annual report 2014 - cxense · annual report 2014 4 message from the ceo 2014 ended on a high note...
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Annual report
2014
Annual report 2014
2
Contents
Highlights ________________________________________________________________ 3
Message from the CEO _____________________________________________________ 4
Board and key executives ___________________________________________________ 5
Cxense – the business ______________________________________________________ 7
Report from the Board of Directors ___________________________________________ 10
Corporate governance _____________________________________________________ 21
Corporate social responsibility _______________________________________________ 30
Group financial statements __________________________________________________ 32
Notes to the consolidated financial statements __________________________________ 38
Financial statements for Cxense ASA _________________________________________ 64
Notes to the annual financial statements Cxense ASA ____________________________ 68
Statement by the Board of Directors and the Chief Executive Officer _________________ 77
Auditors report ___________________________________________________________ 78
“Cxense (pronounced see-sense) helps businesses succeed in a digital
world. Using audience data and advanced real-time analytics, Cxense
creates hyper-relevant content recommendations, targeted advertising
and predictive search that help customers increase digital revenue,
and provide their users with a better experience. Cxense is
headquartered in Oslo, Norway, with offices around the globe.”
Annual report 2014
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Highlights
2014 was a very exciting year for Cxense, including a number of important events for future company growth
Listing on the Oslo Stock Exchange 1 July 2014 with a preceding private placement of USD 7.6 million
Launch of the Data Management Platform (DMP), accelerating market presence
Expanded technical capabilities to gather and merge massive amounts of 1st and 3rd party data in real-
time
Signing of 110 new customer contracts across five sales regions
In addition to the existing sales regions, Cxense established a lighthouse accounts team focusing on
sales to large companies across sectors and geographies
Ståle Bjørnstad was appointed CEO by the Board of Directors
Streamlining of the organization in 2014, reducing SaaS segment operating cost from USD 1.9 million to
USD 1.5 million per month with expected full effect from June 2015
Events after the reporting period
Launch of of online self-service sales in Q1 2015
Raised USD 9 million in new equity in Q1 2015, which in combination with reduced costs, positions the
company well for 2015
Selected contract announcements
South China Morning Post, the leading English language website of South East Asia region, licensed the
Cxense DMP, Cxense Analytics and Cxense Content solutions
AEON, the Japanese retailer, continued to deploy the Cxense software suite on more platforms and has
grown to be one of the Company’s largest customers
Grupo Clarin, the Argentinian Media company, signed an agreement with Cxense for its DMP and three
other solutions
Times Publishing Company licensed the Cxense Analytics, Cxense Content and Cxense DMP solutions
Norwegian online media company Mediehuset Nettavisen licensed the Cxense Analytics and Cxense
Content solutions
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Message from the CEO
2014 ended on a high note for Cxense with a record 34 new contracts signed in Q4 2014, up from 22 in the
previous quarter. This uptick in number of contracts is a good indicator for the strength of the organization and the
momentum we bring into 2015.
When Cxense was founded in February 2010, the founders had a vision on how audience data could be
gathered, analyzed, and put to action to increase customer loyalty and revenues for businesses. In Q2 2014, we
launched the Cxense DMP (Data Management Platform), which not only fulfills this vision, but even takes it one
key step further: Doing it all in real time. Our DMP has in a short amount of time become adopted by leading
publishers and e-commerce players around the world, and is now in many ways the hub of our software-as-a-
service (SaaS) suite.
As part of our go-to-market plan, we will also enter into new market verticals. While we have so far focused mostly
on media companies and publishers, as well as e-commerce companies, we see that premium brands in other
markets, such as financial services and telecom, also realize that the need not just to be strong marketers, but
also to engage consumers directly through the creation and publication of content. Obviously, this need is very
close to our expertise and strengths. Based on the strength of the Cxense DMP, we have already gained attention
from leading industry analysts, and we also recently signed our first contract in the financial services sector, with
the Commercial Bank of Dubai- We expect additional market segments to open up during the next couple of
years.
Our employees in the five sales regions do a great job every day. We are strong believers in local presence, with
employees knowing the language and the culture where we are present. Buenos Aires is quite different from
Tokyo, and Singapore is different from Oslo and New York. Our Sales teams on the ground make a great
contribution to Cxense and our ability to execute and succeed.
After rolling out significant upgrades over the past months, the user interfaces of our SaaS product suite is now
more intuitive and easier to use than ever. Our clients use the Cxense technology to profile, personalize and
monetize a total of almost 1 billion users across the world, with more than 10 billion user interactions tracked in
real time every day in the Cxense software suite. Our R&D team is creating an exceptional customer experience
that is undisputed in the marketplace.
The Global Operations Team helps our customers deploy and be successful with Cxense solutions. The Wall
Street Journal (North America), Globo (Brazil), Amedia (Norway), South China Morning Post (Hong Kong) and
Aeon (Japan) are all premium customers using our software who have been aided by Cxense operations to get
the full effect out of the solutions.
Our Marketing team has during 2014 significantly increased the awareness of Cxense in the media and publishing
vertical, by attending and arranging industry events. Furthermore, in 2015 we are taking this to the next level, with
leading industry analysts starting to pay attention to the unique Cxense technology and positioning in the market
place.
Another important action taken to further strengthen our company was the streamlining of our organization at the
end of the year. This not only reduced the operating cost with more than 20% (to USD 1.5 million per month), but
also positioned us well for continued strong growth. With strong sales traction and the USD 9 million equity issue
in Q1 2015, Cxense is stronger than ever in 2015.
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Board and key executives
BOARD OF DIRECTORS
Morten Opstad, Chairman
Per Olav Monseth, Board member Stig Eide Sivertsen, Board member
Grete Sønsteby, Board member Kjersti Wiklund, Board member
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KEY EXECUTIVES
Ståle Bjørnstad, Chief Executive Officer (CEO)
Jørgen Marius Loeng, Chief Financial Officer (CFO) Aleksander Øhrn, Chief Technology Officer (CTO)
Vigleik Takle, Head of Global Operations John Markus Lervik, Founder
Mikal Rohde, Executive Vice President Business
Development and co-founder
John T. Sviland, Executive Vice President Business
Development and co-founder
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Cxense – the business
The businesses that succeed online are those that deliver the most relevant and engaging content, advertising,
and search results to their audience. These are exactly the capabilities Cxense offers its customers. Through
sophisticated, real-time data analysis and cutting-edge content delivery solutions, Cxense knows what people
want online and have the ability to deliver that content seamlessly. Websites and mobile apps using Cxense
technology appear tailor-made for every single site visitor.
On behalf of customers, Cxense holds anonymous user profiles for well over half a billion users around the world.
All of these profiles are updated in real-time. They drive the decisions on whether to show a story about conflict in
the Middle East or Justin Bieber; whether to promote a new mobile phone or mortgage rates; whether to promote
a basic digital subscription or an upsell.
Cxense customers drive more e-commerce sales, higher digital subscription rates, higher advertising response
rates, and higher consumer loyalty, because the stories, products, videos and subscriptions they promote match
the individual user's interests, and the context that person is in at that particular moment. Consumers get more
interesting sites, advertisers get higher sales, and site-owners get more traffic and revenue. Everyone is a winner.
Cxense solutions are provided as SaaS (Software-as-a-Service) services with monthly recurring subscription
license fees, as well as additional royalty payments dependent on advertising volume and transaction levels. In
addition, Cxense charges implementation fees and consultancy services amounting to 5-10% of revenues in each
quarter. The sale of SaaS applications is reported in the Cxense SaaS business area and represents the
Company’s core business.
Cxense is a global company headquartered in Oslo, Norway, with offices in Buenos Aires, London, Madrid,
Melbourne, Miami, New York, Rio de Janeiro, San Francisco, Singapore, Stockholm, Tokyo, and Zurich.
Customers include Dow Jones/Wall Street Journal, Hearst, Globo, Grupo Clarin, AEON, DMM, Rakuten,
Singapore Press Holdings, South China Morning Post, Amedia, Bonnier, Polaris Media, TV2, and many more.
For more information visit www.cxense.com or follow @Cxense on Twitter. Cxense is listed on the Oslo Stock
Exchange with the ticker CXENSE.
The EIE™ (Extraordinary Insight Engine™)
Cxense built the Extraordinary Insight EngineTM (EIE) for real-time analysis of content, user context, and user
data, including 1st and 3rd party data. The EIE is fully integrated with a range of applications (Cxense Advertising,
Insight, DMP, Content, and Search), which are used by Cxense customers to increase advertising revenue, user
engagement, conversions to digital subscriptions and product sales.
The EIE analyses the behaviour of more than 500 million Internet users, detects their location and devices, and
deduces their interest and intent, among others data points. The EIE gives Cxense’s customers a 360-degree
view of their online users.
The EIE technology has several unique aspects. It is end-to-end real time: From data capture, through data
processing, to actionable data output. It is also mobile optimized through its scalable, low bandwidth user profiling
methodologies, which do not rely on 3rd party cookies. With highly flexible APIs, the EIE can power any
application and make it context aware.
It employs unique behavioural, contextual, collaborative and semantic processing - making user and content
insight actionable in real time.
Cxense Advertising
Cxense Advertising provides businesses with the most targeted advertising solution on the market. Media
companies choose Cxense Advertising so they can deliver the most relevant advertising and promotions to their
users. This improves the user experience on their sites, boosts the effectiveness of the ads they serve and
increases the price at which they can sell their inventory. The Advertising solution offers multiple cost models
(cost-per-click, cost-per-impression and cost-per-action basis), works cross device (computer, tablet and mobile)
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and with every advertising format (text, image and video/rich media, mobile). Cxense Advertising can be
combined with other Cxense solutions for advanced promotion of digital subscriptions and for mixing targeted
advertising with relevant content (native advertising).
Cxense Insight
Cxense Insight provides businesses with powerful insight into their online audience. Through a real time
visualization of how an audience interacts with websites, mobile sites and mobile apps, Cxense customers can
make decisions on which content to promote, which audience to target, how to grow their user base and how to
monetise their assets. Cxense customers monitor and customize dashboards to suit their needs for traffic
patterns, audience interests, demographics, content popularity and first party data across a single site or a
network of sites.
Cxense Content
Cxense Content is used for content optimization and personalization on selected sections of a site or on the
complete site. By providing a personalized and more relevant experience to each user, businesses achieve
increasing site traffic, readership and dwell time.
Cxense Data Management Platform (DMP)
The Cxense DMP gathers data in real time across mobile, tablet and desktop devices and combines this with 1st
and 3rd party data, such as age, gender and subscriber information. It analyses the combined data, develops
individual user profiles and creates useful audience segments, which can be used across customer sites and
multi-channel marketing plans.
The Cxense DMP can be set up to integrate with Cxense customers’ CRM systems to enable highly effective
targeted marketing campaigns, understanding of digital subscription conversion patterns as well as a deep
understanding of individual customer needs.
Out of the box integrations with Cxense solutions such as Cxense Advertising and Cxense Content, as well as
with other industry leading advertising products such as Google DFP, make the DMP extremely easy to use.
Cxense Search
Cxense Search is a cloud-based and easy to implement enterprise search application. It represents a very
affordable, top quality, low maintenance, enterprise search solution for online companies. It is easy to integrate
with other Cxense applications, and it offers unique personalization and advertising monetization opportunities for
the search results pages.
Privacy and Transparency
Cxense is fully aware that the type of technology and services the Company provides has the potential to conflict
with the interests of end users, if used inappropriately. Therefore, Cxense is committed to safeguarding its
services and only providing them in a way that improves the end-user experience, and takes the end user’s
privacy fully into account. This is conducted in collaboration with Cxense customers, the data owners.
Cxense has a clearly stated Privacy Policy and is required to conform to the European Union’s Data Protection
Directive (Directive 95/46/EC, which is also embodied in the US Safe Harbour Privacy Principles of Notice,
Choice, Onward Transfer, Security, Data Integrity, Access and Enforcement, and Safe Harbour Policies). Cxense
regularly reviews its operations in order to be in compliance in view of this Directive.
Hosting and SaaS operations
Cxense delivers its software-as-a-service from scalable outsourced data centres in both USA and Europe. The
Cxense software solutions are based on distributed software architecture making them data centre agnostic –
thus hosting capacity can be purchased choosing between several reputable providers at a market price. With the
Emediate acquisition in 2013, Cxense also got additional data centres hosting most of the Emediate advertising
business.
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The PCAN business segment
Cxense has also helped establish several Publisher-Controlled Advertising Networks (PCANs). The PCANs act
as a publisher-controlled broker between the advertisers and the publishers, distributing and sharing the
advertising revenues generated in the network with the publishers. Cxense is an advertising technology provider
to the PCANs and charges a fee based on the PCAN revenues, thus aligning the interest of Cxense and its
customers. In Spain, the Company has retained a 51% ownership interest, and because of its majority ownership,
this PCAN is consolidated into the Group accounts, and it is reported in the Cxense PCAN business area.
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Report from the Board of Directors
2014 IN BRIEF
The Cxense business model is Software-as-a-Service (SaaS), where customers pay a monthly subscription fee
for using Cxense’s software solutions. This creates a stable predictable long-term revenue stream for the
Company, which differs significantly from a conventional one-off license fee with a 10-15% yearly maintenance
fee. Cxense customer contracts typically run for 12 months, with automatic renewal.
2014 was another exciting year for Cxense, and one of the milestones was the listing on the Oslo Stock
Exchange July 1 2014 with a preceding private placement of USD 7.6 million. A large number of the dedicated
Cxense employees are also shareholders in the Company, and the first day of trading was an important day for
the whole company.
The five sales regions (EMEA, Latin America; North America; Asia Pacific; and Japan) continued their strong
performance, and Cxense signed 110 new contracts during the year. More importantly, the momentum towards
the year-end was strong, and in Q4 2014 the Company signed 34 new contracts, representing 31% of the total
number of contracts for the full year. The 34 contracts signed in Q4 2014 represented a growth of 55% compared
with the 22 new contracts won in Q3 2014.
The Data Management Platform (DMP), launched in Q2 2014, gained significant market traction, and was the
Company’s strongest performing service offering in the latter part of the year. The DMP represented 37% of the
new recurring revenue in Q4 2014. It was stated in the Q3 2014 presentation, that Cxense was aiming to bring the
DMP into new market verticals, and in February 2015 the Company signed the Commercial Bank of Dubai as its
first bank- and finance client.
Cxense has a base of more than 250 clients, and continued to upsell a significant portion of these customers
through the year. The Cxense go-to market strategy focuses on initially selling one service from the software suite
and then returning to the client to increase the use of the offering. The strategy works, and satisfied Cxense
clients tend to use a larger part of the software suite. In Q4 2014 about 40% of the contracts were upsell deals to
the existing customer base. Customers comprising approximately 12% of the revenue base chose to leave the
Company in 2014 (characterised as churn). Churn was larger than 12% for the acquired Emediate client base, but
lower for the clients retained through organic growth.
An important decision in Q3 2014 was to streamline the organization. By removing overlapping resources, the
organization was reduced to 95 full time employees (FTEs) at the end of Q4 2014 from 118 FTEs at the end of Q3
2014. As a result, the SaaS segment operational cost base will be reduced by more than 20%, from more than
USD 1.9 million per month to approximately USD 1.5 million per month. Most of the cost effect will be realized by
March 2015, and the rest by the end of June 2015. The process has led to a simplified organizational model with
fewer administrative functions and an increased sales force.
In addition to the regional sales team, the Company has set up a lighthouse accounts team of five people. There
are high expectations for this team in 2015, which will serve Cxense’s largest clients worldwide. The team
consists of the most experienced sales people in the organization with in depth knowledge of the technology and
the customer needs. A direct sales channel through Cxense.com was also developed in 2014 and launched in
February 2015. Through Cxense.com, a client can now subscribe for the Cxense Insight product, and start using
it without any assistance from the sales- and operations teams. Clients get a 30 -day free trial period, and then
pay by credit card to continue using the service. The direct sales channel is expected to create revenue as well as
sales leads to the regional sales teams.
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Consolidated revenue amounted to USD 16.6 million in 2014 compared with USD 7.6 million in 2013,
representing growth of 118%1. The SaaS segment gross margin was above 80% through the year and the
Company expects the SaaS segment gross margin to stay above 80% also in 2015.
The 2014 consolidated EBITDA was USD -13.1 million compared with USD -8.1 million in 2013. The EBITDA
decrease from 2013 to 2014 relates predominantly to an increase in operational costs. The 2014 consolidated
operational costs were USD 25.4 million compared with USD 13.0 million in 2013. The operational cost increase
relates to organization increase due to the Emediate acquisition at the end of 2013 and hires through 2014, one-
off costs related to the IPO in Q2 2014 and the organizational streamlining in Q4 2014. The total one-off and
extraordinary operational cost items in 2014 amounted to USD 2.6 million2,
The organizational streamlining of the organization in Q4 2014 had a significant positive effect on the SaaS
segment cost run-rate at the end of the year. So even though the 2014 EBITDA has been burdened by significant
one-off costs, the SaaS segment EBITDA run-rate was significantly improved at Q4 2014 compared to Q3 2014.
This is illustrated in the table below where the reported OPEX for Q4 2014 has been adjusted for one-off items
and the estimated cost reduction effect of the organizational streamlining. The Q4 2014 EBITDA run-rate estimate
is USD -1.5 million compared to USD -3.0 million in Q3 2014.
Regional contribution margin
In Q1 2015 Cxense raised USD 9 million (NOK 70 million) in new equity through a private placement and a
subsequent offering. The EBITDA run-rate improvement in Q4 2014 combined with the private placement gives
Cxense a good start to 2015.
1 2013 revenues included only two months of the acquired Emediate entity. 2 For details on the USD 2.6 million see the whereof items in the Cxense Group – Financial Development Summary chapter later in this report.
SaaS segment
USD thousands
Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014
Revenues 2 609 2 587 503 507 479 437 3 591 3 531
COGS (allocated) 411 489 79 96 76 83 566 667
Gross profit 2 197 2 098 424 411 404 354 3 025 2 864
Gross magin % 84 % 81 % 84 % 81 % 84 % 81 % 84 % 81 %
Employees (FTEs) 20 29 14 16 10 9 50 64 95 118
OPEX reported 6 521 5 669 Whereof net one-off items -685 212
Estimated full effect of OPEX reduction program -1 299 -
OPEX run-rate 967 1 325 648 704 483 411 2 439 3 441 4 537 5 881
EBITDA run-rate estimate 1 231 773 -224 -293 -79 -57 -2 439 -3 441 -1 512 -3 017 In % of revenues 47 % 30 % -45 % -58 % -17 % -13 % -42 % -85 %
Group functions
and R&D
SaaS business
segment TOTAL
Regional Sales & Operations
EMEA Americas APAC
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R&D DEVELOPMENTS
2014 was an event-packed year for Cxense R&D.
Just a year ago, the Cxense data management platform (DMP) application was not yet launched. By further
expanding the Company’s already powerful Big Data offering, the launch of the Cxense DMP in 2014 accelerated
market presence and appeal, and put Cxense on the radar of major industry analysts tracking the DMP space.
