Annual Report (ESEF) • Apr 29, 2022
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Download Source FileUntitled LINK Mobility Group Holding ASA Annual Report 2021 2 Because every communication matters WWW.LINKMOBILITY.COM LINK in short Message from the CEO LINK and the digital messaging industry LINK strategy overview LINK expanding to the U.S. Value creation and opportunities through M&A Commercial update: Use cases and GTM Product development: Roadmap Sustainability Social Environment Governance Report from the BoD Financial statements 04 06 09 14 19 22 31 38 42 58 78 3LINK Mobility Group Holding ASA Annual report 2021 LINK has 714 employees and 30 oces 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 LINK in short 1958 212 308 391 619 2000 4000 6000 0 2890 3539 4605 300 600 900 0 2018 2019 2020 LTM Q4 21 2018 2019 2020 LTM Q4 21 33% 43% Revenue NOKm Adjusted EBITDA NOKm * including all closed acquisitions 4 Because every communication matters WWW.LINKMOBILITY.COM LINK in short Renewed our values: United, Dedicated, Enthusiastic COVID-19 Commitment FEBRUARY Global Partnership with Conversation24 announced SMS Collaboration with Universal Music Sweden Tismi Acquisition JANUARY Interview with CEO, Guillaume Van Gaver MARCH Marketing Platform Acquisition LINK Mobility Hackathon 2021 Announced agreement with Everbridge AMM Acquisition Announced framework agreement with Bisnode APRIL Launched LINK Partner Community: new partnership program TietoEVRY Integration MAY Ranked as an established leader in Juniper Research´s CPaaS Competitor Leaderboard Adobe Integration SEPTEMBER Xenioo Acquisition Emarsys Integration Black Friday 2021 NOVEMBER Juniper Research CPaaS Webinar OCTOBER Attended Mobile World Congress 2021 (Barcelona) LINK Days 2021: Culture, Climate, and Creativity Message Broadcast Acquisition JUNE Altiria TIC Acquisition Eversource mobile communication agreement DECEMBER Signed Diversity, Equity, and Inclusion Pledge as part of CEO Commitment Global Logistics company launch WhatsApp for customer care Integrated with Salesforce Marketing Cloud AUGUST MWC Guest Blog Insparia Interview JULY 2021 Highlights 5LINK Mobility Group Holding ASA Annual report 2021 6 Because every communication matters WWW.LINKMOBILITY.COM Message from the CEO 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 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, 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 Message from the CEO 7LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM LINK and the digital messaging industry CHAPTER 01 LINK Mobility Group Holding ASA Annual report 2021 LINK and the digital messaging industry 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-to- person (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 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. NORWAY 548 312 250 164 93 130 87 60 457 257 236 147 90 121 64 51 SWEDEN UK FRANCE AUSTRIA POLAND SPAIN GERMANY 91 54 15 39 3 9 23 9 20% GROWTH INCREASE 2021 SMS per inhabitant 2020 SMS per inhabitant 21% 6% 11% 3% 8% 37% 17% High adoption of A2P SMS in Scandinavia and the UK, large potential in rest of Europe 10 Because every communication matters WWW.LINKMOBILITY.COM LINK and the digital messaging industry 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. New channels to transform digital messaging 0 1 2 3 4 5 6 SMS 5.2 IG/FBM 1.4 Viber 1.2 Whats App 2.3 WeChat 1.2 RCS Monthly active users, billions * Instagram / Facebook Messenger Source: Mobilesquared 0.9 reminders, chatbots, and one-time-passwords (OTP). The importance of digital messaging has naturally and exponentially grown with the increased penetration of mobile phones. 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. 11LINK Mobility Group Holding ASA Annual report 2021 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 in the coming years. 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. 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. 12 Because every communication matters CPaaS market growth by segment $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 2020 2021 2022 2023 2024 2025 $0 Basic messaging Video Core Voice Advanced Messaging Security & Intelligent Services Service and Support Advanced Voice Programable Wireless Source: Gartner (September 2021) Rev $US Mil LINK and the digital messaging industry 13LINK Mobility Group Holding ASA Annual report 2021 LINK strategy overview CHAPTER 02 LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM LINK strategy overview 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 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 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 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. LINK strategy overview 16 Because every communication matters WWW.LINKMOBILITY.COM 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.- 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 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 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 strategy overview 17LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM LINK expanding to the U.S. CHAPTER 03 LINK Mobility Group Holding ASA Annual report 2021 LINK expanding to the U.S. 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 Message Broadcast was founded in 1998 by Bill Joiner and Bill Potter, leveraging innovative information technology to automate customer interactions. Bill Joiner Bill Potter 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, communication needs. 20 Because every communication matters WWW.LINKMOBILITY.COM Message Broadcast is headquartered in Newport Beach, California 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 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 industries such as AT&T, McKesson, and IBM. 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. LINK expanding to the U.S. 21LINK Mobility Group Holding ASA Annual report 2021 Value creation and opportunities through M&A CHAPTER 04 LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM LINK grows fast and creates value through core business M&A 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 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 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 software products to provide upselling opportunities across LINK’s large customer base. Tuck-in acquisitions to further strenghten local presence and become the market leader Acquire platform companies in new territories to gain and build market position Seek new innovative solutions to leverage existing footprint and further differentiate product offering Three pillar M&A approach Add-on Level-up Solutions 24 Because every communication matters WWW.LINKMOBILITY.COM screening process that assesses the target’s technical platform, business performance, and CPaaS capabilities. Targets considered suitable for acquisition by LINK must be either 2021, a more structured manner of integrating newly acquired companies was implemented, in process, more time is allowed for focusing on commercial and product strategies for driving 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. Pre 2020 IPO: Building the European market leader for enterprise messaging solutions 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. the scale of the business by leveraging its advanced product portfolio and improved operational Level-up 2016 27.3 45.9 2.3 5.2 5.1 2021 CAGR EBITDA +17% Revenure Adj.EBITDA Developmnent in revenue and adjusted EBITDA EUR million LINK grows fast and creates value through core business M&A 25LINK Mobility Group Holding ASA Annual report 2021 Post 2020 IPO: Building a global market leader for enterprise messaging solutions 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 U.S.” section of this report. LINK entered the French market in 2019 by acquiring Netsize, a leading enterprise focused for years. The LINK integration rekindled growth through implementation of best practices synergies were realized through increased commercial effectiveness. Level-up Level-up Developmnent in revenue and adjusted EBITDA 53 56 62 62 68 2 1 5 7 8 2017 2019 20212018 2020 CAGR EBITDA +58% EUR million 26 Because every communication matters WWW.LINKMOBILITY.COM Add-on acquisitions 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 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 web- advertising 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 Add-on Add-on Developmnent in revenue and adjusted EBITDA 2019 15.4 15.5 22.9 5.4 4.8 8.8 2020 2021 CAGR EBITDA +62% LINK grows fast and creates value through core business M&A EUR million 27LINK Mobility Group Holding ASA Annual report 2021 LINK acquired MarketingPlatform in Denmark in April 2021. The company has developed a top- of-class modular omnichannel marketing platform with an integrated customer data platform 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. 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. Add-on Solutions acquisitions Solutions refer to acquisitions of innovative software products to provide new upselling opportunities. 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, 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 Solutions Solutions 28 Because every communication matters WWW.LINKMOBILITY.COM 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, (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. M&A pipeline for further expansion 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. Diverse pipeline – Execution along all three pillars Bubble size illustrates number of opportunities Solutions by 1 1 2 Avg. target size by revenue Avg. technological capabilities 3 4 2 3 4 5 CCaas CPaaS Solutions Voice/Video Messaging LINK grows fast and creates value through core business M&A 29LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM Commercial update: Use cases and GTM CHAPTER 05 LINK Mobility Group Holding ASA Annual report 2021 LINK’s go-to-market (GTM) LINK focuses on three main go-to-market (GTM) strategies that allow for the acquisition of 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, Commercial update: Use cases and GTM New Customers and partnerships through GTM expansion Enterprise Nordics Central Europe Western Europe Global messaging 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 Well Developed Developed Opportunity Large growth opportunity 32 Because every communication matters WWW.LINKMOBILITY.COM 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, 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 has a strong partner community PLATINUM GOLD CERTIFIED Commercial update: Use cases and GTM 33LINK Mobility Group Holding ASA Annual report 2021 LINK’s primary use cases LINK sees the adaptation of services being driven by three main use cases: Transactions or growth drivers, and LINK’s efforts are continuously focused on these differences. 