ANNUAL REPORT 05 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 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- 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 , Aspiro will become one of the leaders in Europe’s mobile content services market. 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 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 , 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/ 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 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 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. Schib- in the new handsets achieving faster market penetration. sted Mobile and Aspiro were equally sized and both mainly ac- The Baltic region stands out from other markets with its tive in Scandinavia. The transaction brought the new company unexpectedly high growth, partly a result of operators updating absolute leadership across Scandinavia. Because Norwegian networks, which has implications including making customer media group Schibsted, the owner of Schibsted Mobile, was billing easier. paid in stock, Aspiro also secured a strong main stockholder, As a result of Aspiro focusing on creating and securing and something we had been hoping for some time—a long- a strong position in the Nordic region, countries outside term owner able to make a positive contribution to our future. northern Europe have become less signifi cant. After the acquisition, Schibsted has signifi cant holdings in Apart from the three consummated acquisitions, over Aspiro. Obviously, before the deal, the Board conducted a the past half-year, Aspiro has focused sharply on its internal thorough review of the effects such a strong main stockholder organizational resources, and the strategic positioning Aspiro with a major market position in the media sector would have, intends to gain in mobile services through the coming years. particularly on Aspiro’s smaller stockholders. One year later, it Some parts of these activities have already been announced, is clear the deal has been a big success. Schibsted has brought such as our launch of music singles sales to mobile phones. We stability, and helped on business development through avenues are also continuing our activities in other segments, to ensure including partnerships with other Schibsted companies. our long-term positioning. While progress is very rapid, many Economies of scale, particularly within procurement and commentators still underestimate the time it takes for new mo- operations, are another advantage of our Scandinavian leader- bile phones to penetrate the youth segment. It is important to

4 CEO’s Statement CEO’s Statement 5 note that our strategy is for our business model to work in the racting parts of our customer base through club memberships, market conditions prevailing at any time. Obviously, this will subscriptions and our proprietary web and wap pages. But favor company’s progress when market conditions improve, obviously, advertising will remain important as a brand-buil- for example, when a higher share of our target group have 3G der and because sales of some types of service, such as images phones. and games, are well suited to this channel. The year brought many noteworthy trends: the trend If we look at the Nordic region as a whole, it is fair to towards convergence between PCs and mobile phones has conclude that the operator’s role in mobile content services begun, resulting in Aspiro increasingly extending the availa- will continue towards pure portals. Thus the trend of operators bility of its services and consumer offerings to the . outsourcing content management to partners will continue, Aspiro is also noting how the mobile phone is starting to secure and Aspiro will ensure that we are the best partner. status as the most widely used digital camera, and if this trend In conclusion, I’d like to say that we’ve made good pro- continues, it will also be a very popular MP3 player. Aspiro gress, but there’s a long way to go. Aspiro is now a stable, profi - had anticipated these phenomena, and it is pleasing to see our table corporation with very strong positioning in the northern expectations realized. The Internet is featuring increasingly as European mobile content services market. And we won’t just Aspiro evaluates new business opportunities, with examples of be defending this position, but advancing it. these projects including music, dating and gambling/betting. Sales have continued to migrate towards digital media and less through print advertising. We think this trend will Johan Lenander continue, favoring Aspiro, because our margins will be higher Chief Executive Offi cer if we utilize digital channels. Aspiro is actively downsizing its Aspiro AB (publ) advertising in 2006, and we have an expressed strategy of att-

6 CEO’s Statement Business Concept, Goals & Strategies

BUSINESS CONCEPT Aspiro has one of the market’s most advanced delivery systems, Aspiro packages, markets and sells mobile content services like which processes up to 350 text messages a second, with high games, music and videos to consumers via Aspiro channels and delivery reliability and links to over 250 operators. This system partners. also enables Aspiro to track sales in real time. Aspiro receives revenues for each mobile service sold. The consumer pays for VISION services in two ways: by texting a code to a number (pre- Aspiro will have the most attractive mobile services offering, mium sms/mms) or by downloading a service directly from and be the European consumer’s natural choice when buying wap (wap-billing). In both cases, the charge is added to the mobile content services. consumer’s mobile phone bill, with the operator conducting the billing. In the media partners sales channel, revenues are BUSINESS AND REVENUE MODEL then shared between the parties. Aspiro sells services used on mobile phones. The services are based on content from international providers of products like Ringtone music, games and fi lm. Aspiro will be a self-evident partner for REVENUE MODEL SEK 15-30 the world’s leading suppliers of mobile content through its size Game SEK 30 Consumer price SEK 30 Image SEK 15-2-50 and knowledge of the consumer, well-extended distribution 0 Sales tax SEK 6 0 network and sophisticated reporting systems. WAP-billing SEK 6 Aspiro tailors its offering so consumers are offered the most attractive services locally through its local market pre- Net sales SEK 18 sence and effective measurement and control systems, which Cost of content SEK 3 generate knowledge on precise purchasing patterns. Examples of Channels Press Operator’s Portal Advertising wap.inpoc.se Aspiro markets services directly to consumers through various types of sales channels such as mobile operators, media Cost of sales SEK 8 SEK 11.50 SEK 4.50 corporations, press advertising and proprietary web and wap Gross margin 39% 19% 58% pages. For companies that want to sell mobile services to Profi t after customers, Aspiro is an attractive partner with high delivery direct expenses SEK 7 SEK 3.50 SEK 10.50 reliability, unique technology know-how on mobile terminals, an attractive services portfolio and in-depth knowledge of the consumer. Sales expenses vary between sales channels (see adjacent example).

