CLX Communications AB (publ) - Media Corporate IR Net

 
CLX Communications AB (publ) - Media Corporate IR Net
CLX Communications AB (publ)
A N N U A L   R E P O R T   2 0 1 5 - 2 0 1 6 ,   1 8   M O N T H S
CLX Communications AB (publ) - Media Corporate IR Net
ABOUT

CLX Communications

CLX Communications (CLX) is a leading                          Ever since the company was founded, CLX
global supplier of cloud communications                        has delivered profitable growth. In the ex-
services and solutions for enterprises and                     tended financial year 2015-2016 this trend
mobile network operators. Mobile communi-                      sustained with organic growth of 107 percent,
cations services from CLX make it possible                     sales of SEK 2,339.9 million and reported
for enterprises to communicate globally with                   profit after tax of SEK 111.6 million. The Group
their customers and connected devices – IoT                    is headquartered in Stockholm, Sweden, and
(Internet of Things) – swiftly, securely and                   has a p­ resence in an additional 20 countries.
cost-effectively.                                                 CLX is a global market leader for cloud
   CLX’s solutions enable business-critical                    communications solutions.
communication worldwide through mobile                            The shares of CLX Communications are
messaging services, voice services and IoT                     listed on Nasdaq Stockholm – XSTO: CLX.
connectivity services.

          HQ STOCKHOLM

            1,000+                    80+                             15 billion+                            Listed on

            Enterprise                Operator                        Annual API­                            Nasdaq
                                                                                                             ­
            customers                 ­customers                      ­transactions                          Stockholm
                                                At time of printing

                                          Please visit us on:
                                      www.clxcommunications.com

                               CLX COMMUNICATIONS ANNUAL REPORT 2015/16

                 The annual report is published in Swedish and English. In case of any differences between
                     the English version and the Swedish original text, the Swedish version shall apply.
CLX Communications AB (publ) - Media Corporate IR Net
HQ STOCKHOLM, SWEDEN

 SEKM 2,334 SEKM 5,600+ 309                                               31              100,000+
 Net sales 2015/16      Market cap*                          Employees    Offices in 22   Developers
                                                                          countries

                      Seattle                                                 Montreal

                                                                              New York
                 San Francisco

                                                                    Atlanta
                                            Dallas
                                                                         Miami

                                 Guatemala City

                                                      Bogota
                                                     Quito

                                                      Lima
CLX Communications AB (publ) - Media Corporate IR Net
CLX was founded with a vision of becoming the world’s largest and lead-
                      ing provider in the market for mobile cloud communications. Following the
                      2016 acquisitions of Mblox Inc. and Sinch AB and the acquisition of Xura
                      Secure Communications GmbH in early 2017, we have quickly positioned
                      ourselves as a global leader in cloud communications.
                      Johan Hedberg, CEO CLX Communications AB (publ)

                               Stockholm
    Gothenburg
                            Kalmar
           Lund
                              Warsaw
London
Canterbury                Prague         Kiev
  Paris              Munich**
             Dortmund

          Madrid                       Istanbul

          Baghdad

                              Dubai

                           Bangalore
                                                      Kuala Lumpur

                                          Singapore

                                                                                             Sydney

                                                           Melbourne

                                                                * Approximate market cap when the annual report was produced.
                                                                ** Munich is included in the CLX Group as of February 2017.
CLX Communications AB (publ) - Media Corporate IR Net
2015/16 in brief
•    Net sales amounted to                                         SIGNIFICANT EVENTS DURING THE PERIOD
     SEK 2,333.9 million (844.4).
                                                                   •    The CLX share was listed on Nasdaq Stockholm Mid Cap on 8 October 2015.
•    Net sales increased by 176 per-
                                                                        The introduction price was SEK 59.
     cent compared to previous fiscal
     year. Organic growth amounted                                 •    CLX acquired Mblox Inc. on 11 July 2016. At the time of the acquisition, Mblox
     to 107 percent.                                                    was one of CLX’s largest competitors, particularly in the USA. Through the
                                                                        acquisition, CLX has taken a leading position in the cloud communications
•    EBITDA amounted to SEK 161.9
                                                                        market.
     million (93.1).
                                                                   •    CLX acquired Sinch AB on 20 December 2016. Sinch is a leading developer
•    Adjusted EBITDA amounted to
                                                                        of cloud-based voice communications solutions.
     SEK 238.0 million (89.1).
•    EBIT amounted to SEK 112.5
                                                                   SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD
     million (88.7).
•    Net profit for the period amount-                             •    On 16 February 2017, CLX acquired Xura Secure Communications GmbH,
     ed to SEK 111.6 million (52.9).                                    one of the leading mobile messaging services providers in Germany, with a
                                                                        market share above 30 percent. Xura has a strong position in the banking,
•    Diluted earnings per share
                                                                        logistics and aviation sectors, where it has been delivering solutions including
     amounted to SEK 2.56 (1.53).
                                                                        secure login for online banks, notification services for logistics companies and
                                                                        check-in services for airlines for several years.

KEY FINANCIAL DATA
                                                                                                                                                 2015/16*               2014/15
SEK MILLION                                                                                                                                           18 MON                12 MON
Net sales                                                                                                                                              2,333.9                  844.4
Gross profit                                                                                                                                              642.3                 251.9
Gross margin                                                                                                                                             27.5%                 29.8%
EBITDA                                                                                                                                                    161.9                   93.1
EBITDA margin                                                                                                                                              6.9%                11.0%
EBIT                                                                                                                                                      112.5                   88.7
EBIT margin                                                                                                                                                4.8%                10.5%
Profit for the year                                                                                                                                       111.6                   52.9
Diluted earnings per share, SEK                                                                                                                             2.56                 1.53
Cash flow from operating activities                                                                                                                       107.6                   94.9
Net debt                                                                                                                                                  368.6                    8.9
Debt/equity ratio, multiple                                                                                                                                   2.3                  0.1
Definitions, see page 48

    NET SALES, SEKM                                                                                     EBITDA, SEKM
    2500                                                                                                200
                                                               2,334
                                                                                                                                                                        162
    2000
                                                                                                         150

    1500
                                                                                                                                                         93
                                                                                                         100
                                                                                                                                          78
    1000                                         844                                                                      64
                                 606
                  479                                                                                     50
     500

       0                                                                                                    0
                2012/13         2013/14 2014/15               2015/16*                                                 2012/13         2013/14        2014/15        2015/16*
       * 1 July 2015 to 31 December 2016 is an extended financial year of 18 months. The reason is that CLX´s financial year from 1 January 2017 will coincide with the calendar year.

