cash and shares upon closing. The remainder of the purchase price based on an estimated earn-out amount.
MarketingPlatform is a developer of an omnichannel marketing platform with an integrated customer data platform (CDP).
On 24 June 2021, LINK Mobility Group AS acquired 100% of the shares in the privately owned Message Broadcast LLC (Message Broadcast). Message Broadcast is headquartered in Newport Beach, California, USA.
Upon closing, the purchase price is settled in cash and shares.
Message Broadcast is a leading provider of mission critical customer engagement solutions to blue chip enterprise customers in the USA.
On 14 December 2021, LINK Mobility Group AS acquired the Spanish self sign-up (SSU) company of Altiria TIC, S.L. (Altiria). Altiria is headquartered in Madrid, Spain.
Upon closing, the purchase price is settled in cash and shares.
Alteria was founded in 2002 and is active in the A2P market in Spain as well as other Spanish speaking countries, through its web-based go-to market business model.
On 15 December 2021, LINK Mobility Group AS acquired 100% of Matelab Srl (Matelab). Matelab is headquartered in Lecco, Italy.
Upon closing, the purchase price is settled in cash.
Matelab's core offerings are the proprietary advanced conversational AI and NPL-driven software, including advanced conversational chatbox Xenioo, and the customer support software system xDesk. Xenioo currently operates over 22,000 chatbots, handles over 10 million messages monthly, and supports over 260,000 conversations per month. This acquisition strengthens LINK's omnichannel offering through enhanced conversational messaging capabilities with Contact Centre as a Service (CCaaS) and chatbot competencies.
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srl |
|---|---|---|---|---|---|---|
| Revenue | 60,064 | 109,536 | 7,430 | 119,502 | - | - |
| EBITDA | 15,102 | 10,211 | (3,689) | 58,127 | - | - |
| Net profit | 9,309 | 6,192 | (8,930) | 32,411 | - | - |
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srl |
|---|---|---|---|---|---|---|
| Revenue | 68,885 | 166,158 | 13,508 | 219,036 | 19,917 | 2,646 |
| EBITDA | 17,688 | 16,353 | (8,009) | 112,068 | 3,889 | 2,103 |
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srl |
|---|---|---|---|---|---|---|
| Cash | 67,171 | 129,502 | 32,276 | 1,629,915 | 14,651 | 16,712 |
| Share consideration ¹ | 67,171 | 62,069 | 75,309 | 579,618 | 14,651 | - |
| Vendor loan ² | 67,171 | - | - | - | - | - |
| Earn-out ³ | - | - | 30,071 | - | - | 3,068 |
| Total consideration | 201,512 | 191,571 | 137,655 | 2,209,534 | 29,303 | 19,780 |
As part of the consderation, LINK Mobility Group Holding ASA issued 1,226,637 ordinary shares to the sellers of Tismi. The shares were issued at a fair value of NOK 54.76 per share.
As part of the consderation, LINK Mobility Group Holding ASA issued 1,687,589 ordinary shares to the sellers of AMM. The shares were issued at a fair value of NOK 36.78 per share.
As part of the consderation, LINK Mobility Group Holding ASA issued 1,723,310 ordinary shares to the sellers of MarketingPlatform. The shares were issued at a fair value of NOK 43.70 per share.
As part of the consderation, LINK Mobility Group Holding ASA issued 16,755,069 ordinary shares to the sellers of Message Broadcast. The shares were issued at a fair value of NOK 33.88 per share.
As part of the consderation, LINK Mobility Group Holding ASA issued 713,186 ordinary shares to the sellers of Altiria. The shares were issued at a fair value of NOK 20.37 per share.
One third of the purchase price is settled by way of a vendor loan; interest shall accrue with 3.5% per annum. This loan serves as security for any claims against the lender (Tismi) under the SPA and such claims, if any, shall be deducted from the outstanding balance upon repayment.
The purchase price of MarketingPlatform includes an earn-out payment based on financial performance milestones.
The purchase of Matelab includes stability payments due after the first and second anniversaries after the closing of the transaction. Each stability payment is equal to €150,000.
Assets assumed in connection with the business combinations have been recognised at the estimated fair value on the date of the business combination. Management has identified technology and customer relations as major assets.
Note that the estimates are provisional and may be subject to change during the measurement period, which is one year from the date of the acquisition.
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srl |
|---|---|---|---|---|---|---|
| Customer relationships | 74,633 | 45,806 | - | 887,328 | 6,689 | - |
| Trademark | - | 7,575 | - | - | - | - |
| Technology | 12,962 | 16,139 | 160,575 | 82,082 | 1,347 | 15,393 |
| Deferred tax asset | - | 1,248 | - | - | 1,803 | - |
| Equipment and fixtures | 378 | 120 | - | - | 8 | - |
| Other non-current assets | - | 9,249 | - | 186 | 44 | - |
| Trade and other receivables | 11,055 | 40,520 | 1,595 | 28,913 | 1,953 | 301 |
| Cash and cash equivalents | 3,430 | 39,666 | (7,808) | 12,552 | 4,388 | 1,457 |
| Long-term borrowings* | - | (11,956) | (16,139) | - | - | - |
| Deferred tax liability | (21,899) | (14,242) | (35,327) | (203,576) | (1,672) | (3,694) |
| Other long-term liabilities | - | (2,485) | - | - | - | - |
| Trade and other payables | (10,334) | (36,277) | (6,618) | (13,511) | (2,703) | (30) |
| Income tax payable | (226) | (993) | - | - | - | (409) |
| Fair value of identifiable net assets acquired |
70,000 | 94,370 | 96,279 | 793,974 | 11,857 | 13,017 |
* External debt held by the target company is settled subsequent to acquisition. Due to timing of any given acquisition, this may not be reflected at the financial reporting date.
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srll |
|---|---|---|---|---|---|---|
| Consideration transferred | 201,512 | 191,571 | 137,655 | 2,209,534 | 29,303 | 19,780 |
| Fair value of identifiable net assets acquired |
70,000 | 94,370 | 96,279 | 793,974 | 11,857 | 13,017 |
| Goodwill | 131,512 | 97,201 | 41,376 | 1,415,559 | 17,446 | 6,763 |
Goodwill originating from the business combination is primarily related to anticipated synergies from ongoing operations and the benefit of integrating the entire business into the group. No impairment has been recognised subsequent to the business combination.
Goodwill that has arisen as part of the business acquisition is not tax deductible.
| (Amounts in NOK 1 000) | Tismi | AMM S.p.A. | Marketing Platform |
Message Broadcast |
Altiria TIC, S.L. |
Matelab Srl |
|---|---|---|---|---|---|---|
| Incurred 2021 | 3,633 | 7,509 | 2,963 | 28,727 | 464 | - |
| Total | 3,633 | 7,509 | 2,963 | 28,727 | 464 | - |
The Group reports revenue, gross margin (revenue less direct costs) and adjusted EBITDA in functional operating segments to the Board of Directors (the Group's chief operating decision makers). While LINK uses all four measures to analyze performance, the Group's strategy of profitable growth means that adjusted EBITDA is the prevailing measure of performance (refer to alternate performance measures).
An examination of operating units based on market maturity and product development as well as geography identifies five natural reporting segments. These are Northern Europe, Western Europe, Central Europe, Northern America and Global Messaging; these represent market clusters. Generally, regions are segregated into similar geographic locations as these follow similar market trends. Global Messaging includes all regions with aggregator traffic; the other four have enterprise traffic.
The regions are:
Northern Europe is comprised of Norway, Sweden, Denmark, Finland, and the Baltics.
Central Europe is comprised of Bulgaria, Romania, North Macedonia, Poland, Hungary, Germany, Austria, and the Netherlands.
Western Europe is comprised of Spain, France, the United Kingdom, and Italy.
Global messaging is comprised of non-enterprise traffic and is representative of either standalone business or as a component of revenues in countries included above. If a business is comprised of both enterprise and wholesale/aggregator transactions, the latter is segregated here. The Swiss operation Horisen Messaging is included here.
Wholesale/aggregator business is defined as an operating unit within LINK's industry, and that use LINK connections in markets where they do not have such connections themselves. This business can generally be referred to, at least partly, as a direct competitor that use LINK connections. Smaller local aggregators cannot be expected to be covered efficiently by Global Messaging and as such they are still subject to local handling (not a focus area though because they are generally low margin and switch easily).
| Revenue per segment | 2021 | 2020 |
|---|---|---|
| Northern Europe | 1,333,080 | 1,169,382 |
| Central Europe | 1,075,264 | 765,980 |
| Western Europe | 1,251,425 | 1,125,316 |
| North America | 119,502 | - |
| Global Messaging | 630,866 | 478,553 |
| Total | 4,410,136 | 3,539,231 |
| Gross profit per segment | 2021 | 2020 |
| Northern Europe | 381,904 | 350,957 |
| Central Europe | 360,094 | 218,603 |
| Western Europe | 285,686 | 276,462 |
| North America | 108,937 | - |
| Global Messaging | 63,808 | 53,198 |
| Total | 1,200,429 | 899,220 |
| Adjusted EBITDA per segment | 2021 | 2020 |
| Northern Europe | 241,137 | 240,485 |
| Central Europe | 241,614 | 129,283 |
| Western Europe | 139,421 | 127,826 |
| North America | 65,692 | - |
| Global Messaging | 33,601 | 27,150 |
| Group Costs | -164,806 | -133,902 |
| Total | 556,660 | 390,842 |
| Reconciliation of adjusted EBITDA to Group profit (loss) before income tax |
2021 | 2020 |
| Adjusted EBITDA | 556,659 | 390,842 |
| Non-recurring items* | -252,142 | -97,235 |
| Depreciation and amortization | -337,706 | -271,389 |
| Operating profit | -33,189 | 22,218 |
| Finance income (expense) | -14,481 | -427,047 |
| Total | -47,670 | -404,829 |
*Non-recurring items
Non-recurring items is comprised of amounts that relate entirely to the company. Costs related to mergers and acquisitions, personnel cost deemed to be non-recurring (or one-off), restructuring expenses, advisors, and licenses are included in this reconciliation line item (this list is not exhaustive).
The Group's operations are conducted through its subsidiaries in the countries listed below. The Group derives its revenue from contracts with customers for the transfer of services as described in the table provided in note 3 to the financial statments.
| Revenue per business line | 2021 | 2020 |
|---|---|---|
| Mobile messaging transactions | 4,103,926 | 3,325,620 |
| Payment services | 30,676 | 35,414 |
| Licenses | 212,634 | 155,456 |
| Consulting services | 62,900 | 22,740 |
| Group | 4,410,136 | 3,539,231 |
| Austria | 257,916 | 47,081 |
|---|---|---|
| Bulgaria | 94,428 | 84,386 |
| Denmark | 143,343 | 122,076 |
| Finland | 93,711 | 78,405 |
| France | 722,171 | 696,036 |
| Germany | 466,128 | 504,875 |
| Hungary | 17,897 | 18,925 |
| Italy | 296,184 | 196,588 |
| Latvia | 6,849 | 6,383 |
| The Netherlands | 60,064 | - |
| North Macedonia | 1,530 | 849 |
| Norway | 761,781 | 671,976 |
| Poland | 236,598 | 190,325 |
| Romania | 2,507 | 3,423 |
| Spain | 92,004 | 89,725 |
| Sweden | 439,741 | 422,297 |
| Switzerland | 551,450 | 375,494 |
| United Kingdom | 46,334 | 30,387 |
| United States of America | 119,502 | - |
| Total | 4,410,136 | 3,539,231 |
(Amounts in NOK 1000)
This note provides information for leases where the group is a lessee.
Amounts recognised in the balance sheet The balance sheet shows the following amounts related to leases:
| Right-of-use assets | ||||
|---|---|---|---|---|
| Leased vehicles |
Leased premises |
Other leased items |
Total | |
| Period ended 31 December 2020 | ||||
| Opening net book amount | 1,697 | 21,687 | 899 | 24,283 |
| Additions | - | 23,382 | - | 23,382 |
| Net additions from acquired businesses | 514 | 4,102 | - | 4,616 |
| Disposals | (478) | - | (943) | (1,420) |
| Depreciation charge | (970) | (23,353) | (25) | (24,348) |
| Closing net book amount 31.12 | 763 | 25,818 | (68) | 26,513 |
| Period ended 31 December 2021 | ||||
| Opening net book amount | 763 | 25,818 | (68) | 26,513 |
| Additions | 488 | 46,793 | - | 47,281 |
| Net additions from acquired businesses | 474 | 2,338 | 5,414 | 8,226 |
| Depreciation charge | (1,041) | (14,833) | (1,748) | (17,622) |
| Closing net book amount 31.12 | 685 | 60,116 | 3,597 | 64,398 |
| Cost | 4,116 | 106,726 | 7,009 | 117,851 |
| Accumulated depreciation | (3,431) | (46,610) | (3,412) | (53,453) |
| Net book amount 31.12 | 685 | 60,116 | 3,597 | 64,398 |
| Economic (useful) life | 0 - 3 years | 0 - 5 years | 0 - 3 years | |
|---|---|---|---|---|
| Depreciation plan | Linear | Linear | Linear |
| Lease liabilities | |||||
|---|---|---|---|---|---|
| Leased vehicles |
Leased premises |
Other leased items |
Total | ||
| Period ended 31 December 2021 | |||||
| Opening lease liability | 764 | 38,550 | (70) | 39,244 | |
| New lease liabilities recognised in the period | 963 | 28,093 | 5,414 | 34,469 | |
| Total leasing payments for the lease liability | (1,142) | (12,079) | (1,876) | (15,097) | |
| Interest expense on lease liabilities | 121 | 3,002 | 207 | 3,330 | |
| Closing net book amount 31.12 | 706 | 57,565 | 3,674 | 61,946 | |
| whereof: | |||||
| Current lease liabilities | 16,906 | ||||
| Non-current lease liabilities | 45,040 |
The Group leases office space, equipment and vehicles. Rental contracts are typically made for fixed periods between 1 and 10 years but may have extension options as described below.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for leases of real estate (buildings) for which the group is a lessee, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
y Amounts expected to be payable by the group under residual value guarantees;
y The exercise price of a purchase option if the group is reasonably certain to exercise that option; and
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. While the
Group revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings held by the Group.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Shortterm leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Variable lease payments
The Group is not exposed to variable lease payments.
