Year-End Report Stable Current Business and Strong Growth in New Segments in the Coming Years
06
Year-end report Stable Current Business and Strong Growth in New Segments in the Coming Years
• Full-year EBITDA was SEK 63.5 m (SEK 35.6 m) in 2006. • The Board of Directors considers that the company will The objective for 2006 was a minimum EBITDA of SEK 65 maintain its secure market positioning in its current business m. The actual is consistent with the established objective with retained high profitability. despite increased competition in Finland in the second half- year 2006. Aspiro’s biggest markets—Sweden and Norway— • To enable strong future growth, in the year, the Board took performed strongly in the year. Fourth-quarter EBITDA was the decision to concentrate on the mobile TV, music, mobile SEK 15.3 m (SEK 14.8 m). marketing, search services and community segments. In the next three years, Aspiro expects brisk growth in these • Earnings after tax were SEK 49.5 m (SEK 18.0 m) for the segments. These initiatives are expected to reduce year-2007 full year 2006 and SEK 12.6 m (SEK 8.6 m) for the fourth EBITDA by SEK 15-25 m. The Board expects these initiatives quarter. Earnings per share were SEK 0.26 (SEK 0.11) for to generate positive earnings in the financial year 2009. 2006 and SEK 0.07 (SEK 0.05) for the fourth quarter. The competitive situation in Finland has resulted in a SEK 35 KEY FIGURES oct-dec 2006 (2005) jan-dec 2006 (2005) m goodwill write-down relating to the Finnish companies. Based on estimated taxable earnings, Aspiro is posting a Net sales, SEK m 106.5 (124.7) 447.8 (407.9) deferred tax asset of SEK 35 m. EBITDA, SEK m 15.3 (14.8) 63.5 (35.6) Earnings after tax, SEK m 12.6 (8.6) 49.5 (18.0) • Full-year 2006 net sales were SEK 447.8 m (SEK 407.9 m), Earnings per share, SEK 0.07 (0.05) 0.26 (0.11) with acquired enterprises Mobile Avenue and Rubberduck Liquid funds, closing balance, SEK m 79.4 (89.4) 79.4 (89.4) contributing SEK 31.3 m and discontinued operations in the UK and Spain reducing sales by SEK 19.2 m. Aspiro has Cash flow from operating activities before changes consciously downscaled unprofitable non-strategic sales in in working capital, SEK m 17.3 (10.0) 58.3 (26.3)
favor of improved margins. Fourth-quarter net sales were Figures in brackets are for the corresponding period of the previous year. SEK 106.5 m (SEK 124.7 m).
• Aspiro will be focusing on its growth segments of mobile TV, music downloads, mobile marketing, search services and communities. In the fourth quarter, Aspiro launched music download services on three Scandinavian operators’ mobile portals, piloted a personal search service in Norway and rolled out a mobile marketing campaign alongside brewer Spendrups.
• On 1 October, Aspiro acquired mobile TV company Rub- berduck, which contributed net sales of SEK 1.7 m. This acquisition had a marginal impact on earnings in 2006. After the end of the period, Rubberduck signed a contract with operator 3 regarding the delivery of its technology solution for 3’s mobile TV initiative in Sweden and Denmark.
Q4 in Brief Future mobile users will want to watch TV, listen to music, play games and chat with friends. These services have just started to appear on consumers’ mobile phones. They have been well received, as we and other market players have witnessed. That’s why we’re now concentrating sharply on mobile TV, music, communities and search ser- vices, a natural step considering the experience we have gained from the products we have been supplying to these same consumers over the past seven years. New technology and new usage patterns create entirely new opportunities; user-generated content is in focus right now. But mobile phone content won’t only be user-generated but also created and consumed round-the-clock in locations worldwide because users always have their mobiles with them. When it’s possible for anybody to start a TV broadcast from their own mobile camera, news and other events will reach the world in the blink of an eye. This will not merely mean the distinction between creators and consumers fading, but also how and when this happens. I’m convinced that the initiatives we’re pursuing in 2007, and the costs they imply, mean that we’re creating a very secure position in these exciting seg- ments, says Johan Lenander, Aspiro’s CEO.
Aspiro in Brief Aspiro is the Nordic market leader in the distribution of mobile content services. Aspiro’s services enable consumers to watch TV on their mobiles, listen to music, socialize in communities, play games, etc. Sales are through part- nerships with mobile operators and media corporations, through proprietary web and wap pages and advertising, mainly in print media, through brands like Inpoc, Cellus, Mobilehits and Boomi. Aspiro was incorporated in 1998, and is a small-cap company listed on the Nordiska Börsen marketplace in Stockholm. In 2006, Aspiro generated revenues of SEK 448 m, and has an employee headcount of some 130. Aspiro is headquartered in Sweden, with market office presences in Norway, Sweden, Finland, Denmark, Estonia, Latvia and Lithuania.
