ANNUAL REPORT 05 Norway CONTENTS Market share* ~30% 2 2005 in Brief 3 This is Aspiro 4 CEO’s Statement 7 Business Concept, Goals & Strategies 10 Organization for Growth 12 Market 16 Know-how and Values 20 Operations 29 Aspiro’s Stock 33 Corporate Governance Denmark Market share* 36 Board of Directors & Auditors 37 Senior Executives ~30% 39 Directors’ Report 42 Risk & Sensitivity Analysis UK Market share* 44 Five-year Summary 45 Definitions of Key Figures <5% 46 Income Statement 48 Balance Sheet 52 Cash Flow Statement 53 Statement of Changes in Stockholders’ Equity 55 Accounting Principles 59 Notes 70 Audit Report 71 Glossary 73 Annual General Meeting, Financial Information and Addresses Spain Market share* <5% * Share of the total market for mobile services (value of premium sms/mms and wap-billing). In the music, games and image/fi lm product groups, Aspiro controls a signifi cantly higher market share in the Nordic region. Aspiro is the Nordic region’s market leader in distri- buting mobile content services, i.e. entertainment, in- Finland formation and services that make mobile phones more Market share* personal, such as ringtones and background images. By growing organically in new services segments, acquiring 15-20% and successfully integrating the most attractive enter- prises in Europe, Aspiro will become one of the leaders in Europe’s mobile content services market. Sweden Market share* • Aspiro packages, markets and sells mobile content 25-30% services • Annualized sales of some SEK 500 m • 130 employees • Head offi ce in Sweden The Baltic region • Offi ce presence in Norway, Denmark, Finland, the Market share* UK, Spain, Luxembourg, Estonia, Latvia and Lithuania 15-25% • Quoted on the Stockholm Stock Exchange Attract 40 • Main stockholder: Norwegian media group Schibsted (43.8%) • Market capitalization as of 31 March 2006: approx. SEK 790 m. Quarterly Sales and Profi t, 2004 - 2005 NET SALES, SEK m EBITDA, SEK m 120 20 90 15 60 10 30 5 0 0 -5 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2004 2004 2005 2005 2005 2005 Net Sales EBITDA 1 2005 in Brief • Sales increased to SEK 407.9 (129.5) m, mainly through ac- • The Board’s goal for 2006 is that, in its current form, the quisitions. EBITDA was SEK 35.6 (-6.0) m. Operating profi t company will achieve a minimum EBITDA of SEK 55 m. was SEK 24.8 (-60.1) m. Because in profi t terms, the third and fourth quarters are seasonally stronger than the fi rst and second, the Board • In the fi rst quarter, Aspiro acquired Schibsted Mobile (In- expects more than half of year-2006 EBITDA to be generated poc), a transaction that doubled sales and made Aspiro the in the second half-year. market leader in Norway, Sweden and Denmark. The acqui- sition resulted in Norwegian media group Schibsted beco- KEY FIGURES 2005 2004 ming the largest stockholder, with 44.5% (as of 31 December 2005, the Schibsted group’s holding was 43.8%). Net sales, SEK m 407.9 129.5 EBITDA, SEK m 35.6 -6.0 • Johan Lenander, then Chairman, became Aspiro’s CEO in Operating profi t/loss, SEK m 24.8 -60.1 May and Erik Mitteregger was appointed Chairman. Profi t/loss after tax, SEK m 18.0 -59.9 Earnings per share, SEK m 0.11 -0.89 • At the turn of the month September/October, Aspiro Ave. no. of employees 115 65 completed its acquisition of Boomi, one of Finland’s mobile Liquid funds, closing balance, SEK m 89.4 37.0 content services leaders. This acquisition is expected to Equity/assets ratio, % 78 76 contribute annualized sales of some SEK 45 m and EBITDA of SEK 9 m. Boomi contributed sales of SEK 16.7 m in the fourth quarter. Quarterly Sales and Profi t, 2005* • Coincident with the announcement of the acquisition of NET SALES, SEK m PROFIT, SEK m Schibsted Mobile, Aspiro announced that the company 150 15 expected annualized sales of some SEK 416 m. Pro forma, as if Schibsted Mobile had been consolidated from 1 January 120 ** 12 2005, Aspiro’s sales in 2005 would have been SEK 439.4 m. 90 9 • After the end of the year, Aspiro acquired Finnish mobile ser- 60 6 vices provider Mobile Avenue, a deal that also made Aspiro 30 3 the market leader in Finland. This acquisition is expected to contribute annualized sales of some SEK 28 m and EBITDA 0 0 of some SEK 3 m, excluding synergies. Q1 Q2 Q3 Q4 2005 2005 2005 2005 Net Sales EBITDA Profit after tax * Pro forma as if Schibsted Mobile had been consolidated from 1 January 2005. ** In Q4, acquired company Boomi contributed sales of SEK 16.7 m. 2 2005 in Brief This is Aspiro MOBILE CONTENT SERVICES Aspiro’s management expects the demand for mobile content Aspiro sells attractive services for mobile phones, mainly for services to increase further when the 3G subscriber base and users aged 15 to 40. Customers purchase Aspiro services on the penetration of more sophisticated