Empowering
entertainment
discovery
everywhere
Annual report 2022
Linkfire A/S • Rentemestervej 80 • 2400 København • CVR no. 35 83 54 31
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Table of contents
Introduction
About 4
Building A Sustainable Business 5
Key Events And Highlights In 2022 6
Letter From The CEO 7
Letter From The Chairman 8
Management’s Review
Industry Update 10
Our Solutions, Key Strengths
& Competitive Advantage 11
Our Business Strategy 12
Financial Performance And Key Figures 13
Outlook For 2023 16
Financial Review 17
Sustainability 19
Corporate Governance
The Share And Shareholders 21
Risk Management 23
Board Of Directors 25
Executive Management Team 27
Leadership Team 28
Corporate Governance 29
Consolidated Statement Of Comprehensive Income 32
Consolidated Statement Of Financial Position 33
Consolidated Statement Of Changes In Equity 34
Cash Flow Statement 35
Notes - Consolidated 36
Parent Company Income Statement 60
Parent Company Statement Of Financial Position 61
Parent Company Statement Of Changes In Equity 63
Notes - Parent Company 64
Statement By Management 72
Independent Auditor’s Report 73
Glossary And Company Information 75
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Introduction
⇢ ABOUT LINKFIRE
⇢ BUILDING A SUSTAINABLE BUSINESS
⇢ KEY EVENTS AND HIGHLIGHTS IN 2022
⇢ LETTER FROM THE CEO
⇢ LETTER FROM THE CHAIRMAN
⇢
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About Linkfire
Empowering entertainment discovery everywhere
Linkfire is the world’s leading off-platform entertainment discovery network. Our smart links
connect billions of consumers across the globe to the content they love in the apps they love.
Since 2014, we have become a trusted partner to the music industry’s biggest names and
thousands of soon-to-be biggest names. Linkfire is headquartered in Copenhagen, with offices in
New York City, Los Angeles and Lisbon, Portugal.
Linkfire makes entertainment marketing easy. We optimize impact, drive streams, increase ticket
sales and recommend audio content to billions of fans and listeners on a global scale.
Our SaaS marketing platform transformed music marketing, and we are now building a global
recommendation network for audio entertainment discovery to connect even more fans and
listeners to the content they love.
Linkfire’s customers and partners include most artists on Billboard’s annual Hot 100, all major
music labels, global audio and music streaming services, social media apps and media
publishers.
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Building a sustainable business
2014 - 2015 Linkfire was founded, and the first version of the marketing platform was developed in collaboration with Danish record labels.
2016 - 2017 Going international. The platform became widely used throughout Denmark and Europe. All three major music labels - Universal Music Group, Sony Music Group,
and Warner Music Group – joined Linkfire.
2018 Conquering the US. Linkfire opened its first US offices, followed by a quick adoption increase by the big US record labels.
2019 Building a market leader. Linkfire secures its position as the global market leader by connecting more fans with music than any other competitor.
2020 Scaling up. Independent record labels, competitors, podcasters, and the first large US film studio started using Linkfire.
2021 Linkfire is listed and becomes a publicly listed company on Nasdaq First North Premier Growth Market in Sweden.
2022 Linkfire further solidifies its position in the market and closes 2022 with historical performance taking a significant step towards breakeven as reported in Q4 2022.
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Key events and highlights in 2022
Q1
In January completed the acquisition of key global competitor smartURL and announced the expectation of reaching EBITDA profitability for 2023.
Linkfire ranks in the top 10 in Leap’s yearly report of the top 100 Danish startups based on digital marketing.
Q2
In April, Linkfire entered a multi-year marketing and affiliate agreement with Amazon Music.
In June, Linkfire initiated organizational restructure by reducing staff and operating setup for its expansion plans.
Q3
In August, announcing that the company is evaluating financing options related to debt and equity in the range of DKK 40-50 million.
In September, Linkfire announced the extension of its multi-year agreement with Apple to expand to Apple Services.
Q4
Revenue growth above 70% and substantially improved EBITDA ratio, marking the best quarter in Linkfire’s history.
In October, took further cost reduction actions to ensure profitable operations in 2023 and adjusted mid-term revenue growth to 20-40%.
In November, secured financing of DKK 45 million with completion of tranche 1 (DKK 22.5 million) in December, and tranche 2 (DKK 22.5 million) set to be completed
by April 2023.
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Letter from the CEO
Lars Ettrup
CEO & Co-founder
2022 was another strong year for Linkfire. Despite
market turmoil and internal restructuring, Linkfire
grew revenue by 56% and is a significant step
closer to profitability.
A year of contrasts, 2022 saw the music industry finally revived
while the tech industry was severely challenged. The return of
live concerts after years of covid19 restrictions was a welcome
change, whereas the global economic climate saw a significant
increase in uncertainty.
With our focus on breaking even in 2023, the management team
and Board of Directors decided to restructure and streamline
our operations and company, resulting in cost reductions. This
led to the departure of many good employees in 2022. I want to
extend my deepest gratitude for our former teammates' time
with Linkfire, and I am thrilled to see how quickly most have
found new occupations. The changes have led to a more agile
and trimmed organization better suited for our breakeven focus.
In contrast to 2021, where our focus was on scaling our
company and business, we shifted our primary focus to the core
business and shorter-term value creation, specifically our
marketing platform driving both subscription and commission
sales.
We remain optimistic about the market and outlook. The music
industry continues to grow, and competition for streaming
subscribers and market share is increasing. In particular, we see
a growing long tail of music and audio creators. BandLab,
whose CEO, Meng Ru Kuok, is an investor in Linkfire, now has
over 60 million subscribers on their app, indicating a massive
potential for growth in the segment.
In 2022, we launched our next-generation Artist Bio-Link, a fast
loading miniature website that allows creators to further
customize their engagement with their audience, providing an
array of opportunities to promote such as tickets, merch, social
profiles and the likes. These changes have positively impacted
our business, increasing engagement and are expected to
impact subscription and commission sales in the years to come.
As a result, we are optimizing our platform to suit all types of
music and audio creators, whether they use a computer or a
phone to reach their audience.
We are proud to have expanded our partnership with one of the
industry leaders, Apple Music. Additionally, we entered into an
agreement with Amazon, which further solidified our position as
a leading marketing platform for the entertainment industry.
2022 was also the year that we secured funding of DKK 45
million, divided into two tranches. The first tranche was
completed in November, bringing solid financial and industry
backing to the shareholder base. The second is due in late May.
Looking ahead to 2023, we remain diligent with our costs and
focus. This year will mark a huge milestone for the business as
we target EBITDA break-even. We plan to continue monetising
and to expand our consumer connections by offering even more
product optimisation, which will expand our footprint and further
grow sales. Additionally, we will develop our partnership roster,
including vertical expansion and product development for the
spoken word industry (podcasts).
I want to thank all our employees for their relentless efforts to
bring world-class products to our customers and partners.
Humble appreciation goes to our customers, partners and
shareholders for your continuous belief in what we do. We are
looking into 2023 uplifted by the revenue performance at the
end of 2022 and confident about our mission to break even in
2023 in our trimmed and agile organizational setup.
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Letter from the Chairman
Jesper Møller
Chairman of the Board
Solid growth throughout 2022 and significantly
improved profitability towards the end of the year.
Linkfire focused on efficiency and business initiatives with
quicker rates of return, resulting in improved earnings
performance towards the end of the year. The narrower
commercial focus and reduced cost base resulted in 56%
revenue growth for the year while significantly improving the
EBITDA margin in Q4 2022.
Commission Revenue Per Mille (RPM) is the company's measure
of commission revenue per thousand consumer connections.
This is an important financial measure since it expresses the
company’s ability to monetize its traffic. RPM grew to DKK 8.95,
a 23 per cent increase from last year, while achieving an RPM as
high as DKK 14.95 in Q4 2022.
This results from significantly better general utilization of the
total consumer connections, reflecting the narrowed
commercial focus.
Subscription revenue continued stable growth while the
company received great customer feedback and performance
scores. Securely operating while innovating Linkfire’s product
offering to the music and entertainment industry is a dear
mission to the company, and we are proud of our continued
acknowledgement in the industry.
The company's focus on profitability impacted various business
areas, streamlining the organization and gearing it towards
driving value through rapid and sustainable growth.
This also meant the drawdown of unprofitable partner traffic
agreements to ensure resources were placed in the least
capital-intensive areas with a favorable return on investment
perspective.
As the Chair of the Board of Directors at Linkfire, I look forward
to supporting the company's continued development. Linkfire
has established a solid foundation for its 2023 profitability goal.
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Management’s Review
⇢ INDUSTRY UPDATE
⇢ OUR SOLUTION, KEY STRENGTHS AND COMPETITIVE ADVANTAGE
⇢ OUR BUSINESS STRATEGY
⇢ FINANCIAL PERFORMANCE AND KEY FIGURES
⇢ OUTLOOK FOR 2023
⇢ FINANCIAL REVIEW
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Industry Update
Jeppe Faurfelt
CCO & Co-founder
Over the past few years, we have again seen major changes in
how music is created, released, performed, and consumed.
Covid has pushed all musicians and labels to move fast and
reconsider their approach to making and marketing music, and
some of those adjustments have stayed with us for the long
run. Bandlab, a social music platform that enables creators to
make music anytime and everywhere, is now the fourth largest
investor in Linkfire.
As a result, I strongly believe wrapping your head around what
is currently happening in the music industry is in itself
incredibly important but especially since music tends to be
years ahead of other types of media when it comes to its
relationship to tech and new business models. You only need
to look back 30-40 years, where formats expanded from vinyl
to CDs to MP3 to new business models like streaming, which
now holds a 64.1% share of all revenue in the recorded music
market.
As new tech and innovations transform the digital landscape,
new consumption behaviors evolve, and business opportunities
arise to help more and more consumers discover music and
entertainment in their preferred way. In addition to music,
spoken word content is heavily on the rise, reaching very large
audiences globally and creating new opportunities for
marketing, advertising and selling products.
We have observed many new trends in the market during 2022.
On the streaming side (based on our click-through traffic data),
Spotify was the top DSP (Digital Service Provider) in all markets
except for Africa, where Apple Music held the top position. The
most significant change in these rankings was seen in YouTube
Music, which surpassed its parent service in Africa and South
America. YouTube Music is now comfortably among the top five
most popular DSPs across all regions.
TikTok has been on the rise for a few years now and in 2022
audiences connected with music on TikTok in a much more
engaged way contributing positively to our traffic growth and
quality. In the pas we observed visitors clicking a lot of different
links at a high volume but they wouldn't necessarily go and
engage with the artist in the streaming services afterwards. This
is the key change, and it’s great to see an improved funnel with
the traffic that we're seeing from TikTok.
Recently, TikTok received criticism for its data management
policies and governmental affiliations. At Linkfire we are well
aware of these concerns and are committed to ensuring that
everything Linkfire processes is compliant and safe for
consumers. As an enterprise serving company we follow strict
privacy processes in accordance with current regulation and
our business is not to sell data - all our offerings are strictly
constructed with respect for consumer privacy. As a result,
users can trust that when they interact with Linkfire, their
personal information is being handled in a responsible and
lawful manner.
Linkfire has a strong and unique market position, providing
significant value for consumers, artists, labels, and other
entertainment stakeholders as the market grows and becomes
more complex. Our unparalleled partnerships and premium
technology allow us to simplify entertainment discovery
everywhere. We have developed leading digital marketing
solutions for the music and entertainment industries, making it
easy for consumers to discover music and entertainment while
supporting traffic generation for digital music and
entertainment content providers. To further support our mission
and as a response to the evolution of smart links quickly
becoming “the new website”, in 2022, we launched an updated
version of our Bio Link feature, so artists and labels can easily
share all of their content across multiple platforms with a single
link.
The thrill of discovering a new song for the first time has not
changed but the path guiding consumers to their soon-to-be
favorite content is evolving all the time and it’s a matter of
making the most of this vital moment and taking consumers on
a journey to go deeper and discover more - like other songs,
cool merch, amazing videos, live tour, digital shows etc.
In addition to the industry transformation, the market is
increasingly fragmented and split across many different
platforms and services. Consumers are inundated with options,
making it overwhelming to navigate the fragmented market.
Linkfire simplifies discovering and accessing music and
entertainment by providing a one-stop shop for consumers.
Our platform streamlines sharing content across multiple
platforms and provides a seamless experience for consumers
and content providers. As the entertainment market continues
to evolve, Linkfire is well-positioned to provide value for all
stakeholders and drive growth in the industry.
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Our solution, key strengths and competitive advantage
Solution
We have built two products that globally provide seamless
connections to music and entertainment. Our offering consists of
the Marketing Platform and the Discovery Network.
The Linkfire Marketing Platform is a SaaS marketing tool
allowing labels and artists, its customers, to create Smart Links
for music products such as songs, albums, tickets and
merchandise, which can be shared on websites and
applications. The Smart Links route consumers to a landing
page from which they can easily engage further with the
content. Linkfire launched advanced Artist Bio-links to its
offering in 2022 with the aim to collect all artist and creator
promotions in one link.
Furthermore, the platform offers complex and exclusive data
insights, helping Linkfire’s customers to better understand their
target audiences and consumer journeys.
The Discovery Network is the network of links generated from
the Marketing Platform and through partnerships with
publishers, apps and more, which generates consumer
connections to the content.
Subscription revenue is generated from customers using the
Linkfire Marketing Platform, while commission revenue is
generated through the Discovery Network. Commission revenue
is earned when a consumer signs up for or transacts at Digital
Service Providers, with whom Linkfire has an affiliate agreement
through a Linkfire link, or by the placement of advertisements
on the links in the Discovery Network.
Key strengths and competitive advantage
A leader and consolidator in a fast growing music and
entertainment market
Linkfire’s Smart Links are driving billions of consumer
connections, more than any of its direct competitors. The
recorded music industry is estimated to double in size by 2030.
Linkfire is uniquely positioned to join the growth.
Strong partnership network
Linkfire has a unique partnership network, with partners
including Apple Music, Amazon, Youtube, Deezer, Snapchat and
Ticketmaster among many others. Partnerships are both
monetary and data partnerships that in many cases are
exclusive or custom to Linkfire which contributes to the unique
offering Linkfire operates.
A large and broad customer base
Linkfire works with the largest music labels worldwide; its
marketing platform encompasses over 85,000 users and is used
by the vast majority of Billboard’s Top 100 artists and their teams.