                                                                                                         CLX COMMUNICATIONS ANNUAL REPORT 2015/16                                        3
Contents

        3 2015/16 in brief                     43 Balance sheet Parent company

        6 Message from the CEO                 44 Statement of changes in equity
                                                  Parent company
       10 Market
                                               45 Cash flow statement
        16 The CLX journey                        Parent company

        18 Operational divisions               46 Multi-year review Consolidated

       20 Customers and use cases              48 Definitions

       22 Technology                           49 Notes

       24 Employees                            75 Certification and signatures

       26 Sustainability                       76 Auditor's report

       30 Management report                    80 Corporate governance report

       38 Income statement Consolidated        85 Board of directors and Group
                                                  ­management
       39 Balance sheet Consolidated
                                               87 Auditor’s report on the corporate
       40 Statement of changes in equity          governance report
          Consolidated
                                               88 Annual general meeting, addresses,
       4 1 Cash flow statement Consolidated       terms and abbreviations

       42 Income statement Parent company

4   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
CLX COMMUNICATIONS ANNUAL REPORT 2015/16   5
MESSAGE FROM THE CEO

    From regional ­private enterprise
    to global, public company

                                                             The enterprises that use our services to
                                                             handle critical information, every second
    CLX is creating the communications solutions of the      of the day, every day of the year, include
    future. We make communication easy by offering
    ­                                                        some of the world's largest banks, air-
    ­enterprises and developers tools and services to in-    lines, healthcare providers and leading
     tegrate communication in their business processes.      global internet companies. Only imagi-
     Partnering with CLX makes it possible for enterprises   nation sets the limits to how enterprises
                                                             can integrate and use our services in their
     to rapidly and securely integrate scalable communica-
                                                             business.
     tions solutions based on text messaging, voice, video       We leverage our unique network of
     or IoT (Internet of Things) in their ­operations.       direct connections to hundreds of mobile
                                                             network operators to make it possible for
                                                             enterprises to deliver information to cus-
                                                             tomers, employees and devices. With
                                                             precision and quality, we ensure the right
                                                             information reaches the right recipient in
                                                             the shortest time possible. Through our
                                                             network of mobile operators, we cur-
                                                             rently reach more than five billion mobile
                                                             phones and function as a global, cloud-
                                                             based operator for enterprise customers.
                                                                 CLX was founded with a vision of
                                                             becoming the world’s largest and leading
                                                             provider in the market for mobile cloud
                                                             communications. Following the 2016
                                                             acquisitions of Mblox Inc. and Sinch
                                                             AB and the acquisition of Xura Secure
                                                             ­Communications GmbH in early 2017,
                                                              we have quickly positioned ourselves as
                                                              a global leader in the cloud communica-
                                                              tions market.

6    CLX COMMUNICATIONS ANNUAL REPORT 2015/16
JOHAN HEDBERG, CEO

CLX COMMUNICATIONS ANNUAL REPORT 2015/16   7
MESSAGE FROM THE CEO

         CLX was founded with a vision of becoming
         the world’s largest and leading provider
         in the market for mobile cloud-based
         communication, with solutions for mobile
         messaging, voice, security and IoT – Internet
         of Things.”

    FOUR FACTORS FOR SUCCESS                      tion, put us in a leading position in the      sions are made. A strong position in the
    There are four strong arguments for why       market.                                        ­United States will also power growth in
    we have what it takes to continue our                                                         other markets.
    growth journey:                               A SUCCESSFUL YEAR WITH TWO
                                                  STRATEGIC ACQUISITIONS                        In December we acquired Swedish tech
                                                  The extended financial year of 2015-          company Sinch AB. The acquisition of
    1. The market is growing and compa-                                                         Sinch is a strategic step, enabling us to
    nies around the world are increasing-         2016 was marked by continued strong
                                                  and profitable growth, while we success-      provide a more complete product offering
    ly and rapidly integrating A2P (applica-                                                    to our customers. To an increasing extent,
    tion-to-person) communication into their      fully completed two strategic acquisitions.
                                                     In July 2016, we acquired Mblox Inc.       our customers want to work with fewer
    business systems to effectively communi-                                                    suppliers and the Sinch product portfolio,
    cate with their customers and employees.      With this acquisition, we were able to
                                                  advance our position in the important         in areas including voice and video com-
                                                  American market while achieving sub-          munications, complements our own range
    2. Cloud communications platforms                                                           of services.
    are gaining ground and will increasing-       stantial cost synergies.
    ly become the primary solution for how           This was strategically important to us
                                                                                                THE MARKET FOR CLOUD
    companies build communications into           for the following reasons:
                                                                                                ­COMMUNICATIONS SERVICES
    their business systems. It is cost-effec-     • The development of cloud communica-          Over the past ten years, the ever-smarter
    tive, scalable and flexible. We began with      tions solutions is driven mainly from the    mobile phone has transformed the way
    text message-based communications and           USA. The acquisition takes us closer         people make decisions and how compa-
    now offer a complete range of services for      to the companies and trends that are         nies communicate and build relationships
    voice, video and IoT.                           shaping the market.                          with their customers. What we have seen
                                                                                                 so far is only the beginning of an acceler-
    3. Size and scalability. Our business         • We gained a solution for cost-effectively
                                                                                                 ating evolution.
    model is scalable and we have the ­muscles      selling our services online, making it
                                                                                                    Nowadays, we take online shopping,
    to be active in the continued consolidation     possible to address the SME market.
                                                                                                 banking services, hotel reservations and
    of the market.                                • Size matters. Winning the biggest            social networks for granted. Business-
                                                    contracts and meeting the demands            es that have not created user-friend-
    4. Deep industry expertise. We have             imposed by large companies and govern-       ly services, that do not give customers
    deep industry expertise and we own and          ment agencies takes resources, capac-        the option to get information or imme-
    control the technical platform required         ity and persistence. With the acquisition    diately buy products and services via
    for our deliverables – and we have the          of Mblox we took a step from being just a    internet-based solutions in their mobile
    ­lowest production cost in the industry for     supplier to being increasingly viewed as     phones are struggling to compete with
     the ­services we provide.                      a strategic partner. Many multinational      next-generation enterprises.
        These factors, combined with a strong       corporations are headquartered in               For our customers, this is not a matter
     financial position and a skilled organiza-     the United States, where global deci-        of “oh, it would be nice to have a mobile

8     CLX COMMUNICATIONS ANNUAL REPORT 2015/16
MESSAGE FROM THE CEO

solution.” It is a matter of survival. Global   ness and their skill at translating brilliant
digitalization is pushing companies to          ideas into sales, growth and profitability.
rapidly lower their costs and adapt their         As we close the books for our first finan-      FACTS
value propositions to a new market              cial year as a listed company, we have
­situation – which is creating opportuni-       delivered powerful growth, both organi-           JOHAN HEDBERG
 ties for CLX.                                  cally and through acquisitions, and have          Chief Executive Officer
                                                taken a position as a leading global pro-
2017 AND BEYOND…                                vider of cloud communications services.           Born: 1973
CLX’s sales have multiplied many times          Although the early days as a listed com-          Employee since: 2008
without compromising profitability or           pany have been the most exciting time             Education: Graduate Engineering
quality. Our financial position is resilient,   in my career, the journey has only just           Degree, KTH Royal Institute of
giving us the opportunity for sustained         begun. With great confidence, I am look-          Technology, Stockholm
growth. We have a strong customer base          ing forward to working with the entire CLX
                                                                                                  Johan is a co-founder of CLX and
that includes some of the world’s most          team as we write the next chapter in the
                                                                                                  has more than 15 years of industry
exciting enterprises in the new digitalized     story of the little company from Kalmar           experience, including positions at
world.                                          that has grown into a global titan in only        Ericsson and Mblox. Johan lives
   Our customers include some of the            ten years.                                        with his family in Atlanta, USA.
most famous brands in the world in sec-           My sincere thanks to our customers,
tors that are rapidly adopting new com-         employees, directors and owners.
munications technologies, as well as new
and innovative enterprises that are turn-
ing old industries and beliefs about what
is possible upside down. The common             Stockholm, 28 April 2017
denominator among these enterprises is
not only that they are adopting new com-        Johan Hedberg
munication technology faster, but that, in      President and CEO
partnership with us, they are driving the
development of new mobile services.
   Being the CEO of CLX Communi-
cations is both demanding and very
enjoyable. Demanding because we
do business in a rapidly changing mar-
ket. Enjoyable because I have the best
co-workers I could imagine, in terms of
their industry expertise, their innovative-