Business Concept, Goals & Strategies 7 Aspiro’s position in the mobile content services value chain

SonyBMG Warner Music NCB NetCom Tele2 Telenor

Universal Music Mariann Lionheart VALUE-ADDED VALUE-ADDED Vodafone 3 T-mobile

EMI Electronic Arts Blaze Ifone • Sources TeliaSonera Telefonica ◄ Broad distribution • Quality assures Consumer ► knowledge Digital Chocolate Glu THQ Mforma ◄ Consumer • Modifies Sonofon Comviq VG knowledge • Packages Attractive ► product portfolio Sitevision Small Games Infospace ◄ Reporting • Creates campaigns Her & Nå Halebop systems • Runs entertainment Broad selection ► Real Networks Wonderphone IPlay segments Aftonbladet Se & Hör • Produces graphics Delivery reliability ► Consumers • Distributes Jamdat Playcom Arphiola Pixoi MSN TV3 Egmont • Measures sales/ efficiency Telcogames Selatra MyMobile • Gives strategic advice Mobilehits SMSLand

Celander Mobibase Findexa/Eniro Inpoc Boomi Cellus

Aspiro is the Nordic region’s leading distributor of mobile content services, and complexity resulting from a high number of suppliers, major multinational players thus represents a valuable link between a broad selection of suppliers and an and more sophisticated services will stake out Aspiro’s array of sales channels, some of which Aspiro owns (the yellow boxes). Increasing role more clearly. * Aspiro Channels

ACHIEVING GOALS IN 2005 STRATEGIC GOALS IN THREE YEARS’ TIME Coincident with the announcement of the acquisition of • Aspiro will be one of Europe’s leading mobile content servi- Schibsted Mobile in February 2005, Aspiro also communicated ces distributors that it was expecting annualized sales of some SEK 416 m. Pro • Aspiro will retain its leading market position in the Nordic forma, as if Schibsted Mobile had been consolidated from 1 region January 2005, Aspiro would have had sales of SEK 439.4 m in • Aspiro will achieve success in new services segments 2005, of which Boomi, acquired in fall 2005 contributed SEK • Aspiro will have a strong position on operators’ mobile 16.7 m. portals • Aspiro will own some of the most attractive mobile content GOALS services brands/channels Through market leadership, Aspiro will sell in-fashion, high- quality services, creating satisfi ed customers through market STRATEGIES channels that generate high profi t margins. MARKET LEADERSHIP Aspiro is the stand-out market-leading distributor of mobile OPERATIONAL GOALS IN ONE TO TWO YEARS’ TIME content services in the Nordic region. This market leadership • Aspiro will be the Nordic region’s biggest supplier of real strengthens Aspiro’s negotiating position with content provi- music to mobile phones ders, also securing its relationships with the sales channels that • Aspiro will sell more games to mobile phones than are sold sell its mobile services. Moreover, Aspiro achieves economies on the total market to PCs, TVs and Gameboys of scale, particularly in processing content, operations and • Aspiro will move into at least one new services segment or administration, and creates the right conditions for building geographical market strong brands. • Aspiro will build Aspiro Channels to correspond to one-third of sales BROAD DISTRIBUTION Aspiro will be present everywhere the consumer wants to buy FINANCIAL GOALS FOR 2006 mobile content services. Thus Aspiro sales are partly through • Aspiro will outgrow the market, thus advancing is market partners like mobile operators and media corporations and positions. Growth will be organic and acquisition led partly through proprietary web and wap portals, as well as ad- • In its current form, Aspiro will achieve minimum EBITDA of vertising, mainly in printed media. Aspiro develops long-term, SEK 55 m for 2006 exclusive collaboration agreements with partners that have large user bases. In tandem, Aspiro enhances and consolidates Aspiro channels to create direct relationships with the consumer.