Extension and termination options:
Extension and termination options are included in certain property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations. The majority of extension and termination options held are mutually exercisable and are evaluated accordingly.
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Wages and salaries | 324,839 | 288,039 |
| Share-based payment expense | 134,505 | 30,704 |
| Social security tax | 80,147 | 62,135 |
| Pension expense | 19,680 | 13,174 |
| Other benefits | 19,875 | 10,006 |
| Total payroll and related expenses | 579,045 | 404,060 |
| The number of labor years employed during the financial year: | 714 | 649 |
The pension plans in the Group comply with the pension legislation enacted in respective countries. The pension plans require that the Group pays premiums to public or private administrative pension plans on a mandatory, contractual or voluntary basis. There are no further obligations once the annual premiums are paid. The premiums are accounted for as personnel expenses as soon as they are incurred. Pre-paid premiums are accounted for as an asset to the extent that future benefits can be determined as plausible.
Key group employees are defined as employees who are part of LINK Group management. In FY2021 and as at 31 December 2021, Group management consisted of the following individuals (amounts in NOK 1000):
| Name and position | Employed since | Salary | Bonus | Pension expense |
Other remuneration |
|---|---|---|---|---|---|
| Guillaume Alain Van Gaver (CEO) |
September 2019 | 4,227 | 1,585 | 804 | 23,257 |
| Thomas Berge (CFO) |
September 2016 | 2,400 | 900 | 76 | 16,519 |
| Torbjørn Krøvel (CTO) |
January 2019 | 1,950 | 731 | 76 | 6,407 |
| Lin Ackema (Chief People and Strategy Officer) |
October 2020 | 1,700 | 638 | 74 | 1,281 |
| Fredrik Nyman (CCO) |
November 2007 | 1,964 | 736 | 410 | 6,407 |
| Benoit Bole (COO Western Europe) |
January 2019 | 1,884 | 706 | 566 | 6,407 |
| Ina Rasmussen (COO Northern Europe) |
January 2015 | 1,760 | 728 | 79 | 1,922 |
| Hendrik Faasch (COO Central Europe) |
August 2020 | 1,866 | 700 | 81 | 1,281 |
| Total | 17,751 | 6,724 | 2,165 | 63,483 |
The CEO has a performance based bonus of up to 7 months salary; the amount of the bonus is determined by the successful completion of key management business objectives that are set by the Board of Directors.
The CFO has a performance based bonus of up to 5 months salary. The criteria for this bonus is a combination of quantitative and qualitative targets determined by the Board of Directors.
The remaining key Group employees have a performance based bonus of up to 5 months salary. The bonus is calculated on the basis of achievment of budgeted Group income and EBITDA, and other quantitave and qualitative criteria that are determined on an annual basis.
The Company has two programs for share based remuneration for its employees: the Restricted Share Unit (RSU) program and the long-term incentive plan (LTI) option program. Fair value of the RSU's and LTI's are calculated at the time of allocation and expensed over the vesting period.
In Q4 2020, the Company issued 3 769 092 RSU's and 2 000 000 LTI's to selected employees, including management. Fair value of RSU's and LTI's were calculated to NOK 46.995 (for all practical purposes equal to the share price) and NOK 20.3 at the grant date, respectively.
Grant date for both RSU's and LTI's is set at 20.10.2020. The "strike price" of RSU's is NOK 0.005 (equal to the nominal value of the shares) and the strike price of the LTI's is NOK 47.
In Q4 2021, the Company issued 3 000 000 additional options as part of the LTI (LTI II) program. Fair value of the LTI II options was calculated to NOK 8.5 and the strike price of the LTI II options was NOK 20.89.
An expense of NOK 135 million (including accrued social security tax) related to share options has been recorded in FY2021. The expenses related to the RSU and LTI are NOK 101 million and NOK 34 million, respectively. The amount directly related to the social security tax provision is 3.8 million.
The tables below shows an overview of the outstanding LTI's and RSU's:
| Number of options |
Average price |
||
|---|---|---|---|
| Vested LTI's | 2,000,000 | 47.00 | |
| Unvested LTI's | 3,000,000 | 20.89 | |
| Total outstanding options | 5,000,000 | 31.33 |
| Strike price | Number of options |
Vesting date |
Expiration date |
|
|---|---|---|---|---|
| 47.00 | 2,000,000 | 20/10/2021 | 20/10/2028 | |
| 20.89 | 3,000,000 | 07/12/2023 | 20/10/2028 | |
| Sum | 5,000,000 |
| Q4 2021 | 2021 | |||
|---|---|---|---|---|
| Number of options |
Average price |
Number of options |
Average price | |
| Total vested LTI's | 2,000,000 | 47.00 | 2,000,000 | 47.00 |
| Granted unvested options | 3,000,000 | 20.89 | 3,000,000 | 20.89 |
| Cancelled LTI's | - | - | - | - |
| Dropped LTI's | - | - | - | - |
| Expired LTI's in the period | - | - | - | - |
| Exercised LTI's in the period | - | - | - | - |
| Total outstanding LTI's | 5,000,000 | 31.33 | 5,000,000 | 31.33 |
| Name | Grant date | Number of LTI's granted |
Number of LTI's vested at 31.12.2021 |
Expiry date | Exercise price range |
|---|---|---|---|---|---|
| Guillaume Alain Van Gaver | 20/10/2020 | 470,000 | 220,000 | 20/10/2028 | 47.00 |
| Thomas Berge | 20/10/2020 | 253,000 | 118,000 | 20/10/2028 | 47.00 |
| Torbjørn Krøvel | 20/10/2020 | 100,000 | 100,000 | 20/10/2028 | 47.00 |
| Fredrik Nyman | 20/10/2020 | 198,000 | 88,000 | 20/10/2028 | 47.00 |
| Benoit Bole | 20/10/2020 | 198,000 | 88,000 | 20/10/2028 | 47.00 |
| Hendrik Faasch | 20/10/2020 | 198,000 | 88,000 | 20/10/2028 | 47.00 |
| Ina Rasmussen | 20/10/2020 | 198,000 | 88,000 | 20/10/2028 | 47.00 |
| Lin Ackema | 20/10/2020 | 198,000 | 88,000 | 20/10/2028 | 47.00 |
| Others (not specified) | 20/10/2020 | 3,187,000 | 1,122,000 | 20/10/2028 | 47.00 |
| Sum | 5,000,000 | 2,000,000 |
| Number of RSU's | Average price | |
|---|---|---|
| Vested RSU's | - | |
| Unvested RSU's | 2,261,453 | 0.005 |
| Total outstanding RSU's | 2,261,453 | |
| Strike price | Number of options | Vesting date | Expiration date | |
|---|---|---|---|---|
| Vested RSU's | 0.005 | 1,507,637 | 20/10/2021 | 20/10/2028 |
| Unvested RSU's | 0.005 | 1,130,728 | 20/10/2022 | 20/10/2028 |
| Unvested RSU's | 0.005 | 1,130,728 | 20/10/2023 | 20/10/2028 |
| Sum | 3,769,092 |
| Q4 2021 | 2021 | |||
|---|---|---|---|---|
| Number of options |
Average price |
Number of options |
Average price |
|
| Total unvested RSU's | 3,769,092 | 0.005 | 3,769,092 | 0.005 |
| Assigned RSU's | - | - | - | - |
| Cancelled RSU's | - | - | - | - |
| Dropped RSU's | - | - | - | - |
| Expired RSU's in the period | - | - | - | - |
| Exercised RSU's in the period | -1,507,639 | 0.005 | -1,507,639 | 0.005 |
| Total outstanding RSU's | 2,261,453 | 0.005 | 2,261,453 | 0.005 |
| Name | Grant date | Number of RSU's granted |
Number of RSU's vested at 31.12.2021 |
Expiry date | Exercise price range |
|---|---|---|---|---|---|
| Guillaume Alain Van Gaver | 20/10/2020 | 1,237,209 | 494,884 | 20/10/2028 | 47.00 |
| Thomas Berge | 20/10/2020 | 878,775 | 351,510 | 20/10/2028 | 47.00 |
| Torbjørn Krøvel | 20/10/2020 | 340,847 | 136,339 | 20/10/2028 | 47.00 |
| Fredrik Nyman | 20/10/2020 | 340,847 | 136,339 | 20/10/2028 | 47.00 |
| Benoit Bole | 20/10/2020 | 340,847 | 136,339 | 20/10/2028 | 47.00 |
| Hendrik Faasch | 20/10/2020 | 68,169 | 27,268 | 20/10/2028 | 47.00 |
| Ina Rasmussen | 20/10/2020 | 102,256 | 40,902 | 20/10/2028 | 47.00 |
| Lin Ackema | 20/10/2020 | 68,169 | 27,268 | 20/10/2028 | 47.00 |
| Others (not specified) | 20/10/2020 | 391,973 | 156,790 | 20/10/2028 | 47.00 |
| Sum | 3,769,092 | 1,507,639 |
As at 31.12.2021 there was a total of NOK 7.8 million accrued in social security expenses, based on a weighted average of the social security tax rates in the recipients countries.
Fair value of the LTI's and RSU's are calculated using an adjusted (for exercise behavior) Black-Scholes option pricing model.
The following assumptions are used in the calculations:
The Board of Directors who did not waive their right to remuneration received payment in July/August 2021. On 26 May 2021, the Company's general meeting resolved the following remuneration for the board of directors for the period from 26 May 2021 until the annual general meeting is held in 2022:
| Name | Remuneration |
|---|---|
| Jens Rugseth (Chair) | 600,000 |
| Robert Joseph Nicewicz Jr. | 350,000 |
| Charles Joseph Brucato III | 350,000 |
| Katherine Ji-Young Woo | 350,000 |
| Ralph Paul Choufani | 350,000 |
| Grethe Viksaas | 350,000 |
| Sara Murby Forste | 350,000 |
Robert Joseph Nicewicz Jr., Charles Joseph Brucato III, Ralph Paul Choufani, and Katherine Ji-Young Woo have all waived their right to remuneration and therefore the Company will not remunerate these board members in accordance with the amounts set in the table above.
No loans, advances, or guarantees have been granted to key group employees or Board members.
Further information about remuneration can be found on our website.
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Advisors and consultants | 66,360 | 35,586 |
| IT, licenses and hosting | 65,697 | 53,899 |
| Restructuring costs | 15,493 | 14,471 |
| Cost related to acquisition of subsidiaries | 74,571 | 15,123 |
| Sales and marketing cost | 39,183 | 29,479 |
| Cost for premises | 19,087 | 11,163 |
| Inventory and equipment | 8,884 | 6,883 |
| Bad debts expense | -3,179 | 9,750 |
| Other expenses* | 30,771 | 25,197 |
| Total other operating expenses | 316,867 | 201,553 |
* Other expenses include variable operating expenses related to overhead, travel costs and other operating expenses.
The table below summarises audit fees for FY2021 (FY2020) and fees for audit related services, tax services and other services incurred by the Group during the period. Fees include both Norwegian and foreign subsidiaries.
| 2021 | 2020 | |
|---|---|---|
| Audit fee | 5,729 | 5,450 |
| Other attestation services | 37 | - |
| Tax consulting services | 253 | 795 |
| Other services* | 2,336 | 7,322 |
| Total fee to auditor | 8,355 | 13,568 |
In 2021 and in addition to the fees presented above, NOK 1,647k is remunerated to auditors other than PwC.
* In addition to expensed amounts, an additional NOK 6,946k is included here that has been booked to equity. These are fees paid in relation to the IPO in FY2020.
(Amounts in NOK 1000)
The Group's finance income and expense is comprised of gains (losses) from foreign exchange and from exposure to interest expenses related to loans from financial institutions. Interest amounts are presented as a sum of interest on borrowings offset by amortised cost recognised in the profit and loss.
All categories of financial income and expense are presented on a net basis.
| Net financial income and expenses | 2021 | 2020 |
|---|---|---|
| Net currency exchange gains (losses)1 | 99,745 | -101,218 |
| Net interest expense | -127,518 | -207,093 |
| Net other financial expense | 13,291 | -118,735 |
| Total finance income | -14,481 | -427,047 |
| Net interest expense | 2021 | 2020 |
| Interest expense financial institutions | - | -196,728 |
| Other interest expenses | -12,303 | -7,533 |
| Interest expense leases | -3,330 | -2,670 |
| Interest expense bond loan | -111,885 | -163 |
| Total net interest expense | -127,518 | -207,093 |
| Net other financial expenses | 2021 | 2020 |
| Amortized loan set-up costs | - | -2,529 |
| Previously capitalized loan set-up costs | - | -73,698 |
| Earn-out payment from M&A transactions² | 13,291 | -37,967 |
| Other financial (expenses) income | - | -4,000 |
| Total net other financial expenses | 13,291 | -118,194 |
¹ Foreign currency gain/loss is presented on a net basis here and in the Consolidated Statement of Profit and Loss. Exposure to fluctuations in foreign currency comes from assets and external lending denominated in foreign currencies. Refer to note 19 (interest-bearing liabilities) and note 20 (financial instruments, risk management objectives, and policies) for further details.
