Empowering
entertainment
discovery
everywhere
Annual Report 2023
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 Linkfire 4
Building A Sustainable Business 5
Key Events And Highlights In 2023 6
Letter From The CEO 7
Letter From The Chairman 9
Management’s Review
Financial Performance And Key Figures 11
Outlook For 2024 14
Financial Review 15
Sustainability 18
Corporate Governance
The Share And Shareholders 20
Risk Management 22
Board Of Directors 24
Leadership Team 26
Corporate Governance 27
Consolidated Statement Of Comprehensive Income 30
Consolidated Statement Of Financial Position 31
Consolidated Statement Of Changes In Equity 32
Cash Flow Statement 33
Notes - Consolidated 34
Parent Company Income Statement 58
Parent Company Statement Of Financial Position 59
Parent Company Statement Of Changes In Equity 61
Notes - Parent Company 62
Statement By Management 70
Independent Auditor’s Report 71
Glossary And Company Information 73
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Introduction
⇢ ABOUT LINKFIRE
⇢ BUILDING A SUSTAINABLE BUSINESS
⇢ KEY EVENTS AND HIGHLIGHTS IN 2023
⇢ LETTER FROM THE CEO
⇢ LETTER FROM THE CHAIRMAN
⇢
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About Linkfire
Empowering entertainment discovery everywhere
Linkfire empowers music and audio marketing for millions of artists and creators. Through smart links generated
with its proprietary technology, Linkfire connects billions of fans with their favorite artists, driving streams, sales, and
fan engagement, providing leading data insights, superior user experience, and a quality marketplace for fans,
artists, and creators.
Linkfire’s customers and partners count many of the biggest names in the industry, such as Apple, Amazon, Sony
Music, Universal Music, and Warner Music, in addition to thousands of artists and creators directly.
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
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.
2023 Linkfire expands into the multibillion-dollar podcast industry with Linkfire for Podcasts.
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Key events and highlights in 2023
Q1
Earnings improved significantly as a result of strategic focus to improve capital efficiency and focus on short-term return activities. As a result, EBITDA improved by 83 per cent
compared to the previous year.
Q2
In May, Linkfire A/S secured a debt facility of up to DKK 22.5 million and waived the second tranche of the previously announced directed share issue.
Q3
In July, Linkfire and YouTube Music expanded their partnership by bringing to market the first-ever YouTube Music pre-save, allowing artists and their teams to create a new wave of
hype around upcoming releases.
In August, Linkfire announced an expansion into the multibillion-dollar podcast industry with Linkfire for Podcast, a marketing and analytics toolkit built for podcasters, featuring an
exclusive integration with Apple Podcasts.
Linkfire reached an EBITDA break even, marking the best quarter in Linkfire’s history.
Q4
In November, Linkfire secured debt financing of DKK 37.3 million from Kuok Meng Ru, a shareholder of Linkfire and Group CEO & Founder of Caldecott Music Group (“CMG”).
In December, Linkfire had an Extraordinary General Meeting to treat the initiated delisting of its shares from Nasdaq First North Growth Market Stockholm. The application to delist
was sent and approved the same day, with the last trading day on January 18, 2024.
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Letter from the CEO
Jeppe Faurfelt
CEO & Co-founder
In 2023, Linkfire made significant improvements to
our core business and progressed on our mission
to expand into new verticals. Despite market
turmoil and internal restructuring, we entered the
multibillion-dollar podcast industry through an
exclusive partnership with Apple Podcasts, the
world’s leading podcast platform. We also moved
closer to achieving cash flow break-even. These
achievements are a testament to our resilience
and commitment to becoming profitable and
re-accelerating growth.
Similar to many other SaaS and tech businesses, 2023 was a
year of turning focus towards profit by tightening our belts
supported by restructuring the organization and stabilizing our
revenue generation.
Simultaneously, we expanded into our second vertical with
Linkfire For Podcast, an absolute game-changer for podcast
marketing. Leveraging the same foundational infrastructure of
our music offering, we tailored our solutions to address the
unique challenges faced by podcasters. Launched in
partnership with Apple Podcasts we’ve introduced
groundbreaking listening data attribution, garnering significant
attention from key players in the industry.
We are proud to have expanded our partnership with the
industry leader of Podcast, Apple Podcast. We foresee a
promising future for our product as 20% of the world's top
podcasts already use Linkfire for Podcasts to promote their
shows.
On the music side, the numbers and names speak for
themselves. We’ve powered more than 2 million releases with
1.6 billion link visitors and Linkfire remains the preferred platform
for industry giants, from Taylor Swift’s ‘1989’ to Travis Scott’s
‘Utopia’ and Ed Sheeran’s ‘Subtract’ album releases. In 2023, we
boosted our platform offering with enhanced bio links
customization options and fortified pre-release links through key
partnerships with Tidal, Youtube and Amazon Music. Our
commitment to delighting our users is evident, with our
Customer Satisfaction Scores consistently exceeding 92%,
making this year truly exceptional.
Additionally, we successfully rolled out the Linkfire Wallet
Program. This program represents a strategic innovation,
introducing new revenue streams to us and our customers by
leveraging refined ad products developed in partnership with
leading record labels, global streaming and ticketing services.
So far, it has enabled nearly 7000 individual customers to earn
revenue on their Linkfire links. The number continues to grow as
we roll out the program and acquire new customers.
The go-to-market approach of the Linkfire Wallet is a testament
to our forward-looking approach in the ad-tech landscape,
cementing our position as innovators in ways others have not
been able to and benefitting the future of music, podcasting and
beyond.
Amidst achieving our first-ever EBITDA break-even month and
remaining focused on achieving a positive cash flow, we made
the strategic decision to delist our shares from NASDAQ. The
decision to take the company private aligns with our conviction
that the First North Premier Growth Market’s valuation of the
company did not accurately reflect our consistent revenue
growth, expanding market share, and prominent partnerships.
This decision, along with changes in the executive
management, are also part of our forward-thinking approach to
ensure the long-term success of Linkfire.
We remain optimistic about the outlook for the entertainment
industry. The music industry continues to grow, and competition
for streaming subscribers and market share is increasing. IFPI’s
latest Global Music Report shows a +10.4% growth in streaming
revenue to US § 19.3 billion, For Linkfire, the continued rise of
streaming platforms and the constant flow of new content
to discover lead to an increasing number of releases,
which in turn drive higher traffic and more music
streaming subscribers, ultimately increasing the potential
for commission revenue.
According to Technavio, the global podcast market size, though
still a small industry, is estimated to grow by USD 15.70 billion
from 2024 to 2028, with an expected CAGR of 29.08% during the
forecast period. For Linkfire, podcasting represents an
opportunity to tap into creators across various genres and
verticals such as film, tv, sports, games, comedy, news, health,
food, and culture, who already have a platform to speak to their
audience from and requires smart linking technology.