8 Business Concept, Goals & Strategies OFFERING THE LATEST AND BEST Aspiro will always offer in-demand mobile phone services. Aspiro develops almost no services in-house, but outsour- ces those services that are in demand from a high number of leading content suppliers. Aspiro will always have the most attractive services portfolio because of its unique knowledge of consumer purchasing patterns and thanks to economies of scale with centrally coordinated procurement. Keeping pace with technological progress and demand, Aspiro will continu- ally enhance its offering with new types of mobile services such as dating and games equivalent to formats like Gameboy. With its size, well-extended distribution network and sophisticated reporting systems, Aspiro will be the self-evident partner for Aspiro provided the mobile solution for the Norwegian food producer many of the world’s leading suppliers. Stabburet’s Grandiosa frozen pizza campaign—by 30 March 2006, 570,000 Norwegians had downloaded the advertising song as a ringtone, and over 40,000 had created their own ‘Grandiosa Pizza’ background ACQUISITION-LED GROWTH image. These are the highest volumes ever in Scandinavia, and Stabburet is convinced that using mobile phones as a media channel was decisive to Aspiro will increase its economies of scale through more the campaign’s success. growth. It intends to secure European market leadership for mobile content services. Growth will be acquisition led and or- ganic. Aspiro is already the market leader in its existing services segments in the Nordic region. Expansion in the Nordic region THE MOST EFFECTIVE ADVERTISER OF MOBILE CONTENT Aspiro will be the most effective advertiser of mobile content. is an option to respond to the convergence between the Inter- Increased purchasing via wap will mean sales of mobile content net and mobile telephony, and new product segments (dating, services through advertising reducing, setting even higher communities, gambling, games and music, etc). standards for the effectiveness and precision of advertising POSITIONING MILESTONES activities. Some services, like images and games, will remain well suited to advertising sales, which will also be important for To achieve its overall goal of being one of Europe’s leading attracting traffi c to Aspiro Channels and subscription services. mobile content services distributors, Aspiro has identifi ed four Advertising is also a brand-builder. strategic positions the company must attain.

CLOSE DIRECT CONSUMER RELATIONS THROUGH THE OPERATOR’S NO. 1 WAP PARTNER Data and mobile content services are becoming increasingly PROPRIETARY PORTALS Aspiro’s goal is that the company should own some of Europe’s central for operators. Aspiro will be the most attractive partner most attractive mobile content services brands, which neces- for mobile operators, by Aspiro managing the traffi c through sitates building Aspiro channels systematically. Aspiro already operators’ portals by offering the best and most in-demand has over one million members of Inpoc, and owns Norway’s content, and the best campaigns. Aspiro will also offer delivery biggest youth magazine, Inpoc Magazine, with a readership of reliability and professional customer service. Aspiro will over 190,000 in the country. operate the entertainment segments of portals so operators can focus on total solutions for their subscribers and marketing their portals.

INTERACTIVE MOBILE PARTNER FOR MEDIA CORPORATIONS Aspiro will be the natural partnering choice when companies want help on their mobile solutions, with advertising cam- paigns and competitions, for example. Aspiro offers the tech- nology solutions and content for mobile campaigns.

Business Concept, Goals & Strategies 9 Organization for Growth

To succeed in the mobile content services sector, size matters. There are major economies of scale, particularly in content, content management and technology delivery, operations and Centralized functions reporting systems. As demand for mobile content services rises Content Content Technological Product and economies of scale increase, Aspiro sees good opportuni- procurement management delivery design/ platform modification ties to realize cost and income synergies through mergers and acquisitions. Since the fi rst quarter 2003 when the current Aspiro took shape, quarterly sales have grown from SEK 3.7 m to SEK 124.7 Local modification to countries/segments m in the fourth quarter 2005, with a high share of this growth sourced from acquisitions. Since year-end 2001, Aspiro has conducted eight acquisitions and as many integration proces- Customers ses. Growing this fast, both organically and through acquisi- tions, sets demanding challenges for an organization. Aspiro has succeeded in conducting successful acquisitions, with its success due to factors including skilled and dedicated profes- and substantial M&A know-how also helps sharpen this focus. sionals, process responsibility, fi nancial and technological rou- When screening potential acquisition targets, Aspiro mainly tines, and a skilled management and Board with the ambition proceeds from the following criteria: of building a European leader. • Good consumer relations, with a high share of proprietary Moreover, Aspiro’s organizational structure is suited to in- channels; tegrating new companies and operations. Two members of the • Healthy profi tability; group management have specifi c process responsibility for en- • Skilled corporate management—Aspiro believes in individu- suring the exchange of best practice and collaboration between als and their ability to contribute to the company’s success; the various marketing organizations. Aspiro’s organizational • A similar offering to enable economies of scale. structure will enable economies of scale, and accordingly, product and procurement functions, and technology resources, What Aspiro can bring to the acquired entity: are centralized. Many gaming, music and video offerings are • Skills and experience, best practice in sales and mobile con- global, and can be packaged centrally. However, the demand tent services; for content does differ to some extent between countries, and • Procurement strength: enabling more attractive terms with many of Aspiro’s sales partners are localized. This is why local content providers; tailoring of offerings is necessary through strong marketing • Superior operation and delivery platforms, to process high organizations in each country. volumes; Aspiro being a European leader also necessitates growth • Sophisticated measurement and reporting systems, enabling through avenues including acquisitions. One member of rationalization in advertising sales, for example; Aspiro’s corporate management is dedicated to M&As. A • Stability through fi nancial strength. strong main stockholder with growth ambitions in new media

