ANNUAL REPORT 2011 Aspiro’s offices in Oslo, Malmö, Stockholm, Copenhagen and Berlin.
Aspiro’s customers in Norway, Sweden, Denmark, Estonia, the UK, Germany, Portugal, Austria, Chile, the US, Mexico, Canada and the Netherlands.
Contents This is Aspiro 3 Mobile Search 19 Definitions of Key Ratios 37 2011 in Brief 4 Discontinued Operations 20 Financial Statements, Group 38 A Statement by Gunnar Sellæg 5 Stock and Stockholders 21 Financial Statements, Parent 43 Business Concept, Vision and Goals 7 Corporate Governance Report 24 Accounting Policies 48 Market 9 Board of Directors and Auditors 28 Notes 52 Competence and Values 11 Management 29 Signatures, AGM and Financial Information 67 Operations 13 Directors’ Report 31 Audit Report 68 Music 15 Risk and Sensitivity Analysis 34 TV 17 Five-year Summary 36
Production: Aspiro/Flikk • Foto: Tonje Næss • Translation: Turner & Turner This document is essentially a translation of the Swedish language original. In the event of any discrepancies between this translation and the original, the latter will be deemed correct. This is Aspiro 3
This is Aspiro
Aspiro is a leading streaming company with its primary focus on the WiMP music service and video services delivered to partners. WiMP is delivered direct to consumers and through partners such as operators and TV distributors. With WiMP, Aspiro is thinking globally but working locally, with editorial services and in-house teams tailoring the service for each country. Aspiro has 14 years’ experience of digital services and is a growth company with high ambitions.
Services:
TV and video Search services Music streaming streaming on mobiles
Geography: Aspiro is present in Sweden, Norway, Denmark Music, Warner Music, EMI, IODA, The Orchard, the BBC, Disney and Germany, and delivers to customers worldwide. Channel, CNN, CNBC and Turner.
Customers: Aspiro’s largest customers include corporations The company: Aspiro was founded in 1998 and is listed like Deutsche Telekom, Telenor, 3, TeliaSonera, Entel, Nextel on NASDAQ OMX Nordic Exchange in Stockholm, with ticker and Canal Digital. ASP. There are approximately 206,3 million shares, and as of 31 March 2012, market cap. was some SEK 297 m. Aspiro has Content vendors: Aspiro has agreements with content some 100 staff and sales in 2011 (for continuing operations) vendors in TV and music, including Universal Music, Sony were SEK 230.6 m. 2011 in Brief 4
2011 in Brief
• Aspiro’s repositioning as a streaming company was • Aspiro’s music service more than tripled its paying user completed through the sale of the Mobile Solutions base in the year. business segment to LINK Mobility for NOK 22.9 m and • Aspiro has evolved from being a provider of mobile TV to the divestment of Miles Ahead. delivering video services for all types of display. • 25% sales growth overall, nearly 150% in Aspiro Music.
Aspiro Music in 2011 Aspiro TV and Search in 2011
• The number of paying WiMP users increased from 100,000 to • In the second half-year, Aspiro achieved positive EBITDA in its 350,000 in the year. TV business segment, the result of cost control and efficient • WiMP was launched in Sweden, where Aspiro also signed a operations. distribution agreement with the operator Telenor. • Aspiro TV evolved from being a mobile TV company to • Aspiro signed an agreement with Canal Digital, involving delivering services for all types of display, from mobiles and 700,000 Norwegian customers receiving WiMP bundled with tablets to computers, Internet-enabled TV sets and gaming their TV subscriptions. consoles. • New WiMP clients launched for formats including Windows • Aspiro signed an agreement with NII Holdings in Latin America Phone 7, Nokia, the iPad and Sonos home music system. for delivering video streaming services in a number of countries. • Aspiro acquired Platekompaniet’s shares of jointly held • Aspiro extended its partnership with Telenor for new TV clients. Norwegian distribution company WiMP Music AS, and thus • Aspiro nominated for the Meffy Awards in the best TV and video holds 100% of WiMP on all markets. service category. • WiMP recognized as the world’s best music service at the Meffy • Sales in Mobile Search decreased significantly, tracking the Awards in London, and was nominated for a number of other market development. Aspiro focused on maximizing profitability awards. through efficient operations.
Continuing Operations 2009-2011, SEK m Key Figures 2011 2010
Sales,OMSÄTTNING, SEK m MSEK EBITDA,EBITDA, MSEK SEK m Continuing operations 75 4 Net sales, SEK m 230.6 184.9 EBITDA, SEK m -18.8 -27.2 -2 Profit/loss after tax, SEK m -41.2 -119.5 50 Earnings per share, SEK -0.21 -0.62 -8 Average no. of employees 117 129
25 Cash and cash equivalents at end of year, SEK m 57.5 76.8 -14 Other key figures
0 -20 Equity/assets ratio, % 64 54 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 Return on capital employed, % -11.21 -54.24 Return on equity, % -12.06 -58.92 NettoomsättningNet sales EBITDA Cash flow from operating activities per share, SEK -0.18 -0.01 A Statement by Gunnar Sellæg 5
A Statement by Gunnar Sellæg In this interview, Aspiro’s CEO talks about the past year and initiatives going forward.
How satisfied are you with Aspiro’s results for 2011? were positioned as the leader in mobile content services in I’m really satisfied. We focused the business and are now a the Nordics and Baltics. Aspiro was on the verge of a new, leading streaming company. We achieved growth in our Music momentous phase, namely evolving from a mobile content business segment consistent with our 150% target and tripled services distributor to become a consumer company in the number of paying users. Securing growth in TV didn’t go the digital entertainment sector. The boundary between as quickly as we had originally expected, but this segment the Internet and mobile telephony started to fade, and my still made good progress, and succeeded in achieving positive mission was to lead the company to its new position. Even EBITDA in the second half-year. We also finished the year with if a lot has changed since, we’re now very much a consumer a very brisk fourth quarter, with 43% growth in the company company in the digital entertainment sector, with our focus overall. on our proprietary music streaming brand, WiMP. Aspiro is now a completely different company to 5 years ago, and Is there one single event in the year that you’re we’re making good progress to becoming one of the most especially satisfied with? important global players. There were lots of events, but one of the most important for the company, and our fast-growing music service WiMP, Can you describe the process that occurred? was the agreement we entered with Canal Digital of Norway, In 2007, over 90% of Aspiro’s sales were from traditional which involves 700,000 Norwegian customers—one in every ringtones, mobile business solutions and mobile search three Norwegian households—getting WiMP packaged into services. Then, sales of ringtones and search services fell their TV subscriptions. This agreement wasn’t just important sharply because the market started demanding more for WiMP in Norway, but also our global expansion, because advanced services. We started to develop WiMP and saw that it gives us the size and a fantastic reference that we hope will our TV services were growing and started to evaluate the inspire more partners. disposal of our old services. In 2010 and 2011, we disposed of Mobile Entertainment with its ringtones, Miles Ahead with 2012 is the fifth year since you took over as Aspiro’s its gaming and Mobile Solutions with its mobile business CEO. What was Aspiro like five years ago? solutions, in that order. In that period, music and TV continued That’s right, I started as CEO on 1 March 2007, when we their robust growth, and this pair now represents over 85% of A Statement by Gunnar Sellæg 6 our sales. Because, these operations virtually didn’t exist five Our consistent aim is to inspire people to discover new and years ago, it is no exaggeration to say that Aspiro is an all-new old music. For our service to be the winner, we don’t think it’s company now. enough just to offer a search option for our full range, we’ve also got to present it in the best way, a bit like a good, old- «The future of our music and fashioned record shop. TV services looks very positive, What role is WiMP currently playing on the market? and it’s all about growth and WiMP has over 350,000 paying users, and as a result, is already one of the big players. Meanwhile, our profile and focus expansion now.» has got a lot of praise, we’ve won several awards in many consumer tests in all countries where we are present. In 2011, What was the situation at the beginning of 2011? we were rated as the best music service at the Meffy Awards Going into 2011, we were still in the midst of our repositioning in London, which we’re proud of. In Sweden, our recognition process. We had divested Mobile Entertainment, but still includes success in a major test by gadget magazine M3, held Mobile Solutions. WiMP had been in place for a while in and WiMP won its duels with competitors run by VG of Norway and Denmark, and we’d just launched with Portugal Norway, TV2 of Denmark, and the Danish and Swedish Mobil Telecom, under its brand. We’d succeeded in accumulating magazines, independently. a paying user base of over 100,000, and really felt we were going the right way. This was emphatically confirmed in the How do you view your chances of success with year, when we more than tripled our user base, securing a WiMP going forward? historic deal with Canal Digital. In TV, we had been in long- We’re continuing to focus on helping users find what they term negotiations with a number of new potential customers, want in our huge music catalogue, and think that our simultaneous with working hard to extend our product positioning as a high-quality service is a good starting-point portfolio from only delivering mobile TV, to video services for for success. It’s important that we get onto more markets all types of display. now and achieve bigger economies of scale, and accordingly, we’ve chosen to launch our own brand in several markets, And how would you describe things now, some way without waiting for a partner first. Simultaneously, it is into 2012? obviously a success factor for us to go into more partnerships Aspiro went into 2012 as a pure-play streaming leader in like the ones we have with Canal Digital and Telenor, to get high growth. The future of our music and TV services looks even wider reach. very positive, and it’s all about growth and expansion now. We set aggressive targets for 2012, which honestly, we hope What’s the current status of Aspiro’s TV unit? to beat. First and foremost, this is about getting our WiMP In the TV segment, we developed our product portfolio, and music service on more markets and concluding negotiations are positioning ourselves as one of the world leaders in TV with partners in music and TV. Aspiro is planning alternative solutions for all types of digital display. Where previously, business models in Music, which will mean a funding we focused mostly on TV for mobile phones, we’re now also requirement in 2012. delivering to tablets, computers, the latest Internet-ready TVs, digiboxes and gaming consoles. We’re now working with There are lots of music services that want to expand new customers like TV2 of Denmark and Comoyo of Norway, globally. What makes WiMP different from the which confirm that we’ve succeeded in taking the step from others? delivering only over the closed mobile network to delivering We think it’s important to be conscious of the fact that music services over the Internet, known as over the top. In 2011, streaming is about music first and streaming second. That we also succeeded in improving profitability. We focused on means in the long run, getting and retaining customers is operational excellence and cost control, and late in the year, more about what people want to listen to and where they we also started to gain more new customers, which brought want to listen to it than which technology it is and how it us growth. The TV segment is now profitable, and we expect works. The music sector is complex and is also localized. There it to remain so in 2012. Meanwhile, we’ve got the possibility are many countries where over half of sales are by domestic of achieving further economies of scale when we get more artists. Accordingly, WiMP has opted for a very conscious customers going forward, and there’s positive interest from strategy of focusing on people, and not just devices. We’ve the market. chosen an editorial and local profile, and in each country, we hire a WiMP editorial team with dedicated music people who Finally—how do you view Aspiro’s future? work every day on highlighting our selection and our offering Each year in recent years, I’ve said that this will be an exciting to users. This is about everything from tailoring playlists, year historically for Aspiro. 2012 is no exception, and I’m up-to-the-minute news and thorough reviews of previous really looking forward to continuing our success with popular music eras to creating genre pages and working with record products in a growth market as exciting as the streaming companies to get exclusive content and exciting activities. market,” commented Gunnar Sellæg, Aspiro’s CEO. Business Concept, Vision & Goals 7
Business Concept, Vision & Goals
Business Concept Vision
Aspiro will be a leader in streaming services, deliver music Shaping your mobile life. streaming to consumers and partners, and video services to Aspiro will deliver world-class mobile experiences that really partners. make a difference to people’s everyday lives. Our customers With fourteen years’ experience of digital services, Aspiro will have access to our services anywhere, anytime. We deliver has a unique market position and has strong relationships to consumers and business partners, with a clear focus on with operators, record companies and other media partners. quality.
Goals and Performance
GOALS 2011 PERFORMANCE • Music: Minimum growth 150% • 147% growth in Music • TV: Minimum growth 25% • 2% growth in TV • Mobile Solutions: improve • Mobile Solutions and Miles earnings net of direct expenses Ahead sold off by 15% • Evaluate further structural alternatives to focus the business Summary of Aspiro’s Business Units 8
Summary of Aspiro’s Business Units
Music TV Mobile Search
Development and sale of Development and operation of Delivers text-based paging Business complete music solutions for complete TV and video solutions services. streaming and download, direct for partners that want to put to consumers and through their own branding on the partners. service.
Music streaming and download. TV and video streaming (mobile Text-based directory enquiries Services Editorial guidance. and web) for various types of through two Norwegian short display. User-friendly clients. numbers 1985 and 2100.
Consumers. Operators, Mobile network operators, Consumers. Customers broadband companies, TV broadcasters and media and cable distributors, music corporations like Deutsche distributors and handset vendors, Telekom, Hi3G, Telenor and TV2 such as Telenor, Canal Digital and Denmark. Platekompaniet.
From consumers: monthly Start-up fee, monthly fee and Revenue per search. Business subscription revenues, most often volume-based revenue sharing. model SEK 99. From partners: start-up fee, monthly fee and volume- based revenue sharing.
Very high growth in digital High growth tracking progress Downward volume trend and Market music and new models driven by of hand-held appliances like price increases. trends streaming services. Supported tablets and mobile phones and by the proliferation of new smart convergence between mobile phones and record company and web streaming. Video over needs for new channels. the Internet is expanding and consumers expect to be able to find anything on every type of display.
Aggressive growth strategy on Aggressive growth strategy on Maintain positioning on the Strategic current and new markets where current and new geographical market and focus on efficient focus the goal is to be a significant markets where the goal is to be operations. provider globally. Organic growth a major global vendor. Organic on current and new markets. growth. Close collaborations with partners but with our proprietary brand as our core strategy. The Market 9
Streaming—A Fast Growth Market
MUSIC According to IFPI, the number of consumers subscribing to a to new markets as negotiations with record companies and music service grew by nearly 65% in 2011 from an estimated rights organizations are completed. The below table is an 8.2 million in 2010 to over 13 million in 2011. The number overview of some of Aspiro’s major competitors in music of countries where the largest digital vendors are available streaming. Other competitors include local services like Simfy increased from 23 at the beginning of 2011 to 58 one year later. and Juke on the German market. In Sweden, streaming services represented 82% of digital In total, streaming revenues in Sweden increased from SEK revenues in 2011 and streaming revenues increased by 105%. 64.8 m in 2009 to SEK 348.6 m in 2011. Overall, this meant that the Swedish music market expanded in 2011. In Norway, IFPI reported that total music sales fell by only 2% in 2011, and the increase from streaming services350 was as high as 125%, which means that streaming now represents300 one- third of the whole market and 63% of digital sales. Denmark is 250 Share of Music Sales in Sweden lagging progress in Sweden and Norway somewhat, but new a services were introduced in the year, and streaming revenues 200 100100 amounted to nearly 13% of the market, a 21% increase. Other 8080 markets also increased sharply, such as France, where150 revenues 6060 from subscription services were up by 90%. 100 4040 Overall, the digital music market expanded by 8% globally 50 20 in 2011 to SEK USD 5 billion, or 32% of the total sales of the 20 world’s record companies. In the US, South Korea and0 China, 00 2009 2010 2011 over half of revenues are now sourced from digital channels.-50 A number of vendors are competing to bring their services Streaming Download Physical Source: IFPI
Competitor Countries Number of paying users
Spotify Denmark, Finland, France, Netherlands, Norway, Spain, Sweden and UK 2.5 million
Deezer France, UK, over 25 other countries 1.5 million
Rhapsody Canada, USA 1 million Australia, Austria, Brazil, Canada, Germany, New Zealand, Portugal, Spain and Rdio USA Unknown
Rara Canada, France, Germany, UK, USA and over 20 other countries Unknown
Source: IFPI Digital Music Report 2012
Of the IFPI’s estimated total paying user base of 13,000,000 in 2011, South Korea represented an estimated 3 million, with the biggest services being MelOn and MNET. The Market 10
TV AND VIDEO SERVICES The diagram below illustrates how the Swedish population functionality, are driving development. Informa Telecoms & has already started using the Internet to watch videos and Media expects the number of OTT service users to outsize TV. IMS Research estimates that the global market for OTT those using IPTV as early as 2013. In 2015, they estimate (over the top) video services, i.e. video services used over that 380 million people will use online video via connected the Internet, will increase in the coming years. IMS Research devices such as TV sets, gaming consoles, digiboxes etc. BBC estimates that OTT subscription services will generate over iPlayer and Netflix are identified as important development USD 32 billion over the next five years, to represent a larger drivers, as well as producers like Apple and Google. share of the market than pay per services, which allow users to rent or buy services ad hoc. Mobile or handheld devices like smartphones and tablets, as well as digiboxes with Internet
Share of Internet users (over 16) that use the How Many Video and TV Viewers on the Internet? Internet as a platform for the following media daily
2525 100% EBITDA 2020 Resultat efter direkta kostnader 80% Nettoomsätning 1515 60% 1010
40% 5
0 20% Music Video Tv 2009 2010 2011 Source: Svenskarna och Internet (“Swedes and the Internet”) 2011 0% 16-25 år 26-35 år 36-45 år 46-55 år 56-65 år 66-75 år 76-85 år Age 12-15 Age 16-25 Age 26-35 Age 36-45 Age 46-55 Age 56-65 Age 66-75 Age 76-85 Age 12- 15 år Aspiro’s competitors on the TV and video market include Nokia Siemens networks, Alcatel Lucent, Ericsson, Mobi-TV, YouTube Video Tv Xstream and Kit Digital. Source: Svenskarna och Internet (“Swedes and the Internet”) 2011 Competence and Values 11
Aspiro’s Human Resources –Competence and Values
Highly Qualified Professionals Aspiro is a genuine knowledge-based business where employee operations at group, unit and individual levels are some of the skills are decisive to the company’s progress; some 90% of tools employed. Aspiro also endeavors to highlight individual Aspiro’s employees are graduates, possessing knowledge of employee efforts. everything from marketing, sales, business development and accounting to Java development, programming, design and Human Resources Policy Principles project management. Aspiro’s human resources policy should be based on the laws and contracts that regulate the labor market. The HR policy Human Capital is Aspiro’s Prime Resource should also have natural links to the values that underpin the Hiring and retaining high competence in Aspiro’s strategic focus company’s actions and decisions. In brief, Aspiro’s principles are segments is a key competitive advantage. A common induction a high ethical standard, clear quality standards, good internal program, employee satisfaction surveys and individual updates, communication and participation and clear responsibility for 360 degree leadership appraisal and monitoring results of goals and results.
Age Groups, % Length of Service, % Qualifications, %
60 50 80
40 45 60
30 30 40 20
15 20 10
0 0 0 20-30 31-40 Over 40 <1<1 year år 1-31-3 år 3-53-5 år >5>5 år HighGymnasium school/ UndergraduateUniversitet/ Universitet/Graduates years years years senior high högskolastudies högskola>3 years * No employees under 20. school 1-3 years 1-3 år >3 år
Employee Key Figures 2011 2010 2009 2008 2007 2006 2005 2004 2003
Average number of employees 117 129 142 144 156 133 115 65 30 Number of employees at end of year 104 117 140 134 134 134 112 59 22 Share of women, % 17 19 20 25 18 26 22 35 11 Average age, years 33 34 33 34 32 33 33 35 36 Share of graduates, % 90 89 90 87 80 81 80 90 88 Average work experience, years 10 11 10 11 8 11 10 – 10 Sickness absence, % 1.67 2.50 3.09 1.70 4.50 3.00 1.98 – 3.92 Net sales per employee, SEK 000 2,469.6 2,805.0 3,302.8 2,939.6 2,595.6 3,367.0 3,546.6 1,992.7 605.2 Value-added per employee, SEK 000 1,463.4 1,995.3 2,178.9 2,496.5 2,107.0 2,715.8 2,874.9 1,642.9 426.6 Competence and Values 12
Aspiro’s Employees are from Percentage of Women/Men Percentage of Employees by Business Segment
Australia, Belarus, Brazil, Canada, Colombia, Denmark, Estonia, Finland, France, Germany, Music: 52% Iceland, India, Ireland, Italy, Latvia, Lithuania, Women:Kvinnor: 17% TV: 32% Norway, Pakistan, Poland, Romania, Russia, Men:Män: 83% Finance/ Management/ Spain, Sweden, Taiwan, Turkey, UK, USA. Search: 16%
Organization–Multinational Working Environment segment. Technology and product purchasing is coordinated At the end of the year, Aspiro had 104 employees. The centrally as far as possible, while sales and parts of marketing majority of them, and all of management, are stationed at are conducted at a local level through market offices in Norway, the operational head office in Oslo, which is co-located with Sweden, Denmark and Germany. The company has employees the company’s development functions. The Swedish WiMP from close to 30 different countries and a multinational working editorial service, the marketing and partner organization environment. Read more about the company’s organization in and the company’s accounting function is in Sweden. The the corporate governance section on page 24. company’s business segments are organized into separate Sickness absence group wide was 1.67%. No accidents entities to enable growth according to the conditions of each occurred in the workplace.