² 2021: This is representative of a change in estimate related to the acquisition of Marketing Platform. This does not have any cash effect.
2020: The earn-out related to the acquisition of the Netsize Group was settled in full in 2020; there were no earn-out balances payable at the end of FY2020. In total, the earn-out paid for the Netsize Group was NOK 142.1 million; other payments of purchase price adjustments amounted to NOK 5.8 million. Total purchase price adjustments amounted to NOK 147.9 million.
(Amounts in NOK 1000)
The Group's earnings per share are calculated as below:
| 2021 | 2020 | |
|---|---|---|
| Net loss | -77,561 | -328,006 |
| Weighted average number of ordinary shares (basic) | ||
| Issued ordinary shares at 01 January | 270,911 | 213,656 |
| Effect of shares issued (07 January 2020) | 219 | |
| Share split (15 September 2020) | 213,875 | |
| Effect of shares issued (15 September 2020) | 324 | |
| Effect of shares issued (05 October 2020) | 53,200 | |
| Effect of shares issued (16 November 2020) | 3,512 | |
| Effect of shares issued (11 March 2021) | 1,227 | |
| Effect of shares issued (31 May 2021) | 1,688 | |
| Effect of shares issued (07 June 2021) | 1,723 | |
| Effect of shares issued (24 June 2021) | 16,755 | |
| Effect of shares issued (11 November 2021) | 1,235 | |
| Effect of shares issued (14 December 2021) | 713 | |
| Weighted average number of ordinary shares (basic) at 31 December | 294,252 | 270,911 |
| Basic loss per share (NOK) | -0.26 | -1.21 |
| Weighted average number of ordinary shares (diluted) | ||
| Weighted average number of ordinary shares (basic) | 294,252 | 270,911 |
| Effect of share options on issue | - | - |
| Weighted average number of ordinary shares (diluted) at 31 December | 294,252 | 270,911 |
| Diluted loss per share (NOK) | -0.26 | -1.21 |
| Number of outstanding ordinary shares per 01.01 | 270,911 | 213,656 |
| Number of outstanding ordinary shares per 31.12 | 294,252 | 270,911 |
(Amounts in NOK 1000)
Balances and transactions between LINK Mobility Group Holding ASA and its subsidiaries, which are related parties of LINK Mobility Group AS, have been eliminated on consolidation and are not disclosed in this note.
During the year, the Group has not entered into any transactions with related parties.
At 31 December 2021, the Company had no balances with related parties.
(Amounts in NOK 1000)
Balances and transactions between LINK Mobility Group Holding ASA and its subsidiaries, which are related parties of LINK Mobility Group AS, have been eliminated on consolidation and are not disclosed in this note.
During the year, the Group has not entered into any transactions with related parties.
At 31 December 2021, the Company had no balances with related parties.
| Year ended 31 December 2020 | Trade name | Customer relations |
Technology | Goodwill | Total |
|---|---|---|---|---|---|
| Opening net book value | 313,716 | 939,479 | 508,509 | 3,389,876 | 5,151,580 |
| Net additions from acquired businesses (PPA) |
- | 100,550 | 29,352 | 448,978 | 578,880 |
| Additions in the period | - | - | 105,235 | - | 105,235 |
| Net additions from acquired businesses |
- | 7,469 | 1,101 | - | 8,570 |
| Exchange differences | - | 36,213 | 20,442 | 143,988 | 200,643 |
| Amortization charge | -13,209 | -116,726 | -108,636 | 0 | -238,571 |
| Closing net book amount | 300,507 | 966,985 | 556,002 | 3,982,843 | 5,806,337 |
| At 31 December 2020 | |||||
| Cost | 330,227 | 1,214,290 | 791,607 | 3,982,843 | 6,318,967 |
| Accumulated amortisation and impairment |
-29,720 | -247,305 | -235,605 | 0 | -512,630 |
| Net book amount | 300,507 | 966,985 | 556,002 | 3,982,843 | 5,806,337 |
| Estimated useful life | 25 | 7-10 | 3-10 | Indefinite | |
| Amortisation method | Straight-line | Straight-line | Straight-line |
| Customer | |||||
|---|---|---|---|---|---|
| Year ended 31 December 2021 | Trade name | relations | Technology | Goodwill | Total |
| Opening net book value | 300,507 | 966,985 | 556,002 | 3,982,843 | 5,806,337 |
| Net additions from acquired | 7,620 | 1,016,619 | 283,188 | 1,723,787 | 3,031,214 |
| businesses | |||||
| Additions in the period | -6 | 1,774 | 132,572 | - | 134,341 |
| Exchange differences | -144 | -1,752 | -7,610 | -92,119 | -101,625 |
| Amortization charge | -13,209 | -177,533 | -118,508 | - | -309,250 |
| Closing net book amount | 294,768 | 1,806,093 | 845,644 | 5,614,510 | 8,561,016 |
| At 31 December 2021 | |||||
| Cost | 337,766 | 2,156,700 | 1,259,323 | 5,639,113 | 9,392,901 |
| Accumulated amortisation and | -42,997 | -350,607 | -413,678 | -24,603 | -831,885 |
| impairment | |||||
| Net book amount | 294,768 | 1,806,093 | 845,644 | 5,614,510 | 8,561,016 |
| Estimated useful life | 25 | 7-10 | 3-10 | Indefinite | |
| Amortisation method | Straight-line | Straight-line | Straight-line | ||
The LINK name was established in 2008 and has become a known name within the mobile solutions industry. The estimated useful life is determined to be 25 years and is amortised accordingly. The trade name has not been allocated to specific CGUs.
For customer relationships identified and recognised through business combinations, the amortisation period is estimated to be between 7-10 years. The amortisation period is based on an analysis of customer churn and the remaining useful life of the customer relationships recogonised in the balance sheet.
Amortisation of capital expenditure for the development of Group technology is between 3-10 years. For technology acquired through business combinations, the amortisation period is between 7-10 years based on an evalution of the technological solution.
Goodwill generated from business combinations is primarily related to anticipated growth prospects for the acquired businesses. No impairment has been recognised subsequent to the business combination.
Goodwill and other intangible assets with an indefinite useful life (i.e. trade name) are not amortised. They are tested for impairment on an annual basis at a cash generating unit (hereafter "CGU") level, and more frequently if there are indications that amounts may be impaired. In accordance with IAS 36 - Impairment of Assets, the carrying amount of the CGU to which goodwill has been allocated is compared with the recoverable amount of the CGU. The recoverable amount is determined based on value-in-use calculations. These calculations use cash flow projections reflective of management's best estimate extended over a five year period. The assumed growth rate has been based on the management growth estimate for the next five years and subsequently reduced to 2% for the purpose of determining the terminal value. The pre-tax discount rates applied to the cash flows are calculated based on the weighted average cost of capital (WACC) specific to each CGU and are within the range of 6.5% - 12.5%.
Based on the calculations referred to above, it has been concluded that the recoverable amount exceeds the carrying amount of each CGU. No impairment has been recognized for FY2021 (FY2020 - nil).
| Goodwill | |
|---|---|
| Norway | 806,490 |
| Sweden | 203,224 |
| Denmark | 300,182 |
| Finland | 209,934 |
| Germany | 695,279 |
| Spain | 193,738 |
| Poland | 253,219 |
| Bulgaria | 62,001 |
| France | 395,221 |
| Switzerland | 168,503 |
| Italy | 258,434 |
| Austria | 452,347 |
| United Kingdom | 6,905 |
| Hungary | 14,110 |
| Netherlands | 130,273 |
| USA | 1,464,650 |
| Total | 5,614,510 |
Goodwill has been allocated to each CGU as presented in the table below. The Group classifies each country in it operates in as a CGU:
The impairment test shows that the recoverable amounts significantly exceed the carrying amount of the CGUs.
In connection with the impairment testing of intangible assets, a sensitivity analysis has been performed. The sensitivity analysis has tested changes in terminal growth; if no terminal growth (zero-rated) is used, there is still impairment headroom for all CGU's with the exception of the Baltics and Spain. The estimates used to determine future cash flows and WACC when calculating value in use are subject to uncertainty. The assumptions are described as follows:
Budgeted period - The basis for the projection of the future cash flows estimated is based on the financial budget of one year. The budget in combination with the forecasts represent management's best estimate of the rance of economic conditions that will exist over a five-year period. The forecasted years are estimated based on the company's strategic initiatives.
Local currency and Fx rates - All CGU's forecasted projections are done using NOK.
Terminal value - Terminal value is calculated using the Gordon growth formula based on previous year cash-flow, user-specified long-term growth and WACC for the specific CGU.
WACC - future cash flows are discounted to present value using a discounted rate based on a calculation of a weighted average cost of capital (WACC). The pre-tax WACC is based on an average interest rate adjusted for each CGU.
Management have concluded that no forseable change in any of the key assumptions used in the impairment test would cause the carrying amounts of the cash-generating units with significant goodwill to exceed recoverable amounts.
(Amounts in NOK 1000)
| Opening net book amount | 21,493 |
|---|---|
| Additions | 9,394 |
| Net additions from acquired businesses | 1,485 |
| Disposals | 0 |
| Depreciation charge | -7,975 |
| Translation differences | 685 |
| Closing net book amount 31.12 | 25,083 |
| Opening net book amount | 25,083 |
|---|---|
| Additions | 811 |
| Net additions from acquired businesses | 2,506 |
| Disposals | 138 |
| Depreciation charge | -7,096 |
| Translation differences | -956 |
| Closing net book amount 31.12 | 20,485 |
| Net book amount 31.12 | 20,485 |
|---|---|
| Accumulated depreciation | -49,891 |
| Cost | 70,376 |
| Economic (useful) life | 3-5 years |
|---|---|
| Depreciation plan | Linear |
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Trade receivables | 676,054 | 517,436 |
| Accrued revenue | 158,253 | 161,743 |
| Prepayments | 50,680 | 64,594 |
| Other receivables | 19,936 | 4,774 |
| Total trade and other receivables | 904,923 | 748,547 |
The above trade receivables and other receivables represent the Group's maximum exposure to credit risk at the balance sheet date.
Trade accounts receivable relate to the sale of mobile messaging transactions, payment services, licenses, and consulting services; these are withing the normal operating cycle.
Accrued revenues are representative of an estimate for messaging traffic. An accrual for revenue is made to best reflect volumes in advance of when an invoice from the telecommunications provider is received.
The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses. Based on historical trends, the Group recognises a loss allowance of 100% against all receivables over 120 days past due, unless it is probable that the receivable will be collected based on past experience with customer and financial position of the debtor. Additional allowances for specific balances are recognised based on past experience and an analysis of the financial position of the debtor along with other relevant factors.
There is no loss allowance related to accrued revenues.
The Group has recognised a provision for bad debts of KNOK 37 621 (FY2020 - KNOK 29 617). Trade receivables recognised as a part of business combinations are recognised at fair value on the date of acquisition, allowance for impairment amounted to KNOK 0 (FY2020 - KNOK 302).
| (in thousands of NOK) | 2021 | % | 2020 | % |
|---|---|---|---|---|
| Not past due | 474,157 | 70 % | 359,489 | 69 % |
| 1-30 days overdue | 131,112 | 19 % | 110,614 | 21 % |
| 31-60 days overdue | 17,891 | 3 % | 12,083 | 2 % |
| 61-90 days overdue | 14,308 | 2 % | 22,321 | 4 % |
| 91-180 days overdue | 18,362 | 3 % | 7,314 | 1 % |
| More than 180 days overdue | 20,225 | 3 % | 5,615 | 1 % |
| Total | 676,054 | 100 % | 517,436 | 100 % |
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Cash and cash equivalents | 843,618 | 952,144 |
| Total cash and cash equivalents | 843,618 | 952,144 |
| Restricted cash | 2021 | 2021 |
| Taxes withheld | 13,181 | 4,628 |
| Other restricted cash | 4,354 | 7,516 |
Cash and cash equivalents include restricted cash related to regulatory requirements.
The cash pool is a zero-balancing cash-pool, including the automatic transfers of funds between a master account and subsidiary accounts to cover deposit and withdrawal activity wihin the arrangement.
LINK Mobility Group AS is the cash pool administrator/master and holder of the top accounts in different currencies (defined as Facility Accounts). In addition to Facility Accounts, various transactional accounts exist in the same currency as the Facility Account; these are defined as Detail Accounts.
Funds deposited into a Detail Account are automatically and instantly transferred to a Facility Account. Similarly, funds withdrawn from a Detail Account are automatically and instantly transferred from a Facility Account. The Detail Accounts maintain a balance of zero, whereas each Facility Account holds the credit or debit balance of the funds available for drawing in the cash pool.
A Facility Account (and its balance) is owned solely by LINK and creates rights and obligations only between LINK and the bank. The balance on the Facility Accounts is subject to interest calculations between LINK and the bank. Transactions (deposits or withdrawals) cannot be performed on a Facility Account, but must be performed using a Detail Account.