                                                                                CLX COMMUNICATIONS ANNUAL REPORT 2015/16               9
MARKET

 The cloud communications
 market

                                                             Growth in the market for cloud commu-
                                                             nications services remains strong. The
 The market for cloud communications services has grown      main elements of the market are:
 at an accelerated rate in the past few years. Independent   • Messaging services like SMS, MMS,
 analysts are convinced that large companies will change       text-to-speech and the recently
 their purchasing patterns for communications services         launched RCS.
                                                             • Voice services like Flash Calling and
 from traditional software to cloud communications solu-
                                                               voice communications in applications
 tions, based on precisely the components they need to         and mobile apps.
 address their challenges and create greater competitive-    • Video services and app-to-app video
 ness. Growth continued across all sub-markets in 2016.        calls.
                                                             • IoT – Internet of Things, which comprises,
                                                               a world of connected devices and tech-
                                                               nical equipment, programmable SIM
                                                               cards and machine-to-machine commu-
                                                               nications (M2M).

                                                             MARKET SIZE
                                                             According to market research firm IDC,
                                                             CLX's market is expected to grow by

10   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
MARKET

DIRECT CONNECTIONS OPERATORS WITH                                                            FAST
                   CLX’S PLATFORM/                                                           TRANSACTIONS
                   SOFTWARE

200+
CLX has more than 200
                                              80+
                                              80+ operators have installed
                                                                                             10,000
                                                                                             CLX handles up to
direct connections to mobile                  CLX’s platform                                 10,000 transactions per
network operators                                                                            second

about 23 percent a year, reaching USD         In short, cloud communications are all         The Forrester Consumer Technographics
28.9 billion in 2019. In 2015, sales in the   about the next generation of communi-          North American Online Benchmark Sur-
market were approximately USD 12.8            cation. Enterprises, researchers, ana-         vey (Part 1) data from 2016 showed that
billion. The calculations include solu-       lysts and visionaries all agree that the       messaging services based on SMS, etc.,
tions for messaging (SMS, MMS), voice         absolute majority of the services enter-       are largely replacing, or are expected to
communications and video, as well as          prises offer are going to happen in mobile     replace, other existing communication
security solutions including identification   devices. These communications between          channels, especially email. According to
in banking transactions and IoT.              enterprises and people – A2P (applica-         the study, consumers in North America,
   The market is roughly divided into tra-    tion-to-person) – will be a prerequisite for   for example, prefer to use SMS-based
ditional software and hardware solutions      survival.                                      services when reliability and speed are
on the one hand and cloud communica-             Historically speaking, only the truly       paramount.
tions services on the other. According to     major enterprises have been able to               The trend is clear. The market for
IDC, the segment of the communications        afford these solutions, because com-           business-to-consumer communications
­market based on cloud API solutions is       munications between businesses and             solutions is still growing while the mar-
 alone expected to be worth around USD        consumers required huge investments            ket in which CLX operates is growing
 10 billion in 2019, compared to 2015,        in hardware, software and other costly         con­siderably faster, at the expense of
 when the market generated only about         infrastructure.                                last-generation tech solutions.
 USD 222 million in total.                       CLX is one of the companies leading            An IDC report from March 2016 shows
                                              the migration from the rigid and cost-         that the overall market for cloud commu-
KEY TRENDS IN THE MESSAGING                   ly solutions of yesterday to the modern        nications will grow by an average of 8 per-
MARKET                                        solutions of the digital era based on cloud    cent per year until 2019, while the mar-
In recent years, the communications mar-      communications. Today, enterprises are         ket share for CLX's main market, cloud
ket has become the core or spine of the       integrating communications solutions in        communications services based on API
new and modern society that is emerging       the form of advanced API protocols in          technology, will increase from 1 percent
all around us. We have seen how enter-        their existing business systems. CLX is        in 2014 to 25 percent in 2019.
prises have created opportunities for new     one of few high-tech firms that can pro-          According to Mark Winther, group vice
and revolutionary products and services       vide this type of protocol to every enter-     president, Telecom, at IDC, Cloud API
based on communications. As consum-           prise in the world along with direct con-      messaging platforms are working as a
ers, we rely on communications services       nections to more than 200 mobile network       catalyst since they are open to users for
as the backbone of our everyday lives.        operators worldwide.                           test and development and the develop-

                                                                             CLX COMMUNICATIONS ANNUAL REPORT 2015/16                      11
MARKET

          The market for cloud-based voice
          applications is expected to grow from USD
          94 million in 2014 to USD 3.7 billion in 2018.”

     ment platforms of the new era make it           Ovum predicts that the number of video         thing in common – to reach their full
     possible to build and test new applica-         calls, both for person-to-person and           potential and deliver value, they all, no
     tions in hours.                                 ­conference calls, is going to increase by     matter what, have to connect, collect
                                                      32 percent over the next four years.          and communicate data without regard to
     KEY TRENDS IN THE VOICE                              Business models for WebRTC (an open       physical or technical boundaries.
     ­COMMUNICATIONS MARKET                           and entirely free standard for communi-
      Most enterprises have already integrated        cation via web browsers) are still under      VISUALIZE A WORLD OF
      traditional voice services in their opera-      development. WebRTC allows providers          CONNECTED DEVICES
      tions and many have not considered the          of cloud communications services to offer     Connected cars and body-worn fitness
      possibilities to develop new and compet-        software and infrastructure to application    gadgets are already becoming familiar
      itive services. Thanks to powerful and          developers and enterprises that prefer        IoT devices – but IoT is also coming into
      programmable API protocols from com-            not to independently build the capacity       our lives through the energy industry and
      panies like CLX, it is now so easy to inte-     required for large-scale use of WebRTC.       retail, for example.
      grate new and innovative services based             Telecom operators and enterpris-
      on various types of voice-based services        es are increasingly adopting WebRTC-          COLLECTION OF REAL-TIME DATA
      in enterprise applications that voice calls     based platforms to more easily provide        There has been some lightening of reg-
      to traditional landline and wireless devic-     ­customers with advanced communica-           ulatory burdens in this area – and it may
      es will be an option only for consumers          tions services, such as web-based video      become possible in the future for drones,
      who prefer to communicate that way.              calling and screen sharing. Studies          for example, to deliver vast quantities of
          In a modern information society where        including Ovum’s 2017 Trends to Watch:       data. Another example of data gathering
      customers’ and consumers’ communi-               Communications Services Report show          is CLX's joint project with Top Fuel, where
      cations patterns are constantly evolv-           that development and roll-out of WebRTC      IoT solutions from CLX are helping Top
      ing, large enterprises will not be able          is likely to contribute to powerful growth   Fuel monitor their fuel tanks.
      to afford to stick to traditional technology     in video-based communications starting
      with the attitude that “things are fine as       in 2017.                                     DIGITAL TRANSFORMATION AND
      they are.” If they do, they are likely to                                                     IOT ARE A COMMON CAUSE
      be left behind by companies using              KEY TRENDS IN THE IOT MARKET                   The digital transformation of big busi­
      for example WhatsApp and Slack as              Ericsson predicts that the number of IoT       nesses will be driven by information and
      ­communications channels.                      connections will grow by an average of         data collected from machines, technical
          According to a forecast by market          20-30 percent a year for the next five         devices and analytical tools for process-
       research firm Ovum, minutes of use for        years. The number of connected devices         ing the collected data. Connecting data
       OTT VoIP and video calling will grow at       is expected to increase from 400 million       from things and equipment is only the first
       the expense of conventional mobile and        in 2016 to 1.2 billion in 2022. CLX already    part of IoT-based production. The magic
       fixed voice services.                         has the technology and expertise to meet       happens when the analytics transform
                                                     all of these needs on a global basis.          data into decision support. CLX already
     KEY TRENDS IN THE VIDEO                                                                        has the expertise and experience that
     ­COMMUNICATIONS MARKET                          A FEW EXAMPLES OF TRENDS                       CIO’s need to navigate in a whole new
      Video calls have become an increasing-         IN IOT AND HOW THEY CAN                        world.
      ly common feature of consumers’ lives          CREATE OPPORTUNITIES FOR
      thanks to smart phones with, video call-       ENTERPRISES                                    A NEW AGE DEMANDS NEW
      ing applications like Facetime, WhatsApp       Although the following examples rep-           SKILLS
      and Skype, at the same time as broad-          resent various types of businesses and         An estimated quarter of a million IoT
      band capacity has increased and camera         challenges, all IoT solutions have one         applications will be developed in 2020.
      phones improved.