During 2014, Cxense launched several new products such as:
Extensions to the Extraordinary Insight Engine (EIE) merging 1st or 3rd party data with all other data
collected by the Cxense platform
The addition of novel data analysis algorithms to infer audience demographics, intents, interests and
user mobility patterns
Integration with several major third-party ad-servers through the simple-to-use DMP application
Technical validation in being able to track and update individual user profiles in real-time on steadily
growing traffic volumes
The Cxense Display advertising product
The Cxense Display solution goes beyond a mere rebranding of the Emediate Ad platform. Cxense Display also
features an out of the box integration with the Cxense DMP. Cxense Advertising was further integrated with the
Cxense DMP and its unprecedented tracking and targeting options. In addition, it unveiled exciting features such
as shared products. Cxense R&D also came up with substantial innovations in 2014, such as conceiving and
developing the concept of 3D ads.
The Cxense Insight and Cxense Content applications received significant visual overhauls in 2014, and the
versatile widget-based UI of Cxense Insight was further extended with great success to cater for specialized use
cases such as editorial insights or use in online newsrooms.
The growth in mobile traffic continued in 2014, highlighting the value of the investments that Cxense R&D did in
2014 on developing an identity management subsystem integrated into the full Cxense stack that does not rely on
third-party cookies to do cross-site tracking. This subsystem also enables cross-device linking, an increasingly
sought-after feature in a world where users possess multiple devices.
Lastly, 2014 was a year where Cxense R&D laid the groundwork for further improving already world-class
technical operations. Today, Cxense services are served out of four different data centres (DCs) across the world
with latency-based routing and where services can continue to be delivered even in case of complete DC
outages.
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CXENSE GROUP – FINANCIAL DEVELOPMENT SUMMARY
Q2 2013 continued and quarters thereafter exclude the discontinued operations of PPN AG. All other
quarters are presented including PPN AG. Segment notes in the financial reports published after the
PPN divestment are re-stated with figures for continuing operations.
Cost of sales is presented net of the elimination differences.
Emediate is included in Q4 2013 with the months of November and December, i.e. not a full quarter, as
the effective date for the acquisition was 1 November. For Q1 2014 and onwards Emediate is
consolidated with full quarterly effect.
Share based payment costs and share based social costs provision relates to calculated cost effect of
share options and subscription rights granted by the BoD to the employees, calculated according to
IFRS 2.
USD 1,000 Q1 2013 Q2 2013
Q2 2013
cont'd. Q3 2013
Q4 2013
excl.
Emediate
Q4 2013
incl.
Emediate
Nov & Dec
13 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2013 FY 2014
IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS
SaaS segment
Revenues total 840 993 993 1 090 1 314 2 650 3 568 3 442 3 530 3 591 5 573 14 131
Cost of sales 146 203 203 179 244 501 644 646 666 565 1 030 2 521
Gross profit 694 790 790 911 1 070 2 149 2 924 2 797 2 864 3 025 4 543 11 610
Gross magin % 83 % 80 % 80 % 84 % 81 % 81 % 82 % 81 % 81 % 84 % 82 % 82 %
Personnel 1 790 1 832 1 832 1 833 2 383 2 935 3 055 3 861 4 034 4 487 8 389 15 437
Wherof share based payment costs 74 140 137 136 487
Wherof share based social costs provision 20 - - 76 96
Wherof salary and social restrucutring provisions and costs - 345 345
Other OPEX 676 802 802 643 1 580 1 849 1 662 3 685 1 635 2 034 3 956 9 016
Wherof office moving costs and restructuring costs - - 57 68 125
Wherof extraordinary/special - 40 50 496 586
Wherof one-off provision for doubtful debt - 200 -130 210 280
Wherof transaction costs 436 436 - 1 607 -189 -419 436 999
Whereof R&D refund -228 -228
OPEX 2 466 2 633 2 633 2 476 3 963 4 784 4 717 7 546 5 669 6 521 12 345 24 453
EBITDA -1 772 -1 844 -1 844 -1 565 -2 893 -2 635 -1 793 -4 750 -2 805 -3 496 -7 802 -12 843
EBITDA adjusted for whereof items (run-rate) -2 457 -2 199 -1 793 -2 903 -3 017 -2 811 -7 366 -10 524
Estimated full effect of cost reduction program 1 299
EBITDA adjusted for full effect of cost program -1 512
PCAN segment
Revenues total 1 375 1 534 547 685 634 634 672 750 672 619 2 247 2 714
Cost of Goods Sold 1 390 1 263 487 523 450 450 502 560 509 474 1 905 2 045
Gross profit -15 272 60 162 184 184 170 190 163 145 342 669
Gross magin % -1 % 18 % 11 % 24 % 29 % 29 % 25 % 25 % 24 % 23 % 25 %
Personnel 238 291 124 109 107 107 145 157 154 146 427 602
Other OPEX 97 129 73 35 78 78 84 76 88 89 239 337
OPEX 335 419 196 144 185 185 229 233 242 235 666 939
EBITDA -350 -148 -137 18 -1 -1 -59 -43 -79 -89 -324 -270
GROUP
Revenues all segments 2 215 2 527 1 540 1 775 1 948 3 284 4 240 4 193 4 202 4 210 7 820 16 845
Intra-segment eliminations -110 -126 -40 -67 -72 -72 -66 -78 -62 -58 -208 -264
Revenues consolidated 2 105 2 401 1 500 1 708 1 876 3 212 4 174 4 115 4 140 4 152 7 612 16 580
Gross profit 679 1 062 849 1 073 1 254 2 333 3 094 2 987 3 028 3 170 4 885 12 279
Gross magin % 32 % 44 % 57 % 63 % 67 % 73 % 74 % 73 % 73 % 76 % 64 % 74 %
Personnel 2 027 2 122 1 955 1 942 2 490 3 042 3 200 4 018 4 188 4 633 8 816 16 039
Other OPEX 773 930 875 678 1 658 1 927 1 746 3 761 1 723 2 123 4 195 9 353
OPEX 2 801 3 053 2 830 2 620 4 148 4 969 4 946 7 779 5 911 6 756 13 011 25 392
EBITDA -2 122 -1 991 -1 980 -1 547 -2 894 -2 636 -1 852 -4 793 -2 875 -3 585 -8 126 -13 113
EBITDA adjusted -2 458 -2 200 -1 852 -2 946 -3 096 -2 901 -7 690 -10 794
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14
Transaction costs in Q4 2013 include cost to lawyers and financial advisors, performing due-diligence
and general advisory services in connection with the acquisition of Emediate. Transaction costs related
to the share issue financing the acquisition are booked against other paid in capital and therefore visible
in the consolidated statement of changes in equity, i.e. not in the profit and loss statement. Transaction
costs in Q2 2014 relate to the IPO of Cxense including VAT. Transaction costs in Q3 2014 (negative
costs) relate to VAT refund on IPO costs booked in Q2 2014. Transaction costs in Q4 2014 (negative
costs) relate to re-booking of some of the IPO costs against equity following the final settlement of
advisor costs and VAT calculations.
Office relocation and restructuring costs mentioned under other OPEX in Q3 2014 relate to inter-city re-
location of the offices in Copenhagen and Melbourne. The corresponding Q4 2014 costs relates to rent
provisions for 6 months of rent of the Copenhagen office following the cost reduction program.
Extraordinary / special in Q2 and Q3 2014 relate to one off advisory fees. Extraordinary / special in Q4
2014 relates to write downs connected to the Emediate / Copenhagen re-structuring and office close
down, due diligence fees and cost provisions for a new invoicing tool for the Emediate portfolio following
the restructuring.
The one-off receivable loss provision booked in Q2 2014 of USD 200 thousand was reversed by USD
130 thousand in Q3 2014 due to successful debt negotiations. The one-off receivable loss provision in
Q4 2014 relates to a general increase in loss provisions following a year- end assessment.
The adjusted EBITDA is EBITDA adjusted for all other OPEX listed on the “whereof lines”. The EBITDA
adjusted for full effect of cost reduction program: This EBITDA level is also adjusted for costs incurred in
Q4 2014 on employees that are no longer part of the Cxense organization when the ongoing cost
program has been completed.
GROUP FINANCIAL STATEMENTS
The 2014 Group revenue for continuing operations amounted to USD 16.6 million, an increase of USD 9.0 million
from 2013 (USD 7.6 million). The Cxense Group has two business segments: Cxense Software-as-a-Service
(SaaS) and Cxense Publisher Controlled Advertising Networks (PCAN). The increase of group revenue is due to
a steady growth in the number of external customers in the SaaS segment, the acquisition of Emediate in
November 2013 and steady growth within the PCAN business segment. The Cxense SaaS segment delivered an
revenue increase of USD 8.6 million to USD 14.1 million. The SaaS segment revenues relates predominantly to
sales of recurring software licenses and some implementation services. The PCAN business segment had
revenue of USD 2.7 million in 2014, representing an increase of USD 0.44 million from 2013. Revenue from the
PCAN segment comes from sale of online advertising.
The 2014 cost of sales amounted to USD 4.3 million, compared with USD 2.7 million in 2013. The SaaS segment
cost of sales for 2014 was USD 2.5 million, while the PCAN segment cost of sales was USD 2.0 million before
inter group eliminations of USD 0.3 million. Cost of sales within the SaaS segment mainly relates to the hosting of
the software applications used by customers. Cost of sales within the PCAN segment relates to revenue share
paid to publishers providing advertising space, as well as agency commission paid to advertising agencies. The
2014 gross profit for the SaaS segment amounted to USD 11.6 million (gross margin of 82%). The gross profit for
the continuing PCAN segment was USD 0.67 million (gross margin of 25%).
The 2014 employee benefit expenses were USD 16.0 million, compared with USD 8.8 million in 2013. The
increase is attributable to a higher average number of employees in 2014 compared with 2013, an increase in
shared based payments to USD 0.49 million in 2014 (USD 0.23 million) as well as higher other personnel
expenses of USD 1.2 million in 2014 (USD 0.27 million). Other personnel expenses include the performance
based sales commissions paid to sales representatives.
The Cxense SaaS organization reduced staffing from 118 employees at the beginning of Q4 2014 to 95 at the
end of Q4 2014, a reduction of 23 employees due to an organizational optimization process. Of the 95
employees, there are 40 employees within the R&D organization. Furthermore, 33.5 work within sales &
Annual report 2014
15
marketing, whereof 27 within front-end sales, 16 work within Operations and 5.5 within management, finance &
admin.
The group depreciation expense for 2014 was USD 1.3 million compared with USD 0.23 million in 2013. The
increase in depreciation and amortization in 2014 from 2013 is attributable to the acquisition of Emediate where
the excess value was capitalized to the balance sheet and amortized over a five-year period (only 2 months
amortizations were included in Q4 2013), and the depreciation of hosting cost investments in second half of 2014.
The Q4 2014 goodwill that relates to the Emediate acquisition was USD 3.8 million, the same amount as in Q4
2013. The Q4 2014 goodwill amount has been tested for impairment. Excluding the excess value and goodwill
from the Emediate acquisition and investments in hosting capacity, the group has limited intangible assets. The
large distributed cloud-based systems operated by the Company are predominantly hosted on platforms leased
by large reputable hosting suppliers and thus do not lead to investments in fixed assets. However, in Q3 2014
Cxense invested USD 290 thousand in owned hosting infra-structure. The estimated monthly saving compared
with the leased solution being replaced is USD 32 thousand, with full effect from Q4 2014.
The group R&D costs are expensed in full.The R&D activities (research, development and maintenance), are very
integrated and there is often no clear distinction between them. Thus it is assessed that these expenses do not
qualify for capitalization.
Other operating expenses for 2014 amounted to USD 9.4 million compared with USD 4.2 million in 2013. The
majority of the expenses relate to marketing, travel & representation and external consulting (finance, audit, legal,
and other), the latter driven by activities such as the acquisition and integration of Emediate and the listing of the
Company on the Oslo Stock Exchange in July 2014.
The finance income in 2014 was USD 0.54 million, largely relating to interest earned on bank deposits. Finance
income in 2013 was USD 0.37 million. Finance expenses, mostly relating to currency expenses, amounted to
USD 0.38 million in 2014 and USD 0.18 in 2013.
Income tax expense for 2014 was USD 0.11 million compared with negative USD 0.02 million in 2013. In general
the income tax expense arises in the Cxense SaaS subsidiaries in USA, Japan and Australia that perform sales &
marketing and R&D activities for the parent company based on inter-company agreements (with arm’s length
pricing principles).
In Q4 2014 the tax expense was impacted by a write-down of a withholding tax asset of USD 0.32 million
following an assessment that the asset may not be presented according to IFRS accounting principles. The Group
still has the tax asset and plans to use it when growing into profitability and a tax position. The Company also has
a substantial tax loss carried forward (see annual report tax notes). The amortization of excess values from the
Emediate acquisition has had positive 2014 tax effect.
The group net loss from continuing operations for 2014 amounted to USD 14.4 million, compared with a net loss
of USD 8.2 million in 2013. Overall, the net result for 2014 represents a loss of USD 0.004 per share, comparable
to 2013 of USD 0.60 per share. There was conducted a 1/200 share split in Q2 2014. See note 16 for details.
Total assets at the end of 2014 amounted to USD 15.6 million compared with USD 23.3 million at 2013. The
decrease is mainly due to a reduction of intangible assets following the amortization of intangible assets related to
purchase price allocation of the Emediate acquisition, reduction in trade receivables and a decrease in cash and
cash equivalents.
Cash and cash equivalents amounted to USD 2.8 million at the end of 2014 and USD 8.8 million at the end of
2013. Trade receivables were USD 2.2 million at the end of 2014, equal to 44 days of inventory3, compared with
USD 3.0 million (84 days) at the end of 2013. The decrease in 2014 receivables is due to good collection
progress during the year, as well as a year-end one-off receivable provision in Q4 2014.
3 Days = Receivables / Quarterly revenues * 90 days
Annual report 2014
16
Short-term assets at the end of 2014 were USD 1.8 million, a decrease from USD 1.9 million at the end of 2013.
The amount includes an escrow account related to the Emediate acquisition of USD 1.1 million related to the
delayed payments of parts of the Emediate acquisition proceeds (booked as short- term assets). The escrow
account amounted to USD 1.3 million as of end 4Q 2013.
Total current liabilities at the end of 2014 were USD 5.8 million compared with USD 5.8 million at the end of 2013.
Trade payables decreased to USD 1.4 million at the end of 2014 from USD 1.9 million at the end of 2013. Other
short-term liabilities increased to USD 4.2 million at the end of 2014 from USD 3.8 million at the end of 2013. The
amount includes the escrow account related to the Emediate acquisition of USD 1.1 million as of end 4Q 2014.
Total transaction costs related to the acquisition of Emediate and the corresponding share issue of USD 1.1
million was paid in 1Q 2014.
The deferred tax balance outstanding of USD 0.48 million at the end of 2014 relates to the Emediate business
and has decreased from USD 0.65 million at end 2013.
Net cash flow from operating activities during 2014 was USD -13.0 million compared with USD -7.8 million during
2013.
Net Cash flow from investing activities was USD -0.5 million in 2014 compared with USD -9.8 million in 2013.
Net cash flow from financing activities was USD 7.5 million in 2014 compared with USD 16.3 million in 2013. Both
amounts relate to share issue proceeds. The proceeds from the 2013 and 2014 share issues were largely used to
acquire the Emediate business and to fund the operational loss. In Q1 2015, after the reporting period for this
annual report, Cxense raised USD 9 million in a private placement.
PARENT COMPANY FINANCIAL STATEMENTS
Revenue in the parent company amounted to NOK 46.9 million in 2014 compared with NOK 23.3 million in 2013.
Personnel and payroll costs were NOK 50.3 million in 2014, up from NOK 24.8 million in the preceding year. The
increase is largely explained by higher average manning levels and increased notional (non-cash) cost of share-
based remuneration. The parent company employed on average 45 full-time employees compared with 28 in
2013.
Cost of sales amounted to NOK 49.5 million in 2014, an increase of NOK 17.3 million the preceding year (NOK
32.2 million). The cost of services largely relates to the purchases of services from subsidiaries. All subsidiaries
experienced increased activity in research and development activities, and sales and marketing costs.
Other operating expenses amounted to NOK 27.8 million compared with NOK 14.3 million in 2013. Of this NOK
7.8 million related to travel and marketing costs, NOK 3.1 million related to other operating expenses and NOK
1.8 million was associated with office expenses. During the year a total of NOK 15.1 million was spent on audit,
consulting and legal fees. The audit fee expensed in 2014 was NOK 0.4 million.
Financial items amounted to a net gain of NOK 0.6 million in 2014, compared with a gain of NOK 1.2 million in
2013. Interest income on cash deposits amounted to NOK 0.6 million in 2014 compared with NOK 0.9 million in
2013. Other financial income amounted to NOK 2.0 million compared with NOK 1.3 million in 2013. Other financial
expense relating to foreign exchange adjustments of NOK 1.8 million was recorded and compares with NOK 1.0
million in 2013.
The net result for Cxense ASA in 2014 was a loss of NOK 82.3 million.
The Board of Directors proposes that NOK 79.3 million of the loss is transferred from share premium reserve and
NOK 3.1 million is transferred from other equity. The Board does not propose to pay a dividend for 2014.
SHARE CAPITAL
In April 2014 the Company resolved a 1:200 share split. Following the split there were 3,322,400 shares, each
with a par value of NOK 5. In June 2014 Cxense made two private placements where a total of 359,317 new
shares were issued at a subscription price of NOK 130 per share raising NOK 46.7 million. As at December 31
Annual report 2014
17
2014 Cxense ASA had share capital of NOK 18,408,585 consisting of 3,681,717 shares, with a nominal value of
NOK 5 each.
In connection with the private placement in June 2014 the Board decided to issue two warrants for every one
share subscribed for and allocated in the private placement. The first warrant ("Warrant A") would have a term
expiring on July 4 2015 and an exercise price per share of NOK 140. The second warrant ("Warrant B") would
have a term expiring on July 4 2016 and an exercise price per share of NOK 150. As of December 31 2014, there
were 718,434 outstanding warrants to shareholders in Cxense ASA.
Since July 1 2014, the shares in the Company have been listed and traded on the Oslo Stock Exchange.
As of December 31 2014, there were 177,980 share options and subscription rights outstanding to Cxense
employees. Costs of share based payments are booked to the profit and loss statement according to the IFRS 2
accounting standard.
In Q1 2015 the company completed a private placement of 550,000 new shares and a subsequent offering of
150,000 new shares. All new shares were subscribed at NOK 100 per and the total share issue proceeds was
NOK 70 million. After the private placement and the subsequent offering there are 4,381,717 shares in the
company, each with a nominal value of NOK 5. The share capital is NOK 21,908,585.
RISKS AND RISK MANAGEMENT
Risk management in Cxense is based on the principle that risk evaluation is an integral part of all business
activities. Cxense is a technology company with global operations and exposed to various risk factors of financial
and operational nature. These factors can affect the group’s business activities and financial position. The board
of Cxense prioritises managing risk and has established routines and policies to limit overall risk exposure.