The Bank registers each transaction between each Facility Account and each Detail Account in the cash pool and the total balance thereof. This balance reflects the intra-Group balance between LINK and each Detail Account Holder. The participating entities of the Group have internal balances toward LINK through the use of the Detail Accounts.
(Amounts in NOK 1000)
Share capital as at 31 December 2021 is KNOK 1 471 (2020: KNOK 1 355), being 294 252 254 ordinary shares (2020: 270 911 039 ordinary shares) at a nominal value of NOK 0.005/share (2020: NOK 0.005/share). There are no preference shares in FY2021 (FY2020: nil).
All shares were fully paid; each ordinary share carries one vote at any general meeting.
The movement in the number of shares during the year was as follows:
| 2021 | 2020 | |
|---|---|---|
| Ordinary shares opening balance | 270,911,039 | 10,682,803 |
| Issue of ordinary shares (07 January 2020) | 10,934 | |
| Conversion of nominal value from NOK 0.10 to NOK 0.005 | ||
| Share split (15 September 2020) | 213,874,740 | |
| Issue of ordinary shares (15 September 2020) | 324,000 | |
| Issue of ordinary shares (05 October 2020) | 53,200,000 | |
| Issue of ordinary shares (16 November 2020) | 3,512,299 | |
| Issue of ordinary shares (11 March 2021) | 1,226,637 | |
| Issue of ordinary shares (31 March 2021) | 1,687,589 | |
| Issue of ordinary shares (31 May 2021) | 1,723,310 | |
| Issue of ordinary shares (07 June 2021) | 16,755,069 | |
| Issue of ordinary shares (24 June 2021) | 1,235,424 | |
| Issue of ordinary shares (14 December 2021) | 713,186 | |
| Ordinary shares at the end of the period | 294,252,254 | 270,911,039 |
| Preference shares: | ||
| Preference shares opening balance 2021/2020 | - | 129,158 |
| Share split (15 September 2020) | 2,583,160 | |
| Settlement of preference shares | -2,583,160 | |
| Preference shares at the end of the period | - | - |
Total number of shares at the end of the period 294,252,254 270,911,039
LINK Mobility Group Holding ASA has the following major shareholders as at 31 December 2021:
| Name of shareholder | Type of account | Ownership interest |
|---|---|---|
| Citibank, N.A. | Nominee | 31.84% |
| State Street Bank and Trust Comp | Nominee | 8.07% |
| KARBON INVEST AS | Ordinary | 5.42% |
| Citibank, N.A. | Nominee | 4.56% |
| FOLKETRYGDFONDET | Ordinary | 4.31% |
| Saxo Bank A/S | Nominee | 3.55% |
| UBS AG LONDON BRANCH | Ordinary | 3.09% |
| Skandinaviska Enskilda Banken AB | Ordinary | 3.08% |
| FERD AS | Ordinary | 2.50% |
| Skandinaviska Enskilda Banken AB | Nominee | 2.17% |
| J.P. MORGAN BANK LUXEMBOURG S.A. | Nominee | 1.62% |
| The Bank of New York Mellon SA/NV | Nominee | 1.29% |
| J.P. MORGAN BANK LUXEMBOURG S.A. | Nominee | 1.19% |
| Citibank, N.A. | Nominee | 1.14% |
| BARCLAYS CAPITAL SEC. LTD FIRM | Ordinary | 1.13% |
| The Bank of New York Mellon | Nominee | 0.95% |
| VERDIPAPIRFONDET DNB NORGE | Ordinary | 0.86% |
| Danske Bank A/S | Nominee | 0.79% |
| SUNDT AS | Ordinary | 0.78% |
| VERDIPAPIRFONDET DELPHI NORDIC | Ordinary | 0.64% |
| 78.98% |
The company's trustees (Board Members, management) hold ownership interests and rights to shares:
| Name of shareholder | Total number of shares |
|---|---|
| Victory Partners VIII Limited via a nominee account in Citibank (controlled by Abry who have 4 Board members) |
93,612,321 |
| Karbon Invest AS (controlled by Jens Rugseth) | 15,945,105 |
| Sundahl Aps (controlled by board observer Søren Sundahl) | 9,139,242 |
| Rugz AS (controlled by Jens Rugseth) | 500,000 |
| Guillaume Alain Van Gaver | 204,010 |
| Thomas Berge | 182,786 |
| Fredrik Nyman | 168,465 |
| Benoit Bole | 54,585 |
| Hendrik Faasch | 27,267 |
| Ina Rasmussen | 26,343 |
| Lin Ackema | 14,725 |
| Grethe Helene Viksaas (Board member) | 6,382 |
(Amounts in NOK 1000)
| Carrying value | ||
|---|---|---|
| 12/31/2021 | Amortised cost | Total |
| Current financial assets | ||
| Trade receivables | 676,054 | 676,054 |
| Cash and cash equivalents | 843,618 | 843,618 |
| Non-current financial liabilities | ||
| Borrowings | 3,696,470 | 3,696,470 |
| Lease liabilities | 45,040 | 45,040 |
| Current liabilities | ||
| Borrowings | 24,423 | 24,423 |
| Lease liabilities | 16,906 | 16,906 |
| Trade payables | 579,542 | 579,542 |
The financial assets held by the Group are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and are thus measured subsequently at amortised cost less loss allowances.
All financial liabilities are measured at amortized cost.
The carrying amounts of financial assets and liabilities approximate their fair value as at 31 December 2021. Arrangements with financial institutions are entered into on market terms, and the carrying value at the reporting date has been assessed as approximating fair value.
The recognised amounts consitute a reasonable approximation of fair value.
(Amounts in NOK 1000)
Interest bearing liabilities are measured at amortised cost.
| Non-current financial liabilities | 2021 | 2020 |
|---|---|---|
| Debt to financial institutions | - | 5,235 |
| Bond loan | 3,629,772 | 2,073,280 |
| Long-term lease liability | 45,040 | 30,624 |
| Holdback | 66,698 | - |
| Total | 3,741,510 | 2,109,140 |
| Current liabilities | 2021 | 2020 |
| Holdback | 15,598 | 24,340 |
| Short-term lease liability | 16,906 | 8,619 |
| Debt to financial institutions/bond loan* | 8,856 | 2,904 |
| Total | 41,360 | 35,863 |
*Instalments falling due within a 12 month period, including non-capitalised interest, are classified as current.
The book value of borrowings is estimated to approximate their fair value.
| Facility / Currency | Debt out standing |
Amortized cost EUR |
Amortized cost NOK |
Maturity | Term | Interest p. a. |
Due date Interest |
|---|---|---|---|---|---|---|---|
| Bond loan (tap issue 15.12.2020) | 200,000 | 198,388 | 1,981,657 | 15 Dec 2025 |
5 year | 3.375 % p.a. |
Half yearly |
| Bond loan (tap issue 23.06.2021) | 170,000 | 164,996 | 1,648,115 | 15 Dec 2025 |
5 year | 3.375 % p.a. |
Half yearly |
| Holdback amount Tismi - EUR | - | 6,661 | 66,538 | 10 Mar 2023 |
3 year | 3.5% p.a. |
At maturity |
| Holdback amount Teracomm - EUR |
- | 1,562 | 15,598 | Disputed | n/a | n/a | n/a |
| Holdback amount AMM - EUR | - | 16 | 160 | 21 Feb 2022 |
1 year | n/a | n/a |
| Total | 3,712,068 |
| 2021 | 2020 | |
|---|---|---|
| Bond loan (tap issue 15.12.2020) | 1,998,768 | 2,094,345 |
| Bond loan (tap issue 23.06.2021) | 1,699,011 | - |
| Transaction costs (tap issue 15.12.2020)1 | -21,228 | -21,228 |
| Transaction costs (tap issue 23.06.2021)1 | -56,127 | - |
| Amortisation (tap issue 15.12.2020) | 4,118 | 163 |
| Amortisation (tap issue 23.06.2021) | 5,231 | - |
| Accrued interest and fees | 6,980 | 2,904 |
| Carrying amount | 3,636,753 | 2,076,184 |
¹ The bond loan is initially measured at fair value net of transaction costs and it is subsequently measured at amortized cost using the effective interest rate method. Consequently, the transaction cost will be amortized over the life of the bond loan. The carrying value of the bond loan will be equal to the principal amount of EUR 370 million at maturity in FY2025.
| Contractual maturities of financial liabilities at 31 December 2021 |
< 3 months | 3 months - 1 year | 1 - 2 years | 2 - 5 years | Total |
|---|---|---|---|---|---|
| Bond loan (tap issue 15.12.2020) | - | 67,424 | 67,424 | 2,132,609 | 2,267,458 |
| Bond loan (tap issue 23.06.2021) | - | 57,311 | 57,311 | 1,812,717 | 1,927,339 |
| Lease liabilities | - | 16,906 | 15,013 | 30,027 | 61,946 |
| Holdback | 160 | 15,598 | 66,538 | - | 82,296 |
| Total | 160 | 157,239 | 206,286 | 3,975,353 | 4,339,038 |
| Contractual maturities of financial liabilities at 31 December 2020 |
< 3 months | 3 months - 1 year | 1 - 2 years | 2 - 5 years | Total |
|---|---|---|---|---|---|
| Bond loan (tap issue 15.12.2020) | - | 71,666 | 71,666 | 2,309,539 | 2,452,871 |
| Lease liabilities | - | 8,619 | 10,208 | 20,416 | 39,243 |
| Holdback | - | 24,340 | - | - | 24,340 |
| Total | - | 104,625 | 81,874 | 2,329,955 | 2,516,454 |
Under the bond terms, the Group is required to comply with the following financial covenants at the respective quarterly and annual test dates:
A compliance certificate is to be provided with a copy of the financial reports; the compliance certificate is to be signed by the Chief Executive Officer or the Chief Financial officer to certify that the financial reports are fairly representative of its financial condition as at the date of those financial statements.
Accounting standards are to be consistently applied.
Except as permitted, the Issuer shall not, and shall procure that no other Group Company will, incur any additional Financial Indebtedness or maintain or prolong any existing Financial Indebtedness.
Excluding Permitted Security, the Issuer shall not, and shall procure that no other Group Company will, create or allow to subsist, retain, provide, prolong or renew any Security over any of its/their assets (whether present or future).
The Issuer shall not, and shall ensure that no other Group Company will, sell, transfer or otherwise dispose of all or substantial part of its assets or operations unless the transaction is carried out at fair market value, on terms and conditions customary for such transaction and such transaction would not have a Material Adverse Effect.
Except as permitted, the Issuer shall not, and shall procure that no other Group Company will make any Distribution.
The incurrence test is met if the Leverage Ratio is less than, for any additional Financial Indebtedness (3.50x) or for Distributions (1.50x).
The Interest Coverage Ratio exceeds 3.0x.
Compliance with the Incurrence Test is subject to in each case, that no Event of Default is outstanding or would result from the relevant event for which compliance with the Incurrence Test is required.
On 15 December 2020, LINK Mobility Group Holding ASA (LINK) successfully completed the issuance of EUR 200 million senior unsecured bonds, with a EUR 350 million borrowing limit. Part of the proceeds from the bond issue were used to repay the remaining outstanding senior facility agreement (SFA).
On 23 June 2021, LINK issued EUR 170 million new bonds in LINK's outstanding 5-year senior unsecured 3.375% fixed rate bond issue, raising the total outstanding amount to EUR 370 million. The bonds were issued at par.
The bonds have a 5-year tenor and a fixed coupon of 3.375% p.a.; any outstanding bonds are to be repaid in full at the maturity date.
| Bond loan | Holdback | Other | Senior facilities | Total | |
|---|---|---|---|---|---|
| 12/31/2019 | - | 26,721 | 2,923 | 2,505,877 | 2,535,522 |
| New debt | 2,122,800 | 2,312 | 562,521 | 2,687,634 | |
| Cancellation of debts | - | -3,791 | - | -3,255,289 | -3,259,081 |
| Effects of foreign exchange | -28,455 | 1,410 | - | 151,751 | 124,706 |
| Transaction costs | -21,228 | - | - | - | -21,228 |
| Amortization | 163 | - | - | 73,698 | 73,862 |
| Interest and fees paid | - | - | - | -235,571 | -235,571 |
| Interest and fee expenses | 2,904 | - | - | 197,012 | 199,917 |
| 12/31/2020 | 2,076,184 | 24,340 | 5,235 | - | 2,105,759 |
| Bond loan | Holdback | Other | Senior facilities | Total | |
|---|---|---|---|---|---|
| 12/31/2020 | 2,076,184 | 24,340 | 5,235 | - | 2,105,759 |
| New debt | 1,729,189 | 67,331 | - | - | 1,796,520 |
| Cancellation of debts | - | -7,819 | -5,235 | - | -13,054 |
| Effects of foreign exchange | -123,504 | -1,556 | - | - | -125,059 |
| Transaction costs | -56,127 | - | - | - | -56,127 |
| Amortization | 9,186 | - | - | - | 9,186 |
| Interest and fees paid | -110,060 | - | - | - | -110,060 |
| Interest and fee expenses | 111,885 | - | - | - | 111,885 |
| 12/31/2021 | 3,636,753 | 82,296 | - | - | 3,719,049 |
(Amounts in NOK 1000)
Through its operations the Group is exposed to the the following financial risks;
Interest rate risk arises as a consequence of long-term debt. In December 2020 the Company successfully completed the issuance of EUR 200 million senior unsecured bonds, with a EUR 350 million borrowing limit.