12      CLX COMMUNICATIONS ANNUAL REPORT 2015/16
Naturally, this presents opportunities for      create a completely new kind of health-
talented developers and companies like          care, perhaps especially in this area,
CLX that already have the expertise and         focus on security will be essential. CLX
technology to support this development.         thoroughly understands the IoT field
Buyers of communications solutions will         and has the experience and technology
be confronting new challenges, which in         required to assure compliance with future
turn will affect the need for skilled employ-   regulatory requirements for privacy and
ees and the training they need. CLX is a        security.
valuable partner in corporate skills devel-
opment to enable a more connected world.

PERSONAL PRIVACY AND
SECURITY
IoT is going to entail fundamental changes
and create huge advantages for enter-
prises and individuals, but this develop­
ment will also intensify demands on secu-
rity aspects. For example, IoT is likely to

                                                                            CLX COMMUNICATIONS ANNUAL REPORT 2015/16   13
MARKET

         For companies, SMS is still the cheapest,
         most reliable and most widely available
         mobile communication channel for reaching
         out to customers and employees.”
         Pamela Clarke Dickson, Ovum Research

 TRENDS IN CLOUD COMMUNICATIONS SERVICES
 MARKET CONSOLIDATION                           on selling a single communication chan-       to-use cloud APIs, developer-friendly
 The market is undergoing continuous            nel, such as voice, SMS or OTT, have          communication products similar to SaaS
 consolidation, and there is a high level of    developed and expanded their activities       (Software-as-a-Service), with new pay-
 activity. Mergers and acquisitions will lead   to offer multiple channels and products       as-you-go models and no long-term bind-
 to a gradual reduction in market fragmen-      to take advantage of economies of scale,      ing contracts.
 tation, with fewer players and a number        their infrastructure and their global sales     This trend is particularly relevant for
 of large global companies competing for        teams.                                        small and medium-sized enterprises,
 a rapidly growing market.                         CLX is currently one of the few provid-    which were previously unable to purchase
    CLX is one of the most active players       ers that can meet this broad need. And        telecommunications services since they
 in the ongoing market consolidation, in        with over 200 direct connections with         were complex to implement, costly and
 part through the acquisitions of Mblox and     operators all over the world, CLX is the      obstructed by commercial or regulatory
 Sinch in 2016. CLX will continue to hold       market leader in cloud communications.        barriers.
 this position.
                                                TRADITIONAL TELCOS ARE                        THE RACE FOR THE NEXT BIG
 EXPANDING NUMBER OF                            ­MOVING TO THE CLOUD                          THING
 ­COMMUNICATION CHANNELS                         The more traditional telcos are develop-     Finally, there is an ongoing race to devel-
  Companies active in the cloud commu-           ing and transitioning to cloud services.     op and deliver products for the next
  nications market that previously focused       They are also starting to introduce easy-    ­generation of communications services

     THE VALUE CHAIN FOR ENTERPRISE CLOUD COMMUNICATIONS

     1                                          Enterprises

     2
                                                                                                                                      Outbound traffic

           Service and application providers
                                                                                                                    Inbound traffic

     3                       Cloud communications services providers

     4                                 Mobile network operators

     5      People (enterprise customers and employees) and connected devices

           = flow of communications

14     CLX COMMUNICATIONS ANNUAL REPORT 2015/16
MARKET

and IoT. To an increasing extent, enter-                   book Messenger, WhatsApp, WeChat                            ­ romised major benefits over traditional
                                                                                                                       p
prises that offer cloud communications                     and Viber.                                                  SMS. In early 2017, CLX announced that
services are also going to offer data traf-                   Some believe that these new ecosys-                      the company had entered into a strategic
fic for IoT devices. This is a logical step                tems might disrupt traditional communi-                     partnership with Google, which wants
since these companies can make use of                      cations, but enterprises that offer cloud                   to be able to offer its customers a future
the existing wireless infrastructure that                  communications services see them as                         product portfolio of messaging services
they already use for voice, SMS and MMS                    an opportunity to generate growth. Many                     based on the new RCS standard.
communications. The potential for com-                     of them will also open their platforms in
panies like CLX to offer mobile connec-                    order to create scope for increased prof-
tivity for IoT has become much greater                     itability. For CLX, this presents a huge
through uniform standards for things like                  opportunity to enter these currently
embedded SIM cards.                                        closed ecosystems and offer services that
                                                           customers are willing to pay for.
INNOVATION IS CREATING NEW                                    Finally, the entirely new RCS (Rich
ECOSYSTEMS                                                 Content Service) messaging service has
Innovation has always pushed the bound-                    shown signs of maturing and is grow-
aries of technology and in recent years                    ing rapidly, thanks in part to the Google
has created user-friendly services that                    RCS cloud. In February 2017, Google
integrate new communication channels,                      announced a program for early access
such as video applications like Face-                      to RCS capability for businesses and