BICEP—Aspiro’s Values Committed Aspiro will have one clear goal that all employees work towards—to deliver Aspiro aims to lead development in its sector. Moreover, the company’s world-class mobile experiences that really make a difference in people’s everyday customers demand that everything we deliver has the highest quality—and is lives, “Shaping your mobile life.” The company’s values are designed to support delivered on time. Aspiro’s employees always endeavor to do that bit extra and this goal. Aspiro’s fundamental values are called BICEP—Brave, Innovative, Com- take responsibility for the company’s results. Aspiro keeps its promises. mitted, Enthusiastic and Playful. Enthusiastic Brave Aspiro believes that enthusiasm is an important motivator, internally and Aspiro aims to lead the market in existing segments, while also entering new externally. That’s why everyone at Aspiro endeavors to demonstrate pride in their markets and creating new products. This necessitates quality at all stages, and company and products, while celebrating success together. Aspiro has a lot of means that Aspiro must always be prepared to challenge and question its own skilled professionals, filled with enthusiasm for the company’s products, services organization, suppliers, partners, customers and competitors. That’s when bravery and shared progress. is needed. Playful Innovative Aspiro delivers entertainment—so it’s obvious that all our people should dare Rapid technological progress sets high standards for innovation and flexibility. to be playful and live for entertainment. Aspiro encourages its people to have To predict customer needs and realize dreams, everyone at Aspiro needs to be fun at work, and managers should have the ambition of creating surprises and a creative and inventive—innovation is vital to our survival. playful environment. This enhances well-being, while playfulness often results in someone coming up with a new solution that contributes to innovation. Operations 13
Operations
Net Sales from Continuing Operations, SEK m
250
Some 25% growth from 2010 to 2011 200
150
100
50
0 2009 2010 2011
Sales and Earnings by Business Segment 2009-2011, SEK m 2009 2010 2011
Net sales
Music 28.1 50.0 123.7 TV 39.5 53.2 54.0 Mobile Search 79.8 79.3 52.8 Eliminations/unallocated 18.1 2.4 0.0 Total 165.5 184.9 230.5 Discontinued operations 303.5 176.9 58.4
Earnings Net of Direct Expenses
Music 8.6 13.5 28.7 TV 37 50.3 50.3 Mobile Search 37.1 44.7 29.9 Eliminations/unallocated 17.5 -0.9 1.3 Total 100.2 107.6 110.2 Discontinued operations 124.2 79.2 23.8
EBITDA
Music -8.9 -20.3 -26.9 TV -10.7 -14.6 -5.1 Mobile Search 32.0 39.4 26.6 Eliminations/unallocated -30.1 -31.7 -28.7 Total -17.7 -27.2 -34.1 Discontinued operations 15.1 4.9 -2.9 Operations 14
Aspiro’s Sales in 2011 Aspiro’s Sales in 2011 by Business Segment, % by Country, %
Norway:Norge: 57% 57% Music: 54% Sweden:Sverige: 1717%% TV: 23% Denmark:Danmark: 8%8% Mobile Search: 23% OtherÖvriga countries: länder: 18 18%%
Key Figures. Continuing Operations 2009 2010 2011
Net sales. SEK m 165.6 184.9 230.6 EBITDA, SEK m -17.7 -27.2 -18.8 Net profit/loss, SEK m -16.6 -119.5 -41.2 Earnings per share, SEK -0.09 -0.62 -0.21 Cash and cash equivalents, SEK m 57.9 76.8 57.5 MUSIC Music Business Segment 15
The WiMP music service provides a personalized and local music experience that guides users through the world of music with local perspective, knowledge and feel.
Growth and Expansion with the WiMP Music Service
Aspiro delivers the WiMP music service direct to consumers. With WiMP, users can listen to millions of tracks directly over their Internet connections, and enjoy editorial content created by local editors in each country, day by day and minute by minute. WiMP is also sold via partners such as operators, broadband providers and cable TV companies. Aspiro’s music service works on computers, mobile phones, tablets, digital stereo systems and digiboxes.
Market Trends While the market for physical music sales has been in a downward trend for several years, the market for digital music is in high growth. The introduction of streaming services has offered consumers the possibility of renting access to a global music archive whenever and wherever they want. This has very quickly revolutionized music consumption patterns. A number of companies are currently launching their services in more countries. Read more about the market on page 9.
Business Model End consumers pay a monthly fee for WiMP, which after VAT, is shared between Aspiro, partners, record companies and rights holders. 70-80% of revenues after VAT are paid to record companies and rights organizations , who pay to artists and originators. Operators or other partners often pay a start-up fee, a monthly management fee, and in certain cases, revenue share based on the number of subscribers of the service. Aspiro’s core strategy is to use its proprietary brand, WiMP. Partners can either purchase WiMP and offer it as part of their existing offering, as is the case with Canal Digital, or they can become a distribution partner, such as Telenor. In individual cases, Aspiro also allows partners to put their own branding on the service, such as Portugal Telecom, where the service is called Music Box, and marketed solely by the partner. Depending on the agreement, either Aspiro or the partner manages the content agreements and associated settlement. MUSIC Music Business Segment 16
Sales150 and Earnings 2008-2011, SEK m
120 WiMP was launched in 90 Sweden and Aspiro signed a historical agreement with Canal Digital in Norway. 60 Aspiro hired more staff for further expansion.
30
0
2008 2009 2010 2011 -30
Net sales Earnings net of direct expenses EBITDA
Content Vendors Aspiro collaborates with international and local record companies and content vendors like Universal Music, Sony Music, EMI, Warner Music, Phonofile, Arts Pages, IODA, The Orchard, Beggars Group, Naxos and Vidzone, and has licensed many millions of tracks. In addition, Aspiro also has agreements with rights organizations such as STIM, TONO and KODA, which pay fees to right holders. Aspiro manages the complete process from development to daily content management, promotional activities, statistics and reporting.
Market Position—WiMP’s Unique Benefits The music experts are finally online and they know what you’re going to love! The WiMP music service brings you a personalized, local music experience that guides users through the music world with a local perspective, knowledge and feel. WiMP doesn’t just have millions of tracks to offer—but it also makes music personal. WiMP is for people that love music. WiMP is available everywhere, on all digital platforms. WiMP originates from artists and music experts—not algorithms in server farms. WiMP brings your passion for music back to life.
Customers At the end of December, Aspiro had some 350,000 paying users in Sweden, Norway, Denmark and Portugal, up from 100,000 at the end of 2010. Aspiro delivers music services that are marketed by companies including Telenor, Canal Digital, Platekompaniet and Portugal Telecom.
Progress in 2011 • Sales increased by SEK 73.7 m, or 147%, from 2010 to 2011. • WiMP launched in Sweden in February; Aspiro signed a distribution agreement with Telenor. • Aspiro signed a historic agreement with Canal Digital in Norway, involving 700,000 customers getting WiMP bundled into their TV subscriptions. • The music catalogue passed 13 million tracks, and Aspiro hired a global editor, Swedish editorial team and expanded its organization to manage international expansion. • WiMP launched for iPad, Windows Phone, Nokia Symbian and beta for Sonos. • Aspiro acquired the remaining 50% of WiMP Music AS from Platekompaniet, which means that 100% of sales and earnings from WiMP in Norway are consolidated into the Music business segment from 1 November 2011. TV TV Business Segment 17
Aspiro delivers seamless video solutions via the Internet and mobile phones, tablets, computers, TV sets and Internet-enabled gaming consoles
TV via the Internet on All Types of Display Aspiro develops and manages digital TV and video solutions that allow users to watch TV and video directly on the mobile network or over their Internet connections. TV over the Internet has expanded robustly in the past year because more types of display have got Internet access. Primarily, Aspiro sells these solutions to mobile operators, but also to TV and media corporations. Aspiro offers its partners to take over the complete process, from development and agreements with content vendors to operating the service, plus statistics and reporting.
Market Trends The market for mobile and web TV is in high growth, with the primary driver being the convergence between mobile and stationary appliances over the web. Meanwhile, tablets and smartphones are becoming more widespread at the same time as new TV screens and games consoles also have internet connectivity. Consumers are increasingly expecting to find the same content regardless of their location, and for solutions to work seamlessly from their computer to the mobile, and on to tablets and TVs. User-friendly client apps are another driver facilitating TV viewing on the move. Simultaneously, integration with third-party solutions brings new opportunities for real-time dialogue and advertising. Read more about this market on page 10.
Business Model Aspiro’s business model addresses mobile operators and TV distributors that want to offer their customers complete TV and video services seamlessly for all types of display. Aspiro’s positioning in the value chain is illustrated below. In the example, the customer is a mobile operator, but the same also applies to companies that deliver cable or satellite TV. When a customer buys a TV service from Aspiro, it pays an initial start-up fee, then a monthly fee, and as a third component, revenues are shared according to viewer ratings.
Content owner Aspiro TV Mobile operator Consumer
Paid from agreements Delivers a complete white Use their TV service to Can view live TV or VoD with Aspiro or mobile label TV and video solution increase profitability on computers, tablets or operator • Start-up fee • Increase ARPU* mobiles • Rights fees • Monthly/management fee • Reduce churn** • Subscription • Revenue share • Revenue share • Reduce SAC*** • Pay per view • Increase market share • Bundled offerings
*Average Revenue Per User **Lost subscribers *** Subscriber Acquisition Cost TV TV Business Segment 18
Sales and Earnings 2008-2011, SEK m
60
50
40
30
20
10
0
-10 2008 2009 2010 2011 -20
Net sales Earnings net of direct expenses EBITDA
Content Vendors Aspiro is able to offer its customers rights to content from global vendors like the BBC, Disney Channel, CNN, CNBC and Turner. Aspiro also offers administration of existing content rights for its customers.
Market Position—Aspiro’s Unique Advantages Aspiro delivers a white label service, which means partners can apply their own branding to the service. Aspiro enables partners to offer the same video service of high quality, specially tailored to all the different types of display. Aspiro’s open framework is integrated with leading sector standards, meaning that partners can connect their existing platforms and systems to utilize the technology they’ve already invested in. Aspiro enables it to integrate rapidly with third-party services, which ensures dynamic and living services cost-effectively. Aspiro also emphasizes graphical user interfaces and the user experience, which means its services stand out from others on the market.
Customers Aspiro delivers TV- and video solutions to network operators, TV and media corporations worldwide like Deutsche Telekom, Nextel, Telenor, 3, Entel, TeliaSonera, the BBC and TV2 Denmark etc.
Progress in 2011 • Stable sales for the year overall, with good growth in the second half-year. Fourth-quarter sales were the highest quarterly sales ever. • Significant earnings improvement through efficient operations and cost control. • Aspiro expanded its product portfolio with TV and video services for all types of display, from mobiles through tablets to computers, new Internet-enabled TV sets and gaming consoles. The new product portfolio is attractive on the market for operators, Internet providers and TV companies. • Aspiro signed new agreements with NII Holdings (Nextel), TV2 Denmark and Comoyo (extended agreement with Telenor). MOBILE SEARCH Mobile Search Business Segment 19
Text-based Directory Enquiries
Aspiro delivers paging services and has strong positioning in text-based directory enquiries in Norway, through the company’s short codes 1985 and 2100.
Market Trends The market for text-based directory enquiries is in a downward trend as searches through phones, tablets and other Internet- enabled handheld devices are taking over. The market features intense competition.
Business Model End customer positioning where consumers pay per search.
Content Vendors Aspiro has agreements with content vendors of phone number databases used for directory enquiry services.
Brands Sales and Earnings 2008-2011, SEK m Aspiro’s Norwegian short codes 2100 and 1985 are also brands 100 marketed through a range of radio and TV campaigns, events, EBITDA Internet marketing, and through direct marketing. 80 Resultat efter direkta kostnader Nettoomsätning Progress in 2011 60 • Decreasing sales in line with declining text searches. 40
20
0 2008 2009 2010 2011
Net sales Earnings net of direct expenses EBITDA DISCONTINUED OPERATIONS Discontinued Operations 20
Focusing through Divestments
Aspiro sold the Mobile Solutions business segment in 2011, with its mobile business services, gateway, mobile payment and dialogue businesses. Aspiro also sold the subsidiary Miles Ahead and Mobile Search in Finland. The intention was to focus on the TV and music business and make Aspiro a more pure-play streaming company. In 2010, Aspiro sold former core business Mobile Entertainment.
In the fourth quarter, Aspiro completed the sale of the Mobile Solutions business segment to Link Mobility AS. The purchase price, including an adjustment to working capital, was NOK 22.9 m, NOK 7.5 m of which was paid when the transaction was concluded, NOK 10.4 m with an adjustment for potential guarantees will be paid after nine months, and the remaining NOK 5 m to be paid quarterly as a share of the buyer’s trading earnings. The capital gain on consolidation for the sale of Mobile Solutions was SEK 23.4 m. The sales revenue has been translated to SEK 27.1 m. In recent years, the market trend for the services of the Mobile Solutions business segment has been positive, but with a complex market with multiple players and products, there was a pressing need for consolidation, and Aspiro did not regard itself as the right player to lead this process. Because Aspiro also had award-winning products in its growth segments of music and TV, it was natural for it to focus its business on these segments instead. On 1 April 2011, Aspiro transferred its subsidiaries Miles Ahead Ltd. and Lime Consulting AS to EveryMatrix Holding Ltd. EveryMatrix Holding Ltd. took over Miles Ahead without payment. Miles Ahead was transferred on a debt-free basis and without any cash and cash equivalents being transferred. Miles Ahead was an early-phase technology enterprise, of which Aspiro held 80% of the shares. Mobile Search in Finland was sold on 1 March 2011. The purchase price was EUR 155,000. Mobile Entertainment, Mobile Solutions, Miles Ahead and Mobile Search in Finland are reported as discontinued operations in the Consolidated Accounts.
Sales and Earnings 2009-2011, Discontinued operations SEK m
350 EBITDA 300 Resultat efter direkta kostnader 250 200 Nettoomsätning 150 100 50 0 -50 2009 2010 2011 Net sales Earnings net of direct expenses EBITDA Stock and Stockholders 21
Stock and Stockholders
Aspiro’s Stock immediate subscription for one Aspiro share at an exercise Aspiro is a small-cap company listed on Nasdaq OMX Nordic price of SEK 1.39. Exchange in Stockholm. Aspiro’s stock has been listed on 10 million warrants are being retained by group the Stockholm Stock Exchange since 2001. The stock code is companies for the correct fulfillment of the company’s ASP and it is in the Internet & Software Services segment (ID obligations in the staff stock option plans. 45101010). A trading lot is 5,000 shares. At year-end 2011, the Expenses for stock options are reported in accordance stock price was SEK 1.17 and total market capitalization was with IFRS 2. The fair value of options at granting is calculated some SEK 241 m. The high in 2011 of SEK 1.84, was on 8 July. according to the Black & Scholes general model for valuing The low of SEK 1.09 was on 3 January. Some 67 million shares options without restatement for potential dilution. The were traded in 2011, averaging some 5.6 million per month. expenses are allocated on a straight-line basis over the term A total value of approximately SEK 98 m of Aspiro stock was of the options. Provisioning for social security expenses is traded in 2011. The rate of turnover was 34%. based on the fair value of options at each reporting date, in accordance with statement UFR 7 IFRS 2 on social security Share Capital History expenses for listed companies from RFR. (Rådet för finansiell As of 30 December 2011, Aspiro’s share capital was SEK rapportering, the Swedish Financial Reporting Board). 206,260,016, divided between 206,260,016 shares. Each share The purpose of the staff stock options is to provide senior gives equal entitlement to participation in Aspiro’s assets and managers of the company and key staff with an incentive earnings and entitles the holder to one vote. Upon full exercise whereby they are offered the opportunity to participate in of outstanding warrants, the number of shares could increase value growth of the company’s stock. This is expected to to 216,260,016. enhance interest in the company’s progress, and its stock price performance, and to stimulate continued loyalty to the Stock Option Plans company through the coming years. The option plan is also Aspiro has outstanding staff stock option plans for the CEO, expected to contribute to the Aspiro group being able to hire senior managers and other key Aspiro staff. and retain competent staff. The staff stock option plan resolved by the AGM 2008 Upon full exercise of all outstanding warrants, share capital was the first part of a three-year option plan. The AGM 2009 could increase by a maximum of SEK 10 m, or some 4.6% of resolved on the second part of this option plan, the staff stock the company’s share capital after the increase. option plan 2009/2011, involving the granting of a further There are no rights to renegotiate the terms of the stock 5,000,000 staff stock options, largely consistent with the terms option plans. However, Aspiro is entitled to amend the option of the staff stock option plan 2008/2010, plus a performance terms if required due to legislation, court rulings or regulatory condition regarding the company’s net sales. These options decisions, or if other practical reasons make it expedient or were exercisable from the AGM 2010 until 30 June 2011, both necessary, and the rights of option holders are not impaired inclusive. Each staff stock option entitled the holder to receive in any way. one warrant for immediate subscription for one newly issued Read more about the company’s stock option plans in Aspiro share at an exercise price of SEK 1.30. 2,315,000 of note 4. these staff stock options were exercised on 30 June 2011. The AGM 2010 resolved on the granting of 5,000,000 staff Stockholders stock options. Half of the options are exercisable from one Aspiro had 6,170 stockholders on 30 December, of which 252 year of granting and half two years after granting, but no later were foreign. At the end of the period, 72% of stockholders than 31 December 2012. Each staff stock option entitles the were men, 21% women and some 7% were legal entities. holder to receive one warrant for immediate subscription for Legal entities’ holdings corresponded to 83% of the share one newly issued Aspiro share at an exercise price of SEK 1.91. capital. 92% of stockholders were natural persons domiciled An EGM on 10 October 2011 resolved on the issuance in Sweden, with holdings corresponding to 17% of the share of 5,000,000 staff stock options. The options were primarily capital. Swedish finance corporations and institutions held granted in tandem with the EGM. Granting to new employees 13%, interest groups held 0%, the public sector 0% and other is by 30 June 2012. The staff stock options can be exercised Swedish companies 8% of the share capital. 39% of the share from 1 October to 31 December 2014. Each staff stock capital is held by stockholders domiciled in Sweden, 55% in option confers entitlement to receive one share warrant for the rest of the Nordics and 6% in the rest of Europe. The largest Stock and Stockholders 22
stockholders and their holdings as of 30 December are stated Dividend in the table below. Aspiro held cash and cash equivalents of some SEK 57.5 m at year-end. The Board has defined an expansive strategy including initiatives in growth segments and new Largest Stockholders as of geographical markets, as well as potential complementary 30 December 2011 Shares Votes (%) corporate acquisitions intended to ensure the company’s growth, profitability and dividend capacity for the longer Skandinaviska Enskilda Banken AB 44,000,000 21.3 term. At present, Aspiro has no distributable capital and is also Schibsted 37,772,222 18.3 active on a fast-changing market, where at present, the capital Platekompaniet AS 13,406,901 6.5 requirement to execute the strategy is uncertain. Accordingly, ORKLA ASA 9,490,000 4.6 the Board has proposed to the AGM that no dividend is payable for the financial year 2011. Avanza Pension 9,172,295 4.5 Investra ASA 8,000,000 3.9 Aspiro AspiSIXr ITo SIX IT Totalt antal omsattaTTotalotalt Monthly antali 1000-tal omsatta Turnover, per månadi 1000-tal 000 per månad Nordnet Pensionsförsäkring AB 7,108,016 3.5 Aspiro SIX IT Totalt antal omsatta i 1000-tal per månad SEK 5 5 50000 50000 Swedbank Robur fonder 4,006,365 1.9 5 50000 SEB Enskilda AS - Klientdepo 3,839,958 1.9 4 4 40000 40000 Antech Alliance INC 3,400,000 1.6 4 40000 Other stockholders 66,064,259 32
3 3 30000 30000 Total 206,260,016 100.00 3 30000 Source: Euroclear, VPC 2 2 20000 20000 2 20000
1 1 10000 10000 1 10000
0 0 0 0 0 2005 20062005 20072006 20082007 20092008 20102009 20112010 201220110 2012 2005 2006 2007 2008 2009 2010 2011 2012 © © ©
Stockholder Statistics as of 30 December 2011 No. of No. of Holding/ Holding Stockholders Shares votes (%)
1-500 2,681 393,425 0.19 501-1,000 826 707,416 0.34 1,001-5,000 1,395 4,075,026 1.98 5,001-10,000 534 4,589,034 2.22 10,001-15,000 144 1,894,360 0.92 15,001-20,000 182 3,480,910 1.69 20,001- 408 191,119,845 92.66 Total 6,170 206,260,016 100.00 Stock and Stockholders 23
Share Data 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
Basic and diluted earnings per share, SEK -0.09 -0.68 -0.09 -1.09 0.05 0.26 0.11 -0.89 -4.96 -463.86 Basic and diluted earnings per share, continuing operations, SEK -0.21 -0.62 -0.09 N/A N/A N/A N/A N/A N/A N/A Equity per share, SEK 0.76 0.81 1.49 1.52 2.63 2.56 2.33 1.58 1.96 15.85 Equity per share, inc. potential shares, SEK 0.73 0.77 1.41 1.46 2.46 2.42 2.21 1.55 1.95 15.69 Cash flow per share from operating activities, SEK -0.18 -0.01 -0.08 0.18 0.08 0.25 0.37 -0.27 -4.44 -212.74 Dividend, SEK ------Adj. closing stock price at year-end, SEK 1.17 1.06 1.90 1.04 1.35 3.22 4.42 2.61 2.33 15.59 Ave. number of outstanding shares, 000 193,551 190,538 190,538 190,538 190,538 190,041 169,994 67,658 8,837 450 Ave. number of outstanding shares and potential shares, 000 201,881 200,538 199,013 201,441 202,765 200,584 176,303 68,176 8,876 456 No. of shares at year-end, 000 206,260 190,538 190,538 190,538 190,538 190,538 189,538 108,962 26,503 490
Share Capital History Quotient Change in Share Total Share No. of New Total No. of Year Transaction Value, SEK Capital, SEK Capital, SEK Shares Shares