The long tail customers also continue to grow.
A privacy-first service offering
Linkfire links and landing pages do not rely on cookies, which
lowers the barriers to entering a commercial discussion with
Linkfire, and future-proofs the business.
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Our business strategy
Linkfire has a unique offering to penetrate the market, operates
in a nascent, fast growing industry with multifaceted growth
opportunities and has a solid foundation for future profitable
growth. Our growth strategy is fuelled by growing subscription
revenue and growing commission revenue profitably.
Growing subscription revenue
There are two main ways of growing subscription revenue: by
adding new customers and by increasing existing contract
values.
Expanding the customer base
We aim to grow our customer base both through inbound leads
and through paid acquisition in line with historical performance.
The Linkfire Marketing Platform currently has 85,000 users,
which can be compared with the total number of artists on
Bandlab’s service of 60.0 million, outlining a large potential. In
the coming years, the biggest potential is signing new
customers..
Adding value to our customers
The way to remain relevant for the market and our customers is
by ensuring that our platform is innovative, market-leading and
compliant. We believe if we keep adding value to our
customer’s business, we are able to grow our own. We expect
subscription contract renegotiations to account for a substantial
part of our growth in the near term. With the launch of our bio
link, customers get their own microsite in one smart link, and
we continue to integrate deeper and broader into the entire
product offering of our customers.
Expanding into adjacent verticals
Linkfire has been exploring opportunities to expand into
adjacent verticals within the entertainment industry. With the
launch of our bio link, creators now have the chance to create a
microsite in one smart link, which we developed with the
opportunity in the intersection of creative industries in mind.
Growing commission revenue
Commission revenue has two components: monetization and
traffic. Thus, to improve it, the Company needs to influence
either one or both of the components.
Increasing commission revenue per mille (RPM)
Improving Linkfire’s key monetization metric, RPM, is very
important for growing commission revenues. RPM can be
improved by increasing the commission rates. Linkfire currently
focuses on the following initiatives: i) signing new deals (e.g.
affiliate payment on user leads from a Digital Service Provider),
ii) improving deal terms and application, and iii) expanding its
offering for monetization of the Discovery Network. Possibilities
are many, and include increased commission rates, wider
trigger points (e.g. moving from paid sign-up to lead), more
trigger points (e.g. adding win-backs as a commissionable
action) and expanded advertising offerings.
Improving algorithmic optimisation in the discovery layer
Linkfire is actively working to optimize the algorithm that
successfully arranges Digital Service Providers in discovery
layers and on Linkfire landing pages. This eventually increases
relevance and conversion rates. The product development will
also allow for increased placement options on the inventory,
allowing for the maturation of Linkfire’s advertising efforts.
Entering partnerships with new Traffic Partners
Linkfire continued expanding upon its roster of Traffic Partners
in the first half of 2022. Traffic Partners has been a rather capital
intensive initiative seen as a whole, especially since the
economics of scale and return profiles scaled were less linear
as we know it from the Marketing Platform. Linkfire has chosen
to de-focus from this part of the business for the time being.
There’s still a clear application of Linkfire’s technology and
offering in the space, and we are ready to scale up when the
time is right.
A scalable and flexible business model
Linkfire’s business of providing a digital marketing platform and
generating leads is highly scalable. In 2022 we focused on
making our business sustainable with a determination to
achieve short-term but sustainable profitability. As a digital
product, the cost of adding one more user to the platform or
redirecting one more consumer to a streaming service is
minimal, while the acceleration in revenue by adding a new
traffic monetization deal will not add further cost of hosting the
traffic, thus contributing positively to margins.
Linkfire currently focuses mainly on the music industry, the
service offering is flexible, and the company is exploring
options to address adjacent verticals such as the spoken word
industry (podcasts and audiobooks).
Linkfire’s services are applicable to be tailored to suit the needs
of these industries, which together make up a total addressable
market of over USD 400 billion. This market size refers to the
total music market, total film industry, US podcast market,
gaming video content market and book market.
The business model is supported by an efficient and scalable
technology platform, enabling rapid expansion of the customer
base, extension of partnerships and flawless integration of the
services with various applications.
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Financial Performance and Key Metrics
Note
2022
2021
2020
2019
Local GAAP not
CCB 2018*
Income Statement (DKK thousand)
Recognized Revenue
52,590
33,697
24,699
17,227
13,665
Operating loss before interest, taxes, depreciation & amortization (EBITDA)
(39,875)
(30,512)
(8,371)
(10,243)
(9,658)
Operating loss before interest & taxes (EBIT)
(74,289)
(39,425)
(14,193)
(12,993)
(10,065)
Operating loss before interest & taxes (EBIT) excl. IPO Cost
(74,289)
(32,558)
(14,193)
(12,993)
(10,065)
Result of financial items
(1,274)
(1,652)
(3,796)
(16,002)
(13,430)
Profit after tax
(70,087)
(35,578)
(9,371)
(11,850)
(9,952)
Balance Sheet (DKK thousand)
Intangible assets
74,372
69,876
51,503
42,163
30,894
Additions, property, plant and equipment
263
634
173
41
92
Cash and cash equivalents
7,027
45,946
783
3,539
291
Total assets
101,349
140,200
63,786
60,408
39,551
Equity
43,962
87,125
4,909
10,026
(10,525)
Financial ratios
Operating profit before interest, depreciation & amortizations (EBITDA) margin (%)
(76)%
(91)%
-34%
-59%
-71%
Operating profit margin (EBIT) (%)
(141)%
(117)%
-57%
-75%
-74%
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Financial Performance and Key Metrics (continued)
Note
2022
2021
2020
2019
Local GAAP not
CCB 2018*
Key Metrics
Consumer connections (Traffic)
2,083,437,002
1,603,957,986
1,475,350,156
834,577,974
575,707,449
y/y Growth
30%
9%
77%
45%
42%
Revenue, on constant currency basis (DKK thousand)
48,778
34,521
24,348
17,003
13,665
Revenue Growth
41%
42%
43%
24%
25%
Organic Revenue Growth
41%
42%
43%
24%
25%
Subscription Revenue, on constant currency basis (DKK thousand)
30,122
22,853
18,745
15,268
12,254
y/y Growth
32%
22%
23%
25%
17%
Commission Revenue, on constant currency basis (DKK thousand)
18,656
11,667
5,603
1,736
1,411
y/y Growth
60%
108%
223%
23%
207%
Commission Revenue per Mille (RPM)*,
on constant currency basis (DKK)
8.95
7.27
3.80
2.08
2.45
y/y Growth
23%
92%
83%
-15%
116%
Gross Margin, on constant currency basis
74%
72%
76%
61%
81%
* Commission Revenue per thousand consumer connections
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Outlook for 2023
“To reach EBITDA breakeven based on the
projected cost base for 2023, Linkfire’s
revenue needs to grow by 22%, while the
compounded annual growth rate between
2018-2022 was 40%.”
Revenue guidance
In 2023, Linkfire expects continued revenue growth and guides
revenue within the range between DKK 60-70 million for the
full financial year. This corresponds to a yearly growth of
14-33%.
In order to achieve our guidance, performance on the following
key drivers is required:
● Continued strong RPM performance
● Sustained traffic levels on a year-on-year basis
● Continued inflow of new platform users, free and paid
● Continued ability to retain and expand existing
subscription contracts
● Continued product innovation and development
We maintain our mid-term financial target of 20-40% organic
revenue growth.
EBITDA guidance
Linkfire expects to achieve EBITDA breakeven for the year and
guides EBITDA within the range between negative (DKK 5
million) to positive DKK 5 million for the full financial year.
Linkfire is committed to reaching breakeven, while the
guidance on both sides of neutral EBITDA takes into account
the inherited uncertainty of balancing around the breakeven
point.
Continued investments into innovation and development of our
offering are expected throughout the year, and are the basis for
expecting continued growth in the coming years. Possible
deviations from the guided ranges depend on investments into
new strategic opportunities supporting our announced growth
and long-term growth and profitability strategy.
Strategy execution
During 2022, the company has taken several initiatives to
eliminate risk in the breakeven plan. We have narrowed our
operating focus to short-term return initiatives and the least
capital intensive deployment of cash. In 2023, Linkfire expects
to utilize the lighter operating setup to perform EBITDA
breakeven for the year.
To reach EBITDA breakeven based on the projected cost base
for 2023, Linkfire’s revenue needs to grow by 22%, while the
compounded annual growth rate between 2018-2022 was 40%.
We expect recurring subscription revenue to deliver growth in
line with previous years, while we expect commission revenue
to continue delivering the majority of growth. By focusing on
utilization of our core profit driver, the Marketing Platform and
the part of the Discovery Network deriving directly from it, we
are well positioned to deliver on our guidance.
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Financial Review
Revenue
Revenue increased by DKK 18,893 thousand, or 56 per cent,
from DKK 33,697 thousand in 2021 to DKK 52,590 thousand in
2022. The fastest growing revenue line, Commissions, increased
by DKK 8,872 thousand, or 76 per cent, compared to 2021, while
Subscription revenue increased by DKK 10,020 thousand, or 45
per cent. This is on pace with the growth seen in all other areas
of the business, as we have scaled to be a significantly larger
organization across the board in 2022 as compared to 2021.
Costs
Cost of sales increased by DKK 3,706 thousand, or 40 per cent,
from DKK 9,320 thousand in 2021 to DKK 13,026 thousand in
2022. The increase is centered around server and hosting costs,
improved baseline and scalability as well as ensuring compliant
and premium service delivery.
In 2022, external expenses increased by DKK 12,062 thousand,
or 72 per cent, from DKK 16,853 thousand in the comparable
period in 2021 to DKK 28,915 thousand. The increase is mainly
due to the investment in the Channel Partners program and
acquisition of new software tools to follow the growth of the
organization especially in the first half of 2022.
Other external expenses amounted to DKK 6,867 thousand in
2021 but were eliminated in 2022 since they comprised the costs
related to the IPO.
Staff costs increased by DKK 15,538 thousand, or 50 per cent,
from DKK 31,170 thousand in 2021 to DKK 46,708 thousand in
2022. As a percentage of revenue, staff costs decreased from 91
per cent to 89 per cent. Again, this pertains not to an increase in
the cost of the individual employee but to the growth of the
organization from the year 2021 to 2022, reaching +100 FTEs, and
with contractions in that area taking effect towards the
beginning of 2023, we expect to see this figure regress closer to
that from 2021. Other staff costs amounted to DKK 3,817
thousand in 2022 and comprise severance agreements costs
related to the mentioned contractions in FTEs.
Earnings
Depreciation, amortization and impairment increased by DKK
25,502 thousand, or 286 per cent, from DKK 8,913 thousand in
2021 to DKK 34,414 thousand in 2022. The significant increase is
mainly related to the impairment loss recognised for the
intangible assets and described in note 13 of the consolidated
financial statements.
EBIT increased by DKK 34,865 thousand, or 88 per cent, from
negative DKK 39,425 thousand in 2021 to negative DKK 74,290
thousand in 2022. This is an increase in relation to revenue from
(117) percent in 2021 to (141) per cent in 2022.
Net financial items
Financial income decreased by 2,049 DKK thousand, or 66 per
cent, from DKK 3,091 thousand in 2021 to DKK 1,042 thousand in
2022. The main deviation is related to other financial income
which in 2021 amounted to DKK 1,557 thousand and DKK 0
thousand in 2022. The amount in 2021 derived from the Group
receiving forgiveness on a US covid-related government loan.
Financial expenses decreased by DKK 2,427 thousand, or 51 per
cent, from DKK 4,743 thousand in 2021 to DKK 2,316 thousand in
2022, mainly due to lower interest expenses after bringing down
the total interest-bearing loans as well as improved loan terms.
Income tax
The tax for the year decreased by DKK 23 thousand, or 1 per
cent, from DKK 5,500 thousand in 2021 to DKK 5,477 thousand in
2022. Income tax benefits related to tax credits for research and
development expenses at the applicable tax rate under the
Danish Corporate Income Tax Act.
Net Profit/(loss)
Loss for the period decreased by DKK 34,510 thousand, or 97
per cent, from DKK 35,577 thousand in 2021 to DKK 70,087
thousand during 2022. This represents a decrease in relation to
revenue from (106) per cent in 2021 to (133) per cent in 2022. This
is reflective of the fact that in 2022, Linkfire was an organization
with strong growth, significantly scaling costs to invest in future
returns. Actions and cost cutting measures initiated during 2022
will not take full effect until 2023, by which time we also expect
to see improved returns on agreements signed during the year
2022, moving us in the direction of an operational break-even in
2023.
Cash flow and financing
Cash flow from operations for 2022 was DKK (24,632 thousand)
(2021: DKK 35,487 thousand). Investment activities reduced cash
flows by DKK 26,509 thousand in 2022 (2021: DKK 26,233
thousand). Cash flow from financing activities for 2022 was DKK
12,356 thousand (2021: DKK 105,890 thousand).
Parent company
Linkfire A/S, Denmark, is the parent company of the Group,
which consists of two further subsidiaries in the US and
Portugal. The development of revenue and costs in parent
company activities is in all material aspects covered in the
financial review of the Group figures and follows the Group
explanations.
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Financial Review
Uncertainties of recognition and measurement
At each reporting date, it is required to assess whether there is
any indication that an asset may be impaired. The current
uncertainties in the market and the share price from the last
capital increase, among others, indicate that an impairment
assessment needs to be performed, with main focus on the
carrying amount of the intangible assets.
Development projects have a net value of DKK 74.4M (2021: DKK
61.6 million) in the annual report. Development projects are
measured at cost price reduced with amortization and
write-downs. The measurement of development projects is
dependable on future earnings, which there is a natural
uncertainty related to.
Going concern
During 2022, Linkfire concluded the process of securing the
necessary financing to continue its operations. The equity
financing of DKK 45M is divided into two equal tranches,
whereof the first tranche was settled in Q4-2022, while the
second tranche will settle latest in April 2023. The second
tranche is committed by the largest new shareholder
participating in the first tranche, Maverick Capital Limited
(“Maverick”), at the same price per share of SEK 0.60. Linkfire has
the option to waive the commitment if, and to the extent that
Linkfire is able to obtain equity financing in the amount of DKK
22.5M or more at more favorable terms elsewhere.