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 landing pages, and logics being implemented. Deutsche Post and DHL improve their customer service experience through WhatsApp y LINK positioned as DHL’s backbone for mobile messaging globally, providing DHL Express (which handles 70% of all B2C shipments), and DHL IT Services y Deutsche Post and DHL are using WhatsApp as a new channel for their customer services, with WhatsApp supported chatbot functionality enhancing both customer service and operational efficiencies y During 2021, Deutsche Post service already sees substantial messaging volumes, with high volume growth expected y DHL IT services using WhatsApp for their Digital Assistant globally 34 Because every communication matters WWW.LINKMOBILITY.COM 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. promotional and transactional messaging. These messaging needs include promotional marketing, showcasing product catalogs with personalized shopping assistance, presenting have experienced +400% increases in open rates, engagement scores, and click-through rates using RCS in comparison to the same campaigns on other channels. Global brands adopting rich messaging functionality – leading with the French market Significant traction on RCS messaging in France y Early movers - all mobile network operators adopted RCS in 2020 y RCS device reach continues to exhibit strong growth LINK connects with all mobile network operators to facilitate use cases for customers y Marketing messages – RCS with Rich SMS fall back options y Conversational – RCS with LINK Conversations Web Client fall back Clear benefits from RCS y Significantly higher brand exposure y Verified senders increases trust for the end user y Engagement drives conversions and the bottom line y ROI as high as 10x compared to SMS I did not encounter such a well-knitted & complete RCS campaign, it is really a great piece of work. Mathieu Dubois, SFR Commercial update: Use cases and GTM 35LINK Mobility Group Holding ASA Annual report 2021 Thirdly, the customer experience area is, over time, an area where CPaaS providers will have 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. Value creation for DNB through enhanced customer experience Of businesses think they provide ‘superior’ customer service Of customers believe they have experienced superior support LINK created value in DNB’s customer care department with 2,500 employees y Largest cost in customer in customer care is personnel time with phone support being the least efficient channel y Phone support is also not a preferred channel for their customers LINK delivers a solution that enables signicantly less telephone support y Moving customers into a messaging format authenticated through their IP y Algorithms showcase most frequently used templates. The template library enables only one click to inform customers quickly y Integration with CRM systems and data compilation track KPI’s and provides advice on what templates to use LINK solution signicantly enhanced effectiveness and generated high ROI y Time spent per customer request decreased by more than 80% from 5-8 minutes to 30-60 seconds y Increased customer satisfaction with information quickly available 80% 08% 36 Because every communication matters WWW.LINKMOBILITY.COM 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 using LINK to transform its conversational messaging 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 Turning customer enquiries into messaging conversations y Facilitating promotional marketing messaging y Providing company updates and appointment reminders Adobe’s Campaign Classic Connector integrated with LINK’s CPaaS solutions y Providing real-time, relevant, and personalized communications y Easily managed by multiple business functions including Marketing, CRM, Customer Service, and Store teams Commercial update: Use cases and GTM 37LINK Mobility Group Holding ASA Annual report 2021 Product development roadmap CHAPTER 06 LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM 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 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. 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. Product development roadmap RCS gives huge flexibility on the type of messages you can send Text Messges Video Media Image Media Carousel 40 Because every communication matters WWW.LINKMOBILITY.COM 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 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 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. Marketplace Internal and partners Customer Success Plans Vertical and Regulatory Compliances Developer Blogs, Developer Relations, Certifications and Events Visual Builders Templates SDKs and IDE Provisioning Monitoring Billing RCS WhatsAppVideo Web Chat EmailSMS Voice L2 – Cloud Communications API SIP Trunks Phone Numbers Short and Long Codes Network Interconnect L1 – Networking Layer Sentiment Analysis Analytics Chatbots Voice Bots L4 – Intelligence / AI Contact Center Campaign Manager CRM L5 – Solutions Emergency Services L3 – Package Business Capabilities Authentication Anonymization Notification Basic SecurityIVR Omnichannel TOOLS PROGRAMS Current Roadmaps Apple Messages for Business NLP CDP GTM Phase 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 downwards into the value chain of delivering network layer capabilities needed to optimize the CPaaS value proposition. Product development roadmap LINK CPaaS product offering Illustration adapted from Gartner’s Market Guide for Communications Platform as a Service published September 2021 41LINK Mobility Group Holding ASA Annual report 2021 Sustainability CHAPTER 07 LINK Mobility Group Holding ASA Annual report 2021 WWW.LINKMOBILITY.COM CHAPTER 07 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. 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 directive and the Norwegian Accounting Act Section 3-3C. Materiality assessment 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 as well as other internal stakeholder such as the board members and employees. Sustainability at LINK 44 Because every communication matters WWW.LINKMOBILITY.COM People 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. Diversity, equal opportunity, and non-discrimination 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. Gender equality 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. Customer & Employee Privacy Diversity and equal opportunities Non-discrimination Developing Skills & Employee engagement Human Rights Energy management Carbon Emissions Supplier Environmental Assessment Material use Rapidly changing technology context Anti-corruption Supplier Assessment People Material topics for LINK Planet Profit Sustainability at LINK 45LINK Mobility Group Holding ASA Annual report 2021 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 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. Professional equality at LINK Mobility Norway 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. How we are working to improve gender equality 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. Geographic diversity LINK had operations in 19 countries in 2021, consisting of European nations and the U.S. 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. Disability 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. Our ambitions for 2022 In 2022, LINK plans to conduct a detailed analysis of gender representation, compensation, and 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. 46 Because every communication matters WWW.LINKMOBILITY.COM Employee engagement – Making LINK a better place to work Remaining united with high employee engagement is an integral part of LINK’s values and bimonthly, quarterly, and annual events to keep our employees informed about the latest developments and to present the results of our cooperative dedication. LINK Days 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 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. Tune-In-Tuesdays hosted by Group Product 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. LINK Voice 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. Sick leave at LINK Mobility Norway 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. Sustainability at LINK 47LINK Mobility Group Holding ASA Annual report 2021 Measuring our employee engagement 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. Customer and employee privacy 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: Companywide awareness and training 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. 