Sources:
Ovum – 2017 Trends to Watch: Communications Services – Pamela Clark Dickson – 21 December 2016
Ovum – WebRTC: An Emerging Revenue Opportunity for Telcos – Pamela Clark Dickson – 20 August 2015
Ericsson – Ericsson Mobility Report – June 2016
Forrester – Data Consumer Technographics North American Online Benchmark Survey (Part 1), from 2016
Ovum – Global Communications Outlook: 2016-21 – Pamela Clark Dickson, Gareth Sims, Kamalini Ganguly, Neha Dharia, Ronan de Renesse, Matthew Howett, 9 January 2017
Ovum – Ovum’s Digital Economy 2025: The Future of Communications
IDC – Worldwide Application-to-Person Messaging 2015-2019 Forecast: The Power of Cloud API Messaging Platforms by Mark Winther – March 2016
Ovum – Chat apps set to disrupt the mobile app store – Neha Dharia – 1 February 2017
Ovum – Mobile Messaging Traffic and Revenue Forecast: 2016-21 – Neha Dharia 25 November 2016
GSMA – Messaging as a Platform – Enabling Conversational Commerce v1.0 – 16 December 2016
Forrester – Executive Q&A: Boost your Chatbot IQ by Ian Jacobs, Andrew Hogan, Michael Facemire and Julie A. Ask – 21 February 2017
Forrester – Vendor Landscape: Mobile Messaging Platforms – Michael Facemire and Julie A. Ask – 16 March 2017
EY – Global telecommunications study: navigating the road to 2020-2015
CLX – Internet of Things: Last Mile Connectivity Options Explained – February 2017

                                                                                                  CLX COMMUNICATIONS ANNUAL REPORT 2015/16                           15
THE CLX JOURNEY

 CLX year by year

 2008                            2009                            2010                          2014
 CLX IS FOUNDED                  CLX ACQUIRES                    INTEGRATION OF                CLX ACQUIRES
 CLX is founded by six           ­SYMSOFT                        SYMSOFT                       ­VOLTARIS
 ­people with long and           The company is growing          Symsoft is successfully       CLX acquires Voltaris’s
  extensive experience with      fast. The first office abroad   integrated.                   mobile messaging busi-
  telecom and internet ser-      is opened in the UK and                                       ness in the US and Canada.
  vices with companies like      CLX now has more than                                         The acquisition gives CLX
  Ericsson and Mblox. The        100 customers worldwide.        2013                          access to unique opera-
  vision is to simplify global      CLX acquires Symsoft         INTERNATIONAL                 tor agreements in North
  communications, with initial   AB, a supplier of software                                    America and key customer
                                                                 ­EXPANSION
  focus on making it easier      and services to mobile                                        contracts. Powerful growth
                                                                 Continued international
  for enterprises to com-        ­network operators.                                           continues and CLX now has
                                                                 expansion. The company
  municate effectively with         The acquisition strength-                                  more than 500 customers.
                                                                 opens its tenth interna-
  their customers via mobile      ens CLX's technical                                            The company’s CEO and
                                                                 tional office and CLX now
  messaging services.             infrastructure and relation-                                 co-founder Johan Hedberg
                                                                 has local presence in North
                                  ships with mobile network                                    wins Ernst & Young’s Entre-
                                                                 America, South America,
                                  operators. In parallel, CLX                                  preneur of the Year Award.
                                                                 Europe, the Middle East,
                                  launches a business model                                      CLX expands its enter-
                                                                 Asia and Australia.
                                  using the same technology                                    prise service portfolio with
                                  to offer solutions to enter-                                 the introduction of voice
                                  prises and operators.                                        applications.

                                                                                                               NASDAQ
                        SYMSOFT
                                                                                VOLTARIS                   CALEO

    Founded
     2008

                      Acquisition                                              Acquisition                 Acquisition
                        2009                                                     2014                       and IPO
                                                                                                              2015

16 CLX COMMUNICATIONS ANNUAL REPORT 2015/16
THE CLX JOURNEY

2015                           2016                                                          2017
CLX ACQUIRES                   GLOBAL LICENSE                  CLX ACQUIRES SINCH            AFTER THE END OF
­CALEO                         AGREEMENTS WITH                 CLX acquires Sinch AB, a      THE REPORTING
CLX acquires Caleo Tech-       ERICSSON AND SAP                leading supplier of cloud     PERIOD, CLX
nologies and expands the       The CLX Operator Divi-          communications services,      ANNOUNCED THAT
product portfolio. The         sion closes agreements          primarily voice-based.        IT HAD ACQUIRED
acquisition means CLX can      with Ericsson and SAP.            The acquisition strength-   XURA SECURE
offer complete solutions to    The agreements enhance          ens the CLX product           COMMUNICATIONS
small and virtual operators.   CLX's capacity to attract       portfolio in voice services   GMBH
   The CLX Tier One Super      the world’s largest telcos.     and CLX can now offer         Xura Secure Communica-
Network comprises tech-        Ericsson licenses SMS soft-     globally leading solutions    tions GmbH is a leading
nical and commercial rela-     ware solutions for mobile       to enterprises in all three   provider of cloud com-
tionships with more than       network operators and SAP       mobile communications         munications services in
100 mobile network opera-      licenses firewall solutions     channels: text messaging,     Germany. Its customer
tors all over the world.       to protect mobile operator      voice-based solutions and     base includes some of the
                               networks.                       data for IoT.                 largest banks, logistics
CLX LISTED ON                                                                                companies and airlines in
­NASDAQ                        CLX ACQUIRES                                                  the country.
The CLX share was listed       MBLOX                                                            The acquisition gives
on Nasdaq Stockholm Mid        CLX acquires Mblox and                                        CLX a leading presence in
Cap on 8 October. CLX          takes a leading role in the                                   Germany.
gains access to capital in     ongoing market consolida-
order to drive consolidation   tion. Headquartered in the
in the segments where the      US, Mblox Inc. is one of the
company operates.              largest messaging service
                               providers in the world.
  ­                               With the acquisition, the
                               CLX Enterprise Division
                               more than doubles its sales
                               and the company strength-
                               ens its global presence,
                               especially in the US, UK
                               and Australia.
                                  The acquisition also rein-
                               forces the global CLX Tier 1
                               Super Network, which now
                               includes more than 200
                               mobile network operators.

ERICSSON         MBLOX                           XURA SECURE
                                               COMMUNICATIONS
           SAP        SINCH                         GMBH

       2016      Acquisition                       Acquisition
                   2016                               2017

                                                                        CLX COMMUNICATIONS ANNUAL REPORT 2015/16 17
OPERATIONAL DIVISIONS

 CLX operates through two
 ­complementary business divisions
     The Enterprise Division targets the corporate market. The
     ­Operator Division is a leading supplier of software and services
      to mobile network operators all over the world. Both divisions
      offer their customers products and services based on CLX’s
      proprietary communications platform and software. During
      the 18 month reporting period that ended 31 December 2016,
      the Enterprise Division accounted for 89 percent of CLX’s net
      sales and the Operator Division for 11 percent.