Market risk
Cxense’s markets are undergoing rapid technological change. The Company’s future success will depend on its
ability to meet the changing needs of the industry, develop new technologies that address the increasingly
sophisticated and varied needs of prospective customers, and respond to technological advances and emerging
industry standards and practices on a cost-effective and timely basis.
Regulatory and IPR-related risk
Cxense’s technology is closely tied to the Group operations and business strategy. The Company relies on a
combination of copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions
to protect the Company’s intellectual property rights (IPR). Cxense is working to protect its products and
technologies in all the markets it operates. However, there will always be risk related to copyright protection of
new products, how third parties will challenge them, and how the technology of others can impair the Company’s
ability to do business.
Going forward Cxense may be subject to government regulations affecting the industry, which could adversely
affect the current business model. The Company is not aware of any forthcoming legislation or regulation that will
affect the business negatively.
Foreign exchange risk
Cxense is subject to certain financial risks associated with currency and interest rates. There is a broad currency
mix on both the revenue and the cost side so there is no single large currency risk identified that affects the
company net profit. Cxense’s cost basis is largely in Euro, Danish kroner, Swedish kroner, Norwegian kroner,
Australian dollars, Japanese yen and US dollars. The commercial revenues are essentially Euro, Japanese yen,
Danish kroner, Norwegian kroner, Swedish kroner or US dollars based, while government grants are denoted in
Norwegian kroner and Australian dollars. Proceeds from share issues are saved in Norwegian kroner. Cxense
has not entered into any hedging agreements.
Liquidity and credit risk
Annual report 2014
18
Cxense operates at a loss and does not have any assets suitable for secured borrowing. In January 2015, the
Company raised NOK 55 million in gross proceeds from a private placement and additionally NOK 15 million in a
subsequent offering in March 2015. The Company may seek to raise further capital to finance its expansion plans.
Cxense is exposed to customer-related credit risk, which is related to the financial strength and characteristics of
the Company’s customers. There is always a risk of loss on accounts receivable from customers and reduced
sales to customers if they face liquidity challenges.
CORPORATE GOVERNANCE
Cxense is committed to a high standard of corporate governance, and has adequate monitoring and control
systems in place to ensure insight and control over the activities. The company complies with the legislation,
regulations and recommendations to which a public limited company is subject to, including Section 3-3b of the
Norwegian Accounting Act on corporate governance, day-to-day obligations of a company listed on the Oslo Børs
and the current version of the Norwegian Code of Practice for Corporate Governance, last updated October 30
2014.
A detailed statement of the Company’s corporate governance policy is provided in a separate chapter in this
annual report.
EMPLOYEES, CORPORATE SOCIAL RESPONSIBILITY AND THE ENVIRONMENT
Cxense aspires to achieve sustainable development by striking a good balance between financial results, value
creation, sustainability and CSR. Pursuant to section 3-3c of the Norwegian Accounting Act, the Board of
Directors has drawn up guidelines covering business ethics and corporate social responsibility.
Cxense’s activities in the area of social responsibility, including human rights, labour rights, the working
environment, equality, discrimination, anti-corruption and the external environment, are described in a separate
section of this annual report.
GOING CONCERN AND EVENTS IN 2015
The board confirms that the financial statements of the Company as well as the parent company have been
prepared under the going concern assumption. The Board is confident that the Company is well positioned to
continue in operational existence, based on the current balance sheet, revenue forecast and projected expenses.
In January and March 2015 Cxense raised a total of NOK 70 million in gross proceeds from a private placement
and subsequent offering. The proceeds are expected to secure the Company’s working capital requirements into
Q1 2016. Between year-end 2013 and the presentation of this report the Company has secured a number of new
contracts. Reference is made to Cxense’s stock exchange announcements.
OUTLOOK
Cxense expects the next years to be characterized by strong Software-as-a-Service revenue growth - gradually
resulting in strong profit margins.
The Company has in recent years established a strong direct sales force, with a proven gradual performance
increase, and recently launched self-service online sales. The recurring revenue model were each sale has an
accumulating effect on quarterly revenues, implies a strong growth potential. The strong growth potential was
proven in Q4 2014 when the company signed a record number of 34 new customer contracts. In Q4 2014 the
Company also reduced its operational cost run-rate by more than 20%. Strong new sales moment and cost
reductions combined with the USD 9 million private placement in Q1 2015 gives Cxense a good start to 2015,
Relevancy is an important internet development trend. While traditional online companies show the same content
to any site user (disregarding their specific interests), Cxense customers can target content, advertising and
product promotions towards individual users based on their interest profile. Precise user targeting increases site
relevancy and drives advertising revenue, traffic growth and product sales. Cxense predicts that relevancy will be
Annual report 2014
19
an important element of the next generation internet experience – and that Cxense will empower it with its unique
real-time data engine.
Since its inception, Cxense has developed several commercial software applications powered by the Cxense real
time data engine. With a ~40 FTE development team the Company expects to continue to launch new software
products and new features enhancing existing products. In 2H 2014, the Company launched the Cxense Data
Management Platform (DMP). The DMP has very good third-party application connectivity and empowers
customers to utilize the power of the Cxense real-time data engine together with existing software solutions such
as ad-servers, CRM- and CMS systems. With a SaaS delivery model the DMP represents a low-risk purchase
decision with simple onboarding and connectivity to existing IT infrastructure and workflows – thus the solution
has a very good sales scalability potential. The DMP solutions represented 35% of Q4 2014 new sales and
Cxense expects increasing demand for its DMP going forward.
During 2014, the Cxense software solutions were sold to online publishers, advertisers and e-commerce
companies. In Q1 2015 the Company also signed with its first banking sector customer. Cxense sees an
increasing interest for its software products in all market verticals. The fundamental use of the Cxense software is
similar in each market vertical, which combined represents a significant market opportunity.
Cxense’s commercial product platform addresses a large and fast-growing market. The global online advertising
market is estimated to be more than USD 125 billion in 2014, growing at 20 per cent p.a over the last years.4.
According to another report, $50 billion is about how much marketers are spending on big data and advanced
analytics in the hopes of improving marketing’s impact on the business.5 The global e-commerce market is
according to Emarketer estimated to pass USD 1.5 trillion by 2014, and is growing about 20 per cent per year.
Industry analyst group, Gartner 6 expects that big data will drive USD 230 billion in IT spending through 2016, up
from USD 96 billion in 2012.
The market potential is considerable, as the number of people with internet access is still growing rapidly all over
the world. People are also accessing the internet more frequently, from home, at work, as well as on the go, and
are connecting with an increasing number of people through social networks, using a range of devices such as
PCs, mobile phones, tablets and internet-connected TVs. As a result, the internet has become a primary channel
for content creation, consumption, social engagement and commerce. The continuing increase in global online
activity generates massive amounts of data that can be collected and analysed to provide valuable insight for
business processes, especially given the dramatic drop in computation and storage costs.
Deriving value out of consumer web is a huge opportunity in big data, but at the same time highly complex.
Consumer web data is often user generated, unstructured and text-based, making it complex. Bigger complexities
lie in the contextual (customer internal and external circumstances), temporal and geographical dimensions that
have to be understood and applied to data analysis, to extract valuable and actionable insight. Further, there are
big issues around privacy/permission, ownership of data, (real and perceived) value of data to the brand and
consumer, consumers’ trust in and relationship with brands, social buying behaviours and appropriate level of
personalization.
A general market trend is that big publishers and online companies are not only becoming more dependent on big
data, but also more importantly looking to gain control over their data and derive valuable insights.
The Company believes that it is the only provider of the complete capabilities which empower online publishers
and media brands to do so.
4 http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/internet-advertising.jhtml 5 http://www.forbes.com/sites/mckinsey/2012/12/03/big-data-advanced-analytics-success-stories-from-the-front-lines/ 6 http://techcrunch.com/2012/10/17/big-data-to-drive-232-billion-in-it-spending-through-2016/
Annual report 2014
20
Cxense ASA
Oslo, 26 March 2015
Morten Opstad
Chairman
Per Olav Monseth
Board member
Stig Eide Sivertsen
Board member
Grete Sønsteby
Board member
Kjersti Wiklund
Board member
Ståle Bjørnstad
Chief Executive Officer
Annual report 2014
21
Corporate governance
Cxense ASA (Cxense) seeks to create sustained shareholder value, and the Company pays due respect to the
norms of the various stakeholders in the business. In addition to its shareholders, Cxense considers its
employees, the Company’s business partners, the society in general and the authorities as stakeholders. Cxense
is committed to maintaining a high standard of corporate governance, be a good corporate citizen and
demonstrate integrity and high ethical standards in all its business dealings.
1. IMPLEMENTATION AND REPORTING ON CORPORATE GOVERNANCE
Cxense is a Norwegian public limited company listed on the Oslo Stock Exchange, and bases its corporate
governance structure on Norwegian legislation.
The company’s corporate governance practices were resolved and stated on 13 March 2014. This review of the
Company’s corporate governance principles and practices is prepared in compliance with Section 3-3b of the
Norwegian Accounting Act and the Norwegian Code of Practice for Corporate Governance (“Code of Practice”) as
updated per 30 October 2014. The Code of Practice is available on www.nues.no.
Application of the Code of Practice is based on the “comply or explain” principle, and any deviations from the
code, if any, will be explained.
The principles and implementation of corporate governance is subject to annual reviews and discussions by the
Company’s Board of Directors. The corporate governance statement will be made available in the annual report.
In 2014, Cxense deviated from the recommendations in the Code of Practice on one section:
Section 9: The full Board serves as the compensation committee.
Corporate values, Code of Conduct and Corporate Social Responsibility
Cxense’s core values represent the core of the Company culture:
People:
We care about people: People using our services; i.e., our customers and their customers again, and our
partners. We empower people to find what they need, when they need it.
Integrity:
We do the right thing by everyone always; we say what we mean and we do what we say.
Passion:
We have confidence in our technology and our team, and passion for our products that gain our
customers control over their value chain.
Innovation:
In an ever-evolving digital world, we strive to drive innovation, be transparent, agile and forward thinking.
The Board has resolved ethical guidelines in accordance with the core values, which apply to all employees,
consultants and contractors as well as the elected Board members. The ethical guidelines are also incorporated
in the Company’s guidelines on corporate social responsibility.
All employees have committed to follow the policies through their employment contracts, and the management
ensures a strong focus on the compliance work and frequent training on relevant topics. Any potential or actual
breaches in the daily operations will be reported and tracked.
Cxense recognizes that the formal guidelines is only a starting point for establishing and maintaining sound
business ethics in all parts of the Company. Emphasising ethical conduct is a management responsibility, and
such behaviour will be developed over time through vigilance and monitoring between colleagues, discussion and
attention to activities and issues which pose particular challenges.
Annual report 2014
22
The company strives to ensure that suppliers and business partners comply with principles for sustainability and
CSR that are in alignment with Cxense’s own principles.
Deviations from the Code of Practice: None
2. CXENSE’S BUSINESS
Cxense helps businesses succeed in a digital world. Using audience data and advanced real-time analytics,
Cxense creates hyper-relevant content recommendations; targeted advertising and predictive search that help
customers increase digital revenue, and provide their users with a better experience. Cxense’s headquarter is in
Oslo, Norway, with offices around the globe.
In the articles of association, the Company’s business is defined as “The Company’s business is within
information technology, hereunder development, operations, sale and licensing of software, including what is
naturally connected with this, hereunder participation in other companies with similar activities.”
The company’s business goals and key strategies are stated in a business plan adopted by the Board. The plan is
reviewed and revised as and when appropriate. The business goals and key strategies are presented in the
annual report.
Deviations from the Code of Practice: None
3. EQUITY AND DIVIDENDS
The Board aims to maintain a satisfactory equity ratio in the Company in light of the goals, strategy and risk
profile, and thereby ensure that there is an appropriate balance between equity and other sources of financing.
The Board regularly assesses the Company’s capital requirements. By 31 December 2014, Cxense had a total
equity of USD 9.4 million representing an equity ratio of 60%.
Cxense has not an established dividend policy in place except to say that the Company’s aim and focus is to
enhance shareholder value and provide an active market in its shares. The company has historically never
declared or paid any dividends on its shares, and does not anticipate paying any cash dividends for 2015 or the
next few years. Cxense intends to retain future earnings, if any, to finance operations and the expansion of its
business. Any future determination to pay dividends will depend on the Company’s financial condition, results of
operation and capital requirements.
Mandates to the Board
At the Annual General Meeting in 2014, the Board of Directors was granted authorisation to issue a maximum of
1,661,200 new shares with a maximum total nominal value of NOK 8,306,000. This represents 10% of the
registered share capital at the time of the authorisation. The authorisation is limited to specific purposes and
applies until the Annual General Meeting in 2015, however no later than June 30 2015. Each mandate for board
authorisations to issue shares was considered and voted separately by each type and purpose.
The authorisation underlying the Company’s share option program, as resolved by the extraordinary general
meeting on 21 September 2012, was granted for two (2) years. On the Annual General Meeting in 2014, the
shareholders adopted a new subscription rights plan for its share-based incentive programs, as opposed to share
options under a Board authorisation. All future grants of share-based incentives shall be made under the
subscription rights plan, while issued and outstanding share options under the share option plan shall remain in
effect, in accordance with their terms. To enable four years vesting period, Cxense will renew its subscription
rights plan each year at the Annual General Meetings, whereby the preceding plan is closed for new grants when
the new plan takes effect.
There are no authorisations to the Board to acquire own shares. As and when such authorisation is adopted, the
Board will propose that the length of the authorisation be limited to a period ending at the next annual general
meeting.
Deviations from the Code of Practice: None
Annual report 2014
23
4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH CLOSE
ASSOCIATES
Cxense has one class of shares and each share carries one vote. Each share has a nominal value of NOK 5 per
share. Further information on voting rights at general meetings is provided under chapter 6 “General Meetings”.
The company places great emphasis on ensuring equal treatment of its shareholders. There are no trading
restrictions, voting restrictions or limitations relating only to non-residents of Norway under the Company’s articles
of association.
Over the last years, Cxense has been in need of raising equity on several occasions to fund its activities, which
also has caused a dilution of shareholdings of existing shareholders. In the authorisations to issue new shares
where the shareholders have resolved to waive the pre-emptive rights of existing shareholders, the rationale for
doing so has been included as part of the decision material presented to the general meeting. When such
transactions have been conducted, the justification has also been included in the announcements to the market.
All related-party transactions in effect have been and will be carried out on arm’s length basis. Any not immaterial
future related-party transactions shall be subject to an independent third-party valuation unless the transaction by
law requires shareholder approval. The company takes legal and financial advice on these matters when relevant.
Members of the Board and the management are obliged to notify the Board if they have any material direct or
indirect interest in any transaction contemplated or entered into by the Company.
Deviations from the Code of Practice: None
5. FREELY NEGOTIABLE SHARES
All shares are freely assignable, except for the shares held by management and board members that are subject
to a lock-up following the July 2014 IPO. The lock-up expires 1 July 2015. The articles of association do not
contain any restrictions on the shares. There are no shareholders’ agreements in effect that restrict assignability
of the Company’s shares. The company has however, by contract, imposed certain restrictions on the sale and
transfer of Shares by Employee Shareholders.
Deviations from the Code of Practice: None
6. GENERAL MEETINGS
The general meeting is the highest authority of Cxense, and provides a forum for shareholders to raise issues
with the Board. The Annual General Meeting has adopted the Articles of Association where topics such as the
agenda, notice period and attendance are regulated. Extraordinary General Meetings are held in accordance with
the provisions of the Public Limited Liability Companies Act, and may be called by the Board of Directors,
corporate assembly or Chairman of the corporate assembly.
Notification
The Annual General Meeting will be held by the end of June each year. The 2015 Annual General Meeting is
scheduled for May 13 2015.
Notice of a general meeting shall be sent no later than 21 days before the date of the general meeting. According
to the articles of association §12, the notice of the general meeting and related documents can be made available
on the Company’s website only. All documents will be made available in English.
Registration and proxies
The notice will provide information on the procedures shareholders must observe in order to participate in and
vote at the general meeting. The Board endeavours to provide comprehensive information in relation to each
agenda item in order to facilitate productive discussions and informed resolutions at the meeting.
Shareholders wishing to attend the general meeting, in person or by proxy, shall submit a written confirmation
electronically through the Company’s website or by mail or e-mail to the Company’s registrar DNB Bank ASA. The
Annual report 2014
24
confirmation of attendance must be submitted no later than two days prior to the general meeting. If a shareholder
does not notify the Company of his or her attendance in a timely manner, the Company may deny him or her
access to the general meeting.
Shareholders are entitled to request specific matters to the agenda of an Annual General Meeting, by given a
written notice to the Board of Directors in due time before the notice of the general meeting, however, no later
than one week before the notice is issued.
Shareholders who are unable to attend in person will be provided the option to vote by proxy. The notice shall
contain a proxy form as well as information of the procedure for proxy representation. At the meeting, votes shall
be cast separately on each subject and for each office/candidate in the elections. Consequently, the proxy form
shall to the extent possible, facilitate separate voting instructions on each subject and on each office/candidate in
the elections.
Agenda and execution
The agenda for the general meeting is set by the Board, and the main items are specified in §6 of the Articles of
Association.
The shareholders elect a person to chair the general meeting. The Board will arrange for an independent
candidate if so requested by shareholders.
To the maximum degree possible, all members of the Board and nomination committee shall be present at the
general meeting, together with the Company’s auditors.
The company will announce the protocol for the general meeting according to stock exchange regulations.
Deviations from the Code of Practice: None
7. NOMINATION COMMITTEE
The company’s nomination committee is regulated by §7 in the Articles of Association. The implementation of a
nomination committee was resolved at the Annual General Meeting 2 April 2014.
The nomination committee consists of three members, who are elected for a period of two years. The committee
and its chair are elected by the general meeting, which also decides on the remuneration of the committee.
The current nomination committee consists of Robert Keith, Per Axel Koch and John Markus Lervik. The
committee members were elected at the Board meeting dated 27 October 2014. In accordance with the
instructions for the nomination committee, the committee itself proposes new members of the committee and
remuneration of the committee members.
The nomination committee proposes candidates for election to the Board of Directors in the general meeting, and
recommends remuneration for members of the Board.
Deviations from the Code of Practice: None
8. CORPORATE ASSEMBLY AND BOARD OF DIRECTORS; COMPOSITION AND
INDEPENDENCE
Cxense does not have a Corporate Assembly.
Composition of the Board
Pursuant to the Articles of Association §5, the Board of Directors shall have three to six members, as decided by
the general meeting. As at 31 December 2014 the Board of Directors consisted of five members, whereof two
women and three men, and hence the gender diversity requirements pursuant to Norwegian legislation is met.
The members of the Board are elected for a period of two years and may be re-elected. The General Meeting
elects the Chairman of the Board.
Annual report 2014
25
Independence of the Board
The majority of Board are independent of the Company’s management and material business contacts and at
least two of the shareholder elected Board members are independent of the Company’s major shareholders. The
members of the Board are independent from the Company’s management, and the executive management is not
represented in the Board.
All Board members are required to make decisions objectively in the best interest of the Company, and the
presence of independent directors is intended to ensure that additional independent advice and judgment is
brought to bear.