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This year will mark a huge milestone for the business as we
target cash flow break-even. We plan to continue monetizing
and expanding our consumer connections by offering even
more product optimization, which will expand our footprint and
further grow sales. We are looking into 2024, uplifted by the
revenue performance at the end of 2023, and confident about
our mission to reach cash flow breakeven in 2024 in our trimmed
and agile organizational setup. We remain diligent with our costs
and focus.
We extend our heartfelt gratitude to all our employees and
former teammates for their unwavering dedication to delivering
world-class products to our customers and partners. We also
deeply appreciate our customers, partners, and shareholders
for your steadfast belief in our mission and continuous support.
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Letter from the Chairman
Jesper Møller
Chairman of the Board
In 2023, Linkfire embraced new opportunities as
the company transitioned from the Nasdaq First
North Growth Market Sweden to becoming a
private company again, accompanied by changes
in executive management.
2023 was a year with an intense focus on running a streamlined
and more focused organization with fewer strategic objectives,
concentrating on our core business. Linkfire focused on
efficiency and business initiatives with quicker rates of return.
With the company's first EBITDA break-even quarter in Q3 2023,
a consistent EBITDA break-even is expected from Q2 2024, and
Cash break-even during H2 2024.
Looking into yet another year of increasing global market
uncertainty, the management team, major shareholders, and the
Board of Directors decided to initiate the delisting of the
company's shares from Nasdaq First North Growth Market. An
Extraordinary General Meeting was held in December, during
which the EGM approved the decision to apply for delisting.
Following the approval of the delisting application by Nasdaq,
the company's last trading day on the exchange was set for
January 18, 2024. This strategic decision is bringing significant
cost savings and reinforces our commitment to financial
efficiency.
In our pursuit to break even in 2024, the management team and
Board of Directors decided to restructure and streamline our
operations. This led to cost reductions and the departure of
several employees in 2023, along with changes in executive
management.
As part of the restructuring, co-founder Jeppe Faurfelt has
assumed the role of executive management of the Company.
Meanwhile, Co-founder and former CEO Lars Ettrup and CFO
Tobias Demuth stepped down from their previous positions but
supported the new management team in a transition period.
Lars Ettrup remains a strategic advisor to the leadership team.
This change is a natural step in Linkfire’s journey towards
becoming a financially self-sustainable company with a tight
focus on cost and a lighter organizational structure whilst still
pursuing opportunities for growth. The delisting from Nasdaq
further supports a lighter management setup.
As the Chairman of the Board of Directors at Linkfire, I extend
my gratitude to all our devoted employees for their diligent
work and contribution to the company's ongoing success. I look
forward to supporting the company's potential for growth and
innovation in the upcoming year. Linkfire has established a solid
foundation to achieve its profitability goal for 2024.
Ensuring enough cash to secure operations towards the
break-even goal, the target is to secure financing in the range of
DKK 7 - 10.5M to ensure its operations towards cash break-even
and complete a debt refinancing transaction during Q3 2024.
Management remains confident in securing both equity
financing and refinancing of current debt and expects to
conclude both operations by end of August 2024.
In the Board of Directors we will maintain our focus on
maximizing shareholder value through improved financial
performance and revenue growth,
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Financial Performance and Key Metrics
Note
2023
2022
2021
2020
2019
Income Statement (DKK thousand)
Recognized Revenue
50,084
52,590
33,697
24,699
17,227
Operating loss before interest, taxes, depreciation & amortization (EBITDA)
(8,572)
(39,875)
(30,512)
(8,371)
(10,243)
Operating loss before interest & taxes (EBIT)
(28,052)
(74,288)
(39,425)
(14,193)
(12,993)
Operating loss before interest & taxes (EBIT) excl. IPO Cost
(28,052)
(74,288)
(32,558)
(14,193)
(12,993)
Result of financial items
(5,943)
(1,273)
(1,652)
(3,796)
(16,002)
Profit after tax
(49,574)
(70,085)
(35,578)
(9,371)
(11,850)
Balance Sheet (DKK thousand)
Intangible assets
74,978
74,372
69,876
51,503
42,163
Additions, property, plant and equipment
-
263
634
173
41
Cash and cash equivalents
4,669
7,027
45,946
783
3,539
Total assets
91,486
101,349
140,200
63,786
60,408
Equity
(4,903)
43,962
87,125
4,909
10,026
Financial ratios
Operating profit before interest, depreciation & amortizations (EBITDA) margin
(%)
(17)%
(76)%
(91)%
(34)%
(59)%
Operating profit margin (EBIT) (%)
(56)%
(141)%
(117)%
(57)%
(75)%
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Financial Performance and Key Metrics (continued)
Note
2023
2022
2021
2020
2019
Key Metrics
Consumer connections (Traffic)
1,545,661,431
2,083,437,002
1,603,957,986
1,475,350,156
834,577,974
y/y Growth
(26)%
30%
9%
77%
45%
Revenue, on constant currency basis (DKK thousand)
46,906
48,778
34,521
24,348
17,003
Revenue Growth
(4)%
41%
42%
43%
24%
Organic Revenue Growth
(4)%
41%
42%
43%
24%
Subscription Revenue, on constant currency basis (DKK thousand)
30,181
30,122
22,853
18,745
15,268
y/y Growth
.2%
32%
22%
23%
25%
Commission Revenue, on constant currency basis (DKK thousand)
16,725
18,656
11,667
5,603
1,736
y/y Growth
(10)%
60%
108%
223%
23%
Commission Revenue per Mille (RPM)*,
on constant currency basis (DKK)
10.82
8.95
7.27
3.80
2.08
y/y Growth
21%
23%
92%
83%
(15)%
Gross Margin, on constant currency basis
83%
74%
72%
76%
61%
* Commission Revenue per thousand consumer connections
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Outlook for 2024
“To reach both EBITDA and cash break-even
based on the projected cost base for 2024,
Linkfire’s needs to maintain the 2023 revenue
numbers.”
Revenue guidance
In 2024, Linkfire expects to have a transition year, stabilizing
profit generation and podcast vertical expansion. Revenue is
guided within the range of DKK 45-55 million for the full
financial year. This corresponds to a yearly growth of (10)-10%.
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
● 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 and confident about 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 revenue
and long-term growth and profitability strategy.
Strategy execution
During 2023, the company has continued taking 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 2024,
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 2024, Linkfire’s revenue needs to be maintained at the 2023
levels. We expect recurring subscription revenue to deliver
conservative growth, while we expect commission revenue
recurring baseline to deliver 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 decreased by DKK 2.505 thousand, or 5 per cent, from
DKK 52.590 thousand in 2022 to DKK 50.084 thousand in 2023.
Commissions revenue decreased by DKK 3.355 thousand, or 16
per cent, compared to 2022 while Subscription revenue
increased by DKK 850 thousand or 3 per cent. This is on pace
with the performance seen in all other areas of the business, as
we have scaled down to be a significantly smaller organization
across the board in 2023 as compared to 2022.
Costs
Cost of sales decreased by DKK 3.887 thousand, or 30 per cent,
from DKK 13.026 thousand in 2022 to DKK 9.139 thousand in
2023. The decrease is centered around server and hosting costs,
improved baseline and scalability as well as ensuring compliant
and premium service delivery.