Linkfire is continuing its path towards profitability and with a
strong improvement in earnings in Q4-2022 as well as a
structurally lighter cost base, the company’s management
remains confident in its plan to reach EBITDA profitability for the
full year of 2023. In its restructured form, the company’s
management is confident in the presence of sufficient operating
flexibility to mitigate the expectation of difficult operating
conditions.
The above-mentioned financing, including the second tranche
investment and the company breaks-even on EBITDA in 2023, is
sufficient to sustain investments into innovation as well as
servicing loan obligations. Current budgets and plans are still
considered achievable at the signing date. Linkfire is
continuously optimizing its capital preparedness and options as
complementary to secured equity financing.
Management has on this background decided to prepare the
financial statements on a going concern basis.
Subsequent Events
On February 23, 2023, the Board of Directors of Linkfire A/S
decided to issue warrants to the executive management, the
senior leadership team, key employees and contracted staff
within the authorization granted by the annual general meeting
on 27 April 2022. The purpose of the warrant program is to
create possibilities for the company to retain and incentivize
certain key employees by offering a long-term ownership
engagement. In total, the grants cover 2,676,000 warrants of
which 936,000 warrants have been granted to the executive
management and senior leadership, and the remaining
1,740,000 warrants have been granted to key employees and
contracted staff.
There have not been any other subsequent events after the
reporting period which could influence the evaluation of the
financial statements.
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Corporate governance
⇢ THE SHARE AND SHAREHOLDERS
⇢ RISK MANAGEMENT
⇢ BOARD OF DIRECTORS
⇢ EXECUTIVE MANAGEMENT TEAM
⇢ LEADERSHIP TEAM
⇢ CORPORATE GOVERNANCE
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The share and shareholders
Linkfire was listed on June 28, 2021, and is traded on the
Nasdaq First North Premier Growth Market. Linkfire’s
trading code is LINKFI.
The number of shares outstanding on December 31, 2022, was
114,989,051. Each share entitles the holder to one vote, which
means that all shares hold equal voting rights and equal rights
to the company’s earnings and capital.
The closing price for the share on the last trading day of the
year, December 30, 2022, was 1.17 SEK, corresponding to a
market capitalization of approximately SEK 134.1 million.
About Nasdaq First North Premier Growth Market
Nasdaq First North Growth Market is a registered SME growth
market. Issuers on Nasdaq First North Growth Market are not
subject to all the same rules as issuers on a regulated market,
as defined in EU legislation (as implemented in national law).
Instead, they are subject to a less extensive set of rules and
regulations adjusted to small growth companies. All issuers
with shares admitted to trading on Nasdaq First North Growth
Market have a Certified Adviser who monitors that the rules are
followed. Linkfire’s Certified Adviser is Aktieinvest FK AB,
www.aktieinvest.se.
Our share
Trading code (ticker)
LINKFI
Market
Nasdaq First North Premier
Growth Market, Sweden
ISIN
DK0061550811
First day of trading
January 3, 2022
Trading currency
SEK
Opening Price on first day of
trading (Jan 3)
7.2000 SEK
Closing price on last day of
trading (Dec, 30)
1.1660 SEK
Share price development in 2022
-83.8%
Market capitalization on last day
of trading (Dec, 30)
134.1 mSEK
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Individuals with an insider position
As a listed company Linkfire maintains a logbook on
individuals with insider positions in order to ensure
compliance with the rules and legislation on insider
trading. In May 2021, the Board of Directors adopted
an insider policy and an instruction for insider lists.
Annual General Meeting
The Annual General Meeting for the financial year
2022 will take place on April 26, 2023. For further
information, please visit the Investor website on
www.linkfire.com.
Financial calendar
May 25, 2023
Interim financial report Q1, 2023
August 24, 2023
Interim financial report Q2, 2023
November 23, 2023
Interim financial report Q3, 2023
February 22, 2024
Interim financial report Q4, 2023
Analysts
Pareto Securities
Stefan Wård
+46 8 402 5287
stefan.ward@paretosec.com
Vincent Edholm
+46 8 402 5281
vincent.edholm@paretosec.com
Investor relations
The information provided by Linkfire to its
shareholders and the capital market is intended to
provide a fair picture of the company’s
performance, minimize the risk of unfounded rumor
and speculation and increase interest in the
company’s share. The ambition is to provide
continuous, relevant, and clear information.
If you need more information about Linkfire as an
investment, you can contact us via the email
investors@linkfire.com.
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Risk Management
Uncertainties about future events can potentially have a
negative impact in any business operations, and it is important
to carefully analyze such risk factors that might affect the future
development of the Linkfire share.
Linkfire is on an ongoing basis assessing and evaluating the
potential risk factors. Critical risks in the business environment
are strategically managed and operationally handled in the
daily processes.The significant risk factors are described below.
Industry
Linkfire is a technology company providing marketing and
promotional services for artists and record labels. The music
and entertainment industries are young industries
characterized by innovation and rapid technological
development, evolving industry standards and practices as well
as changing customer and consumer needs and preferences.
In order to remain successful and execute its growth strategy,
Linkfire must continuously effectively adapt to, respond to, and
also anticipate such changes, and develop its technology and
service offering on a timely and cost-effective basis.
Commission revenue
Linkfire is striving to let commissions be a growing part of the
business and if Linkfire does not succeed in retaining and
building new affiliate partnerships with Digital Service Providers
(such as Spotify, YouTube, Apple Music, Amazon and
Ticketmaster) that ambition may fail. However, it is Linkfire’s
opinion that the market for monetization of music related
internet traffic is growing.
Data Partnerships
A key part of Linkfire’s strategy is to integrate the Linkfire
marketing platform with third-party application providers and
Social Media Platforms. The integration provides Linkfire with
valuable data and insights on consumer patterns on digital
service platforms to be shared with Linkfire’s subscription
customers. Any changes or restrictions on the APIs (application
programming interfaces) may limit the functionality and
accessibility of Linkfire’s services, but Linkfire evaluates the risk
of this materializing as low.
Subscription revenues
The core of the Linkfire business is the subscriptions to
Linkfire’s link generator and a major part of its subscription
revenues are generated from contracts with major music
labels, such as Universal Music Group, Sony Music
Entertainment and Warner Music Group. Some of these major
agreements are up for re-negotiation in 2023.
Management and key employees
Linkfire is highly dependent on our management team and
employees, with people being our biggest asset. It is crucial to
Linkfire to be able to attract, retain, develop and motivate
diverse and thriving management and staff to ensure the right
competencies and skills to succeed as a business.
Competition
The industry in which the Company operates is rapidly evolving
and highly competitive, with relatively low barriers to entry.
The Company mainly faces competition from one other
marketing platform, Feature.fm, targeting music labels and
artists, as well as a long tail of small, local market players.
Thereto, there are providers of Smart Links that operate both in
the Smart Linking Market for music as well as the general
Smart Linking market, such as Linktree and Bit.ly.
The Company may in the future also face competition from
other SaaS companies or players within the online marketing
industry that decides to innovate or invest in similar, or superior,
services and technologies that may compete with the
Company’s platform and services, for example by delivering
solutions at lower prices, more conveniently or more securely.
Technical errors and disruptions to the Company’s IT
infrastructure
The Company is dependent on maintaining a secure and
well-functioning IT environment for all aspects of its operations.
There is a risk that the Company’s IT environment, as well as its
partners’ IT environment, is affected by problems with software,
hardware, computer viruses, improper or negligent operation of
the Company’s IT systems by the Company’s employees or
contractors, attacks or physical damages as well as other
unforeseen events. Such failures and interruptions can lead to
delays, increased costs and could negatively impact the very
basis of Company’s digital operations.
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Privacy regulation
Linkfire maintains a high focus on privacy compliance as well as
other regulatory issues. As the emphasis on privacy security is
an increasing success factor, Linkfire will maintain this focus in
order to stay both compliant and an attractive provider of
services and partner.
Risks related to taxation
The company is subject to a number of tax regulations in
Denmark and in other jurisdictions, which involves for example
corporate income tax including the Danish tax credit regime for
R&D activities, VAT, social security taxes and transfer pricing
regulations. The tax considerations made by the company are
based on interpretations of current tax laws, tax treaties and
other tax regulations and the requirements of the relevant tax
authorities.
Risks related to foreign currency exposure, credit and
interest rate
Risk related to foreign currency exposure, credit and interest
rate are described in note 22 of the financial statements. Please
be referred to this section of the annual report for a full review.
Financial risks
The company may not show profitability when expected and
may experience uneven cash flows impacting cash position.
The company has historically incurred significant costs for the
development of its current operations and expects that such
costs will continue to incur in the future to a certain extent.
Following a significant reduction and continued expectation of
firm cost control, the company may risk costs varying above
the expected levels despite its intention to manage cost
reductions. There is a risk that the company will not earn
sufficient revenues or reach and maintain profitability to
conduct its operations in accordance with set goals and
strategies, which could impair the Company’s ability to sustain
operations or to obtain any required additional funding.
In addition, the company may experience uneven cash flows,
including due to seasonality in user traffic, for example, due to
the occurrence of big music releases or shows. Moreover,
upfront payments from contracts with major labels, which
make up for a large part of the company’s revenues, normally
occur three times per year, which also contributes to uneven
cash flows.
Risks related to future financing needs
As part of its business strategy, the company wants to increase
its subscription user base and expand its market position
further through scaling and expanding its operations
organically. The company is also exploring opportunities of
expanding into new geographical markets as well as into
adjacent verticals within the entertainment industries. In light of
the above-mentioned growth plans, the company believes it is
not unlikely that it may have to turn to the capital market to
finance its business further in the future. If additional financing
cannot be raised when needed, if financing cannot be raised on
terms favorable to the company, or if such financing should
prove insufficient to fund the company’s future operations, this
could have a material adverse effect on the company’s ability to
conduct business operations as planned, pursue its sustainable
growth strategy and ultimately its financial position.
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Board of Directors
Jesper Møller
Chairman of the board (since 2021)
Thomas Weilby
Board member (since 2020)
Charlotte Klinge
Board member (since 2021)
Professional
background
Seasoned Danish CEO level executive with a current focus on
non-executive board positions and advisory roles in Northern Europe. Key
experiences from food and service industries. The latest operational
experience was 9 years as CEO of a confectionery manufacturer with full
value chain responsibility. Previous job experiences from Coca-Cola,
Carlsberg, ISS, Nestlé, Q8, BP and more. Solid experience with strategy
processes, product development/ innovation, category management,
concept development, financial reporting, governance, CSR, Sports
Management.
Thomas Weilby has more than 10 years of experience as the General
Partner of Northcap Partners, an investment company focusing on ICT
start-ups in Northern Europe. Weilby has worked with venture capital (VC)
for more than a decade and has gained extensive experience in
establishing new businesses across Europe and has specialized in maturing
businesses for the US market. Weilby has a special interest in cloud
computing and SaaS businesses and has held several senior management
positions in IT and Internet-based companies. In addition to this, Weilby is
active on several boards of portfolio companies, as well as ad hoc projects
on other companies.
Charlotte Klinge has +20 years of experience within organizational
development and HR from both global companies and start-up enterprises
. Klinge served for 14 years in Novo Nordisk A/S firstly as an expert in
handling authorities and the last 6 years as Global Director in Corporate HR
at Novo Nordisk A/S. Later Klinge operated in DBI Plastics as CPO for 4
years. Klinge has extensive c-level experience including in depth expertise
within sustainability from several enterprises. Furthermore, as a daily
advisor to several companies, Klinge has a strong focus on how to swiftly
generate organizational structures that create motivation, trust and
well-being along with effectiveness in flexible governance structures. She
has extensive board experience and acts as a private investor and advisor.
Education
Master’s degree in Administration and Management at Copenhagen
Business School, Denmark.
M.Sc. in Business and Economics from Aarhus University.
Master of Science, Copenhagen University.
Other ongoing
assignments
Chairman of the board of Konsolidator A/S andThornæs Destiller A/Si..
Board member at KFI Erhvervsdrivende Fond. Chairman at
Entrepreneurship Denmark. Board Member at Ungdomsbureauet. Chairman
at The Great Belt Committee.
Chairman of the board of directors of 22. Maj APS and Insurance Business
Applications ApS. Board member of Visiopharm A/S. Member of the
management in IVS II GP ApS, Lekamo ApS, Lekamo Holding ApS, NCP-IVS
III GP ApS and Northcap Partners ApS. CEO of IVA A/S.
Consultancy in leadership training, HSE, sustainability and organizational
development in Novo Nordisk A/S, ASA-LIFT, Fehmarn A/S o.a.
Previous
positions
Deputy Chairman of Indutriens Fond and Brøndbyernes IF Fodbold A/S.
Chairman at Mangaard & Partners. Advisory Board member at Lakrids by
Johan Bülow. Director of Executive Services at AS3 Executive. CEO at Toms
Gruppen A/S.
Chairman of the Board of Directors of Comparo A/S, Falcon.io ApS Kolibri
Technology A/S and Komfo ApS. Board member of 22. Maj ApS, GAN
Integrity Solutions Holding ApS, Insurance Business Applications ApS and
Intelepeer. Member of the management in Anpartsselskabet AF 21. Juli
2005.
Board Member of Cope IT, Board Member at Klinge Trading Aps. CPO as
DBI Plastics, Global Director at Novo Nordisk A/S.
Position of
dependency
Independent in relation to the company and the management and in
relation to Major Shareholders.
Independent in relation to the company and the management, but not
independent in relation to Major Shareholders.
Independent in relation to the company and the management and in
relation to Major Shareholders.
Shareholding
142,304 shares and 368,540 warrants.
N/A
121,400 shares and 184,270 warrants.
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Board of Directors (continued)
Ole Larsen
Board member (since 2022)
Petra von Rohr
Board member (since 2022)
Professional
background
Experienced CFO and finance professional with a demonstrated history of working in various industries in both
listed and unlisted companies. Skilled in restructuring, turn-arounds, growth/start-ups, Mergers & Acquisitions and
Corporate Finance.
More than 20 years of leadership experience being part of the executive management team of a listed large cap
company as well as CEO in smaller companies within Finance, Medtech and Communications. Extensive experience
being a board member of listed as well as unlisted companies. Background as an equity analyst in London and
Stockholm.