10 Organization for Growth ACQUISITIONS

Acquired Price Sales & Profi t Headcount Incorpora- Active in Operations Year ted

Mgage 2001/ SEK 16.0 m – 10 2000 Sweden & “Mgage develops and sells applications to 2002 (5.8 million mobile operators so their subscribers can chat shares) with each other.”

Picofun 2002 SEK 10.7 m – 10 2000 Sweden, “Picofun publishes and distributes mobile (12.9 million France, UK games and entertainment services.” shares and SEK & US 5.5 m cash)

Mobilehits 2003 SEK 35.8 m 2002: sales 12 2000 Sweden & “Mobilehits is a producer and supplier of mobile (569 million SEK 12.2 m Spain music and entertainment-related services.” shares)

Emode 2004 SEK 23.4 m 2003: sales 10 2000 5 European “Emode offers entertainment services for mo- (5.7 million NOK 25 m, countries, bile phones through advertising in print media.” shares and SEK profi t NOK 1 m focused on 2.5 m cash) Sweden & Norway

Cellus 2004 SEK 125.8 m 2004: sales 33 2000 Sweden, Nor- “Cellus supplies mobile entertainment applica- (64.5 million SEK 128.3 way, Spain tions and services to end-customers through shares and SEK m, operating and the UK distribution channels like press, TV, radio, web 61.3 m cash) profi t: SEK and wap portals.” 13.0 m

Schibsted 2005 SEK 233.1 m 2004: sales 50 2000 Norway, “Inpoc supplies mobile content services, with a Mobile (77.6 million SEK 170 m Sweden, strong position in proprietary channels. Inpoc is (Inpoc) shares) Denmark, Scandinavia’s leading brand.” Estonia, Latvia and Lithuania

Boomi 2005 SEK 51.9 m Annual esti- 20 1999 Finland, “Boomi sells mobile content services in Finland, (3.0 million mate: sales Norway and Norway and Denmark, with the Finnish opera- shares and SEK approx. SEK Denmark tion representing 70% of total. Half of sales in 37.9 m cash 45 m, EBITDA Finland are through proprietary channels.” SEK 9 m

Mobile 2006 SEK 28 m Annual esti- 20 2000 Finland “Mobile Avenue sells mobile content services Avenue (cash) mate: sales through media partners, via proprietary web approx. SEK and wap pages and print media advertising. 28 m, EBITDA Half of sales are through the various media SEK 3 m partners.”

Organization for Growth 11 Market

Mobile content services are services used in mobile phones as Looking ahead, operators will use revenue sharing models to entertainment, information or for personalizing phones. Aspiro encourage the production of high-quality services, shifting defi nes the size of the mobile content services market as the total the focus from basic to more value-added services. From the value of premium sms/mms and wap-billing. operator’s perspective, it is important that these more sophis- ticated services use data networks, rather than merely trans- THE MOBILE CONTENT SERVICES MARKET— porting data, so their market conditions are also enhanced. NOW AND IN THE FUTURE The mobile content services value chain is changing. For operators, this means these changes are simultaneous with John Strand, Strand Consult them experiencing more price competition from a growing ar- ray of smaller players. There are a number of reasons operators For much of the infancy of the mobile content market, there currently occupy such a signifi cant role in the value chain, one was only one route to the consumer—through mobile opera- of the most important being that they own the licenses for pro- tors. This has made the services market very infl exible. Other viding mobile telephony and they are the only players capable market players were unable to achieve the full sales potential of billing consumers. It is operators that transfer fi nancial re- that an open market would allow. sources from the consumer to other players in the value chain. This closed market model is still in place in some regions, This condition will change signifi cantly in the coming years. although in Western Europe, we are in the midst of a paradigm Content distributors and new players will take over the role of shift. At present, many operators use a revenue sharing busi- value chain leader from distributors. ness model, enabling all content distributors to offer sms/mms/ The services market of the future will be far more com- wap services to consumers through all mobile phone networks. plex, with the various players being more dependent on their The revenue sharing model in use is the same as that used pre- consumer relations to stay successful. In this scenario, it will viously for premium sms services. This is merely the beginning, not necessarily be the operators that bill the customer, because the next step will be new, more sophisticated business models. content distributors and other players will be able to themselves. Premium sms/mms/wap services have been on the market The next, and third, generation of mobile content services for a far shorter period than TV or radio, for example. But will feature close integration between content distributors’ despite this, mobile content services have many similar market content and operator platforms. Operators’ internal platform conditions to traditional entertainment and information environments will consist of a wide array of differing techno- services. Content services will also require continuous product logy platforms, processing identifi cation, positioning, e-mail, enhancement, otherwise revenues are very likely to fall sharply. instant messaging, streaming, DRM, fi nancial transactions, Now, mobile content services have become very big billing and other functions. Access to these platforms will give business, with terminal producers, operators and content content distributors a big opportunity to develop more sophis- distributors creating products and services to be as attractive as ticated, user-friendly services, which will add functionality and possible, so consumers will want to buy more mobile content signifi cantly enhance positive market progress. services. In Europe at present, there are two market trends in Despite many commentators heralding the death of wap, the mobile content services. For basic services, we are seeing a market for premium mms and wap services expanded in the year. migration from a closed to an open market strategy. In more In fact, operators are sharpening their focus on wap, as a tool for value-added services, operators have invested in unique tech- delivering innovative premium services to their subscribers. nology platforms to ensure the delivery of specifi c services to