On 23 June 2021, LINK issued EUR 170 million new bonds in LINK's outstanding 5-year senior unsecured 3.375% fixed rate bond issue, raising the total outstanding amount to EUR 370 million. The bonds were issued at par; refer to note 19 for further details.
The sensitivity analysis below is based on the exposure to changes in interest rates for nonderivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount outstanding at reporting date was outstanding for the whole year. A one percent increase or decrease represents management's assessment of reasonable and possible changes in interest rates.
If interest rates had been one percent higher/lower and all other variables were held constant, the Group's profit (and corresponding equity) for the period ended 31 December 2021 would decrease/increase by KNOK 36 959 (FY2020 KNOK 20 941). This is mainly attributable to the Group's exposure to interest rates on its variable rate borrowings.
The Group undertakes business in foreign currencies and is consequently exposed to fluctuations in exchange rates. Foreign exchange risk arises from transactions related to operations conducted, and assets and liabilities arising in foreign currencies. The Group undertakes transactions denominated in NOK, DKK, EUR, SEK, PLN, BGN, CHF, GBP, HUF, RON, MKD and USD. Revenue and cost transactions within foreign subsidiaries are normally carried out in the same currency, which mitigates the currency risk.
However, as the Group's overall financial reporting is presented in NOK, changes in the value of DKK, EUR, SEK, PLN, BGN, CHF, GBP, HUF, RON, MKD or USD in relation to NOK affect the Group's overall revenue, profit or loss and financial position. Based on exposure throughout the year and balances at the period-end, the Group assesses that fluctuations in NOK/EUR, NOK/SEK and NOK/CHF have the most significant impact on the financial reporting of financial assets and liabilities. The table below summarises the impact a change in these currencies will have on the consolidated income statement and on retained earnings/accumulated losses as at 31 December 2021. The analysis is based on the assumption that the foreign exchange rates increase or decrease by 10%, all other variables held constant.
| 31 December 2021 | |||
|---|---|---|---|
| (amounts in NOK 1000) | NOK/EUR impact | NOK/SEK impact | NOK/CHF impact |
| Trade receivables | 55,403 | 11,049 | 8,769 |
| Trade payables | 41,521 | 7,277 | 9,222 |
| Borrowings | 369,586 | - | - |
Credit risk is the risk of a counterparty defaulting. The Group's credit risk is limited to trade and other receivables and is mitigated by the Group's guidelines to ensure that credit sales are only made to customers with high credit rating. Customers with a low credit rating are required to prepay for services rendered by the Group.
The Group's credit risk related to trade receivables is assessed to be limited due to the high number of diverse customers in the Group's customer base. Refer to note 15 for additional information related to trade and other receivables.
The carrying value of trade and other receivables represent the Group's maximum exposure to credit risk at the balance sheet date.
Liquidity risk is the risk that the Group is unable to meet its financial obligations when they mature, resulting in default.
The Group considers its liquidity risk to be limited, and has sufficient liquidity available on bank accounts as of year-end. Refer to notes 19 and 21 for information about maturity of trade and other payables and borrowings.
The Group has no credit facilities. Subsidiaries receive all funding from the Group and are not permitted to raise external financing independently.
The Group has financial debt covenants related to the senior unsecured bonds. Refer to note 18 for information about the bond convenants.
The Group focuses on maintaining sufficient cash resources to ensure the ability to finance further activities.
(Amounts in NOK 1000)
| Total trade and other payables | 1,062,618 | 927,171 |
|---|---|---|
| Accrued expenses | 353,590 | 323,920 |
| Accrued vacation pay | 55,259 | 25,401 |
| Public duties | 74,227 | 53,791 |
| Trade payables | 579,542 | 524,059 |
| Trade and other payables | 2021 | 2020 |
Trade payables is comprised of amounts outstanding for trade purchases.Accrued expenses are representative of accrued cost of goods sold or other operating expenses for which a final invoice has not been received.
Trade and other payables are due within three months.
(Amounts in NOK 1000)
The tax benefit/(expense) is calculated based on profit before income tax and consists of current tax and deferred tax.
| 2021 | 2020 | |
|---|---|---|
| Deferred tax expense (income) | -44,583 | -116,053 |
| Current tax expense | 74,474 | 39,230 |
| Income tax expense (income) | 29,891 | -76,823 |
| Income tax payable (balance sheet) | 2021 | 2020 |
| Income tax payable | 29,627 | 8,928 |
| Current tax liabilities (balance sheet) | 29,627 | 8,928 |
The difference between income tax calculated at the applicable income tax rate and the income tax expense attributable to loss before income tax was as follows:
| 2021 | 2020 | |
|---|---|---|
| Profit/(loss) before income tax | -47,670 | -404,829 |
| Statutory income tax rate* | 22% | 22% |
| Expected income tax expense/(benefit) | -10,487 | -89,062 |
| Tax effect on non-taxable income/expenses | -5,566 | -2,117 |
| Tax effect non deductible expenses | 46,073 | - |
| Prior year adjustment | 5,839 | - |
| Effect of changes in tax rules and rates | -1,652 | -9,417 |
| Non deductible interest, interest cap rules | 14,135 | 28,256 |
| Change in deferred tax asset not recognized | -18,450 | -4,483 |
| Income tax expense/income (-) for the year | 29,891 | -76,823 |
| Effective tax rate | -63% | 19% |
* The statutory income tax rate based on the currently enacted tax rate in Norway.
Tax losses and interest cap for which no deferred tax asset has been recognised
| 2021 | 2020 | |
|---|---|---|
| Unused tax loss carry forward | - | 97,280 |
| Interest cap | 365,406 | 312,784 |
| Potential tax benefit unused tax losses, 22 % | - | 21,402 |
| Potential tax benefit interest cap, 22 % | 80,389 | 68,812 |
The unused tax loss carry forward balances are related to LINK Mobility Group Holding ASA. For this company the benefit from the unused tax losses is uncertain.These can be carried forward indefintiely.
Interest cap is related to LINK Mobility Group Holding ASA, LINK Mobility Pecunia AS and to LINK Mobility Group AS. The benefit from the interest cap carried forward is uncertain and the amount can be carried forward for 10 years.
| 2021 | 2020 | |
|---|---|---|
| Temporary differences for which deferred tax liabilities have not been recognised |
- | -21,065 |
| Unrecognised tax liabilities relating to the above temporary differences, 22 % |
- | -4,634 |
The temporary differences are related to LINK Mobility Group ASA and form part of the net tax asset that has not been recognised.
| Deferred tax assets: | 2021 | 2020 |
|---|---|---|
| Tangible and intangible assets | 6,569 | 9,952 |
| Interest | - | - |
| Other non-current items | 9,434 | - |
| Total tax effect of temporary differences | 16,003 | 9,952 |
| Deferred tax asset arising from tax losses carried forward | 126,941 | 130,599 |
| Deferred tax assets | 142,944 | 140,551 |
| Deferred tax liabilities: | 2021 | 2020 |
| Intangible assets (mainly due to PPA business combinations) | 528,555 | 313,090 |
| Other | 28,406 | - |
| Deferred tax liabilities | 556,961 | 313,090 |
As at 31 December 2021 and as at the date of signing of this annual report, certain Group subsidiaries are involved in ongoing legal proceedings as either defendant or as plaintiff. Due to the uncertain outcome for all of these ongoing proceedings, there are no provisions (contingent or otherwise) accounted for in the financial statements or disclosed elsewhere in the notes to the financial statements. Claims for which Group entities are defendants are deemed to be low risk as the majority are covered by guarantees as a result of acquisitions (M&A).
A list of ongoing legal proceedings is provided as follows:
| Entity | Counterparty | Claim | Position |
|---|---|---|---|
| LINK Mobility EAD | Customer | € 13,000 | Defendant |
| MarketingPlatform Aps | Customer | € 22,992 | Defendant |
| Netsize S.A. | Public Authority | € 300,000 | Defendant |
| LINK Mobility GmbH | Supplier | € 250,000 | Defendant |
| LINK Mobility Italia Srl | Customer | € 262,000 | Defendant |
| LINK Mobility Italia Srl | Customer | € 210,000 | Defendant |
| LINK Mobility Group AS | Seller (SPA) | € 1,561,536 | Defendant |
| Teracomm RO SRL | Customer | € 460,000 | Defendant |
| LINK Mobility Spain S.L.U. | Supplier | € 275,000 | Defendant |
| LINK Mobility Spain S.L.U. | Supplier | € 380,000 | Defendant |
| Netsize S.A. | Public Authority | € 2,323,063 | Defendant |
| LINK Mobility EAD | Customer | € 13,567 | Plaintiff |
| LINK Mobility EAD | Customer | € 5,545 | Plaintiff |
| LINK Mobility EAD | Customer | € 5,000 | Plaintiff |
| LINK Mobility EAD | Customer | € 112,000 | Plaintiff |
| LINK Mobility GmbH | Supplier | € 1,000,000 | Plaintiff |
As at the date of this report, there are no events after the reporting date.
The financial information in this report is prepared under International Financial Reporting Standards (IFRS), as adopted by the EU. To enhance the understanding of LINK's performance, the Group presents several alternative performance measures ("APM's"). An APM is defined by the European Securities and Markets Authority (ESMA) guidelines as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework (IFRS).
Below, LINK presents certain APMs, including gross profit, gross margin, EBITDA, adjusted EBITDA, and adjusted EBITDA margin. APMs such as EBITDA are commonly reported by
companies in the markets in which LINK competes and are widely used by investors when comparing performance on a consistent basis without regard to factors such as depreciation and amortization, which can vary significantly, depending upon accounting methods (particularly when acquisitions have occurred) or based on non-operating factors.
Gross Profit means revenues less direct costs of services rendered.
Gross margin means gross profit as a percentage of total operating revenues.
Adjusted EBITDA means EBITDA adjusted by expenses related to significant one-time, nonrecurring events such as acquisitions and restructuring activities, legal advisors, and sharebased compensation. LINK has presented adjusted EBITDA in the consolidated statement of profit and loss because management believes the measure provides useful information regarding operating performance.
EBITDA means earnings before interest, taxes, amortization, depreciation, and impairments. LINK has presented EBITDA in the consolidated statement of profit and loss because management believes that the measure provides useful information regarding the Group's ability to service debt and to fund capital expenditures and provides a helpful measure for comparing its operating performance with that of other companies.
See below for a reconciliation of EBITDA to Adjusted EBITDA, and adjusted EBITDA margin.
| NOK '000 | YTD 2021* | YTD 2020* |
|---|---|---|
| Operating profit (loss), ("EBIT") | -33,189 | 22,218 |
| Add: Depreciation intangible assets | 337,706 | 271,389 |
| EBITDA | 304,517 | 293,607 |
| Add: Restructuring costs | 26,815 | 47,400 |
| Add: Share-based compensation | 149,457 | 34,711 |
| Add: Expenses related to acquisitions | 75,870 | 15,123 |
| Adjusted EBITDA | 556,659 | 390,841 |
| Operating revenues | 4,410,136 | 3,539,231 |
| Adjusted EBITDA | 556,659 | 390,841 |
| Adjusted EBITDA margin | 12.6 % | 11.0 % |
The Group monitors Net debt according to Bond loan terms which includes interest-bearing debt and debt like arrangements. Net debt is derived from the balance sheet and consists of both current and non-current liabilities such as bond loan, other debt from financial institutions and current and non-current lease liabilities less cash and cash equivalents. Sellers credits, holdback and earn-outs are excluded as they are not interest-bearing.
LINK measures leverage ratio as Net debt/Last Twelve Months Adjusted EBITDA. The measure provides useful information about the financial position. Due to the significant M&A activity LINK use Last Twelve Months Proforma Adjusted EBITDA to calculate net debt to present a comparable measure over time.
Below is a reconciliation of Net debt and Net debt/LTM adjusted EBITDA ratio*:
| NOK '000 | YTD 2021 | YTD 2020 |
|---|---|---|
| Bond loan | 3,695,856 | 2,073,280 |
| Other long-term | - | 5,235 |
| IFRS 16 liabilities | 61,946 | 39,244 |
| Seller's credit (interest bearing) | 66,698 | - |
| Less cash | -843,618 | -952,144 |
| Net debt | 2,980,882 | 1,165,615 |
| LTM adjusted EBITDA (proforma) | 619,304 | 435,169 |
| Net debt/LTM adjusted EBITDA | 4.8 | 2.7 |
* The leverage definition of the legacy SFA agreement is not directly comparable with the Bond loan terms and is therefore omitted for the historical periods.
For the period ended 31 December (Amounts in NOK 1000)
| Note | 2021 | 2020 | |
|---|---|---|---|
| Other operating expenses | 6 | -5,727 | -369 |
| Total operating expenses | -5,727 | -369 | |
| Operating loss | -5,727 | -369 | |
| Finance income and finance expenses | |||
| Net currency exchange gains (losses) | 132,852 | 33,656 | |
| Net interest expense | -35,837 | -3,298 | |
| Net other financial income (expenses) | 1,331,915 | -169 | |
| Total finance income | 7 | 1,428,931 | 30,189 |
| Profit before income tax | 1,423,203 | 29,820 | |
| Income tax | 14 | -5,017 | -725 |
| Profit for the period | 1,418,187 | 29,095 |
The accompanying notes are an integral part of these financial statements.