80% 82% 84% 86% 88% 90% 92% 94% November 2020 374/440 responses Participation 443/492 responses 554/601 responses June 2021 January 2022 85% 90% 92% Company participation 48 Because every communication matters WWW.LINKMOBILITY.COM Companywide policy updates and implementation 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. Focus on personal data protection and privacy compliance in new aliates 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. transparency of LINK’s processes to comply with the GDPR. Larger scope for data privacy 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 y Policy Implementation y Encryption of data y Deletion of data y Access control y Security strategy Our data privacy ambitions for 2022 Data retention 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 Increasing awareness and training participation LINK will put in place monetary incentives to encourage employees to participate in groupwide training and achieve 100% participation Sustainability at LINK 49LINK Mobility Group Holding ASA Annual report 2021 Environment and climate change 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 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: A. Climate action during LINK Days 2021 The LINK Days is a digital company-wide gathering bringing together employees from 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 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. Planet Access control 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. Human rights 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 Employee code of conduct 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 y Oppose all forms of forced labor and child labor in our operations y Report on any human rights abuse in our operations or in those of our business partners y Always apply national labor laws and regulations 50 Because every communication matters WWW.LINKMOBILITY.COM This talk led to another workshop: our employees were brought together to work in 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 examples. B. Climate action in the DACH region 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 footprint, to name a few: y Educating employees about emissions related to commuting y Reducing and optimizing business travel y Purchasing nuclear-free low carbon electricity y Selecting server hosting partners with carbon assessments and reduction measures y Switching to sustainable certified provision fund for employees in Austria 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. Suppliers’ environmental assessment 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. Sustainability at LINK 51LINK Mobility Group Holding ASA Annual report 2021 Material use 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. implemented in 2022-203. This step consists of mapping of all IT equipment in data centers and Energy consumption 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 Carbon footprint calculation 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. Climate Risk assessment In 2022, we will start assessing transition and physical risks related to climate. Our objective also verify our business’ vulnerability to this topic. Climate actions on a local level We feel that it is our responsibility to help create awareness on climate change for our related to climate change in their local settings. Our ambitions to reduce our environmental impact in 2022 52 Because every communication matters WWW.LINKMOBILITY.COM Rapidly changing technology context 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 are a tool for measuring vulnerability going forward. LINK’s focus on adaptability is seen through multiple areas of its business, hereunder Development of new product offerings expectation and new developments, in order to ensure a product portfolio that is in line with technological development in the marketplace Resilient infrastructure As a business highly dependent upon data storage, LINK maintains and develops its processes company of its size and geographical presence. Migration of server sites, assessment of carbon footprint, and secure redundancy are examples of such processes Promotion of ESG as part of its business 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 Attraction and retention of skilled employees 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. Prot Sustainability at LINK 53LINK Mobility Group Holding ASA Annual report 2021 Anti-Corruption 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 anti-corruption system. Anti-Bribery and Anti-Corruption Policy 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. Employee Code of Conduct At LINK, we do not tolerate corruption in any form, including bribery, facilitation payments, and corruption in business practices Supplier Code of conduct 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. Training 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. A global whistleblowing system LINK’s current whistleblowing system was set up in May 2021 and is available to all LINK 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 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. 54 Because every communication matters WWW.LINKMOBILITY.COM Suppliers’ assessment - The supplier due diligence process at LINK 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 y Data Privacy y Anti-Corruption y Antitrust/ Fair competition y Environment 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 Supplier and Employee Code of Conduct Embedding LINK core values into corporate policies and subsequently developing relevant 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. Employees training 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, anti- corruption, and competition policies. All new employees are expected to complete both training courses upon commencement of their employment at LINK and subsequently every year. Privacy/ IT security questionnaires 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. Sustainability at LINK 55LINK Mobility Group Holding ASA Annual report 2021 To continue our efforts to reduce risks associated with suppliers, the following measures will be implemented in 2022. Increasing the scope of suppliers In 2021 the suppliers’ mapping covered telecommunication vendors. In 2022, LINK will increase its supplier assessment scope to certain IT suppliers. SDD questionnaire The general SDD questionnaire, developed in 2021, is expected to act as a primary guidance to raise employees’ awareness of compliance issues, and to collect relevant knowledge on suppliers’ entities. Contract measures 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. Internal audits performance against corporate policies. Internal audits relevant to the implementation of supplier assessment measures will be introduced in 2022. Environment clauses In 2022, material environmental issues will be analyzed with respect to suppliers. IT security 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. Information Security Policy 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. Our 2022 ambitions 56 Because every communication matters WWW.LINKMOBILITY.COM There are two prevalent approaches that are being instilled in our daily development and is to establish a framework for the protection of information at LINK and all subsidiaries, 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 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. Sustainability at LINK 57LINK Mobility Group Holding ASA Annual report 2021 Report from the board of directors CHAPTER 08 LINK Mobility Group Holding ASA Annual report 2021 Because every communication matters WWW.LINKMOBILITY.COM 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. 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., globally. Market position and development 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 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 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. Report from the board of directors 60 Because every communication matters WWW.LINKMOBILITY.COM 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. Comments related to the nancial statements statements have been prepared based on that assumption. As a listed company, LINK Mobility accordance with IFRS (International Financial Reporting Standards) as adopted by the European Union. Acquisitions 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 Enterprise customers and CPaaS providers. Denmark. The company has developed an omnichannel marketing platform with an integrated 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. in the U.S. The company offers its proprietary CPaaS platform EONS (Emergency Outage communication. Message Broadcast operates within large US industry verticals like utilities, Report from the board of directors 61LINK Mobility Group Holding ASA Annual report 2021 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. Revenue, costs, and prots LINK reported revenue of NOK 4 410 million in 2021, an increase of 25% from NOK 3 539 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). of NOK 13 million and a positive currency effect of NOK 100 million. LINK’s outstanding bond 170 million, related to the acquisition of Message Broadcast in the U.S., was completed in June 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. Annual result and allocation The board proposes that the 2021 net loss will be transferred to accumulated losses. Financial position, cash ow, and liquidity 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. 62 Because every communication matters WWW.LINKMOBILITY.COM from investing activities was NOK 2009 million (NOK 660 million) of which the acquisition of activities amounted to NOK 1 583 million (NOK 1 135 million), largely stemming from a tap issue of EUR 170 million in June 2021. Risks successful implementation of LINK’s business strategy or manage its growth effectively. Market 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. Market risk 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 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. Report from the board of directors 63LINK Mobility Group Holding ASA Annual report 2021 Financial risk credit. Overall, these risks are regarded as low and manageable. 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 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 bond is listed on the Oslo Stock Exchange and LINK considers its liquidity risk to be limited and future M&A agenda. LINK saw marginal losses on trade receivables in 2021 and has established Acquisition risk 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 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. 64 Because every communication matters WWW.LINKMOBILITY.COM IT Risk 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 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 y Alignment on group level of the process to perform penetration testing on LINK’s platforms y Structuring of LINK’s approach to documenting its information security management system y Groupwide implementation of incident management processes Legal & compliance risk 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, 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. 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 Risk 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. Report from the board of directors 65LINK Mobility Group Holding ASA Annual report 2021 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. y LINK’s introduction of a group-wide CRM system to ensure alignment with group-wide processes and policies, and mitigating negative impact through detective controls y LINK’s centralization and structuring of insurance to ensure adequate coverage is aligned in all areas Global pandemic 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 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. Geopolitical uncertainty 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 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 66 Because every communication matters WWW.LINKMOBILITY.COM sanctions, affecting global energy and raw material markets, has been experienced by LINK. Shareholders and shares 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. 