12 Market their subscribers. But operators will also open up here in time, THE SCALE OF THE MARKET enabling other players to use their platforms to sell mobile Aspiro sells mobile content services in Norway, Sweden, content services to consumers. Finland, Denmark, Estonia, Latvia, Lithuania, the UK, Spain Simply put, the trend demonstrates that we are migrating and the US. Aspiro is the market leader in all Nordic countri- from operators supplying services to content distributors and es, with a market share of some 30% in the Nordic region media corporations doing so, and we think that as a result, (Aspiro’s market shares in each countries are mapped on page market growth will benefi t. 1). Estimates indicate that mobile content services sales were Many commentators are attempting to estimate the future some SEK 850 m in Norway, SEK 650 m in Finland, SEK 400 m value of this market. Strand Consult’s view is that it is hard to in Sweden and SEK 210 m in Denmark in 2005. estimate future values for the slightly longer term. But expe- The mobile content services market has progressed rience of markets like Korea indicates that increased bandwidth robustly over the last fi ve years. In 2005, the Nordic regional and more sophisticated handsets have a positive impact on the market grew by an average of 10%. Aspiro expects the mobile market. The biggest challenge is in operators’ capacity to deve- content services market to grow by 10 - 15% in 2006 in those lop and implement new business models that can stimulate the product segments and geographical markets where Aspiro is market for content distributors. currently active. Aspiro’s management expects the demand for We think it is very likely that the sector will continue to mobile content services to increase further when the number of consolidate, resulting in larger players dominating, who are 3G subscribers and penetration of more sophisticated handsets, capable of benefi ting from being active in many countries, resulting from the build-out of 3G, achieve critical mass in thus cutting their costs per transaction. Operators will then Aspiro’s target groups, expected to occur around year-end 2007. allow other players to drive market progress, and remain an important, but lesser, portion of the value chain for mobile content services. The total Western European market for premium content EUR m

12,000 John Strand 10,000 Strand Consult* 8,000

6,000

4,000

2,000

0 2005 2006 2007 Source: Strand Consult

* Strand Consult (www.strandreports.com) is an independent consulting practice specializing in research of the IT and telecom sector. Market 13 MOBILE CONTENT DISTRIBUTORS BUONGIORNO VITAMINIC —COMPETITORS Business concept: designing, producing, aggregating and dist- There are a small number of major players in Europe selling ributing multimedia content to mobile phones. Two business mobile content services at present. Some of the largest content areas: services to consumers and digital marketing to businesses. distributors are iTouch, Jamba, Buongiorno Vitaminic, Mons- Sales: EUR 136 m, of which 117.1 m comprise consumer termob, Index Multimedia and LANetro/ZED. As a result of services mergers and acquisitions, the trend is towards fewer players. EBITDA: EUR 12.3 m A number of corporate transactions were conducted in 2005: Profi t/loss before tax: EUR 5.2 m Buongiorno Vitaminic of Italy acquired Freever of France and Number of employees: over 600 Tutch Mobile Media of the , the UK’s Monstermob Active in: mainly Italy, the UK, Spain, France, Germany, Aus- acquired Chinese companies ATOP Century and M Dream, tria, Mexico and the US while Electronic Arts bought out US listed Jamdat. Also, Itouch Other: quoted on Borsa Italiana, market capitalization approx. was acquired by For-side of Japan. EUR 403 m*