1998 Incorporation 1.00 50,000 50,000 50,000 50,000 1998 Bonus issue 1.00 50,000 100,000 50,000 100,000 1999 New issue 1.00 50,000 150,000 50,000 150,000 1999 Split 0.10 – 150,000 1,350,000 1,500,000 1999 Bonus issue 0.10 350,000 500,000 3,500,000 5,000,000 1999 New issue 0.10 250,000 750,000 2,500,000 7,500,000 2000 New issue, acquisition 0.10 17,613 767,613 176,130 7,676,130 2000 New issue, acquisition 0.10 3,386 770,999 33,855 7,709,985 2000 New issue, acquisition 0.10 6,000 776,999 60,000 7,769,985 2000 New issue, acquisition 0.10 467 777,465 4,668 7,774,653 2000 Split 0.02 – 777,465 31,098,612 38,873,265 2000 New issue 0.02 77,747 855,212 3,887,327 42,760,592 2000 New issue, acquisition 0.02 122,253 977,465 6,112,673 48,873,265 2000 Exercise of options 0.02 23,012 1,000,477 1,150,578 50,023,843 2001 New issue, acquisition 0.02 600,000 1,600,477 30,000,000 80,023,843 2001 Exercise of options 0.02 116,000 1,716,477 5,800,000 85,823,843 2001 New issue, acquisition 0.02 4,279 1,720,756 213,968 86,037,811 2002 New issue, acquisition 0.02 239,240 1,959,996 11,962,000 97,999,811 2003 New issue 0.02 11,759,977 13,719,974 589,998,866 685,998,677 2003 New issue, acquisition 0.02 1,400,000 15,119,974 70,000,000 755,998,677 2003 New issue, acquisition 0.02 11,383,336 26,503,310 569,166,809 1,325,165,486 2003 New issue, reverse split 0.02 2 26,503,312 114 1,325,165,600 2003 Reverse split 4.00 0 26,503,312 –1,318,539,772 6,625,828 2003 Reduction of share capital 2.50 –9,938,742 16,564,570 0 6,625,828 2003 New issue 2.50 49,693,710 66,258,280 19,877,484 26,503,312 2004 Private placement 2.50 20,000,000 86,258,280 8,000,000 34,503,312 2004 New issue, acquisition 2.50 14,100,418 100,358,698 5,640,167 40,143,479 2004 Reduction of share capital 1.76 –29,706,174 70,652,523 0 40,143,479 2004 New issue 1.76 70,652,523 141,305,046 40,143,479 80,286,958 2004 New issue, acquisition 1.76 50,468,000 191,773,046 28,675,000 108,961,958 2005 New issue, acquisition 1.76 136,593,885 328,366,931 77,610,162 186,572,120 2005 New issue, acquisition 1.76 5,220,151 333,587,082 2,965,995 189,538,115 2006 Exercise of options 1.76 1,760,000 335,347,082 1,000,000 190,538,115 2009 Reduction of share capital 1.00 –144,808,967 190,538,115 0 190,538,115 2011 Exercise of options 1.00 2,315,000 192,853,115 2,315,000 192,853,115 2011 New issue, acquisition 1.00 13,406,901 206,260,016 13,406,901 206,260,016 Corporate Governance Report 24
Corporate Governance Report
The preparation of a Corporate Governance Report has been Annual General Meeting and a requirement of the Swedish Annual Accounts Act since Extraordinary General Meeting 2011 2010. This Corporate Governance Report conforms to the Aspiro’s Annual General Meeting was held in Stockholm, stipulations and application instructions of the Swedish Code Sweden, on 19 May 2011. The AGM re-elected Gisle Glück of Corporate Governance. The Corporate Governance Report Evensen, Åsa Sundberg , Peter Pay, and Lars Boilesen, and has been prepared as a separate document from the Annual elected Trond Berger as Board members. Trond Berger Accounts, and accordingly, is not part of the formal Annual was elected as Chairman of the Board. Directors’ fees will Accounts documentation. The Corporate Governance Report amount to a total of SEK 750,000, of which SEK 250,000 has been reviewed by the company’s Auditor in accordance to the Chairman of the Board and SEK 125,000 to each of with the stipulations of the Swedish Annual Accounts Act, and the other Board members. The AGM approved the Board’s the Auditor’s statement is attached to the Report. proposed guidelines for remunerating senior managers. An EGM 2011 was held in Malmö on 10 October 2011. The Legislation and Articles of Association Board was authorized to decide on the new issue of shares, Primarily, Aspiro observes the Swedish Companies Act, the waving preferential rights for existing shareholders, against rules and recommendations ensuing from the company’s cash payment, set-off or contributions in kind on one or quotation on NASDAQ OMX Stockholm and generally more occasions before the next AGM. This authorization accepted practice on the stock market. Additionally, Aspiro encompasses a number of shares, which in total does not observes the stipulations of Aspiro’s Articles of Association. exceed 10% of the total number of outstanding shares in The Articles of Association are available from Aspiro’s website, the company before using this authorization. The AGM also www.aspiro.com. resolved on the issuance of staff stock options for granting to key executives. The minutes of the AGM and the EGM are Annual General Meeting available at Aspiro’s website. Information on the AGM 2012 is Aspiro’s Annual General meeting (AGM) is held in Stockholm, published on Aspiro’s website. Sweden, in the first half of each year, and is conducted in accordance with applicable legislation. The AGM, or where Nomination Committee applicable, Extraordinary General Meeting (EGM), is the chief The Nomination Committee represents the company’s decision-making body, where all shareholders are entitled stockholders; its work is conducted in accordance with the to participate. The Articles of Association do not include stipulations of the Swedish Code of Corporate Governance. any limitations on the matter of how many votes each Aspiro’s AGM 2008 resolved that the Chairman of the Board shareholder may cast at shareholders’ meetings. All shares should contact the largest shareholders by no later than the have equal entitlement to votes. At year-end 2011, Aspiro end of the third quarter of each year, to appoint a Nomination had two principal owners, Skandinaviska Enskilda Banken Committee consisting of three members. The Nomination AB and Schibsted group, with holdings amounting to 21.3% Committee appoints its Chairman internally. The Members and 18.3% respectively. After the end of the period, through of the Nomination Committee for the AGM 2012 are Trond a public takeover bid and via the stock exchange, Schibsted Berger for Schibsted ASA, Björn Franzon for Swedbank Robur acquired 115,367,602 shares, and holds 74.3% of Aspiro Fonder and private shareholder Odd Winger. shares. For more information on shareholders, see page 21. The Nomination Committee’s complete proposals and The AGM considers the company’s progress and resolves on information on the proposed members will be available at matters such as dividend, Directors’ fees, amendments of the Aspiro’s website. No remuneration was paid to the members Articles of Association, discharging the Board of Directors of the Nomination Committee. from liability and resolutions on a new Board of Directors until the next AGM, as well as authorization for the Board of Board of Directors Directors on the new issue of shares. Press releases, minutes The Board of Directors is responsible for the company’s and presentations from shareholders’ meetings are available organization and administration in accordance with the at the company’s website. Swedish Companies Act and its work is conducted according to the guidelines of the Swedish Code of Corporate Governance. Corporate Governance Report 25
Board Composition Non- affiliated Atten- Aspiro’s Board will comprise a minimum of three, and Non-affi- to Major dance Directors’ maximum of ten, regular members. Board members are liated to Share- at Board Fees, SEK elected by the AGM for a period of one year. There are no rules Company holders Meetings 000 stipulating how long a Board member may serve. Trond Berger* Yes No 6/12 250 The AGM 2011 elected five regular Members. Trond Berger Mats Alders** Yes Yes 3/12 250 is employed by Schibsted, Gisle Glück Evensen was formerly Åsa Sundberg Yes Yes 12/12 125 employed by Schibsted, while Peter Pay, Åsa Sundberg and Peter Pay Yes Yes 12/12 125 Lars Boilesen are not affiliated to the company or major Nils Petter Tetlie** Yes Yes 3/12 125 stockholders. On 12 January 2012, Schibsted announced a public Lars Boilesen Yes Yes 10/12 125 takeover bid for Aspiro. Aspiro’s board considered a number Gisle Glück Evensen*** Yes No 8/12 125 of matters relating to this bid in the period December 2011 * Board member from the AGM in May 2011. Fees invoiced via Schibsted. - February 2012. Trond Berger, who is CFO of Schibsted and ** Board member until the AGM in May 2011. *** Gisle Glück Evensen was previously employed by Schibsted. Chairman of Aspiro, and Gisle Glück Evensen, who until recently, was a Schibsted employee and is an Aspiro Board The Work of the Board of Directors in 2011 member, did not participate in the Board’s appraisal and In 2011, the Board held 12 meetings where minutes were decision regarding Schibsted’s bid. In December 2011, the taken (including the Board meeting following election, where Board of Directors held two meetings where minutes were the new Board was appointed), of which four were held taken relating to Schibsted’s bid. in tandem with the company presenting interim reports. Board members have broad experience from segments The company’s Auditors attended one meeting. Apart from including the mobile services, finance and media sectors, permanent business, such as monitoring operations against and experience of listed companies. Information on Board budget and strategic plans, the Board considered other members (elected by the AGM 2011 until the AGM on 14 May significant matters in the year including: 2012) can be found on page 28 and the company’s website. • Review and continued development of Aspiro’s strategy, with a clear focus on growth in the focus segments of TV The Board of Directors’ Rules of Procedure and Music The rules of procedure adopted by the Board of Directors • Sale of the Mobile Solutions business segment is based on the Swedish Companies Act’s overall rules on • Acquisition of the remaining 50% of WiMP Music AS the responsibilities of the Board of Directors and CEO, and • Budget for 2011 otherwise, on the decision-making process adopted by • Structural changes the Board, with clearly defined responsibilities within the • Compensation issues company, and the Board’s approved policies. The Board holds • Planning alternative business models in Music, which will regular meetings in accordance with the plan stipulated in the imply a funding requirement in 2012 rules of procedure, which includes predetermined matters for consideration. In 2011, the Board of Directors also commenced its evaluation of Schibsted’s takeover bid for Aspiro, and in January 2012, Appraisal of the Work of the unanimously decided to recommend that the company’s Board of Directors and Chief Executive Officer shareholders accept the bid. The underlying considerations of In 2011, the Board of Directors conducted an appraisal of the Board’s recommendation included a fairness opinion from its work, which essentially, produced positive results. The Pareto Öhman AB, according to which, from the assumptions appraisal focused on the Board’s work on the company’s and conditions stated in the fairness opinion, the offered strategy and goals, investments, reporting and controls, payment was reasonable to Aspiro’s shareholders from a communication, organizational resources and executive financial perspective. management, the Board’s working methods, composition and overall functionality, and the work of individual Board Audit Committee members. The Board conducts an appraisal of the work of the In accordance with a Board decision, Aspiro has no dedicated CEO three to four times per year. Additionally, the Chairman of Audit Committee, but rather, the whole Board of Directors the Board holds an appraisal interview with the CEO. performs the Audit Committee’s duties. The Board is accountable for ensuring insight into, and control of, the Remuneration to the Board company’s operations through reporting and ongoing Remuneration to the Board is resolved by the AGM and is contact with the company’s Auditors. The Board held one payable to those members not employed by the company. meeting in the year with the company’s Auditor, where the Fees for each Board member for 2011 are stated in the table Auditor’s actions included a detailed presentation on the below. Board members not employed by Aspiro are not audit. The Board was also given the opportunity to submit eligible for the company’s share-related incentive schemes. additional, more in-depth questions. Corporate Governance Report 26
Remuneration Committee comprehensive audit of the annual accounts, the Auditor The Board of Directors has decided against a dedicated also conducts a summary review of the Interim Report for the remuneration committee. The whole Board performs the second quarter. All reports and press releases are published duties of a remuneration committee. The Board of Directors with simultaneous uploads to Aspiro’s website. issues instructions to the Chairman of the Board, who negotiates with the CEO regarding remuneration. Based on Internal Controls over Financial Reporting this negotiation, the Chairman submits a proposal, which is In accordance with the Swedish Companies Act and the Code, then approved by the whole Board. The Board also decides on the Board of Directors is responsible for internal controls. This an overall bonus ceiling for all employees of the company. review has been prepared in accordance with chap. 6 § 6 of the Swedish Annual Accounts Act, and accordingly, reviews Management and Organizational Resources the company’s system for internal controls over financial The work and role of the Chief Executive Officer is formalized reporting. by written instructions, which also state the division of Internal controls over financial reporting is a process responsibility between the Board of Directors and the Chief designed by the Board of Directors intended to provide Executive Officer. Management met on 20 occasions in 2011. the Board and management with reasonable assurance Information on the current members of management is regarding the reliability of external financial reporting, and on page 29. Aspiro’s corporate governance is based on clearly that the financial statements are prepared consistent with decentralized accountability. Each line manager is responsible generally accepted accounting principles, applicable laws and for his or her areas of responsibility delivering results. Day- ordinances and other standards applying to listed companies. to-day operations should sustain the long-term strategy Internal control in Aspiro is based on a control and enable the company to achieve its predetermined environment including organizational resources, decision goals. Aspiro’s various business segments are organized paths, authorization and responsibility. Responsibility for into individual units, with a dedicated manager and each preparing an effective control environment and ongoing business segment is a separate legal entity with its own Board internal controlling and risk management work is delegated of Directors. In this way, Aspiro is endeavoring to optimize to group management. Controlled risk-taking is achieved the prospects of each unit according to market trends and through a clear organizational structure and decision-making positioning. Synergies between business segments are process. created by means including partnerships, user understanding The control activities include both general and more and economies of scale on the cost side. detailed controls, intended to prevent, discover and rectify misstatements and variances. The CFO has overall Remuneration to Management responsibility for implementing, enhancing and maintaining The principles for remunerating management are resolved by the group’s control routines. the AGM, proceeding from proposals submitted by the Board. Regular monitoring of financial results is conducted in the These principles mainly imply that Aspiro should offer market Board of Directors and operational units’ managements. The remuneration levels and employment terms. The complete Board of Directors receives monthly financial reports. Aspiro principles are stated in the Directors’ Report on page 31. The has processes and routines to ensure the quality of financial remuneration payable to the Chief Executive Officer and reporting, and that potential variances are followed up. management in 2011 is stated in note 4. The Board of Directors’ judgment is that at present, there is no need for a dedicated internal audit function. This judgment Audit is reconsidered yearly by the board of Directors. The Auditor is appointed by the AGM for a term of four years. Authorized Public Accountant Johan Thuresson of Ernst & Non-compliance with the Code Young was elected as Senior Auditor for the period until the Aspiro’s governance for the financial year 2011 departs from date of the AGM 2012. In 2011, the group’s Interim Report the stipulations of the Code on the following points: for the second quarter and the Year-end Report underwent Code requirement 2.4 Nomination Committee, the a summary review by the company’s Auditor, in accordance Chairman of the Board or other Board member should not be with the recommendations issued by FAR (the Institute for the Chairman of the Nomination Committee. the Accounting Profession in Sweden) and generally accepted The reason for this departure is that the shareholders auditing standards in Sweden. The remuneration payable to represented on the Nomination Committee have declared the company’s Auditors in 2011 is stated in note 3. that they consider the Chairman of the Board as particularly appropriate to lead the work of the Nomination Committee Financial Reporting effectively to achieve the best results for the company’s The group applies International Financial Reporting shareholders. Standards (IFRS/IAS) and interpretation statements issued by the International Financial Reporting Interpretations Malmö, Sweden 17 April 2012 Committee (IFRIC/SIC) as endorsed by the EU Commission, when preparing the Consolidated Accounts. Apart from a Board of Directors Corporate Governance Report 27
Auditors’ Statement on the Corporate Governance Report
To the Annual General Meeting of Shareholders of Aspiro AB (publ.), corporate identity number 556519-9998
Assignment and Division of Responsibility I have reviewed the Corporate Governance Report for 2011 on pages 24-26. The Board of Directors is responsible for the Corporate Governance Report and its preparation in accordance with the Swedish Annual Accounts Act. My responsibility is to state an opinion on the Corporate Governance Report on the bases of my audit.
Orientation and Scope of Audit The audit was conducted in accordance with instruction RevU 16, on the auditor’s review of the corporate governance report. This means that I have planned and conducted my audit to attain reasonable assurance that the Corporate Governance Report does not contain material misstatements. An audit involves reviewing a selection of the supporting data for information in the Corporate Governance Report. I consider that the audit gives me reasonable grounds to make the following statement.
Statement of Opinion I believe that a Corporate Governance Report has been prepared and that it is consistent with the Annual Accounts and Consolidated Accounts.
Malmö, Sweden, 17 April 2012
Johan Thuresson Authorized Public Accountant Board of Directors and Auditors 28
Board of Directors and Auditors
Trond Berger (Chairman) Peter Pay Lars Boilesen
Board member since May 2011. Board member since 2007. Board member since May 2009. Born: 1957 Born: 1940 Born: 1967 Authorized Public Accountant, B.Sc. (Econ.) from the B.Sc. (Eng.) from NTNU (the Norwegian University of B.Sc. in business economics from Aarhus Business BI School of Economics and staff officer training from Science and Technology), Trondheim. School and postgraduate diploma from Kolding the Norwegian Armed Forces. Occupation: Senior Partner of Credo Partners AS. Business School. Occupation: CFO of Schibsted ASA Other assignments: Chairman of Inven2 AS and Occupation: CEO of Opera Software. Other assignments: Various directorships in Board member of Redcord AS et al. Other assignments: – Schibsted Experience: Group Director of Telenor 1997-2001, Experience: CEO of Alcatel-Lucent Nordic and Experience: Investment Manager at Stormbull, CEO of Telenor Plus AS 1992-1997. Self-employed Baltic, Sales Director of Tandberg and Lego, formerly CFO of Nycomed ASA and Group Head of consultant 1989-1992, interim CEO of several Denmark, and broad experience of the mobile Strategy and Business Development at Nycomed companies. Formerly, nineteen years’ experience in sector with Opera and Alcatel. Amersham (1997-98). Partner of Arthur Andersen the EB group, including CEO of the two subsidiaries Aspiro stockholding: – 1981-92. EB Telecom and EB Netcom. Non-affiliated to company: Yes. Aspiro stockholding: – Aspiro stockholding: – Non-affiliated to major stockholders: Yes. Non-affiliated to company: Yes. Non-affiliated to company: Yes. Non-affiliated to major stockholders: No. Non-affiliated to major stockholders: Yes.
Åsa Sundberg Gisle Glück Evensen
Board member since May 2010. Board member since May 2010. Born: 1959 Born: 1976 B.Sc. (Eng.), the Royal Institute of Technology, B.Sc. (Eng.) in industrial economics from NTNU (the Stockholm and marketing diploma from Berghs Norwegian University of Science and Technology), School of Communication, Stockholm. Trondheim. M.Sc. in management. Employment: CEO Net1 Sverige. Occupation: CFO Fornebu Utvikling ASA Auditors Other assignments: Chairman of Teracom/Boxer Other assignments: – Group. Experience: Consultant, McKinsey & Co, Investor Johan Thuresson Experience: 10 years in venture capital focusing on Relations, Schibsted ASA, CFO of Media Norge ASA, Born: 1964 early-stage media, telecom and IT companies. 1996- Head of M&A Schibstedt ASA. Authorized Public Accountant since 1995. 2000, CEO of product development enterprises Aspiro stockholding: – Aspiro’s Auditor since 2008. Engineering AB and ProSoft AB. 1994-1995, Non-affiliated to company: Yes. Aspiro’s Deputy Auditor 2004 - 2007. President of Telia International Carrier. Non-affiliated to major stockholders: No. Aspiro stockholding: – Kerstin Mouchard Non-affiliated to company: Yes. Born: 1952 Non-affiliated to major stockholders: Yes. Authorized Public Accountant since 1981. Aspiro’s Deputy Auditor since 2008.
Management 29
Management
Gunnar Sellæg (CEO) Erlend Prestgard Per Einar Dybvik
Born: 1973 Born: 1978 Born: 1965 Chief Executive Officer. Commercial Manager, Music Chief Technical Officer and Head of Music. Aspiro employee since 2006. Aspiro employee since 2010. Aspiro employee since 2005. B.Sc. (Eng.) from NTNU (the Norwegian University of B.Sc. (Econ.) from the Norwegian School of B.Sc. (Eng.) from the University of Manchester. Science and Technology). Economics and Business Administration. Experience: Schibsted Mobile employee since Experience: formerly CEO of Aftenposten Experience: CFO of Aspiro 2010-2011. Project 2000. Former Product Development Manager at Multimedia AS, responsible for Aftenposten.no, Manager at McKinsey & Company. Headed up Scandinavia Online, consultant at Icon Medialab Oslopuls.no and the start-up of consumer portal change projects for a series of clients mainly and CEO of Internet services provider Neo Interaktiv. Forbruker.no and news portal E24.no. Previous in sectors including telecom. Analyst at UBS Previously electronic services manager at Telenor experience as CEO of the PrimeTime.net AS Investment Bank Corporate Finance in London, Media and researcher at Telenor’s research institute. advertising network and Schibsted ASA trainee. focusing on IPOs, M&A and corporate valuations. Aspiro stockholding: - Aspiro stockholding: – Aspiro stockholding: – Staff stock options: 1,375,000 Staff stock options: 2,500,000. Staff stock options: 1,375,000.
Erling Paulsen Peter Tonstad
Born: 1978 Born: 1972 Head of TV. CFO Aspiro employee since 2009. Aspiro employee since 2010. B.Sc. (Eng.) from NTNU (the Norwegian University of B.Sc. (Econ.) and master program in financial Science and Technology). management from the BI School of Economics. Experience: Head of Aspiro Mobile Solutions Political science qualifications from the University 2009-2010. Commercial Director and Senior of Oslo. Manager at Elkem Solar, Strategy Consultant and Experience: Head of Aspiro Mobile Solutions Project Manager at the Boston Consulting Group. 2010-2011. Board member of companies including HR North, Edda Digital AB, Netsprint, Newsdesk, Aspiro stockholding: – SmartCom and Mobiento. Head of online sales for Staff stock options: 1,375,000. Reuters Norway and Thomson Financial (London). Business Development Director of Dagens Næringsliv Nye Medier AS, Director of B2B and International Operations for Edda Media/Mecom and former CEO of Tarantell AS.