In 2023, external expenses decreased by DKK 12.342 thousand,
or 43 per cent, from DKK 28.915 thousand in the comparable
period in 2022 to DKK 16.573 thousand in 2023. The decrease is
mainly due to discontinuing the investment in the Channel
Partners program and a strong focus on cost optimization
through the entire company.
Staff costs decreased by DKK 15.471 thousand, or 33 per cent,
from DKK 46.708 thousand in 2022 to DKK 31.237 thousand in
2023. As a percentage of revenue, staff costs decreased from 89
per cent to 62 per cent. During 2023, Linkfire continued cost
optimization measures aimed at delivering on the plan to show
EBITDA profitability. Efforts included a significant headcount
reduction which explains the decrease,
Other staff costs dropped to DKK 1.707 thousand in 2023 and
comprise severance agreements costs related to the mentioned
contractions in FTEs.
Earnings
Depreciation, amortization and impairment decreased by DKK
14.933 thousand, or 43 per cent, from DKK 34.414 thousand in
2022 to DKK 19.480 thousand in 2023. The significant decrease is
mainly related to the impairment loss recognised in 2022 for the
intangible assets and described in note 13 of the consolidated
financial statements.
EBIT decreased by DKK 46.238 thousand, or 62 per cent, from
negative DKK 74.290 thousand in 2022 to negative DKK 28.052
thousand in 2023. This is a decrease in relation to revenue from
(141) per cent in 2022 to (56) per cent in 2023.
Net financial items
Financial income increased by 343 DKK thousand or 33 per cent,
from DKK 1.042 thousand in 2022 to DKK 1.385 thousand in 2023.
The deviation is related to the fluctuation of the US dollar
exchange rate throughout the year.
Financial expenses increased by DKK 5,012 thousand, or 216 per
cent, from DKK 2.316 thousand in 2022 to DKK 7,328 thousand in
2023, mainly due to interest expenses after securing new debt
facilities to maintain operations until reaching the cash
break-even point.
Income tax
The tax for the year decreased by DKK 21,056 thousand, or 384
per cent, from DKK 5,477 thousand in 2022 to DKK (15,579)
thousand in 2023. The Danish Tax Authorities (Skattestyrelsen)
has rejected the company's request for tax credit for the income
years 2020-2022. Management, However, still considers the
conditions for using the scheme to be fulfilled and has appealed
the decision.
As a result of the uncertainty associated with the outcome of the
final decision, the recognized receivable from expected use of
the tax credit scheme related to 2022 (DKK 5,500 thousand has
been reversed in the accounting item "tax for the year" in the
income statement. Furthermore, a reversal for the received tax
credit for 2020 and 2021 has been recognised for a total of DKK
10,029 thousand. In total, the reversal is DKK 15,529 thousand in
tax expense and 1,883 thousand in estimated interest expense
related to the tax repayment. If Management succeeds in the
appeal, subsequent financial years will be positively affected by
DKK 17,412.
Net Profit/(loss)
Loss for the period decreased by DKK 20,514 thousand or 29 per
cent, from DKK 70.087 thousand in 2022 to DKK 49,573 thousand
during 2023. This represents a decrease in relation to revenue
from (133) per cent in 2022 to (99) per cent in 2023. 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 were carried out
throughout the entire 2023, improving profitability and moving
the company in the direction of an operational break-even in
2024. Net result was also negatively impacted by the tax
expense impact described under Income tax.
Cash flow and financing
Cash flow from operations for 2023 was DKK (12,379) thousand)
(2022: DKK 24.495 thousand). Investment activities reduced cash
flows by DKK 15.662 thousand in 2023 (2022: DKK 26,509
thousand). Cash flow from financing activities for 2023 was DKK
26.064 thousand (2022: DKK 12.356 thousand).
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Financial Review (continued)
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.
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 75.0M (2022: DKK
74.4 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. Growth in 2023 and outlook corresponds
to a lower growth than mid-term financial targets. If future
growth continues to be lower than mid-term financial targets
this could entail an impairment loss of the value of capitalized
Development projects.
Going concern
Linkfire is in the process of securing necessary financing in the
range of DKK 7 - 10.5M to ensure its operations towards cash
break-even. The financing may be conducted in one or more
steps, and the company’s Management has advanced dialogues
related to equity financing.
Furthermore, the company is actively working on a full or partial
refinancing of existing debt, including better terms and an
accrued interest period to preserve cash.
Alongside external financing, the company is consistently
optimizing its operations including among other initiatives
operating with a streamlined organization and working capital
measures. Linkfire is continuing its path towards profitability and
with a strong improvement in earnings from Q2-2024 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 2024, and cash break-even for H2 2024. Current
budgets and plans are still considered achievable at the signing
date, and 2024 has been showing an above budget
performance so far. Linkfire is continuously optimizing its capital
preparedness and options as complementary to the previously
mentioned financing.
The ongoing process to secure needed additional financing
implies material uncertainty about the company’s ability to
continue as a going concern. However the company’s
Management remains confident in securing both equity
financing and refinancing of current debt, and expects to
conclude both operations by end of August. Management has,
on this background, decided to prepare the financial statements
on a going concern basis.
Tax Credit Scheme
The Danish Tax Authorities have requested Linkfire to share its
calculations for received payouts under the Tax Credit Scheme
for FY 2020 and 2021. Under this program, the Tax Authorities
encourage innovation in Denmark, supporting Danish
loss-making, innovative companies with paying out the tax value
of qualified research and development costs. The program is a
great driver for keeping innovation in Denmark and for global
exposure to Denmark as an accommodating and innovative
business market. This is a regular procedure conducted by the
Tax Authorities. The event prompted management to reiterate
the implicit uncertainty in receiving payouts under the Tax Credit
Scheme since calculations and assumptions can be challenged.
Linkfire received DKK 4.5 million in 2021 (for FY 2020) and DKK
5.5 million in 2022 (for FY 2021), and expected to receive DKK 5.5
million in November 2023 (for FY 2022).
Linkfire’s management believes in having solid documentation
for its innovative development in the global audio entertainment
market and welcomes the control as an important part of such a
supportive arrangement for innovation in Denmark. Linkfire
delivered its first batch of documentation to the Tax Authorities,
who had an initial proposal to change Linkfire’s taxable income,
and needed to see further documentation. Therefore, the Tax
Authorities were invited to Linkfire’s office for a walkthrough of
our product and developments during the challenged years,
and asked Linkfire to prepare additional documentation to prove
the innovative element of the developments, which was
delivered in March 2024.
In April 2024, Linkfire received the decision by The Danish Tax
Authorities, who deemed Linkfire ineligible, demanding
repayment of DKK 12.3M including interest as of April 2024 for
FY 2020 and 2021, and rejecting payment of the expected funds
corresponding to FY 2022, which was recognized as tax
receivable of DKK 5.5 million. Many Danish software companies
are facing the same decision from The Danish Tax Authorities
regarding R&D under the Tax Credit Scheme. Based on the
advice from tax specialists, Linkfire appealed the decision to the
Danish Tax Tribunal, including a deferred payment request,
meaning no payments need to be made until the Tax Tribunal
makes a final ruling .