Aspiro AB Investor Relations Östermalmsgatan 87 D SE-114 59 Stockholm Sweden Tel: +46 (0)8 410 00610 Fax: +46 (0)8 441 1910 www.aspiro.com [email protected]
Q4 in Brief Figures in brackets are for the corresponding period of business segment, has been a sharper profitability focus. Aspiro the previous year. The acquired enterprise Mobile Avenue has designated subscription services, text-based directory has been consolidated from 1 January 2006 onwards and inquiries, the major Nordic operators and Aspiro Channels as Rubberduck from 1 October 2006 onwards. key strategically. Sales in these segments in the second half-year Sales and Earnings increased by 26% year on year. As a natural consequence of this orientation, Aspiro has Current Reporting Period (October-December) chosen to eliminate unprofitable activities in some advertis- Net sales in the fourth quarter 2006 were SEK 106.5 m (SEK ing and Media Partner channels. This reduced sales in these 124.7 m), of which acquired enterprises Mobile Avenue and segments by 36% in the second half-year 2006, but helped Rubberduck contributed SEK 8.9 m and discontinued opera- profitability improve significantly, particularly in advertising in tions in the UK and Spain reduced sales by SEK 3.2 m. Sweden and Norway. Finland progressed more weakly than expected, due to For the full year 2006, EBITDA was SEK 63.5 m (SEK 35.6 sustained intense competition on a market where Aspiro is not m). The objective for 2006 was minimum EBITDA of SEK 65 the market leader. Aspiro enjoys a very strong market position m. The improved profitability in 2006 is the result of the down- in the other Nordic countries. Fourth-quarter EBITDA was scaling of unprofitable advertising and media partner channels SEK 15.3 m (SEK 14.8 m). in favor of more profitable Aspiro Channels and liquidations in Fourth-quarter earnings after tax were SEK 12.6 m (SEK the UK and Spain. Additionally, cost and revenue synergies re- 8.6 m). After an impairment test, due to the competitive situa- sulting from consummated acquisitions and price and cost opti- tion in Finland, goodwill relating to the acquisitions of Finnish mizations could be realized, as were price increases on services enterprises Mobile Avenue and Boomi was written down by including the Norwegian text-based directory inquiries service. SEK 35 m. On the basis of estimated future taxable earnings, a Earnings after tax for the twelve-month period were SEK cautious valuation of deferred tax assets attributable to deduc- 49.5 m (SEK 18.0 m). Earnings per share for the same period tible loss carry-forwards has been conducted. A deferred tax before and after dilution were SEK 0.26(SEK 0.11). asset of SEK 35 m has been accounted. Earnings per share for the fourth quarter before and after Market dilution were SEK 0.07 (SEK 0.05). Aspiro considers that the total Nordic market for mobile con- tent services* grew by an average of 15% in 2006. The demand
The Year 2006 and Achievement of Goals for traditional services like ringtones, images and games has Net sales in 2006 were SEK 447.8 m (SEK 407.9 m), of which not expanded to the same extent. acquired enterprises Mobile Avenue and Rubberduck contri- In 2007, Aspiro also expects the total mobile content servi- buted SEK 31.3 m and discontinued operations in the UK and ces market to remain in high growth. Particularly, the demand Spain reduced sales by SEK 19.2 m. for music, videos and search services is expanding. Aspiro Since early 2006, the strategy, in the mobile downloads expects the demand for ringtones, images and games to reduce. Additionally, Aspiro expects the demand for new types of ser- vice to increase substantially when the 3G subscriber base and penetration of more sophisticated handsets, resulting from the
Quarterly Sales and Profit, 2005-2006 build-out of 3G, attain critical mass in Aspiro’s target groups. Aspiro expects this to occur around year-end 2007. NET SALES, SEK m PROFIT, SEK m 150 25 Mobile Download Services
120 20 Aspiro’s largest markets, Norway and Sweden, progressed very robustly throughout 2006. Subscription services in these 15 90 countries and the text-based directory inquiries service in Nor-
60 10 way were especially successful. More stringent regulation introduced on the Danish mar- 30 5 ket primarily reduced Danish sales via advertising in the second half-year 2006. The employee headcount in Denmark was 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 downsized in the period, with a new Country Manager appoin- 2005 2005 2005 2005 2006 2006 2006 2006 ted. Altered market conditions mean Aspiro has chosen to focus Net sales EBITDA Earnings after tax on the more profitable Aspiro Channels, and sales on operators’ mobile portals in Denmark. These changes are expected to exert
Sales and Earnings * Share of the total market for mobile services (value of premium sms/mms and wap billing). SALES AND PROFIT BY SALES CHANNEL, Q4 2006
Earnings Net of Division of Aspiro’s Sales, Q4 2006 Sales Channel net sales direct Expenses*
Media Partners, SEK m 55,4 19.8 By sales channel Advertising, SEK m 21.2 5.2 Aspiro Channels, SEK m 29.9 25.5 Media Partners 52% * Net sales less expenses for purchased content, advertising and revenue sharing. Advertising 20% Aspiro Channels 28% SALES BY PRODUCT GROUP, Q4 2006
Product Group net Sales , SEK m
Music (ringtones) 32.5 By product group Information services 27.6 Games 19.4 Music (ringtones) 30% Information services 26% Image/video 14.9 Games 18% Mobile TV 1.7 Image/video 14% Mobile TV 2% Other 10.4 Other 10%
SALES BY GEOGRAPHICAL MARKETs, Q4 2006
By geographical markets geographical market net Sales , SEK m
Norway 53% Norway 56.3 Sweden 19% Sweden 20.1 Finland 13% Finland 13.4 Denmark 6% The Baltic region 6% Denmark 6.8 Other countries 3% The Baltic region 6.4 Other countries 3.5