Aspiro stockholding: – Staff stock options: 1,375,000. 30
Contents, Financial Statements
Directors’ Report 31
Risk and Sensitivity Analysis 34
Five-year Summary 36
Definitions of Key Figures 37
Financial Statements, Group 38
Financial Statements, Parent Company 43
Accounting Principles 48
Notes 52
Signatures, Annual General Meeting and Financial Information 67
Audit Report 68 Director’s Report 31
Director’s Report
The Board of Directors and Chief Executive Officer of Aspiro AB (publ), corporate accordance with the Swedish Companies Act. At the Extraordinary General identity number 556519-9998, hereby present the Annual Accounts and meeting on 10 October 2011, the Board was authorized to decide on new Consolidated Accounts for the operations of the parent company and group share issues. On one or more occasions before the next AGM, the Board was in the financial year 1 January 2011 - 31 December 2011. Aspiro AB, with authorized to decide on new share issues, with or without preferential rights for registered office in Malmö, Sweden, is the parent company of the Aspiro group. previous stockholders, against cash payment, through set-off or contributions The company was incorporated in autumn 1998 and is a vendor of complete in kind or other conditions. This authorization encompassed a number of shares streaming services for music and TV. With 14 years’ experience of developing the total of which did not exceed 10% of the total number of outstanding and selling mobile services, Aspiro has unique market positioning in the shares in the company before utilization of the authorization. The purpose of Nordics. the authorization was to enable corporate or product acquisitions through payment in shares and/or to ensure that the company can expediently receive Operations capital contributions for the financing of operations and to enable a broader ownership base. The issue may take place at a market price. The Board is entitled to decide on other terms, although they must be on a market basis. Sales and Results of Operations 6.5% of the authorization of 10% was utilized in connection with the acquisition Consolidated net sales for continuing operations were SEK 230.6 m of the remaining 50% of the shares in WIMP Music AS. (SEK 184.9 m) for the 12-month period. Earnings before interest and taxes, There are no agreements between the company and Board members or depreciation and amortization (EBITDA) for continuing operations were employees that specify payments if these parties terminate employment, SEK -18.8 m (SEK -27.2 m). Excluding a revaluation gain in tandem with the have their employment terminated without reasonable grounds, or if their acquisition of WiMP Music AS (see divestments and acquisitions of companies), employment ceases as a result of a public takeover bid, other than the EBITDA for continuing operations was SEK -34.1 m. The net profit/loss for agreements between the company and senior managers stated in Note 4. continuing operations was SEK -41.2 m (SEK -119.5 m). Earnings per share before and after dilution for continuing operations amounted to SEK -0.21 Remuneration Guidelines for Senior Managers (SEK -0.62). Aspiro will offer the remuneration levels and employment terms considered In year-on-year terms, the EBITDA of the TV business segment improved, necessary to hire and retain a management with good skills and the capacity to while initiatives in streaming services in Music and reduced sales in Mobile achieve predetermined goals. Decisions on salary and employment terms of the Search are the main reasons for reduced EBITDA excluding revaluation. Chief Executive Officer are taken by the Board of Directors, which also decides Goodwill impairment relating to the Search operation affected earnings by SEK on the total bonus for staff. Salary and other employment terms for other 6.8 m (SEK 66.4 m). senior managers are decided by the Chief Executive Officer in accordance with
the principles determined by the Board. Senior managers shall receive basic Cash and Cash Equivalents, Financial Position salary. In addition to basic salary, performance-related pay may also be due. Consolidated equity was SEK 157.0 m (SEK 154.5 m). Total assets reduced from Performance-related pay shall depend on the extent predetermined goals are SEK 288.3 m to SEK 246.2 m. Thus the equity share was 64% (54%). At year-end, satisfied within the framework of the company’s operations. These goals should the group’s cash and cash equivalents were SEK 57.5 m (SEK 76.8 m). The Board not relate to the company’s share. Performance-related pay may not exceed of Directors has set a financial objective, implying the company maintaining 50% of basic salary. This remuneration will not be pensionable. Share-related a capital structure that ensures financial stability, which provides a secure incentive schemes will be resolved by the Annual General Meeting. Other foundation for the continued development of operations. Aspiro has not paid benefits, such as company cars, computers, mobile phones, health insurance dividends, but instead, has re-invested accrued funds to finance development or corporate health-care policies will be due to the extent this is judged as initiatives to create growth. consistent with market terms. Senior managers will be entitled to retire at age Aspiro’s Stock 65 at the earliest. Pension benefits will correspond to the ITP (supplementary pensions for salaried employees) scheme or corresponding premium-based Aspiro is a small cap company quoted on Nasdaq OMX Nordic Exchange pension insurance policies. Managers domiciled outside Sweden or who are Stockholm, Sweden. The outstanding shares in Aspiro was 206,260,016 shares as foreign citizens and have their main pension in countries other than Sweden of 31 December 2011. The total number of shares issued is 206,260,016, issued are eligible for other pension solutions that are reasonable in the relevant in one class. Each share has one vote. There are no limitations to transferability country. Dismissal pay and severance pay for members of management may of shares due to stipulations in the Articles of Association. The company has two principal owners, Skandinaviska Enskilda Banken AB and the Schibsted group, not exceed a maximum of 18 months’ salary. The Board shall be entitled to whose holdings were 21.3 % and 18.3% respectively at year-end 2011. After the depart from these guidelines if there are special circumstances justifying this in end of the period, Schibsted acquired 115,367,602 shares in a public takeover individual cases, assuming it is reported and explained subsequently. The Board bid and acquisitions on the market and holds 74.3% of the shares of Aspiro (see of Directors’ proposal to the AGM 2012 for guidelines for remunerating senior post balance sheet events). managers are consistent with those guidelines approved in the previous year. There are staff who have private shareholdings of the company, although See also Note 4. not as a single entity, through a pension fund or similar structure. The company is not aware of any agreements between stockholders implying any limitations Music to rights to transfer shares. Nor are there any contracts that the company is The Music business segment develops and delivers digital music solutions party to, which have an effect, change or cease to apply if control over the to enable users to listen to music directly over their Internet connections or company changes as a result of a public takeover bid. However, there are to download tracks and albums to their computers or mobile phones. Aspiro agreements that group companies are party to that include customary change partners with international and local record companies like Universal Music, of control clauses. Sony Music, EMI, Warner Music, Naxos and Phonofile. In the period, Aspiro’s user The Articles of Association stipulate that Board members are elected yearly base passed a total of 350,000 paying users. Sales of music were SEK 123.7 m at the AGM (Annual General Meeting). The Articles of Association have no (SEK 50.0 m). EBITDA was SEK -26.9 m (SEK -20.3 m). Sales growth is primarily restrictions regarding the appointment or dismissal of Board members, or sourced from Aspiro’s agreement with Canal Digital in Norway, the acquisition regarding amendments to the Articles of Association. Decisions are taken in Director’s Report 32
of WiMP Music AS and growth in the user base through the proprietary channel translated to SEK 1.4 m. This operation has not been recognized at any value in in the Scandinavian countries. Subscription sales in Music are generated in the Consolidated Balance Sheet. For more information, see Note 6. different ways depending on business model. In Norway, Aspiro was previously running a joint venture with retail chain Platekompaniet, where half of revenues Investments—Research and Development were consolidated into Aspiro Music. Aspiro acquired the remaining 50% of Investments in intangible assets were SEK 0.7 m (SEK 3.2 m). Investments in WiMP Music AS at the end of October, which implies that 100% of sales and property, plant and equipment amounted to SEK 8.0 m (SEK 5.0 m). Aspiro’s earnings from WiMP in Norway is consolidated into the Music business area development expenditure mainly comprises expenditure on its own staff and from 1 November 2011. consultants. In 2011, this work mainly related to development in the strategic In the fourth quarter, Aspiro signed a letter of intent for a launch in a segments of Music and TV. The majority of Aspiro’s development expenditure is Benelux country. Aspiro already has a letter of intent for Ireland, where the classified as maintenance and expensed on an ongoing basis. No development partner’s negotiations with record companies are still ongoing. Because these expenditure was capitalized in the year. The expensed development cost was negotiations have been protracted, when the service can be launched is some SEK 23.6 m (SEK 21.5 m). uncertain. Simultaneously, Aspiro is preparing for a series of launches inside and outside Europe. Preparations for a beta test of WiMP in Germany commenced at Human Resources the end of the year. Aspiro had an average of 117 (129) employees in the year, and at year-end, had 104 (117) full-time employees. Staff headcount increased in Music, where TV further increases are expected going forward. The number of employees in Aspiro develops and manages digital TV and video solutions that allow users TV reduced temporarily at the end of the year due to unfilled vacancies and to watch TV and video directly on the mobile network or over their Internet ongoing hiring processes. In tandem with the divestments of Mobile Solutions, connections. TV over the Internet has expanded sustainably in the past year the number of employees reduced by 15. because more types of display have got Internet access. Primarily, Aspiro sells these solutions to mobile operators, but also to TV and media corporations. Parent Company Aspiro offers its partners to take over the complete process, from development Parent company net sales for 2011 were SEK 20.2 m (SEK 56.7 m), of which SEK and agreements with content vendors to operating the service, plus statistics 20.2 m (SEK 55.7 m) were intra-group sales. Profit/loss before tax was SEK -39.6 and reporting. The focus in TV is growth. Aspiro delivers solutions to network m (SEK -27.8 m). operators, broadcasters and other media partners worldwide, including Deutsche Telekom, Hi3G, Telenor and TV2 Denmark. Sales in TV were SEK 54.0 m (SEK 53.2 m). EBITDA was SEK -5.1 m (SEK -14.6 m). Environment The company does not conduct any business subject to permits or reporting in Mobile Search accordance with the Swedish Environmental Code. Corporate Mobile Search has a very strong position in text-based directory inquiries in Norway through the short numbers 1985 and 2100. In paging services, Aspiro Governance Report has end-customer positioning with consumers paying per search. Aspiro has Aspiro has decided to prepare a corporate governance report separately from agreements with content providers on telephone number databases. Sales were its Annual Accounts, in accordance with chap. 6 § 8 of the Swedish Annual SEK 52.8 m (SEK 79.3 m). EBITDA was SEK 26.6 m (SEK 39.4m). In Mobile Search, Accounts Act. there is a downward trend in sales and the number of searches. Aspiro’s strategy is to maximize profitability through efficient operations. Risks A summary of the most significant risk and uncertainty factors follows. For more Acquisition and Divestment of Operations detail on risk exposure and risk management, please refer to the dedicated risk Aspiro acquired Platekompaniet’s shares of the Norwegian distribution and sensitivity analysis section and Note 22. company WiMP Music AS. This acquisition was executed through a non-cash issue of 13,406,901 Aspiro AB shares to Platekompaniet AS. The non-cash issue Rights was at a price of SEK 1.20, corresponding to the volume-weighted average price Copyright organizations like TONO, STIM and KODA manage the rights to music paid on 2 November. The capital contributed in kind, 60,000 shares of WiMP on assignment from the music sector. Record companies are also active in rights Music AS, were reported at a value of SEK 16,103,979 in the company’s Balance and productions. Aspiro is dependent on retained agreements with record Sheet. The acquisition of the remaining 50% of shares generated a revaluation companies for the content of its music services. There is a risk that the pricing gain of SEK 15.3 m, which was reported as other operating revenue in the of music rights is subject to upward pressure, which would result in Aspiro’s group. For more information, see Note 17. margins contracting. The sale of the Mobile Solutions business segment to Link Mobility AS was completed in the fourth quarter. The purchase price, including an adjustment Dependency on Partners to working capital, was NOK 22.9 m. NOK 7.5 m was paid on completion of the transaction on 14 October, NOK 10.4 m with an adjustment for potential A significant share of Aspiro’s revenues are invoiced via mobile operators and guarantees will be paid after nine months and the remaining NOK 5 m will be other major collaboration partners (such as Canal Digital). There is always a risk paid off quarterly as a portion of the buyer’s trading earnings. Sales revenues that these partners choose to collaborate with Aspiro’s competitors or choose to were translated to SEK 27.1 m and the capital gain on consolidation was manage services independently. SEK 23.4 m. Miles Ahead was divested on 1 April 2011. The capital gain on consolidation for the divestment was SEK 0.5 m. Sales revenue was EUR 1. This Competition operation had negative equity of SEK 0.5 m at the divestment date. Mobile Aspiro conducts business on a highly competitive market. The possibility that Search Finland was divested on 1 March 2011. The capital gain on consolidation competitors enter agreements on better terms than those Aspiro has at present from the divestment was SEK 1.4 m. The sales revenue of EUR 155,000 m was cannot be ruled out. Director’s Report 33
Aspiro signed an agreement with the operator Ziggo in the Netherlands for a Rapid Technological and Market Progress version of its WiMP music service. This agreement is expected to generate sales The products and services on the market where Aspiro is active feature rapid corresponding to SEK 9 m over two years. technological progress. If Aspiro is unable to realign its business to keep Aspiro commenced a closed beta test of WiMP in Germany. Launch is early pace with rapid technological progress, there is a risk that the group will lose in the second quarter. competitiveness, which may affect its results of operations negatively. Aspiro TV is extending its delivery to Deutsche Telekom. This agreement is expected to produce net sales corresponding to SEK 24-32 m over a period of Forecast Accuracy 18 months. Aspiro is active on a relatively young and unstable market, obstructing prospects of evaluating the future progress of operations. Misjudgment of Proposed Appropriation of Accumulated Deficit market progress may adversely affect the group’s overall results of operations and liquidity negatively. SEK
Utilizing Intellectual Property Parent Company Aspiro has various commitments to a range of content providers and licensors. The following funds are at the disposal There is always an operational risk that Aspiro is not completely successful in of the Annual General Meeting: fulfilling all its commitments. Aspiro is also dependent on continued positive Share premium reserve 4,670,313.00 collaborations with rights owners so it can offer high-quality content for its music and TV services. Profit/loss brought forward -29,171,573.48 Net profit/loss -39,626,026.55 Guarantees Aspiro AB has issued a parent company guarantee in favor of Aspiro TV AS to Accumulated deficit -64,127,287.03 Telefónica O2 Ireland.
The Board of Directors proposes that the Financial Risks accumulated deficit is appropriated as follows: Aspiro’s operations are exposed to various financial risks, i.e. currency, interest, Carried forward -64,127,287.03 funding and credit risks. The Board’s judgment is that Aspiro is mainly exposed to currency risks. Exchange rate fluctuations of some foreign currencies against Total -64,127,287.03 the Swedish krona may exert an adverse effect on the group’s sales and operating profit, and on the international competitiveness of its business. Aspiro has a currency risk linked to intra-group loans between the parent Annual General Meeting company and subsidiaries, and between subsidiaries. See also Note 22 on Aspiro’s AGM will be held at 12 noon on Monday 14 May at Grev Turegatan 19 in financial risk management. Stockholm, Sweden. Operating Risks Aspiro has a relatively high share of fixed expenses without any direct correlation to revenue in the event that sales decrease. Individual agreements in Music have fixed revenues but variable expenses, implying uncertainty regarding the profitability of these agreements. In TV especially, Aspiro also has a relatively high dependency on single large customers, which may have a major impact on profitability if a customer chooses to terminate its business relationship.
Prospects for 2012 Aspiro is continuing to focus on growth in its Music and TV business segments. Aspiro is planning alternative business models in Music, which will result in a requirement for capital in 2012. Aspiro is continuing its initiatives in Music and expects negative EBITDA in 2012. TV is expected to achieve a positive EBITDA in 2012. Aspiro’s goal is to maximize profitability in Mobile Search through operational excellence.
Post-Balance Sheet Events Aspiro’s Board of Directors unanimously recommended that shareholders accepted Schibsted’s public takeover bid. At the end of the scheduled acceptance period on 15 February 2012, Schibsted had a holding of 63.7% of the shares and votes of Aspiro. After extension of the acceptance period and acquisitions on the market, Schibsted holds 153,139,824 shares, or 74.3% of the shares and votes of Aspiro. Risk and Sensitivity Analysis 34
Risk and Sensitivity Analysis
The market for music and TV streaming is still immature and features fast insured for personal and material damage is SEK 30 m, although subject to technological and market progress, a changeable competitive situation and an annual maximum of SEK 60 m during the insurance term and SEK 30 m for new regulatory structures. Aspiro’s operations and profitability are affected by damage to property (worldwide coverage). both operating and financial risks. The following risks have not been stated in Neither Aspiro nor its subsidiaries are currently party to any dispute, legal any particular order, nor make any claims to be comprehensive. This means that proceedings or arbitration proceedings that the Board considers to be of there are other risks than those stated that may affect Aspiro’s operations and material significance. Nor is the Board aware of any other circumstances that earnings. could be expected to result in disputes or action by the authorities, and that the Board judges could materially affect Aspiro’s financial position. Exogenous Risks Dependency on Partners Demand for Services A significant share of Aspiro’s revenues are invoiced via mobile operators and Aspiro creates and delivers services and is dependent on sustained good other major collaboration partners (such as Canal Digital). There is always a demand for these services. Aspiro considers that demand for music and TV risk that operators choose to collaborate with Aspiro’s competitors or opt to streaming will continue to grow. There is a natural migration away from more manage everything independently. basic and towards more value-added services in line with more sophisticated To minimize risks, Aspiro constantly endeavors to satisfy, and exceed, mobile networks and improved mobile units achieving critical mass for Aspiro’s target operators’ and other customers’ expectations in terms of its services’ topicality, groups. quality and accessibility. Additionally, the dependency on individual customers reduces with an expanding customer base. Cyclicality Dependency on Content Providers The influence of the general macroeconomic trend on Aspiro’s markets is considered limited. For Aspiro, this means that any revenue cyclicality is limited. It is essential that Aspiro constantly offers attractive services to its customers, whether this is music, TV, videos or other products. Access to the best content Rights requires contracts with leading content providers. There is a risk that content providers choose to sell services via Aspiro’s competitors exclusively or direct Copyrighting organizations like TONO, STIM and KODA manage music rights to mobile operators. If content providers increase the prices of various services, on assignment from the music industry. Record companies are also active with to avoid margin deterioration, Aspiro will also be forced to increase consumer regard to rights and production. Aspiro is dependent on retained agreements prices, with the risk of sales volumes contracting. with record companies for the content of its music services. There is a risk that the price of these rights is subject to upward pressure, Forecast Accuracy which would reduce Aspiro’s margins. Alternatively, higher consumer pricing may result in fewer unit sales, and generally lower product acceptance. Aspiro is active on relatively new markets, limiting the possibility of judging the future progress of operations. Inaccurate assessments of market progress may Competition adversely affect the group’s aggregate earnings and liquidity. The streaming services sector is new and a number of major players are Financial Risks about to launch new services in Europe and the rest of the world. Aspiro is encountering strong competition across all markets. A review of the market and In its operations, Aspiro is exposed to various financial risks. These currently competitors is in the section Market on pages 9. comprise currency, interest, funding and credit risk. The Board considers that first and foremost, Aspiro is exposed to currency risk, i.e. the risk of the value of a financial instrument changing due to fluctuations in rates of exchange. Business Risks Interest and credit risks are considered marginal. At present, Aspiro does not have any financial liabilities, while almost all sales are generated through major Technological Progress and Operations mobile operators, with consistently high credit ratings. In 2011, doubtful debt The services on Aspiro’s markets feature rapid technological progress. If Aspiro was SEK 0.03 m (SEK 0.5 m) of total sales of some SEK 231 m (SEK 185 m). For is unable to adapt its operations to rapid technological progress, there is a risk more information on financial risks, see Note 22. of the group losing competitiveness, which could adversely affect earnings. Meanwhile, there is a risk that the market reacts more slowly than expected Risks in Operating Expenses when new products, applications and technologies are introduced. Terminal Aspiro has a relatively high share of fixed expenses without any direct producers (Apple, HTC, Nokia, Sony, Samsung, Motorola etc.) play an important correlation to revenue. Individual agreements in Music have fixed revenues role in terms of the development and growth on the mobile services market, but variable expenses, which implies uncertainty regarding the profitability because more sophisticated handsets trigger increased demand for more and of these agreements. In TV primarily, Aspiro also has fairly high dependency more value-added services. on single large customers, which may have a substantial effect on profitability The effective operating time for Aspiro’s technological systems is if a customer chooses to terminate its business relationship. Products are nearly 100%. Systems for back-end also have virtually zero downtime. The distributed through different channels, one of them being smart phones. The development of new applications and systems elements does not cause any producers of these handsets are launching proprietary payment solutions actual operational disruptions. for subscribers. If Aspiro is forced to pay charges for them, this may result in reduced margins. Product Liability, Intellectual Property and Disputes Potential faults on Aspiro’s products could result in liability and damages claims. Other Risks However, the Board considers that Aspiro has satisfactory cover for product Group companies have the customary Board liability insurance. Aspiro evaluates liability, and accordingly, the direct risk is considered limited. The amount the group’s insurance cover on an ongoing basis. Other feasible risks can be classified as data infringement. Aspiro regards its protection in this segment Risk and Sensitivity Analysis 35
as very comprehensive, because its technology platforms are hosted on very secure technology environments. Aspiro sells content with complex underlying legal structures. There is a risk that, in connection with existing rights structures, a mistake is made in an individual country or sales channel that might trigger a claim from suppliers. Aspiro judges this risk to be low.
Sensitivity Analysis Aspiro’s profits are influenced by a number of factors. The effects of changes in some of the key factors are illustrated below.
Sensitivity Analysis, 31 December 2011 Change in Change Variable Change EBITDA
Net sales +/– 10% +/– 23 Direct expenses +/– 5% +/– 6 Indirect operating expenses +/– 5% +/– 7 Personnel expenses +/– 5% +/– 5 Consolidated Five-year Summary 36
Consolidated Five-year Summary
SEK 000 2011 2010 2009 2008* 2007* Income Statement
Continuing operations Net sales 230,584 184,921 165,542 423,366 404,859
Other operating revenues 18,027 4,710 15,402 11,604 2,271 Work performed by the company for its own use and capitalized - - - - 5,537 Operating expenses -288,298 -303,832 -210,960 -632,226 -404,060 Operating profit/loss -39,687 -114,201 -30,016 -197,256 8,607 Net financial income/expense -297 -220 321 7,882 1,153 Profit/loss before tax -39,984 -114,421 -29,695 -189,374 9,760 Tax on net profit/loss -1,174 -5,110 13,033 -19,216 -2,107 Net profit/loss from continuing operations -41,158 -119,531 -16,662 -208,590 7,653
Discontinued operations Net profit/loss from discontinued operations 22,314 -11,364 261 - - Net profit/loss -18,844 -130,895 -16,401 -208,590 7,653
Balance Sheet 31 Dec. 2011 31 Dec. 2010 31 Dec. 2009 31 Dec. 2008 31 Dec. 2007 Intangible assets 85,835 67,948 182,357 182,166 387,941 Property, plant and equipment 11,902 12,525 17,185 12,705 7,668 Financial assets 133 953 96 61 2,332 Deferred tax asset - 1,698 16,314 16,482 36,192 Current receivables 90,888 128,349 129,933 109,459 99,045 Cash and cash equivalents 57,466 76,793 57,881 92,429 73,591 Total assets 246,224 288,266 403,766 413,302 606,769 Equity 157,001 154,500 283,038 291,211 500,418 Non-current liabilities 1,500 222 7,383 9,566 12,712 Current liabilities 87,723 133,544 113,345 112,525 93,639 Total equity and liabilities 246,224 288,266 403,766 413,302 606,769
Cash Flow 2011 2010 2009 2008 2007 Cash flow from operating activities -35,760 -2,229 -14,856 34,063 15,038 Cash flow from investing activities 13,378 24,794 -20,763 -17,991 -22,234 Cash flow from financing activities 2,953 - - -176 -42 Cash flow for the year -19,429 22,565 -35,619 15,896 -7,238 Cash and cash equivalents at beginning of year 76,793 57,881 92,429 73,591 79,417 Exchange rate difference in cash and cash equivalents 102 -3,653 1,071 2,942 1,412 Cash and cash equivalents at end of year 57,466 76,793 57,881 92,429 73,591
*Not restated according to new accounting principles Consolidated Five-year Summary 37
Consolidated Five-year Summary cont.