Share ownership
The Board considers that at this stage of Cxense’s corporate development, it is beneficial for the Company and its
shareholders that also Board members are shareholders in the Company and encourages the members of the
Board to hold shares in the Company.
The Board pays attention to ensure that ownership shall not in any way affect or interfere with proper performance
of the fiduciary duties that the Board members and the management owe the Company and all shareholders. As
and when appropriate, the Board takes independent advice in respect of its procedures, corporate governance
and other compliance matters.
Deviations from the Code of Practice: None
9. THE WORK OF THE BOARD OF DIRECTORS
The Board’s tasks
The Board of Directors is elected by the shareholders to oversee the executive management and to assure that
the long-term interests of the shareholders and other stakeholders are being served.
The Board has the ultimate responsibility over the day-to-day management and the Company’s activities in
general. The main responsibility includes organization and planning of the Company, as well as control and
supervision of the operations. The Board shall also ensure that the organization of the accounting and funds
management includes satisfactory control.
The Board resolves an annual plan for its work, with particular emphasis on objectives, strategy and
implementation.
Instructions to the Board
The Board has issued instructions for its own work as well as for the Managing Director, to allocate the duties and
responsibility between the managing director and the Board. The instructions are based on applicable laws and
well-established practices. The current instructions were last amended by the Board in February 2014.
The Board instructions state that in situations when the Chairman cannot or should not lead the work of the
Board, the longest-serving Board member shall chair the Board until an interim Chairman has been elected by
and among the Board members present.
Audit committee
In accordance with the Public Companies Act, Cxense has established an audit committee. The main
responsibilities of the audit committee relate to financial reporting, audits, internal control and overall risk
management.
The audit committee was elected at the Board meeting April 29 2014 and consists of three members from the
Board: Grete Sønsteby, Stig Eide Sivertsen and Per Olav Monseth.
Annual report 2014
26
Compensation committee
The full Board serves as the compensation committee for Cxense. The compensation policy is reviewed annually.
The full Board determines the remuneration of the managing director and determines the overall salary
framework. The Chairman of the Board must approve the remuneration of the CEO. The remuneration of the
Board and the nomination committee is determined by the nomination committee.
Evaluation of the Board
The Board evaluates its performance and expertise annually.
Deviations from the Code of Practice:
In Cxense, the full Board serves as the compensation committee. With a compact Board of only five members,
the Board has determined that there is not a need for a separate compensation committee. The future need for
any such sub-committee is reviewed minimum annually in connection with the annual review of the Company’s
corporate governance practices.
10. RISK MANAGEMENT AND INTERNAL CONTROL
The Board has adopted internal rules and guidelines regarding, amongst other matters, risk management and
internal control. The rules and guidelines duly take into account the extent and nature of the Company’s activities
as well as the Company’s corporate values and ethical guidelines, including the corporate social responsibility.
The Board conducts an annual review of the Company’s most important areas of exposure to risk and its internal
control arrangements. The Board has appointed an audit committee to support the Board’s work related to
financial reporting, audits, internal control and overall risk management.
The management prepares monthly performance reports for review by the Board. In addition, quarterly financial
reports are prepared and reported to the financial market in accordance with the requirements from the Oslo
Stock Exchange. These quarterly reports are presented to the audit committee who reviews the reports prior to
the Board meeting. The auditor takes part in the audit committees meetings on an ad hoc basis and meets with
the entire Board for the presentation and approval of the annual financial statements.
The Board has adopted an insider manual with ancillary documents. The insider manual is intended to ensure
that, among other things, trading in the Company’s shares by Board members, executives and/or employees,
including close relations to the aforementioned, are conducted in accordance with applicable laws and
regulations.
Deviations from the Code of Practice: None
11. REMUNERATION OF THE BOARD OF DIRECTORS
The general meeting determines the remuneration of the Board, based on proposals from the nomination
committee. The remuneration shall reflect the Board’s responsibilities, competence, time spent and the complexity
of the business. The remuneration is not linked to performance, and none of the board members have share
options issued by the Company.
Beyond the scope of Board responsibility, Board members can from time to time take on certain consultancy
projects for the Company. Any Board member performing work for the Company beyond the Board duty shall
ensure that such assignments do not in any way affect or interfere with proper performance of the fiduciary duties
as a Board member. Moreover, the Board (without the participation of the interested member) shall approve the
terms and conditions of such arrangements. Adequate details shall be disclosed in the annual financial
statements.
Advokatfirma Ræder DA, in which the Chairman Morten Opstad is a partner, renders legal services to Cxense.
While the bulk of the legal services are carried out by lawyers at Advokatfirma Ræder other than Morten Opstad,
some of the services provided by Ræder may be carried out by Morten Opstad. Any such services, which would
be beyond Morten Opstad’s duties as Chairman, are billed by Ræder. Mr. Opstad abstains from voting on any
board matters concerning the Company’s affiliation with Advokatfirma Ræder DA.
Annual report 2014
27
An overview of the remuneration of the individual board members is described in the notes to the financial
statement in the Annual Report for 2014.
Deviations from the Code of Practice: None
12. REMUNERATION TO THE EXECUTIVE MANAGEMENT
Cxense offers market-based compensation packages for the executives and employees in order to attract and
retain the competence the Company needs. The exercise price for any share option is in line with the share price
at the time of the grant. The share option vest in tranches over four years. No so-called ‘golden parachutes’ are in
effect, and post-employment pay will only apply in case the Company invokes contractual non-competition
clauses.
The Board shall determine the compensation of the CEO. There is a maximum amount of cash incentive
remuneration per calendar year. It follows from the nature of the incentive share option program resolved by the
annual general meeting that the limit does not apply to the possible gain on share options. The Board has
adopted a policy for the CEO’s remuneration of the employees.
At the annual general meeting, the Board will present to the shareholders a statement of remuneration to the
management. The resolution by the annual general meeting is binding to the extent it relates to share-based
compensation and advisory in other aspects.
At the Annual General Meeting in 2014, Board remuneration for services from the Annual General Meeting in
2013 until the Annual General Meeting in 2014 was resolved as follows: Board members, who are not employees
of the Company, each received board remuneration of NOK 75,000. In addition, the Chairman of the Board
received an additional remuneration of NOK 25,000.
Deviations from the Code of Practice: None
13. INFORMATION AND COMMUNICATIONS
Investor relations
The Board places great emphasis on the relationship and communication with the shareholders. The primary
purpose of Cxense’s external information activities is to provide the financial markets sufficient information to
accurately value the shares in the Company. The information shall be presented factually and soberly, and be
issued by use of methods and channels that ensure simultaneous, fair and wide distribution of the information. All
information is published in English, which is the corporate language of Cxense.
The primary channels for communication are the interim reports, the annual report and the associated financial
statements. Cxense also issues other notices to shareholders when appropriate.
All reports and notices are issued and distributed according to the rules and practices at Oslo Stock Exchange,
and made available on the Company’s website and at www.newsweb.no.
Cxense has, in line with the Code of Practice, adopted an “IR Policy”. The CEO and the CFO are responsible for
communicating with the shareholders, stock exchange, analysts and the media, however all press releases and
stock exchange announcements shall be approved by the Chairman. The general meeting of shareholders
provides a forum for shareholders to raise issues with the Board.
The Board has adopted the following policies for information and investor relation:
Policy for reporting of financial and other information and investor relations;
Policy for contact with shareholders outside general meetings; and
Policy for information management in unusual situations attracting or likely to attract media or other
external interest.
Financial information
Cxense holds open investor presentations in association with its quarterly results. These presentations are open
to all, and provide an overview of the Company’s operational and financial performance in the previous quarter,
Annual report 2014
28
as well as an overview of the general market outlook and company’s own future prospects. These presentations
are also made available on the Company’s website.
The financial reporting of Cxense is fully compliant with applicable laws and regulations. Cxense prepares and
presents its interim and annual financial reports in accordance with IFRS. The interim reports are published on
Oslo Stock Exchange no more than 60 days after the close of the quarter, and the annual reports no later than the
end of April each year, in line with the regulations of Oslo Stock Exchange. The reports and other pertinent
information are also available at www.cxense.com.
Quiet period
Cxense practices a minimum of two weeks quiet period before scheduled interim and annual report publication
dates. In this period, no meetings or telephone conferences or similar with analysts, investors, press or other
parties of the financial market are held. Communication, if any, shall be limited to practical matters and – on
request – provision of statements and reports issued earlier.
Financial calendar
Cxense publishes an annual financial calendar for the following year; setting forth the dates for major events such
as its annual general meeting, publication of interim reports, any scheduled public presentations, any dividend
payment date if applicable, etc. The reports and other pertinent information are also available on the Company’s
website, www.cxense.com.
Deviations from the Code of Practice: None
14. TAKE-OVERS
Cxense has no takeover defence mechanisms in place. The Board will endeavour that shareholder value is
maximised and that all shareholders are treated equally. The Board shall otherwise ensure full compliance with
section 14 of the Code.
Deviations from the Code of Practice: None
15. AUDITOR
The company’s auditor is appointed by the general meeting and is responsible for the financial audit of the parent
company and the Group accounts. The auditor is fully independent of Cxense, and the Company represents a
minimal share of the auditor’s business.
The auditor annually presents a plan to the audit committee covering the main considerations for carrying out the
audit. Auditor participates in at least two meetings of the audit committee each year, whereof one of them the
Board meeting where the annual accounts are approved. The auditor will attend other meetings if requested.
The auditor presents the audit results to the audit committee and the Board at the approval meeting for the annual
accounts. The audit results includes a presentation of any material changes in the Company’s accounting
principles, significant accounting estimates and report any material matters in case of disagreements between the
external auditor and the management.
At least once per year, a meeting will be held between the auditor and the Board without the presence of the CEO
or other members of the executive management. The audit committee has a specific obligation to survey the
auditor’s independence and qualifications, and to propose candidates for external audit of the Company to the
general meeting.
Cxense does not obtain advice from its auditor on business strategy, operational execution, investment evaluation
or tax planning. The auditor may provide certain technical and clerical services in connection with the preparation
of the annual tax return and other secondary reports, for which Cxense ASA assumes full responsibility.
The auditor attends the Annual General Meeting and informs about the auditor’s report and remuneration for the
year.
Annual report 2014
29
Assignment to auditor
The Board has established written guidelines to the CEO in respect of assignments to the auditor other than the
statutory audit. The sum total of the audit firm’s fees and expenses for services which are not related to
assurance services shall not exceed 50% of the audit firm’s fees and expenses for the assurance service.
Before any assignment beyond assurance service is awarded to the auditor, it is the management’s duty to
carefully assess that (i) the assignment is in the best interest of Cxense, (ii) that the auditor is the optimal vendor
available, (iii) the assignment does not constitute a risk of compromising the integrity and independence of the
auditor and (iv) there is no conflict of interest. It is taken for granted that the audit firm’s staff engaged in providing
service beyond the mandatory audit is not engaged in the audit of the same service.
Members of Cxense’s management team or their close relations may not purchase any services from the audit
firm.
Deviations from the Code of Practice: None
--o--
Annual report 2014
30
Corporate social responsibility
GUIDELINES
Cxense aspires to achieve sustainable development by striking a good balance between financial results, value
creation, sustainability and CSR. The value created shall benefit owners, stakeholders and society-at-large.
Cxense operates worldwide within the IT, media and other industries. The company operates, from time to time,
in areas with less developed framework, as well as a lack of tradition and underdeveloped understanding for
labour rights, environmental protection, anti-corruption and human rights, compared to Norway.
Hence, Cxense has developed policies for ethics and social responsibility that constitute general principles and
guidelines for business practices and personal conduct, and provide a basis for the attitudes and values that
should govern the culture in Cxense.
The core principles for the CSR work in Cxense are based on four pillars: people, quality, safety and integrity. In
addition, the Company has adopted standards set by the UN Global Compact, International Labour Organisation
and Transparency International to ensure that it is in line with all relevant regulations related to sustainability and
CSR.
The principles and policies are intended to promote the Company’s long-term business goals, and is followed up
frequently by reporting the key performance to the Board of Directors.
The Board of Directors would like to thank all Cxense employees for their great contribution throughout the year.
HUMAN RIGHTS
Cxense adheres to the internationally recognised human rights described by the UN Universal Declaration of
Human Rights. This means that human rights abuses shall not occur in Cxense, and that the Company respects
labour rights, opposes any form of child labour, forced labour or discrimination, avoids corruption and is
considerate to the environment.
ORGANISATION AND EMPLOYEES
Working environment and demographics
As a company with global operations, Cxense has a goal of engaging its employees from a variety of nationalities
and cultural backgrounds, with the right competence and experience for the job.
The overall number of employees in Cxense grew from 101 employees at the end of 2013 to 105 employees by
the end of 2014, located in 15 different countries. At the end of 2014, 10 employees worked within the PCAN
business segment and 95 within the SaaS business segment. During the fourth quarter 2014, the Company cut
23 positions within the SaaS business segment as part of a process removing overlapping resources, reducing
the SaaS segment organization from 118 full-time employees (FTEs) at the end of third quarter 2014 to 95 at the
end of fourth quarter 2014. Of the 95 employees, there are 40 employees within the R&D organization, compared
with 39 at the end of 2013. Furthermore, 33.5 employees work within sales & marketing (21), whereof 27 within
front-end sales, 16 work within operations (25) and 5.5 within management, finance & administration (7).
Diversity and equality
Cxense shall be a healthy workplace where all employees are given opportunities for professional development.
All employees shall have equal opportunities for development, irrespective of gender, ethnicity or other
distinguishing characteristics.
By the end of 2014, Cxense had employees from 15 nationalities. Within the group, 19 out of the 105 employees
were women and 86 were men. For the PCAN segment, 6 out of 10 were women and for the SaaS segment 13
out of 95 were woman.
Annual report 2014
31
During the year, a new management group came in place with four men representing the management group. In
addition, the Company had 5 employees in executive positions in 2014. Of these, 20% were women and 80%
men. The Board of Directors comprised five members, two of whom are women.
When hiring new candidates, Cxense seeks to identify highly qualified candidates for all positions and maintain an
environment that is neutral and independent regardless of ethnic origin, religious beliefs or orientation, nationality
or other criteria not relevant to their work. Cxense does not classify its employees based on such criteria nor are
they considered relevant in relation for a career within the Company. Cxense believes in qualifications and
achievements as the key decision factors for employment, but will – everything else being equal – seek to employ
more women in leading positons to improve the gender balance. In addition, Cxense has a policy of equal pay for
equal work.
Competence raising
Being a knowledge intensive company, continuous learning and development among employees is imperative for
driving the business. We emphasise knowledge sharing and collaborative learning, ensuring a high competence
level across the organization.
Health and safety
Cxense has a strong commitment to the health, safety and welfare of its employees, their families and its
customers. The company has developed clear policies related to health, alcohol and drug use to support the
commitment for a safe and secure workplace.
Cxense seeks to create a good working environment with high job satisfaction. All employees are encouraged to
take advantage of flexible working hours to better balance their job with responsibilities at home.
Sick leave in 2014 was 0.97 %, compared with less than 3% in 2013. The sick leave remains well below the
national average of approximately 6 % for industrial employees and below the averages for the data/electronics
and ITC sub-segments of approximately 4 %. No work accidents that have caused personal injuries or material
damage occurred in 2014. Tailor-made interventions or suited work tasks are offered to prevent or minimise sick
leave when necessary.
All employees are free to be organised, and Cxense support the right to collective bargaining. Wages shall be
above the minimum to live on.
ANTI-CORRUPTION
Cxense has zero tolerance for corruption in any forms, including extortion and bribery. The company is committed
to following the regulations given by FCPA, UK Bribery Act and the Norwegian penal code, and has over the
years given significant attention to the Company’s active pursuit to prevent corruption and bribery.
The company recognises that some of the group’s operations are in countries with high level of acceptance for
corruption, as reported by Transparency International. Hence, Cxense follows the reports from Transparency
International closely and adjusts its level of precautions accordingly.
Going forward, the Company will continue to have a strong focus on compliance with anti-corruption work and to
maintain a high level of relevant training in the organization.
THE ENVIRONMENT
Cxense is committed to reduce its environmental impact and continually improving its environmental performance
as an integral and fundamental part of its business strategy and operations. The company has therefore
implemented an “Environmental policy and Environmental standard” which forms the basis for the Company’s
work for ensuring the development of environmental proactive measures.
Overall, Cxense’s operations results in minimal pollution of the natural environment. The company practices
recycling of paper at its offices where a system is available.