     ENTERPRISE DIVISION
 The CLX Enterprise Division combines         landline and mobile phones, initiate                     Enterprises and
 programmable APIs and cloud services         phone-to-phone or app-to-app calls and                     developers
 to create, in partnership with its exten-    connect incoming and outgoing voice
 sive network of mobile network opera-        calls to their applications and systems.
 tors, opportunities for enterprise cus-      Examples of how voice APIs are used
 tomers and developers to easily build        include flight and hotel reservations,                   Cloud services
 global communications, including mes-        where customers can call a central reser-           ­providers and partners
 saging, voice, video services and data       vations service directly from an app while                 in verticals
 connectivity, into applications, business    relevant customer information is simulta-
 processes and IoT devices.                   neously transmitted digitally for smooth        Cloud APIs
                                              and efficient reservations and customer
 Offering                                     relationships.                                  PROGRAMMABLE APIS
 The CLX Enterprise Division’s offer-
 ing includes APIs for mobile messaging       APIs for verification services
 ­services from enterprises to customers,     Application developers and enterprises
                                                                                               Mobile         Voice   Telephone
  primarily SMS, but also MMS and USSD.       can use phone number and identity verifi-
                                                                                              messaging                numbers
  These make it possible for enterprises      cation services to quickly verify that a per-
  to send and receive customized text         son’s phone number is correct and that
  messages to and from their customers,       the person is who they claim to be. This
  employees and connected devices world-      is usually managed with a PIN that is sent        Information      Infrastructure
  wide, fast and easily.                      by text message or voice call.                      services        management
    Examples of how these APIs are used:
                                              APIs for video services
                                                                                              MOBILE CONNECTIVITY FOR
 Banking and finance sector                   Developers and enterprises can use
                                                                                              IoT
 To reach and communicate with custom-        these APIs to easily add high-qual-
 ers via the channel they prefer, improve     ity video services to an existing app or                IoT – M2M – MVNO
 and streamline customer service and          website.                                                   – Mobile data
 enhance security by implementing veri-
 fication and/or two-factor authentication.   Data connectivity
                                              CLX provides mobile connectivity ser-
 Retail and brands online                     vices for IoT. The service makes it easy                    1,000+
 To increase sales through relevant mes-      to connect IoT devices to the internet,                  mobile network
 sages to customers at precisely the right    regardless of location.
                                                                                                         operators
 moment and enhance security by imple-          CLX has more than 3,000 active enter-
 menting verification and/or two-factor       prise customers including Air Canada,
 authentication.                              L’Oréal, Panasonic, Microsoft, Viber,
                                              Renault, Uber, Badoo, Truecaller, Snap-
 APIs for voice services                      deal, Rebtel and Domino’s Pizza.                        5+ billion people
 These APIs enables enterprises to acti-                                                                and devices
 vate calls via the cloud from an app to

18     CLX COMMUNICATIONS ANNUAL REPORT 2015/16
OPERATIONAL DIVISIONS

OPERATOR DIVISION
The CLX Operator Division (Symsoft) is         The Operator Division’s product portfolio       4. Prevent fraud
a partner to more than 80 mobile network       simplifies many of the greatest challenges      Symsoft’s firewall solution for SMS and
operators in more than 40 countries. The       mobile network operators are facing.            SS7, along with filter solutions, help
division offers innovative, stable and scal-                                                   mobile network operators prevent fraud.
                                               1. Transition to providing cus-
able software and services to customers        tomers of mobile network oper-                  Our products are updated in real-time
in the areas of IoT platforms, real-time       ators mainly digital services and               with a specific update service so that all
BSS, VAS, fraud prevention solutions for       enabling service innovation to                  vulnerabilities are quickly detected.
revenue retention and full-service solu-       ­sharpen competitiveness                        5. Thrive as a virtual operator
tions for virtual operators (MVNO).             Symsoft contributes here with products         Symsoft provides mobile virtual net-
   Solutions can be provided as local           like Real-Time Business Support Sys-           work operators (MVNO) a full-coverage
installations for operators, as managed         tem (BSS), which contains tools for cre-       solution: voice, messaging, mobile data
outsourcing services or as cloud services       ating high-quality customer experiences        ­services and more. We create short time-
in public or private clouds.                    for end users, and Integrated Policy and        to-market through a complete MVNO
   The Division creates value for its cus-      Online Charging, which provides the flex-       solution that is included in our MVNCloud
tomers by making them more compet-              ibility and control required for mobile net-    offer.
itive in terms of shorter time-to-market        work operators to create differentiated
(TTM), access to new revenue streams,           products in a highly competitive market.       6. Monetize IoT
the opportunity to prevent fraud and sub-                                                      Symsoft can help mobile network opera-
                                               2. Reduce operating costs in the                tors launch IoT products for their existing
stantially lower costs of ownership and
                                               operators’ base networks                        business customers via the same under-
operation. CLX offers a wide range of flex-
                                               Symsoft offers consolidated, leaner and         lying software that the Enterprise Division
ible usage options and several different
                                               more efficient SMSC and MMSC prod-              uses for cloud communications services
levels of service.
                                               ucts that can replace costlier systems and      in IoT.
   In 2016, the division achieved a cus-
                                               those about to be phased out.                      Symsoft’s customers include Virgin
tomer satisfaction score of 86 percent,
while 96 percent of the customer base          3. Generate revenues from whole-                Mobile, 3, Mobile One, Telefonica, Reb-
regards the Operator Division as a long-       sale SMS                                        tel, Telia and Tango.
term partner. Other highlights in 2016         Symsoft’s SMS platform (SMSC) and rev-
were that Symsoft was the first supplier       enue retention solutions make it possible
in the world to bill a cash-card subscriber    for mobile network operators to capture
for a VoLTE call and we won the world’s        revenues for traffic for which fees are not
largest multi-market contract for SS7          currently charged.
signaling.

                                                                      Each transit stage
                                                                     causes delays and
                                                                        reduces security,
                            Tier 3                                 control and protection
                           Network                                               of data.

Enterprises                                                                                                           Operators,
                              Transit

   and                                                                                         MNOs                    5+ billion
developers                                      Tier 2
                                                                                                                      people and
                                               Network                                                                  devices

                                                             Comprehensive commercial,
                                                               operational and technical
                                                                             integration.
                                                 Transit

                                                                  Tier 1
                                                                 Network

                                                                              CLX COMMUNICATIONS ANNUAL REPORT 2015/16                   19
CUSTOMERS AND USE CASES

     USE CASES

                   Banking                                   Healthcare
                   •   Confirmation                          •   Patient monitoring
                   •   Notifications                         •   Voice authentication
                   •   Two-factor authentication, one-time   •   Appointment reminders
                       pin codes
                   •   Passwords

                   E-commerce                                Industry and public
                   •   Authentication                        ­sector
                   •   Two-factor authentication             •   Utility meter reading
                   •   Virtual phone numbers                 •   IoT connection
                                                             •   Human resources planning

                   Travel                                    Transport
                   •   Flight and ticket status              •   Process monitoring
                   •   Local phone numbers                   •   Delivery confirmation
                   •   Sponsored data

                   Connected cars                            Media
                   •   Service notification and              •   News notifications and updates
                       ­downloads                            •   Sponsored data
                   •   IoT connections                       •   Data from commercial
                   •   Always local connection                   advertisements

20   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
CUSTOMERS AND USE CASES