Key Figures 2011 2010 2009 2008 2007 Ave. no. of employees 117 129 142 144 156 Net sales, SEK m 288.9 361.8 469.0 423.3 404.9 Net sales, continuing operations, SEK m 230.6 184.9 165.5 N/A N/A EBITDA, SEK m -21.7 -22.3 -2.6 28.0 29.0 EBITDA, continuing operations, SEK m -18.8 -27.2 -17.7 N/A N/A Operating profit/loss, SEK m -43.7 -114.1 -23.1 -197.2 8.6 Operating profit/loss, continuing operations, SEK m -39.7 -114.2 -30.0 N/A N/A Profit/loss before tax, SEK m -17.7 -118.8 -22.5 -189.5 9.8 Profit/loss before tax, continuing operations, SEK m -40.0 -114.4 -29.7 N/A N/A Profit/loss after tax, SEK m -18.8 -130.9 -16.4 -208.6 7.7 Profit/loss after tax, continuing operations, SEK m -41.2 -119.5 -16.6 N/A N/A Operating margin, % -15.1 -31.5 -4.9 -46.6 2.1 Operating margin, continuing operations, % -17.2 -61.8 -18.1 N/A N/A Equity/assets ratio, % 64 54 70 70 82 Cash flow from operating activities per share, SEK -0.18 -0.01 -0.08 0.18 0.08 Return on equity, % -12.06 -58.92 -5.72 -52.70 1.55 Return on capital employed, % -11.21 -54.24 -7.77 -47.80 2.05 Basic earnings per share, SEK -0.09 -0.68 -0.09 -1.09 0.05 Diluted earnings per share, SEK -0.09 -0.68 -0.09 -1.09 0.05 Basic earnings per share, continuing operations, SEK -0.21 -0.62 -0.09 N/A N/A Diluted earnings per share, continuing operations, SEK -0.21 -0.62 -0.09 N/A N/A
Definitions of Key Figures
Margins Capital Structure Stock-related Key Figures Human Resources Profit margin Capital employed Average outstanding shares Number of employees Profit/loss before tax as a percentage of net Total assets less non interest-bearing Weighted average outstanding shares in Average number of full-time employees. sales for the year. liabilities including deferred tax liabilities. the period. Value-added per employee Operating margin Equity/assets ratio Average outstanding shares and potential Net sales less expenses for services and Operating profit/loss as a percentage of net Equity (including non-controlling interests) shares goods for resale divided by number of sales for the year. as a percentage of total assets. Weighted average of outstanding shares employees. Returns and potential shares in the period. Debt/equity ratio Net sales per employee Return on equity Interest-bearing liabilities in relation to Earnings per share Net sales divided by number of employees. Net profit/loss attributable to equity equity. Net profit/loss attributable to equity holders of the parent as a percentage of holders of the parent divided by average average equity. Interest coverage ratio outstanding shares. Profit/loss after financial items plus Return on total capital financial expenses divided by financial Equity per share Profit/loss before tax plus financial expenses. Equity attributable to equity holders of the expenses as a percentage of average total parent divided by outstanding shares at the assets. end of the period.
Return on capital employed Cash flow per share Profit/loss before tax plus financial Cash flow from operating activities divided expenses as a percentage of average capital by average number of outstanding shares. employed. Consolidated Income Statement 38
Consolidated Income Statement
SEK 000 Note 1 Jan.—31 Dec. 2011 1 Jan.—31 Dec. 2010
Continuing operations Net sales 1 230,584 184,921 Other operating revenues 1 18,027 4,710 Total 248,611 189,631
Services and goods for resale -117,628 -69,787 Other external expenses 2,3 -52,727 -56,221 Personnel expenses 4 -93,296 -78,690 Depreciation and impairment losses, property, plant and equipment 5 -7,737 -6,395 Amortization and impairment losses, intangible assets 5 -13,179 -80,571 Other operating expenses -3,731 -12,168 Total -288,298 -303,832
Operating profit/loss 6 -39,687 -114,201 Interest income and similar profit/loss items 9 840 633 Interest expenses and similar profit/loss items 9 -1,137 -853 Total -297 -220 Profit/loss before tax -39,984 -114,421 Tax 10 -1,174 -5,110 Net profit/loss from continuing operations -41,158 -119,531
Discontinued operations Net profit/loss from discontinued operations 22,314 -11,364 Net profit/loss* -18,844 -130,895
* Attributable to equity holders of the parent -18,306 -128,925 Attributable to non-controlling interests -538 -1,970
Basic earnings per share, SEK 20 -0.09 -0.68 Diluted earnings per share, SEK 20 -0.09 -0.68
Basic earnings per share, continuing operations, SEK 20 -0.21 -0.62 Diluted earnings per share, continuing operations, SEK 20 -0.21 -0.62
Basic earnings per share, discontinued operation (SEK) 20 0.12 -0.06 Diluted earnings per share, discontinued operation (SEK) 20 0.12 -0.06
Statement of Comprehensive Income SEK 000 Note 1 Jan.—31 Dec. 2011 1 Jan.—31 Dec. 2010
Net profit/loss -18,844 -130,895 Translation difference for the year 104 -62 Comprehensive income for the year* -18,740 -130,957 * Attributable to equity holders of the parent -18,202 -129,060 Attributable to non–controlling interests -538 -1,897 Consolidated Balance Sheet 39
Consolidated Balance Sheet
SEK 000 Note 31 Dec. 2011 31 Dec. 2010
ASSETS
Fixed assets 5 Goodwill 76,271 57,148 Other intangible assets 9,564 10,800 Equipment 11,902 12,525 Deferred tax asset 10 - 1,698 Other long-term receivables 133 953 Total fixed assets 97,870 83,124
Current assets Accounts receivable 22 46,636 83,509 Current tax receivables 2,064 2,511 Other receivables 22 30,306 28,440 Prepaid expenses and accrued income 11, 22 11,882 13,889 Cash and cash equivalents 16, 22 57,466 76,793 Total current assets 148,354 205,142 TOTAL ASSETS 246,224 288,266 Consolidated Balance Sheet 40
Consolidated Balance Sheet cont.
SEK 000 Note 31 Dec. 2011 31 Dec. 2010
EQUITY AND LIABILITIES
Equity Equity attributable to equity holders of the parent Share capital (206,260,016 shares, quotient value SEK 1) 18 206,260 190,538 Other paid-up capital 381,859 378,524 Reserves 4,228 4,124 Retained earnings -417,040 -289,661 Net profit/loss -18,306 -128,925 Total 157,001 154,600 Equity attributable to non-controlling interests - -100 Total equity 157,001 154,500
Non-current liabilities 13 Deferred tax liabilities 10 1,500 222 Total non-current liabilities 1,500 222
Current liabilities Accounts payable 22 18,117 32,106 Current tax liabilities 745 36 Other liabilities 22 13,037 31,314 Accrued expenses and deferred income 14, 22 55,824 68,852 Other provisions 12 - 1,236 Total current liabilities 87,723 133,544
Total liabilities 89,223 133,766
TOTAL EQUITY AND LIABILITIES 246,224 288,266
Pledged assets 15 None None Contingent liabilities 15 None None Consolidated Cash Flow Statement 41
Consolidated Cash Flow Statement
SEK 000 Note 31 Dec. 2011 31 Dec. 2010
Operating activities 16 Net profit/loss -18,844 -130,895 Adjustment for non-cash items -14,403 106,410 Cash flow from operating activities before changes in working capital -33,247 -24,485
Cash flow from changes in working capital Change in operating receivables 26,389 1,584 Increase in operating liabilities -28,902 20,672 Cash flow from operating activities -35,760 -2,229
Investing activities Purchase of subsidiaries 9,071 -348 Sale of subsidiaries 13,148 33,358 Purchase of intangible assets -677 -3,223 Purchase of property, plant and equipment -8,050 -4,993 Change in long-term receivables -114 - Cash flow from investing activities 13,378 24,794
Financing activities New issue 2,953 - Cash flow from financing activities 2,953 -
Cash flow for the year -19,429 22,565
Cash and cash equivalents at beginning of year 76,793 57,881 Exchange rate difference in cash and cash equivalents 102 -3,653 Cash and cash equivalents at end of year 57,466 76,793
Interest paid in the period amounted to SEK 141,000 (176,000). Interest received in the period amounted to SEK 698,000 (1,268,000). Income tax paid by the group amounted to SEK 1,000 (77,000). Consolidated Statement of Changes in Equity 42
Consolidated Statement of Changes in Equity
Attributable to non-controlling Attributable to Equity Holders of the Parent Interest Other Paid Retained Net Profit/ Share Capital up Capital Reserves Earnings loss Total
Closing balance, equity, 31 December 2009 190,538 378,524 4,259 -273,882 -16,401 0 283,038 Opening balance, equity, 1 January 2010 190,538 378,524 4,259 -273,882 -16,401 0 283,038 Transfer of previous year’s earnings - - - -16,401 16,401 - - Net profit/loss - - - - -128,925 -1,970 -130,895 Other comprehensive income - - -135 - - 73 -62
Total changes in net worth excluding trans- actions with equity holders of the company - - -135 -16,401 -112,524 -1,897 -130,957 Effect of stock option plans - - - 2,419 - - 2,419 Non-controlling interests - - - -1,797 - 1,797 0 Closing balance, equity, 31 December 2010 190,538 378,524 4,124 -289,661 -128,925 -100 154,500
Opening balance, equity, 1 January 2011 190,538 378,524 4,124 -289,661 -128,925 -100 154,500 Transfer of previous year’s earnings - - - -128,925 128,925 - - Net profit/loss - - - - -18,306 -538 -18,844 Other comprehensive income - - 104 - - - 104
Total changes in net worth excluding trans- actions with equity holders of the company - - 104 -128,925 110,619 -538 -18,740 New issue, stock options* 2,315 643 - - - - 2,958 New issue, acquisitions* 13,407 2,692 - - - - 16,099 Non-controlling interests - - - -638 - 638 - Effect of stock option plans - - - 2,184 - - 2,184
Closing balance, equity, 31 December 2011 206,260 381,859 4,228 -417,040 -18,306 - 157,001
* Issue expenses amounting to SEK 56,000 reduced raised capital. Parent Company Income Statement 43
Parent Company Income Statement
SEK 000 Note 1 Jan. - 31 Dec. 2011 1 Jan. - 31 Dec. 2010
Operating revenues Net sales 1 20,248 56,683 Other operating revenues 1 564 766 Total 20,812 57,449
Operating expenses Services and goods for resale -474 -13,462 Other external expenses 1, 2,3 -6,694 -26,533 Personnel expenses 4 -5,986 -6,732 Depreciation and impairment losses, property, plant and equipment 5 -191 -324 Amortization and impairment losses, intangible assets 5 -480 -640 Other operating expenses -1,097 -5,414 Total -14,922 -53,105
Operating profit/loss 5,890 4,344
Profit/loss from financial investments 9 Profit/loss from participations in group companies 2,687 -34,368 Interest income and similar profit/loss items 3,261 2,205 Interest expenses and similar profit/loss items -51,465 -14 Total -45,517 -32,177
Profit/loss after financial items -39,627 -27,833 Tax on net profit/loss 10 - -15,000 Net profit/loss -39,627 -42,833
Statement of Comprehensive Income Net profit/loss -39,627 -42,833 Comprehensive income for the year -39,627 -42,833 Parent Company Balance Sheet 44
Parent Company Balance Sheet
SEK 000 Note 1 Jan. - 31 Dec. 2011 1 Jan. - 31 Dec. 2010
Assets
Fixed assets 5
Intangible assets Licenses and trademarks 431 811 Total intangible assets 431 811
Property, plant and equipment Equipment 89 267 Total property, plant and equipment 89 267
Financial assets Participations in group companies 7 125,307 117,797 Participations in joint venture 8 - 6,071 Other long-term receivables - 900 Total financial assets 125,307 124,768 Total fixed assets 125,827 125,846
Current assets
Current receivables Accounts receivable 22 227 538 Receivables from group companies 19,22 83,800 87,179 Other receivables 22 20,570 4,036 Prepaid expenses and accrued income 11,22 844 720 Total current receivables 105,441 92,473
Cash and bank balances 22 15,598 23,783 Total current assets 121,039 116,256 TOTAL ASSETS 246,866 242,102 Parent Company Balance Sheet 45
Parent Company Balance Sheet cont.
SEK 000 Note 1 Jan. - 31 Dec. 2011 1 Jan. - 31 Dec. 2010
Equity and liabilities
Equity Restricted equity Share capital (206,260,016 shares, quotient value SEK 1) 18 206,260 190,538 Statutory reserve 16,162 16,162 Total restricted equity 222,422 206,700
Non-restricted equity Share premium reserve 4,670 1,335 Retained earnings -29,172 13,661 Net profit/loss -39,627 -42,833 Total non-restricted equity -64,129 -27,837 Total equity 158,293 178,863
Non-current liabilities 13 Liabilities to group companies 19, 22 135 310 Total non-current liabilities 135 310
Current liabilities Accounts payable 22 160 785 Liabilities to group companies 19, 22 81,434 53,156 Other liabilities 22 194 236 Accrued expenses and deferred income 14, 22 6,650 8,752 Total current liabilities 88,438 62,929
TOTAL EQUITY AND LIABILITIES 246,866 242,102
Memorandum items 15 Pledged assets None None Contingent liabilities * *
* Parent company guarantee in favor of Aspiro TV AS to Telefonica O2 Ireland. Parent Company Cash Flow Statement 46
Parent Company Cash Flow Statement
SEK 000 Note 1 Jan. - 31 Dec. 2011 1 Jan. - 31 Dec. 2010
Operating activities 16 Net profit/loss -39,627 -42,833 Adjustment for non-cash items 45,568 47,874 Cash flow from operating activities before changes in working capital 5,941 5,041
Cash flow from changes in working capital Change in operating receivables -42,734 -18,185 Change in operating liabilities 21,796 18,201 Cash flow from operating activities -14,997 5,057
Investing activities Purchase of subsidiaries and joint venture -3,384 -11,767 Sale of subsidiaries 7,369 9,878 Purchase of intangible assets -100 -468 Purchase of property, plant and equipment -13 -112 Cash flow from investing activities 3,872 -2,469
Financing activities New issue 2,953 - Cash flow from financing activities 2,953 -
Cash flow for the year -8,172 2,588
Cash and cash equivalents at beginning of year 23,783 21,316
Exchange rate difference in cash and cash equivalents -13 -121 Cash and cash equivalents at end of year 15,598 23,783
Interest paid in the period amounted to SEK 1 (14,000). Interest received in the period amounted to SEK 323 (229,000). Income tax paid by the parent company amounted to SEK 0 (0). Parent Company Statement of Changes in Equity 47
Parent Company Statement of Changes in Equity
Statutory Share Premi- Retained Net profit/ Share Capital Reserve um Reserve Earnings loss Total
Closing balance, equity, 31 December 2009 190,538 16,162 1,335 33,923 -20,262 221,696
Opening balance, equity, 1 January 2010 190,538 16,162 1,335 33,923 -20,262 221,696 Appropriation of previous year’s earnings -20,262 20,262 - Net profit/loss - - - - -42,833 -42,833 Total changes in net worth excluding transactions with equity holders of the company - - - -20,262 -22,571 - Closing balance, equity, 31 December 2010 190,538 16,162 1,335 13,661 -42,833 178,863
Opening balance, equity, 1 January 2011 190,538 16,162 1,335 13,661 -42,833 178,863
Appropriation of previous year’s earnings - - - -42,833 42,833 - Net profit/loss - - - - -39,627 -39,627 Total changes in net worth excluding transactions with equity holders of the company - - - -42,833 3,206 -39,627 New issue, stock options* 2,315 - 643 - - 2,958 New issue, acquisitions* 13,407 - 2,692 - - 16,099 Closing balance, equity, 31 December 2011 206,260 16,162 4,670 -29,172 -39,627 158,293
* Issue expenses amounting to SEK 56,000 reduced raised capital. Accounting Principles 48
Accounting Principles
The Consolidated Accounts have been prepared in accordance with that commences on 1 January 2015 or later. In anticipation of all parts of this International Financial Reporting Standards (IFRS/IAS) and interpretation standard being complete, Aspiro has not evaluated the effects of the new statements from the International Financial Reporting Interpretations standard. Committee (IFRIC/SIC) as endorsed by the EU Commission. Additionally, RFR 1, Supplementary Accounting Standards for Groups, and applicable statements - IFRS 7 Amendment, Financial Instruments: Disclosures. Amendments from RFR (Rådet för finansiell rapportering, the Swedish Financial Reporting to IFRS 7 should be applied to financial years that commence 1 July 2011 Board), have been applied. or later. Additional quantitative and qualitative disclosures should be The parent company observes the same accounting principles as the group made on derecognition of financial instruments from the Balance Sheet. apart from those cases stated below in the ‘Parent Company Accounting Disclosures should be made when transfers of assets do not result in Principles’ section. complete derecognition and when the company retains a commitment to the derecognized asset. Application may affect the group’s disclosures of financial Basis of Preparation of the Parent Company and Consolidated instruments. Annual Accounts The parent company’s functional currency is the Swedish krona, which is also - IFRS 13 Fair Value Measurement. IFRS 13 should be applied to financial years the presentation currency of the parent company and group. Thus, the financial that commence on 1 January 2013 or later. This standard describes how fair statements are presented in Swedish kronor. All amounts are rounded to the value should be measured when fair value shall or may be used in accordance nearest thousand Swedish kronor (SEK 000) unless otherwise stated. with individual standards. At present, IFRS 13 is not expected to have any Preparing the financial statements in accordance with IFRS necessitates material effect on how the group measures fair value, but may affect the management making judgments, estimates and assumptions that influence disclosures made. the stated amounts of revenues, expenses, assets and liabilities. Estimates and assumptions are based on historical experience and are reviewed regularly. - IAS 1 Amendment, Presentation of Financial Statements. This amendment Actual outcomes can differ from these estimates and judgments. Changes to relates to presentation of other comprehensive income and should be applied estimates are reported in the period the change is made if the change only to financial years that commence on 1 July 2012 or later. This amendment affects that period, or the period the change is made and future periods if the means that the groups of transactions recognized in other comprehensive change affects both current and future periods. The areas that, in 2011, required income change. The actual content of other comprehensive income is not more extensive judgments and estimates are impairment tests for goodwill amended, but the presentation format only. Adoption may affect the group’s on consolidation (see Note 5) and valuation in connection with business presentation format of other comprehensive income. acquisitions (see Note 17). The Consolidated Accounts are based on historical cost unless otherwise New standards, addenda and interpretation statements, which are present, are stated below. The following accounting principles are applied consistently for not judged to affect the Consolidated Accounts: the periods presented in the Consolidated Accounts. - IAS 12—Amendment, Income Taxes. Amendments of IFRS in 2011 - IAS 19—Amendment, Employee Benefits. - IAS 27—Separate Financial Statements. The accounting principles applied are consistent with those applied in the - IAS 28—Investments in Associates and Joint Ventures. previous year with the exceptions stated below. The revised accounting - IAS 32—Amendment, Financial Instruments: Presentation. principles that the group is applying from 1 January 2011 are stated below. The - IFRS 10—Consolidated Financial Statements. application of the following standards did not have any effect on the group’s - IFRS 11—Joint Arrangements. results of operations or financial position. Neither the presentation of the - IFRS 12—Disclosures of Interests in Other Entities. financial reports or additional information has been affected. - IFRIC 20—Stripping Costs in the Production Phase of a Surface Mine.