As a result of the uncertainty associated with the outcome of the
final decision, the recognized receivable from expected use of
the tax credit scheme related to 2022 (DKK 5,500 thousand has
been reversed in the accounting item "tax for the year" in the
income statement. Furthermore, a reversal for the received tax
credit for 2020 and 2021 has been recognised for a total of DKK
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Financial Review (continued)
10,029 thousand. In total, the reversal is DKK 15,529 thousand in
tax expense and 1,883 thousand in estimated interest expense
related to the tax repayment. If Management succeeds in the
appeal, subsequent financial years will be positively affected by
DKK 17,412.
Equity
As per 31. December 2023 equity is negative by DKK (4,903)
thousand. As described under Going concern, Linkfire is in the
process of securing additional equity financing in order to
re-establish positive equity.
Subsequent Events
From January 1, 2024, co-founder and former Chief Commercial
Officer, Jeppe Faurfelt, assumed the position as CEO of the
Company as previous CEO Lars Ettrup stepped down and
departed the operations of the Company. Furthermore, Tobias
Demuth, former CFO, has also stepped down from February 14,
2024. This change is a natural step in Linkfire’s journey, and it has
been in mutual planning for months towards becoming a
financially self-sustainable company with a tight focus on cost
and a lighter organizational structure while still pursuing
opportunities for growth.
On January 18, 2024 Linkfire had its last trading day on Nasdaq
First North Growth Market. The delisting furthermore supports a
lighter management setup.
There have not been any other significant subsequent events
after the reporting period.
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The share and shareholders
Linkfire was listed on June 28, 2021, and was traded on
the Nasdaq First North Premier Growth Market. Linkfire’s
trading code was LINKFI.
The number of shares outstanding on December 31, 2023, 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, 2023, was 1.17 SEK, corresponding to a
market capitalization of approximately SEK 134.1 million.
Delisting fromNasdaq First North Growth Market
On December 21, Linkfire A/S announced that it had submitted
an application to delist its shares from Nasdaq First North
Premier Growth Market Sweden. Following this, Nasdaq
Sweden promptly accepted the application, removing Linkfire
A/S’s shares from trading on Nasdaq First North Premier
Growth Market Sweden. Linkfire had its final day of trading
shares on Thursday, 18 January 2024.
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 until delisting has been
Aktieinvest FK AB, www.aktieinvest.se.
Our share
Trading code (ticker)
LINKFI
Market
Nasdaq First North Growth
Market, Sweden
ISIN
DK0061550811
First day of trading
January 2, 2023
Trading currency
SEK
Opening Price on first day of
trading (Jan 2)
1.16000 SEK
Closing price on last day of
trading (Dec, 29)
0.99000 SEK
Share price development in 2023
-15%
Market capitalization on last day
of trading (Dec, 29)
113.8 mSEK
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Individuals with an insider position
As a former 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
2023 will take place on June, 2024. For further
information, please visit the Investor website on
www.corporate.linkfire.com.
Financial calendar
May 28, 2024
Interim financial update Q1, 2024
August 22, 2024
Interim financial update Q2, 2024
November 21, 2024
Interim financial update Q3, 2024
February 20, 2025
Interim financial update Q4, 2024
Investor relations
The information provided by Linkfire to its
shareholders 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 former shares. 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,
entertainment and Podcast 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 and Podcast, Amazon
and Ticketmaster) that ambition may fail. However, it is Linkfire’s
opinion that the market for monetization of music and podcast
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 2024.
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 decide 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 the Company’s digital operations.
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 partners.
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Risks related to taxation
The company is subject to a number of tax regulations in
Denmark and in other jurisdictions, which involve 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 Knudsen
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 and Thornæs Destilleri A/S.
Board member at KFI Erhvervsdrivende Fond. Chairman at
Entrepreneurship Denmark. 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 Industriens 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)
Peter Balint
Board member (since 2023)
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.
Peter Balint has a strong financial and operating background. From 2001-2010, he worked at Erste Bank Group in various
positions within the investment banking division. From 2010-2018, he was the managing director of Infinity Capital
Group, a Slovakia-based boutique private equity firm, leading investments into portfolio companies in energy, real
estate, and technology. He currently holds various board positions and acts as an advisor at Twin Capital, including
Barreson Limited, which is a part of one of the largest family offices in the Central European region.
Education
Master of Science, Copenhagen Business School
Master in Business Administration, University of Economics, Bratislava, Slovakia
Other ongoing
assignments
2018 - Chairman of the Board at Rikke Gravengaard – Copenhagen A/S
2022 - Founder & CEO at nuso ApS
2023 - CFO at FluoGuide A/S
2019- Advisor at Twin Capital (including Barreson Limited)
2018- Managing director at ICS Investment Management LLC
Previous
positions
2018 – 2021 Member of the Board of Directors in various subsidiaries in the BioPorto Group;
2011 – 2018 CFO 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);
2004 – 2008 Chairman and member of various Boards of Directors in the Nordisk Film Group;
2001 – 2004 CFO at Berlingske Tidende;
2010-2018 Infinity Capital Group, Managing Director
2001-2010 Erste Bank, various positions
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.
Shareholding
0 shares and 184,270 warrants.
N/A
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Leadership team
Jeppe Faurfelt
Co-founder & CEO (since 2024)
Andrea Arcari
CBDO (since 2017)
Jannik Jepsen
CTO (since 2016)
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.
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.
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.