Annual report 2014
32
Group financial statements
Annual report 2014
33
CONSOLIDATED INCOME STATEMENT
USD 1,000 Note
Year Ended 31
December
2014
Year Ended 31
December
2013
Continuing operations:
Revenue 3, 4, 5 16 580 7 612
Operating expense
Cost of sales 3, 4, 5 4 301 2 728
Employee benefit expense 6 16 039 8 814
Depreciation & Amortisation expense 11 1 333 227
Other operating expense 7 9 352 4 209
Total operating expense 31 026 15 978
Net operating income/(loss) (14 446) (8 366)
Financial income and expense
Finance income 8 541 367
Finance expense 8 (382) (179)
Net financial income/(expense) 159 188
Net income/(loss) before taxes (14 287) (8 178)
Income tax expense 9 110 (15)
Net income/(loss) for the period from continuing
operations (14 397) (8 163)
Discontinued operations
Net income/(loss) for the period from discontinuing
operations 4 0 (24)
Total net income/(loss) for the period (14 397) (8 187)
Net income/(loss) attributable to:
Owners of the Company (14 266) (8 041)
Non-controlling interests (131) (147)
Earnings per share:
Basic and diluted 10 (0,0041) (0,60)
Statement of comprehensive income
Net income/(loss) for the period (14 397) (8 187)
Other comprehensive income:
- Currency translation differences 3 473 562
Total comprehensive income/(loss) (10 923) (7 625)
Total comprehensive income/(loss) attributable to:
Owners of the Company (10 793) (7 478)
Non-controlling interests (131) (147)
Annual report 2014
34
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
USD 1,000 Note
As of 31
December 2014
As of 31
December 2013
Assets
Non-current assets
Goodwill 11 3 807 3 807
Deferred tax asset 9 35 36
Intangible assets 11 4 309 5 429
Office machinery, equipment,etc. 11 483 295
Other financial assets 12 197 20
Total non-current assets 8 829 9 586
Current assets
Trade receivables 13 2 150 3 000
Other short-term assets 14 1 827 1 870
Cash and cash equivalents 15 2 828 8 843
Total current assets 6 805 13 714
Assets classified as " held for sale" 0 0
Total assets 15 635 23 300
Annual report 2014
35
USD 1,000 Note
As of 31
December 2014
As of 31
December 2013
Equity and liabilities
Equity
Share capital 16 2 477 2 713
Own shares - (56)
Other paid in capital 18 170 22 914
Currency translation differences 4 238 764
Retained earnings (15 097) (9 179)
Equity attributable to the holders of the Company 9 788 17 155
Non-controlling interest 20 (403) (272)
Total equity 9 385 16 883
Liabilities
Non-current liabilities
Deferred tax liabilities 9 480 654
Total non-current liabilities 480 654
Current liabilities
Trade payables 18 1 454 1 933
Current taxes 9 119 35
Other short-term liabilities 17 4 196 3 794
Total current liabilities 5 770 5 763
Liabilities related to assets "held for sale" 0 0
Total liabilities 6 250 6 417
Total equity and liabilities 15 635 23 300
Annual report 2014
36
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
USD 1,000
Nominal
share
capital
Own
shares
Other paid in
capital
Currency
translation
differences
Retained
earnings
Attributable to
owners of
parent
company
Non
Controlling
interest
Total
equity
Total equity as of 1 January 2013 2 269 0 13 803 201 (6 453) 9 820 (125) 9 695
Profit for the period (8 041) (8 041) (147) (8 187)
Other comprehensive income 562 562 562
Total comprehensive income/(loss) for 31
December 2013 0 0 0 562 (8 041) (7 478) (147) (7 625)
Reduction of paid in-capital (4 773) 4 773 0 0
Transaction costs (633) (633) (633)
Share- based payments 191 191 191
Increase in share capital 650 15 583 16 233 16 233
Purchase own shares (56) (56) (56)
Currency effects from translation of equity (206) 0 (1 256) 541 (922) (922)
Total equity as of 31 December 2013 2 713 (56) 22 914 764 (9 179) 17 155 (272) 16 883
USD 1,000
Nominal
share
capital
Own
shares
Other paid in
capital
Currency
translation
differences
Retained
earnings
Attributable to
owners of
parent
company
Non
Controlling
interest
Total
equity
Total equity as of 1 January 2014 2 713 (56) 22 914 764 (9 179) 17 155 (272) 16 883
Profit for the period (14 266) (14 266) (131) (14 397)
Other comprehensive income 3 473 3 473 3 473
Total comprehensive income/(loss) for YTD 2014 0 0 0 3 473 (14 266) (10 793) (131) (10 923)
Reduction of paid in-capital 0 0 0 0 0 0 0 0
Transaction costs 0 0 (416) 0 0 (416) 0 (416)
Share- based payments 0 0 412 0 0 412 0 412
Increase in share capital 292 0 7 300 0 0 7 592 0 7 592
Sales/Purhcase of own shares 0 46 0 0 0 46 0 46
Reclassification of equity 0 0 (6 817) 0 7 162 345 0 345
Currency effects from translation of equity (528) 10 (5 222) 0 1 187 (4 554) 0 (4 554)
Total equity as of 31 December 2014 2 477 0 18 170 4 238 (15 097) 9 788 (403) 9 385
Annual report 2014
37
CONSOLIDATED STATEMENT OF CASH FLOW
USD 1,000 Note
Year Ended 31
December 2014
Year Ended 31
December 2013
Cash flow from operating activities
Profit / (loss) before income tax (including disposal group) (14 397) 8 202
Adjustments:
Income tax payable (173)
Share- based payments 6 487 199
Result from investment in associates 12
Depreciation and amortization 11 1 334 227
Impairment
Net interest expense
Currency translation effects (870) (364)
Change in trade receivables 850 465
Change in trade payables (479) (544)
Change in other accrual and non-current items 223 409
Net cash flow from / (used in) operating activities (13 024) (7 810)
Cash flow from investing activities
Investment in furniture, fixtures and office machines 11 (399) (62)
Investment in intangible assets 11
Investment in associated companies 12 (112)
Investment in subsidiary (1) 3 (9 809)
Net cash effects from disposal of subsidiary (1) 4 55
Net cash flow from / (used in) investing activities (512) (9 816)
Cash flow from financing activities
Net proceeds from borrowings
Net proceeds from share issues 7 521 16 260
Proceeds from minority interest
Paid dividends
Interest paid
Net cash flow from / (used in) financing activities 7 521 16 260
Net increase/ (decrease) in cash and cash equivalents (6 016) (1 367)
Cash and cash equivalents at the beginning of the period 8 843 10 210
Cash and cash equivalents at the end of the period 2 828 8 843
Annual report 2014
38
Notes to the consolidated financial statements
NOTE 1 GENERAL INFORMATION
Cxense ASA, the parent company of the Cxense group (the Group) is a limited liability company incorporated and
domiciled in Norway, with its Head Office in Oslo. The Group is a global technology company delivering
innovative and intuitive products that help companies build unique online experiences.
The Board of Directors approved the Financial statements on March 26 2015.
This is the Group’s third audited consolidated financial statements, and covers the period from 1 January 2013 up
until 31 December 2014.
NOTE 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below.
Basis for preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and in accordance with the additional requirements
following the Norwegian Accounting Act.
The financial statements have been prepared on a historical cost basis.
Basis of consolidation
The Group’s consolidated financial statements comprise Cxense ASA and its subsidiaries. The subsidiaries are
fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to
be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent company, using consistent accounting policies. All intra-group
balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group
transactions are eliminated in full. A change in the ownership interest of a subsidiary, without a change of control,
is accounted for as an equity transaction.
Foreign currency
Functional currency, presentation currency and consolidation:
The Group’s presentation currency is USD. The functional currency of the Parent Company is NOK.
For consolidation purposes, the balance sheet figures for subsidiaries with a different functional currency than
USD are translated into the presentation currency (USD) at the rate applicable at the balance sheet date. Income
statements are translated at the exchange rate that approximate the prevailing rate at the date of transaction.
Exchange differences from translating subsidiaries are recognized in other comprehensive income. Currency
effects from translating equity items in the Parent company, are presented within equity.
Transactions in foreign currency
Foreign currency transactions are translated into the functional currency using the exchange rates at the
transaction date. Monetary balances in foreign currencies are translated into the functional currency at the
exchange rates on the date of the balance sheet. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation of monetary assets and liabilities denominated
in foreign currencies are recognized in the income statement.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment
charges. Depreciations are calculated on a straight-line basis over the assets expected useful life and adjusted for
Annual report 2014
39
any impairment charges. Expected useful lives of long-lived assets are reviewed annually and where they differ
significantly from previous estimates, depreciation periods are changed accordingly. Ordinary repairs and
maintenance costs are charged to the income statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and
are included in operating profit. Major assets with different expected useful lives are reported as separate
components.
Property, plant and equipment are reviewed for potential impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset exceeds its recoverable amount.
The difference between the assets carrying amount and its recoverable amount is recognized in the income
statement as impairment. Property, plant and equipment that have suffered impairment are reviewed for possible
reversal of the impairment at each reporting date.
Intangible assets
Intangible assets acquired separately that have a finite useful life are carried at cost less accumulated
amortisation and any impairment charges. Amortisation is calculated on a straight- line basis over the assets
expected useful life and adjusted for any impairment charges.
Internally generated intangible assets
Expenditures on research activities, undertaken with the prospects of gaining new technical knowledge and
understanding, are recognized in profit or loss as incurred.
Development activities shall be capitalised if specific requirements occur. The Group works continuously on
improving its technical platforms. This work involves both maintenance, research and development. Most of these
activities are very integrated and there is often no clear distinction between them, making it difficult to assess if
the activities are maintenance, research or development. Currently it is assessed that the Group cannot,
according to strict IFRS requirements, demonstrate how this work will generate probable future economic
benefits, and thus expenses in this respect have been expensed as incurred.
Goodwill
All business combinations are accounted for by applying the purchase method. Goodwill represents the difference
between the cost of the acquisition and the fair value of all identifiable assets and liabilities acquired.
Goodwill is not amortized, but tested yearly for impairment. Goodwill is allocated to the relevant cash-generating
unit, and if the related discounted cash flow does not exceed the carrying amount of goodwill, the goodwill will be
written down to its fair value
Trade receivables and other current receivables
Trade receivables and other current receivables are initially recognized at fair value plus any transaction costs.
The receivables are subsequently measured at amortised cost using the effective interest method, if the
amortisation effect is material, less provision for impairment. Other current receivables include prepayments, and
receivables on related parties.
Cash and cash equivalents
Cash and the equivalents include cash on hand, deposits with banks and other short-term highly liquid
investments with original maturities of three months or less.
Trade creditors
Trade creditors are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method, if the amortization effect is material.
Annual report 2014
40
Taxes
Income tax expense for the period comprises current tax expense and deferred tax expense.
Tax is recognized in the income statement, except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case the tax is also recognized in other comprehensive income
or directly in equity.
Deferred tax assets and liabilities are calculated on the basis of existing temporary differences between the
carrying amounts of assets and liabilities in the financial statement and their tax bases, together with tax losses
carried forward at the balance sheet date. Deferred tax assets and liabilities are calculated based on the tax rates
and tax legislation that are expected to apply when the assets are realized or the liabilities are settled, based on
the tax rates and tax legislation that have been enacted or substantially enacted on the balance sheet date.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available
against which the assets can be utilized. Deferred tax assets and liabilities are not discounted. Deferred tax
assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred taxes assets and liabilities relate to income taxes levied by the same taxation
authority on the same taxable entity.
The companies included in the consolidated financial statement are subject to income tax in the countries where
they are domiciled.
Revenue recognition
In general, revenue comprises the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Group’s activities. Revenue is presented net of value-added tax, returns,
rebates and discounts and after eliminating sales within the Group. The group recognize revenue when the
amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and
when specific criteria have been met for each of the Group’s activities as described below.
Sale of right to use software
Revenue from the use of the Groups technological platforms are recognized in the month the service is provided.
Revenue is based on fixed monthly software fees and/or royalty payments dependent on platform utilization.
There are few significant cut-off judgments to make for sales of software.
Revenue from advertising activities
The Group generates revenue from the sale of online advertising on the sites of various publishers. Amounts of
revenue generated are measured continuously, but are invoiced from the Group the following month.
Income received from advertisers and costs incurred from advertising agencies and publishers are presented
gross, which reflects that the Group do have separate transactions with separate counterparty risks. That is, the
Group does not act only as an agent in these transactions.
Segment reporting
An operating segment is a component of an entity that engages in business activities from which it may earn
revenues and incur expenses. Furthermore, the entity’s component’s operating results are regularly reviewed by
the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and
assess its performance, and thus separate financial information is available. Cxense is organized into two
operating segments Cxense SaaS and PCAN.
See note 5 for financial segment reporting.
Pension plans
The Group has a defined contribution plan for some of its employees. The Group’s payments are recognized in
the income statement as employee benefit expenses for the year to which the contribution applies.
Annual report 2014
41
Provisions
A provision is recognized when the Group has a present legal or constructive obligation as a result of past events,
it is probable (i.e. more likely than not) that an outflow of resources will be required to settle the obligation, and the
amount can be reliably estimated. At each balance sheet date the provisions are reviewed and adjusted to reflect
the current best estimate. Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation. The increase in the provision due to passage of time is recognized as finance
cost.
Leases (as lessee)
Financial leases
Leases where the group assumes most of the risk and rewards of ownership are classified as financial leases.
The group currently does not have any such leases.
Operating leases
Leases in which most of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the income statement on a straight-line basis over
the period of the lease.
Share-based payment
Some of the employees in the Group have been granted options to shares in the Company, if certain vesting
conditions are met. Equity settled share-based payments are measured at fair value of the equity instrument at
the grant date. The fair values calculated are expensed on a straight- line basis over the vesting period with a
corresponding entry in the equity (other paid in capital).
Government grants
Government grants, such as “Skattefunn” is recognized in profit and loss in the period it is granted for. The grants
are presented as a reduction of the applicable costs.
Government grants related to capitalized expenses are presented in the balance by deducting the grant in arriving
at the carrying amount of the asset.
Contingent liabilities
Contingent liabilities are not recognized in the financial statements. Significant contingent liabilities are disclosed,
with the exception of contingent liabilities where the probability of the liability occurring is remote.
Earnings per share
The calculation of basic earnings per share is based on the profit attributable to ordinary shares using the
weighted average number of ordinary shares outstanding during the year after deduction of the average number
of treasury shares held over the period.
The calculation of diluted earnings per share is consistent with the calculation of the basic earnings per share, but
gives at the same time effect to all dilutive potential ordinary shares that were outstanding during the period, by
adjusting the profit/loss and the weighted average number of shares outstanding for the effects of all dilutive
potential shares, i.e.:
• The profit/loss for the period attributable to ordinary shares is adjusted for changes in profit/loss that would result
from the conversion of the dilutive potential ordinary shares.
• The weighted average number of ordinary shares is increased by the weighted average number of additional
ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary.
Annual report 2014
42
2.2 IFRS AND IFRIC ISSUED BUT NOT ADOPTED BY THE GROUP
Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the group are listed below.
It is assessed that none of the standards, amendments and interpretation to existing standards will have material
impact on the Group’s financial statements.
Changes in accounting principles, new standards and interpretations
The Group implemented the following new accounting standards in 2014:
IFRS 10 Consolidated Financial Statements
The standard is based on the principle to use the term control as the decisive criteria to decide how an ownership
share in a company is to be treated in the Group financial statements. The standard puts more emphasis on
actual control than prior standards. The Group’s subsidiaries are mainly owned 100 %, either directly or indirectly
through the parent company Cxense ASA. The Groups investments in subsidiaries and associated companies are
evaluated in relation to IFRS 10. The implementation of this standard has not resulted in any changes.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary
Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using
proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using
the equity method. The implementation of this standard has not resulted in any changes.
IFRS 12 Disclosure of Involvement with Other Entities
New standards and interpretations not yet taken effect and not yet implemented
Except the changes in principles described above, the Group has elected not to early adopt any standards or
interpretations that have an adoption date after the balance sheet date. Below is an overview of the most central
Standards that have been adopted by the IASB, but not the EU.
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to
classification and measurement of financial assets and financial liabilities as defined in IAS 39. According to IASB
the standard is effective for annual periods beginning on or after 1 January 2015. EU has not yet decided on
effective date. The adoption of the first phase of IFRS 9 may have an effect on the classification and
measurement of the Group’s financial assets and financial liabilities.
IFRS 15 Revenue recognition
In the spring of 2014, the IASB adopted a new standard for revenue recognition. The standard establishes a
framework for recognition and measurement of revenue based on a fundamental principle that recognition of
revenue reflects the transfer of ownership of goods and services to the customer. The standard takes mandatory
effect on January 1, 2017.
Neither IFRS 9 nor IFRS 15 are approved by EU.
Preliminary assessments indicate that the standards will not result in considerable effects for the Group.
IASB has also adopted several small changes and clarifications in several different standards where the changes
have not yet been implemented.
It is not expected that any of these changes will have considerable effect for the Group.
Annual report 2014
43
NOTE 2.3 KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGEMENTS
The preparation of the financial statements in accordance with IFRS requires management to make judgements,
use estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are
considered to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed
on an ongoing basis. The management does not assess that there are any specific areas for which there have
been much estimation uncertainty.
Critical accounting judgements:
a) Capitalisation of intangible assets
Development costs have been expensed as incurred as described in the accounting policies above. The
management has thus assessed that the specific criteria in IAS 38 for capitalisation of development costs have
not been met.
b) Business combination
Assets acquired and liabilities assumed in acquiring the Emediate Group shall (with some exceptions) be
recognized at fair value at the acquisition date. Valuing intangible assets such as customer relationship and
technology are subject to substantial judgment. The purchase price allocation assessment has been performed by
the Company. See note 3 for further information.
NOTE 3 BUSINESS COMBINATIONS
On 15 November 2013, the group acquired 100% of the shares in Emediate Aps from Ad Pepper Media
International N.V. for USD 10,281 Thousands. Emediate Aps and its subsidiaries ("Emediate") is the Nordic
region’s largest ad serving company. By combining the Emediate ad serving technology with the unique audience
insight and targeting capabilities of the Cxense Extraordinary Insight Engine (EIE), Cxense believes it can create
a unique and future proof next generation ad serving technology.
USD 1,000
Fair value recognised
at acquisition
Intangible assets 5 610
Deferred tax asset 747
Office machinery, equipment, etc. 191
Trade receivables 1 592
Other short-term assets 239
Cash and cash equivalents 471
Total assets 8 851
Deferred tax liabilities on excess values (1 402)
Trade payables (167)
Other short-term liabilities (808)
Total short-term liabilities (2 377)
Total identifiable net assets 6 474
Goodwill 3 807
Total consideration 10 281
Annual report 2014
44
Acquisition-related costs of USD 0.44 million have been charged to other operating expenses in the consolidated
income statement for the year ended 31 December 2013.
The fair value of the acquired identifiable intangible assets was USD 5.61 million.. Identifiable intangible assets
consist of customer related assets USD 4.75 million and technology related assets USD 0.86 million are both
depreciated over 5 years.
Goodwill arises as a residual and is assumed to mainly comprise a) the ability to capture synergies from being
able to combine the Emediate market position with Cxense technology, and b) the assembled workforce of
Emediate.
Acquisition impact on 2013 Group results
Included in the 2013 profit/(loss) for the year is a net profit of USD 0.21 million from the business generated by
Emediate (includes amortisation of excess values). This contribution corresponds to the months of November and
December 2013 (i.e. from acquisiton effective date). SaaS segment revenues for 2013 includes USD 1.34 million..
Had the business combination been effective at 1 January 2013, the 2013 revenue of the Group would have been
UDS 16,340 thousands, and loss for the year would have been USD 8,179 thousands. From January to October
2013 (prior to the acquisition) the Emediate Aps entity included the Pentamind operations (13 R&D employees
that incurred additional cost but limited attributable revenues to the Emediate Aps entity). The Pentamind
operations did R&D work for the ad Pepper group that was not related to the Emediate advertising technology
business. With effect as of 31.10.2013 the Pentamind operations were carved out of Emediate Aps, thus it is the
Emediate November and December 2013 figures included in the Cxense SaaS segment that represents the run-
rate contribution from the acquired entity excluding the Pentamind operations..
NOTE 4 DISCONTINUING OPERATIONS
At the end of Q2 2013 Cxense negotiated an agreement to sell the PCAN subsidiary PPN AG to Tamedia AG, the
Swiss based media group. The transaction is effective as of July 1, 2013. PPN AG is presented as discontinuing
operations throughout this report.
Tamedia AG has been the most significant publisher in the Publisher Controlled Advertising Network alongside a
number of other publishers in the Swiss market. Tamedia states that the rationale for the transaction is to improve
the control of PPN and to use PPN as part of their strategy to develop an exclusive networked advertising offering
for their online publications. Tamedia’s intention is to continue to cooperate with the other existing publishers in
PPN around click-based performance advertising.
One hundred percent of the shares in PPN AG were sold for USD 0.1 million. Net assets from PPN AG included
in the consolidated accounts as of June 30, 2013 and presented as "held for sale" is USD 5 Thousand. The final
transaction values have subject to a separate audit of the PPN AG accounts and now fully finalized. The sale
resulted in a gain of USD 0.14 million.
Profit and loss from discontinuing operations:
USD 1,000
Year Ended
December 2013
Revenue 1 982
Operating expenses 2 139
Net operating income/(loss) (156)
Net finance (11)
Income tax expense 0
Gain from sale of discontinued operation 143
Net income/(loss) for the period from discontinuing operations (24)
Annual report 2014
45
(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was
sold effective from 1 July 2013.