a positive earnings impact from the second quarter onwards. Media Partners As a result of increased competition in Finland, Aspiro ini- Aspiro collaborates with several hundred media corporations tiated a package of remedial measures for the Finnish organiza- and operators including Telenor, NetCom, T-Mobile, TeliaSo- tion in the third quarter. These measures are expected to exert nera, 3, Sonofon, Tele2, TV3, Aftonbladet, VG, NRK and TV2 their full impact from the second quarter 2007 onwards. and P4 of Norway. Aspiro contributes mobile services, marke- The largest-scale campaigns in the period were rolled out ting material and campaigns to its partners, and in exchange, before and during Christmas and the New Year, because this is receives marketing space or direct consumer contacts. a high season for mobile services. More people chose to send Fourth-quarter net sales through Media Partners were SEK Christmas and New Year’s greetings via their mobile phones, 55.4 m, against SEK 54.4 m in the third quarter. Earnings net and a new record for the number of text messages transmitted of direct expenses for the period were SEK 19.8 m, against SEK in the Nordic region was set in 2006. As a result, Aspiro’s sales 18.9 m in the previous quarter. of images and animations used as greetings increased. Sales also In Finland, Aspiro launched Webstores on Plaza and Eniro increased after Christmas, as the people that received mobile Suomi24, and a mobile store for Helsingin Sanomat. Aspiro phones as Christmas presents loaded them with new content. also secured two major new media partners in the Baltic region in the period. Aspiro was selected to partner TV2 Denmark. Sales by Sales channels In Norway, the directory inquiries service was launched on Aspiro markets and sells services to consumers through a range TV2’s channels. In Sweden, Aspiro launched a games store on of media partners and proprietary web and wap pages, plus Telenor’s mobile portal. advertising, mainly in print media. Sales through Media Partners reduced somewhat com-
* Share of the total market for mobile services (value of premium sms/mms and wap billing). Mobile Download Services pared to 2005, a consequence of Aspiro’s choice to terminate Sales by Product Group a number of less profitable media partner channels in 2006. Music (Ringtones) Collaborations with Nordic operators were the most successful Aspiro sold some 2.7 million ringtones in the fourth quar- partnerships in 2006. ter, against some 2.5 million in the previous quarter. Sales of Funtones continued to increase, particularly in Sweden, the Advertising country where the launch of this product type has been most Aspiro sources marketing space, mainly in print media, in its successful. Advertising Sales channel. Cost of sales within Advertising is Compared to 2005, the share of Realtones and Funtones relatively high, although there is no revenue sharing. Revenues of total ringtone sales increased significantly, while the share of from subscription services are also included in Advertising. polyphonic ringtones reduced. Year on year, Aspiro sold some Fourth-quarter net sales in Advertising were SEK 21.2 m, 20% more ringtones in 2006. against SEK 23.6 m in the third quarter. Earnings net of direct expenses in the period were SEK 5.2 m, against SEK 6.2 m in Image and Film the previous quarter. Subscription services sustained positive Approximately 1.1 million image/film products were sold in progress; revenues increased in the period. Good results were the fourth quarter, against some 933,000 images and anima- achieved from the launch of a new Boomi-branded sub- tions in the previous quarter. Christmas and New Year are the scription concept in Sweden and Norway in November. This year’s most important period for the sale of images and anima- concept will be launched in Finland in the first quarter 2007. tions. Image and animation greetings were the biggest sellers in Aspiro has taken the strategic decision to migrate sales more this period. from shorter-term revenues from unit sales to repeat revenues. The demand for simple color background images reduced In 2006 the profitability of Advertising in Sweden and compared to 2005. Video sales are the product category grow- Norway increased by 36% year on year. Looking ahead, Aspiro ing fastest. will continue to focus on its most profitable advertising chan- nels. Negotiation of annual advertising contracts was comple- Games ted in the period, implying that advertising volumes will reduce Aspiro sold some 772,000 mobile games in the fourth quarter, further in 2007, in Finland and Denmark particularly. against about 687,000 in the previous quarter. Aspiro’s games store on 3’s Swedish portal set a sales record in October. Game Aspiro Channels sales were also strong in Denmark. In November, Aspiro Aspiro Channels are Aspiro’s web and wap pages, where the brought Electronic Arts’ (EA) titles into its games portfolio. company markets club memberships and proprietary brands Unit game sales increased by 6% in 2006 year on year. like Inpoc, Cellus, Mobilehits and Boomi, directory inquiries services and a members’ magazine. Aspiro achieves its highest Information Services margins in Aspiro Channels, because cost of sales is lower. The Norwegian text-based directory inquiries service con- Fourth-quarter net sales in Aspiro Channels were SEK tinued to progress well. A new number, 2100, was launched 29.9 m against SEK 30.5 m in the third quarter. Earnings net in Norway, accentuating the positive progress. The directory of direct expenses for the period were SEK 25.5 m, against SEK inquiries service is Aspiro’s largest information service; Aspiro 26.2 m in the previous quarter. is one of the market’s biggest vendors in Norway. A number of successful Christmas and New Year cam- paigns were rolled out through Aspiro Channels in the period. New Growth Segments The profitability of Aspiro Channels increased significantly In the second half-year 2006, Aspiro started initiatives in mo- compared to 2005. Aspiro Channels are one of the most im- bile marketing, search services, mobile TV, music downloads portant strategic segments of mobile download services. Thus and communities on a larger scale. The convergence between Aspiro channels will gain increased focus in 2007. the Internet and mobile telephony is becoming increasingly apparent. Many of Aspiro’s new initiatives, particularly within communities, search services and music, will be web and mo- bile based.