Education
Master of Science, Copenhagen Business School
Master of Science, Stockholm School of Economics
Other ongoing
assignments
2018 - Chairman of the Board at Rikke Gravengaard – Copenhagen A/S
2022 - Founder & CEO at nuso ApS
2023 - CFO at CathVision ApS
2023 - CFO at FluoGuide A/S
2023 - Member of the Board of Directors at Pharma Equity Group
2019- Webrock, Board member
2018- Better Collective, Board member
Previous
positions
2018 – 2021 Member of the Board of Directors in various subsidiaries in the BioPorto Group; 2011 – 2018 CEO and
Member of the Board of Directors in various subsidiaries in the Bavarian Nordic Group; 2005 – 2008 Member of the
Board of Directors at Søndagsavisen A/S (now North Media);
2002 – 2008 Chairman and member of various Boards of Directors in the Nordisk Film Group; 2001 – 2004
Chairman and Member of various Boards of Directors in the Berlingske Group; 1996 – 1997 Member of the Board of
Directors in Bloch & Behrens ApS
2016 – 2017 Lauritz.com, Board member 2015 – 2017 Novare Human Capital AB – Board member
2009-2015 Takkei Training Systems AB, Board member 2007-2009 Wildeco Ekonomisk Information AB, Chairman of the
board.
Position of
dependency
Independent in relation to the Company and the management and in relation to Major Shareholders.
Independent in relation to the Company and the management and in relation to Major Shareholders.
Shareholding
0 shares and 184,270 warrants.
0 shares and 184,270 warrants.
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Executive Management Team
Lars Ettrup
Co-founder & CEO (since 2014)
Tobias Demuth
CFO (since 2017)
Professional
background
Lars Ettrup has extensive experience within the technology business sector, from having served as CTO at Nodes
(Digital Agency), as well as from having founded and exited Social Media Agency and Look Curious ApS in 2015.
Tobias Demuth is a finance professional with 12 years of experience with the last 6+ years in financial management
positions in global companies. Demuth started his financial career at Deloitte as a Financial Auditor which he held
for more than 5 years.
Education
M.Sc. in eBusiness from the IT-University in Copenhagen, Bachelor’s Degree in Film & Digital Media from
Middlesex University.
Bachelor in Business Administration from University of Aarhus.
Other ongoing
assignments
Member of the management in Ettrup Invest ApS and Rocket Group ApS.
-
Shareholding
9,777,400 shares and 168,000 warrants.
392,764 shares and 168,000 warrants.
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Leadership team
Jeppe Faurfelt
Co-founder & CCO (since 2014)
Andrea Arcari
CBDO (since 2017)
Jannik Jepsen
CTO (since 2016)
Tina Finsen
Professional
background
As co-founder and CCO of Linkfire, Jeppe Faurfelt has
gained a vast experience within commercial strategy,
operations, and developing the client-facing
organization to drive overall business growth. Before
joining Linkfire, Faurfelt served as a project manager
for the MeWe Group, a full-service ad agency
specializing in business development, branding, and
unique digital solutions. In addition, Faurfelt worked as
a marketing project manager for Downtown.dk, where
focusing on brand management and website tracking.
Andrea Arcari is a professional musician who
recently turned entrepreneur. Arcari has a
background in partnerships and operations, and has
an experience from free-launching as Process and
Operations Consultant founding several companies
and working as Artist and
Band Manager.
Jannik Jepsen has a M.Sc. in Interaction Design, and
extensive experience from various projects on
consumer connectivity within in-car infotainment
systems in collaboration with brands such as Volvo
and Continental. Jepsen has had various student
jobs related to Web and graphical design for
eCommerce and marketing purposes, and has more
than 5 years of experience of managing and
developing Linkfire’s infrastructure, technology and
product.
Tina Ndlovu Finsen is an experienced People and
Culture professional who joined Linkfire in 2022.
Ndlovu Finsen is well versed in all people-related
aspects of business and has spent most of her
career working actively in leading positions in the
interface between organizational strategy,
performance and succession management and
employee development.
Education
B.Sc. in Social Science and Business Studies from
Roskilde Universitetscenter.
Bachelor’s Degree in Foreign Language and
Literature.
M.Sc. in Interaction from Aalborg University.
MSc in Human Resource Management from
Copenhagen Business School.
Other ongoing
assignments
-
-
Director of JJepsen Holding ApS.
Shareholding
3,728,198 shares and 150,000 warrants.
906,787 shares and 150,000 warrants.
503,923 shares and 150,000 warrants.
150,000 warrants.
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Financial statements
⇢ CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
⇢ CONSOLIDATED STATEMENT OF FINANCIAL POSITION
⇢ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
⇢ CASH FLOW STATEMENT
⇢ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Consolidated statement of comprehensive income
DKK thousand
Note
2022
2021
DKK thousand
2022
2021
Attributable to:
Revenue
6
Earnings per share (DKK)
(1.0 )
(0.77 )
Cost of Sales
(13,026 )
(9,320 )
Earnings per share, diluted (DKK)
(0.9 )
(0.76 )
Gross Profit
75.23%
Other comprehensive income
External Expenses
(28,915 )
(16,853 )
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods (net of tax):
Other External Expenses
(6,867 )
Exchange differences on translation
of foreign operations
Staff Costs
7
(46,708 )
(31,170 )
-47
-476
Other staff Costs
7
(3,817 )
Other comprehensive income for the year, net of tax
-47
-476
EBITDA
(39,875 )
(30,512 )
Total comprehensive income for the year
(70,134 )
(36,053 )
Depreciation, amortization and impairment losses
9
(34,414 )
(8,913 )
EBIT
(74,289 )
(39,425 )
Financial Income
10
Financial Expenses
11
(2,316 )
(4,743 )
Profit/(loss) before tax
(75,563 )
(41,077 )
Tax for the year
12
Profit/(loss) for the year
(70,087 )
(35,577 )
32 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
Consolidated statement of financial position
DKK thousand
Note
2022
2021
DKK thousand
Note
2022
2021
Assets
Equity and liabilities
Non-current assets
Equity
Intangible assets
13
Share capital
19
Property, plant and equipment
14
Retained Earnings
Right-of-use assets
15
Translation reserve
(399 )
(352 )
Deposits
16
Other capital reserve
21
Total non-current assets
Total Equity
Current assets
Non-current liabilities
Trade Receivables
17
Interest bearing liabilities
20
Income tax receivables
11
Lease liabilities
22
Other receivables
Other payables
Prepayments
Total non-current liabilities
Cash
Total Current Assets
Current liabilities
Interest-bearing liabilities
20
Total assets
Contract liabilities
Lease liabilities
22
Trade payables
Other payables
Total current liabilities
Total liabilities
Total equity and liabilities
33 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
Consolidated statement of changes in equity
DKK thousand
Share capital
Retained
earnings
Translation
reserve
Other capital
reserve
Total
DKK thousand
Share capital
Retained
earnings
Translation
reserve
Other capital
reserve
Total
Balance at 1 January, 2022
(352 )
Balance at 1 January, 2021
(73 )
Net profit/(loss) for the period
(70,087 )
(70,087 )
Net profit/(loss) for the period
(35,577 )
(35,577 )
Other comprehensive income
(47 )
(47 )
Other comprehensive income
(476 )
(476 )
Total Comprehensive income
(399 )
Total Comprehensive income
(35,650 )
(352 )
(31,144 )
Capital increase
Capital increase
Transaction cost
(3,092 )
(3,092 )
Transaction cost
(8,259 )
(8,259 )
Share-based payments
(791 )
Share-based payments
(4,321 )
Balance at 31 December, 2022
(399 )
Balance at 31 December, 2021
(352 )
During the period no dividend was paid
During the period no dividend was paid
34 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
Cash flow statement
DKK thousand
Note
2022
2021
DKK thousand
Note
2022
2021
Operating Loss
(74,289 )
(39,425 )
Proceeds from borrowings
Depreciation, amortization and impairment losses
9
Repayment of borrowings
(14,521 )
(8,916 )
Change in working capital
18
(7,603 )
Payment of principal portion of lease liabilities
15
(4,080 )
(2,424 )
Share-based payment expense
8
Transaction cost from capital increase
(3,092 )
(8,259 )
Cash flow from ordinary operating activities
(29,875 )
(37,552 )
Proceeds from capital increase
Cash flow financing activities
Income taxes received
Interest paid
Change in cash and cash equivalents
Interest received
(120 )
(4,020 )
Net cash flow
(38,649 )
Cash flow from operating activities
(24,495 )
(35,487 )
Net foreign exchange difference
(271 )
Cash, Begin
Development expenditures
13
(26,144 )
(16,573 )
Cash, End
Prepaid intellectual property rights
(8,298 )
Investments in property, plant and equipment
(263 )
(634 )
Part of the acquisition of SmartURL was a non-cash investment (payment in shares) of DKK 7,563 thousand
and DKK 1,000 thousand in estimated earn-out. The non-cash parts of the acquisition are excluded
(presented net) in the cash flow from investing activities and financing activities.
Change in deposits
16
(102 )
(728 )
Cash flow from investing activities
(26,509 )
(26,233 )
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
1
Accounting policies
14
Property, plant and equipment
2
Going concern
15
Right-of-use assets
3
Adoption of new and amended standards
16
Deposits
4
Critical accounting judgements and key sources of estimation uncertainty
17
Trade receivables
5
Segment information
18
Working capital changes
6
Revenue
19
Share capital and earnings per share
7
Staff costs
20
Interest-bearing liabilities
8
Share-based payments
21
Other capital reserve
9
Depreciation, amortization and impairment losses
22
Financial risks
10
Financial income
23
Liabilities arising from financing activities
11
Financial expenses
24
Related parties
12
Tax for the year
25
Events after the reporting period
13
Intangible assets
26
Guarantees, contingent liabilities and collateral
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
1. Accounting policies
General information
Linkfire A/S is a limited liability company and is incorporated in
Denmark. The parent company and its subsidiaries (referred to as
the “Group” or “Linkfire”) are on a mission to frictionlessly connect
fans to the world of entertainment. Linkfire is a technology
company providing marketing and promotional services within the
music and entertainment industries.
Basis of preparation
The financial statements are presented in Danish kroner (DKK). All
amounts have been rounded to the nearest DKK thousand, unless
otherwise indicated. The financial statements have been prepared
on a going concern basis and in accordance with the historical cost
convention, except where IFRS explicitly requires use of other
values.
For the purpose of clarity, the financial statements and the notes to
the financial statements are prepared using the concepts of
materiality and relevance. This means that line items not
considered material in terms of quantitative and qualitative
measures or relevant to financial statement users are aggregated
and presented together with other items in the financial
statements. Similarly, information not considered material is not
presented in the notes.
The accounting policies, except as described below, have been
applied consistently during the financial year and for the
comparative figures.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Linkfire A/S (the Parent) and subsidiaries which are
entities controlled by Linkfire A/S. The Group controls an entity
when it directly or indirectly owns more than 50% of the voting
rights or may otherwise exercise a controlling influence.
Name
Country
Ownership
Linkfire Inc.
Linkfire Sociedade Unipeossal Lda.
USA
Portugal
100%
100%
Principles of consolidation
The consolidated financial statements are prepared on the basis of
the financial statements of the Parent and its subsidiaries.
The consolidated financial statements are prepared by combining
items of a uniform nature and subsequently eliminating
intercompany transactions, internal shareholdings and balances
and unrealised intercompany gains or losses. The financial
statements used for consolidation are prepared in accordance with
the Group’s accounting policies.
The accounting items of subsidiaries are recognized 100% in the
consolidated financial statements. Investments in subsidiaries are
offset by the interest’s share of subsidiaries’ net assets at the
acquisition date at fair value.
Accounting policies are described in full in this note below.
Foreign currency translation
Transactions denominated in currencies other than the functional
currency are considered transactions in foreign currency.
On initial recognition, transactions denominated in foreign
currencies are translated to the functional currency applying the
exchange rates at the transaction date. Foreign exchange rate
adjustments arising between the transaction date and the date of
payment are recognised in the income statement under financial
income or financial expenses.
Monetary assets and liabilities denominated in foreign currencies
are translated at the exchange rates at the reporting date. The
difference between the exchange rates at the reporting date and at
the date of transaction or the exchange rate in the latest financial
statements is recognised in the income statement under financial
income or financial expenses.
Cash flow statement
The cash flow statement is presented using the indirect method
and shows cash flows from operating, investing, and financing
activities for the year as well as the Group’s cash and cash
equivalents at the beginning and end of the financial year.
Cash flows from operating activities are calculated based on
operating profit/loss, adjusted for the cash flow effect of non-cash
operating items, working capital changes, financial expenses paid
and income tax paid.
Cash flows from investing activities comprise payments in
connection with the acquisition and sale of non-current intangible
assets, property, plant, and equipment as well as financial assets.
Cash flows from financing activities comprise payments arising
from changes in the size or composition of the Group’s share
capital and dividend paid. Cash and cash equivalents comprise
cash at bank and in hand.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
1. Accounting policies (continued)
Income statement
Revenue
The Group recognizes revenue from the following major sources
being subscriptions and commissions. Revenue mainly derives
from subscription fees charged for customers’ access to the
Group’s marketing platform software. For software contracts, the
total contract sum is allocated to the separate performance
obligations for the purpose of revenue recognition.
Revenue recognition requires an agreement with the customer,
which creates enforceable rights and obligations between the
parties, has commercial substance, and identifies payment terms.
In addition, it must be probable that the consideration determined
in the contract will be collected.
Revenue is measured based on the consideration to which the
Group expects to be entitled in a contract with a customer and
exclude amounts collected on behalf of third parties. The Group
recognizes revenue when it transfers control of the license or
service to a customer. All revenue is derived from contracts with
customers.
Subscription fees
Subscription fees cover license, hosting and maintenance, as is
standard in the software as a service subscription offering. The
license is not distinct from the hosting service, revenue is therefore
recognized over time, as the customers are receiving and
consuming the benefits of the Group‘s performance while
performing. The hosting service and maintenance are therefore
bundled tintoone performance obligation together with the license.
Revenue is recognized over the duration of the contract on a
straight line basis.
Non-recurring subscription fees comprise material contracts that
are recognized over time as production of each project is carried
out. Revenue from fixed price projects is recognized based on the
value corresponding to the stage of completion method.
Revenue is recognized when value to the customer of the services
is transferred and completion at the balance sheet date can be
measured reliably as Linkfire satisfies its performance obligations
and it is probable that the economic benefits including payments
will flow to the Group. Linkfire considers this output method to be
an appropriate measure of the progress towards complete
satisfaction of these performance obligations under IFRS 15. The
timing of revenue recognition often differs from contract payment
schedules. Amounts billed in accordance with customer contracts,
but not yet earned, are recorded and presented as part of “Contract
liabilities”.