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. 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. 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. Report from the board of directors 67LINK Mobility Group Holding ASA Annual report 2021 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 stocks. Organization, workforce, and management 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 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. 68 Because every communication matters WWW.LINKMOBILITY.COM Board statement on corporate governance 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 interests of shareholders, employees, and other stakeholders. 1. Applicable legislation and principles 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. 2. Business 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). through deep dives into the strategy and business throughout the year, in order to ensure that social, and environmental considerations into account when performing such deep dives. LINK fully complies with the Code. Report from the board of directors 69LINK Mobility Group Holding ASA Annual report 2021 3. Equity and dividends Dividend Policy is published on LINK’s homepage under corporate governance, key documents. LINK fully complies with the Code. 4. Equal treatment of shareholders 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. 5. Shares and negotiability 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. 6. General meetings In accordance with LINK’s Articles of Association, all shareholders with shares acquired before 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 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. 70 Because every communication matters WWW.LINKMOBILITY.COM 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. 7. Nomination committee 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 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 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. 8. Board of directors’ composition and independence 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 Report from the board of directors 71LINK Mobility Group Holding ASA Annual report 2021 LINK fully complies with the Code. 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. Overview of the Board of Directors 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 9. The work of the board of directors 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. 72 Because every communication matters WWW.LINKMOBILITY.COM 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 Audit committee 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 board. The current version of the audit committee’s instructions is from December 7th, 2021. 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. Remuneration committee 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 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. incentives linked to share price performance. Report from the board of directors 73LINK Mobility Group Holding ASA Annual report 2021 M&A committee LINK has an M&A committee that consists of board members and members of the company’s 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. 10. Risk management and internal control 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 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 IT and legal & compliance, and each area provides support and information from group level to 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. 74 Because every communication matters WWW.LINKMOBILITY.COM 11. Remuneration of the board of directors 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. 12. Salary and other remuneration for executive personnel 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). absolute limit. LINK fully complies with the Code. 13. Information and communication 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. 14. Takeovers 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 offer will make it clear whether the views expressed are unanimous or specify the basis on offer will be made by the shareholders in an extraordinary general meeting (EGM). LINK fully complies with the Code. Report from the board of directors 75LINK Mobility Group Holding ASA Annual report 2021 15. Auditor 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 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 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. Insurance 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 from claims made against them in respect of actual or alleged acts in their capacity as directors Environmental, social, and governance (ESG) 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. Forward looking statement 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. 76 Because every communication matters WWW.LINKMOBILITY.COM 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. 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 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 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. The board of directors appreciates and emphasizes uncertainty in relation to assessments of expected future development. Forward looking statement Pro forma revenue Pro forma adjusted EBITDA margin 2024 10,000 15-17% Amounts are in million NOK Ralph Paul Choufani Board member Guillaume Alain Van Gaver Chief Executive Officer Jens Rugseth Chairman of the board Sara Murby Forste Board member Charles Joseph Brucato III Board member Katherine Ji-Young Woo Board member Robert Joseph Nicewicz Jr Board member Grethe Helene Viksaas Board member Report from the board of directors 77LINK Mobility Group Holding ASA Annual report 2021 Consolidated income statement 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. 78 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Consolidated statement of Comprehensive Income 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 79LINK Mobility Group Holding ASA Annual report 2021 Consolidated statement of financial position (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. 80 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Ralph Paul Choufani Board member Guillaume Alain Van Gaver Chief Executive Officer Jens Rugseth Chairman of the board Sara Katarina Murby Forste Board member Charles Joseph Brucato Board member Katherine Ji-Young Woo Board member Robert Joseph Nicewicz Jr Board member Grethe Helene Viksaas Board member The Board of Directors of LINK Mobility Group Holding ASA Oslo, 28 April 2022 81LINK Mobility Group Holding ASA Annual report 2021 Consolidated statement of Changes in Equity 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. 82 Because every communication matters WWW.LINKMOBILITY.COM Consolidated statement of cash flows 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 Proceeds on issue of shares 60,807 2,373,513 Repayment of equity - -411,757 Other financial items 19 - - Proceeds from borrowings 19 1,670,021 2,687,634 Repayment of borrowings 19 -40,898 -3,259,081 Interest paid -110,076 -243,386 Principal elements of lease payments -11,379 -11,615 Net cash flows from financing activities 1,568,476 1,135,309 Effect of foreign exchange rate changes -23,840 -33,987 Net change in bank deposits, cash and equivalents -108,525 804,946 Cash and equivalents at beginning of period 952,144 147,198 Cash and equivalents at end of the period 843,618 952,144 The accompanying notes are an integral part of these financial statements. Financial statements 2021 83LINK Mobility Group Holding ASA Annual report 2021 Notes to the financial statements for the period ended 31 December 2021 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 84 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 1 General information 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 AD 29/07/2019 Sofia, Bulgaria 100 % Teravoice EAD 29/07/2019 Sofia, Bulgaria 100 % Link Mobility Development Hub EOOD 30/9/2016 Sofia, Bulgaria 100 % LINK Mobility EAD 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 % 85LINK Mobility Group Holding ASA Annual report 2021 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. 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 Limited 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. ² Formerly Dream Interactive Ltd. ³ Archynet s.r.s. and SMS IT Srl were merged on 01.01.2021 to become LINK Mobility Italia Srl. Formerly Hay Systems Ltd. Netsize Espana S.L.U. is merged with LINK Mobility Spain S.L.U. on 31 December 2021. LINK Mobility EAD and Teravoice EAD are merged with Tera Communications AD on 27 January 2022. Netsize Societa’ A Responsabilita’ Limitada is merged with LINK Mobility Italia Srl on 31 December 2021. 86 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 2 Adoption of new and revised International Financial Reporting Standards (IFRS) 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, from the date of establishment. The accounting policies adopted are described in Note 3 Standards and interpretations affecting amounts reported in the current period The accounting policies adopted, and methods of computation followed are consistent with following standards and interpretations has not had any material impact on the disclosures or y Amendment to IFRS 16 concerning COVID-19-Related Rent Concessions beyond 30 June 2021 y Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2 New or amended standards that have effective date on 1 January 2023 or later have not been period of initial application. Management will continue to follow the development of changes to Standards and Interpretations issued by the IASB throughout 2022. Note 3 Summary of signicant accounting policies 3.1 General information LINK Mobility Group Holding ASA (“the Company”) is a limited liability Company incorporated 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”. Minor rounding differences may be present, and the total may deviate from the total of the individual 87LINK Mobility Group Holding ASA Annual report 2021 3.2 Basis for preparation International Financial Reporting Standards (IFRS) as issued by the International Accounting been prepared on the historical cost basis. 