Mobile Download Services Mobile TV Sweden. Jan Erik Sørgaard, previously Norwegian Country The acquisition of Rubberduck marked the start of Aspiro’s Manager, was appointed to head up the mobile marketing unit. mobile TV initiative. Aspiro expects the mobile TV market to grow expansively through the coming years, to become one Communities of the mobile market’s major drivers. Aspiro intends to build Aspiro launched a new community concept—Inpoc Home—in secure positioning by offering its partners new entertain- Norway in September. This community is web based with ment services and interactive TV/video services. Additionally, mobile functionality. The mobile functionality was enhanced Aspiro’s ambition is to build some of the market’s most attrac- in the period. tive direct consumer offerings. Aspiro is interested in acquiring enterprises in the Com- munities segment with operations in the Nordic region, parti- Music cularly outside Norway. Aspiro launched music download services on the mobile por- tals of Tele2 and Halebop in Sweden and Sonofon in Denmark Search Services in the fourth quarter. After these launches, Aspiro is supplying A web and mobile-based personal search service was piloted in music download services in tandem with five operators in the the period. The launch of this service is scheduled for the first Nordic region. As yet, Sweden remains Aspiro’s biggest music half-year 2007. to mobile market. Music to mobile sales gathered sizeable momentum in the Human and Organizational Resources fourth quarter. Six months ago, Aspiro was selling approxima- At the end of the period, Aspiro had 134 (112) full-time em- tely 100 singles daily in Norway and Sweden, but by December, ployees. A major hiring initiative began in the fourth quarter this figure was between 1,000 and 2,000, totaling some 10,000 in Norway, with the aim of appointing at least 15 technology per week. A single costs SEK 15, excluding operator call tariffs. and product development staff, mainly for the new growth This means that in a few months, sales have expanded to an an- segments. nualized equivalent of some SEK 8 m (consumer prices). In December, Gunnar Sellæg was appointed Aspiro’s COO. Mr. Sellæg was appointed to the group management in Mobile Marketing late August. He is based in Oslo, where the company mana- Aspiro was brewer Spendrups’ mobile collaboration partner ges its central functions, and where operational activities are when Spendrups employed mobile marketing for the Norr- managed from. Mr. Sellæg was previously CEO of Aftenposten lands Guld beer brand’s film project “It’s Saturday Again Multimedia of Norway, and responsible for some of Norway’s Soon”. Aspiro was responsible for the concept and production most significant and successful web initiatives. of the mobile campaign, plus the technology solution. Norr- Aspiro’s CFO and CTO are leaving the company. Jostein lands Guld’s mobile campaign site was launched coincident Viksøy was hired as CFO and takes up his position in early with the release of the film’s theme tune in October, which April. He joins Aspiro from Norwegian daily newspaper immediately became one of the highest-selling ringtones in Aftenposten, where he was Finance/Strategy Director, and
New Growth Segments was previously a consultant with McKinsey. Aspiro’s Head of in the fourth quarter. Earnings before tax in the same period Development, Lasse Bjerde, became CTO. were SEK -38.6 m (SEK -91.9 m). Net sales for the full year A Management Forum consisting of the company’s 2006 were SEK 141.3 m (SEK 69.3 m), of which SEK 127.2 m country managers, business area managers and a number of (SEK 46.7 m) comprised intra-group sales. Full-year earnings other senior executives, was created as a resource for the group before tax were SEK -11.9 m (SEK -94.5 m). management. AGM 2007 and Annual Report Acquisition of Rubberduck Aspiro’s AGM in 2007 will be held at 4 p.m. on Tuesday, 15 On 1 October, Aspiro acquired mobile TV enterprise Rub- May, in Aspiro’s premises at Östermalmsgatan 87 D, Stock- berduck, enabling Aspiro to supply one of the market’s leading holm, Sweden. A notice convening the meeting, with the Board mobile TV solutions for download and streaming. Rubberduck of Directors’ proposals for resolution, will be advertised in has also brought a number of significant mobile TV partners good time before the Meeting. and customers like TV4, Telenor, NRK, MTV Nordic, the BBC The Board has decided to propose to the Meeting that no and Fox Movies. This acquisition is expected to give rise to dividends are paid for the financial year 2006. The Election synergies in marketing/sales and the new growth segments of Committee for the AGM 2007 comprises the members Chris- mobile marketing and music. Rubberduck’s sales in 2005 were tian Ruth from Schibsted, Ole E. Dahl from Orkla ASA and Jan some SEK 2.8 m, and some SEK 7.7 m in 2006. Aspiro’s objec- Andersson from Robur Fonder. tive is for Rubberduck to generate sales of SEK 30 m in 2009. The Annual Report will be available from the company’s More information on the scale of the purchase price and head offices and its Website www.aspiro.com by no later than the division between goodwill and other intangible assets is in two weeks before the AGM. The Annual Report will also be the comments on the accounts. available to order from Aspiro (see ‘IR Contacts’).