Commissions
Affiliate partners are creating tokens and supplying these to
Linkfire, which allows the affiliate partners to track referrals from
Linkfire. Linkfire is implementing the tokens in their infrastructure,
and in return the affiliate partners are paying commissions based
on the result of approved transactions and qualifying purchases.
Commissions are treated as one performance obligation, as they
constitute a series of services. Revenue is recognized on a running
basis because the affiliate partner receives and consumes the
benefits of the Group‘s performance while performing.
The recognition point in time is when the revenue generating
conversion, according to the individual contract, is earned by the
affiliate partner.
Cost to obtain a contract
The Group pays sales commission to its employees based on the
contracts that they obtain for sales of licenses. The commissions
are expensed when incurred as the underlying customer contracts
have a duration of less than a year. These are one-off payments
directly related to specific sales, and are as such to be recognized
as incremental costs.
Cost of sales
Cost of sales comprise costs incurred to achieve the year’s revenue
including hosting and transaction costs.
External expenses
External expenses comprise sales and marketing costs, external
consultancy costs, other employee-related costs, IT and software
costs, investor relations costs, loss allowances for doubtful trade
receivables and other administrative expenses.
Other external expenses
Other external expenses comprise expenses of an extraordinary
nature. The expenses recognized in 2021 relate to the First North
listing and associated consultancy expenses.
Staff costs
Staff costs consist of salaries, sales commissions, bonuses,
pensions and social costs, share-based payments, vacation pay,
and other benefits. Salaries, bonuses, pensions and social costs,
share-based payments, vacation pay, and other benefits are
recognised in the year in which the associated services are
rendered by the employees.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
1. Accounting policies (continued)
Share-based payments
The Board of Directors, the Board of Management and other
employees have been granted warrants. The warrants are
measured at fair value at the grant date and are recognized as an
expense in staff costs over the vesting period. Expenses are set off
against equity (equity-settled share-based payments). The fair
value of the warrants is measured using the Black & Scholes
valuation method or other generally accepted valuation techniques.
The calculation takes into account the terms and conditions under
which the warrants are granted. Fair value is not subsequently
remeasured. If subsequent modifications to a warrant program
increase the value of the warrants granted, measured before and
after the modification, the increase is recognized as an expense. If
the modification occurs before the vesting period, the increase in
value is recognized as an expense over the period for services to be
received. If the modification occurs after the vesting date, the
increase in value is recognized as an expense immediately.
Consideration received for warrants sold is recognized directly in
equity.
Financial income and financial expenses
Financial income and expenses include interest income, interest
expense, lease interest and amortization, amortization of
borrowing issue costs and realized and unrealised exchange gains
and losses.
Tax
Tax on the profit/loss for the year comprises the year’s current tax
and changes in deferred tax. The tax expense relating to the
profit/loss for the year is recognised in the income statement, and
the tax expense relating to items recognized in other
comprehensive income and directly in equity, respectively, is
recognised in other comprehensive income or directly in equity.
Exchange rate adjustments of deferred tax are recognised as part
of the adjustment of deferred tax for the year.
Current tax payable and receivable is recognised in the balance
sheet as the expected tax on the taxable income for the year,
adjusted for tax paid on account. The current tax charge for the
year is calculated based on the tax rates and rules enacted at the
balance sheet date.
Deferred tax is calculated using the liability method on all
temporary differences between the accounting and taxable values
of assets and liabilities.
Deferred tax assets are assessed yearly and only recognized to the
extent that it is more likely than not that they can be utilized.
Deferred tax assets, including the tax value of tax losses carried
forward, are recognised as other non-current assets and measured
at the amount at which they are expected to be realized, either by
setting off deferred tax liabilities or by setting off tax on future
earnings within the same legal entity or a jointly taxed entity.
Deferred tax is measured based on the tax legislation and statutory
tax rates in the respective countries that will apply under the
legislation in force on the balance sheet date when the deferred tax
asset is expected to crystallize as current tax. Changes in deferred
tax resulting from changes in tax rates are recognised in the
income statement.
The Group recognizes deferred tax assets relating to losses carried
forward when Management finds that these can be offset against
taxable income in the foreseeable future. An assessment is made
taking into consideration the effect of restrictions in utilization in
local tax legislation. Future taxable income is assessed based on
budgets as well as Management’s expectations regarding growth
and operating margin in the coming years.
Balance sheet
Intangible assets
Intangible assets with determinable useful lives comprise
completed and in progress development projects and are
measured at cost less accumulated amortization and impairment
losses. Completed development projects by the Group are
recognized as an asset if the cost of development is reliably
measurable and an analysis shows that future economic benefits
from using the software exceed the cost. Cost is defined as
development costs incurred to make the software ready for use
and consists primarily of direct salaries and other directly
attributable development costs.
Once a software application has been developed, the cost is
amortized over the expected useful life on a straight-line basis. If
the useful life cannot be estimated, it is tested for impairment
yearly or if indications of impairment arise.
Amortization and impairment charges are recognised in the
income statement.
The amortization periods used are 5 -10 years.
Expected useful lives are reassessed regularly. The Group regularly
reviews the carrying amounts of its finite-lived intangible assets to
determine whether there is an indication of an impairment loss.
Intangible assets, including development projects in progress, are
tested for impairment at least on a yearly basis, or if indications of
impairment exist. Intangible assets are written down to their
recoverable amount if the carrying amount exceeds the higher of
the fair value less costs to sell and the value in use. Depreciation
and impairment charges are recognized in the income statement.
Property, plant and equipment
Property, plant and equipment comprises other fixtures and fittings,
tools and equipment and are measured at cost less accumulated
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
1. Accounting policies (continued)
depreciation and accumulated impairment. Other fixtures and
fittings, tools and equipment are depreciated on a straight-line
basis over the expected useful lives of the finite-lived assets, which
are as follows:
Other fixtures and fittings, tools and equipment – 3-5 years
Property, plant and equipment is tested for impairment if
indications of impairment exist. Property, plant and equipment is
written down to its recoverable amount if the carr ying amount
exceeds the higher of the fair value less costs to sell and the value
in use. Depreciation and impairment charges are recognised in the
income statement.
Leases
When entering into an agreement, the Group assesses whether an
agreement is a lease agreement or contains a lease element.
The right-of-use asset is measured at cost, which is calculated as
the present value of the lease obligation plus any direct costs
related to the entering into of the lease and prepaid lease
payments.
The right-of-use asset is depreciated on a straight-line basis over
the shorter of the lease term and the useful life of the asset.
The Group leases properties which include a service element in the
payments to the lessor. This service is deducted from the lease
payment when measuring the lease obligation. Where the Group
cannot reliably separate lease and non-lease items, it is considered
a single lease payment.
Short leases with a maximum lease term of 12 months and leases
where the underlying asset has a low value are not recognised in
the statement of financial position. The lease term is defined as
the non-cancellable period of a lease together with periods covered
by options to extend the lease if it is reasonably certain that the
options will be exercised and periods covered by options to
terminate the lease if it is reasonably certain that the options will
not be exercised. A number of leases contain extension and
termination options in order to guarantee operational flexibility in
managing the leases.
The lease obligation, which is recognised under “Lease liabilities”, is
measured at the present value of the remaining lease payments,
discounted by the Group’s incremental loan interest rate, if the
implicit interest rate is not stated in the lease agreement or cannot
reasonably be determined. The lease obligation is subsequently
adjusted if:
● The value of the index or interest rate on which the lease
payments are based changes.
● There is a change in the exercise of options to extend or
shorten the lease period due to a material event or a
material change in circumstances which is within the
control of the lessee.
● The lease term is changed as a result of exercising an
option to extend or shorten the lease term.
Subsequent adjustments of the lease obligation are recognized as
a correction to the right-of-use asset. However, if the right-of-use
asset has a value of DKK 0, a negative reassessment of the
right-of-use asset is recognized in the income statement.
Deposits
On initial recognition, deposits are measured at fair value and
subsequently at amortized cost less impairment losses, if any.
Trade receivables
For trade receivables, the Group applies a simplified approach in
calculating expected credit losses (ECLs). Therefore, the Group
does not track changes in credit risk, but instead recognizes a loss
allowance based on lifetime ECLs at each reporting date.
Provisions for bad debts are determined on the basis of an
individual assessment of each receivable, and, in respect of trade
receivables, a general provision is also made based on its historical
credit loss experience, adjusted for forward-looking factors specific
to the debtors and the economic environment.
However, in certain cases, the Group may also consider a financial
asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking any credit enhancements
held by the Group into account. Trade receivables are written off
when all possible options have been exhausted and there is no
reasonable expectation of recovery.
The cost of allowances for expected credit losses and write-offs
for trade receivables are recognised in the income statement under
other external expenses.
The maximum exposure to credit risk at the reporting date is the
carrying value of trade receivables in note 17. The Group does not
hold collateral as security.
Prepayments
Prepayments comprise incurred costs relating to subsequent
financial years. Prepayments are measured at cost.
Interest-bearing liabilities
Debt to credit institutions and other interest-bearing liabilities.
Interest-bearing liabilities are measured at amortized cost.
Trade payables and other payables
Other payables include bonus and commission accruals, vacation
pay obligations, payroll taxes and VAT. Payables are measured at
amortized cost.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
2. Going concern
During 2022, Linkfire concluded the process of securing the
necessary financing to continue its operations. The equity
financing of DKK 45M is divided into two equal tranches whereof
the first tranche was settled in Q4-2022, while the second tranche
will settle latest in April 2023. Second tranche is committed by the
largest new shareholder participating in the first tranche, Maverick
Capital Limited (“Maverick”), at the same price per share of SEK
0.60. Linkfire has the option to waive the commitment if, and to the
extent that Linkfire is able to obtain equity financing in the amount
of DKK 22.5M or more at more favorable terms elsewhere.
Linkfire is continuing its path towards profitability and with a strong
improvement in earnings in Q4-2022 as well as a structurally lighter
cost base, the company’s management remains confident in its
plan to reach EBITDA profitability for the full year of 2023. In its
restructured form, the company’s management is confident in the
presence of sufficient operating flexibility to mitigate the
expectation of difficult operating conditions.
The above-mentioned financing, including the second tranche
investment and the company breaks-even on EBITDA in 2023 is
sufficient to sustain investments into innovation as well as
servicing loan obligations. Current budgets and plans are still
considered achievable at the signing date. Linkfire is continuously
optimizing its capital preparedness and options as complementary
to secured equity financing.
Management has on this background decided to prepare the
financial statements on a going concern basis.
3. Adoption of new and amended standards
Management has assessed the impact of new or amended
accounting standards and interpretations (IFRSs) issued by the
IASB and IFRSs endorsed by the European Union effective on or
after 1 January 2023. Management assessed that application of
these has not had a material impact on the financial statements for
2022.
Furthermore, Management has assessed the impact of new or
amended accounting standards and interpretations (IFRSs) issued
by the IASB that have not yet become effective. Management does
not anticipate any significant impact on future periods from the
adoption of these amendments.
4. Critical accounting judgments and key
sources of estimation uncertainty
As part of the preparation of the financial statements, Management
makes a number of accounting estimates and assumptions as a
basis for recognising and measuring the Group’s assets, liabilities,
income and expenses as well as judgments made in applying the
entity’s accounting policies. The estimates, judgments and
assumptions made are based on experience gained and other
factors that are considered prudent by Management in the
circumstances, but which are inherently subject to uncertainty and
volatility.
The assumptions may be incomplete or inaccurate, and
unforeseen events or circumstances may occur, for which reason
the actual results may differ from the estimates and judgements
made. The accounting policies are described in detail in note 1 to
the financial statements to which we refer.
Management considers the following accounting estimates and
judgments to be significant in the preparation of the financial
statements.
Development costs
The Group capitalizes costs for software development projects.
Initial capitalization of costs is based on management’s judgment
that technological and economic feasibility is confirmed, usually
when a product development project has reached a defined
milestone according to an established project management model.
In determining the amounts to be capitalized, management makes
assumptions regarding the expected future cash generation of the
project and the expected period of benefits. At 31 December 2022,
the carrying amount of capitalized development costs was DKK
74,372 thousand (2021: DKK 69,875 thousand). In 2022, DKK
26,144 thousand were capitalized (2021: DKK 19,215 thousand)..
Determining the lease term of contracts with renewal and
termination options – Group as lessee
The Group determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease, if it is
reasonably certain not to be exercised. The Group applies
judgment in evaluating whether it is reasonably certain whether or
not to exercise the option to renew or terminate the lease.
Impairment of non-financial items
At each reporting date, it is required to assess whether there is any
indication that an asset may be impaired, and an impairment test is
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
4. Critical accounting judgments and key
sources of estimation uncertainty (continued)
conducted by Management in relevant cases. Impairment is
recognized when the carrying amount of an asset exceeds its
recoverable amount.
As a result of Management's impairment assessment, Linkfire
recognized in 2022 a net impairment loss of DKK 19,893k (2021:
DKK 0). For further description please refer to note 13 of the
financial statements.
Share-based payments
Estimating fair value for share-based payment transactions
requires determination of the most appropriate valuation model,
which depends on the terms and conditions of the grant. This
estimate also requires determination of the most appropriate
inputs to the valuation model, including the expected life of the
share option or appreciation right, volatility and dividend yield and
making assumptions about them. The assumptions and models
used for estimating fair value for share-based payment
transactions are disclosed in note 7.
The assumptions may be incomplete or inaccurate, and
unforeseen events or circumstances may occur, for which reason
the actual results may differ from the estimates and judgments
made. In 2022, the cost of share-based payments amounted to
DKK 791 thousand (2021: DKK 562 thousand).
Deferred tax
Linkfire has not accounted for deferred tax assets related to tax
losses carried forward. Linkfire’s tax losses can be carried forward
indefinitely. The deferred tax assets shall be recognized based on
expected earnings for the next 3-5 years and the possibility to
utilize the deferred tax assets to be offset against positive taxable
income in each jurisdiction. The Group has concluded that the
deferred tax assets will not be fully recoverable using the estimated
future taxable income based on business plans and budgets for the
Group. Deferred tax assets not recognized have a total value of
DKK 14,847 thousand (2021: 4,100 thousand).
5. Segment information
For management purposes and based on internal reporting
information, Linkfire is organized in only one operating segment, as
the information reported includes operating results at a
consolidated level only. The company setup and costs related to
the main nature of the business are not attributable to any specific
revenue stream or customer type and are therefore borne centrally.