(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was
sold effective from 1 July 2013. Cash effects acquisition in 2012 and disposal are not included cash flow
summary above.
NOTE 5 SEGMENT INFORMATION
For management purposes, the Group is organized into business units based on its product and services and has
two reportable segments:
- Cxense SaaS, which sells software-as-a-service applications based on the Extraordinary Insight Engine™
(EIE™) for real-time analysis of content, user context, and behavior. The EIE is fully integrated by a range of
applications (web analytics, recommendations, search and targeted advertising), which are used by Cxense
customers to improve their online businesses by increasing advertising revenue, page views, readership and
conversion. The business generated by Emediate is included in the Cxense SaaS segment below. Information
regarding revenue and Net income/(loss) generated by Emediate after the acquisition is disclosed in note 3.
- Publisher-Controlled Advertising Networks (PCANs) which sell online advertising on the sites of various
publishers, and distribute and share the advertising revenues generated in the network with publishers.
Segment performance is evaluated by the management based on operating profit or loss and is measured
consistently with operating profit in the financial statements. Transfer prices between operating segments are on
an arm's length basis in a manner similar to transactions with third parties.
Earnings per share:
Basic and diluted (0,000)
Cash flow from discontinuing operations
USD 1,000 YTD 2013
Net cash flow from operating activities (88)
Net cash flow from investing activities 0
Net cash flow from financing activities 0
Net cash inflow/(outflow) (88)
USD 1,000 As at 30 June 2013
Assets
Intangible assets 2
Office machinery, equipment etc. 5
Trade receivables 666
Other short term assets 66
Cash and cash equivalents 49
Total assets 787
Liabilities
Trade payables 673
Other short term liabilities 108
Total liabilities 781
Net assets included from discontinued operations 5
Annual report 2014
46
Discontinued operations:
To be consistent with the presentation in the income statement and statement of financial position, the PCAN
segment presented below is exclusive to the discontinued operations. Furthermore, Cxense SaaS sale to the
discontinued operation is presented as a sale to external customers.
Year ended 31 December 2014
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 13 866 2 714 0 16 580
Inter-segment 264 0 (264) 0
Revenues total 14 131 2 714 (264) 16 580
Cost of sales 2 521 2 045 (264) 4 301
Gross profit 11 610 669 (0) 12 279
Employee benefit expense 15 437 602 0 16 039
Depreciation & Amortization expenses 1 327 8 0 1 333
Other operating expense 9 015 337 0 9 352
EBIT (14 170) (278) (0) (14 446)
Net finance income/(expense) 159 0 0 159
Income tax income/(expense) (110) 0 0 (110)
Net income/(loss) before continuing operation (14 120) (278) (0) (14 397)
Net income/(loss) for the period from discontinuing operations 0 0 0 0
Total net income/(loss) for the period (14 120) (278) (0) (14 397)
Balance sheet information 31 December 2014
USD 1,000 Cxense SaaS PCAN
Eliminations
and unallocated Consolidated
Segment assets:
Non-current assets 8 604 29 197 8 829
Current assets
- Trade receivables 1 673 477 2 150
- Other short term assets 1 785 43 0 1 827
- Cash and cash equivalents 2 750 79 2 828
Total segment assets 14 811 627 197 15 635
Segment liabilities:
Non-current liabilities 480 0 0 480
Current liabilities 4 823 1 015 (67) 5 770
Total segment liabilities 5 302 1 015 (67) 6 250
Year ended 31 December 2013
USD 1,000 SaaS PCAN Eliminations Consolidated
Revenue
External customers 5 367 2 245 0 7 612
Inter-segment 206 2 (208) 0
Revenues total 5 573 2 247 (208) 7 612
Cost of sales 1 030 1 905 (206) 2 728
Gross profit 4 543 342 (2) 4 883
Employee benefit expense 8 390 427 (2) 8 814
Depreciation expenses 223 4 0 227
Other operating expense 3 970 239 0 4 209
EBIT (8 026) (327) 0 -8 366
Net finance income/(expense) 194 (6) 0 188
Income tax income/(expense) (3) 0 0 -3
Net income/(loss) before continuing operation (7 835) (333) 0 -8 163
Net income/(loss) for the period from discontinuing operations 0 (24) 0 -24
Total net income/(loss) for the period (7 835) (358) 0 -8 187
Balance sheet information 31 Dec 2013
USD 1,000 SaaS PCAN Eliminations Consolidated
Segment assets:
Non-current assets 9 543 24 20 9 586
Current assets
- Trade receivables 2 459 541 0 3 000
- Other short term assets 1 832 102 (63) 1 870
- Cash and cash equivalents 8 815 28 0 8 843
Total segment assets 22 643 695 (43) 23 300
Segment liabilities:
Non-current liabilities 654 0 0 654
Current liabilities 4 846 1 007 (92) 5 762
Total segment liabilities 5 501 1 007 (92) 6 417
Liabilities related to assets "held for sale" 0 0 0 0
Total segment liabilities 5 501 1 007 (92) 6 417
Geographic information
Revenues from external customers: 2 014 2 013
EMEA 13 423 7 568
Americas 1 774 984
Pacific 1 383 882
Total revenue from external customers 16 580 9 434
Annual report 2014
47
The revenue information above is based on the location of the entity generating the revenue and includes sales
generated by discontinued operations. Revenues from discontinued operations are included in the 2013
geographic information above, and have solely been booked to the EMEA segment. The acquisition of Emediate
Group is included in the 2014 figures and with November and December for the 2013 numbers.
Information about major customers
The Company does not have single customers that generate 10% or more of the entity's total revenue.
Year ended 31 December 2014
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 13 866 2 714 0 16 580
Inter-segment 264 0 (264) 0
Revenues total 14 131 2 714 (264) 16 580
Cost of sales 2 521 2 045 (264) 4 301
Gross profit 11 610 669 (0) 12 279
Employee benefit expense 15 437 602 0 16 039
Depreciation & Amortization expenses 1 327 8 0 1 333
Other operating expense 9 015 337 0 9 352
EBIT (14 170) (278) (0) (14 446)
Net finance income/(expense) 159 0 0 159
Income tax income/(expense) (110) 0 0 (110)
Net income/(loss) before continuing operation (14 120) (278) (0) (14 397)
Net income/(loss) for the period from discontinuing operations 0 0 0 0
Total net income/(loss) for the period (14 120) (278) (0) (14 397)
Balance sheet information 31 December 2014
USD 1,000 Cxense SaaS PCAN
Eliminations and
unallocated Consolidated
Segment assets:
Non-current assets 8 604 29 197 8 829
Current assets
- Trade receivables 1 673 477 2 150
- Other short term assets 1 785 43 0 1 827
- Cash and cash equivalents 2 750 79 2 828
Total segment assets 14 811 627 197 15 635
Segment liabilities:
Non-current liabilities 480 0 0 480
Current liabilities 4 823 1 015 (67) 5 770
Total segment liabilities 5 302 1 015 (67) 6 250
Year ended 31 December 2013
USD 1,000 SaaS PCAN Eliminations Consolidated
Revenue
External customers 5 367 2 245 0 7 612
Inter-segment 206 2 (208) 0
Revenues total 5 573 2 247 (208) 7 612
Cost of sales 1 030 1 905 (206) 2 728
Gross profit 4 543 342 (2) 4 883
Employee benefit expense 8 390 427 (2) 8 814
Depreciation expenses 223 4 0 227
Other operating expense 3 970 239 0 4 209
EBIT (8 026) (327) 0 -8 366
Net finance income/(expense) 194 (6) 0 188
Income tax income/(expense) (3) 0 0 -3
Net income/(loss) before continuing operation (7 835) (333) 0 -8 163
Net income/(loss) for the period from discontinuing operations 0 (24) 0 -24
Total net income/(loss) for the period (7 835) (358) 0 -8 187
Balance sheet information 31 Dec 2013
USD 1,000 SaaS PCAN Eliminations Consolidated
Segment assets:
Non-current assets 9 543 24 20 9 586
Current assets
- Trade receivables 2 459 541 0 3 000
- Other short term assets 1 832 102 (63) 1 870
- Cash and cash equivalents 8 815 28 0 8 843
Total segment assets 22 643 695 (43) 23 300
Segment liabilities:
Non-current liabilities 654 0 0 654
Current liabilities 4 846 1 007 (92) 5 762
Total segment liabilities 5 501 1 007 (92) 6 417
Liabilities related to assets "held for sale" 0 0 0 0
Total segment liabilities 5 501 1 007 (92) 6 417
Geographic information
Revenues from external customers: 2 014 2 013
EMEA 13 423 7 568
Americas 1 774 984
Pacific 1 383 882
Total revenue from external customers 16 580 9 434
Annual report 2014
48
NOTE 6 - EMPLOYEE BENEFIT EXPENSE
Specification of employee expense
See note 19 for information regarding remuneration to management.
Pensions
Cxense ASA (parent company) is required to have an occupational pension scheme in accordance with the
Norwegian law of mandatory occupational pension (lov om obligatorisk tjenestepensjon). The company's pension
scheme fulfills the requirements of that law.
The employees in the Group has pension rights that vary between the legal entities. However, all of the plans are
assessed to constitute defined contribution plans, and thus the Group has no liability except for each years'
contribution.
Share based payments
In September 2012 the Group established a share-based payment program for executives and senior employees
in the Group. The exercise price of the share options is equal to the market price of the Cxense ASA share on the
date of grant. The share options vest over a four-year period, if the employee still is employed by the Group.
The fair value of the share options is estimated at the grant date using the Black-Scholes option- pricing model,
taking into account the terms and conditions upon which the share options were granted.
The weighted average fair value of options granted during 2014 was NOK 66.94
Other inputs to the fair value measurement:
USD 1,000 2014 2013
Payroll expense 12 277 7 502
Share-based payments 487 199
Social security tax 1 622 888
Pensions 452 273
Other personnel expense 1 203 270
Presented as part of discontinued operations 0 (318)
Total employee benefit expense 16 039 8 814
Option series Number Grant date
Fair value per
option at
grant date
Numbers
outstanding
31.12.2014
31 400 24.08.2012 47,85 31 400
32 800 09.12.2012 59,81 32 800
9 800 22.04.2013 61,14 4 800
8 000 26.08.2013 61,14 8 000
24 800 14.10.2013 61,14 14 880
7 800 09.12.2013 66,46 4 200
18 000 22.01.2014 66,94 8 000
16 800 25.03.2014 66,94 16 800
Grant 7: January 2014
Grant 8: March 2014
Grant 1: August 2012
Grant 2: December 2012
Grant 3: April 2013
Grant 4: August 2013
Grant 5: October 2013
Grant 6: December 2013
Grant 1-6 Grant 7-8
Option life 4 years 4 years
70 % 70 %
Risk free interest rate 1,60 % 2,00 %
Expected dividends 0 0
Expected volatility
Annual report 2014
49
At 2 April 2014 Annual General Meeting, the shareholders adopted a new subscription rights plan available for
employees in the company and its subsidiaries and affiliated companies. All future grants of share-based
incentives shall be made under the subscription rights plan, while issued and outstanding share options under the
share option plan shall remain in effect in accordance with their terms.
The fair value of the subscription rights is estimated at the grant date using the Black-Scholes option- pricing
model,
Taking into account the terms and conditions upon which the subscription rights were granted.
Other inputs to the fair value measurement:
Number Grant date
Fair value
per Subscr.
R. at grant
date
Numbers
outstanding
31.12.2014
78 700 12.05.2014 66,94 57 100
Subscription rights series
Grant 1: May 2014
Grant 1
Subscription right life 4 years
70 %
Risk free interest rate 2,00 %
Expected dividends 0
Expected volatility
Annual report 2014
50
NOTE 7- OTHER OPERATING EXPENSES
Specification of other operating expense:
Grant 1
Subscription right life 4 years
70 %
Risk free interest rate 2,00 %
Expected dividends 0
Expected volatility
Subscription rights and share options
Share options terminated in 2014 54 720
Share options excersised in 2014 -
Share options expired in 2014 -
Vested share options 24 020
All Share options vest over 4 years
Numbers
outstanding
31.12.2014
Grant date Expiry dateWeighted
strike price
Options round 1 31 400 24.08.2012 24.08.2017 90
Options round 2 32 800 09.12.2012 09.12.2017 113
Options round 3 4 800 22.04.2013 22.04.2018 115
Options round 4 8 000 26.08.2013 26.08.2018 115
Options round 5 14 880 14.10.2013 14.10.2018 115
Options round 6 4 200 09.12.2013 09.12.2018 125
Options round 7 8 000 22.01.2014 22.01.2019 125
Options round 8 14 800 25.03.2014 25.03.2019 125
Total outstanding options 118 880
Subscription rights round 1 54 500 12.05.2014 12.05.2019 125
173 380 115
Subscription rights series
Total outstanding subscriptions
rights and options
USD 1,000 2014 2 013
Audit, legal and other consulting fees 4 169 1 876
Office rental and related expenses 1 121 526
Marketing and representation 967 729
Travel expenses 1 755 906
Other operating expense 1 340 271
Presented as part of discontinued operations 0 (100)
Total other operating expense 9 352 4 209
Annual report 2014
51
Specification of auditor's fees:
NOTE 8 - FINANCIAL INCOME AND EXPENSE
1) Refer to note 12 for further information.
NOTE 9 – TAX
Specification of income tax:
USD 1,000 2014 2 013
Statutory audit 78 109
Other assurance services 6 25
Tax advisory services - 21
Other advisory services 17 22
Total auditor's fees (excl. VAT) 101 177
USD 1,000 2014 2 013
Interest income 90 161
Currency income 450 206
Other finance income 0 0
Total finance income 541 367
Interest expense 8 1
Other financial expenses 20 7
Currency expenses 354 104
Investment in associate company 1) 0 66
Total finance expense 382 179
Net financial income/(expense) 159 188
USD 1,000
Income tax payable 390 37
Change in deferred tax -280 -53
Total income tax expense 110 -15
2014 2 013
Annual report 2014
52
Specification of tax effects of temporary differences:
Capitalization of deferred income tax assets is subject to strict requirements in respect of the ability to
substantiate that sufficient taxable profit will be available against which the unused tax losses can be utilized.
Based on these requirements deferred tax asset from Cxense ASA has not been recognized.
The major part of tax losses carried forward relates to the Parent Company, and for this part it is no time limit
related to when the tax losses may be utilized.
Reconciliation of effective tax rate:
Movements in defered tax:
2014 2013
Intangible assets -1 075 -1 332
Other temporary differences 661 644
Tax losses carried forward 7 068 5 270
Total basis for deferred tax 6 653 4 582
Deferred tax asset not recognised -7 098 -5 201
Deferred tax asset (+) / liability (-), 27% -445 -619
Of this:
Presented as deferred tax asset 35 36
Presented as deferred tax liability -480 -654
Net deferred tax asset (+) / liability (-) -445 -619
2014 2013
Profit before income tax -14 287 -8 203
Expected income tax assessed at the tax rate for the Parent company (27/28%) -3 858 -2 297
Adjusted for tax effect of the following items:
Permanent differences -94 -47
Change in not recognised deferred tax asset/valuation allowance 1 897 1 377
Withheld tax 318 0
Effect of different tax rate in subsidiary and currency effects 1 845 951
Total income tax expense 110 -15
Carrying amount net deferred tax assets (+)/ liabilities(-) at 31 December 2013 (619)
Recognised as income/expense (-) in income statement 280
Recognised from business acuisition 0
Effect from currency effects and other items (106)
Carrying amount net deferred tax assets (+)/ liabilities(-) at 31 December 2014 (445)
Annual report 2014
53
NOTE 10 EARNINGS PER SHARE
(1) A 1/200 share split was conducted on the annual general meeting April 2 2014.
The split has only effect for 2014.
(2) The Company has 173 380 potential dilutive shares from share options and subscription rights outstanding Since the Group has a loss for the year, and since the potential shares do not have a dilutive effect, they are not included in the calculation.
USD 1,000 2014 2013
Net income/(loss) for the year attributable to the parent
company (14 266) (8 041)
Weighted average number of shares outstanding for basic
earnings per share (1) 3 505 053 13 305
Earnings per share
- Basic (0,0041) (0,60)
- Diluted (2) (0,0041) (0,60)
Annual report 2014
54
NOTE 11 INTANGIBLE AND FIXED ASSETS
Capitalization of development expenses
Research and development (“R&D”) is a highly important component of innovation. The Company invests
substantial resources in research and development to enhance the applications and technology infrastructure,
develop new features, conduct quality assurance testing and improve the core technology. The Company expects
to continue to expand capabilities of the technology in the future and to invest significantly in continued research
and development efforts. These activities are very integrated and there is often no clear distinction between them,
making it difficult to assess if the activities are maintenance, research or development. It is assessed that in 2013
and 2014 these expenses does not qualify for capitalization. See note 2.1 for further information.
The estimated R&D share of operational costs for the years 2013 and 2014 were USD USD 5.5 million, and USD
8.7 million, respectively.
USD 1,000 Goodwill
Intangible
assets
Office
machinery,
equipment
etc. Total
Cost
Cost at 1 January 2013 2 145 147
- 65 65
Additions through business combinations 2) 3 807 5 614 191 9 612
Disposals - -3 -3
Currency effects -
Cost at 31 December 2013 3 807 5 616 398 9 821
- - 399 399
Disposals - - - -
Currency effects - - - -
Cost at 31 Decmeber 2014 3 807 5 616 797 10 220
Depreciation and impairment
Accumulated at 1 January 2012 - - - -
Amortisation and depreciation for the year - -187 -103 -290
Impairment - - - -
Accumulated at 31 December 2013 - -187 -103 -290
Amortisation and depreciation for the year - -1 122 -211 -1 333
Impairment - - - -
Disposals - - - -
Accumulated at 31 December 2014 - -1 309 -314 -1 623
Carrying amount at 1 January 2013 - 2 145 147
Carrying amount at 31 Decmeber 2013 3 807 5 429 295 9 531
Carrying amount at 31 Decmeber 2014 3 807 4 309 483 8 598
Depreciation plan Linear
Estimated useful life (years) 3-5 years
Additions 1)
Additions 1)
Annual report 2014
55
Goodwill and impairment
The Cxense Group is required to test, on an annual basis, whether goodwill has suffered any impariment. The
recoverable amount is determined based on value in use calculations. The use of this method requires the
estimation of future cash flows and the determination of a discount rate in order to calculate the present value of
the cash flows.
As at 31.12.2014 the Cxense Group had Goodwill of USD 3.8 million on the balance sheet. All the goodwill
related to the Cash Generating Unit (CGU) Emediate, following the purchase price allocation (PPA) of the
Emediate acquisition. This goodwill amount was tested for impairment in connection with the preparation of the
Q4 2014 report. The conclusion was that the goodwill has not suffered any impairment.
During 2014 Emediate lost some revenue generating customers, but the Emediate business was also re-
organized and synergies were captured that led to significant profitability margin increase.