Investments The Share and Stockholders Some SEK 2.5 m (-) of expenditure was capitalized in the Aspiro is a small-cap company listed on the Nordiska Börsen fourth quarter for new growth segments (see the new growth marketplace in Stockholm. As of 29 December, the share price segments section). Investments in tangible fixed assets were was SEK 3.22, and total market capitalization was some SEK SEK 0.9 m (SEK 0.9 m) for the fourth quarter. 614 m. There were 190,538,115 Aspiro shares as of the end of the period. Upon full exercise of outstanding warrants, the number Liquidity and Finance of shares could increase to 201,638,115. Consolidated liquid assets were SEK 79.4 m (SEK 89.4 m) at The largest stockholders and their holdings as of 29 De- the end of the period. The fourth-quarter cash flow from ope- cember are illustrated in the following table. rating activities before changes in working capital was SEK 17.3 m (SEK 10.0 m).
Tax LARGEST STOCKHOLDERS AS OF 29 december Aspiro has total unutilized loss carry-forwards of some SEK 600 m in the group’s Swedish companies. Since the majority Stockholders No. of shares holdings (%) of consolidated earnings are generated outside Sweden, and Schibsted Group 81,772,222 42.92 there is no right to group contributions, then consistent with Investra ASA 8,000,000 4.20 previous announcements, the company estimates that tax paid SEB Enskilda ASA 6,130,671 3.22 for the coming years will be approximately 15%. On the basis Orkla ASA 6,000,000 3.15 of estimated future taxable earnings from the group’s Swedish Swebank Robur funds, incl the Swedish Church 3,971,500 2.08 operations, a cautious valuation of deferred tax assets attributa- Länsförsäkringar funds 3,256,000 1.71 ble to deductible loss carry-forwards has been conducted. This Antech Allianca Inc 3,000,000 1.57 has resulted in SEK 35 m being accounted as a deferred tax asset in the Consolidated Income Statement. DnB Nor Bank ASA 2,505,199 1.31 EFG Investment Bank AB 2,351,176 1.23 Parent Company Nordnet Pensionsförsäkring AB 2,238,200 1.17 Parent company net sales were SEK 35.2 m (SEK 33.8 m), of Other stockholders 71,313,147 37.43 which SEK 31.9 m (SEK 27.3 m) comprised intra-group sales, Total 29 December 190,538,115 100.00
The Share and Stockholders Events after the End of the Period Reporting Schedule Aspiro’s wholly owned subsidiary Rubberduck signed a con- Annual Report, April 2007 tract with Scandinavian operator 3 after the end of the report- Interim Report January-March, 10 May 2007 ing period. Rubberduck is providing the technology solution, AGM 2007, 15 May 2007 and managing the operation and hosting of 3’s mobile TV Interim Report January-June, 16 August 2007 project in Sweden and Denmark. This service, called 3Show, Interim Report January-September, 1 November 2007 has been packaged with 3’s X-series mobile broadband services from 1 February onwards. IR Contacts Aspiro maintains updated information on the corporation at Outlook www.aspiro.com. The company is also accessible by e-mail: Aspiro’s strategy in its current operations is to focus on high [email protected], by phone on profitability. This means that looking ahead, Aspiro may +46 (0)8 410 00610, fax on +46 (0)8 441 1910 or by mail: continue to downscale non-strategic sales in unprofitable Aspiro AB (publ), Investor Relations, Östermalmsgatan 87 D, advertising and media partner channels. Aspiro will continue SE-114 59 Stockholm, Sweden. to prioritize subscription services, text-based directory inqui- ries, the major Nordic operators and its Aspiro channels in its Malmö, Sweden, 8 February 2007 existing operations. The Board considers that the company will maintain its Johan Lenander Chief Executive Officer Aspiro AB (publ) secure market positioning in existing operations with retained Corporate ID no. 556519-9998 high profitability. To enable high future growth, the Board decided this year For further information, please contact: to concentrate on the mobile TV, music, mobile marketing, Ann Charlotte Svensson search services and communities segments; Aspiro anticipates Head of Corporate Communications and IR robust growth in these segments over the next three years. This Phone: +46 (0)70 991 8010 initiative is expected to reduce year-2007 accounted EBITDA e-mail: [email protected] by SEK 15-25 m. The Board expects this initiative to generate earnings in the financial year 2009. Johan Lenander Chief Executive Officer Phone: +46 (0)40 630 0300 e-mail: [email protected]