The results of the single reporting segment are shown in the
statement of comprehensive income.
For the split of revenue, please refer to note 6.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
6. Revenue
Geographic Information
As an online platform,the Group generates revenue from customers located worldwide. For this purpose,
internal reporting divides revenue according to the NAM (Northern America),the EMEA region (Europe,
Middle East and Africa) as well as APAC (Asia and Oceania) and LATAM (Latin America and the
Caribbean).
2022
2021
2022
2021
DKK thousand
Revenue
NAM
34,253
19,441
EMEA
13,143
9,573
DKK thousand
APAC
4,331
4,129
Subscriptions*
32,100
22,079
LATAM
864
554
Commissions
20,490
11,618
Total
52,590
33,697
Total
52,590
33,697
%-split
%-split
NAM
65
58
Subscriptions
61
66
EMEA
25
28
Commissions
39
34
APAC
8
12
Total
100
100
LATAM
2
2
Total
100
100
* A total of DKK 4,561 thousand correspond to non-recurring subscription revenue
recognized in 2022 (2021: DKK 0).
In 2022, two customers exceeded 10% of total revenue and accounted for 44%.
In 2021, two customers exceeded 10% of total revenue and accounted for 39%.
43 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
6 Revenue (continued)
2022
2021
Contract balances (liability)
DKK thousand
Cost at 1 January
6,166
5,702
Recognised during the year
-32,100
-22,079
Additions
35,861
22,543
Cost at 31 December
9,927
6,166
Management expects that 100.0% of the transaction price allocated to the unsatisfied contracts as of the
year ended 2022 will be recognized as revenue during the next reporting period (DKK 9.9 million).
44 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
7. Staff Costs
2022
2021
2022
2021
DKK thousand
DKK thousand
Gross salaries
60,437
38,071
Key Management Personnel
Share-based payments
791
562
Salaries
9,323
5,782
Other social security costs
2,143
1,314
Share-based payments
0
105
Other staff costs
6,316
2,728
Total
9,323
5,887
Total
69,687
42,676
Increase in Key Management Personnel costs is related to general Management
compensation increases reflecting leadership benchmarks of a listed company, short-term
incentive payouts to commercial part of Management for reaching sales targets, more
Management staff than in 2021 and a stronger Fx rate impacting salary developments.
Capitalized Salaries
(19,162)
(11,506)
Total
50,525
31,170
Number of employees at year end
74
91
Employment contracts for members of the Key Management Personnel contain terms and
conditions that are common to those of their peers in similar companies, including terms
of notice and non--competitive clauses.
Average numbers of employees during the year
Board of Directors
Salaries
775
346
Share-based payments
727
428
Total
1,502
774
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
8. Share-based payments
DKK thousand
2022
2021
Specification of outstanding warrants:
Cost of share-based payments
791
562
Number of warrants
Weighted average
exercise price
DKK
Boards of
Directors
Key Management
Personnel
Employees &
Advisors
Total
Total
791
562
Costs of share-based payments are recognized as staff costs with a corresponding effect in equity.
Consideration received for warrants sold is recognized directly in equity. The share based incentive programs
will only be settled in shares and no cash
Corporate conversion
1.00
200
1,250
1,928
3,378
The board of directors was authorized on:
Granted
8.20
849
-
-
849
1. 15 June 2021 to issue warrants to key employees, consultants and members of executive management in
the company. The warrant terms entitle the warrant holders to subscribe for up to a total of 3,010,764 shares
of nominal DKK 0.01 each.
The warrants are granted to the Warrant Holder at the signing of the issued subscription agreement.
The warrants are to be vested linearly over 36 months after the grant date.
2. 15 June 2021 to issue warrants to members of the board of directors in the company. The warrant terms
entitle the warrant Holders to subscribe for up to a total of 737,080 shares of nominal DKK 0.01 each.
The warrants are granted to the Warrant Holder at the signing of the issued subscription agreement.
The warrants are to be vested linearly over 36 months after the grant date.
3. 27 April 2022 (continuance of authorization from 15 June 2021) to issue warrants to key employees,
consultants and members of the executive management in the company. The warrant terms entitle warrant
holders to subscribe for up to a total amount of 3,010,764 shares of nominal DKK 0.01 each.
The warrants are granted to the warrant holder at the signing of the issued subscription agreement.
The warrants are to be vested linearly over 36 months after the grant date.
4. 27 April 2022 to issue warrants to members of the board of directors in the company. The warrant terms
entitle warrant holders to subscribe for up to a total amount of 368,540 shares of nominal DKK 0.01 each.
The warrants are to be vested linearly over 36 months after the grant date.
Transferred
4.47
(168)
-
168
-
Exercised
3.71
(112)
(1,639)
(2,642)
(4,393)
Canceled
4.47
(107)
(76)
(172)
(355)
Outstanding at 31 December 2021
8.77
737
-
-
736
Granted
3.01
369
-
139
508
Transferred
-
-
-
-
-
Exercised
-
-
-
-
-
Canceled
5.89
(133)
-
(87)
(220)
Outstanding at 31 December 2022
6.53
972
-
53
1,024
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
8. Share-based payments (continued)
Outstanding warrants have the following characteristics:
The fair value of the warrants issued is measured at calculated market price at the
grant date based on the Black & Scholes valuation method. The calculation is
based on the following assumptions at the grant date:
Warrants outstanding
Weighted average
exercise price DKK
Vesting period
Exercise
period
2022
2021
Number of warrants
Warrants granted
in 2022
Warrants granted
in 2021
Warrants outstanding
Average share price (DKK)
3.01
8.77
Warrants granted in 2021
8.77
Jul 21 - Jun 24
Jun 24 - Jun
26
604
737
Expected volatility rate (% p.a.)
0.54
0.54
Warrants granted in 2022
3.01
May 22 - Jun
25
Apr 25 - Apr 27
421
-
Risk-free interest rate (% p.a.)
-
-
Outstanding at 31 December
1,025
737
Expected warrant life (no. years)
5.00
5.00
Exercise price (DKK)
3.01
8.77
DKK thousand
2022
2021
Average remaining life of outstanding warrants at
31 December (years)
4.00
5.00
Fair value per granted warrant (DKK)
1.16
3.40
Exercise price for outstanding warrants at 31
December (DKK)
3.01-8.77
8.77
Fair value all granted warrants, after
dilution (DKK thousand)
588
2,510
Volatility rate is applied based on the annualized volatility on Linkfire's stock and
relevant peer groups derived from the standard deviation of daily observations
over 12 months ending December 2022.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
9. Depreciation, amortization and impairment losses
12. Tax for the year
DKK thousand
2022
2021
DKK thousand
2022
2021
Amortization of intangible assets
10,341
6,499
Current tax for the year income
(23)
-
Depreciation of property plant and equipment
651
134
Changes in deferred tax
Depreciation of right-of-use assets
3,529
2,280
Recognised as receivable tax credit
5,500
5,500
Impairment loss of intangible assets
19,893
-
Total
5,477
5,500
Total
34,414
8,913
Income tax benefits for both the years 2022 and 2021 relate to tax credits for research and development expenses
at the applicable tax rate under the Danish Corporate Income Tax Act.
For further information on the impairment loss of intangible assets, please refer to note 13 of
the consolidated financial statements.
DKK thousand
2022
2021
10. Financial income
Tax calculated as 22% of profit/loss before tax
16,624
9,036
DKK thousand
2022
2021
Non-capitalised tax assets
(10,747)
(2,025)
Foreign exchange income and other adjustments
1,042
1,534
Non-deductible expenses
(400)
(1,511)
Other financial income
-
1,557
Effective tax
5,477
5,500
Total
1,042
3,091
Tax rate for the year (%)
7.2%
13.8%
11. Financial expenses
Due to uncertainty of utilization of the tax loss carry-forward, the Group has not recognised any deferred tax assets.
Deferred tax assets not recognized have a total value of DKK 14,847 thousand (2021: 4,100 thousand).
DKK thousand
2022
2021
Interest expenses
1,320
4,249
Foreign exchange losses and other adjustments
627
313
Interest on lease liabilities
369
181
Total
2,316
4,743
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
13. Intangible assets
DKK thousand
Prepaid Intellectual
Property Rights
Completed development
projects
Development projects in
progress
Total
2022
Completed development projects comprise software development costs related to development of the
existing software. The software is under continuous development for the use of customers and partners and
is sold as i) a license to use the software for a given period, and ii) as an integration component on websites
and in applications. Users have access to upgrades and new functionalities during the contract period.
Development costs for the year cover both development of the front-end and the back-end part of the software
solution. Both parts are to increase the user experience, functionalities within the software as well as expand
upon the technical applications of the software in order to increase the Group’s revenue by maintaining
existing customers and partners and acquire new customers and partners.
It is Management’s assessment that the expected useful lives of the finite-lived assets, as well as the expected
future revenue streams from the assets, are sufficient to cover the value of recognised developed software at
the reporting date.
In 2022, Linkfire expensed DKK 12,107 thousand (2021: 10,141 thousand) for development projects not
meeting the recognition criteria applicable to internally generated intangible assets.
Sub-projects together (the platform) constitute one single cash-generating unit.
As a result of Management's assessment, Linkfire recognised in 2022 a net impairment loss of
DKK 16,885 thousand related to SmartURL and an impairment loss of DKK 3,008
thousand on other Completed development projects, totalling a recognition of DKK 19,893 thousand in
impairment losses.
After the acquisition of SmartURL the technology and platform were migrated into the Linkfire platform.
The impairment related to the recoverable amount of SmartURL has been recognized even though the asset is
showing good results, including indirect developments with enterprise clients, since Linkfire's assessment of
the value of the SmartURL asset lies in the integration with the Platform as a whole and not in value of the
isolated asset itself. This is a financial measure and not an expression of management’s belief in the
commercial potential of the acquired assets.
The impairment related to other Completed development projects is related to outdated advertising
sub-projects, which comprises assets that are not being commercialized any more. The write-down has been
made as a result of Management not believing in any further earnings from these sub-projects, which is why
the recoverable amount is calculated at DKK 0.
Cost at 1 January
8,298
74,979
-
83,277
Transfers
(16,885)
43,029
(26,144)
-
Additions
12,387
26,144
38,531
Disposals
(3,800)
-
-
(3,800)
Cost at 31 December
-
118,008
-
118,008
Amortization and impairment at 1 January
-
(13,402)
-
(13,402)
Amortization during the year
-
(10,341)
-
(10,341)
Impairment during the year
-
(19,893)
-
(19,893)
Amortization and impairment at 31 December
-
(43,636)
-
(43,636)
Carrying amount at 31 December
-
74,372
-
74,372
2021
Cost at 1 January
-
55,764
2,642
58,406
Transfers
-
19,215
(19,215)
-
Additions
8,298
-
16,573
24,871
Cost at 31 December
8,298
74,979
-
83,277
Amortization and impairment at 1 January
-
(6,903)
-
(6,903)
Amortization and impairment during the year
-
(6,499)
-
(6,499)
Amortization and impairment at 31 December
-
(13,402)
-
(13,402)
Carrying amount at 31 December
8,298
61,577
-
69,875
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
14. Property, plant and equipment
15. Right-of-use assets
DKK thousand
Other fixtures and
fittings, tools and
equipment
Leasehold
improvements
Total
DKK thousand
Offices
Vehicles
Equipment
Total
2022
2022
Cost at 1 January
834
121
955
Cost at 1 January
12,608
81
1,088
13,777
Additions
263
-
263
Additions
683
683
Disposals
-
-
-
Cost at 31 December
12,608
81
1,771
14,460
Cost at 31 December
1,097
121
1,218
Depreciation at 1 January
(4,255)
(47)
(787)
(5,089)
Depreciation at 1 January
(165)
(121)
(286)
Depreciation during the year
(3,919)
(34)
(261)
(4,214)
Depreciation during the year
(651)
-
(651)
Depreciation at 31 December
(8,174)
(81)
(1,048)
(9,303)
Depreciation at 31 December
(816)
(121)
(937)
Carrying amount at 31 December
4,434
-
723
5,157
Carrying amount at 31 December
281
-
281
2021
2021
Cost at 1 January
200
121
321
Cost at 1 January
5,060
-
975
6,035
Additions
634
-
634
Additions
7,548
81
113
7,742
Disposals
-
-
-
Cost at 31 December
12,608
81
1,088
13,777
Cost at 31 December
834
121
955
Depreciation at 1 January
(33)
(119)
(152)
Depreciation at 1 January
(2,368)
-
(441)
(2,809)
Depreciation during the year
(132)
(2)
(134)
Depreciation during the year
(1,887)
(47)
(346)
(2,280)
Depreciation at 31 December
(165)
(121)
(286)
Depreciation at 31 December
(4,255)
(47)
(787)
(5,089)
Carrying amount at 31 December
669
-
669
Carrying amount at 31 December
8,353
34
301
8,688
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
15. Right-of-use assets (continued)
16. Deposits
Carrying amounts of lease liabilities and movements during the period:
DKK thousand
2022
2021
DKK thousand
2022
2021
At 1 January
8,794
3,296
Cost at 1 January
1,153
427
Additions
683
7,742
Additions
53
726
Accrual of interest
368
181
Cost at 31 December
1,206
1,153
Payments
(4,079)
(2,424)
Exchange rate adjustments
(65)
(1)
17. Trade Receivables
At 31 December
5,701
8,794
Non-Current
2,345
4,958
DKK thousand
2022
2021
Current
3,356
3,836
Trade receivables
5,026
6,238
The following amounts have been recognised in the income statement:
Write-downs
(623)
-
DKK thousand
2022
2021
Total
4,403
6,238
Depreciation expense of right-of-use assets
4,214
2,280
Expected credit loss
The following table details the maturity of trade receivables. The Group has
assessed their expected credit losses on an individual level, and has
recognised an expected loss on debtors of DKK 623 thousand (2021: DKK 0)
related mainly to debtors with more than 12 months due.
Interest expense on lease liabilities
368
181
Total amount recognised in the income statement
4,582
2,461
The Group had total outflow for leases of DKK 4,079 thousand (2021: DKK 2,424 thousand).
The Group leases offices, and lease terms are negotiated on an individual basis and contain different
terms and conditions.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
17. Trade Receivables (continued)
19. Share capital and earnings per share
DKK thousand
Not Past due
Overdue by
0-15 days
Overdue by
16-30 days
Overdue by
>30 days
Write-downs
Carrying
amount of
receivables
At 31 December 2022, the share capital consisted of 114,989,051 (2021: 58,339,222) shares with a nominal value of
DKK 0.01 each.