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Corporate governance (continued)
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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
2023
2022
DKK thousand
2023
2022
Attributable to:
Revenue
6
Earnings per share (DKK)
(0.4 )
(1.0 )
Cost of Sales
(9,139 )
(13,026 )
Earnings per share, diluted (DKK)
(0.4 )
(0.9 )
Gross Profit
Other comprehensive income
External Expenses
(16,573 )
(28,915 )
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods (net of tax):
Other External Expenses
Exchange differences on translation
of foreign operations
Staff Costs
7
(31,237 )
(46,708 )
-47
Other staff Costs
7
(1,707 )
(3,818 )
Other comprehensive income for the year, net of tax
-47
EBITDA
(8,572 )
(39,875 )
Total comprehensive income for the year
(48,865 )
(70,134 )
Depreciation, amortization and impairment losses
9
(19,480 )
(34,414 )
EBIT
(28,052 )
(74,289 )
Financial Income
10
Financial Expenses
11
(7,328 )
(2,315 )
Profit/(loss) before tax
(33,995 )
(75,563 )
Tax for the year
12
(15,579 )
Profit/(loss) for the year
(49,574 )
(70,087 )
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Consolidated statement of financial position
DKK thousand
Note
2023
2022
DKK thousand
Note
2023
2022
Assets
Equity and liabilities
Non-current assets
Equity
Intangible assets
13
Share capital
19
Property, plant and equipment
14
Retained Earnings
(8,526 )
Right-of-use assets
15
Translation reserve
(399 )
Deposits
16
Other capital reserve
21
Total non-current assets
Total Equity
(4,903 )
Current assets
Non-current liabilities
Trade Receivables
17
Interest bearing liabilities
20
Income tax receivables
12
Lease liabilities
22
Right-of-use assets
15
Other payables
Other receivables
Total non-current liabilities
Prepayments
Cash
Current liabilities
Total Current Assets
Interest-bearing liabilities
20
Contract liabilities
Total assets
Lease liabilities
22
Trade payables
Other payables
Total current liabilities
Total liabilities
Total equity and liabilities
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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, 2023
(399 )
Balance at 1 January, 2022
(352 )
Net profit/(loss) for the period
(49,574 )
(49,574 )
Net profit/(loss) for the period
(70,087 )
(70,087 )
Other comprehensive income
Other comprehensive income
(47 )
(47 )
Total Comprehensive income
(7,583 )
(4,903 )
Total Comprehensive income
(399 )
Capital increase
Capital increase
Transaction cost
Transaction cost
(3,092 )
(3,092 )
Share-based payments
(943 )
Share-based payments
(791 )
Balance at 31 December, 2023
(8,526 )
(4,903 )
Balance at 31 December, 2022
(399 )
During the period no dividend was paid
During the period no dividend was paid
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Cash flow statement
DKK thousand
Note
2023
2022
DKK thousand
Note
2023
2022
Operating Loss
(28,052 )
(74,288 )
Proceeds from borrowings
Depreciation, amortization and impairment losses
9
Repayment of borrowings
(19,042 )
(14,521 )
Change in working capital
18
(3,964 )
Payment of principal portion of lease liabilities
15
(4,044 )
(4,080 )
Share-based payment expense
8
Transaction cost from capital increase
(3,092 )
Cash flow from ordinary operating activities
(11,592 )
(29,874 )
Proceeds from capital increase
Cash flow financing activities
Income taxes received
Interest paid
(787 )
(120 )
Change in cash and cash equivalents
Cash flow from operating activities
(12,379 )
(24,494 )
Net cash flow
(1,976 )
(38,649 )
Net foreign exchange difference
(382 )
(271 )
Development expenditures
13
(16,178 )
(26,144 )
Cash, Begin
Prepaid intellectual property rights
Cash, End
Investments in property, plant and equipment
(263 )
Change in deposits
16
(102 )
Part of the acquisition of SmartURL in 2022 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.
Cash flow from investing activities
(15,662 )
(26,509 )
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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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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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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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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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Notes to the consolidated financial statements
2. Going concern
Linkfire is in the process of securing necessary financing in the
range of DKK 7 - 10.5M to ensure its operations towards cash
break-even. The financing may be conducted in one or more steps,
and the company’s Management has advanced dialogues related
to equity financing.
Furthermore, the company is actively working on a full or partial
refinancing of existing debt, including better terms and an accrued
interest period to preserve cash.
Alongside external financing, the company is consistently
optimizing its operations including among other initiatives
operating with a streamlined organization and working capital
measures. Linkfire is continuing its path towards profitability and
with a strong improvement in earnings from Q2-2024 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
2024, and cash break-even for H2 2024. Current budgets and plans
are still considered achievable at the signing date, and 2024 has
been showing an above budget performance so far. Linkfire is
continuously optimizing its capital preparedness and options as
complementary to the previously mentioned financing.
The ongoing process to secure needed additional financing implies
material uncertainty about the company’s ability to continue as a
going concern. However the company’s Management remains
confident in securing both equity financing and refinancing of
current debt, and expects to conclude both operations before
summer 2024. 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 2024. Management assessed that application of
these has not had a material impact on the financial statements for
2023.
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 2023,
the carrying amount of capitalized development costs was DKK
74,978 thousand (2022: DKK 74,372 thousand). In 2023, DKK
16,178 thousand were capitalized (2022: DKK 26,144 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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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 did
not recognize any impairment loss in 2023 (2022: DKK 19,893). For
further description please refer to note 13 of the financial
statements. Growth in 2023 and outlook corresponds to a lower
growth than mid-term financial targets. If future growth continues
to be lower than mid-term financial targets this could entail an
impairment loss of the value of capitalized Development projects.
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 8.
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 2023, the cost of share-based payments amounted to
DKK 943 thousand (2022: DKK 791 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 32,374 thousand (2022: 14,847 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).
2023
2022
2023
2022
DKK thousand
Revenue
NAM
31,231
34,253
EMEA
12,710
13,143
DKK thousand
APAC
5,218
4,331
Subscriptions*
32,950
32,100
LATAM
925
863
Commissions
17,135
20,490
Total
50,084
52,590
Total
50,084
52,590
%-split
%-split
NAM
62
65
Subscriptions
61
62
EMEA
25
25
Commissions
39
38
APAC
10
8
Total
100
100
LATAM
2
2
Total
100
100
* A total of DKK 2,658 thousand corresponds to non-recurring subscription revenue
recognized in 2023 (2022: DKK4,561).
In 2023, two customers exceeded 10% of total revenue and accounted for 44%.
In 2022, two customers exceeded 10% of total revenue and accounted for 44%.
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Notes to the consolidated financial statements
6 Revenue (continued)
2023
2022
Contract balances (liability)
DKK thousand
Cost at 1 January
9,927
6,166
Recognised during the year
(32,950)
(32,100)
Additions
29,031
35,861
Cost at 31 December
6,008
9,927
Management expects that 100.0% of the transaction price allocated to the unsatisfied contracts as of the
year ended 2023 will be recognised as revenue during the next reporting period (DKK 6.0 million).
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Notes to the consolidated financial statements
7. Staff Costs
2023
2022
2023
2022
DKK thousand
DKK thousand
Gross salaries
39,861
60,437
Key Management Personnel
Share-based payments
943
791
Salaries
10,189
9,323
Other social security costs
1,052
2,143
Share-based payments
69
-
Other staff costs
7,265
6,316
Total
10,258
9,323
Total
49,121
69,687
Increase in Key Management Personnel costs is related to general Management
compensation increases reflecting leadership benchmarks of a listed company and
short-term incentive payouts.
Capitalized Salaries
(16,177)
(19,162)
Total
32,944
50,525
Number of employees at year end
60
74
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
925
775
Share-based payments
682
727
Total
1,607
1,502
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Notes to the consolidated financial statements
8. Share-based payments
DKK thousand
2023
2022
Specification of outstanding warrants:
Cost of share-based payments
943
791
Number of warrants
Weighted average
exercise price
DKK
Boards of
Directors
Key Management
Personnel
Employees &
Advisors
Total
Total
943
791
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
8.77
737
737
The board of directors was authorized on:
Granted
3.01
369
-
139
508
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.
5. On February 23, 2023 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. 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.