(Amounts in NOK 1000)
| ASSETS | Note | 31 December 2021 | 31 December 2020 |
|---|---|---|---|
| Investment in LINK Mobility Group AS | 5 | 7,978,341 | 6,899,176 |
| Long-term receivables - intercompany | 7 | 2,914,375 | - |
| Total non-current assets | 10,892,716 | 6,899,176 | |
| Cash and cash equivalents | 8, 10 | 139,684 | 122,234 |
| Total current assets | 139,684 | 122,234 | |
| TOTAL ASSETS | 11,032,400 | 7,021,410 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 1,471 | 1,355 | |
| Share premium and other reserves | 5,826,515 | 4,906,672 | |
| Retained earnings (accumulated losses) | 1,482,567 | 28,701 | |
| Total equity | 9 | 7,310,554 | 4,936,728 |
| Liabilities | |||
| Long-term borrowings | 11 | 3,698,186 | 2,073,280 |
| Deferred tax | 14 | 15,806 | - |
| Loans and borrowings - intercompany | 464 | 510 | |
| Total non-current liabilities | 3,714,456 | 2,073,790 | |
| Short-term borrowings | 10, 11 | 6,980 | 2,945 |
| Trade payables and other payables | 10, 13 | 410 | 7,222 |
| Current tax liabilities | 14 | - | 725 |
| Total current liabilities | 7,390 | 10,892 | |
| Total liabilities | 3,721,846 | 2,084,682 | |
| TOTAL EQUITY AND LIABILITIES | 11,032,400 | 7,021,410 |
The accompanying notes are an integral part of these financial statements.
For the period ended 31 December (Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Profit (loss) for the period | 1,418,187 | 29,095 |
| Other comprehensive income Items that may be reclassified to profit or loss |
| Total comprehensive income for the period | 1,418,187 | 29,095 |
|---|---|---|
| Other comprehensive income for the period | - | - |
| Translation differences of foreign operations | - | - |
Oslo, 28 April 2022
Jens Rugseth Chairman of the board
Charles Joseph Brucato Board member
Robert Joseph Nicewicz Jr Board member
Ralph Paul Choufani Board member
Sara Katarina Murby Forste Board member
Katherine Ji-Young Woo Board member
Grethe Helene Viksaas Board member
Guillaume Alain Van Gaver Chief Executive Officer
for the period ended 31 December 2021 (Amounts in NOK 1000)
| Note | Share capital |
Share premium |
Retained earnings (accumulated losses) |
Total equity | |
|---|---|---|---|---|---|
| Balance at 01 January 2020 | 1,081 | 2,725,406 | -393 | 2,726,094 | |
| Profit for the period | - | - | 29,095 | 29,095 | |
| Other comprehensive income (loss) for the year, net of income tax |
- | - | - | - | |
| Total comprehensive income for the year | - | - | 29,095 | 29,095 | |
| Issue of ordinary shares | 273 | 2,150,562 | - | 2,150,835 | |
| Share based payment | - | 30,704 | - | 30,704 | |
| Balance at 31 December 2020 | 9 | 1,355 | 4,906,672 | 28,701 | 4,936,728 |
| Balance at 01 January 2021 | 1,355 | 4,906,672 | 28,701 | 4,936,728 | |
| Profit for the year | - | - | 1,418,187 | 1,418,187 | |
| Currency effect - hedge accounting | 35,679 | 35,679 | |||
| Other comprehensive income (loss) for the year, net of income tax |
- | - | - | - | |
| Total comprehensive income for the year | - | - | 1,453,866 | 1,453,866 | |
| Issue of ordinary shares | 117 | 785,339 | - | 785,455 | |
| Share based payment | - | 134,505 | - | 134,505 | |
| Balance at 31 December 2021 | 9 | 1,471 | 5,826,515 | 1,482,567 | 7,310,554 |
The accompanying notes are an integral part of these financial statements.
For the period ended 31 December 2021 (Amounts in NOK 1000)
| Note | 2021 | 2020 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before income tax | 1,423,203 | 29,820 | |
| - | |||
| Adjustments for: | - | ||
| Finance income (expense) | -87,705 | -30,189 | |
| Change in trade and other payables | 10, 13 | -7,283 | 38,387 |
| Change in other provisions | -125 | -345 | |
| Net cash flows from operating activities | 1,328,091 | 37,672 | |
| Cash flows from investing activities | |||
| Net cash outflow, capital increase subsidiary | 5 | -944,660 | -3,081,749 |
| Net cash outflow, loan to subsidiaries | -2,717,473 | - | |
| Net cash flows from investing activities | -3,662,133 | -3,081,749 | |
| Cash flows from financing activities | |||
| Proceeds on issue of shares | 9 | 785,455 | 2,368,423 |
| Repayment of equity | -1,299,422 | ||
| Proceeds from borrowings | 1,670,117 | 2,101,572 | |
| Interest paid | -94,781 | ||
| Net cash flows from financing activities | 2,360,791 | 3,170,573 | |
| Net change in bank deposits, cash and equivalents |
26,749 | 126,497 | |
| Effect of foreign exchange rate changes | -9,299 | -4,285 | |
| Cash and equivalents at beginning of period | 122,234 | 22 | |
| Cash and equivalents at end of the period | 139,684 | 122,234 |
The accompanying notes are an integral part of these financial statements.
| 1 | General information |
|---|---|
| 2 | Adoption of new and revised International Financial Reporting Standards (IFRS) |
| 3 | Summary of significant accounting policies |
| 4 | Critical accounting judgments and key sources of estimation variances |
| 5 | Investment in subsidiaries |
| 6 | Other operating expenses |
| 7 | Net finance income and expenses |
| 8 | Cash and cash equivalents |
| 9 | Share capital and shareholder information |
| 10 | Classes and categories of financial instruments |
| 11 | Interest-bearing liabilities |
| 12 | Financial instruments, risk management objectives, and policies |
| 13 | Trade and other payables |
| 14 | Income tax |
| 15 | Contingencies and legal claims |
LINK Mobility Group Holding ASA is the parent company of LINK Mobility Group AS, and is headhquartered in Oslo, Norway. LINK is Europe's leading provider of mobile and CPaaS solutions specializing in messaging, digital services and intelligent data usage.
The Company's subsidiary as at 31 December 2021 is listed below.
| Name of entity | Date of acquisition | Place of business / country of registration |
Ownership interest |
|---|---|---|---|
| LINK Mobility Group AS | 06/12/2021 | Oslo, Norway | 100% |
A number of amended IFRS standards issued by the International Accounting Standards Board (IASB) and IFRS interpretations issued by the IFRS Interpretations Committee (IFRS IC) are effective for accounting periods commencing on or after 01 January 2021. The requirements arising from revised IFRSs or IFRIC interpretations are embedded in the recognition, measurement and disclosures relevant to the consolidated financial statements of the Group from the date of establishment. The accounting policies adopted are described in Note 3 Summary of significant accounting policies.
The accounting policies adopted, and methods of computation followed are consistent with those of the previous financial year, except for items disclosed below. The adoption of the following standards and interpretations has not had any material impact on the disclosures or on the amounts reported in these financial statements:
As at the date of authorisation of these financial statements, Standards and Interpretations had been issued by the IASB but were not effective for the financial year ended 31 December 2021. At the date of these financial statements, it is not foreseable that these changes will not have a material impact on the financial reporting for the Group.
New or amended standards that have effective date on 1 January 2023 or later have not been assessed if these will have any impact on Link Mobility Groups financial statements in the period of initial application. Management will continue to follow the development of changes to Standards and Interpretations issued by the IASB throughout 2022.
LINK Mobility Group Holding ASA ("the Company") is a limited liability Company incorporated and domiciled in Norway. The address of the registered office is Universitetsgata 2, 0164 Oslo, Norway. LINK Mobility Group Holding ASA is the parent company of the LINK Mobility Group AS. LINK Mobility Group AS provides services in mobile communication and specialises in mobile messaging services, mobile solutions, and mobile intelligence. LINK Mobility Group Holding ASA and its subsidiaries are regarded as "the Group".
These financial statements were approved for issue by the Board of Directors on date 28 April 2022. Minor rounding differences may be present, and the total may deviate from the total of the
individual amounts. This is due to the rounding of whole figures to thousands for presentation purposes.
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union. The financial statements have been prepared on the historical cost basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgments in applying the Group's accounting policies. Areas involving a high degree of judgment or complexity, and areas in which assumptions and estimates are significant to the financial statements are disclosed in Note 4 Critical accounting judgements and key sources of estimation variances. The financial statements have been prepared on a going-concern basis.
The presentation currency of the financial statement is Norwegian kroner (NOK). Amounts are rounded to nearest thousand, unless otherwise stated.
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries, which are entities controlled by the Company. Control is achieved when the Group has power over the investee, is exposed, or has rights to, variable returns from its involvement with the investee, and has the ability to use its power to affect its returns through its power over the investee. The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control noted above.
The financial statements of the subsidiaries are prepared for the same reporting periods as the parent company and consistent accounting policies are applied. The results of subsidiaries acquired or disposed of during the year are included in the income statement from the date when control is obtained and until control ceases, respectively. Intercompany transactions, balances, revenues, expenses and unrealised Group internal gains or losses are eliminated on consolidation.
The presentation currency of the financial statement is Norwegian kroner (NOK). Amounts are rounded to nearest thousand, unless otherwise stated.
Business combinations are accounted for using the acquisition method. The consideration transferred and all the identifiable assets and liabilities of acquired entities are, with limited exceptions measured at fair values at the date of acquisition. Acquisition-related costs are recognised in the income statement as incurred.
Goodwill arising from an acquisition is recognised as an asset measured as the excess of the sum of the consideration transferred, the fair value of any previous held equity interest and the amount of any non-controlling interest in the investee over the net amounts of the identifiable
assets acquired and the liabilities assumed. If, after reassessment, the Group's interest in the net fair value of the investee's identifiable assets, liabilities and contingent liabilities exceeds the total consideration of the business combination, the excess is immediately recognised in the income statement. Goodwill is allocated to each of the Group's cash-generating units (or groups of cash generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit is the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or group of assets. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
When the consideration transferred by the Company in a business combination includes contingent consideration arrangements, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments recognised in goodwill. Measurement period adjustments arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
An asset is classified as current when it is expected to be realised, or is intended for sale or consumption, in the Company's normal operating cycle, it is expected/due to be realised or settled within next twelve month after the reporting date. Other assets are classified as noncurrent. A liability is classified as current when it is expected to be settled in the Company's normal operating cycle, the liability is due to be settled within twelve months after the reporting period or if the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as noncurrent.
Revenues are recognised when services are rendered and measured based on the consideration to which the Company expects to be entitled in a contract with a customer net of discounts and sales related taxes. The Company recognises revenue when it transfers control of a product or service to a customer.
When another party is involved in providing goods or services to a customer, the Company evaluates whether it has an obligation to provide the specified service itself (i.e. the Company is the principle) or to arrange for those services to be provided by the other party (i.e. the Company is the agent). Where the Company does not control the service, the Company is considered an agent in the transaction.
Revenues primarily comprise sale of services that enable customers to communicate by mobile phone with their customers. To be able to render these services, the Company needs to obtain services from one or more telecommunication operators. Cost incurred that are directly related to fulfilling a specified contract with a customer are regarded as a contract fulfilment cost and are expensed in the period in which the related revenue is recognised.
| Type of service | Timing of recognition | Measurement of revenue |
|---|---|---|
| Mobile messaging transactions |
The Group provides mobile messaging services via SMS and other messaging channels such as Apps, Facebook, Messenger, WhatsApp and email. Revenue from messaging is recognised when the message service has been provided; when the messages are delivered to the recipient. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
| Payment services |
The Group offers payment solutions where the customer can get their customers (the end users) to pay for services by charging their mobile phone account or credit/debit card. As payment for these services, the Group is entitled to remuneration related to the processed transactions/payment. Revenue is recognised when the payment service is rendered. |
The Group acts as an agent for this type of service and the performance obligation is to arrange for the provision of services by another party. Consequently, only the income from the processed transactions is recognised as revenue. |
The services rendered are split into the following groups:
| Type of service | Timing of recognition | Measurement of revenue |
|---|---|---|
| Licences | License revenue consists of revenue from monthly fees paid by customers for access to Group platforms and solutions. No proprietary rights are transferred to the customer. The revenue is recognised throughout the duration of the license agreement. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
| Consulting services |
Revenue from consulting services is recognised in the accounting period during which the services are rendered. |
The revenue is based on the price specified in the sales contract, net of discounts and value added tax. |
The consolidated financial statements are presented in NOK, which is theCompany's functional currency. In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rate of exchange on the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the balance sheet date. Non-monetary items carried at fair value in foreign currencies are translated using the exchange rate at the date when the fair value was measured. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated after the transaction date.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement as financial items. All other foreign exchange gains and losses are presented on a net basis in the income statement as other operating expenses. Exchange differences are recognised in the income statement in the period in which they arise.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company's foreign operations are translated to NOK at exchange rates on the reporting date. Income and expense items are translated to NOK at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity.
Goodwill and fair value adjustments arising from the acquisition of a foreign entity are considered as assets and liabilities of the foreign entity and translated at the closing rate. These exchange differences are recognised in other comprehensive income.