brief financial summary Q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004
Net sales, SEK m 106.5 108.5 113.5 119.3 124.7 111.3 101.4 70.5 52.1 54.5 14.5 8.5 EBITDA, SEK m 15.3 20.1 13.1 15.0 14.8 11.4 8.0 1.4 3.6 4.6 -10.7 -3.5 Operating profit/loss, SEK m -23.6 16.9 10.0 11.9 12.0 9.3 4.6 -1.2 1.3 2.1 -57.7 -5.9 Profit/loss before tax, SEK m -22.8 20.1 10.6 11.1 13.6 9.0 3.7 -1.1 1.1 1.6 -57.7 -5.8 Profit/loss after tax, SEK m 12.6 20.0 8.2 8.7 8.6 5.4 4.5 -0.5 1.5 2.1 -57.7 -5.8 Equity/assets ratio, % 82 81 79 79 77 78 80 76 76 71 55 84 Return on equity, % 2.6 4.2 1.8 2.0 2.0 1.3 1.1 neg. 0.9 2.1 neg. neg. Earnings per share before dilution, SEK 0.07 0.10 0.04 0.05 0.05 0.03 0.02 -0.00 0.01 0.02 -1.43 -0.19 Earnings per share after dilution, SEK 0.07 0.10 0.04 0.05 0.05 0.03 0.02 -0.00 0.01 0.02 -1.43 -0.19 Average no. of shares outstanding, millions 190.5 190.5 189.5 189.5 189.2 186.6 186.6 117.6 109.0 91.7 40.1 29.8
Average no. of shares outstanding and potential shares, millions 201.6 201.6 199.5 199.6 199.3 196.6 190.8 118.6 110.0 92.7 40.2 29.8
Outlook Consolidated Income Statement
oct-dec oct-dec Jan-dec Jan-dec SEK 000 2006 2005 2006 2005
Net sales 106,529 124,690 447,808 407,864 Other operating revenues 330 924 1,929 2,932 Total 106,859 125,614 449,737 410,796
Capitalized development costs 2,521 - 4,034 - Services and goods for resale -22,644 -26,533 -86,605 -77,245 Other external expenses -44,460 -59,266 -201,106 -213,741 Personnel expenses -26,080 -24,408 -98,617 -82,256 Depreciation and write-downs of tangible fixed assets -539 -582 -2,486 -2,048 Depreciation and write-downs of intangible fixed assets -38,348 -2,145 -45,864 -8,758 Other operating expenses -895 -633 -3,924 -1,983 Total -130,445 -113,567 -434,568 -386,031 Operating profit/loss -23,586 12,047 15,169 24,765
Financial income/expenses 813 1,558 3,900 497 Profit/loss before tax -22,773 13,605 19,069 25,262
Tax 35,420 -4,973 30,476 -7,213 Net profit/loss* 12,647 8,632 49,545 18,049
Earnings per share before dilution (SEK) 0.07 0.05 0.26 0.11 Earnings per share after dilution (SEK) 0.07 0.05 0.26 0.11 Average no. of shares before dilution (000) 190,538 189,248 190,041 169,994 Average no. of shares after dilution (000) 190,538 190,792 190,167 170,128
10 Consolidated Income Statement Consolidated Balance Sheet
SEK 000 31 dec 2006 31 dec 2005
ASsETS FIXED ASSETS Goodwill 338,757 331,241 Other intangible assets 53,863 46,993 Equipment 4,879 3,613 Other stockholdings 19 27 Deferred tax asset 36,497 3,381 Other long-term receivables 172 259 Total fixed assets 434,187 385,514
CURRENT ASSETS Accounts receivable 66,737 65,567 Other receivables 6,440 5,436 Prepaid expenses and accrued income 9,718 22,282 Liquid funds 79,417 89,407 Total current assets 162,312 182,692 TOTAL ASSETS 596,499 568,206
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Share capital 335,347 333,587 Other contributed equity 233,720 232,380 Reserves 866 7,452 Retained earnings -132,395 -150,444 Net profit/loss 49,545 18,049 Total equity 487,083 441,024
Non-current liabilities Other liabilities - 1 Deferred tax liabilities 13,162 12,206 Other provisions - 164 Total non-current liabilities 13,162 12,371
Current liabilities Accounts payable 25,707 38,973 Current tax liabilities 6,401 9,168 Other liabilities 15,432 13,049 Accrued expenses and deferred income 42,291 48,472 Other provisions 6,423 5,149 Total current liabilities 96,254 114,811 Total liabilities 109,416 127,182 TOTAL EQUITY AND LIABILITIES 596,499 568,206
Consolidated Balance Sheet 11 Cash Flow Statement
oct-dec oct-dec Jan-dec Jan-dec SEK 000 2006 2005 2006 2005
OPERATING ACTIVITIES Net profit/loss 12,647 8,632 49,545 18,049 Adjustment for items not included in cash flow 4,630 1,318 8,792 8,239 Cash flow from operating activities before changes in working capital 17,277 9,950 58,337 26,288 Cash flow from changes in working capital -8,348 -6,726 -9,984 35,941 Cash flow from operating activities 8,929 3,224 48,353 62,229
INVESTING ACTIVITIES Acquisitions/divestments of subsidiaries 370 -2,086 -51,530 2,050 Change in intangible fixed assets -2,521 -986 -4,034 -986 Change in tangible fixed assets -870 -929 -2,973 -2,014 Change in financial fixed assets 133 474 202 369 Cash flow from investing activities -2,888 -3,527 -58,335 -581