The shares are not divided into classes and carry no right to fixed income
31 December 2022
DKK thousand
2022
Trade receivables
3,299
2,284
-
66
(623)
5,026
31 December 2021
Issued and fully paid shares:
Trade receivables
5,516
112
3
607
-
6,238
At 1 January 2021, 10,808,661 shares of DKK 0.01 each
104
18. Working capital changes
Corporate conversion
292
DKK thousand
2022
2021
Capital increase
187
At 31 December 2021
583
Change in receivables and prepayments
564
(5,219)
Change in trade payables and other debt etc
8645
(2,384)
Capital increase
567
Total
9,209
(7,603)
Share capital at 31 December 2022
1,150
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
19. Share capital and earnings per share
20. Interest-bearing liabilities
DKK thousand
2022
2021
DKK thousand
2022
2021
Earnings per share
Non-current borrowings
The calculation of earnings per share is based on the following:
Debt to credit institutions
22,054
19,385
Profit/(loss) for the year
(70,087)
(35,578)
Other
2,152
2,111
Total
24,206
21,496
Average number of ordinary shares for calculation of earnings per share:
73,098,111
46,318,136
Average diluted effect of outstanding share options
1,118,033
695,065
Current borrowings
Average number of shares for calculation of diluted earnings per share:
74,216,144
47,013,201
Debt to credit institutions
2,250
7,200
Total
2,250
7,200
Earnings per share (EPS)
(0.96)
(0.77)
Earnings per share, diluted (DEPS)
(0.94)
(0.76)
21. Other capital reserve
Other capital reserve is used to recognize the value of equity-settled share-based payments provided
to employees, including Key Management Personnel, as part of their remuneration. Refer to note 8 for
further details of these plans.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
22. Financial risks
Capital Management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity balances. The capital structure of the Group consists of net
debt and equity. Management reviews the capital structure continually to consider if the current capital structure is in
accordance with the Group’s and shareholders’ interests.
Financial risk management
Due to the nature of its operations, investments, and financing, the Group is exposed to a number of financial risks. It is
Group policy to operate with a low risk profile so that currency risk, interest rate risk and credit risk only occur in commercial
relations. The scope and nature of the Group’s financial instruments appear from the income statement and statement of
financial position in accordance with the accounting policies applied. Provided below is information about factors that may
influence amounts, time of payment, or the reliability of future payments, where such information is not provided directly in
the financial statements. This note addresses only financial risks directly related to the Group’s financial instruments.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations towards the Group, resulting in a financial loss. The
Group is exposed to credit risk primarily related to its trade and other receivables, receivables from group enterprises,
contract assets and cash held at financial institutions. The Group considers accounts receivables in default when they are
due more than 90 days, and the outstanding amount is written off when there is a court order of bankruptcy from the
counterparty. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial
assets.
Foreign currency risk
Currency risk is the risk that arises from changes in exchange rates and affects the Group’s result.
The general objective of the Group’s currency risk management is to limit and delay any adverse impact of exchange rate
fluctuations on earnings and cash flows and thus increase the predictability of the financial results. The Group also aims at
balancing incoming and outgoing payments in local currency as much as possible as well as monitoring the development in
exchange rates and adjusting price lists when required.
The greatest exposure in foreign currency is to USD, and in 2022, 93% (2021: 84%) of the Group’s revenue was denominated
in USD. In order to minimize the currency risk related to transactions in USD, the Company ’s revenues are mainly invoiced in
USD, while the majority of the Group’s expenses, such as employee costs, are denominated in DKK. The Group is thus
offering as much as possible revenue in EUR to match the main cost driver, as DKK is tied to EUR. Meanwhile, optimizing
cost placements in USD to utilize incoming USD payments. However, currency fluctuations could cause currency
transaction losses or gains which the Company cannot predict, and if the currency fluctuations are detrimental to the Group,
it could have a material adverse effect on the Group’s business, results of operations, and financial position. Furthermore,
fluctuations in the value of USD and other foreign currencies may make the Group’s subscriptions more expensive for
international customers, which could harm its business.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
22. Financial risks (continued)
DKK thousand
2022
2021
Sensitivity to a 10% increase in USD exchange rate
Effect on profit before tax
6,749
3,691
Effect on pre-tax equity
6,749
3,691
Assets
Liabilities
Net assets
DKK thousand
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Currency
USD
17,611
23,179
2,801
1,174
14,810
22,005
EUR
361
3,137
443
209
(82)
2,928
Other
-
1,394
1,423
60
(1,423)
1,334
Liquidity risk
The Group ensures sufficient liquidity resources by liquidity management. In order to limit the Group’s counterparty risk, deposits are only made in well-reputed
banks.
At 31 December 2022, the Group’s cash and cash equivalents amounted to DKK 7,027 thousand (2021: DKK 45,946 thousand).
The cash reserve and expected cash flow for 2023 are considered to be adequate to meet the obligations of the Group as they fall due.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
22. Financial risks (continued)
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
Financial instruments
DKK thousand
Less than 3
months
3 to 12 months
1 to 5 years
> 5 years
Total
DKK thousand
2022
2021
Year ended on 31 December 2022
Financial assets measured at amortized cost
Interest-bearing liabilities
1,000
1,250
22,054
2,152
26,456
Deposits
1,206
1,153
Lease liabilities
839
2,517
2,345
-
5,701
Trade receivables
5,026
6,238
Trade and other payables
11,297
2,870
1,000
-
15,167
Other receivables
579
543
Total
13,136
6,637
25,399
2,152
47,324
Cash
7,027
45,946
Total
13,839
53,880
Year ended on 31 December 2021
Interest-bearing liabilities
3,600
3,600
18,758
2,738
28,696
Financial liabilities measured at amortized cost
Lease liabilities
959
2,876
4,959
-
8,794
Interest-bearing loan
26,456
28,696
Trade and other payables
7,843
1,576
-
-
9,419
Trade payables
9,471
4,831
Total
12,402
8,052
23,717
2,738
46,909
Other payables
5,822
4,588
Total
41,750
38,115
Interest rate risk
Interest rate risk arises in relation to interest-bearing assets and liabilities.
Classification of financial assets measured at amortized cost
Since the Group’s financial instruments measured at amortized cost are either short-term and/or
exposed to floating interest rates, Management has assessed that the carrying amount is a
reasonable approximation of fair value.
The Group’s interest-bearing debt to credit institutions of DKK 13,760 thousand (2021: DKK 16,590 thousand) at 31 December 2022 is
subject to a variable rate of interest based on a 3-month CIBOR plus a premium, whereas DKK 12,696 thousand (2021: DKK 12,106
thousand) has a fixed interest rate of 5%
If market interest rates increased by one percentage point, the interest rate sensitivity as calculated based on the loan balance to credit
institutions as per the end of 2022 would result in a yearly increase in interest expenses of DKK 265 thousand (2021: DKK 287 thousand).
A corresponding decrease in market interest rates would have the opposite impact.
56 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
23. Liabilities arising from financing activities
24. Related Parties
DKK thousand
Other borrowings
Lease liabilities
Total
Shareholders
Registered office
Basis of influence
2022
Maverick Capital Limited
Dubai
Liabilities at 1 January
28,696
8,794
37,490
Rocket Group ApS
Copenhagen
Loans raised
11,549
683
12,232
Faurfelt Invest ApS
Copenhagen
Repayments
(14,521)
(4,079)
(18,600)
Other
732
303
1,035
There is no ultimate Parent, as no owner holds the majority of the voting rights.
Liabilities at 31 December
26,456
5,701
32,157
2021
Liabilities at 1 January
48,587
3,296
51,883
Adjustment to 1 January balance*
(10,975)
-
(10,975)
Loans raised
-
7,742
7,742
Repayments
(8,916)
(2,424)
(11,340)
Foreign exchange rate movements
-
(1)
(1)
Other
-
181
181
Liabilities at 31 December
28,696
8,794
37,490
* Beginning balance included Trade payables and Other payables which is incorrect.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the consolidated financial statements
24. Related Parties
25. Events after the Reporting Period
Other related parties
Other related parties of the Group with significant influence comprise the Board of
Directors and the Executive Board and their related parties. The transactions with the
Board of Directors and the Executive Board only consist of normal remuneration, as
disclosed in note 7.
All agreements relating to these transactions are based on market price (arm’s length).
On February 23, 2023 the Board of Directors of Linkfire A/S decided to issue warrants to the executive management, the senior leadership
team, key employees and contracted staff within the authorization granted by the annual general meeting on 27 April 2022.
The purpose of the warrant program is to create possibilities for the company to retain and incentivize certain key employees by offering a
long-term ownership engagement. In total the grants cover 2,676,000 warrants of which 936,000 warrants have been granted to the
executive management and senior leadership, and the remaining 1,740,000 warrants have been granted to key employees and contracted
staff.
There have not been any other subsequent events after the reporting period which could influence the evaluation of the interim report.
26. Guarantees, contingent liabilities and collateral
The group has provided a bank guarantee to Euroclear of DKK 145 thousand.
In order to secure the Company’s balance with Danske Bank, a mortgage has been granted with mortgages in simple receivables, operating
inventories and equipment and intellectual property rights at a total book value of DKK 80,160 thousand (2021: DKK 76,630 thousand).
58 / 76 L I N K F I R E A / S A N N U A L R E P O R T 2 0 2 2
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent Company
⇢ PARENT COMPANY INCOME STATEMENT
⇢ PARENT COMPANY STATEMENT OF FINANCIAL POSITION
⇢ PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
⇢ NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company income statement
DKK thousand
Note
2022
2021
Revenue
52,590
33,697
Cost of sales
(13,026)
(9,320)
External expenses
(54,354)
(32,835)
Other external expenses
-
(6,867)
Gross profit
(14,790)
(15,325)
Staff costs
2
(26,387)
(17,754)
Other staff Costs
2
(3,817)
-
Depreciation, amortization and impairment losses
3
(30,434)
(6,576)
Operating profit/(loss)
(75,427)
(39,655)
Financial income
939
1,888
Financial expenses
(1,576)
(4,232)
Profit/(loss) before tax
(76,064)
(41,998)
Tax for the year
6
5,500
5,500
Profit/(loss) for the year
(70,564)
(36,498)
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company statement of financial position
DKK thousand
Note
2022
2021
DKK thousand
Note
2022
2021
Assets
Assets
Completed development projects
7
74,372
61,578
Trade receivables
5,026
6,238
Acquired Intellectual Property Rights
7
-
8,298
Other receivables
445
448
Total intangible assets
74,372
69,876
Income tax receivables
5,500
5,500
Prepayments
2,200
1,588
Other fixtures and fittings, tools and equipment
8
317
516
Total receivables
13,171
13,774
Total property, plant and equipment
317
516
Cash
6,532
45,083
Deposits
521
508
Total current assets
19,703
58,858
Investments in subsidiaries
-
-
Total financial assets
521
508
Total assets
94,913
129,758
Total fixed assets
75,210
70,900
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company statement of financial position
DKK thousand
Note
2022
2021
Equity and liabilities
Share capital
595
583
Reserve for development costs
74,372
61,578
Retained earnings
(33,157)
23,110
Total equity
41,810
85,271
Interest bearing liabilities
10
24,206
21,496
Other payables
1,000
-
Total non-current liabilities
25,206
21,496
Interest bearing liabilities
10
2,250
7,200
Prepayments from customers
9,927
6,166
Trade payables
9,334
4,800
Payables to group enterprises
2,232
1,258
Other payables
4,153
3,567
Total current liabilities
27,896
22,990
Total liabilities
53,103
44,487
Total equity and liabilities
94,913
129,758
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company statement of changes in equity
DKK thousand
Share
capital
Share
premium
Reserve for
development costs
Retained
earnings
Total
DKK thousand
Share capital
Share
premium
Reserve for
development costs
Retained
earnings
Total
2022
2021
Equity beginning of period
584
-
61,578
23,110
85,272
Equity beginning of period
108
-
51,503
(47,255)
4,356
Increase of capital
566
30,052
-
(424)
30,194
Increase of capital
475
125,489
-
(292)
125,672
Transferred from share premium
-
(30,052)
-
30,052
-
Transferred from share premium
-
(125,489)
-
125,489
-
Transfer to reserves
-
-
12,794
(12,794)
-
Transfer to reserves
-
-
10,075
(10,075)
-
Transaction cost from capital increase
-
-
-
(3,092)
(3,092)
Transaction cost from capital increase
-
-
-
(8,259)
(8,259)
Proposed dividend
-
-
-
-
-
Proposed dividend
-
-
-
-
-
Profit/(loss) for the period
-
-
-
(70,563)
(70,563)
Profit/(loss) for the period
-
-
-
(36,498)
(36,498)
Equity end of period
1,150
-
74,372
(33,712)
41,810
Equity end of period
583
-
61,578
23,110
85,271
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the parent financial statements
1
Accounting policies
2
Going concern
3
Staff costs
4
Depreciation, amortization and impairment losses
5
Other financial income
6
Other financial expenses
7
Tax on profit/loss for the year
8
Intangible assets
9
Property, plant and equipment
10
Financial assets
11
Interest-bearing liabilities
12
Unrecognized rental and lease commitments
13
Guarantees, contingent liabilities and collateral
14
Subsequent events
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Notes to the parent financial statements
1. Accounting policies
The separate parent financial statements have been incorporated in the
annual report because a separate set of financial statements is required
for the Parent under the Danish Financial Statements Act requirements for
annual reports of reporting class B enterprises with additions of certain
provisions for reporting class C.
The accounting policies applied for these financial statements are
consistent with those applied last year.
Recognition and measurement
Assets are recognized in the balance sheet when it is probable as a result
of a prior event that future economic benefits will flow to the Entity, and
the value of the asset can be measured reliably. Liabilities are recognized
in the balance sheet when the Entity has a legal or constructive obligation
as a result of a prior event, and it is probable that future economic benefits
will flow out of the Entity, and the value of the liability can be measured
reliably. On initial recognition, assets and liabilities are measured at cost.
Measurement subsequent to initial recognition is effected as described
below for each financial statement item. Anticipated risks and losses that
arise before the time of presentation of the annual report and that confirm
or invalidate affairs and conditions existing at the balance sheet date are
considered at recognition and measurement. Income is recognized in the
income statement when earned, whereas costs are recognised by the
amounts attributable to this financial year.