On the disposal of a foreign operation (i.e. a disposal of the Company's entire interest in a foreign operation), or a disposal involving loss of control over a subsidiary that includes a
foreign operation, all of the exchange differences accumulated in a separate component of equity in respect of that operation attributable to the owners of the foreign operation are reclassified to the income statement. In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non‑controlling interests and are not recognised in profit or loss.
Goodwill and intangible assets acquired in a business combination are recognised initially as set out in 3.4 Business Combinations above.
Amortisation of intangible assets are based on the following estimated useful lives:
| Goodwill | Indefinite |
|---|---|
| Tradename | 25 year |
| Customer relations/contracts | 7-10 |
| Technology | 3-10 years |
Goodwill is not amortised but is reviewed for impairment at least annually, or more frequently when there is an indication that the cash-generating unit to which goodwill has been allocated, may be impaired. Goodwill is allocated to each of the Company's cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash generating unit, the attributable amount of goodwill is included in the determination of the gain or loss on disposal in the income statement.
Intangible assets acquired in a business combination and recognised separately from goodwill, such as Tradename and Customer relations are recognised initially at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses.
Intangible assets with finite useful lives such as Technology, that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Subsequent to initial recognition, separately acquired intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired in a business combination.
Expenditure on research and development activities is recognised as an expense in the period in which it is incurred. An internally generated intangible asset arising from development of the Company's technical platforms and products is recognised if, and only if, all the following conditions have been demonstrated:
The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognised, development expenditures are expensed as incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired in a business combination.
Equipment and fixtures are initially recognised at cost, which includes the purchase price (including duties and non-refundable purchase taxes) and any directly attributable costs of bringing the asset to the location and condition necessary for it to be able to operate in the intended manner. Equipment and fixtures are subsequently recognised at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is recognised using the straight-line method to reduce the cost of assets less their residual values over their useful lives. Depreciation commences when the assets are ready for their intended use.
Estimated useful life, depreciation method and residual values are reviewed at least annually. The straight-line depreciation method is used as this best reflects the consumption of the assets, which often is the passage of time. Residual value is estimated to be zero for all assets.
Repair and maintenance are expensed as incurred. If new parts are capitalised, replaced parts are derecognised and any remaining net carrying amount is recognised in operating profit (loss) as loss on disposal.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an item of equipment and fixtures is determined as the difference between the sales proceeds and the carrying amount of the asset and is presented as other income or other expenses in the income statement.
At each reporting date, the Company reviews if there are any indicators that the carrying amounts of its tangible and intangible assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Goodwill and intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Any impairment loss recognised for goodwill is not reversed in a subsequent period.
The Company initially applied IFRS 16 from 01 January 2019; IFRS 16 was applied using the modified retrospective approach. At the inception of a contract, the company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease liability is recognized at the commencement date and measured at the present value of the remaining lease payments, discounted using the company's incremental borrowing rate
at the commencement date. The lessee's incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow over a similar term, and with similar security, the funds necessary to obtain an asset of a similar value of the right-of-use asset in a similar economic environment.
The Company has chosen to measure the Right-of-Use asset (RoU assets) at an amount equal to the lease liability for all leases by using the lessee's incremental borrowing rate; the rate may differ from country to country. RoU assets are depreciated over the lease term as this is ordinarily shorter than the useful life of the assets. The lease term represents the noncancellable period of the lease, together with periods covered by an option either to extend or to terminate the lease when the company is reasonably certain to exercise this option. The Company applies the exemption for short term leases (12 months or less) and low value leases. As such, related lease payments are not recognized in the balance sheet but expensed or capitalized in line with the accounting treatment for other non-lease expenses. The inclusion of non-lease components may vary across different lease categories.
The Company receives Government grant as part of the "Skattefunn" arrangement in Norway, which is an arrangement to stimulate research and development in Norway. The government grant is initially recognised as a deduction to the carrying amount of the relevant asset. The amount is subsequently recognised to the income statement on a straight-line basis over the estimated useful life of the related asset.
In the application of the Company's accounting policies, as described in note 3 (summary of significant accounting policies), management is required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. Estimates and judgments are evaluated on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are considered to be relevant. Future events may cause these estimates to change and actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis.
Changes in accounting estimates are recognised in the period when the changes occurred, if they apply to that period. If the changes also apply to future periods, the effect will be distributed between the current period and future periods.
The Company has finalised certain acquisitions in FY2021; refer to note 5 (business combinations) for further details. In order to account for the business combinations and determine the fair value of the underlying assets and liabilities in accordance with IFRS 3, management has used significant judgement. In order to calculate the fair value of the intangible assets in the acquired companies, the expected future cash flows have been
reconciled to the purchase price of the acquired companies. The reconciliation is performed via a Business Enterprise Valuation (BEV). Intangible assets have been valued using the Multi Excess Earnings Method ("MEEM") and Relief From Royalty Method ("RFR"). The methods are considered to be appropriate for the type of assets being valued (MEEM for customer relationships and RFR for technology and trade name). The excess of the consideration over the fair value of the net identifiable assets acquired is recognised as goodwill.
Significant input used in the estimation of fair values utilising the above methods are as follows:
Estimated impairment of goodwill and other intangible assets
The carrying amounts of non-current tangible and intangible assets are assessed by means of impairment tests whenever there is an indication of impairment. Any impairment of goodwill is assessed at least annually. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. As of 31 December 2021, the amount of goodwill tested for impairment amounted to KNOK 5 614 510 (FY2020 - KNOK 3 982 843). No impairment losses were recognised in FY2021 (FY2020 - nil). Please refer to notes 3 (summary of significant accounting policies) and 13 (intangible assets) for further details related to the impairment testing methodology and results.
Management judgment is required in determining provisions for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be recognized. The Company is also subject to income taxes in various jurisdictions. Judgment is required in determining the Company's provision for income taxes. There may be transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax liability and expense in the period in which such determination is made.
Periodically, the Company acquires subsidiaries where the preliminary purchase price is based on an assumption that the acquired company will achieve a target EBITDA for the current financial year. The final purchase price is subject to an upwards or downwards earnout adjustment based on the company's actual achieved EBITDA. The earn-out adjustment is accounted for in the income statement as finance income or expense.
On 06 December 2021, LINK Mobility Pecunia AS was officially merged with LINK Mobility Group AS. As a result of this merger, LINK Mobility Group AS is the immediate subsidiary of LINK Mobility Group Holding ASA.
The Company has the following investment in a subsidiary:
| Entity | Country | Industry | Date of acquisition | Proportion of voting equity acquired |
|---|---|---|---|---|
| LINK Mobility Group AS | Norway | Mobile messaging services and solutions |
06 December 2021 | 100% |
LINK Mobility Group AS provides mobile communication services and specializes in messaging, digital services and data intelligence. 100% of the voting equity interest of the company was acquired on 06 December 2021 when LINK Mobility Pecunia AS was merged with LINK Mobility Group AS.
The total amortized cost as of 31 December 2021:
| (Amounts in NOK 1 000) | LINK Mobility Group AS |
|---|---|
| Total amoritzed cost (01.01) | 6,899,176 |
| Capital increase subsidiary | 357,514 |
| Capital increase subsidiary | 587,146 |
| Employee share options in subsidiary |
134,505 |
| Total amoritzed cost (31.12) | 7,978,341 |
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Advisors and consultants: | ||
| Audit fees | 375 | 163 |
| Legal fees | 2,182 | 37 |
| Stock exchange listing expenses1 | 2,560 | - |
| Other expenses2 | 610 | 169 |
| Total other operating expenses | 5,727 | 369 |
¹ These costs are representative of stock exchange listing fees, registration fees for increases in share capital, management of insider logs, and share register analysis.
² Other expenses are representative of license fees, insurance related to merger and acquisition activities, and insurance premiums.
The table below summarises audit fees for the period 01.01.2021 - 31.12.2021 (01.01.2020 - 31.12.2020) and fees for audit related services, tax services and other services incurred by the Company during the period.
| 2021 | 2020 | |
|---|---|---|
| Audit fee | 375 | 138 |
| Other attestation services | - | - |
| Tax consulting services | - | 25 |
| Other services* | - | 6,983 |
| Total fee to auditor | 375 | 7,146 |
* In addition to expensed amounts, NOK 6,946k has been booked to equity. These are fees paid in relation to the IPO in FY2020.
(Amounts in NOK 1000)
The Group's finance income and expense is comprised of gains (losses) from foreign exchange and from exposure to interest expenses related to loans from financial institutions. Interest amounts are presented as a sum of interest on borrowings offset by amortised cost recognised in the profit and loss.
All categories of financial income and expense are presented on a net basis.
| Net financial income and expenses | 2021 | 2020 |
|---|---|---|
| Net currency exchange gains (losses)1 | 132,852 | 33,656 |
| Net interest expense | -35,837 | -3,298 |
| Net other financial expense | 1,331,915 | -169 |
| Total finance income | 1,428,931 | 30,189 |
| Net interest expense | 2021 | 2020 |
| Interest expense financial institutions | -100,724 | -2,945 |
| Interest expense - seller's credit | -1,876 | - |
| Other interest expenses | -1,037 | -353 |
| Interest income from related parties | 67,800 | - |
| Total net interest expense | -35,837 | -3,298 |
| Net other financial expenses | 2021 | 2020 |
| Amortized loan set-up costs | -9,186 | -163 |
| Dividend from related parties2 | 1,341,726 | - |
| Earn-out payment from M&A transactions | - | - |
| Other financial (expenses) income | -625 | -6 |
| Total net other financial expenses | 1,331,915 | -169 |
¹ Foreign currency gain/loss is presented on a net basis here and in the Statement of Profit and Loss. Exposure to fluctuations in foreign currency comes from external lending denominated in EUR. Refer to note 11 (interest-bearing liabilities) and note 12 (financial instruments, risk management objectives, and policies) for further details.
² In order to align intercompany financing with external financing for the Group, dividends were declared in each of BK Invest GmbH, Simple SMS GmbH, LINK Mobility SAS, LINK Mobility AB, GfMB mbh, and LINK Mobility Holding ApS. These amounts also comprise part of long-term receivables - intercompany; they are adjusted for fluctuations in foreign currency as well as interest.
In addition to the dividend amounts receivable, long-term receivables is also comprised of loans established and related to acquisitions in the current year. This includes the purchase of Message Broadcast LLC (USA) and Altiria TIC Sociedad Limitada (Spain).
(Amounts in NOK 1000)
| 2021 | 2020 | |
|---|---|---|
| Cash and cash equivalents | 139,684 | 122,234 |
| Total cash and cash equivalents | 139,684 | 122,234 |
| Restricted cash | 2021 | 2020 |
| Restricted cash | - | - |
| Bank balance in escrow account | - | - |
| Total cash and cash equivalents | 139,684 | 122,234 |
If applicable, cash and cash equivalents include amounts classified as restricted cash. There are no restricted amounts as at 31 December 2021.
Share capital as at 31 December 2021 is KNOK 1 471 (2020: KNOK 1 355), being 294 252 254 ordinary shares (2020: 270 911 039 ordinary shares) at a nominal value of NOK 0.005/share (2020: NOK 0.005/ share). There are no preference shares in FY2021 (FY2020: nil).
All shares were fully paid; each ordinary share carries one vote at any general meeting. The movement in the number of shares during the year was as follows:
| 2021 | 2020 | |
|---|---|---|
| Ordinary shares opening balance 2021/2020 | 270,911,039 | 10,682,803 |
| Issue of ordinary shares (07 January 2020) | 10,934 | |
| Conversion of nominal value from NOK 0.10 to NOK 0.005 | ||
| Share split (15 September 2020) | 213,874,740 | |
| Issue of ordinary shares (15 September 2020) | 324,000 | |
| Issue of ordinary shares (05 October 2020) | 53,200,000 | |
| Issue of ordinary shares (16 November 2020) | 3,512,299 | |
| Issue of ordinary shares (11 March 2021) | 1,226,637 | |
| Issue of ordinary shares (31 March 2021) | 1,687,589 | |
| Issue of ordinary shares (31 May 2021) | 1,723,310 | |
| Issue of ordinary shares (07 June 2021) | 16,755,069 | |
| Issue of ordinary shares (24 June 2021) | 1,235,424 | |
| Issue of ordinary shares (14 December 2021) | 713,186 | |
| Ordinary shares at the end of the period | 294,252,254 | 270,911,039 |
| Preference shares: | ||
| Preference shares opening balance 2021/2020 | - | 129,158 |
| Share split (15 September 2020) | 2,583,160 | |
| Settlement of preference shares | -2,583,160 | |
| Preference shares at the end of the period - |
- | |
| Total number of shares at the end of the period | 294,252,254 | 270,911,039 |
LINK Mobility Group Holding ASA has the following major shareholders as at 31 December 2021:
| Name of shareholder | Type of account | Ownership interest |
|---|---|---|
| Citibank, N.A. | Nominee | 31.84% |
| State Street Bank and Trust Comp | Nominee | 8.07% |
| KARBON INVEST AS | Ordinary | 5.42% |
| Citibank, N.A. | Nominee | 4.56% |
| FOLKETRYGDFONDET | Ordinary | 4.31% |
| Saxo Bank A/S | Nominee | 3.55% |
| UBS AG LONDON BRANCH | Ordinary | 3.09% |
| Skandinaviska Enskilda Banken AB | Ordinary | 3.08% |
| FERD AS | Ordinary | 2.50% |
| Skandinaviska Enskilda Banken AB | Nominee | 2.17% |
| J.P. MORGAN BANK LUXEMBOURG S.A. | Nominee | 1.62% |
| The Bank of New York Mellon SA/NV | Nominee | 1.29% |
| J.P. MORGAN BANK LUXEMBOURG S.A. | Nominee | 1.19% |
| Citibank, N.A. | Nominee | 1.14% |
| BARCLAYS CAPITAL SEC. LTD FIRM | Ordinary | 1.13% |
| The Bank of New York Mellon | Nominee | 0.95% |
| VERDIPAPIRFONDET DNB NORGE | Ordinary | 0.86% |
| Danske Bank A/S | Nominee | 0.79% |
| SUNDT AS | Ordinary | 0.78% |
| VERDIPAPIRFONDET DELPHI NORDIC | Ordinary | 0.64% |
| 78.98% |
The company's trustees (Board Members, management) hold ownership interests and rights to shares:
| Name of shareholder | Total number of shares | |
|---|---|---|
| Victory Partners VIII Limited via a nominee account in Citibank (controlled by Abry who have 4 Board members) |
93,612,321 | |
| Karbon Invest AS (controlled by Jens Rugseth) | 15,945,105 | |
| Sundahl Aps (controlled by EVP M&A and Global Messaging Søren Sundahl) |
9,139,242 | |
| Rugz AS (controlled by Jens Rugseth) | 500,000 | |
| Guillaume Alain Van Gaver | 204,010 | |
| Thomas Berge | 182,786 | |
| Fredrik Nyman | 168,465 | |
| Benoit Bole | 54,585 | |
| Hendrik Faasch | 27,267 | |
| Ina Rasmussen | 26,343 | |
| Lin Ackema | 14,725 | |
| Grethe Helene Viksaas (Board member) | 6,382 |
(Amounts in NOK 1000)
| Carrying value | ||
|---|---|---|
| 2021 | Amortised cost | Total |
| Current financial assets | ||
| Cash and cash equivalents | 139,684 | 139,684 |
| Non-current financial liabilities | ||
| Borrowings | 3,698,186 | 3,698,186 |
| Current liabilities | ||
| Borrowings | 6,980 | 6,980 |
| Trade payables | 289 | 289 |
The financial assets held by the Company are held within a business model with the objective to hold financial assets in order to collect contractual cash flows and are thus measured subsequently at amortised cost less loss allowances.