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, disclosed in Note 4 Critical accounting judgements and key sources of estimation variances. rounded to nearest thousand, unless otherwise stated. 3.3 Principles of consolidation 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 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. 3.4 Business combinations Business combinations are accounted for using the acquisition method. The consideration 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 assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in the 88 Because every communication matters WWW.LINKMOBILITY.COM 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 recoverable amount of the cash-generating unit is less than its carrying amount, the impairment 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 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 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 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. 3.5 Current/non-current classication consumption, in the Group’s normal operating cycle, it is expected/due to be realised or settled 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 3.6 Revenue recognition 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. Financial statements 2021 89LINK Mobility Group Holding ASA Annual report 2021 When another party is involved in providing goods or services to a customer, the Group 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 are expensed in the period in which the related revenue is recognised. The services rendered are split into the following groups: 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. 90 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 3.7 Foreign currency translation 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 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. 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, 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 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 3.8 Intangible assets 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 91LINK Mobility Group Holding ASA Annual report 2021 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 recoverable amount of the cash-generating unit is less than the carrying amount of the unit, 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. losses. Separately acquired intangible assets 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. Internally generated intangible assets – Technology 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: y the technical feasibility of completing the intangible asset so that it will be available for use or sale; y the intention to complete the intangible asset and use or sell it; y the ability to use or sell the intangible asset; y how the intangible asset will generate probable future economic benefits; y the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and y the ability to measure reliably the expenditure attributable to the intangible asset during its development. 92 Because every communication matters WWW.LINKMOBILITY.COM The amount initially recognised for internally generated intangible assets is the sum of the 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. 3.9 Equipment and xtures (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 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. 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 as loss on disposal. An item of property, plant and equipment is derecognised upon disposal or when no future 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. 3.10 Impairment of non-nancial assets 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 the Group estimates the recoverable amount of the cash-generating unit to which the asset 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 annually and whenever there is an indication that the asset may be impaired. Financial statements 2021 93LINK Mobility Group Holding ASA Annual report 2021 Recoverable amount is the higher of fair value less costs of disposal and value in use. In 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 cash- generating 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 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. 3.11 Leases 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 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 non- cancellable 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. 3.12 Government grants 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. 94 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 3.13 Financial Instruments through other comprehensive income (FVTOCI) and Financial liability at cost (FLAC). Currently trade and other receivables (FAAC), cash and cash equivalents, trade and other payables (FLAC), and borrowings (FLAC). Trade receivables and other current and non-current nancial assets 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 calculated by taking into account the historic evidence of the level of credit losses experienced management assesses them not to be wholly or partially collectible. Cash and cash equivalents Cash and cash equivalents include cash, bank deposits and commercial papers with original maturities of three months or less. Financial liabilities Trade and other payables include trade payables and other current and non-current, non- value (net of any transaction costs), and subsequently measured at amortised cost using the effective interest rate method. 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 95LINK Mobility Group Holding ASA Annual report 2021 discharged, cancelled, or have expired. The difference between the carrying amount of the loss. 3.14 Cash ow 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 behalf of authorities. 3.15 Employee benets entity (insurance company). The Group has no legal or constructive obligations to pay further 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. 3.16 Taxation 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 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 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 96 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 all or part of the asset to be realised. Tax positions are regularly reviewed to identify situations where it is not probable that the 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 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. 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 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 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 differences can be utilized. The carrying amount of deferred tax assets is reviewed at each 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. 97LINK Mobility Group Holding ASA Annual report 2021 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. Note 4 Critical accounting judgements and key sources of estimation variances In the application of the Group’s accounting policies, as described in note 3 (summary of 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. 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 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 is recognised as goodwill. y The remaining estimated useful life of customer relationships is between 7 and 10 years y The remaining estimated useful life of technology is 10 years y Revenue growth and EBITDA (earnings before interest, tax, depreciation and amortisation) margins are based on estimates of growth and margins in the respective companies 98 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 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 impairment testing methodology and results. Deferred tax assets 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 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. Purchase price of subsidiaries – earn-out Periodically, the Group acquires subsidiaries where the preliminary purchase price is based on based on the company’s actual achieved EBITDA. The earn-out adjustment is accounted for in 99LINK Mobility Group Holding ASA Annual report 2021 Note 5 Business combinations 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 Acquisition of Tismi B.V. and Tismi Mobile B.V. 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 CPaaS providers. 100 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Acquisition of AMM S.p.A. 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. Acquisition of MarketingPlatform Aps 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). Acquisition of Message Broadcast LLC 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. Acquisition of Altiria TIC, S.L. 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. 101LINK Mobility Group Holding ASA Annual report 2021 Acquisition of Matelab Srl 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. Revenue and net profit, in the period from the date of acquisition until 31 December 2021: (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 - - Estimated revenue and net profit, as if the acquisition had occurred 01 January 2021 (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 Consideration transferred (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 19,780 102 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 ¹ Share consideration 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. ² Vendor loan 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. ³ Earn-out performance milestones. anniversaries after the closing of the transaction. Each stability payment is equal to €150,000. Identiable assets and liabilities recognised on the date of the business combination Assets assumed in connection with the business combinations have been recognised at the 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. 