Cash flow statement
Referring to section 86(4) of the Danish Financial Statements Act, no cash
flow statement have been prepared.
Income statement
Gross profit or loss
Gross profit or loss comprises revenue, own work capitalized, other
operating income, cost of sales and external expenses with reference to
section 32 of the Danish Financial Statements Act.
Revenue
Revenue from the sale of services is recognized in the income statement
when delivery is made to the buyer. Revenue is recognized net of VAT,
duties and sales discounts and is measured at the fair value of the
consideration fixed.
Cost of sales
Cost of sales comprises goods consumed in the financial year measured
at cost, adjusted for ordinary inventory write-downs.
External expenses
Other external expenses comprise sales and marketing costs, external
consultancy costs, other employee-related costs, IT and software costs,
investor relations costs, loss allowances for doubtful trade receivables
and other administrative expenses.
Other external expenses
Other external expenses comprise expenses of an extraordinary nature.
The expenses recognized in 2021 relate to the First North listing and
associated consultancy expenses.
Staff costs
Staff costs comprise salaries and wages, and social security
contributions, pension contributions, etc for entity staff.
Depreciation and amortization
Depreciation and amortization relating to property, plant and equipment
and intangible assets comprise Depreciation and amortization for the
financial year, and gains and losses from the sale of intangible assets and
property, plant and equipment.
Other financial income
Other financial income comprises dividends etc received on other
investments, interest income, including interest income on receivables
from group enterprises, net capital or exchange gains on securities,
payables and transactions in foreign currencies, amortization of financial
assets, and tax relief under the Danish Tax Prepayment Scheme etc.
Other financial expenses
Other financial expenses comprise interest expenses, including interest
expenses on payables to group enterprises, net capital or exchange losses
on securities, payables and transactions in foreign currencies,
amortization of financial liabilities, and tax surcharge under the Danish Tax
Prepayment Scheme etc.
Tax on profit/loss for the year
Tax for the year, which consists of current tax for the year and changes in
deferred tax, is recognized in the income statement by the portion
attributable to the profit for the year and recognized directly in equity by
the portion attributable to entries directly in equity.
Balance sheet
Intellectual property rights etc.
Intellectual property rights etc comprise development projects completed
and in progress with related intellectual property rights, acquired
intellectual property rights and prepayments for intangible assets.
Development projects on clearly defined and identifiable products and
processes, for which the technical rate of utilization, adequate resources
and a potential future market or development opportunity in the enterprise
can be established, and where the intention is to manufacture, market or
apply the product or process in question, are recognised as intangible
assets. Other development costs are recognized as costs in the income
statement as incurred. When recognizing development projects as
intangible assets, an amount equaling the costs incurred less deferred tax
is taken to equity under reserve for development costs that are reduced as
the development projects are amortized and written down.
The cost of development projects comprises costs such as salaries and
amortization that are directly and indirectly attributable to the
development projects. Completed development projects are amortized on
a straight-line basis using their estimated useful lives which are
determined based on a specific assessment of each development project.
If the useful life cannot be estimated it is impairment tested yearly.
For development projects protected by intellectual property rights, the
maximum period of amortization is the remaining duration of the relevant
rights. The amortization periods used are 5 -10 years. Intellectual property
rights etc are written down to the lower of recoverable amount and
carrying amount.
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Notes to the parent financial statements
1. Accounting policies (continued)
Property, plant and equipment
Other fixtures and fittings, tools and equipment are measured at cost less
accumulated depreciation and impairment losses. Land is not
depreciated. Cost comprises the acquisition price, costs directly
attributable to the acquisition and preparation costs of the asset until the
time when it is ready to be put into operation. The basis of depreciation is
the cost less estimated residual value after the end of useful life.
Straight-line depreciation is made on the basis of the following estimated
useful lives of the assets:
Other fixtures and fittings, tools and equipment 3 years
Leasehold improvements 5 years
For leasehold improvements and assets subject to finance leases, the
depreciation period cannot exceed the contract period. Estimated useful
lives and residual values are reassessed annually. Items of property, plant
and equipment are written down to the lower of recoverable amount and
carrying amount.
Investments in group enterprises
Investments in group enterprises are measured at cost. Investments are
written down to the lower of the recoverable amount and carrying amount.
Receivables
Receivables are measured at amortized cost, usually equalling nominal
value less write-downs for bad and doubtful debts.
Income tax payable or receivable
Current tax payable or receivable is recognised in the balance sheet,
stated as tax computed on this year’s taxable income, adjusted for prepaid
tax.
Prepayments
Prepayments comprise incurred costs relating to subsequent financial
years. Prepayments are measured at cost. Cash comprises cash in hand
and bank deposits.
Other financial liabilities
Other financial liabilities are measured at amortized cost, which usually
corresponds to nominal value.
2. Going concern
During 2022, Linkfire concluded the process of securing the necessary
financing to continue its operations. The equity financing of DKK 45M is
divided into two equal tranches whereof the first tranche was settled in
Q4-2022, while the second tranche will settle latest in April 2023. Second
tranche is committed by the largest new shareholder participating in the
first tranche, Maverick Capital Limited (“Maverick”), at the same price per
share of SEK 0.60. Linkfire has the option to waive the commitment if, and
to the extent that Linkfire is able to obtain equity financing in the amount
of DKK 22.5M or more at more favorable terms elsewhere.
Linkfire is continuing its path towards profitability and with a strong
improvement in earnings in Q4-2022 as well as a structurally lighter cost
base, the company’s management remains confident in its plan to reach
EBITDA profitability for the full year of 2023. In its restructured form, the
company’s management is confident in the presence of sufficient
operating flexibility to mitigate the expectation of difficult operating
conditions.
The above-mentioned financing, including the second tranche investment
and the company breaks-even on EBITDA in 2023 is sufficient to sustain
investments into innovation as well as servicing loan obligations. Current
budgets and plans are still considered achievable at the signing date.
Linkfire is continuously optimizing its capital preparedness and options as
complementary to secured equity financing.
Management has on this background decided to prepare the financial
statements on a going concern basis.
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Notes to the parent financial statements
3. Staff Costs
5. Other financial income
DKK thousand
2022
2021
DKK thousand
2022
2021
Wages and salaries
41,679
26,776
Foreign exchange gains
936
1,210
Other social security costs
333
361
Other financial income
3
678
Other staff costs
4618
2,123
Total
939
1,888
46,630
29,260
Staff costs classified as assets
(16,427)
(11,506)
6. Other financial expenses
Total
30,203
17,754
DKK thousand
2022
2021
Other interest expenses
980
3,864
Average number of employees at balance sheet date
69
46
Foreign exchange losses and other adjustments
652
212
For information about remuneration to Board of Directors and Key Management Personnel and Share-based
payments please refer to note 7 and 8 in the notes to the consolidated financial statements
Other financial expenses
60
156
Total
1,692
4,232
4. Depreciation, amortization and impairment
losses
DKK thousand
2022
2021
7. Tax on profit/loss for the year
Depreciation and amortization of intangible assets
10,341
6,499
DKK thousand
2022
2021
Impairment loss on intangible assets
19,893
-
Current tax
(5,500)
(5,500)
Depreciation of property plant and equipment
200
76
Total
30,434
6,575
For information about recognized impairment losses please refer to note 13 in the notes to the consolidated
financial statements.
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Notes to the parent financial statements
8. Intangible assets
DKK thousand
Prepaid
Intellectual
Property
Rights
Completed
development
projects
Development
projects in
progress
Total
DKK thousand
Prepaid
Intellectual
Property
Rights
Completed
development
projects
Development
projects in
progress
Total
2022
2021
Cost at 1 January
8,298
74,979
-
83,277
Cost at 1 January
-
55,764
2,642
58,406
Transfers
(16,885)
43,029
(26,144)
-
Transfers
-
19,215
(19,215)
-
Additions
12,387
26,144
38,531
Additions
8,298
-
16,573
24,871
Disposals
-3,800
0
0
(3,800)
Cost at 31 December
8,298
74,979
-
83,277
Cost at 31 December
-
118,008
-
118,008
Amortization and impairment at 1 January
-
(6,903)
-
(6,903)
Amortization and impairment at 1 January
-
(13,402)
-
(13,402)
Amortization during the year
-
(6,499)
-
(6,499)
Amortization during the year
-
(10,341)
-
(10,341)
Amortization and impairment at 31 December
-
(13,402)
-
(13,402)
Impairment during the year
-
(19,893)
-
(19,893)
Amortization and impairment at 31 December
-
(43,636)
-
(43,636)
Carrying amount at 31 December
8,298
61,577
-
69,875
Carrying amount at 31 December
-
74,372
-
74,372
Completed development projects comprise software development costs related to development of the existing software. The software is under continuous development for the use of customers and partners and is sold as i) a license to use the software for a given period, and ii)
as an integration component on websites and in applications. Users have access to upgrades and new functionalities during the contract period. Development costs for the year cover both development of the front-end and the back-end part of the software solution. Both parts are
to increase the user experience, functionalities within the software as well as expand upon the technical applications of the software in order to increase the Group’s revenue by maintaining existing customers and partners and acquire new customers and partners.
It is Management’s assessment that the expected useful lives of the finite-lived assets, as well as the expected future revenue streams from the assets, are sufficient to cover the value of recognised developed software at the reporting date.
In 2022, Linkfire expensed DKK 12,107 thousand (2021: 10,141 thousand) for development projects not meeting the recognition criteria applicable to internally generated intangible assets.
Sub-projects together (the platform) constitute one single cash-generating unit.
As a result of Management's assessment, Linkfire recognised in 2022 a net impairment loss of DKK 16,885 thousand related to SmartURL and an impairment loss of DKK 3,008 thousand on other Completed development projects, totalling a recognition of DKK 19,893 thousand in
impairment losses. After the acquisition of SmartURL the technology and platform were migrated into the Linkfire platform. The impairment related to the recoverable amount of SmartURL has been recognized even though the asset is showing good results, including indirect
developments with enterprise clients, since Linkfire's assessment of the value of the SmartURL asset lies in the integration with the Platform as a whole and not in value of the isolated asset itself. This is a financial measure and not an expression of management’s belief in the
commercial potential of the acquired assets.
The impairment related to other Completed development projects is related to outdated advertising sub-projects, which comprises assets that are not being commercialized any more. The write-down has been made as a result of Management not believing in any further earnings
from these sub-projects, which is why the recoverable amount is calculated at DKK 0.
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Notes to the parent financial statements
9. Property, plant and equipment
DKK thousand
Other fictures and
fittings, tools and
equipment
Leasehold
improvements
Total
DKK thousand
Other fictures and
fittings, tools and
equipment
Leasehold
improvements
Total
2022
2021
Cost at 1 January
614
121
735
Cost at 1 January
116
121
237
Additions
263
-
263
Additions
498
498
Disposals
-
-
Disposals
-
-
Cost at 31 December
877
121
998
Cost at 31 December
614
121
735
Depreciation at 1 January
(97)
(121)
(218)
Depreciation at 1 January
(22)
(119)
(141)
Depreciation during the year
(463)
-
(463)
Depreciation during the year
(75)
(2)
(77)
Depreciation at 31 December
(560)
(121)
(681)
Depreciation at 31 December
(97)
(121)
(218)
Carrying amount at 31 December
317
-
317
Carrying amount at 31 December
517
-
517
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Notes to the parent financial statements
10. Financial assets
11. interest-bearing liabilities
DKK thousand
Investments in
group enterprises
Deposits
DKK thousand
2022
2021
2022
Non-current borrowings
Cost at 1 January
-
508
Debt to credit institutions
22,054
19,385
Additions
-
13
Other
2,152
2,111
Cost at 31 December
-
521
Total
24,206
21,496
2021
Current borrowings
Cost at 1 January
-
426
Debt to credit institutions
2,250
7,200
Additions
-
82
Total
2,250
7,200
Cost at 31 December
-
508
For a specification of the debt that is due after 5 years please refer to note 22 of the notes to the
consolidated financial statements.
Name
Country
Ownership
12. Unrecognized rental and lease commitments
DKK thousand
2022
2021
Linkfire Inc.
USA
100%
Liabilities under rental or lease agreements until maturity
1,027
335
Linkfire Sociedada Unipeossal Lda.
Portugal
100%
Total
1,027
335
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Notes to the parent financial statements
13. Guarantees, contingent liabilities and collateral
14. Subsequent events
The group has provided a bank guarantee to Euroclear of DKK 145 thousand.
In order to secure the Company’s balance with Danske Bank, a mortgage has been granted with mortgages in simple
receivables, operating inventories and equipment and intellectual property rights at a total book value of DKK 80,160
thousand (2021: DKK 76,630 thousand).
On February 23, 2023 the Board of Directors of Linkfire A/S decided to issue warrants to the executive
management, the senior leadership team, key employees and contracted staff within the authorization granted
by the annual general meeting on 27 April 2022.
The purpose of the warrant program is to create possibilities for the company to retain and incentivize certain
key employees by offering a long-term ownership engagement. In total the grants cover 2,676,000 warrants of
which 936,000 warrants have been granted to the executive management and senior leadership, and the
remaining 1,740,000 warrants have been granted to key employees and contracted staff.
There have not been any other subsequent events after the reporting period which could influence the
evaluation of the interim report.
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Executive Management
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Independent auditor’s report
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Independent auditor’s report
CVR No. 33963556
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Glossary
Subscription Revenue
Subscription revenue is generated from recurring subscription fees which
customers pay to use the Company’s platform.
Commission Revenue
When consumers discover music and are funneled from the Linkfire discovery
layer to various Digital Service Providers, Linkfire in some cases generates
commission revenue through affiliate partnerships.
Digital Service Providers
Stores and/or services where consumers play music, purchase other related
content, or sign up for subscriptions, e.g. Apple Music, Amazon, Ticketmaster, etc.
Consumer Connections
Represent the number of unique visitors on Linkfire’s smart links and are a key
driver for Commission revenue in conjunction with the ability to monetize traffic,
reflected in the RPM.
Commission Revenue per Mille (RPM)
RPM is an important metric to Linkfire. It represents the commission revenue
generated per thousand consumer connections for the period.
Constant Currency
Figures on a constant currency basis are an important measure to Linkfire as the
majority of revenue is made in USD. This measure highlights the clean growth,
adjusted for exchange rate impact in period-to-period comparison.
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