Transferred
-
-
-
-
-
Exercised
-
-
-
-
-
Canceled
5.89
(133)
-
(87)
(220)
Outstanding at 31 December 2022
6.53
972
-
53
1,025
Granted
0.71
936
1,740
2,676
Transferred
-
-
-
-
-
Exercised
-
-
-
-
-
Canceled
2.90
128
-
-
128
Outstanding at 31 December 2023
2.28
1,100
936
1,793
3,829
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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
2023
2022
Number of warrants
Warrants granted
in 2023
Warrants granted
in 2022
Warrants outstanding
Average share price (DKK)
0.64
3.01
Warrants granted in 2022
3.01
May 22 - Jun 25
Apr 25 - Apr
27
1,100
604
Expected volatility rate (% p.a.)
0.54
0.54
Warrants granted in 2023
0.71
Mar 23 - Apr 26
Feb 26 - Feb
28
2,676
421
Risk-free interest rate (% p.a.)
0.04
-
Outstanding at 31 December
3,776
1,025
Expected warrant life (no. years)
5.00
5.00
Exercise price (DKK)
0.71
3.01
DKK thousand
2023
2022
Average remaining life of outstanding warrants at
31 December (years)
4.50
4.00
Fair value per granted warrant (DKK)
0.46
1.16
Exercise price for outstanding warrants at 31
December (DKK)
0.71-8.77
3.01-8.77
Fair value all granted warrants, after
dilution (DKK thousand)
253
588
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 2023.
45 / 74 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 3
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
2023
2022
DKK thousand
2023
2022
Amortization of intangible assets
15,572
10,341
Current tax for the year income
(50)
(23)
Depreciation of property plant and equipment
189
651
Changes in deferred tax
-
-
Depreciation of right-of-use assets
3,719
3,529
Adjustments to previous years tax
(15,529)
-
Impairment loss of intangible assets
-
19,893
Recognised as receivable tax credit
-
5,500
Total
19,480
34,414
Total
(15,579)
5,477
Income tax benefits for 2022 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
2023
2022
10. Financial income
Tax calculated as 22% of profit/loss before tax
7,479
16,624
DKK thousand
2023
2022
Non-capitalised tax assets
(1,436)
(10,747)
Foreign exchange income and other adjustments
1,385
1,042
Non-deductible expenses
(400)
(400)
Total
1,385
1,042
Effective tax
5,643
5,477
Tax rate for the year (%)
15.3%
7.2%
11. Financial expenses
DKK thousand
2023
2022
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 32,374 thousand (2022: 14,847 thousand).
Interest expenses
6,158
1,320
Foreign exchange losses and other adjustments
380
627
Interest on lease liabilities
790
369
Total
7,328
2,316
46 / 74 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 3
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
2023
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 2023, Linkfire expensed DKK 3,408 thousand (2022: 12,107 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 did not recognise any impairment loss in 2023.
In 2022, Management recognised 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
-
118,008
-
118,008
Transfers
16,178
(16,178)
-
Additions
16,178
16,178
Disposals
-
-
-
-
Cost at 31 December
-
134,186
-
134,186
Amortization and impairment at 1 January
-
(43,636)
-
(43,636)
Amortization during the year
(15,572)
(15,572)
Impairment during the year
-
-
-
-
Amortization and impairment at 31 December
-
(59,208)
-
(59,208)
Carrying amount at 31 December
-
74,978
-
74,978
2022
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
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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
2023
2023
Cost at 1 January
1,097
121
1,218
Cost at 1 January
12,608
81
1,771
14,460
Additions
-
-
-
Additions
1,342
-
357
1,699
Disposals
(191)
(121)
(312)
Cost at 31 December
13,950
81
2,128
16,159
Cost at 31 December
906
-
906
Depreciation at 1 January
(8,174)
(81)
(1,048)
(9,303)
Depreciation at 1 January
(816)
(121)
(937)
Depreciation during the year
(3,236)
-
(292)
(3,528)
Disposals
124
121
245
Depreciation at 31 December
(11,410)
(81)
(1,340)
(12,831)
Depreciation during the year
(189)
-
(189)
Carrying amount at 31 December
2,540
-
788
3,328
Depreciation at 31 December
(881)
-
(881)
Carrying amount at 31 December
26
-
26
2022
2022
Cost at 1 January
12,608
81
1,088
13,777
Cost at 1 January
834
121
955
Additions
-
-
683
683
Additions
263
-
263
Cost at 31 December
12,608
81
1,771
14,460
Disposals
-
-
-
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
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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
2023
2022
DKK thousand
2023
2022
At 1 January
5,701
8,794
Cost at 1 January
1,206
1,153
Additions
1,699
683
Additions
(516)
53
Accrual of interest
213
368
Cost at 31 December
690
1,206
Payments
(4,044)
(4,079)
Exchange rate adjustments
(236)
(65)
17. Trade Receivables
At 31 December
3,333
5,701
Non-Current
2,489
2,345
DKK thousand
2023
2022
Current
844
3,356
Trade receivables
4,588
5,026
The following amounts have been recognised in the income statement:
Write-downs
-
(623)
DKK thousand
2023
2022
Total
4,588
4,403
Depreciation expense of right-of-use assets
3,528
4,214
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 0 thousand (2022: DKK 623
thousand) related mainly to debtors with more than 12 months due.
Interest expense on lease liabilities
213
368
Total amount recognised in the income statement
3,741
4,582
The Group had total outflow for leases of DKK 4,044 thousand (2022: DKK 4,079 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 2023, the share capital consisted of 114,989,051 (2022:
114,989,051) 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 2023
DKK thousand
2023
Trade receivables
2,916
1,080
178
414
-
4,588
31 December 2022
Issued and fully paid shares:
Trade receivables
3,299
2,284
-
66
(623)
5,026
At 1 January 2022, 58,339,222 shares of DKK 0.01 each
583
18. Working capital changes
Corporate conversion
-
DKK thousand
2023
2022
Capital increase
567
At 31 December 2022
1,150
Change in receivables and prepayments
10
564
Change in trade payables and other debt etc
(3,974)
8,645
Capital increase
-
Total
(3,964)
9,209
Share capital at 31 December 2023
1,150
50 / 74 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 3
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
2023
2022
DKK thousand
2023
2022
Earnings per share
Non-current borrowings
The calculation of earnings per share is based on the following:
Debt to credit institutions
23,272
22,054
Profit/(loss) for the year
(49,574)
(70,087)
Other
35,101
2,152
Total
58,373
24,206
Average number of ordinary shares for calculation of earnings per share:
114,989,051
73,098,111
Average diluted effect of outstanding share options
-
1,118,033
Current borrowings
Average number of shares for calculation of diluted earnings per share:
114,989,051
74,216,144
Debt to credit institutions
1,701
2,250
Other
11,911
-
Earnings per share (EPS)
(0.43)
(0.96)
Total
13,612
2,250
Earnings per share, diluted (DEPS)
(0.43)
(0.94)
21. Other capital reserve
Other capital reserve is used to recognise 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 optimisation 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 adjust 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.