ITOUCH INDEX MULTIMEDIA Business concept: offering entertainment and information servi- Business concept: aggregating and distributing mobile content ces to professional mobile users. and information services to consumers, and Internet and mo- Sales: EUR 115 m (2004) bile services to media corporations. EBITDA: EUR 12 m (2004) Sales: EUR 236.8 m, EUR 158 m of which comprise consumer Profi t/loss before tax: EUR 2.7 m (2004) services. Number of employees: approx. 350 Operating profi t/loss: EUR 11.9 m Active in: the UK, Ireland, Spain, Portugal, France, Poland, Profi t/loss before tax: EUR 10.6 m South Africa, Australia and New Zealand Number of employees: approx. 600 Other: acquired by For-side in 2005, previously quoted on the Active in: Countries including France (64% of sales), Spain, London Stock Exchange Italy and North Africa. Other: main stockholder is Index Corporation, quoted on Eu- MONSTERMOB ronext Paris, market capitalization approx. EUR 186 m* Business concept: sales of mobile entertainment services, via proprietary channels and partners. LANETRO/ZED Sales: EUR 51 m Business concept: Developing and marketing mobile entertain- EBITDA: EUR 16 m ment and communications services. Profi t/loss before tax: EUR 13 m Sales: EUR 136 m Active in: the UK, Russia, China and Southeast Asia EBITDA: EUR 25 m Other: quoted on the London Stock Exchange, market capitali- Number of employees: approx. 280 zation, EUR 229 m* Active in: Spain, Germany, , the UK, France, Finland, Ireland, , the US, Mexico, China, the Philippines JAMBA/JAMSTER and Malaysia Business concept: offers mobile services through proprietary Other: owned by Wisdom Entertainment Group web and wap portals and advertising. Sales: USD 245 m (second half-year 2005) * As of 11 April 2006. Sales and profi t fi gures are based on information from companies’ own reports and Websi- Active in: Germany, Switzerland, Austria, The Netherlands, the tes, and fi nancial data sources. UK, the US and Nordic region Other: owned by US listed IT and telecom corporation Veri- Sign

14 Market Market 15 Know-how and Values

A GROWING ORGANIZATION. Aspiro’s employee headcount has more than doubled since 1 January 2005. High growth puts demands on an organization and its employees. During the year, Aspiro attained a size implying altogether new demands for structured processes within the organization. This is why Aspiro is conducting an ambitious development package to fi ne- tune its resources and prepare for growth.

OUR VALUES AND PRINCIPLES and thus, we must benefi t from each other. Aspiro shall stimu- Aspiro shall have a clear goal that all staff are working towards. late this by creating processes that promote collaboration and Aspiro’s overall goal is to sell in-fashion, high-quality services utilize the aggregate know-how in the whole group. and create satisfi ed customers through market channels that re- sult in high profi t margins. The company’s values are intended BASIC PRINCIPLES OF ASPIRO’S HUMAN RESOURCES POLICY to support this goal. Aspiro’s human resources policy shall be well rooted in the legislation and contracts that formalize conditions on the labor LEADERSHIP AND CREDIBILITY market. Aspiro’s human resources policy shall have natural Aspiro is a market leader, and will thus lead progress in its sec- links to the values that are fundamental to the company’s deci- tor. Leadership shall feature in everything Aspiro does, which sions and actions. A summary of Aspiro’s principles: extends into day-to-day activities. This implies high standards • High ethical standards on the people leading staff in a growing organization. Within • Unequivocal quality standards Aspiro, leadership shall feature responsiveness and openness, • Good internal communication with all leaders endeavoring to set an example and communi- • Clear responsibility for goals and results cate clear goals. • All staff having high skills levels, and goal-oriented skills enhancement PROACTIVITY AND A GO-AHEAD ATTITUDE • Motivation and recognition of performance Aspiro is active in a sector in rapid change in terms of its services and technology. Aspiro’s target group demands that SKILLS ENHANCEMENT AND MOTIVATION it is always fi rst to offer the latest. What was attractive yester- Aspiro’s staff shall gain suffi cient, relevant developmental day may not be so today. Responsiveness and trend-watching opportunities to realize the differing expectations of each are necessary to keep up. Brisk technological progress on the individual’s working situation. High skills in Aspiro’s strategic mobile phone market also raises challenges on innovation and segments, and the will to enhance this rationally, comprise fl exibility. a key competitive edge for the company. Aspiro shall have a systematic skills enhancement process that is tailored for needs, TOGETHERNESS AND MUTUAL RESPECT and intended to enable its staff to progress with the company Aspiro is the integration of a number of enterprises with so Aspiro can lead progress in the sector. operations in ten countries. Aspiro will utilize the dynamism All staff positively committing to operations and being ac- and diversity it possesses, with everyone having respect for countable for achieving goals is vital to Aspiro’s success. Highly each other’s know-how in each country and function. A high motivated staff at all levels represent an important competitive proportion of Aspiro’s operations are similar in each country, edge for Aspiro, and thus a means of achieving established goals.