All financial liabilities are measured at amortized cost.
The carrying amounts of financial assets and liabilities approximate their fair value as at 31 December 2021. Arrangements with financial institutions are entered into on market terms, and the carrying value at the reporting date has been assessed as approximating fair value.
The recognised amounts consitute a reasonable approximation of fair value.
(Amounts in NOK 1000)
Interest bearing liabilities are measured at amortised cost.
| Non-current financial liabilities | 2021 | 2020 |
|---|---|---|
| Bond loan | 3,629,772 | 2,073,280 |
| Holdback | 66,538 | - |
| Total | 3,696,310 | 2,073,280 |
| Current liabilities | 2021 | 2020 |
| Bond loan* | 6,980 | 2,945 |
| Total | 6,980 | 2,945 |
*Instalments falling due within a 12 month period, including non-capitalised interest, are classified as current.
| Contractual maturities of financial liabilities at 31 December 2021 |
< 3 months | 3 months - 1 year |
1 - 2 years | 2 - 5 years | Total |
|---|---|---|---|---|---|
| Bond loan (tap issue 15.12.2020) | - | 67,424 | 67,424 | 2,166,321 | 2,301,170 |
| Bond loan (tap issue 23.06.2021) | - | 57,311 | 57,311 | 1,841,373 | 1,955,994 |
| Total | - | 124,735 | 124,735 | 4,007,694 | 4,257,164 |
| Contractual maturities of financial liabilities at 31 December 2020 |
< 3 months | 3 months - 1 year |
1 - 2 years | 2 - 5 years | Total |
| Bond loan (tap issue 15.12.2020) | - | 71,666 | 71,666 | 2,309,539 | 2,452,871 |
| Total | - | 71,666 | 71,666 | 2,309,539 | 2,452,871 |
| 2021 | 2020 | ||||
| Principal amount (tap issue 15.12.2020) | 1,998,768 | 2,094,345 | |||
| Principal amount (tap issue 23.06.2021) | 1,699,011 | - | |||
| Transaction costs (tap issue 15.12.2020)1 | -21,228 | -21,228 | |||
| Transaction costs (tap issue 23.06.2021)1 | -56,127 | - | |||
| Amortization (tap issue 15.12.2020) | 4,118 | 163 | |||
| Amortization (tap issue 23.06.2021) | 5,231 | - | |||
| Accrued interest and fees | 6,980 | 2,945 | |||
| Carrying amount | 3,636,753 | 2,076,225 |
¹ The bond loan is initially measured at fair value net of transaction costs and it is subsequently measured at amortized cost using the effective interest rate method. Consequently, the transaction cost will be amortized over the life of the bond loan. The carrying value of the bond loan will be equal to the principal amount of EUR 370 million at maturity in FY2025.
On 15 December 2020, LINK Mobility Group Holding ASA (LINK) successfully completed the issuance of EUR 200 million senior unsecured bonds, with a EUR 350 million borrowing limit. Part of the proceeds from the bond issue were used to repay the remaining outstanding senior facility agreement (SFA).
On 23 June 2021, LINK issued EUR 170 million new bonds in LINK's outstanding 5-year senior unsecured 3.375% fixed rate bond issue, raising the total outstanding amount to EUR 370 million. The bonds were issued at par.
The bonds have a 5-year tenor and a fixed coupon of 3.375% p.a.; any outstanding bonds are to be repaid in full at the maturity date.
Through its operations LINK Mobility Group Holding ASA is exposed to the the following financial risks;
Interest rate risk arises as a consequence of long-term debt. In December 2020 the Company successfully completed the issuance of EUR 200 million senior unsecured bonds, with a EUR 350 million borrowing limit.
On 23 June 2021, LINK issued EUR 170 million new bonds in LINK's outstanding 5-year senior unsecured 3.375% fixed rate bond issue, raising the total outstanding amount to EUR 370 million. The bonds were issued at par; refer to note 11 for further details.
The sensitivity analysis below is based on the exposure to changes in interest rates for nonderivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount outstanding at reporting date was outstanding for the whole year. A one percent increase or decrease represents management's assessment of reasonable and possible changes in interest rates.
If interest rates had been one percent higher/lower and all other variables were held constant, the Company's profit (and corresponding equity) for the period ended 31 December 2021 would decrease/increase by KNOK 36 959 (FY2020 KNOK 20 941). This is mainly attributable to the Company's exposure to interest rates on its variable rate borrowings.
The Company is a holding company and does not actively undertake business in foreign currencies; as a consequence, exposure to fluctuations in exchange rates is limited. Foreign exchange risk arises from transactions related to operations conducted, and assets and liabilities arising in foreign currencies.
| 31 December 2021 | |||
|---|---|---|---|
| (amounts in NOK 1000) | NOK/EUR impact | NOK/SEK impact | NOK/CHF impact |
| Borrowings | 36,959 | - | - |
The Company is a holding company and owns all shares in LINK Mobility Group AS; credit risk is deemed to be low.
Liquidity risk is the risk that the Company is unable to meet its financial obligations when they mature, resulting in default.
The Company considers its liquidity risk to be limited, and has sufficient liquidity available on bank accounts as of year-end. Obligations are covered by transfer of cash from subisidiaries.
The Company has financial debt covenants related to the senior unsecured bonds. Refer to note 11 for information about the bond convenants.
The Company does not have any credit facilities.
(Amounts in NOK 1000)
| Trade and other payables | 2021 | 2020 |
|---|---|---|
| Trade payables | 289 | 5,631 |
| VAT payable | 25 | 1,545 |
| Other accruals | 96 | 46 |
| Total trade and other payables | 410 | 7,222 |
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs.
Trade and other payables are due within three months.
(Amounts in NOK 1000)
The tax benefit/(expense) is calculated based on profit before income tax and consists of current tax and deferred tax.
| 2021 | 2020 | |
|---|---|---|
| Deferred tax expense (income) | 5,017 | - |
| Current tax expense | - | 725 |
| Income tax (income) | 5,017 | 725 |
| Income tax payable (balance sheet) | 2021 | 2020 |
| Income tax payable | - | 725 |
| Current tax liabilities (balance sheet) | - | 725 |
The difference between income tax calculated at the applicable income tax rate and the income tax exepense attributable to loss before income tax was as follows:
| 2021 | 2020 | |
|---|---|---|
| Profit/(loss) before income tax | 1,423,203 | 29,820 |
| Statutory income tax rate* | 22% | 22% |
| Expected income tax benefit | 313,105 | 6,560 |
| Tax effect on non-taxable income/expenses | -304,734 | -23,973 |
| Effect of changes in tax rules and rates* | - | - |
| Prior year adjustment | -725 | - |
| Non deductible interest, interest cap rules | 14,864 | - |
| Current tax expense, interest cap rules | 725 | |
| Change in deferred tax asset not recognized | -17,493 | 17,412 |
| Income tax expense/income (-) for the year | 5,017 | 725 |
| Effective tax rate | 0% | 2% |
* The statutory income tax rate based on the currently enacted tax rate in Norway.
| Tax losses carried forward | 2021 | 2020 |
|---|---|---|
| Unused tax loss carry forward | - | 97,280 |
| Interest cap | - | 3,298 |
| Potential tax benefit unused tax losses @ 22 % | - | 21,402 |
| Potential tax benefit interest cap @ 22 % | - | 725 |
Deferred tax assets related to tax losses have not been recognised as it is deemed unlikely that the company will generate taxable income in the foreseeable future. The tax loss can be carried forward indefintiely.
The benefit from the interest cap carried forward is uncertain and the tax asset is not recognised. The amount can be carried forward for 10 years.
| Deferred tax liabilities: | 2021 | 2020 |
|---|---|---|
| Long term receivables and debt in foreign currency | 35,031 | - |
| Other provisions | 4,898 | - |
| Tax loss to carry forward (-) | -24,124 | - |
| Deferred tax liabilities | 15,806 | - |
| Unrecognised temporary differences | 2020 | |
|---|---|---|
| Temporary differences for which deferred tax liabilities have not been recognised | - | 21,065 |
| Unrecognised tax liabilities relating to the above temporary differences @ 22 % | - | 4,634 |
The temporary differences are related to unrealized gains from currency translation. Deferred tax liability has not been recognised as it is deemed unlikely that the company will generate taxable income in the foreseeable future.
The Company is not involved in any disputes or litigation as at the balance sheet date or as at the date these financial statements are approved, that would lead to the recognition of a liability or require additional disclosure. Management and the Board of Directors are not aware of any such incidents that may have a negative impact on the Company.
To the General Meeting of LINK Mobility Group Holding ASA
We have audited the financial statements of LINK Mobility Group Holding ASA, which comprise:
In our opinion:
Our opinion is consistent with our additional report to the Audit Committee.
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
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accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 3 years from the election by the general meeting of the shareholders on 17 September 2019 for the accounting year 2019.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The Company's and the Group's business activities have remained largely unchanged during 2021. Impairment of goodwill has approximately the same risks and characteristics as last year and continues to be in our focus.
At the balance sheet date, the net book value of goodwill was KNOK 5 615 510, distributed between 16 different cash generating units (CGU's). The values involved are significant and constitute a major part of total assets in the balance sheet. No impairment charge was recognized for 2021.
Management performs an impairment test at least annually by estimating the recoverable amount of goodwill. Determination of the recoverable amount requires application of significant judgement by management, in particular with respect to cash flow forecasts and the applied discount rate.
We focused on impairment of goodwill due to the pervasive effect of goodwill in the balance sheet and managements use of judgement in estimating the recoverable amount.
See note 13 in the consolidated financial statement for further explanation of managements use of judgement and impairment review.
We obtained an understanding of management's process related to impairment review of goodwill. We obtained management's impairment review. We satisfied ourselves that the impairment review and the valuation model used, contained the elements and methodology required by IFRS. We also tested the impairment model for mathematical accuracy.
We challenged management's assumptions on future revenues and margins by comparing them to historical financial data and future budgets approved by management. Further, we assessed the accuracy of management's budgets and forecasts in prior years, by comparing them to actual results. We noted no material deviations.
We evaluated the discount rate used by management by reviewing the elements in the calculation of the discount rate against both internal and external information.
We found management's assumptions reasonable and noted no significant deviations during our audit procedures.
Finally, we considered the adequacy of Financial Statements disclosure in note 13 and found them appropriate.
The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors' report and 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 Board of Directors' report nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors' report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors' report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors' report and the other information accompanying the financial statements otherwise appears to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors' report or the other information accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors' report
Our opinion on the Board of Director's report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility.
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU, 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 and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
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.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
We have performed an assurance engagement to obtain reasonable assurance that the financial statements with file name 2549006RH08XJGKC2Y14-2021-12-31-en have been prepared in accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance with the requirements of ESEF.
Management is responsible for preparing, tagging and publishing the financial statements in the single electronic reporting format required in ESEF. This responsibility comprises an adequate process and the internal control procedures which management determines is necessary for the preparation, tagging and publication of the financial statements.
For a description of the auditor's responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 28 April 2022 PricewaterhouseCoopers AS
Jone Bauge State Authorised Public Accountant
Universitetsgata 2 0164 Oslo, Norway
[email protected] +47 22 99 44 00 (HQ)
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