Liquidity risk
Linkfire is in the process of securing necessary financing in the range of DKK 7 - 10.5M to ensure its operations towards
cash break-even. The financing may be conducted in one or more steps, and the company’s Management has advanced
dialogues related to equity financing.
Furthermore, the company is actively working on a full or partial refinancing of existing debt, including better terms and an
accrued interest period to preserve cash.
Alongside external financing, the company is consistently optimizing its operations including among other initiatives
operating with a streamlined organization and working capital measures. Linkfire is continuing its path towards profitability
and with a strong improvement in earnings from Q2-2024 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 2024, and cash break-even for H2
2024. Current budgets and plans are still considered achievable at the signing date, and 2024 has been showing an above
budget performance so far. Linkfire is continuously optimizing its capital preparedness and options as complementary to
the previously mentioned financing.
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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
2023
2022
Sensitivity to a 10% increase in USD exchange rate
Effect on profit before tax
5,826
6,749
Effect on pre-tax equity
5,826
6,749
Assets
Liabilities
Net assets
DKK thousand
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Currency
USD
8,875
17,611
3,147
2,801
5,727
14,810
EUR
355
361
86
443
269
(82)
Other
141
-
369
1,423
(228)
(1,423)
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 2023, the Group’s cash and cash equivalents amounted to DKK 4,669 thousand (2022: DKK 7,027 thousand).
The cash reserve and expected cash flow for 2024 are considered to be adequate to meet the obligations of the Group as they fall due.
53 / 74 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 3
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
2023
2022
Year ended on 31 December 2023
Financial assets measured at amortized cost
Interest-bearing liabilities
250
750
69,601
-
70,601
Deposits
690
1,206
Lease liabilities
211
633
2,489
-
3,333
Trade receivables
4,588
5,026
Trade and other payables
9,427
4,266
814
-
14,507
Other receivables
697
579
Total
9,888
5,649
72,904
-
88,441
Cash
4,669
7,027
Total
10,643
13,839
Year ended on 31 December 2022
Interest-bearing liabilities
1,000
1,250
22,054
2,152
26,456
Financial liabilities measured at amortized cost
Lease liabilities
839
2,517
2,345
5,701
Interest-bearing loan
71,985
26,456
Trade and other payables
11,297
2,870
1,000
-
15,167
Trade payables
5,925
9,481
Total
13,136
6,637
25,399
2,152
47,324
Other payables
9,139
5,822
Total
87,048
41,760
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 13,718 thousand (2022: DKK 13,760 thousand) at 31 December 2023 is
subject to a variable rate of interest based on a 3-month CIBOR plus a premium, whereas DKK 11,255 thousand (2023: DKK 12,696
thousand) has a fixed interest rate of 5%.
The Group’s interest-bearing debt to public institutions of DKK 11,228 thousand (2022: DKK 0) at 31 December 2023 is subject to a fixed
interest rate of 13.85%.
The Group’s interest-bearing debt to private companies of DKK 32,716 thousand (2022: DKK 0) at 31 December 2023 is subject to a fixed
interest rate of 17%.
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 2023 would result in a yearly increase in interest expenses of DKK 713 thousand (2022: DKK 256 thousand).
A corresponding decrease in market interest rates would have the opposite impact.
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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
2023
Maverick Capital Limited
Dubai
Liabilities at 1 January
26,456
5,701
32,157
Rocket Group ApS
Copenhagen
Loans raised
49,150
1,699
50,849
Faurfelt Invest ApS
Copenhagen
Repayments
(19,042)
(4,044)
(23,086)
Other
15,421
(23)
15,398
There is no ultimate Parent, as no owner holds the majority of the voting rights.
Liabilities at 31 December
71,985
3,333
75,318
2022
Liabilities at 1 January
28,696
8,794
37,490
Loans raised
11,549
683
12,232
Repayments
(14,521)
(4,079)
(18,600)
Other
732
303
1,035
Liabilities at 31 December
26,456
5,701
32,157
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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).
From January 1, 2024, co-founder and former Chief Commercial Officer, Jeppe Faurfelt, assumed the position as CEO of the Company as
previous CEO Lars Ettrup stepped down and departed the operations of the Company. Furthermore, Tobias Demuth, former CFO, has also
stepped down from February 14, 2024. This change is a natural step in Linkfire’s journey, and it has been in mutual planning for months
towards becoming a financially self-sustainable company with a tight focus on cost and a lighter organizational structure while still
pursuing opportunities for growth.
On January 18, 2024 Linkfire had its last trading day on Nasdaq First North Growth Market. The delisting furthermore supports a lighter
management setup.
There have not been any other significant subsequent events after the reporting period.
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 80,567 thousand (2022: DKK 80,160 thousand).
56 / 74 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 3
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
57 / 74 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 3
CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company income statement
DKK thousand
Note
2023
2022
Revenue
50,084
52,590
Cost of sales
(9,139)
(13,026)
External expenses
(30,892)
(54,354)
Gross profit
10,054
(14,790)
Staff costs
3
(21,130)
(26,387)
Other staff Costs
3
(1,707)
(3,817)
Depreciation, amortization and impairment losses
4
(15,760)
(30,434)
Operating profit/(loss)
(28,543)
(75,428)
Financial income
479
939
Financial expenses
(6,513)
(1,576)
Profit/(loss) before tax
(34,577)
(76,064)
Tax for the year
7
(15,528)
5,500
Profit/(loss) for the year
(50,105)
(70,564)
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company statement of financial position
DKK thousand
Note
2023
2022
DKK thousand
Note
2023
2022
Assets
Assets
Completed development projects
8
74,978
74,372
Trade receivables
4,588
5,026
Total intangible assets
74,978
74,372
Other receivables
500
445
Other fixtures and fittings, tools and equipment
9
65
317
Income tax receivables
-
5,500
Total property, plant and equipment
65
317
Prepayments
2,510
2,200
Total receivables
7,598
13,171
Deposits
511
521
Total financial assets
511
521
Cash
4,493
6,532
Total current assets
12,091
19,703
Total fixed assets
75,554
75,210
Total assets
87,646
94,913
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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
Parent company statement of financial position
DKK thousand
Note
2023
2022
Equity and liabilities
Share capital
1,150
595
Reserve for development costs
77,728
74,372
Retained earnings
(87,173)
(33,157)
Total equity
(8,295)
41,810
Interest bearing liabilities
11
58,373
24,207
Other payables
814
1,000
Total non-current liabilities
59,187
25,207
Interest bearing liabilities
11
13,612
2,250
Prepayments from customers
6,008
9,927
Trade payables
5,837
9,334
Payables to group enterprises
3,128
2,232
Other payables
8,169
4,153
Total current liabilities
36,754
27,896
Total liabilities
95,941
53,103
Total equity and liabilities
87,646
94,913
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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
2023
2022
Equity beginning of period
1,150
-
74,372
(33,712)
41,810
Equity beginning of period
584
-
61,578
23,110
85,272
Increase of capital
-
-
-
-
-
Increase of capital
566
30,052
-
(424)
30,194
Transferred from share premium
-
-
-
-
-
Transferred from share premium
-
(30,052)
-
30,052
-
Transfer to reserves
-
-
606
(606)
-
Transfer to reserves
-
-
12,794
(12,794)
-
Transaction cost from capital increase
-
-
-
-
-
Transaction cost from capital
increase
-
-
-
(3,092)
(3,092)
Profit/(loss) for the period
(50,105)
(50,105)
Profit/(loss) for the period
-
-
-
(70,564)
(70,564)
Equity end of period
1,150
-
74,978
(84,424)
(8,295)
Equity end of period
1,150
-
74,372
(33,712)
41,810
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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 has 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.