FINANCING ACTIVITIES New issue/sale of options - - 3,100 - Change in financial liabilities - - 0 -12,990 Cash flow from financing activities - - 3,100 -12,990 Cash flow for the period 6,041 -303 -6,882 48,658 Liquid funds, opening balance 74,648 90,000 89,407 36,957
Exchange rate difference in liquid funds -1,272 -290 -3,108 3,792 Liquid funds, closing balance 79,417 89,407 79,417 89,407
12 Cash Flow Statement Quarterly Income Statement
SEK 000 q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004
Net sales 106,529 108,480 113,454 119,345 124,690 111,265 101,376 70,533 52,074 54,461 14,536 8,454 Other operating revenues 330 342 544 713 924 596 673 739 290 69 309 84 Total 106,859 108,822 113,998 120,058 125,614 111,861 102,049 71,272 52,364 54,530 14,845 8,538
Capitalized development costs 2,521 1,389 28 96 ------283 474 Services and goods for resale -22,644 -18,967 -22,391 -22,603 -26,533 -22,745 -17,306 -10,661 -7,567 -8,899 -4,296 -2,635 Other external expenses -44,460 -47,838 -52,749 --56,059 -59,266 -56,453 -56,070 -41,952 -30,777 -30,869 -12,713 -5,271 Personnel expenses -26,080 -22,219 -25,015 -25,303 -24,408 -20,744 -20,367 -16,737 -9,846 -10,140 -8,788 -4,524 Depreciation and write-downs: of tangible fixed assets -539 -692 -621 -634 -582 -579 -559 -328 -254 -254 -156 -180 of intangible fixed assets -38,348 -2,528 -2,469 -2,519 -2,145 -1,477 -2,894 -2,242 -2,103 -2,199 -46,811 -2,145 Other operating expenses -895 -1,100 -768 -1,161 -633 -558 -271 -521 -558 -42 -33 -112 Total -130,445 -91,955 -103,985 -108,183 -113,567 -102,556 -97,467 -72,441 -51,105 -52,403 -72,514 -14,393 Operating profit/loss -23,586 16,867 10,013 11,875 12,047 9,305 4,582 -1,169 1,259 2,127 -57,669 -5,855
Financial income/expenses 813 3,268 634 -815 1,558 -287 -861 87 -131 -566 -28 60 Profit/loss before tax -22,773 20,135 10,647 11,060 13,605 9,018 3,721 -1,082 1,128 1,561 -57,697 -5,795
Tax 35,420 -131 -2,438 -2,375 -4,973 -3,627 779 608 377 536 - - Net profit/loss 12,647 20,004 8,209 8,685 8,632 5,391 4,500 -474 1,505 2,097 -57,697 -5,795
Quarterly Income Statement 13 Statement of Changes in Equity 1 January - 30 December 2006
other net share CONTRIBU- RETAINED profit/ sek 000 capital TED capital Reserves EARNINGS loss Total
Stockholders’ equity 31 December 2005 333,587 232,380 7,452 -150,444 18,049 441,024 Opening balance stockholders’ equity 1 January 2006 333,587 232,380 7,452 -150,444 18,049 441,024 Transfer of previous year’s earnings - - - 18,049 -18,049 - Redemption of options 1,760 1,340 3,100 Change in translation reserve - - -6,586 - - -6,586 Total changes in net worth accounted directly against stockholders’ equity 1,760 1,340 -6,586 18,049 -18,049 -3,486 Net profit/loss - - - - 49,545 49,545 Closing balance stockholders’ equity 30 December 2006 335,347 233,720 866 -132,395 49,545 487,083
Statement of Changes in Equity 1 January - 30 December 2005
MINORITY attRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY interest
other net share CONTRIBU- RETAINED profit/ sek 000 capital TED capital Reserves EARNINGS loss Total
Stockholders’ equity 31 December 2004 191,773 131,699 -1,080 -90,556 -59,888 8 171,956 Opening balance stockholders’ equity 1 January 2005 191,773 131,699 -1,080 -90,556 -59,888 8 171,956 Transfer of previous year’s earnings - - - -59,888 59,888 - - New share issue, acquisition of Schibsted Mobile AS 136,594 91,575 - - - - 228,169 New share issue, acquisition of Boomi International OY 5,220 9,106 14,326 Other changes in minority interest -8 -8 Change in translation reserve - - 8,532 - - - 8,532 Total changes in net worth accounted directly against stockholders’ equity 141,814 100,681 8,532 -59,888 59,888 -8 251,019 Net profit/loss - - - - 18,049 - 18,049 Closing balance stockholders’ equity 30 December 2005 333,587 232,380 7,452 -150,444 18,049 - 441,024