handsets, resulting from the basis of three drivers: build-out of 3G, achieve critical mass in Aspiro’s target groups. • Personalization: a ringtone or background image showing who they are/want to be; ASPIRO IN FIGURES • Entertainment: games, music, chatting or dating; Aspiro has some 130 employees and annualized sales of some • Information services: directory inquiries or sports scores. SEK 500 m. The company was incorporated in 1998 and its stock is listed on the Stockholm Stock Exchange Attract 40. A LINK IN THE VALUE CHAIN Media group Schibsted, with a 43.8% holding, is the largest Aspiro is the Nordic region’s market leader in the distribution stockholder. There are 189.5 million Aspiro shares, and as of 31 of mobile content services, and thus represents a valuable link March 2006, market capitalization was SEK 792 m. between a broad selection of suppliers and an array of sales channels, some of which Aspiro owns. Aspiro is the obvious OUTLOOK partner for many of the world’s leading suppliers of mobile Aspiro’s goal is to outgrow the market, thus advancing its content, through its well-extended distribution network and market position. Growth will be organic and acquisition led. sophisticated reporting systems. For companies that want to sell Aspiro’s long-term goal is to be one of Europe’s leading mobile mobile services to customers, Aspiro offers high delivery reliability, content services players. unique technology know-how on mobile terminals, an attractive services portfolio and in-depth knowledge of the consumer. SALES CHANNELS Aspiro reaches the consumer through mobile operators, media Division of Aspiro’s Sales corporations, proprietary web and wap pages and advertising, By country* By product group mainly in print media. Aspiro collaborates with a wide array of partners such as Telenor, NetCom, T-Mobile, TeliaSonera, 3, Dagbladet, Tele2, Vodafone, TV3, Aftonbladet, VG and NRK. MARKET Aspiro sells mobile content services in Norway, Sweden, Fin- land, Denmark, Estonia, Latvia, Lithuania, the UK, Spain and Norway 43% Music** 28% Sweden 19% Games 19% the US. Aspiro is the market leader in all the Nordic countries. Finland 15% Image/film 16% Estimates indicate that sales of mobile content services in 2005 Denmark 10% Information services 16% were as follows: SEK 850 m in Norway, SEK 650 m in Finland, The Baltic region 5% Community services 5% SEK 400 m in Sweden and SEK 210 m in Denmark. Aspiro ex- Other countries 8% Other 16% pects the mobile content services market to grow by 10 – 15% in 2006 in those product segments and geographical markets * After the acquisition of Mobile Avenue. where it is currently active. ** Mainly ringtones. This is Aspiro 3 CEO’s Statement THE MOBILE SERVICES MARKET became more complex in the year, which benefi ted Aspiro. When the sector was in its infancy, almost anybody with computer skills and a server could es- tablish a service and advertise it in the press. Nowadays, though, things are different. Barriers to entry in the mobile content services market are far higher, which has also accentuated the need for sector consolidation, a process where Aspiro has now taken the lead. Previously, content had to be modifi ed for a few differing for- ship. We were able to cut our procurement costs sharply, secu- mats, whereas now, Aspiro supplies content and applications ring new, large suppliers with attractive products. Aspiro also for over 100 mobile phone models. Additionally, most compa- rationalized its operations, the majority of these actions taken nies were previously able to create content that was attractive, in a very short time thanks to the experience garnered through or outsource it, apart from products based on the big brands. the acquisitions and integrations conducted in recent years. Nowadays, however, collaboration with major international The acquisition of Schibsted Mobile was followed by record companies, game developers or other major intellectual the takeovers of two Finnish enterprises, Boomi and Mobile property owners is necessary. But to be able to collaborate Avenue. These transactions extended Aspiro’s leadership to with these players, distributors must have critical mass, which Finland, and thus the Nordic region. Apart from realizing eco- Aspiro has accumulated in recent years. Aspiro’s strategy is nomies of scale, Finland has particular attractions for reasons to grow, and thus be able to create an attractive consumer of- including being a country that has not permitted subsidized fering and strong positioning in distribution. mobile phone sales until now. This barrier was removed on 1 As a result of Aspiro’s growth strategy, the acquisition of April 2006, which will be exciting, because it is likely to result Schibsted Mobile was a major feature of the past year.