16 Know-how and Values Know-how and Values 17 Corporate managers possessing knowledge of staff qualities, EMPLOYEES, KEY FIGURES 2005 2004 2003 ambitions and wishes is viewed as a strategic issue for success. Ave. no. of employees 115 65 30 Relevant recognition and rewards for good performance and No. of employees at year-end 112 59 22 achieved results are methods to motivate staff. Aspiro uses Share of women, % 22 35 11 resources like contracted coaches and Harvard’s leadership Average age 33 35 36 training packages to develop corporate leadership. Share of graduates 80 90 88 Average no. of years’ work experience 10 - 10 HIGHLY QUALIFIED PROFESSIONALS Sickness absence, % 1.98 - 3.92 Aspiro is an out-and-out knowledge business, where staff Staff turnover, %* 11 15 23 skills are decisive to the company’s progress; 80% of Aspiro’s Payroll expenses per employee, SEK 000 516.5 415.2 572.0 employees are graduates whose skills extend from marketing, Net sales per employee, SEK 000 3,546.6 1,992.7 605.2 sales, business development and accounting to technology, Value-added per employee, SEK 000 2,874.9 1,642.9 426.6 design and traditional/digital advertising production. * Excluding staff downsizing conducted coincident with acquisitions.

FOCUSING ON A POSITIVE WORKING ENVIRONMENT Age Profi le Aspiro’s working environment should help employees get on NO. together, feel proud of the company, make progress, and feel 50 good physically and psychologically. Working environment 40 issues are part of daily activities in collaboration between line managers and staff. Planning a positive working environment 30 should proceed from an overall assessment, and be part of 20 business planning. Aspiro pursues all staff feeling togetherness and participating in the company. All staff are encouraged to 10 contribute actively to a positive working environment by being 0 accountable for their activities and showing mutual considera- <20 25-30 31-35 36-40 41-45 >46 years tion. The working environment should be tailored to the dif- Educational Standard ferent conditions facing staff members. Decoration, premises % and equipment should be of a high standard. The purpose of 50 environmental activities is to increase satisfaction at work and 40 maintain low sickness absence. Staff turnover was some 11% in 2005. Sickness absence for 30 the Aspiro group was 1.98%. No accidents at work occurred. 20

ORGANIZATIONAL RESOURCES 10 After the acquisition of Mobile Avenue, Aspiro has about 132 employees, a third of employees, and the majority of the 0 Compulsory/ Undergraduates Post-graduates corporate management, are stationed in Norway. The central senior high school technology and product functions are located in Norway. The Length of Service company’s accounting, corporate communications function NO. and CEO are in Sweden. Technology and product procure- 40 ment is centrally coordinated, while sales and some marketing 35 functions are localized through offi ces in Norway, Sweden, 30 Finland, Denmark, Spain, the UK, Estonia, Latvia, Lithuania 25 and Luxembourg. 20 15

10

5 0 <1 year 2-3 years 4-5 years >5 years

18 Know-how and Values ANNONS

KAPITELNAMN 19 “In the long term, our success, and that of 3G, depends on how well we succeed in satisfying our customers’ needs. Our portal must be con- stantly updated with the best content from the Operations best suppliers. Our partnership with Aspiro gives us this.” Andreas Johnsson, Business Developer, 3

SALES CHANNELS store on TeliaSonera’s Swedish mobile portal and took over 3’s Aspiro markets and distributes services to consumers through game stores in Sweden and Denmark. Aspiro also signed new three channels: Media Partners, Advertising and Aspiro Chan- partnering agreements with Norway’s biggest commercial TV nels. station, TV2, the Swedish MSN portal and UK media corpora- tion Emap in the year. SALES AND PROFIT BY SALES CHANNEL, 2005* Aspiro was Telia’s offi cial supplier of mobile versions of the

SALES CHANNEL NET SALES PROFIT/LOSS AFTER contributions to Sweden’s competition to select its entry to the DIRECT EXPENSES** Eurovision Song Contest. The corresponding collaboration was

Media Partners, SEK m 241.7 95.9 conducted in Norway with NRK. Advertising, SEK m 108.5 22.4 Aspiro also rolled out a series of campaigns in the year alongside NRK, such as ‘Test your Vote’, an opinion poll ahead Aspiro Channels, SEK m 89.2 53.7 of the Norwegian elections, the ‘Drømmefanger’ anti-violence * Pro forma as if Schibsted Mobile had been consolidated from 1 January 2005. TV campaign and TV/mobile Christmas quiz ‘Julenøtter’. Aspiro ** Net sales less expenses for purchased content, advertising and revenue sharing. rolled out an array of Christmas campaigns and advent calendars

Sales Share by Sales Channel, 2005 with its media partners in December. Aspiro was recognized as content provider of the year at the SurfPort Awards arranged by TeliaSonera/Netcom.