14 Statement of Changes in Equity Comments on the Accounts fourth quarter. For the full year January-December, dilution For the group, this Year-end Report has been prepared pursu- amounts to 0.07%. The calculations have been conducted on ant to IAS 34 Interim Reporting and RR 31 Interim Reporting an average share price of SEK 3.21 per share and SEK 3.76 per for Groups. The accounting principles applied are consistent share respectively. with those used when preparing the most recent Annual Re- port. Review The acquisition of Mobile Avenue Finland OY (Mobile I have conducted a review of this Year-end Report for Aspiro Avenue) was consummated on 26 January, but because Aspiro AB (publ) for 1 January 2006 to 31 December 2006. The Board gained a controlling influence over this company’s cash flow of Directors and Chief Executive Officer are responsible for from year-end, Mobile Avenue has been consolidated from 1 preparing and publishing this Year-end Report pursuant to IAS January 2006 onwards. The total cost amounted to SEK 32.5 m. 34 and the Swedish Annual Accounts Act. My responsibility The liquid assets of the acquired company amounted to SEK is to state a conclusion on this Year-end Report based on my 3.0 m. The apportionment of the acquisition price resulted in review. SEK 7.6 m of intangible assets being accounted separately from I have conducted my review pursuant to SÖG 2410, the goodwill, giving rise to a deferred tax liability of SEK 2.1 m. applicable standard for reviews conducted by the company’s Acquired goodwill is accounted at a value of SEK 24.8 m, and auditors, which is issued by FAR (the Institute for the Ac- accordingly, goodwill comprised 76% of the cost. counting Profession in Sweden). A review consists of making Expenditure of SEK 3.9 m was capitalized for new growth inquiries, primarily to individuals responsible for financial and segments in the third and fourth quarters. This expenditure accounting issues, conducting an analytical review and taking comprises directly attributable personnel expenditure and other review measures. A review has a differing orientation and external consulting expenditure. The underlying data for significantly less scope than the orientation and scope of an capitalizing personnel expenditure is timesheet reporting on audit pursuant to the RS Swedish auditing standard and gene- each project, salaries and payroll overheads for each individual. rally accepted auditing practice otherwise. The review measures There has been no supplement for indirect expenditure. taken in a review do not enable me to attain sufficient certainty The acquisition of Rubberduck was effected by assuming for me to state that I am aware of all significant circumstances control as of 1 October 2006, and accordingly, these compa- that would have been identified if an audit had been conduc- nies have been consolidated from 1 October onwards. The ted. Accordingly, the stated conclusion of a review does not acquisition price, excluding potential supplementary purchase have the certainty of the stated conclusion based on an audit. price, amounted to some SEK 25.7 m in cash. In addition to Based on my review, no circumstances have arisen that the initial purchase price, maximum cash remuneration of give me reason to consider that essentially, for the group’s part, some SEK 9.0 m may be payable to the company’s former the Year-end Report has not been prepared pursuant to IAS stockholders and current employees, assuming the satisfaction 34 and the Swedish Annual Accounts Act and, for the parent of the number of pre-defined sales and earnings objectives for company’s part, pursuant to the Swedish Annual Accounts Act. the full year 2008. The preliminary division of the purchase price has not included any supplementary purchase price. The division of the purchase price has resulted in intangible assets Ingvar Ganestam (technology platform) of SEK 5.3 m being accounted separately Authorized Public Accountant, Ernst & Young Malmö, Sweden, 8 February 2007 from goodwill, giving rise to a deferred tax liability of SEK 1.5 m. SEK 17.7 m of acquired goodwill has been posted to the ac- counts. Goodwill comprises 69% of the accounted cost. This document is essentially a translation of the Swedish language original. In the event of In the annual financial statement, consolidated goodwill any discrepancies between this translation and the original, the latter will be deemed correct. has been subject to impairment testing. As a result, goodwill attributable to operations in Finland has been written down by SEK 35 m. A cautious valuation based on estimated taxable surpluses in Sweden over the next three years has resulted in the deferred tax assets attributable to loss carry-forwards being accounted in the fourth quarter. A deferred tax asset of SEK 35 m has been included in consolidated earnings for the fourth quarter. Outstanding stock options did not imply any dilution in the
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