In the value in use calculation the recoverable amount is estimated to exceed the carrying amount. The
recoverable value is estimated to USD 13 million. The following key assumptions have been applied to estimate
the recoverable amount:
Revenue growth of 5% in the 2015 – 2019 projection period
Terminal value growth of 2.5%
EBITDA margin of 32%
WACC of 11.9%
If any of the following changes were made to the above key assumptions, the recoverable amount would equal
the carrying amount.
Revenue growth: Reduction from 5% to -10%
Terminal value growth: Reduction from 2.5% to -6%
EBITDA margin: Reduction from 32% to 22%
WACC: Increase from 11.9% to 16.7%
NOTE 12 OTHER FINANCIAL ASSETS
(1) Investment in associated companies
Cxense has a 10% ownership in Matchad AB, an online advertising network. The company is incorporated in
Sweden.
Summarized financial information for Matchad AB:
USD 1,000 2014 2013
Investment in associated companies (1) 112 0
Other long term receivables 85 20
Other long term financial assets 197 20
USD 1,000 2014 2013
Total assets 813 227
Total liabilities -418 -1 090
Net assets 395 -863
Group's share of net assets: 79 -
2014 2013
Total revenue 1 609 809
Total profit for the year -874 -943
Group share of profit 1)-175 -94
Annual report 2014
56
NOTE - 13 TRADE RECEIVABLES
Trade receivables are non-interest bearing and are generally on 30-day terms.
As of 31 December, the age analysis of trade receivables is as follows:
Movements in allowance for doubtful debt:
NOTE 14 – OTHER SHORT-TERM ASSETS
(1) Includes Escrow account related to acquisition of Emediate Group of USD 1.1 million in 2014
NOTE 15 – CASH AND CASH EQUIVALENTS
USD 1,000 2014 2013
Trade receivables 2 600 3 300
Allowance for doubtful debts (450) (300)
Presented as assets "held for sale" 0 0
Total trade receivables 2 150 3 000
USD 1,000
Total
Neither past due
nor impaired
<30
days 31-90 days >90 days
2014 2 600 1 470 432 372 326
2013 3 300 1 981 931 246 143
Past due but not impaired
USD 1,000 2014 2013
Balance at the beginning of the year 300 30
Impairment losses recognized on receivables 224 300
Amounts written off during the year as uncollectible (64) (30)
Amounts recovered during the year (7) 0
Impairment losses reversed (3) 0
Balance at the end of the period 450 300
USD 1,000 2014 2013
Accrued income 150 6
Prepayments 164 141
Receivable on authorities and government grants 197 276
Other short-term receivables (1) 1 316 1 447
Other short term assets 1 827 1 870
USD 1,000 2014 2013
Bank deposits 2 828 8 843
Cash and cash equivalents 2 828 8 843
Annual report 2014
57
NOTE 16 – SHARE CAPITAL AND SHAREHOLDER INFORMATION
Warrants:
In connection with the Private Placement in the Company, the Board on June 10 2014 decided to issue two
warrants for every one share subscribed for and allocated in the Private Placement. The first warrant ("Warrant
A") would have a term expiring on July 4 2015 and an exercise price per share of NOK 140. The second warrant
("Warrant B") would have a term expiring on July 4 2016 and an exercise price per share of NOK 150. As of
December 31 2014, there are 718,434 outstanding warrants to shareholders in Cxense ASA.
Share options and subscription rights:
As of December 31 2014, there were 173,380 outstanding share options and subscription rights outstanding to
Cxense employees. This is a reduction compared to September 30 2014, where the company had 216,300 share
options outstanding to Cxense employees. The reduction is caused by cost reduction program that led to the
termination of the employment of employees with allocated share options that were not fully vested according to
the vesting schedule set out in the Company's share option and subscription rights programs.
Restricted cash included in the above:
Withholding tax in relation to employee benefits 363 182
All cash and cash equivalents are bank deposits.
Number of
shares
Share capital
NOK
Share capital
USD thousand
Balance at 1 January 2013 2 526 000 12 630 000 2 269
Issued during the year 796 400 3 982 000 444
Balance at 31 December 2013 3 322 400 16 612 000 2 713
Issued during the year 359 317 1 796 585 292
Currency effects from translation of equity -528
Balance as at 31 December 2014 3 681 717 18 408 585 2 477
Annual report 2014
58
20 largest shareholders registered in VPS as of 31 December 2014:
Number of shares owned directly or indirectly by Executives and Board of directors at 31 December 2014:
NOTE 17- OTHER SHORT-TERM LIABILITIES
Shareholder Number of shares % Share
CXVEST LIMITED 536 502 14,57
POLARIS MEDIA ASA 476 462 12,94
ASAH AS 407 492 11,07
SIMPSON FINANCIAL LT 163 800 4,45
STOREBRAND VEKST 129 892 3,53
MP PENSJON PK 118 895 3,23
PORTIA AS 104 000 2,82
HOME CAPITAL AS 103 076 2,80
FOLLO EIENDOM AS 99 770 2,71
VIOLA AS 83 138 2,26
GBBT AS 81 800 2,22
NORTH MURRAY AS 80 000 2,17
MIKITANI HIROSHI 80 000 2,17
DANIELSEN STEIN HARDY 75 400 2,05
ØHRN ALEKSANDER 73 000 1,98
CRESSIDA AS 70 076 1,90
M&L PRITCHARD HOLDIN 65 400 1,78
DNB NOR MARKETS, AKS 49 000 1,33
RAMS AS 40 000 1,09
STOREBRAND NORGE 39 400 1,07
Total top 20 shareholders 2 877 103 78,15
Others 804 614 21,85
Total 3 681 717 100,00
An updated list of the 20 largest shareholders can be found under the
Investor Relations section on the Cxense website (www.cxense.com)
Name Number of shares
% of total
shares
Number of
warrants
Number of
share options
Number of
subscription
rights
Morten Opstad (BoD), through
Marc O Polo Norge AS 5 800 0,2 % 1 600 - -
Stig Eide Sivertsen (BoD),
through Theoline AS 18 923 0,5 % 3 846 - -
Grete Sønsteby (BoD), through
Rearden 770 0,0 % 1 540 - -
Jørgen M. Loeng (CFO), through
JLO Invest AS 33 000 0,9 % 20 000 -
Ståle Bjørnstad (CEO) 1 538 0,0 % 3 076 12 500
Vigleik Takle, SVP Global
Operations 4 000 0,1 % 8 000 -
Aleksander Øhrn, (CTO) 73 000 2,0 % - 2 000
Total 137 031 3,7 % 10 062 28 000 14 500
USD 1,000 2014 2013
Public duties payables 551 331
Prepayments from customers 87 170
Accrued expenses 1 196 1 056
Salary-related provisions 999 805
Other current liabilities (1) 1 363 1 432
Total other short-term liabilities 4 196 3 794
Annual report 2014
59
(1) Includes the Escrow account related to the Emediate acquisition of USD 1.1 million in 2014
NOTE 18- FINANCIAL INSTRUMENTS
(a) Categories of financial instruments:
1) Prepaid expenses and accruals are excluded since they are not defined as financial instruments.
2) Accruals for incurred costs and prepayments are excluded since they are not defined as financial
instruments.
(b) Fair value of financial instruments:
The carrying amount of all of the Groups financial assets and liabilities is approximately equal to fair value since these instruments have a short term to maturity, and thus the time value is not material.
(c) Financial risk:
The most significant financial risks which affect the Group are listed below. The management performs a continuous evaluation of these risks and determines policies related to how these risks are to be handled within the Group.
Credit risk:
Carrying amounts of financial assets presented above represents the maximum credit exposure. The Group is
mainly exposed to credit risk related to trade receivables and cash and cash equivalents.
Trade receivables: The Group does not have specific procedures for assessing credit risks for its customers
before transactions are entered into. However, most of the transactions are of limited amounts and the Group
does not have significant credit risk associated with a single counter-party or several counterparties that can be
considered a group. During 2013 and 2014, the Group has not suffered significant credit-related losses, and
furthermore the Group has not noticed significant increases in delayed customer payments.
See note 13 for information about the ageing analysis of trade receivables.
Cash and cash equivalents: The counterparties for the Group's cash deposits are large banks that are assessed
to be solid. It is assumed that there is no material credit risk associated with these deposits.
Liquidity risk:
Liquidity risk is the risk of being unable to pay financial liabilities as they fall due. The Groups' approach to
managing liquidity risk is to ensure that it will always have sufficient liquidity to meet its financial liabilities as they
fall due, under normal as well as extraordinary circumstances, without incurring unacceptable losses or risking
damage to the Group’s reputation.
USD 1,000 Category 2014 2013
Financial assets:
Trade receivables Loans and receivables 2 150 3 000
Other receivables 1) Loans and receivables 1 808 1 743
Cash and cash equivalents Loans and receivables 2 828 8 843
Total financial assets 6 785 13 586
Financial liabilities:
Trade creditors Measured at amortised cost 1 454 1 933
Other current liabilities 2) Measured at amortised cost 0 2 237
Total financial liabilities 1 454 4 171
Annual report 2014
60
The Group’s financial liabilities are mainly trade payables, and are all short- term which fall due within 0 - 6
months. Due to current large cash positions, there is very limited liquidity risk as at 31 December.
Foreign exchange rate risk:
Entities included in this consolidated financial statement have various functional currencies (NOK, USD, AUD,
JPY, DKK, SEK and EUR). For the purpose of the disclosure provided below, currency risk arise balances in
currencies other than the respective functional currencies.
At 31 December 2014 and 2013 the Group is exposed to exchange rate risk mainly due to trade receivables and
payables in USD, EUR and DKK in the Parent Company, and SEK and EUR in Emediate ApS.
For currency conversion in this report, the following currency rates have been applied for one USD:
(d) Capital management
The primary focus of the Group's capital management is to ensure that it maintains a healthy equity ratio in order
to support its business and maximize shareholders value. The group manages its capital structure in light of
changes in economic and actual conditions. To maintain or adjust the capital structure, the Group may pay
dividends to shareholders, purchase treasury shares, issue new shares or sell assets to reduce debt. The Group
monitors its capital structure using an equity ratio, which is total equity divided by total assets. As at 31 December
2012, the equity ratio was 60% (72% as at 31 December 2013).
Sensitivity analysis 31 December 2014
Currency USD thousand
EUR 135
USD 55
DKK -69
SEK -52
Sensitivity analysis 31 December 2013
If the following currencies had strenghtened 10 % against the functional currency of the respective entities at 31
December 2014, the effect on the Group's profit would have been:
If the USD and EUR had strengthened 10% against the functional currency of the respective entities at 31 December
2013, the Group profit would have been USD 179 thousand lower before tax.
Profit and loss Balance sheet Profit and loss Balance sheet
NOK 0,1587 0,1345 0,170 0,163
AUD 0,9010 0,8190 0,968 0,887
JPY 0,0094 0,0084 0,010 0,010
DKK 0,1779 0,1633 0,178 0,185
SEK 0,1458 0,1291 0,153 0,154
EUR 1,3259 1,2157 1,328 1,377
20132014
Annual report 2014
61
NOTE 19- RELATED PARTY DISCLOSURES
Balances and transactions between the Company and its subsidiaries, which are related parties to the Company,
have been eliminated on consolidation and are not disclosed in this note. The group does not have other
transactions with related parties, except for remuneration to management as disclosed below:
Remuneration to management:
1) Commenced 18 November 2014
USD 1,000
Purchase of services from Description of services 2014 2013
Advokatfirma Ræder (1) Legal services 672 299
Theoline AS (2) Consulting services 64 45
(1) The Chairman of the Board in Cxense ASA is a partner in Advokatfirma Ræder.
(2) Stig Eide Sivertsen, Board member, is the owner of Theoline AS
USD 1,000
Balances with related parties Balance type 2014 2013
Advokatfirma Ræder Other Short Term Liabilties 125 239
Theoline AS Trade payables 0 0
all balance sheet figures incl. VAT
Year ended 31 December 2014
Position Salary
Pension
contribution
Share based
payment
Other
remuner
ation
Total
2014
John Markus Lervik (former CEO) 122 2 8 0 133
Raman Bhatnagar (former CEO) 171 3 120 0 295
Ståle Bjørnstad (new CEO) (1)105 2
52 0159
Jørgen M. Loeng (CFO) 144 3 32 0 179
Pål Petersen (CCO) 145 3 46 0 194
Aleksander Øhrn (CTO) 122 2 8 0 133
Mikal Rode (EVP, BusinessDev. & PCAN) 126 3 8 0 137
Jon T. Sviland (EVP,Business Development) 130 3 8 0 141
Vigleik Takle (EVP Global Operations) 125 3 31 0 159
Total 1 190 24 313 1 1 528
Annual report 2014
62
1) Commenced 1. November 2013 *) John Markus Lervik served as CEO until 21 March 2014 when Raman Bhatnagar was appointed group CEO by the Board of Directors
Remuneration to board of directors in the parent company:
The annual board remuneration amounted to USD 13,000 for each board member not employed by the Company.
No board remuneration was payable to board members who were also employed by the Company. Payment was
based on service period in the manner that payment was made for the period up until the 2013 annual general
meeting. Board members who were elected during the service period received a proportionate remuneration
based on the actual service period. The Chairman of the Board received an additional annual amount of USD
4,000 for serving in this capacity.
NOTE 20 – SUBSIDIARIES
On 1 November 2013 100% of the shares in Emediate Aps and its subsidiaries were purchased.
On 16 December 2014, Emseas Norway NUF was liquidated.
In Q4 2014 Cxense Group sold 5% of its holdings in PAN Spain to PAN Spain Management for EUR 5 thousand.
The transaction fulfils the original intention that Cxense should hold 51% and management 49%. Before the transaction, Cxense held 56% of the shares as temporary solution following changes to the PAN Management.
Year ended 31 December 2013
Position Salary
Pension
contribution
Share based
payment
Other
remuner
ation
Total
2013
John Markus Lervik (CEO) 121 3 0 1 125
Jørgen M. Loeng (CFO) 158 4 39 1 202
Otto Neubert (COO) 1) 28 3 0 0 31
Pål Petersen (CCO) 150 4 39 1 194
Raman Bhatnagar (EVP, Corporate Development) 1) 38 1 6 0 45
Aleksander Øhrn (CTO) 123 3 0 0 126
Stein H. Danielsen (Chief Architect) 123 3 0 0 126
Mikal Rode (EVP, BusinessDev. & PCAN) 123 3 0 1 127
Jon T. Sviland (EVP,Business Development) 133 4 0 1 138
Total 997 28 84 5 1 114
Place of
incorporation
Portion of
ownership and
voting power
Cxense Ltd. Cxense SaaS Australia 100 %
Cxense Co., Ltd. Cxense SaaS Japan 100 %
Cxense, Inc. Cxense SaaS USA 100 %
Cxense Inc. NV Holdings Cxense SaaS USA 100 %
Emediate Aps Cxense SaaS Copenhagen 100 %
Emseas Teknik AB (Emediate Sweden) Cxense SaaS Sweden 100 %
Emediate Norway NUF Cxense SaaS Norway 100 %
Premium Audience Network, s.l.u. PCAN Spain 51 %
Principal activity
according to segmentName of subsidiary
Annual report 2014
63
NOTE 21 – LEASES
NOTE 22 – CONTINGENT LIABILITIES
The Group has not been involved in any legal or financial disputes in Q4 2014 or Q4 2013, where an adverse
outcome is considered more likely than remote, except for the following case see note 15
NOTE 23 – EVENTS AFTER THE REPORTING PERIOD
Since December 31, 2014 and until the date of these financial statements, the Board of directors is not aware of
any matter or circumstance not otherwise dealt with in this report that has significantly or may significantly affect
the operations of the Consolidated Entity with the exception of the following:
On January 19, 2015 Cxense completed a successful private placement raising NOK 55 million in gross proceed
through the issue of 550 000 shares, each share at a subscription price of NOK 100. Based on the subscriptions
received and the allocation principles set out in the resolution on the Subsequent Offering by the extraordinary
general meeting held 11 February 2015, the board of directors resolved to allocate the maximum of 150,000
shares at a price per share of NOK 100, raising NOK 15 million in gross proceeds.
For further stock exchange notices please see www.cxense.com
Note 21 Leases
The Group has no finance leases.
USD 2014 2013
Lease office premises 689 366
Total lease costs 689 366
The future minimum rents related to non-cancellable leases fall due as follows:
USD 2014 2013
Within 1 year 179 478
1 to 5 years 510 36
After 5 years 0 -
Total 689 514
The Group has entered into operating leases for office facilities. The lease costs consist of ordinary lease payments
and include:
Annual report 2014
64
Financial statements for Cxense ASA
NOK Note 2 014 2013
Sales revenue 23 450 396 13 847 238
Other operating income 23 450 257 9 470 306
Total operating income 1, 10 46 900 652 23 317 544
Cost of sales 10 49 450 118 32 214 025
Staff costs 2, 3, 15 50 259 910 24 793 335
Depreciation 6 306 940 0
Other operating expenses 4 27 801 894 14 324 444
Total operating expenses 127 818 862 71 331 805
Result of operations -80 918 209 -48 014 260
Interest income from group entities 10 145 146 39 699
Other interest income 566 105 935 406
Other financial income 1 804 051 1 292 964
Total financial income 2 515 302 2 268 069
Interest expense to group entities 10 125 017 0
Write-down of financial fixed assets 0 86 800
Other Interest expenses 20 033 42
Other financial expenses 1 766 467 1 017 775
Total financial expenses 1 911 517 1 104 617
Net financial items 603 784 1 163 452
Operating result before tax -80 314 425 -46 850 808
Tax on ordinary result 5 -2 006 818 0
Operating result after tax -82 321 244 -46 850 808
Results of the year -82 321 244 -46 850 808
Transfers
Transfers to/from reserves 14 -79 255 527 -45 684 056
Transfers to/from other equity 14 -3 065 717 -1 166 752
Total transfers and allocations -82 321 244 -46 850 808
Annual report 2014
65
BALANCE SHEET CXENSE ASA
NOK Note 2 014 2013
ASSETS
Fixed assets
Tangible fixed assets
Equipment and other movables 6 1 793 770 0
Total tangible fixed assets 1 793 770 0
Financial fixed assets
Investments in subsidiaries 9 64 586 894 64 624 422
Loans to associates and joint ventures 10 3 433 870 2 095 625
Investments in shares 832 500 0
Total financial fixed assets 68 853 264 66 720 047
Total fixed assets 70 647 034 66 720 047
Current assets
Receivables
Trade debtors 7, 10 3 627 300 2 770 211
Other receivables 15 8 915 497 9 377 845
Group receivables 10 8 381 175 3 208 322
Total receivables 20 923 973 15 356 378
Bank deposits, cash in hand, etc 8 10 958 264 47 170 270
Total bank deposits, cash in hand, etc 10 958 264 47 170 270
Total current assets 31 882 237 62 526 648
Total assets 102 529 271 129 246 695
Annual report 2014
66
NOK Note 2 014 2013
EQUITY AND LIABILITIES
Equity
Paid-in capital
Share capital 11, 12, 13 18 408 585 16 612 000
Own shares 14 0 -15 000
Share premium reserve 14 52 740 167 89 311 873
Total paid-in capital 71 148 752 105 908 873
Retained earnings
Retained earnings 14 0 0
Total retained earnings 0 0
Total equity 71 148 752 105 908 873
Liabilities
Current liabilities
Trade creditors 3 476 620 4 282 404
Public duties payable 3 106 535 1 917 378
Group payables 10 8 017 735 1 985 730
Other short term liabilities 15 16 779 628 15 152 309
Total current liabilities 31 380 518 23 337 821
Total liabilities 31 380 518 23 337 821
Total equity and liabilities 102 529 271 129 246 695
Annual report 2014
67
STATEMENT OF CASH FLOW CXENSE ASA
NOK Note 2 014 2013
Cash flow from operating activities
Profit / loss (-) before income tax -80 314 425 -46 850 808
Taxes paid in the period -2 006 818 0
Gain/loss from investment in associates -4 149 426 237
Depreciation of financial assets 0 86 800
Depreciation of fixed assets 306 940 0
Share based payments 3 065 717 1 166 752
Change in trade receivables 2 098 386 -2 393 185
Change in trade payables -805 784 3 381 608
Change in other accrual and non-current items -155 747 6 818 568
Currency translation effects 0 -367 478
Net cash flow from / used in (-) operating activities -77 815 880 -37 731 506
Cash flow from investing activities
Purchase of fixed assets -2 100 708 0
Proceeds from sale of shares 41 677 595 763
Purchase of shares and investments in other companies -832 500 -63 938 713
Net cash flow from / used in (-) investing activities -2 891 531 -63 342 950
Cash flow from financing activities
Net proceeds from share issue 44 495 405 95 187 700
Net cash flow from / used in (-) financing activities 44 495 405 95 187 700
Net increase / decrease (-) in cash and cash equivalents -36 212 006 -5 886 756
Cash and cash equivalents at the beginning of the period 47 170 270 53 057 026
Cash and cash equivalents at the end of the period 10 958 264 47 170 270
Annual report 2014
68
Notes to the annual financial statements Cxense ASA
Accounting Principles
The financial statements have been prepared in accordance with the Norwegian Accounting Act and generally
accepted accounting principles in Norway. All amounts are in NOK
Revenue recognition
In general, revenue comprises the value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is presented net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. Sale of right to use software Revenue from the use of the Groups technological platforms is recognized in the month the service is provided. Revenue is based on fixed monthly software fees and/or royalty payments dependent on platform utilization. There are few difficult judgments in determining the amount of revenue. Revenue from advertising activities
The Group generates revenue from the sale of online advertising on the sites of various publishers. The Group receives a pre-determined share of the revenue generated in the network with the publishers. Amounts of revenue generated is measured continuously, but are invoiced from the Group the following month. Income received from advertisers and costs incurred from advertising agencies and publishers are presented
gross, which reflects that the Group do have separate transactions with separate counterparty risks. That is, the
Group does not act only as an agent in these transactions.