- IAS 24 Related Party Disclosures—Amendment. Classification, etc. - IAS 32 Financial Instruments: Presentation—Presentation of Subscription Essentially, fixed assets and non-current liabilities exclusively comprise amounts Rights, Amendment. expected to be recovered or paid after more than 12 months from the reporting - IFRIC 14 Prepayments of a Minimum Funding Requirement—Amendment. date. Essentially, the parent company’s and group’s current assets and current - IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. liabilities exclusively comprise amounts expected to be recovered or paid within 12 months of the reporting date. Amendments of IFRS that Have Not Yet Come into Effect New standards and interpretations statements that should be applied for the Consolidated Accounts financial year 2012 or later are presented below. Aspiro does not apply any The Consolidated Accounts encompass the parent company and companies standards in advance. New standards, addenda and interpretation statements in which the parent company holds more than half of the vote directly that may affect the Consolidated Accounts: or indirectly, or exerts a controlling influence in some other manner. All subsidiaries are reported in accordance with acquisition accounting, which - IFRS 9 Financial Instruments: Recognition and Measurement. IFRS 9 is part means that the cost of the business combination is divided by reporting the of a revision of IAS 39. This standard involves a reduction of the number of identifiable assets, liabilities and contingent liabilities of the acquired company measurement categories of financial assets, which means that measurement that satisfy the terms for accounting in accordance with IFRS at fair value at the will be at amortized cost or fair value respectively in the Income Statement. time of acquisition. Some investments in equity instruments may be recognized at fair value in the The cost is calculated as the total of the fair values of assets given, liabilities Balance Sheet with value changes recognized directly in other comprehensive incurred or assumed and the equity instruments issued in exchange for the income, where there is no transfer to net profit or loss on sale. IFRS 9 will be controlling influence over the acquired entity, as of the transaction date. When supplemented with rules on impairment, hedge accounting and derecognition the cost of the business combination exceeds the net fair value of the acquired from the Balance Sheet. This standard will probably apply to the financial year share of identifiable assets, liabilities and reported contingent liabilities, the Accounting Principles 49
difference is reported as goodwill. When this difference is negative, it is reported A financial asset is derecognized from the Balance Sheet when the directly in the Income Statement. contracted rights are realized, mature or the company relinquishes control In step acquisitions, the previous equity participations in the acquired company over them. The same applies to parts of a financial asset. Financial liabilities are restated at their fair value at the acquisition date and the potential gain are derecognized from the Balance Sheet when the contracted commitment or loss arising is recognized in profit or loss (other operating revenue or other is satisfied or ceases in some other manner. The same applies to a part of operating expenses respectively). a financial liability. The company evaluates whether there is any objective Subsidiaries are consolidated from the acquisition date until the divestment indication of impairment of a financial asset at each occasion when financial date inclusive. Aspiro’s former US subsidiary, Aspiro Inc., has been closed, but statements are prepared. not formally liquidated. Aspiro Inc. is not consolidated. The group’s balances in bank accounts including foreign currency accounts Intragroup receivables and liabilities, revenue and expenses and unrealized and incoming funds are included in cash and cash equivalents. Consolidated gains and losses are eliminated wholly when preparing the Consolidated cash and cash equivalents are only subject to an insignificant risk of value Accounts. fluctuations. Assets and liabilities of foreign operations are translated from functional Accounts receivable are reported at the amount expected to be received currency to Swedish kronor at the rates of exchange ruling on the reporting after deducting for doubtful debt, which is evaluated on a case-by-case basis. date. Revenues and expenses of foreign operations are translated to Swedish Because the expected term of accounts receivable is short, values are reported kronor at average rates of exchange for the relevant calendar month. at nominal amount without discounting. Impairment losses on accounts Translation differences that arise coincident with the conversion of foreign receivable are reported in operating expenses as other external expenses operations are reported in other comprehensive income. Accounts receivable not settled within 90 days after their due date are reported Associated companies are reported in accordance with the equity method, as doubtful debt unless there are specific reasons to assume that payment will and initially recognized at cost. The carrying amount of participations in be received. Examples of specific reasons may be an agreement on payment by associated companies reported in the group corresponds to the group’s installments. participation in the associated companies’ equity and potential residual values Liabilities are classified as other financial liabilities, which means that initially, for consolidated surplus values and deficits. The group’s participation in profit they are reported at the amount received. After the acquisition date, loans are after tax arising in the associated company after acquisition is reported in the reported at cost in accordance with the effective interest method. Accounts Income Statement as a portion of operating profit. payable are classified as other financial liabilities. Because accounts payable Participations in joint ventures are reported in accordance with the have short expected terms, values are reported at nominal amount without proportional method in the group. The application of the proportional method discounting. means that the group’s participation in the joint venture’s assets and liabilities There are no derivative instruments to cover the risk of exchange rate are included in the Balance Sheet. The group’s participation in the joint venture’s fluctuations within the group. revenue and expenses is included in the Income Statement. The merger is by item in the Income Statement and Balance Sheet. Intangible Assets In legal entities, associated companies and joint ventures are reported Goodwill according to the cost method. In step acquisitions, the previous equity Goodwill is the positive difference between the cost of a business combination participations are not restated. and the net fair value of acquired identifiable assets, liabilities and contingent liabilities. Goodwill can be regarded as a payment for future economic rewards Revenue Recognition that cannot be identified individually, nor recognized separately. Goodwill is Revenues are the gross inflows of economic rewards that arise in the company’s measured at cost less potential accumulated impairment losses. Goodwill is operating activities in a period and that increase the company’s equity, with allocated to cash-generating units and is subject to impairment tests at least the exception of increases that depend on contributions from stockholders. yearly, see the Impairment Losses heading below. Revenues only encompass the gross inflow of economic rewards that the company receives, or may receive, on its own behalf. Amounts accrued on Other Intangible Assets behalf of another party, such as sales tax, tax on goods and services and value Acquired intangible assets are reported at cost less accumulated amortization added tax, are not reported as revenues. Revenues are measured at the fair and impairment losses. Development costs are only capitalized if the expenses value of what is received or will be received. Revenues are recognized when are expected to result in identifiable future economic rewards that are under the company has transferred the essential risks and rewards associated with the control of the company, and it is technologically and financially possible to ownership of the products and the company no longer exerts any material complete the asset. The costs that can be capitalized are costs that are invoiced control over the sold products. externally, direct costs for labor and share of indirect costs. Other development Aspiro’s revenues can be divided between subscription fees, start-up fees, costs are expensed in the Income Statement as they arise. Capitalized develop- transaction fees and fixed and variable usage fees. When the operation of ment costs are reported at cost, less deductions for accumulated amortization. services is ongoing, the revenues from fixed and variable fees are recognized Supplementary expenditure for capitalized intangible assets is reported as monthly. The revenue from start-up fees is recognized when the service is an asset only if it increases the future economic rewards for the specific asset delivered and approved by the customer. Transaction-based revenues are to which they relate. The carrying amount of the asset is derecognized from recognized on an ongoing basis as services are utilized. The revenue from the Balance Sheet upon disposal or divestment, or when no future economic subscription fees is recognized monthly. rewards are expected from the use or disposal/divestment of the asset. The gain or loss resulting when an intangible fixed asset is derecognized from the Financial Revenue and Expenses Balance Sheet is reported in the Income Statement. The gain or loss is calculated Financial revenue and expenses comprise interest income on bank balances as the difference between the potential net revenue from the divestment and and receivables, interest expenses on liabilities and exchange rate differences. the asset’s carrying amount. Exchange rate differences on intragroup receivables and liabilities are reported net. Property, Plant and Equipment Expenditure for property, plant and equipment is reported as an asset in the Financial Instruments Balance Sheet when it is likely that the future economic rewards associated Financial instruments reported in the Balance Sheet include cash and cash with the asset will arise for the company and the asset’s cost can be reliably equivalents, accounts receivable, other receivables and accrued income on calculated. Property, plant and equipment are reported at cost less accumulated the assets side. The equity and liabilities side includes accounts payable, depreciation according to plan and potential impairment losses. The cost other current liabilities and accrued expenses. Initially, financial instruments comprises the purchase price and expenditure directly attributable to the are recognized at cost corresponding to the fair value of the instrument plus asset to bring it to the place and condition for use in the manner the company transaction expenses, apart from financial instruments measured at fair value intended. The carrying amount of the asset is derecognized from the Balance via the Income Statement. Sheet upon disposal or divestment, or when no future economic rewards are A financial asset or liability is reported in the Balance Sheet when the expected from the use or disposal/divestment of the asset. The gain or loss company becomes party to the instrument’s contracted terms. Accounts that results when a tangible fixed asset is derecognized from the Balance receivable are reported in the Balance Sheet when the invoice is sent. Liabilities Sheet is reported in the Income Statement. The gain or loss is calculated as the are recognized when the counterparty has delivered and there is a contracted difference between the potential net revenue from the divestment and the obligation for payment, even if no invoice has been received yet. Accounts asset’s carrying amount. payable are recognized when the relevant invoice is received. Accounting Principles 50
Depreciation and Amortization Leases Intangible Assets Lease arrangements are classified according to the extent to which the After first-time reporting, intangible assets are reported in the Balance Sheet at cost economic risks and rewards associated with ownership of the relevant leased less deductions for potential accumulated amortization and impairment losses. For items rest with the lessor or lessee. A lease arrangement is classified as a finance intangible assets with finite useful lives, amortization is on a straight-line basis over lease if it implies that essentially, the economic rewards and risks associated the asset’s estimated useful life. Intangible assets with indefinite useful lives are not with ownership of the item are transferred from the lessor to the lessee. A amortized. Instead, an impairment test is applied in accordance with IAS 36 by com- lease arrangement is classified as an operating lease if it does not mean that paring the asset’s recoverable value and its carrying amount. This test is conducted yearly, or at any time there are indications of value impairment of the intangible asset. essentially, the rewards and risks are transferred to the lessee. Finance leases Evaluations of amortization methods and useful lives are conducted yearly. are reported as assets and liabilities in the Balance Sheet, which means that depreciation and interest expenses for each period are reported in the Income The following amortization periods are applied: Statement. For operating leases, lease charges are expensed on a straight- line basis over the lease term, providing there is no better way of reflecting Licenses and trademarks 3-10 years the company’s economic reward over time. Aspiro has no significant lease Capitalized development expenditure 3 years arrangements over and above premises leases. Only a few lease arrangements, on office equipment, for example, remained at year-end 2011. These IT systems 5 years arrangements are classified as operating leases in the parent company and Customer contracts 3 years group.
Property, Plant and Equipment Tax Tax is reported in the Income Statement apart from when the underlying After first-time reporting, property, plant and equipment are reported in the transaction is reported directly against other comprehensive income. Current Balance Sheet at cost less accumulated depreciation and potential accumulated tax is tax to be paid or received in the current year, including potential impairment losses. Depreciation is on a straight-line basis over the asset’s adjustments of current tax attributable to previous periods. Deferred tax is estimated useful life. Evaluations of depreciation methods and useful lives are calculated in accordance with the balance sheet method, proceeding from conducted yearly. temporary differences between the carrying amounts and taxable values of assets and liabilities. The amounts are calculated based on how the temporary The following depreciation periods are applied: differences are expected to even out, and by applying the tax rates and rules that are enacted or substantively enacted on the reporting date. Office equipment 5 years 5 years Temporary differences are not considered in goodwill on consolidation, nor Computer equipment 3 years 3 years in differences attributable to participations in subsidiaries that are not expected to become subject to tax in the foreseeable future. For legal entities, potential untaxed reserves are reported including deferred tax liabilities. However, the Consolidated Accounts divide untaxed reserves between deferred tax liabilities Impairment Losses and equity. Carrying amounts for the group’s assets are verified at each reporting date Deferred tax assets in deductible temporary differences and loss carry- to determine whether there is any impairment. If so, the asset’s recoverable forwards are only reported to the extent that it is likely that they will imply value is calculated, defined as the greater of fair value less selling expenses lower future tax payments. No deferred tax asset was reported in the financial and value in use. When calculating value in use, future payment surpluses statement for 2011. This item was written down to zero in the financial the asset is expected to generate are discounted at a rate corresponding to statement for 2010. risk-free interest and the risk associated with the specific asset. The recoverable value of the cash-generating unit to which the asset belongs is calculated for Employee Benefits assets that do not generate cash flow that is essentially independent of other Employee benefits are reported as salaries paid and accrued benefits. Full assets. If the recoverable value of the asset is less than the carrying amount, provisions are made for various assumptions such as vacations, social security an impairment loss is effected. Impairment losses are charged to the Income contributions and pensions. All the group’s pension contracts have been Statement. Regardless of whether there is any indication of value impairment, classified as defined-contribution plans, which means that the company pays tests are conducted on assets with indefinite useful lives and intangible assets predetermined charges to a separate legal entity, and has no legal or informal that are not yet ready for use. Impairment tests allocate goodwill acquired in a commitment to pay further charges if the legal entity does not have sufficient business combination to each of the acquired cash-generating units or groups assets to pay all benefits for employee service during current and previous of cash-generating units that are expected to benefit from the synergies of the periods. Pension expenses for defined-contribution plans are charged to acquisition, from the acquisition date onwards. Each unit or group of units over earnings as employees render service. These commitments are calculated which goodwill is allocated correspond to the lowest level in the company at without discounting because the payments for all these plans become due for which goodwill in question is monitored in internal controls, and is not greater payment within 12 months. than a segment based on the basis for division in accordance with IFRS 8, Provisions are only reported coincident with termination of employees if the Operating Segments. Aspiro has allocated acquired goodwill on the basis of company has demonstrably committed to conclude employment before the business segments. The impairment test as of 31 December 2011 resulted in normal time, or when remuneration is paid to encourage voluntary redundancy. impairment of goodwill relating to the Search business segment (see Note 5). In those cases the company issues redundancy notices, a detailed plan, which as The company determines whether there is any indication that the previous a minimum, includes information on workplaces, positions and the approximate impairment loss of an asset, apart from goodwill, is no longer justified wholly or number of people affected, and the remuneration for each employee category partly at each reporting date. A reversal of impairment losses is only effected to or position and the time for conducting the plan. the extent the asset’s carrying amount is not greater than the company would Staff stock options are settled through new share issues. The staff stock have reported (after depreciation) if the company had not written down the option plan is reviewed in Note 4. The expenses for staff stock options have asset. Reversals of impairment losses are reported in the Income Statement. been calculated in accordance with IFRS 2. The fair value of options has been calculated in accordance with the Black & Scholes general model for valuing Foreign Currencies options, without adjusting for potential dilution. The expense is allocated on a Foreign currencies are translated to the functional currency at the rate straight-line basis over the term of the options. A provision for social security of exchange ruling on the transaction date. In some cases, actual rates of contributions is made based on the fair value of the stock options at each exchange are approximated as an average over one month. Foreign currency reporting date. receivables and liabilities have been translated to functional currency at rates of exchange ruling on the reporting date. Exchange rate differences on trading Earnings per Share receivables and liabilities are included in operating profit/loss in the Income Basic earnings per share are calculated by earnings attributable to holdings of Statement. Differences in financial receivables and liabilities are reported as a ordinary shares of the parent company being divided by the weighted average net total in financial items. Exchange rate differences on monetary intragroup of outstanding ordinary shares in the period. For comparative purposes, the items are included in the Consolidated Income Statement. The group does not outstanding shares is adjusted for bonus issues, split and reverse split. currently use any financial instruments to hedge rates of exchange. When calculating the potential dilution due to outstanding warrants, the value of the subscription price is compared with the share’s market value. Accounting Principles 51
Assumed payment from warrants is considered as if it had been received upon stated below have been applied consistently for all periods published in the the issue of ordinary shares at the average market price of ordinary shares in the parent company’s financial statements. period. The difference between the number of issued ordinary shares and the number of ordinary shares that would have been issued at an average market Classification and Presentation price of ordinary shares in the period is treated as an issue of ordinary shares The parent company’s financial reports are presented in the format stipulated without payment. Warrants only give rise to a dilution effect when the average by the Swedish Annual Accounts Act. The primary discrepancy from IAS 1 price of ordinary shares in the period is greater than the exercise price of the relates to the accounting of equity and the incidence of provisions as an stock options and when profit or loss attributable to holders of ordinary shares independent title in the Balance Sheet. of the parent company is positive.
Provisions Group and Stockholders’ Contributions Group contributions paid are reported as an increase in the participations in Provisions are reported in the Balance Sheet when a legal or informal subsidiaries item of the issuer. If the contribution is intended to cover losses, commitment arises as a consequence of an event that has occurred and the group’s participations in subsidiaries have been subjected to an impairment it is likely that an outflow of economic rewards will be necessary to settle test subsequently. Group contribution that the parent company receives from the commitment and a reliable estimate of the amount is possible. The a subsidiary is reported using the same principles as usual dividends from provision is reported at an amount corresponding to the best estimate of the subsidiaries. disbursement necessary to settle the commitment. Provisions are liabilities that are uncertain in terms of the amount or timing of when they will be settled. When provisioning for restructuring expenses, in addition to the general criteria Leases for provisions being satisfied, the company must have a detailed formal plan The parent company accounts all lease arrangements in accordance with the for restructuring, which state the operations and sites affected, the number rules on operating leases. of employees that will receive severance pay, other expenses the company will incur, and when the measures will be conducted. The creation of a well- Financial Instruments founded expectation with the parties affected is another precondition for The parent company does not utilize the valuation rules of IAS 39. The parent reporting provisions for restructuring measures. The financial statement for company values financial fixed assets at cost less potential impairment losses 2010 reported a provision for estimated supplementary purchase price relating and financial current assets at the lower of cost or market. Financial receivables to the acquisition of Apparat AS. This provisional was reversed via the Income and liabilities are translated to the functional currency at the rate of exchange Statement in 2011 (see Note 12). ruling on the reporting date.
Contingent Liabilities Tax Contingent liabilities are potential commitments sourced from events that The parent company accounts potential untaxed reserves including deferred have occurred and whose incidence may be confirmed only by one or more tax liabilities. The Consolidated Accounts divide untaxed reserves between uncertain future events occurring or not occurring, which do not lie entirely deferred tax liabilities and equity. within the company’s control. Contingent liabilities may also be existing commitments sourced from events that have occurred but that are not reported as a liability or provision because it is unlikely that an outflow of resources will be necessary to settle the commitment, or the size of the commitment cannot be measured with sufficient reliability.
Borrowing Costs Borrowing costs are reported to earnings for the period to which they are attributable. No borrowing costs have been incorporated in the cost of assets.
Cash Flow Statement The Cash Flow Statement has been prepared in accordance with the indirect method. Cash flow from operating activities is calculated proceeding from net profit/loss. The profit/loss is adjusted for transactions not involving payments made or received, changes in trade-related receivables and liabilities, and for items attributable to investing or financing activities.
Cash and Cash Equivalents Cash and cash equivalents comprise cash and bank balances and short-term investments with a due date within three months.
Operating Segments Aspiro has defined operating segments as the group’s three business segments: Music, TV and Mobile Search. The executive management monitors the business segments on the basis of total sales, earnings net of direct expenses and EBITDA.
Parent Company Accounting Principles The parent company prepares its Annual Accounts in accordance with the Swedish Annual Accounts Act (1995:1554) and RFR 2, Accounting for Legal Entities issued by the Swedish Financial Reporting Board. RFR 2 is based on legal entities whose securities are quoted on a Swedish stock market or recognized marketplace, whose general rule is to apply the IFRS/IAS applied in the Consolidated Accounts. Accordingly, in its Annual Accounts for the legal entity, the parent company applies all IFRS and statements endorsed by the EU where this is possible within the auspices of the Swedish Annual Accounts Act and with consideration to the relationship between accounting and taxation in Sweden. RFR 2 states the exemptions and amendments to be made from and to IFRS. The difference between the group’s and the parent company’s accounting principles are stated below. The accounting principles of the parent company Notes 52
Notes
Note 1 Net Sales and Segment Reporting Group Parent Company 2011 2010 2011 2010
Net sales by group and other companies (conti- nuing operations) Net sales to group companies - - - - 20,248 100 % 55,682 98 % Net sales to other companies 230,584 100 % 184,921 100 % 0 0 % 1,001 2 % Total net sales 230,584 100 % 184,921 100 % 20,248 100 % 56,683 100 %
External expenses by group and other compa- nies (continuing operations) Other external expenses, group companies - - - - 560 8 % 13,807 52 % Other external expenses, other companies 52,727 100 % 56,221 100 % 6,134 92 % 12,726 48 % Total other external expenses 52,727 100 % 56,221 100 % 6,694 100 % 26,533 100 %
Reporting by Operating Segment Eliminations/ Continuing Discontinued Music TV Mobile Search Unallocated Operations Operation Group 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Revenues
External net sales 123,695 49,997 53,980 53,166 52,810 79,258 99 2,500 230,584 184,921 58,360 176,927
Internal net sales - - 63 93 - - -63 -93 - - - -
Other operating revenues 123 -43 245 1,436 53 74 2,351 3,243 2,772 4,710 1,768 380
External direct expenses -95,150 -36,492 -3,981 -4,364 -22,977 -34,624 -1,028 -6,507 -123,136 -81,987 -36,405 -98,083
Internal direct expenses - - -55 -35 - - 55 35 - - - -
Earnings net of direct expenses 28,668 13,462 50,252 50,296 29,886 44,708 1,414 -822 110,220 107,644 23,723 79,224
Indirect operating expenses -55,539 -33,797 -55,342 -64,895 -3,252 -5,289 -30,113 -30,898 -144,246 -134,879 -26,693 -74,243
EBITDA -26,871 -20,335 -5,090 -14,599 26,634 39,419 -28,699 -31,720 -34,026 -27,235 -2,970 4,981
Revaluation gain, WiMP 15,255 - - -
Depreciation, amortization and impair- ment -20,916 -86,966 -994 -4,948
Operating profit/loss -39,687 -114,201 -3,964 33
Financial income and expenses -297 -220 955 -4,412
Profit/loss before tax -39,984 -114,421 -3,009 -4,379
Tax on net profit/loss -1,174 -5,110 - -6,794
Capital gain, sale - - 25,323 -191
Net profit/loss -41,158 -119,531 22,314 -11,364
*Direct expenses are expenses for purchased content, advertising and revenue sharing. Notes 53
Note 1 cont. Note 2 Lease Payments Group 2011 2010 Group Parent Company
Reporting by Geographical Regions 2011 2010 2011 2010
Norway 131,547 109,728 Total lease payments for the financial year, equipment 44 102 13 13 Denmark 40,176 22,468 Sweden 17,451 5,341 Lease payments due in the coming Other countries 41,410 47,384 years, equipment Total net sales by geographical region 230,584 184,921 2011 - 46 - 13 Discontinued operation 58,360 176,927 2012 44 44 13 13 2013 44 44 13 13 Information on Major Customers 2014 7 6 1 1 The group’s largest customers represent 17%, 14% and 12% of net sales respectively. Revenue from the largest customers are in Music and TV. Total lease payments due in the coming years 95 140 27 40 Other Disclosures Aspiro has defined operating segments as the group’s three business segments: Music, TV and Mobile Search. The allocation of revenues and expenses is partly based Group Parent Company on information from Aspiro’s statistics and monitoring systems. The executive management monitors the business segments on the basis of total 2011 2010 2011 2010 net sales (including intragroup revenues), earnings net of direct expenses for purcha- sed content, advertising and revenue sharing, and EBITDA. Total rental expenses for the financial Assets, liabilities and investments cannot be allocated by segment in a reasonable year, premises 6,784 6,624 450 450 and reliable manner because, to some extent, the operation is integrated. Rental contracts maturing in the coming years, premises 2011 - 6,289 - 450 2012 6,589 5,843 450 113 Group Parent Company 2013 4,538 565 450 - Other Operating Revenues 2011 2010 2011 2010 2014 5,901 - 450 - Gain on revaluation of 2015 5,564 - 113 - holding in WiMP Music AS 15,255 - - - 2016 5,451 - - - Trading-related Total rental contracts maturing exchange rate gains 2,561 4,567 564 766 in the coming years 28,043 12,697 1,463 563 Rental revenues 153 141 - - Other revenues 58 2 - - All lease arrangements have been reported as operating leases. There are only a few lease arrangements in the group, for office equipment. Total other operating revenues 18,027 4,710 564 766 Note 3 Audit Fees and Reimbursement Group Parent Company 2011 2010 2011 2010
Ernst & Young Auditing 1,818 1,843 540 538 Auditing in addition to audit assignment 275 243 275 243 Tax consultancy 127 8 96 8 Other services 242 460 191 247 Total, Ernst & Young 2,462 2,554 1,102 1,036
Other auditors Auditing 90 43 - - Auditing in addition to audit assignment - - - - Tax consultancy - 36 - 36 Other services 17 68 9 68 Total, other auditors 107 147 9 104
Total audit fees and reimbursement 2,569 2,701 1,111 1,140 Notes 54
Note 4 Human Resources Group Parent Company Subsidiaries Average no. of employees 2011 2010 2011 2010 2011 2010
Employees in Sweden 13 17 9 8 4 9 Of which men in Sweden 7 10 5 4 2 6 Employees in Norway 98 100 - - 98 100 Of which men in Norway 86 85 - - 86 85 Employees in Denmark 2 1 - - 2 1 Of which men in Denmark 2 1 - - 2 1 Employees in Baltic states 4 7 - - 4 7 Of which men in Baltic states 3 6 - - 3 6 Employees in Finland - 3 - - - 3
Of which men in Finland - 3 - - - 3 Employees in the US - 1 - - - 1 Of which men in the US - 1 - - - 1 Total average no. of employees 117 129 9 8 108 121 Total, of which men 98 106 5 4 93 102
Salary, other benefits and payroll overheads Total salary and other benefits 84,791 96,114 4,801 4,878 79,990 91,236 Total social security contributions 17,609 20,564 1,844 2,426 15,765 18,138 Of which pension expenses 3,784 4,736 473 614 3,311 4,122
Of the parent company’s pension expenses of SEK 473,000 (614,000), SEK 0 (SEK 0) relate to the Board and CEO.