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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CONTENTS INTRO MANAGEMENT’S REVIEW SUSTAINABILITY CORPORATE GOVERNANCE FINANCIAL STATEMENTS STATEMENTS
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
Linkfire is in the process of securing necessary financing in the range of
DKK 7 - 10.5M to ensure its operations towards cash break-even. The
financing may be conducted in one or more steps, and the company’s
Management has advanced dialogues related to equity financing.
Furthermore, the company is actively working on a full or partial
refinancing of existing debt, including better terms and an accrued interest
period to preserve cash.
Alongside external financing, the company is consistently optimizing its
operations including among other initiatives operating with a streamlined
organization and working capital measures. Linkfire is continuing its path
towards profitability and with a strong improvement in earnings from
Q2-2024 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 2024, and cash break-even for H2 2024. Current budgets
and plans are still considered achievable at the signing date, and 2024 has
been showing an above budget performance so far. Linkfire is
continuously optimizing its capital preparedness and options as
complementary to the previously mentioned financing.
The ongoing process to secure needed additional financing implies
material uncertainty about the company’s ability to continue as a going
concern. However the company’s Management remains confident in
securing both equity financing and refinancing of current debt, and
expects to conclude both operations before summer 2024. 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
2023
2022
DKK thousand
2023
2022
Wages and salaries
31,127
41,679
Foreign exchange gains
478
936
Other social security costs
338
333
Other financial income
1
3
Other staff costs
6,886
4,618
Total
479
939
38,351
46,630
Staff costs classified as assets
(15,514)
(16,427)
6. Other financial expenses
Total
22,837
30,203
DKK thousand
2023
2022
Other interest expenses
5,970
980
Average number of employees at balance sheet date
45
69
Foreign exchange losses and other adjustments
501
652
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
42
60
Total
6,513
1,692
4. Depreciation, amortization and impairment
losses
DKK thousand
2023
2022
7. Tax on profit/loss for the year
Depreciation and amortization of intangible assets
15,572
10,341
DKK thousand
2023
2022
Impairment loss on intangible assets
-
19,893
Current tax
-
5,500
Depreciation of property plant and equipment
188
200
Adjustments to previous years tax
(15,528)
-
Total
15,760
30,434
Total
(15,528)
5,500
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
3. Staff Costs
5. Other financial income
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
2023
2022
Cost at 1 January
-
118,008
-
118,008
Cost at 1 January
8,298
74,979
-
83,277
Transfers
-
16,178
(16,178)
-
Transfers
(16,885)
43,029
(26,144)
-
Additions
-
-
16,178
16,178
Additions
12,387
26,144
38,531
Disposals
-
-
-
-
Disposals
(3,800)
-
-
(3,800)
Cost at 31 December
-
134,186
-
134,186
Cost at 31 December
-
118,008
-
118,008
Amortization and impairment at 1 January
-
(43,636)
-
(43,636)
Amortization and impairment at 1 January
-
(13,402)
-
(13,402)
Amortization during the year
-
(15,572)
-
(15,572)
Amortization during the year
-
(10,341)
-
(10,341)
Impairment during the year
-
-
-
-
Impairment during the year
-
(19,893)
-
(19,893)
Amortization and impairment at 31 December
-
(59,208)
-
(59,208)
Amortization and impairment at 31 December
-
(43,636)
-
(43,636)
Carrying amount at 31 December
-
74,978
-
74,978
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 2023, Linkfire expensed DKK 3,408 thousand (2022: 12,107 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 did not recognise any impairment loss in 2023.
In 2022, Management recognised 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.
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Notes to the parent financial statements
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.
9. Property, plant and equipment
DKK thousand
Other fixtures and
fittings, tools and
equipment
Leasehold
improvements
Total
DKK thousand
Other fixtures and
fittings, tools and
equipment
Leasehold
improvements
Total
2023
2022
Cost at 1 January
877
121
998
Cost at 1 January
614
121
735
Additions
-
-
-
Additions
263
-
263
Disposals
(189)
(121)
(310)
Disposals
-
-
Cost at 31 December
688
-
688
Cost at 31 December
877
121
998
Depreciation at 1 January
(560)
(121)
(681)
Depreciation at 1 January
(97)
(121)
(218)
Disposals
125
121
246
Adjustments
-
-
-
Depreciation during the year
(189)
-
(189)
Depreciation during the year
(463)
-
(463)
Depreciation at 31 December
(624)
-
(624)
Depreciation at 31 December
(560)
(121)
(681)
Carrying amount at 31 December
65
-
65
Carrying amount at 31 December
317
-
317
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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
2023
2022
2023
Non-current borrowings
Cost at 1 January
-
521
Debt to credit institutions
23,272
22,054
Additions
-
(10)
Other
35,101
2,154
Cost at 31 December
-
511
Total
58,373
24,208
2022
Current borrowings
Cost at 1 January
-
508
Debt to credit institutions
1,701
2,250
Additions
-
13
Other
11,911
-
Cost at 31 December
-
521
Total
13,612
2,250
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
Linkfire Inc.
USA
100%
DKK thousand
2023
2022
Linkfire Sociedada Unipeossal Lda.
Portugal
100%
Liabilities under rental or lease agreements until maturity
-
1,027
Total
-
1,027
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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 80,567
thousand (2022: DKK 80,160 thousand).
From January 1, 2024, co-founder and former Chief Commercial Officer, Jeppe Faurfelt, assumed the position
as CEO of the Company as previous CEO Lars Ettrup stepped down and departed the operations of the
Company. Furthermore, Tobias Demuth, former CFO, has also stepped down from February 14, 2024. This
change is a natural step in Linkfire’s journey, and it has been in mutual planning for months towards becoming a
financially self-sustainable company with a tight focus on cost and a lighter organizational structure while still
pursuing opportunities for growth.
On January 18, 2024 Linkfire had its last trading day on Nasdaq First North Growth Market. The delisting
furthermore supports a lighter management setup.
There have not been any other significant subsequent events after the reporting period.
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Executive Management
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Independent auditor’s report
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Independent auditor’s report
● Identify and assess the risks of material misstatement of
● Obtain an understanding of internal control relevant to the
● Evaluate the appropriateness of accounting policies used
● Conclude on the appropriateness of Management’s use of
● Evaluate the overall presentation, structure and content of
● We communicate with those charged with governance
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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