103LINK Mobility Group Holding ASA Annual report 2021 (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. Goodwill (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. Acquisition related expenses (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 - 104 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 6 Segment reporting (Amounts in NOK 1000) 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 to alternate performance measures). An examination of operating units based on market maturity and product development as well Europe, Central Europe, Northern America and Global Messaging; these represent market clusters. Generally, regions are segregated into similar geographic locations as these follow The regions are: Northern Europe Northern Europe is comprised of Norway, Sweden, Denmark, Finland, and the Baltics. Central Europe Central Europe is comprised of Bulgaria, Romania, North Macedonia, Poland, Hungary, Germany, Austria, and the Netherlands. Western Europe Western Europe is comprised of Spain, France, the United Kingdom, and Italy. Global Messaging alone 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. 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 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). 105LINK Mobility Group Holding ASA Annual report 2021 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). 106 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Disaggregation of revenue 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 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 Revenue per geographical region 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 107LINK Mobility Group Holding ASA Annual report 2021 Note 7 Leases (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 Estimated useful life, depreciation plan and residual value is as follows: Economic (useful) life 0 - 3 years 0 - 5 years 0 - 3 years Depreciation plan Linear Linear Linear 108 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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’s leasing activities and how these are accounted for: 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 Fixed payments (including in-substance fixed payments), less any lease incentives receivable; y Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date; y Amounts expected to be payable by the group under residual value guarantees; 109LINK Mobility Group Holding ASA Annual report 2021 y The exercise price of a purchase option if the group is reasonably certain to exercise that option; and y Payments of penalties for terminating the lease, if the lease term reflects the group exercising that option. 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: y Where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; y Uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by Group subsidiaries, which do not have recent third-party financing; and y Makes adjustments specific to the lease (i.e. term, country, currency and security). 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. remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the following: y The amount of the initial measurement of lease liability; y Any lease payments made at or before the commencement date less any lease incentives received; y Any initial direct costs; and y Restoration costs. 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 110 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT 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 used in the Group’s operations. The majority of extension and termination options held are mutually exercisable and are evaluated accordingly. Note 8 Payroll and related expense (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 111LINK Mobility Group Holding ASA Annual report 2021 Remuneration of key group employees FY2021 and as at 31 December 2021, Group management consisted of the following individuals (amounts in NOK 1000): 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. Share based remuneration 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. 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 63,483 112 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 113LINK Mobility Group Holding ASA Annual report 2021 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 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 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 Number of RSU’s Average price Vested RSU’s - Unvested RSU’s 2,261,453 0.005 Total outstanding RSU’s 2,261,453 114 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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: y The share price is set equal to the offer price on October 20th 2020 (date of completetion of the Initial Public Offering (IPO) of Link Mobility Group Holding ASA. y The strike price for the RSUs is set equal to the nominal share value (NOK 0.005). y We assume that historical volatility of a selected group comparable companies within the CPaaS-univserse is an indication of future volatility. y Expected volatility is set identical to historical volatility, equal to 61 % in the calculations for the first LTI’s and for the RSU’s. The volatility for the LTI II is estimated at 51%. y We assume that the employees will exercise the options at the mid-point between earliest and latest possible exercise opportunity. y Risk free rate used in the calculations is set equal to the rate of Norwegian treasury bills and Government Bonds corresponding to the lifetime of the option. 115LINK Mobility Group Holding ASA Annual report 2021 Remuneration to the Board of Directors 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: 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. * Other expenses include variable operating expenses related to overhead, travel costs and other operating expenses. 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 Note 9 Other operating expenses (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 316,867 201,553 116 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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. 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. 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 117LINK Mobility Group Holding ASA Annual report 2021 Note 10 Net nance income and expenses (Amounts in NOK 1000) amounts are presented as a sum of interest on borrowings offset by amortised cost recognised ¹ Foreign currency gain/loss is presented on a net basis here and in the Consolidated Statement lending denominated in foreign currencies. Refer to note 19 (interest-bearing liabilities) and note 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. 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 -118,194 118 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 11 Earnings per share (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 119LINK Mobility Group Holding ASA Annual report 2021 Note 12 Transactions 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. Note 13 Intangible assets (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 120 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Year ended 31 December 2021 Trade name Customer relations Technology Goodwill Total Opening net book value 300,507 966,985 556,002 3,982,843 5,806,337 Net additions from acquired businesses 7,620 1,016,619 283,188 1,723,787 3,031,214 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 impairment -42,997 -350,607 -413,678 -24,603 -831,885 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 Trade name 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 Customer Relationships 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. Technology 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 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. 121LINK Mobility Group Holding ASA Annual report 2021 Impairment test 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 period. The assumed growth rate has been based on the management growth estimate for the 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). each country in it operates in as a CGU: 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 amount of the CGUs. 122 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Sensitivity analysis 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 calculating value in use are subject to uncertainty. The assumptions are described as follows: Budgeted period 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 WACC 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 123LINK Mobility Group Holding ASA Annual report 2021 Period ended 31 December 2020 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 Period ended 31 December 2021 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 Cost 70,376 Accumulated depreciation -49,891 Net book amount 31.12 20,485 Estimated useful life, depreciation plan and residual value is as follows: Economic (useful) life 3-5 years Depreciation plan Linear Note 14 Equipment and xtures (Amounts in NOK 1000) 124 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 15 Trade and other receiveables (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. 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 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). Ageing of past due but not impaired trade receivables (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 % 125LINK Mobility Group Holding ASA Annual report 2021 Note 16 Cash and cash equivalents (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 Total restricted cash 17,535 12,143 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 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 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. 126 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 17 Share capital and shareholder information (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 127LINK Mobility Group Holding ASA Annual report 2021 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) 6,382 128 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 Note 18 Classes and categories of nancial instruments (Amounts in NOK 1000) subsequently at amortised cost less loss allowances. the carrying value at the reporting date has been assessed as approximating fair value. The recognised amounts consitute a reasonable approximation of fair value. 