Of the group’s pension expenses of SEK 3,784 (SEK 4,736,000), SEK 175,000 (SEK 169,000) relate to the Board and CEO.
Salary and other benefits distributed between Board members, the CEO and other employees
Board of Directors and CEO 4,068 3,614 843 838 3,225 2,776 Other employees 80,723 92,500 3,958 4,040 76,765 88,460 Total 84,791 96,114 4,801 4,878 79,990 91,236
Senior Executives’ Employment Terms and Remuneration The AGM resolved on SEK 750,000 (SEK 875,000) of Directors’ fees for the period until the next AGM. Fees shall be SEK 125,000 to each member and SEK 250,000 to the Chairman.
Remuneration Remuneration to the Board of Directors Directors’ Fees via Company
Trond Berger, Chairman of the Board 250 Lars Boilesen 125 Gisle Glück Evensen 125 Peter Pay 125
Åsa Sundberg 125
Total 750 Notes 55
Note 4 cont. Stock Option Plans The CEO, senior managers and other managers of Aspiro have received stock options. The CEO can be issued six months’ notice of termination of employment. If such notice The 2009/2011 Plan involved 5,000,000 stock options with entitlement to subscribe is issued by the company, severance pay of twelve months’ salary is due. Basic salary for one Aspiro share at an exercise price of SEK 1.30. Half of the stock options could is payable at NOK 2.5 m yearly. Maximum yearly bonus is six months’ salary. Other be exercised from one year after granting onwards, and half two years after granting, benefits comprise premium-based pension insurance of 5% of basic salary between although no later than 30 June 2011. 0 and 6G, and 8% of basic salary between 6G and 12G (G is defined as the Norwegian The 2010/2012 Plan involves 5,000,000 stock options with entitlement to subscribe equivalent of the Swedish basic amount, G is presently NOK 79,000). for one Aspiro share at an exercise price of SEK 1.91. Half of the stock options can be Remuneration to the CEO Gunnar Sellæg amounted to SEK 3.3 m (SEK 2.8 m) exercised from one year after granting onwards, and half two years after granting, in 2011. The bonus for 2011 is payable in 2012 at SEK 786,000 (SEK 298,000), although no later than 31 December 2012. corresponding to some 64% (24%) of maximum bonus. The salary and employment The 2009/2011 and 2010/2012 Plans include a vesting condition that consolidated terms of the CEO are determined by the Board of Directors. net sales, adjusted for extraordinary events, should increase by 5% yearly. The employment terms of other senior managers are determined by consultation The plans also include a re-investment obligation of 25% of the gain after tax. between the CEO and Board of Directors. Other members of management are subject The 2011/2014 plan involves 5,000,000 stock options stock options with to mutual notice periods of three to six months. Pension benefits to senior managers entitlement to subscribe for one a share at an exercise price of SEK 1.39. The options in Sweden correspond to the Maxplan or SEB Tryggplan chemes. Senior managers can be exercised in the period 1 October to 31 December 2014 inclusive. in Norway have a premium-based pension policy of 3% of basic salary between 0G Exercise of staff stock options requires the option-holder to remain an employee and 6G, and 6% of basic salary between 6G and 12G. All pension plans are defined of the group. contribution. Aspiro’s obligations are limited to the amount the company accepts to To ensure the correct execution of the stock options, the group has issued warrants contribute. to a group company. More information in the Stock and Stockholders section on page In 2011, total remuneration of SEK 9,110,000 (SEK 6,370,000) was paid to other 21. senior managers in management, totaling four (five) people in the year. Of total On 11 December 2008, a shareholders’ meeting resolved on the issuance of call remuneration SEK 0 (SEK 0) is severance pay. Pension expenses for this group options and transfer of shares of the subsidiaries Rubberduck Media Lab AS and amounted to SEK 187,000 (SEK 131,000). The following applies to bonuses to the Rubberduck Media Lab Inc. management group for 2011 (four people) in accordance with Board decision: bonus is based on EBITDA and personal targets. Management may receive a maximum of 50% of yearly salary as bonus. The bonus for 2011 was SEK 2.6 m (SEK 0.6 m).
2011 2010 Division between At the Of At the Of Sexes among Senior End of the which End of the which Managers Period Men Period Men
Group Board members 12 92 % 16 94 % CEO and management 5 100 % 5 100 %
Parent Company Board members 5 80 % 6 83 % CEO and management 5 100 % 5 100 %
Staff Stock Option Plans 2010/2012 2011/2014 Total
Maximum number of options for granting to employees 5,000,000 5,000,000 10,000,000 Actual number of granted options 5,000,000 4,830,000 9,830,000 Value per option, SEK 0.22 0.51 Valuation date 30 Jun. 09 30 Jun. 10 Stock price, SEK 1.54 1.21 Exercise price, SEK 1.91 1.39 Estimated average duration 2 years 2 years Interest 1.45 % 1.40 % Expected volatility 33 % 65.5% Dividends - - Original estimate of share of remaining staff at exercise dates 100 % 100 % Total estimated expense during term of plan exc. employer’s contribution, SEK 000 1,100 2,463 Fair value per option, 31 Dec. 2011, including dilution effect, SEK 0.07 0.34
The above valuation remains, apart from the assumption on the share of remaining staff at each exercise date. This assumption may be changed due to actual circumstances. Total expense will also change because employer’s contributions are calculated on the fair value of the options, and a new present value calculation is conducted each quarter. In 2011, expenses for the staff stock option plan reduced operating profit by SEK 2.2 m (SEK 2.4 m). The recognized liability for accrued expenses for social security contributions amounts to SEK 145,000 (145,000). Notes 56
Note 5 Fixed Assets Intangible Assets Group Parent Company Group Parent Company Capitalized development costs 2011 2010 2011 2010 Goodwill 2011 2010 2011 2010
Cost, opening balance - 11,117 - 2,033 Cost, opening balance 123,548 426,669 - - Retirements/sales - -11,117 - -2,033 Derecognition on disposal - -303,121 - - Cost, closing balance - - - - Purchase of subsidiaries 26,366 - - - Accumulated amortization and im- Exchange rate difference -427 - - - pairment losses, opening balance - -9,605 - -2,033 Amortization - -1,512 - - Cost, closing balance 149,487 123,548 - - Amortization retirements/sales of Accumulated impairment losses, retirements for the year - 11,117 - 2,033 opening balance -66,400 -284,856 - - Accumulated amortization and Impairment losses -6,816 -66,400 - - impairment losses, closing balance - - - - Impairment losses, derecognition Carrying amount, closing on disposal for the year - 284,856 - - balance - - - - Accumulated impairment losses, closing balance -73,216 -66,400 - - No consulting fees, in-house work and licenses for the enhancement of Aspiro’s technology platform and new segments were capitalized in 2011. Expensed Carrying amount, closing development costs were some SEK 23.6 m (SEK 21.5 m) and mainly consist of costs balance 76,271 57,148 - - for staff. Total carrying amount, intan- gible assets, closing balance 85,835 67,948 431 811
Group Parent Company Licenses, technology, Impairment Test for Cash-generating Units Including Goodwill trademarks and customer The impairment test was based on calculated value in use for the Mobile Search and TV business segments and WiMP in Norway. These values are based on cash flow fo- contracts 2011 2010 2011 2010 recasts for five years and a terminal value based on sustainable growth of 2% (2%) for TV, a negative growth rate of 0% (-30%) for Mobile Search and a sustainable growth Cost, opening balance 27,475 99,341 1,625 3,977 rate of +2% for WiMP. The present value of cash flows was calculated by applying a discount rate (weigh- Purchases 677 3,223 100 468 ted average cost of capital WACC) corresponding to 11.1% (11.9%) after tax. The Increase via purchase of operation 5,826 - - - comparison between the carrying amounts of the cash-generating units containing goodwill and the units’ value in use resulted in impairment of the goodwill attributa- Decrease via sale of operation -2,280 - - - ble to the Search business segment of SEK 6.8 m (SEK 66.4 m). The estimated value in Retirements/sales - -73,744 - -2,820 use of the TV business segment and WiMP Norway exceeds carrying amount. Amended assumptions regarding the sustainable growth rate for TV and WiMP of Exchange rate difference 289 -1,345 - - +/-2 percentage points and amended discount rate of +/- 5 percentage points still means value in use exceeding the carrying amount for WiMP. For TV, a change in the Cost, closing balance 31,987 27,475 1,725 1,625 discount rate of +/-2 percentage points would mean that the value in use would still Accumulated amortization and im- exceed the carrying amount. Because the terminal value portion of value in use for pairment losses, opening balance -16,675 -60,309 -814 -1,476 Mobile Search is negligible, the computation is not significantly affected by amended assumptions regarding growth rates and discount rates. Increase via purchase of operation -33 - - - Decrease via sale of operation 1,616 - - - Goodwill 2011 2010 Reclassification - -6 - -6 Amortization -6,971 -11,625 -480 -640 Mobile Search 31,168 37,984 Impairment losses - -4,772 - - TV 19,164 19,164 Amortization of retirements for WiMP, Norway 25,939 - the year - 59,032 - 1,308 Total 76,271 57,148 Exchange rate difference -360 1,005 - - Accumulated amortization and impairment losses, closing balance -22,423 -16,675 -1,294 -814 Carrying amount, closing balance 9,564 10,800 431 811 Notes 57
Note 5 Fixed Assets, cont. Note 6 Discontinued Operations, cont. Property, Plant and Equipment The capital gain on consolidation for the sale of Mobile Solutions was SEK 23.4 m. The Group Parent Company sales revenue including working capital adjustment, NOK 22.9 m, has been translated to SEK 27.1 m. 2011 2010 2011 2010 Capital gain 2011 Office and computer equipment Sales revenue 27,091 Cost, opening balance 38,809 41,643 1,849 1754 Transferred net assets -2,216 Increase via purchase of subsi- diaries 10 - - - Other expenses attributable to the sale -1,500 Decrease via sale of operation -3,170 - - - Capital gain on consolidation 23,375
Purchases 8,050 4,993 13 112 The profit/loss from Miles Ahead has been recognized in the Income Statement as a profit/loss from discontinued operations. This operation was sold on 1 April 2011. Divestment and retirement -11 -5,054 - -17 Exchange rate difference -93 -2,773 - - Cost, closing balance 43,595 38,809 1,862 1,849 Profit/loss from discontinued operation 2011 2010
Accumulated depreciation and im- Miles Ahead pairment losses, opening balance -26,284 -24,458 -1582 -1279 Net sales 223 2,507 Increase via purchase of subsi- diaries -5 - - - Other operating revenue 97 23 Decrease via sale of operation 2,614 - - - Total 320 2,530 Reclassification - 6 - 6 Services and goods for resale -23 -50 Divestment and retirement 7 3,985 - 15 Other external expenses -1,610 -6,044 Depreciation -8,110 -7,605 -191 -324 Personnel expenses -1,491 -5,272 Exchange rate difference 85 1,788 - - Depreciation and impairment of property, plant and equipment -15 -58 Accumulated depreciation and impairment losses, closing balance -31,693 -26,284 -1,773 -1,582 Amortization and impairment of intangible assets -447 -361 Carrying amount, closing Other operating expenses -42 -192 balance 11,902 12,525 89 267 Total -3,628 -11,977 Operating profit/loss -3,308 -9,447 Net financial income/expenses 2 7 Note 6 Discontinued Operations Profit/loss before tax -3,306 -9,440 The profit/loss from Mobile Solutions has been recognized in the Income Statement Tax - - as the profit/loss from discontinued operations. This operation was sold on 14 October 2011. Net profit/loss -3,306 -9,440
Profit/loss from discontinued operation 2011 2010
Mobile Solutions Capital gain
Net sales 58,009 76,887 The capital gain on consolidation for the divestment of Miles Ahead was SEK 0.5 Other operating revenue 1,671 288 m. Sales revenue was EUR 1. This operation had negative equity of SEK 0.5 m on divestment. Total 59,680 77,175 Services and goods for resale -30,769 -30,253 Other external expenses -16,791 -38,946 Personnel expenses -12,166 -23,638 Depreciation and impairment of property, plant and equipment -357 -624 Amortization and impairment of intangible assets -175 -357 Other operating expenses -135 -204 Total -60,393 -94,022 Operating profit/loss -713 -16,847 Net financial income/expenses 953 -4,409 Profit/loss before tax 240 -21,256 Tax - - Net profit/loss 240 -21,256 Notes 58
Note 6 Discontinued Operation cont. Note 6 Discontinued Operation cont.
The profit/loss from Mobile Search in Finland has been recognised in the Income The capital gain on consolidation for the divestment of Entertainment in Denmark, Statement as profit/loss from discontinued operations. This operation was sold on Norway and Sweden, was SEK -1.7 m. The sales revenue has been translated to SEK 1 March 2011. 41.8 m.
Profit/loss from discontinued operation 2011 2010 Capital gain 2010 Mobile Search Finland Sales revenue 41,783 Net sales 128 1,568 Transferred property, plant and equipment -1,200 Other operating revenue - - Transferred intangible assets -12,000 Total 128 1,568 Goodwill relating to discontinued operation -18,265 Services and goods for resale -71 -748 Other transferred net assets -10,294 Other external expenses - -51 Other expenses relating to the sale -4,839 Personnel expenses - - Decrease of deferred tax liabilities relating to transferred assets 3,156 Depreciation and impairment of property, plant and Capital gain on consolidation -1,659 equipment - -
Amortization and impairment of intangible assets - - Other operating expenses - - Total -71 -799 The profit/loss from Entertainment in Finland was recognized in the Income State- Operating profit/loss 57 769 ment as a profit/loss from discontinued operations. This operation was sold on 18 November 2010. Net financial income/expenses - - Profit/loss before tax 57 769 Profit/loss from discontinued operation 2011 2010
Tax - - Entertainment Finland Net profit/loss 57 769 Net sales - 9,992 Other operating revenue - 1 Capital gain Total - 9,993
Services and goods for resale - -4,221 The capital gain on consolidation from the divestment of Mobile Search Finland was SEK 1.4 m. The sales revenue of EUR 155,000 m was translated to SEK 1.4 m. This Other external expenses - -5,326 operation has not been recognized at any value in the Consolidated Balance Sheet. Personnel expenses - -1,121 Depreciation and impairment of property, plant and equipment - -93 In the Income Statement, the profit/loss from Entertainment in Denmark, Norway and Sweden has been recognized as a profit/loss from discontinued operations. This Amortization and impairment of intangible assets - -15 operation was divested on 1 July 2010. Other operating expenses - -114 Profit/loss from discontinued operation 2011 2010 Total - -10,890 Operating profit/loss - -897 Entertainment Denmark, Norway and Sweden Net financial income/expenses - 7 Net sales - 85,973 Profit/loss before tax - -890 Other operating revenue - 68 Tax - 0 Total - 86,041 Net profit/loss - -890 Services and goods for resale - -29,648
Other external expenses - -13,954 Personnel expenses - -12,344 The capital gain on consolidation for the divestment of Entertainment in Finland is Depreciation and impairment of property, plant and SEK 1.5 m. The sales revenue was translated to SEK 3.2 m. equipment - -435 Capital gain 2010 Amortization and impairment of intangible assets - -3,005 Sales revenue 3,169 Other operating expenses - -200 Transferred intangible assets -2,781 Total - -59,586 Other transferred net assets 381 Operating profit/loss - 26,455 Other expenses related to the sale -80 Net financial income/expenses - -17 Decrease of deferred tax liability related to transferred assets 779 Profit/loss before tax - 26,438 Capital gain on consolidation 1,468 Tax - -6,794
Net profit/loss - 19,644
Notes 59
Note 7 Participations in Group Companies Parent Company 2011 2010
Cost, opening balance 294,369 411,388 Acquisition/stockholders’ contribution for the year 25,558 9,623 Sales/liquidation for the year -7,078 -126,642 Cost, closing balance 312,849 294,369 Impairment losses, opening balance -176,572 -262,161 Impairment losses, remaining participations -10,970 -38,485 Sales/liquidation for the year - 124,074 Accumulated impairment losses, closing balance -187,542 -176,572 Carrying amount, closing balance 125,307 117,797
Note 7 Participations in Group Companies Equity Corporate ID No. Reg. Office No. of Shares Holding Vote Holding
Parent Company Aspiro Innovation AB 556598-3888 Malmö 1,000 100 % 100 % 159 Aspiro AS 981 656 652 Oslo 9,214,727 100 % 100 % 25,303 Aspiro Inpoc AB 556598-2781 Stockholm 65,349 62 % 62 % 10,740 Aspiro Musik AB 556777-9607 Malmö 1,000 100 % 100 % 196 Aspiro Music AS 993 741 345 Oslo 100 100 % 100 % 126 Aspiro Sök AS 992 434 635 Oslo 9,214,727 100 % 100 % 34,995 Aspiro TV AS 986 704 337 Oslo 110,000 100 % 100 % 31,519 SMS Opplysningen 2100 AS 995 065 398 Oslo 100 100 % 100 % 95 WiMP Music AS 994 588 044 Oslo 120,000 100 % 100 % 22,174 Total, parent company 125,307
Equity Corporate ID No. Reg. Office No. of Shares Holding Vote Holding
Subsidiaries Owned by Aspiro AS Aspiro Inpoc AB 556598-2781 Stockholm 40,000 38 % 38 % 11,408 SMS Opplysningen 1985 AS 991 937 676 Oslo 100 100 % 100 % 122 Owned by Aspiro TV Rubberduck Media Lab Inc. 26-4047695 Carlsbad 1,000 100 % 100 % - Total, subsidiaries 11,530 Notes 60
Note 8 Participations in Joint Venture Group Parent Company 2011 2010 2011 2010
Cost, opening balance - - 6,071 3,927 Purchase/new share issue - 2144 Reclassification - - -6,071 - Carrying amount at end of year - - - 6,071
Aspiro AB and Platekompaniet AS formed a joint venture, Wimp Music AS (formerly Kompanjong AS), in September 2009. At the end of October 2011, Aspiro acquired the remain- ing shares, 50 %, of WiMP Music AS from Platekompaniet AS. In the group, Wimp Music AS is reported in accordance with the proportional method until October 2011 inclusive. From first November onwards, WiMP Music AS is reported as a wholly owned subsidiary using the purchase method. See also Note 17.
Group
Participation in Joint Venture–Financial Information 2011 Jan-okt 2010
Share of revenues 32,084 6,753 Share of expenses -27,095 -6,875
Share of assets - 2,557 Share of liabilities - 2,138 Notes 61
Note 9 Profit/loss from Financial Investments Group Parent Company 2011 2010 2011 2010
Profit/loss from participations in group companies Profit/loss from sales of shares in subsidiaries/liquidation - - 18,513 9,755 Impairment of participations in subsidiaries - - -15,826 -44,123 Total profit/loss from participations in group companies - - 2,687 -34,368
Interest income and similar profit/loss items Other financial revenues, subsidiaries - - 2,789 1,832 Net exchange rate differences - - - 144 Interest income 840 633 472 229 Total interest income and similar profit/loss items 840 633 3,261 2,205
Interest expenses and similar profit/loss items Other financial expenses, subsidiaries* - - -49,736 - Exchange rate differences, net -1,008 -230 -1,728 - Interest expenses -83 -115 -1 -14 Other financial expenses -46 -508 - - Total interest expenses and similar profit/loss items -1,137 -853 -51,465 -14
Total profit/loss from financial investments -297 -220 -45,517 -32,177
* Other financial expenses, subsidiaries include impairment of receivables from subsidiaries of SEK 48,058,000 (SEK 0).
Note 10 Tax on Net Profit Group Parent Company 2011 2010 2011 2010 Reconciliation of Effective Tax 2011 2010
Continuing operations Profit before tax -17,670 -118,800
Current tax -712 6,931 - - Tax at applicable tax rate, 26.3% 4,647 31,244 Deferred tax on temporary difference -462 -12,041 - -15,000 Tax effect of non-deductible expenses -2,260 -29,104 Total tax on net profit/loss -1,174 -5,110 - -15,000 Tax effect of non-taxable revenues 4,012 - Change in valuation of temporary differences -462 -11,827 Divested operations Utilization of un-reported loss carry-forwards 1,511 1,052 Current tax - -7,008 - - Increase in loss carry-forwards without the corresponding Deferred tax on temporary difference - 214 - - capitalization of deferred tax -8,622 -3,269 Total tax on net profit/loss - -6,794 - - Tax on net profit/loss -1,174 -11,904
Accumulated consolidated deductible deficits amount to some SEK 540 m. The A deferred tax liability is reported for temporary differences relating to acquired majority of this deficit is in the parent company (some SEK 402 m), and accordingly, intangible assets in the group. The opening carrying amount is SEK 0.2 m. In tandem there is no time limit for utilization of significant amounts. with amortisation of purchased intangible assets, the deferred tax liability decreased by SEK 0.3 m. The acquisition of WiMP Music AS involved an additional deferred tax liability of SEK 1.6 m. The closing recognized deferred tax liability amounts to SEK 1.5 m.