SELECTION OF CLX CUSTOMERS AND PARTNERS

 Enterprises

 Operators

                              CLX COMMUNICATIONS ANNUAL REPORT 2015/16   21
TECHNOLOGY

 The communications platform

 The proprietary, software-based CLX communications plat-            from CLX's enterprise customers and is used in the operations
 form can handle message, voice and mobile data traffic and is       of more than 80 mobile operators.
 extremely reliable and thoroughly tested in environments that          Through its communications platform, CLX offers its enter­
 require 99.999 percent availability. CLX handles all traffic that   prise customers efficient direct access to about five billion
 its Enterprise Division customers generate in its own commu-        mobile phone subscribers and connected devices all over
 nications platform. The same platform is also sold to and used      the world. The communications program is easily accessed
 by mobile network operators in their businesses, generating         through secure and versatile APIs. The company has a sub-
 revenues for the CLX Operator Division. CLX thus uses the           stantial number of direct uplinks to mobile network opera-
 same infrastructure and technology in its Enterprise Division       tors and provides its enterprise customers direct access to a
 operations as the Operator Division sells to its customers.         global mobile network. Powered by the CLX communications
 This achieves substantial and advantageous synergies, such          platform, this global mobile network enables cost-effective,
 as shared costs of R&D, support and operation, but also gen-        high-quality, secure and scalable services and solutions for
 erates excellent relationships and stronger trust in CLX in the     mobile-based business communications. CLX's communica-
 mobile industry.                                                    tions services can lower investments, costs and barriers in
    The platform is modular and scalable, which creates flexibil-    connection with an enterprise’s launch of a global communi-
 ity of use while offering comprehensive functionality. In 2016,     cations service.
 the platform managed about 15 billion billable transactions

                            ENTERPRISE DIVISION                             OPERATOR DIVISION

                       The platform is used to                          The platform is sold
                        enable the enterprise                             as software or
                                offer                                     “as-a-service”

                                            CLX COMMUNICATIONS PLATFORM

                                                                                        MOBILE CONNECTIVITY
              VOICE APPLICATIONS                        A2P MESSAGING:
                                                                                              FOR IOT
           • Enables use of voice                 • Send text messag-                  • Enables communications
             services in business                   es (SMS) to and from                 to and from business
             ­applications                          ­business applications               applications and systems
           • E.g. temporary phone                    and systems                         via mobile data
              numbers                             • E.g. “Reply to check in”           • E.g. connected cars

22   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
TECHNOLOGY

THE CLX TIER 1 SUPER NETWORK™ – WHAT IS IT AND HOW DOES IT STRENGTHEN
OUR MARKET POSITION AND OUR CUSTOMER VALUE PROPOSITION?

The CLX Tier 1 Super Network       Direct connections and relationships are     Establishing these direct connections is
                                   important because they produce both          no easy task. It takes complex techni-
comprises more than 200
                                   commercial and performance advant­           cal integration, contract negotiations and
direct commercial relation-
                                   ages. That gives CLX a competitive           high start-up fees. It has taken CLX more
ships and technical connec-        edge that sets us apart from the compet-     than ten years to build up this network
tions with the world’s largest     itors. CLX benefits from the lowest possi-   and we are still adding new links: about
mobile network operators           ble cost by buying capacity directly from    35 in 2016 alone. Mobile network opera-
(MNO). It reaches five billion     the recipient subscribers’ mobile network    tors can sometimes be reluctant to take
people and devices. These          operators. In addition, direct connec-       on new partners, because it generates
­direct connections with more      tions are more reliable, cut queue times     higher administrative costs but no new
 than 200 MNOs give CLX a          and increase security, because mess­         revenue. This is a major barrier for new
 major competitive advantage       ages and calls never leave the CLX net-      entrants to the market.
                                   work. As a result, CLX offers enterprises       The need for direct connections is
 that is difficult for others to
                                   the best level of service in the business.   going to increase as more mobile net-
 achieve.
                                   Another advantage is that CLX has direct     work operators choose to install SMS
                                   access to subscribers’ operators and can     firewalls (from the CLX Operator Divi-
                                   swiftly diagnose and correct faults, with    sion or another supplier) in their mobile
                                   no need to deal with a long chain of third   networks, because the firewalls only let
                                   parties and intermediaries.                  through messages delivered via direct
                                                                                connections.

CLOUD COMMUNICATIONS PLATFORM

Our cloud communications           The platform is available via developer-­    Our industry-leading platform has one
                                   friendly APIs for cloud-based applica-       of the highest levels of service in the
platform is based on the same
                                   tions as well as APIs based on industry      business. We have the highest deliv-
software developed by the
                                   standards (such as SMPP). We make it         ery performance with the lowest queue
Operator Division and is used      easy for developers to integrate with our    times while handling more than one bil-
by more than 80 mobile net-        platform by giving them software devel-      lion API transactions per month from six
work operators worldwide.          opment kits (SDK), code examples and         continents. The CLX platform is linearly
                                   guidance. Combined with our e-com-           scalable and works no matter how many
                                   merce capability, this means enterprises     ­customers connect.
                                   can get online fast and easily, without          The platform is optimized and totally
                                   having to talk to a salesperson.              adapted for our Tier 1 Super Network of
                                      The platform is placed in a geograph-      more than 200 mobile network operators,
                                   ically redundant set-up in both the US        which ensures that all signals from the
                                   and the EU with complete error-tolerant       mobile networks are used to optimize all
                                   redundancy that ensures zero-downtime         connections.
                                   service to customers even if a problem           Last but not least, we take security and
                                   should arise in a data center. If custom-     regulatory compliance extremely serious-
                                   ers require their data to be held within      ly. Our data centers are certified under
                                   the USA or the EU, we can accommo-            PCI and ISO 27001. We perform regular
                                   date that as well.                            penetration tests and have a full-cover-
                                                                                 age continuity plan.

                                                               CLX COMMUNICATIONS ANNUAL REPORT 2015/16                    23
EMPLOYEES

 Our people

                                                      To us, a strong company culture is a key prerequisite for suc-
                                                      cess. The culture is inevitably affected by the relatively large
 Working at CLX means coming every day                number of acquisitions we have made. But the essence of
 to a workplace where passion is a main in-           what makes us CLX is so strong that we have maintained its
 gredient – something we are very proud of!           vibrancy through structural changes and acquisitions.
 We are ­   energetic, pragmatic and humble.             We value and reward our employees’ deep expertise in their
 And we get things done. Working for us, as a         fields and we have developed a rigorous recruitment process
                                                      to ensure that we attract and select the top talents. We devote
 truly global company, means having the free-
                                                      a great deal of time to selection and discussion with potential
 dom and independence you need to succeed.            candidates. We are very picky and put a lot of energy into
 We constantly challenge ourselves and each           interviewing applicants. The point of it all? We want to make
 ­other to be the best at what we do. We moti-        sure this is the start of a long and mutually rewarding relation-
  vate and encourage our people to be the best        ship.
  they can be, every single day. We also believe in      We do business in more than 30 countries and together our
  maintaining a good work/life balance by mak-        people speak more than 40 languages at the native speaker
  ing it possible to relax, be ourselves and enjoy    or professional level. That means we can often talk to our cus-
  the workday and the challenges it brings.           tomers in their own language. And that is only one of the com-
                                                      petitive advantages that diversity brings – we are convinced
                                                      that diversity in every respect generally creates success.

24   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
Our people are
                                                                                     hand-picked,
                                                                                     world-class
                                                                                     communications
                                                                                     experts – they are
                                                                                     here to help our
                                                                                     customers!”

CLX COMPANY VALUES

       Be the trusted partner               Be cost-conscious                         Listen and learn
       Provide solutions pro-               Be smart, act smart. Drive                Be open, humble and learn
       actively, always exceed              value creation with a culture             to continuously improve.
       customer expectations.               of frugality.

     Embrace and drive change               It's one global network                Empower others
     Be agile, flexible and act             Think big and act local.               Share knowledge and give
     fast. Think ahead and drive            We are part of a global         guidance to feed creativity. We
     change.                                ­ecosystem.
                                                                            grow and succeed together.