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 129LINK Mobility Group Holding ASA Annual report 2021 Note 19 Interest-bearing liabilities (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 3,712,068 130 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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. Covenants Under the bond terms, the Group is required to comply with the following financial covenants at the respective quarterly and annual test dates: Financial Reporting: y Publish interim accounts (quarterly reports) in the English language on the Group website (or other relevant platform) no later than 60 days after the end of the relevant interim period. y Publish annual financial statements in the English language on the Group website (or other relevant platform) no later than 120 days after the end of the fiscal year. Maturity analysis of borrowings (including interest) 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 131LINK Mobility Group Holding ASA Annual report 2021 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. Financial Indebtedness: 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. Negative Pledge: 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). Disposals of Business: 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. Distribution: Except as permitted, the Issuer shall not, and shall procure that no other Group Company will make any Distribution. Incurrence Test: 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. Collateral and guarantees 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 million. The bonds were issued at par. be repaid in full at the maturity date. 132 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 Note 20 Financial instruments, risk management objectives, and policies (Amounts in NOK 1000) y Interest rate risk y Foreign exchange risk y Credit risk y Liquidity risk Interest rate risk 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 million. The bonds were issued at par; refer to note 19 for further details. 133LINK Mobility Group Holding ASA Annual report 2021 The sensitivity analysis below is based on the exposure to changes in interest rates for non- 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, 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. Foreign exchange risk The Group undertakes business in foreign currencies and is consequently exposed 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. DKK, EUR, SEK, PLN, BGN, CHF, GBP, HUF, RON, MKD or USD in relation to NOK affect the Group’s 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. Credit Risk 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. 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 - - 134 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 The carrying value of trade and other receivables represent the Group’s maximum exposure to credit risk at the balance sheet date. Liquidity risk mature, resulting in default. 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 for information about the bond convenants. Capital management further activities. Note 21 Trade and other payables (Amounts in NOK 1000) Trade and other payables 2021 2020 Trade payables 579,542 524,059 Public duties 74,227 53,791 Accrued vacation pay 55,259 25,401 Accrued expenses 353,590 323,920 Total trade and other payables 1,062,618 927,171 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. 135LINK Mobility Group Holding ASA Annual report 2021 Note 22 Income tax (Amounts in NOK 1000) Specication of income tax expense 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 Effective Tax Rate 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. 136 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 Interest cap is related to LINK Mobility Group Holding ASA, LINK Mobility Pecunia AS and to amount can be carried forward for 10 years. Specication of the tax effect of temporary differences and losses carried forward Tax losses and interest cap for which no deferred tax asset has been recognised Unrecognised temporary differences 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. Tax effect of temporary differences and tax losses carried forward as of 31 December 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 137LINK Mobility Group Holding ASA Annual report 2021 Note 23 Contingencies and legal claims 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 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: Note 24 Events after the reporting date As at the date of this report, there are no events after the reporting date. Alternate performance measures (“APM’s”) Standards (IFRS), as adopted by the EU. To enhance the understanding of LINK’s performance, EBITDA, and adjusted EBITDA margin. APMs such as EBITDA are commonly reported by 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 138 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 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 (particularly when acquisitions have occurred) or based on non-operating factors. LINK uses the following APMs: Gross Profit Gross Profit means revenues less direct costs of services rendered. Gross margin Gross margin means gross profit as a percentage of total operating revenues. Adjusted EBITDA Adjusted EBITDA means EBITDA adjusted by expenses related to significant one-time, non- recurring events such as acquisitions and restructuring activities, legal advisors, and share- based 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 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 % 139LINK Mobility Group Holding ASA Annual report 2021 Net debt 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 lease liabilities less cash and cash equivalents. Sellers credits, holdback and earn-outs are excluded as they are not interest-bearing. Net debt/LTM adjusted EBITDA LINK measures leverage ratio as Net debt/Last Twelve Months Adjusted EBITDA. The measure 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 loan terms and is therefore omitted for the historical periods. 140 Because every communication matters WWW.LINKMOBILITY.COM Income Statement 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. Financial statements 2021 141LINK Mobility Group Holding ASA Annual report 2021 Statement of financial position (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. 142 Because every communication matters WWW.LINKMOBILITY.COM Statement of Comprehensive Income 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 Translation differences of foreign operations - - Other comprehensive income for the period - - Total comprehensive income for the period 1,418,187 29,095 Ralph Paul Choufani Board member Guillaume Alain Van Gaver Chief Executive Officer Jens Rugseth Chairman of the board Sara Katarina Murby Forste Board member Charles Joseph Brucato Board member Katherine Ji-Young Woo Board member Robert Joseph Nicewicz Jr Board member Grethe Helene Viksaas Board member The Board of Directors of LINK Mobility Group Holding ASA Oslo, 28 April 2022 Financial statements 2021 143LINK Mobility Group Holding ASA Annual report 2021 Statement of Changes in Equity 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. 144 Because every communication matters WWW.LINKMOBILITY.COM Statement of cash flows 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. Financial statements 2021 145LINK Mobility Group Holding ASA Annual report 2021 Notes to the financial statements for the period ended 31 December 2021 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 Note 1 General information 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% 146 Because every communication matters WWW.LINKMOBILITY.COM Note 2 Adoption of new and revised International Financial Reporting Standards (IFRS) 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 of the Group from the date of establishment. The accounting policies adopted are described Standards and interpretations affecting amounts reported in the current period The accounting policies adopted, and methods of computation followed are consistent with following standards and interpretations has not had any material impact on the disclosures or y Amendment to IFRS 16 concerning COVID-19-Related Rent Concessions beyond 30 June 2021 y Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2 New or amended standards that have effective date on 1 January 2023 or later have not been period of initial application. Management will continue to follow the development of changes to Standards and Interpretations issued by the IASB throughout 2022. Note 3 Summary of significant accounting policies 3.1 General information LINK Mobility Group Holding ASA (“the Company”) is a limited liability Company incorporated 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”. 2022. Minor rounding differences may be present, and the total may deviate from the total of the Financial statements 2021 147LINK Mobility Group Holding ASA Annual report 2021 purposes. 3.2 Basis for preparation Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board historical cost basis. 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, disclosed in Note 4 Critical accounting judgements and key sources of estimation variances. rounded to nearest thousand, unless otherwise stated. 3.3 Principles of consolidation 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 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. rounded to nearest thousand, unless otherwise stated. 3.4 Business combinations Business combinations are accounted for using the acquisition method. The consideration 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 148 Because every communication matters WWW.LINKMOBILITY.COM assets acquired and the liabilities assumed. If, after reassessment, the Group’s interest in 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 recoverable amount of the cash-generating unit is less than its carrying amount, the impairment 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 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 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 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. 3.5 Current/non-current classication consumption, in the Company’s normal operating cycle, it is expected/due to be realised or 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 current. Financial statements 2021 149LINK Mobility Group Holding ASA Annual report 2021 3.6 Revenue recognition 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 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 are expensed in the period in which the related revenue is recognised. The services rendered are split into the following groups: 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 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. 150 Because every communication matters WWW.LINKMOBILITY.COM 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 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 contract, net of discounts and value added tax. 3.7 Foreign currency translation 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 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. 