Note 11 Prepaid Expenses and Accrued Income Group Parent Company 2011 2010 2011 2010
Prepaid rent 206 1,570 147 135 Prepaid lease payments 3 3 3 1 Other accrued income 7,594 9,242 - - Other prepaid expenses 4,079 3,074 694 584 Total prepaid expenses and accrued income 11,882 13,889 844 720 Notes 62
Note 12 Provisions Note 16 Cash Flow Statement Group 2011 Group Parent Company 2011 2010 2011 2010 Opening balance 1,236 Remuneration paid - Adjustment for non-cash items Reversed -1,269 Depreciation, amortization and impairment losses 21,897 91,914 48,729 45,087 Translation difference 33 Capital gains -25,323 191 -2,687 -9,755 Closing balance - Revaluation gain -15,255 - - - The provision related to additional purchase price for the acquisition of Apparat AS. Deferred tax on temporary difference -311 11,827 - 15,000 Other 4,689 2,469 -474 -2,458 Total adjustment for non-cash items -14,303 106,401 45,568 47,874
Note 13 Non-current Liabilities Group Group Parent Company 2011* 2010**
2011 2010 2011 2010 Purchase of subsidiaries
Liabilities to group companies - - 135 310 Goodwill 26,366 - Deferred tax liabilities 1,500 222 - - Other intangible assets 5,813 - Total non-current liabilities 1,500 222 135 310 Property, plant and equipment 10 - Current receivables 18,559 - The parent company’s non-current liabilities to subsidiaries have no predetermined maturity. Cash and cash equivalents 18,142 - Deferred tax -1,615 - Current liabilities -35,067 - Note 14 Accrued Expenses and Deferred Income Purchase price 32,208 - Group Parent Company Purchase price paid - - 2011 2010 2011 2010 Cash and cash equivalents in purchased companies 9,071 - Accrued salary 9,408 12,273 372 672 Effect on consolidated cash and cash equiva- Accrued social security contributions 2,283 3,279 904 1,036 lents 9,071 -
Accrued expenses for rights and * The remaining 50% of WiMP Music AS was acquired at the end of October 2011. content 36,693 20,697 3,645 5,155 WiMP Music AS was previously consolidated in accordance with the proportional Accrued expenses, media partners - 12,592 - - method. ** The acquisition of Apparat AS in 2009 created an estimated additional purchase Other accrued expenses 5,541 14,969 1,729 1,889 price of SEK 1.7 m. Payment was made in relation to the contribution margin achieved Deferred income 1,899 5,042 - - on specific customer contracts. SEK 0.3 m of additional purchase price was paid in 2010. A provision for additional purchase price was recognised as revenue in 2011, Total accrued expenses and deferred see Note 12. income 55,824 68,852 6,650 8,752 Group 2011* 2010
Sale of subsidiaries Note 15 Pledged Assets and Contingent Liabilities Goodwill - -18,265 Group Parent Company Other intangible assets -62 -14,781 2011 2010 2011 2010 Property, plant and equipment -451 -1,200 Pledged assets Cash and cash equivalents -1,999 -8,451 Internal commitments None None None None Deferred tax - 3,935 Total pledged assets None None None None Others assets and liabilities, net -669 -6,382 Contingent liabilities None None * * Capital gains -25,263 191 * Parent company guarantee in favor of Aspiro TV AS to Telefonica O2 Ireland. Purchase price 28,444 44,953 Purchase price paid 15,147 41,809 Cash and cash equivalents in sold companies -1,999 -8,451 Effect on consolidated cash and cash equivalents 13,148 33,358 * The operations of Mobile Solutions were divested in 2011. This divestment involved three former subsidiaries. Miles Ahead (two subsidiaries) and the operations of Mobile Search in Finland were also divested. Unpaid purchase price relates to the sale of Mobile Solutions, where NOK 10.4 m with an adjustment for potential guarantees will be paid nine months after the sale and the remaining NOK 5 m will be paid quarterly as a share of the buyer’s trading earnings. ** The operations of Mobile Entertainment in Norway, Sweden, Denmark and Finland were divested in 2010. This divestment involved a combination of transfers of com- panies and separate assets. There is an unpaid purchase price for the divestment of the operation in Finland, where an earn-out model is applied. SEK 0.5 m was paid in 2011. This amount is included in the paid purchase price under sale of operations in 2011 above. Notes 63
Note 16 Cash Flow Statement cont.
Group Parent Company 2011 2010 2011 2010
Cash and cash equivalents Cash and bank balances 57,466 76,793 15,598 23,783 Total cash and cash equivalents 57,466 76,793 15,598 23,783 The above items have been classified as cash and cash equivalents because they have insignificant risk of value fluctuations, can be readily converted to cash and have a maximum maturity of three months from acquisition date.
Note 17 Business Combinations
2011 The group acquired the remaining shares of WiMP Music AS in the year. WiMP Music AS is reported as a subsidiary in the accounts from 1 November onwards. In January to October inclusive, WiMP is reported according to the proportional method. The cost of the shares has been measured at SEK 32.2 m. The allocation of the acquisition price meant that intangible assets in the form of customer agreements were identified and recognized. The goodwill arising in tandem with the acquisition of WiMP Music AS is primarily explained by expectations of growth and profitability for the WiMP music service in Norway. The acquisition of WiMP Music AS has been recognized in accordance with the rules for step acquisitions (IFRS 3 p 42), which means a revaluation gain of SEK 15.3 m was included in the cost. The acquisition of WiMP Music AS had the following effects on consolidated assets and liabilities:
Carrying Amounts Fair Value Fair Value before Acquisition Adjustment Reported in Group
Intangible assets 45 5,768 5,813 Property, plant and equipment 10 - 10 Current receivables 18,559 - 18,559 Cash and cash equivalents 18,142 - 18,142 Deferred tax liability - -1,615 -1,615 Current liabilities -35,067 - -35,067 Identified assets and liabilities, net 1,689 4,153 5,842 Goodwill on consolidation 26,366 Cost 32,208 Cash purchase price paid - Cash and cash equivalents in acquired company* 9,071 Net effect on cash and cash equivalents 9,071
* 50% of cash and cash equivalents on acquisition. The remaining portion was included via the proportional method.
If the acquisition of WiMP Music AS had occurred at the beginning of the year, consolidated net sales would have been some SEK 31.6 m higher and consolidated net profit some SEK 4.9 m higher. WiMP Music AS represented SEK 52.3 m of consolidated net sales in 2011. Its profit effect is SEK 8.8 m (for the period January - October 50% is included and for November - December 100%).
2010 No business combinations were completed in 2010. Notes 64
Note 18 Share Capital and Dividend Note 20 Earnings per Share
Number of shares 2011 2010
Outstanding shares at beginning of period 190,538,115 Basic earnings per share New share issue, exercise of options 2,315,000 Net profit/loss -18,306 -128,925 New share issue, acquisition 13,406,901 Average outstanding shares (000) 193,551 190,538 Outstanding shares at end of period 206,260,016 Basic earnings per share -0,09 -0,68
Aspiro has only one share class, with all shares having equal voting rights. The value of shares is SEK 1 (one) and total share capital is SEK 206,260,016. Diluted earnings per share No treasury shares were repurchased or sold. Net profit/loss -18,306 -128,925 Dividends and Capital Management Average outstanding shares (000) 193,551 190,538 The Board of Directors has decided to propose to the Meeting that no dividend is paid for the financial year 2011. Capital is defined as total reported equity. Neither Diluted earnings per share -0,09 -0,68 the parent company nor subsidiaries are subject to external capital requirements. To create the right conditions for the continued progress of operations and to be able to act on business opportunities, attaining a capital structure that generates financial stability is central. The basic principle is that Aspiro will be financed using Continuing Operations 2011 2010 stockholders’ equity. Borrowings will be considered for acquisitions and other major structural changes. Basic earnings per share Net profit/loss -40,620 -117,561 Average outstanding shares (000) 193,551 190,538 Basic earnings per share -0,21 -0,62
Diluted earnings per share Note 19 Related Parties Net profit/loss -40,620 -117,561 The parent company has close relations with its subsidiaries. Purchases from and Average outstanding shares (000) 193,551 190,538 sales to subsidiaries are stated in Note 1. Transactions between group companies are conducted at cost plus a certain margin. Diluted earnings per share -0,21 -0,62 As of 31 December 2011, the parent company had SEK 83.8 m (SEK 87.2 m) in receivables from group companies and SEK 81.6 m (SEK 53.5 m) of liabilities to group companies. Discontinued operation 2011 2010 Transactions with the main owner, Schibsted ASA and its subsidiaries, are on an arm’s length basis only. Basic earnings per share Net profit/loss 22,314 -11,364 Average outstanding shares (000) 193,551 190,538 Basic earnings per share 0.12 -0.06
Diluted earnings per share Net profit/loss 22,314 -11,364 Average outstanding shares (000) 193,551 190,538 Diluted earnings per share 0.12 -0.06
Basic earnings per share are based on the net profit/loss attributable to the equity holders of the parent and a weighted average of outstanding shares. Diluted earnings per share are based on net profit/loss attributable to the equity holders of the parent and a weighted average of outstanding shares with a supple- ment for the dilution effect of potential shares. There is no dilution. When calculating the potential dilution effect, the exercise price is restated for the estimated expense for services that will be rendered.
Note 21 Post-Balance Sheet Events
Aspiro’s Board of Directors unanimously recommended that shareholders accepted Schibsted’s public takeover bid. At the end of the scheduled acceptance period on 15 February 2012, Schibsted had a holding of 63.7% of the shares and votes of Aspiro. After extension of the acceptance period and acquisitions on the market, Schibsted holds 153,139,824 shares, or 74.3% of the shares and votes of Aspiro. Aspiro signed an agreement with the operator Ziggo in the Netherlands for a version of its WiMP music service. This agreement is expected to generate sales cor- responding to SEK 9 m over two years. Aspiro commenced a closed beta test of WiMP in Germany. Launch is early in the second quarter. Aspiro TV is extending its delivery to Deutsche Telekom. This agreement is expec- ted to produce net sales corresponding to SEK 24-32 m over a period of 18 months. Notes 65
Note 22 Financial Risk Management As of 31 December, the division of the group’s accounts payable by currency was as follows: The group’s Finance Policy formalizes the management of financial risks. Financial transactions are mainly managed by the parent company’s finance function. Aspiro’s Group Parent Company operations give rise to a number of financial risks such as liquidity risk, interest risk, SEK 000 2011 2010 2011 2010 currency risk and credit risk.
Liquidity Risk Division by currency In the group there are no interest-bearing loans. The group’s liquidity reserves NOK 11,955 19,482 - 269 consisting of bank balances and short-term investments was SEK 57.5 m (SEK 76.8 m) at year-end, corresponding to 25% (42%) of sales for remaining operations. Surplus SEK 989 2,426 99 377 liquidity is to be invested in recognized banks or in securities issued by central go- DKK 3,501 6,696 17 17 vernment. A minority may be invested in corporate bonds with maximum durations of three months. The basic principle is that investments will be made with capital EUR 1,510 2,954 - 17 guarantees. Accounts payable and other current liabilities are due for payment within one year. LVL - 198 - - USD 92 24 - - Interest Risk The group’s interest risk is attributable to changes in market interest rates and their EEK - 0 - - impact on surplus liquidity. The group’s interest-bearing assets were SEK 57.5 m (SEK LTL - 114 - - 76.8 m), and almost exclusively comprised of bank balances with variable interest. Other currencies 70 212 44 105 Currency Risk Total 18,117 32,106 160 785 The group’s currency risks are managed by the parent company. The objective is to mi- nimize the effect of the influence of variations in rates of exchange on Aspiro’s stock- holders’ equity. Currency exposure mainly relates to the translation risk of net assets in foreign subsidiaries. At present, there is no hedging of this exposure. Currency flows arising from purchases and sales in foreign currencies are of a short-term nature and not hedged. Currency exchange is conducted when necessary via Nordea emarket. Credit Risk The various companies also have foreign currency accounts for the most important The group is subject to credit risks in accounts receivable, which are managed in each currencies to avoid exchanging. subsidiary. The value of these receivables gross before impairment for doubtful debt The currency risks of the group, excluding intra-group transactions, have been was SEK 47,615,000 (SEK 85,316,000). Because the majority of receivables are from calculated at value at risk (VAR). The risk calculation is based on one year’s historical major telecom operators, the credit risk is low. Individual credit checks are conducted figures. The VAR level is 95%, which means that in 95 cases of 100, the earnings impact for new customers. No collateral has been received for these receivables. Two Scandi- would be less than calculated. The total currency risk of the Aspiro group, after consi- navian and one German telecom operator represent 62% of total accounts receivable. dering the correlation between the various currencies, was SEK 3.8 m (SEK 1.9 m). Based on year-2011 operating revenues and operating expenses in foreign cur- rency, a 5 percentage point depreciation or appreciation of the Swedish krona against other currencies would exert an annualized change in EBITDA of some SEK +/- 1.7 m. A 5 percentage point depreciation/appreciation against the group’s most important Group Parent Company currency, the NOK, would imply an annualized change in EBITDA of some SEK +/- 1.6 m. SEK 000 2011 2010 2011 2010
Age analysis of As of 31 December, the division of the group’s accounts receivable by currency was accounts receivable as follows: Not overdue 43,048 73,856 - 472 Group Parent Company Overdue 0-30 days 2,067 3,095 - - SEK 000 2011 2010 2011 2010 Overdue 31-120 days 573 5,367 18 54 Division by currency Overdue > 120 days 1,927 2,998 791 642 NOK 20,931 52,127 106 - Total 47,615 85,316 809 1,168 SEK 1,741 4,271 - 373 DKK 12,936 13,513 - - Parent Group Company EUR 10,422 11,402 129 147 SEK 000 2011 2010 2011 2010 LVL - 1,178 - - USD 242 882 - - Doubtful accounts receivable, change LTL - 2 - - Opening balance 1,808 2,190 630 437 Other currencies 364 134 -8 18 Translation differences -51 -238 -48 - Total 46,636 83,509 227 538 Increase on disposal of operations -660 - - - Doubtful debt 34 524 - 193 Bad debt - - - - Reversed unutilized amounts -152 -668 - - Closing balance 979 1,808 582 630
In addition to the above doubtful/bad debt, a receivable from a customer of was impaired by SEK 4.9 m in the financial statement for 2010. Of this receivable, SEK 0.9 m was recovered in 2011. No other financial assets in the group have been subject to impairment. Accrued income and other receivables are not due for payment. Impairment of receivables from subsidiaries of SEK 48.1 m (SEK 0 m) was conducted by the parent company. Notes 66
Carrying amounts and fair values of the group’s financial assets and liabilities are as follows: Carrying Amount Fair Value Carrying Amount Fair Value 2011 2011 2010 2010
Financial assets * Other long-term receivables 133 133 953 953 Accounts receivable 46,636 46,636 83,509 83,509 Other short-term receivables and accrued income** 37,900 37,900 37,682 37,682 Cash and cash equivalents 57,466 57,466 76,793 76,793
Financial liabilities *** Accounts payable 18,117 18,117 32,106 32,106 Other current liabilities and accrued expenses** 66,962 66,962 95,124 95,124
Carrying amounts and fair values of the parent company’s financial assets and liabilities are as follows: Carrying Amount Fair Value Carrying Amount Fair Value 2011 2011 2010 2010
Financial assets * Receivables from group companies 83,800 83,800 87,179 87,179 Accounts receivable 227 227 538 538 Other short-term receivables and accrued income** 20,570 20,570 4,036 4,036 Cash and cash equivalents 15,598 15,598 23,783 23,783
Financial liabilities *** Liabilities to group companies 81,569 81,569 53,466 53,466 Accounts payable 160 160 785 785 Other current liabilities and accrued expenses** 6,844 6,844 8,988 8,988
* Cash and cash equivalents are categorized as saleable financial assets. Other financial assets are categorized as loan receivables and accounts receivable. ** Accrued income and accrued expenses are stated in Notes 11 and 14 respectively. *** All financial liabilities are categorized as other liabilities and measured at amortized cost. Underskrifter, årsstämma och ekonomisk information 67
The undersigned hereby certify that the Consolidated Accounts and Annual Annual General Meeting 2012 Accounts have been prepared in accordance with the international accounting standards referred to in Regulation (EC) No. 1606/2002 of the European Time and location Parliament and of the Council of 19 July 2002 on the application of international Aspiro’s AGM (Annual General Meeting) 2012 will be held at 12:00 a.m. on accounting standards and generally accepted accounting principles in Sweden Monday, 14 May 2011 at Grev Turegatan 19, Stockholm, Sweden. and give a true and fair view of the group’s and parent company’s financial position and results of operations. The Directors’ Report of the group and parent company give a true and fair view of the group’s and parent company’s Who can participate? operations, financial position and results of operations and state the significant For entitlement to participate and vote at the AGM, stockholders must be: risks and uncertainty factors facing the parent company and group companies. – Included in the share register maintained by Euroclear Sweden AB (previously The Annual Accounts and Consolidated Accounts were approved for VPC, the Swedish Central Securities Depository & Clearing Organization); issuance by the Board of Directors on 17 April 2011. The Consolidated Income – Notify the company Statement and Balance Sheet and the Parent Company Income Statement and Balance Sheet will be subject to adoption at the Annual General Meeting on How can I be included in the share register? 14 May 2012. Shares can be recorded in the share register maintained by Euroclear in the name of the stockholder or their nominee. For entitlement to participate at the Meeting, stockholders with nominee-registered holdings must request Malmö, Sweden, 17 April 2012 temporary re-registration of their shares in their own name. Registration should be complete by no later than 8 May 2012. Please note that this procedure also applies to stockholders that utilize bank custody departments and trade on the Internet. Trond Berger, Chairman of the Board How do I notify the company? Notifications of participation should be made to the company by no later than 4 p.m. on 8 May 2012. Notifications can be made directly on Aspiro’s website www.aspiro.com, by mail to Aspiro AB, “AGM”, Gråbrödersgatan 2, SE-211 21 Peter Pay, Board member Malmö, Sweden, by phone on +46 (0) 40 630 0300, by fax: +46 (0)40 579771 or by e-mail: [email protected]. Notifications should state stockholders’ names, personal or corporate identity numbers, addresses and phone numbers, number of shares and number of assistants (maximum two) that stockholders wish to bring to the AGM. If participation is through power of attorney, the Lars Boilesen, Board member company should have received such power of attorney before the AGM.
Financial Information in 2012 Aspiro will publish the following financial information for 2012: Gisle Glück Evensen, Board member Q1 Interim Report 10 May 2012 AGM 2012 14 May 2012 Q2 Interim Report 9 August 2012 Q3 Interim Report 6 November 2012 Year-end Report 2012 February 2012 Åsa Sundberg, Board member Annual Report 2012 April 2013
IR Contacts Aspiro maintains updated information at www.aspiro.com. The company can also be contacted by e-mail at [email protected], by phone on +46 (0)40 630 Gunnar Sellæg, Chief Executive Officer 0300, fax +46 (0)40 57 97 71 or by mail:
Aspiro AB (publ) Investor Relations Gråbrödersgatan 2 My Audit Report was presented on 17 April 2012 SE-211 21 Malmö Sweden
Subscribers to information via e-mail will receive these reports direct via email. This Annual Report is available at Aspiro’s website, www.aspiro.com/ investorrelations. Johan Thuresson Authorized Public Accountant Auditor’s report 68
Auditor’s report
To the annual meeting of the shareholders of Aspiro AB (publ), corporate identity number 556519-9998
Report on the annual accounts and consolidated accounts Report on other legal and regulatory requirements I have audited the annual accounts and consolidated accounts of Aspiro AB In addition to my audit of the annual accounts and consolidated accounts, I (publ) for the year 2011. The annual accounts and consolidated accounts of the have examined the proposed appropriations of the company’s profit or loss company are included in the printed version of this document on pages 30-67. and the administration of the Board of Directors and the Managing Director of Aspiro AB (publ) for the year 2011. Responsibilities of the Board of Directors and the Managing Director for the annual accounts and consolidated accounts Responsibilities of the Board of Directors The Board of Directors and the Managing Director are responsible for the and the Managing Director preparation and fair presentation, of the annual accounts in accordance with The Board of Directors is responsible for the proposal for appropriations of the the Annual Accounts Act and, of the consolidated accounts in accordance with company’s profit or loss, and the Board of Directors and the Managing Director International Financial Reporting Standards, as adopted by the EU, and for such are responsible for administration under the Companies Act. internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated Auditor’s responsibility accounts that are free from material misstatement, whether due to fraud or My responsibility is to express an opinion with reasonable assurance error. on the proposed appropriations of the company’s profit or loss and on the administration based on my audit. I conducted the audit in accordance with Auditor’s responsibility generally accepted auditing standards in Sweden. My responsibility is to express an opinion on these annual accounts and As a basis for my opinion on the Board of Directors’ proposed appropriations consolidated accounts based on my audit. I conducted my audit in accordance of the company’s profit or loss, I examined whether the proposal is in with International Standards on Auditing and generally accepted auditing accordance with the Companies Act. standards in Sweden. Those standards require that I comply with ethical As a basis for my opinion concerning discharge from liability, in addition requirements and plan and perform the audit to obtain reasonable assurance to my audit of the annual accounts and consolidated accounts, I examined about whether the annual accounts and consolidated accounts are free from significant decisions, actions taken and circumstances of the company in order material misstatement. to determine whether any member of the Board of Directors or the Managing An audit involves performing procedures to obtain audit evidence about Director is liable to the company. I also examined whether any member of the the amounts and disclosures in the annual accounts and consolidated Board of Directors or the Managing Director has, in any other way, acted in accounts. The procedures selected depend on the auditor’s judgement, contravention of the Companies Act, the Annual Accounts Act or the Articles of including the assessment of the risks of material misstatement of the annual Association. accounts and consolidated accounts, whether due to fraud or error. In making I believe that the audit evidence I have obtained is sufficient and appropriate those risk assessments, the auditor considers internal control relevant to to provide a basis for my opinion. the company’s preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are Opinions appropriate in the circumstances, but not for the purpose of expressing an I recommend to the annual meeting of shareholders that the loss be dealt opinion on the effectiveness of the company’s internal control. An audit also with in accordance with the proposal in the statutory administration report includes evaluating the appropriateness of accounting policies used and the and that the members of the Board of Directors and the Managing Director be reasonableness of accounting estimates made by the Board of Directors and the discharged from liability for the financial year. Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. Malmö, Sweden 17 April 2012 I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Johan Thuresson Authorized Public Accountant Opinions In my opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2011 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act, and the consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2011 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. I therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group. Sweden Norway Denmark Aspiro AB (publ) Aspiro WiMP / Aspiro Music Gråbrödersgatan 2 Øvre Slottsgate 25 Studiestræde 19, 1. sal, SE-211 21 Malmö P. O. Box 8710 DK-1455 København K Tel: +46 40 630 03 00 Youngstorget Fax: +46 40 57 97 71 N-0028 Oslo www.aspiro.com/ir Tel: +47 452 86 900 Aspiro Fax: +47 22 37 36 59 www.wimp.no Grev Turegatan 19 www.wimp.dk SE-114 38 Stockholm www.wimpmusic.se Tel: +46 40 630 03 00 Fax: +46 8 441 19 10
Aspiro AB (publ), Investor Relations, Gråbrödersgatan 2, SE-211 21 Malmö, Sweden, www.aspiro.com