Balance sheet classification
Current assets and short term liabilities consists of items linked to the inventory cycle. For current assets except
trade, debtors are included items receivable and payables due within one year after transaction day. Other
balance sheet items are classified as fixed assets/long term liabilities.
Current assets are valued at the lower of cost and fair value. Short- term liabilities are recognized at nominal
value at date of establishment.
Assets are valued at cost less depreciation and impairment losses. Long- term liabilities are recognized at
nominal value at date of establishment
Accounts receivable and other receivables
Accounts receivable and other current receivables are recorded in the balance sheet at nominal value less
provisions for doubtful accounts. Provisions for doubtful accounts are based on an individual assessment of the
different receivables. For the remaining receivables, a general provision is estimated based on expected loss.
Fixed assets
Fixed assets are capitalized and depreciated over the asset’s estimated life if the estimated life is expected to be
more than 3 years and the asset’s cost exceeds NOK 15 000. Direct maintenance of assets are expensed as
incurred as operating cost, while additions and improvements are added to the cost of asset to be depreciated as
the asset itself.
Income tax
The tax expense consists of the tax payable and changes til deferred tax. Deferred tax is calculated as 28 percent
of temporary differences and the tax effect of tax losses carried forward.
Annual report 2014
69
Taxable and deductible temporary differences which reverse or can reverse in same period are offset and the tax
impact is calculated on a net basis.
Foreign currencies
Assets and liabilities in foreign currencies are valued at the exchange rate on the balance sheet date.
NOTE 1- OPERATING INCOME
NOTE 2 - PAYROLL EXPENSES, NUMBER OF EMPLOYEES, REMUNERATIONS ETC.
The average number of employees in the accounting year has been 45.
Share based payments
In 2012 the company established a share-based payment program for executives and senior employees in the
company. The exercise price of the share options is equal to the marked price of the Cxense ASA share on the
date of grant. The share options vest over a four-year period, if the employee still is employed by the company.
The fair value of the share options is estimated at the grant date using the Black-Scholes option- pricing model,
Taking into account the terms and conditions upon which the share options were granted.
The weighted average fair value of options granted during 2014 was NOK 66.94.
Specification of operating
income2014 2013
Sales revenues 23 450 397 13 847 238
License income 10 916 308 5 524 799
Royalty income 8 025 704 3 945 507
Management fee 4 508 244
Total operating income 46 900 652 23 317 544
Payroll expenses 2014 2013
Salaries/wages 38 745 200 19 596 404
Share based payment 3 065 717 1 166 752
Sosial security fees 5 114 451 2 749 104
Pension costs 668 387 451 385
Other remuneration 2 666 155 829 690
Total 50 259 910 24 793 335
Option series Number Grant date Expiry dateExercise
price
Fair value per
option at grant
date
Numbers forfeited
during 2014
Numbers outstanding
31.12.2014
31 400 24.08.2012 24.08.2016 90 47,85 0 31 400
32 800 09.12.2012 09.12.2016 113 59,81 0 32 800
9 800 22.04.2013 22.04.2017 115 61,14 5 000 4 800
8 000 26.08.2013 26.08.2017 115 61,14 0 8 000
24 800 14.10.2013 14.10.2017 115 61,14 9 920 14 880
7 800 09.12.2013 09.12.2017 125 66,46 3 600 4 200
18 000 22.01.2014 22.01.2018 125 66,94 10 000 8 000
16 800 25.03.2014 25.03.2018 125 66,94 0 16 800
Grant 7: January 2014
Grant 8: March 2014
Grant 1: August 2012
Grant 2: December 2012
Grant 3: April 2013
Grant 4: August 2013
Grant 5: October 2013
Grant 6: December 2013
Annual report 2014
70
At the 2 April 2014 Annual General Meeting, the shareholders adopted a new subscription rights plan available for
employees in the company and its subsidiaries and affiliated companies. All future grants of share-based
incentives shall be made under the subscription rights plan, while issued and outstanding share options under the
share option plan,shall remain in effect in accordance with their terms.
The fair value of the subscription rights is estimated at the grant date using the Black-Scholes option- pricing
model, taking into account the terms and conditions upon which the subscription rights were granted.
NOTE 3 – REMUNERATION TO EXECUTIVES
The managing director has a cash bonus agreement whereby he may receive an annual bonus maximized to 25
per cent of his base salary, subject to attainment of certain bonus objectives/milestones. The managing director,
Board Chairman or other related parties have not been granted loans/sureties.
Mr. Ståle Bjørnstad was appointed CEO November 18, 2014.
NOTE 4 – AUDIT FEE
Other inputs to the fair value measurement:
Grant 1-6 Grant 7-8
Option life 4 years 4 years
Expected volatility 70 % 70 %
Risk free interest rate 1,60 % 2,00 %
Expected dividends 0 0
Number Grant date
Fair value
per Subscr.
R. at grant
date
Numbers
outstanding
31.12.2014
78 700 12.05.2014 66,94 57 100
Grant 1
Subscription right life 4 years
70 %
Risk free interest rate 2,00 %
Expected dividends 0
Subscription rights series
Expected volatility
Other inputs to the fair value measurement:
Grant 1: May 2014
Managing director BoD
Salaries 1 120 457 0
Pension costs 33 000 0
Other remuneration 4 394 250 000
Total 1 157 851 250 000
2014 2013
Statutory audit 220 000 228 225
Other assurance services 0 0
Tax advisory fee (incl. technical assistance with tax return) 0 0
Other assistance 140 550 108 650
Total audit fees 360 550 336 875
Annual report 2014
71
VAT is not included in the audit fee
NOTE 5 – TAXES
Based on the objective of care deferred tax benefits of NOK 52 762 663 are not reflected in the balance 31.12.
The company have not booked any withholding tax assets in the balance sheet as of December 31, 2014.
2014 2013
Income before taxes -80 314 423 -46 850 808
Permanent differences -2 191 821 -564 804
Change in temporary differences 476 209 153 276
Change in losses carried forward 82 030 035 47 262 336
Taxable income 0 0
2014 2013
Tax payable 0 0
Tax effect of group contribution 0 0
Tax payable 0 0
2014 2013
27/28 % of income before taxes -21 684 894 -13 118 226
27/28 % of permanent differences -591 792 -158 145
Deferred tax asset not recognised 22 276 686 13 276 371
Withheld tax abroad 2 006 818 0
Tax on ordinary result 2 006 818 0
Calculation of deferred tax/deferred tax benefit
Temporary differences 2014 2013
Fixed assets 317 929 0
Current assets -319 464 -121 348
Current liabilities -835 807 -239 785
Net temporary differences -837 342 -361 133
Tax losses carried forward -194 579 929 -112 549 894
Basis for deferred tax -195 417 271 -112 911 027
Deferred tax -52 762 663 -30 485 977
Deferred tax benefit not shown in the balance sheet 52 762 663 30 485 977
Deferred tax in the balance sheet 0 0
Annual report 2014
72
NOTE 6 – FIXED ASSETS
NOTE 7 – TRADE DEBITORS
Trade debtors are recorded in the balance sheet at nominal value less expected losses on debt.
It has been recognized a loss of NOK 206 627 in trade debtors during 2014.
NOTE 8 – RESTRICTED BANK DEPOSITS
Included in bank deposits is account for withheld employee taxes amounting to NOK 1 792 973. Withheld
employee taxes are amounting NOK 1 788 936.
Fixed assets Equipment Machines
Total fixed
assets
Purchase cost 01.01. 0 0 0
Additions 239 992 1 860 716 2 100 708
Disposals 0 0 0
Purchase cost 31.12. 239 992 1 860 716 2 100 708
Accumulated depreciation 31.12. 48 505 258 433 306 940
Net book value 31.12. 191 487 1 602 283 1 793 770
Depreciation in the year 48 505 258 433 306 940
Expected useful life 3 years 3 years 3 years
Depreciation plan Straight line Straight line Straight line
Specification trade debtors 2014 2013
Trade debtors nominal value 4 091 475 3 041 013
Bad debts provision -464 174 -270 802
Trade debtors in the balance sheet 3 627 300 2 770 211
Annual report 2014
73
NOTE 9 – INVESTMENTS IN SUBSIDIARIES, ASSCOCIATED COMPANIES AND JOINT VENTURES
*) Emseas Teknik AB is a 100% owned subsidiary of Emediate ApS
cXense Co. Ltd Japan 100 % 709 015
cXense Ltd. Australia 100 % 0
cX Inc. NA holding USA 100 % 29 980
Emediate ApS Denmark 100 % 63 465 113
Emseas Teknik AB Sweden 100 % (* 0
Premium Audinece Network S.L. Spain 51 % 382 786
LocationOwnership/
voting rightsCompany
Booked
value
Annual report 2014
74
NOTE 10 – INTERCOMPANY BALANCES AND TRANSACTIONS
Receivables subsidiaries 2014 2013
cXense Ltd 454 354 0
Premium Audience
Network S.L.4 246 616 2 479 150
cXense Co. Ltd 274 725 213 148
cXense Inc. NA Holding 5 712 287 2 611 648
Emediate Aps 1 127 061 0
Total group receivables 11 815 045 5 303 947
Intercompany interest
income2014 2013
Premium Audience
Network Spain136 784 39 699
cXense Ltd 8 362 0
Total interest income from group companies 145 146 39 699
Payables subsidiaries 2014 2013
cXense Ltd 304 709 172 062
Premium Audience
Network S.L.0 14 750
cXense Co. Ltd 841 478
cXense Inc. NA Holding 1 861 332 1 798 919
Emediate Aps 5 010 216 0
Total group payables 8 017 735 1 985 730
Intercompany interest
cost2014 2013
Emediate Aps 125 017 0
Total interest cost from group companies 125 017 0
Specification of intercompany revenue 2014 2013
Royalty income cXense
Co. Ltd8 025 704 3 945 507
License income cXense
Inc. NA holding10 916 308 4 062 414
Emediate ApS 4 508 244 0
Sales revenues PAN Spain 1 666 194 1 157 442
Total 25 116 450 9 165 363
Specification of intercompany costs 2014 2013
Services bought from
cXense Ltd.13 638 223 9 138 269
Services bought from
cXense Inc. NA holding22 355 308 11 922 317
Services bought from
cXense Co. Ltd 7 244 922 5 466 472
Total 43 238 453 26 527 058
Annual report 2014
75
NOTE 11 – SHARE CAPITAL
The share capital of NOK 18 408 585 consists of 3 681 717 shares, with a nominal value of NOK 5 each.
The company has one class of shares.
NOTE 12 – SHAREHOLDER INFORMATION
20 largest shareholders registered in VPS as of 31 December 2014:
NOTE 13 – SHAREHOLDINGS OF SENIOR EXECUTIVES
Number of shares owned directly or indirectly by Executives and Board of directors at 31 December 2014
Shareholder Number of shares % Share
CXVEST LIMITED 536 502 14,57
POLARIS MEDIA ASA 476 462 12,94
ASAH AS 407 492 11,07
SIMPSON FINANCIAL LT 163 800 4,45
STOREBRAND VEKST 129 892 3,53
MP PENSJON PK 118 895 3,23
PORTIA AS 104 000 2,82
HOME CAPITAL AS 103 076 2,80
FOLLO EIENDOM AS 99 770 2,71
VIOLA AS 83 138 2,26
GBBT AS 81 800 2,22
NORTH MURRAY AS 80 000 2,17
MIKITANI HIROSHI 80 000 2,17
DANIELSEN STEIN HARDY 75 400 2,05
ØHRN ALEKSANDER 73 000 1,98
CRESSIDA AS 70 076 1,90
M&L PRITCHARD HOLDIN 65 400 1,78
DNB NOR MARKETS, AKS 49 000 1,33
RAMS AS 40 000 1,09
STOREBRAND NORGE 39 400 1,07
Total top 20 shareholders 2 877 103 78,15
Others 804 614 21,85
Total 3 681 717 100,00
Name Number of shares
% of total
shares
Number of
warrants
Number of share
options
Number of
subscription
rights
Morten Opstad (BoD), through
Marc O Polo Norge AS 5 800 0,2 % 1 600 - -
Stig Eide Sivertsen (BoD), through Theoline AS 18 923 0,5 % 3 846 - -
Grete Sønsteby (BoD), through Rearden 770 0,0 % 1 540 - -
Jørgen M. Loeng (CFO), through JLO Invest AS 33 000 0,9 % 20 000 -
Ståle Bjørnstad (CEO) 1 538 0,0 % 3 076 12 500 -
John Markus Lervik, (Founder), through ASAH AS 407 492 11,1 % 15 384 2 000
Vigleik Takle, SVP Global Operations 4 000 0,1 % 8 000 -
Aleksander Øhrn, (CTO) 73 000 2,0 % - 2 000
Total 544 523 14,8 % 25 446 40 500 4 000
Annual report 2014
76
NOTE 14 – SHAREHOLDER EQUITY
NOTE 15 – SHORT- TERM ASSETS AND LIABILITIES
Cxense ASAShort-term assets and liabilities includes an Escrow account related to the Emediate acquisition of
NOK 8.4 million in 2014.
NOTE 16 – MANDATORY OCCUPATIONAL
Cxense ASA is required to have an occupational pension scheme in accordance with the Norwegian law of
mandatory occupational pension. The company’s pension scheme fulfils the requirements of the law. The
company has established a defined contribution scheme for all employees.
Specification of EquityShare capital Own shares
Share premium
reserve
Other paid-in
equity
Retained
earningsTotal
Equity 01.01.2014 16 612 000 -15 000 89 311 873 0 0 105 908 873
Share based payments 3 065 717 3 065 717
Increase in share capital 1 796 585 44 914 625 46 711 210
Share Issue costs -2 560 805 -2 560 805
Sale of own shares 15 000 330 000 345 000
Loss for the period -79 255 527 -3 065 717 -82 321 244
Equity 31.12.2014 18 408 585 0 52 740 167 0 0 71 148 752
Annual report 2014
77
Statement by the Board of Directors and the Chief Executive Officer
We confirm to the best of our knowledge that: the consolidated financial statements for 2014 have been prepared
in accordance with IAS as adopted by the EU, as well as additional information requirements in accordance with
the Norwegian Accounting Act, and that the financial statements for the parent company for 2014 have been
prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in
Norway, and that the information presented in the financial statements gives a true and fair view of the
Company’s and the Group’s assets, liabilities, financial position and results for the period viewed in their entirety,
and that the Board of Directors’ report gives a true and fair view of the development, performance and financial
position of the Company and the Group, and includes a description of the material risks that the Board of
Directors, at the time of this report, deem might have a significant impact on the financial performance of the
Group.
Cxense ASA
Oslo, 26 March 2015
Morten Opstad
Chairman
Per Olav Monseth
Board member
Stig Eide Sivertsen
Board member
Grete Sønsteby
Board member
Kjersti Wiklund
Board member
Ståle Bjørnstad
Chief Executive Officer
Annual report 2014
78
Auditors report
Annual report 2014
79
Annual report 2014
80
OFFICE LOCATIONS
North America Latin America Japan Europe Asia Pacific
New York City, NY Buenos Aires,
Argentina
Tokyo, Japan Oslo, Norway
(Corporate HQ)
Melbourne, Australia
Cxense, Inc.
1180 Avenue of the
Americas
Rockefeller Center
NY 10036
USA
Cxense Argentina
Victoria Ocampo 360
Puerto Madero
Ciudad de Buenos Aires
Argentina
Cxense Co., Ltd.
Cerulean Tower 15F
26-1, Sakuragaoka-cho,
Shibuya-ku
Tokyo, 150-8512
Japan
Cxense ASA
Sommerrogaten 17
P.O. Box 2920 Solli
NO-0230 Oslo,
Norway
Cxense Australia Pty Ltd
Suite 20/717 Bourke
Street
Docklands 3008
Melbourne Victoria
Australia
Miami, FL Rio de Janeiro, Brazil Stockholm, Sweden Singapore
Cxense Latin America
Suite 232, 4801 South
University Drive Davie,
FL 33328
USA
Cxense Brazil
Praia Botafogo, 300 -
Botafogo
22250-040 Brazil
Cxense Sweden
Emseas Teknik AB
Drottninggatan 67
111 36 Stockholm
Sweden
Cxense Asia
218 Orchard Road
Level 6
Orchard Gateway @
Emerald
238851 Singapore
Madrid, Spain
Cxense Spain
PAN Spain
C/ Arlabán 7, 8 planta
28014 Madrid
Spain