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 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 Financial statements 2021 151LINK Mobility Group Holding ASA Annual report 2021 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 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 3.8 Intangible assets 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 the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, 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. losses. Separately acquired intangible assets 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. 152 Because every communication matters WWW.LINKMOBILITY.COM Internally generated intangible assets – Technology 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: y the technical feasibility of completing the intangible asset so that it will be available for use or sale; y the intention to complete the intangible asset and use or sell it; y the ability to use or sell the intangible asset; y how the intangible asset will generate probable future economic benefits; y the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and y the ability to measure reliably the expenditure attributable to the intangible asset during its development. The amount initially recognised for internally generated intangible assets is the sum of the 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. 3.9 Equipment and xtures (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 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. 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 as loss on disposal. Financial statements 2021 153LINK Mobility Group Holding ASA Annual report 2021 An item of property, plant and equipment is derecognised upon disposal or when no future 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. 3.10 Impairment of non-nancial assets 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 the Company estimates the recoverable amount of the cash-generating unit to which the asset 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 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 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 cash- generating 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 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. 3.11 Leases The Company initially applied IFRS 16 from 01 January 2019; IFRS 16 was applied using the the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the 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 154 Because every communication matters WWW.LINKMOBILITY.COM 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 non- cancellable 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. 3.12 Government grants 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. Note 4 Critical accounting judgements and key sources of estimation variances In the application of the Company’s accounting policies, as described in note 3 (summary of 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. Business combinations 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, Financial statements 2021 155LINK Mobility Group Holding ASA Annual report 2021 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 y The remaining estimated useful life of customer relationships is between 7 and 10 years y The remaining estimated useful life of technology is 10 years y Revenue growth and EBITDA (earnings before interest, tax, depreciation and amortisation) margins are based on estimates of growth and margins in the respective companies 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 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 impairment testing methodology and results. Deferred tax assets 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 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. Purchase price of subsidiaries – earn-out 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 out adjustment based on the company’s actual achieved EBITDA. The earn-out adjustment is 156 Because every communication matters WWW.LINKMOBILITY.COM Note 5 Investment in subsidiaries 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: Acquisitions during the period: 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 Financial statements 2021 157LINK Mobility Group Holding ASA Annual report 2021 Note 6 Other operating expenses (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. Auditor’s fees 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. 158 Because every communication matters WWW.LINKMOBILITY.COM Note 7 Net finance income and expenses (Amounts in NOK 1000) Interest amounts are presented as a sum of interest on borrowings offset by amortised cost 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). Financial statements 2021 159LINK Mobility Group Holding ASA Annual report 2021 Note 8 Cash and cash equivalents (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. 160 Because every communication matters WWW.LINKMOBILITY.COM Note 9 Share capital and shareholder information 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 Financial statements 2021 161LINK Mobility Group Holding ASA Annual report 2021 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) 6,382 162 Because every communication matters WWW.LINKMOBILITY.COM Note 10 Classes and categories of financial instruments (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. Note 11 Interest-bearing liabilities (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. Financial statements 2021 163LINK Mobility Group Holding ASA Annual report 2021 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. Collateral and guarantees 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 million. The bonds were issued at par. to be repaid in full at the maturity date. 164 Because every communication matters WWW.LINKMOBILITY.COM Note 12 Financial instruments, risk management objectives, and policies Through its operations LINK Mobility Group Holding ASA is exposed to the the following y Interest rate risk y Foreign exchange risk y Credit risk y Liquidity risk Interest rate risk 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 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 non- 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, 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. Foreign exchange risk The Company is a holding company and does not actively undertake business in 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 - - Credit Risk The Company is a holding company and owns all shares in LINK Mobility Group AS; credit risk is deemed to be low. Financial statements 2021 165LINK Mobility Group Holding ASA Annual report 2021 Liquidity risk mature, resulting in default. bank accounts as of year-end. Obligations are covered by transfer of cash from subisidiaries. 11 for information about the bond convenants. The Company does not have any credit facilities. Note 13 Trade and other payables (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. 166 Because every communication matters WWW.LINKMOBILITY.COM Note 14 Income tax (Amounts in NOK 1000) Specication of income tax expense 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 Effective Tax Rate 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. Financial statements 2021 167LINK Mobility Group Holding ASA Annual report 2021 Specication of the tax effect of temporary differences and losses carried forward 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 recognised. The amount can be carried forward for 10 years. Tax effect of temporary differences and tax losses carried forward as of 31 December 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 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 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. Note 15 Contingencies and legal claims The Company is not involved in any disputes or litigation as at the balance sheet date or as at 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. 168 Because every communication matters WWW.LINKMOBILITY.COM Financial statements 2021 169LINK Mobility Group Holding ASA Annual report 2021 170 Because every communication matters WWW.LINKMOBILITY.COM Because every communication matters 171LINK Mobility Group Holding ASA Annual report 2021 Universitetsgata 2 0164 Oslo, Norway [email protected] +47 22 99 44 00 (HQ) 2549006RH08XJGKC2Y142021-01-012021-12-312549006RH08XJGKC2Y142020-01-012020-12-312549006RH08XJGKC2Y142021-12-312549006RH08XJGKC2Y142020-12-312549006RH08XJGKC2Y142019-12-31ifrs-full:IssuedCapitalMember2549006RH08XJGKC2Y142020-01-012020-12-31ifrs-full:IssuedCapitalMember2549006RH08XJGKC2Y142020-12-31ifrs-full:IssuedCapitalMember2549006RH08XJGKC2Y142019-12-31ifrs-full:SharePremiumMember2549006RH08XJGKC2Y142020-01-012020-12-31ifrs-full:SharePremiumMember2549006RH08XJGKC2Y142020-12-31ifrs-full:SharePremiumMember2549006RH08XJGKC2Y142019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2549006RH08XJGKC2Y142020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2549006RH08XJGKC2Y142020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2549006RH08XJGKC2Y142019-12-31ifrs-full:RetainedEarningsMember2549006RH08XJGKC2Y142020-01-012020-12-31ifrs-full:RetainedEarningsMember2549006RH08XJGKC2Y142020-12-31ifrs-full:RetainedEarningsMember2549006RH08XJGKC2Y142019-12-312549006RH08XJGKC2Y142021-01-012021-12-31ifrs-full:IssuedCapitalMember2549006RH08XJGKC2Y142020-12-31ifrs-full:IssuedCapitalMemberifrs-full:FinancialEffectOfCorrectionsOfAccountingErrorsMember2549006RH08XJGKC2Y142021-12-31ifrs-full:IssuedCapitalMember2549006RH08XJGKC2Y142021-01-012021-12-31ifrs-full:SharePremiumMember2549006RH08XJGKC2Y142020-12-31ifrs-full:SharePremiumMemberifrs-full:FinancialEffectOfCorrectionsOfAccountingErrorsMember2549006RH08XJGKC2Y142021-12-31ifrs-full:SharePremiumMember2549006RH08XJGKC2Y142021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2549006RH08XJGKC2Y142020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMemberifrs-full:FinancialEffectOfCorrectionsOfAccountingErrorsMember2549006RH08XJGKC2Y142021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember2549006RH08XJGKC2Y142021-01-012021-12-31ifrs-full:RetainedEarningsMember2549006RH08XJGKC2Y142020-12-31ifrs-full:RetainedEarningsMemberifrs-full:FinancialEffectOfCorrectionsOfAccountingErrorsMember2549006RH08XJGKC2Y142021-12-31ifrs-full:RetainedEarningsMember2549006RH08XJGKC2Y142020-12-31ifrs-full:FinancialEffectOfCorrectionsOfAccountingErrorsMemberiso4217:NOKiso4217:NOKxbrli:shares
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