EMPLOYEES                          EMPLOYEES AND CON-
                                   SULTANTS BY COUNTRY NUMBER                                          NUMBER
At 31 December 2016,               Australia                            2   Malaysia                              1
CLX had 309 employees,             Canada                               9   Poland                            12
of whom 249 were men,              Colombia                             2   Singapore                             1
working across more                                                         Spain                                 3
                                   Czech Republic                       2
than 30 countries.
                                   Ecuador                              2   Sweden                           156
                                   France                               3   Turkey                                3
                                   Germany                              1   Ukraine                               1
                                   Greece                               1   United Arab Emirates                  9
                                   Guatemala                            1   United Kingdom                    39
                                   Hungary                              1   United States                     52

                                                              CLX COMMUNICATIONS ANNUAL REPORT 2015/16                25
SUSTAINABILITY

 Sustainability management
 at CLX

                                    SUSTAINABILITY MANAGEMENT                       •   AA1000
                                    AT CLX                                          •   UN Global Compact 10 Principles
 CLX shall run its business         CLX has established a Code of ­Conduct          •   GRI
 responsibly with considera­
 ­                                  that applies to all companies in the
 tion for the environment,          Group. The Code requires compliance             For the second year in a row, Symsoft
 society, customers and em-
 ­                                  with the Ten Principles of the UN Global        was awarded the Gold CSR medal by
 ployees. The company ­aspires      Compact, which sets out how businesses­         EcoVadis, a CSR agency, in 2016. Gold
                                    around the world should approach                is the highest CSR recognition level that
 to steadily reduce the envi-
                                    human rights, labor law and workers’            EcoVadis awards. Symsoft received the
 ronmental impact of its op-                                                        medal for the environmental, social and
                                    rights, the environment and corruption.
 erations. Generally speaking,          CLX allocates resources, and will           ethical aspects of its business and the
 since the aim of CLX’s busi-       continue doing so, to nurture employee          award is an important acknowledgment
 ness is for users of the com-      health, safety and social welfare in the        of Symsoft’s ongoing sustainability ef-
 pany’s products and services       workplace. This also applies to others          forts. The Gold recognition level means
 to communicate virtually to        who are affected by the company's op-           that EcoVadis considers Symsoft among
 a greater extent. CLX there-       erations.                                       the top-ranked 3.3 percent in its industry.
 by helps to reduce the use of          The company endeavors to uphold
                                    high standards for employee conduct             STAKEHOLDERS
 paper, which is good for the
                                    in relation to how the company does             CLX's key stakeholders are customers,
 environment. CLX’s products                                                        employees, suppliers, industry players,
                                    ­business – and CLX expects the same
 and services also help re-                                                         shareholders and society as a whole.
                                     approach from its business partners.
 duce the need for travel and           CLX is committed to having a healthy          CLX strives to maintain fruitful dia-
 transport in a v
                ­ ariety of ways,    business in terms of environmental impact.     logue with its stakeholders and commu-
 including ­
 ­          delivery of cloud        And, it goes without saying, the company       nicates with them in the following ways:
 services.                           does not tolerate corruption in any form.      Customers
                                        CLX supports the organization Hand-         The company’s communications with
 Customer benefit is number          in-Hand, which is working to eradicate         customers are mainly direct, through
 one for CLX and in recent           poverty through job creation.                  meetings, email and phone calls. A cus-
 years the company has been                                                         tomer satisfaction survey is performed
                                    SYMSOFT                                         every year in which CLX asks its cus-
 ranked the best A2P supplier
                                    CLX's subsidiary Symsoft, which consti-         tomers what they think about the com-
 in the market.                     tutes the company’s Operator Division,          pany and what it delivers. The results
                                    is a signatory to the UN Global Com-            of the latest survey were enthusiastic.
                                    pact. Accordingly, Symsoft publishes an         The survey showed, for example, that
                                    annual Communication of Progress re-            95 percent of the respondents think their
                                    port in which it describes its progress in      account manager at CLX listens to them,
                                    the relevant areas. The next report will        reacts to their needs and provides accu-
                                    be published on the website during the          rate information.
                                    first half of 2017. Symsoft supports the           ROCCO, a consulting firm, performs a
                                    following initiatives:                          survey of operators every year. CLX was
                                    •   EICC Code of Conduct                        voted the best A2P provider in both 2015
                                    •   GeSI (Global e-Sustainability Initiative)   and 2016. In fact, the only category in
                                    •   EICC-GeSI Extratives Working Group          which CLX was not voted one of the three
                                    •   iNEMI (International Electronics            best in the industry was “Brand Recogni-
                                        ­Manufacturing Initiative)                  tion,” which could be interpreted to mean
                                    •    OECD Due Diligence Guidance                that CLX is the world’s best-kept secret!
                                         for Responsible Supply Chains of           CLX's subsidiary Symsoft was ranked
                                         ­Minerals from Conflict-Affected and       No. 1 SMS Firewall Vendor by ROCCO
                                          High-Risk Areas                           in 2016.

26   CLX COMMUNICATIONS ANNUAL REPORT 2015/16
SUSTAINABILITY

                                                                                          In 2016, for the second
                                                                                          year in a row, Symsoft
                                                                                          was awarded the Gold CSR
                                                                                          medal by EcoVadis for
                                                                                          the environmental, social
                                                                                          and ethical aspects of the
                                                                                          ­business. The award are
                                                                                           an important acknowledg-
                                                                                           ment of Symsoft’s ongoing
                                                                                           ­sustainability efforts.”

Employees                                   happy to share their knowledge, both          Shareholders
Employee health and wellbeing is crit-      internally and externally. The company        CLX demonstrates responsibility to its
ically important to CLX. The company        has developed a rigorous recruitment          owners by working to maximize value
communicates with employees through         process, which has proven successful          within the framework of laws, regula-
face-to-face meetings, email, phone,        when it comes to recruiting the right peo-    tions and norms. The company reports
etc.                                        ple. CLX has more than 300 employees          to its owners by publishing interim and
   CLX performs an employee satis-          in more than 30 locations around the          annual reports and by holding general
faction survey twice a year. Happily        world, where more than 40 languages are       meetings.
enough, the latest survey showed that       spoken – diversity is a success ­factor for   Society
the company is above average com-           CLX!                                          CLX makes its best to ensure that the
pared to other companies in our indus-
                                            Suppliers                                     company’s interactions with government
try with regard to most of the parame-
                                            CLX communicates with its suppliers           agencies, the media and the rest of
ters measured. One of several areas of
                                            on a daily basis – through face-to-face       ­society are managed in accordance with
strength is our employees’ sense of free-
                                            meetings, email, phone, etc.                   generally accepted practice.
dom, both when it comes to organizing
                                                                                             CLX communicates with all stakehold-
their own work, but also the freedom to     Industry players
                                                                                           ers indirectly through the media.
express their opinions.                     In 2016, MNOs (Mobile Network Oper-
   CLX believes the company culture is      ators) ranked CLX the “Leading Tier 1
a key prerequisite for success. CLX val-    Global A2P SMS Messaging Provider”
ues deep expertise and employees are        for the second consecutive year.

                                                                         CLX COMMUNICATIONS ANNUAL REPORT 2015/16               27
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