Media Partners 55% Advertising 25% ADVERTISING Aspiro Channels 20% Downloadable services such as ringtones, games and back- ground images are effectively exposed to consumers by ad- vertising in traditional media. In the advertising sales channel, Aspiro buys slots in the press, TV and radio. Although the cost of sales in advertising is relatively high, there is no revenue MEDIA PARTNERS sharing. Revenues from subscription services are included in Aspiro collaborates with several hundred media partners and advertising. mobile operators. Aspiro contributes mobile services, marke- Using its statistics system, Aspiro can measure exactly how ting material and content to its partners using its experience much each advertisement has generated. The statistics system and rigorous know-how of mobile services and mobile inte- illustrates how many times a specifi c product has been down- ractivity consumption patterns. In exchange, Aspiro receives loaded and the margin each product generates in real time. marketing space or direct consumer contacts. Revenues are This enables the next advertisement to be reformatted so that shared between Aspiro and its media partner. high-selling and high-margin products gain more space. Sales through media partners increased in the year, with On average, Aspiro has over 150 advertisements running particularly positive progress in Norway and in Sweden. every week, mainly in weekly publications in the Nordic and Baltic Aspiro started collaborating with mobile operators Telenor regions, the UK and Spain. In the second half-year 2005, Aspiro and Netcom (Norway), Sonofon (Denmark) and TeliaSonera sourced revenues from 289 different advertising media, and in the (Finland) in the year. In July, Aspiro launched a new game full year 2005, Aspiro’s advertising buying was some SEK 62 m.

20 Operations “Aspiro has grown into Mr. Goodliving’s big- gest distributor in northern Europe. We value its fast response, short lead-time and proac- tive launching and marketing of our products. Aspiro is a pioneer in these contexts.” Wilhelm Taht, Head of Marketing, Mr. Goodliving Ltd.

In 2005, Aspiro invested in advertising space to build its sub- high-quality suppliers offer Aspiro access to the content con- scription services. This expense was posted to profi ts in 2005, sumers are demanding, such as popular music and Java games, but will also generate revenues ahead. and can thus be an attractive partner for mobile operators and In late 2005, Aspiro concluded the negotiations for ad- media corporations. vertising contracts for 2006. Aspiro secured contracts in the Aspiro collaborates with a wide array of content providers, most profi table advertising channels in the Nordic region. In including the biggest B2B providers in mobile content services. parallel, Aspiro chose not to extend less profi table advertising Aspiro’s partners include major multinational record compa- contracts, resulting in an expected reduction from sales in the nies like SonyBMG and EMI, with deals covering music distri- Advertising segment in 2006 in favor of higher margins. The bution rights and access to artist images and promo material. share of buying directly from handsets via wap is in continuous The acquisition of Schibsted Mobile brought Aspiro access to increase, and as a natural result, Aspiro is successively downsi- content from Universal Music. zing its advertising volumes in favor of wap sales. In 2005, Aspiro signed contracts with Warner Music for the Nordic region and Spain. Aspiro also began collaborating ASPIRO CHANNELS with a number of local record companies in the Nordic region, Aspiro Channels are the company’s web and wap pages, where enabling access to local content. Most record company deals the company markets club memberships and its proprietary also cover distribution rights for original music. brands like Inpoc, Cellus, Mobilehits and Boomi, directory in- Aspiro holds the rights to distribute games from leading quiry services and its membership magazine. Aspiro secures its players like Electronic Arts, Glu, IPlay, Real Networks, highest margins in Aspiro Channels because the exposure costs Infospace and Mforma. Aspiro attracted several new suppliers are lower. In December, the Norwegian text-based directory in the year including THQ, Ifone, Digital Chocolate, Jamdat enquiries service set a new sales record. Norway is the Nordic and Wonderphone. The company continually screens existing region’s most highly developed text-based directory enquiries and potential suppliers, to ensure its access to the right content. market. Aspiro Channels were signifi cantly enhanced by the acqui- sition of Inpoc; late in the year, Inpoc membership passed the one million mark. Additionally, Aspiro launched Inpoc’s new wap portals in Norway and Sweden around year-end. Inpoc also reaches members through its own membership publication Inpoc Magazine, Norway’s biggest youth publication with a readership of some 190,000.

CONTENT PROVIDERS Aspiro will sell the mobile content services the market is demanding through its distribution channels. Aspiro is an attractive partner for the biggest content providers through its market leadership and well-extended distribution network, particularly in the Nordic and Baltic regions. Contracts with

Operations 21 “Aspiro is one of SonyBMG’s most important partners in terms of distributing music content to mobile phones, like Realtones and artist ima- ges. We expect 2006 to be an exciting year now that Aspiro is concentrating on the distribution of original music via phones.” Birgitta Bokström, Director Business Affairs, SonyBMG

SERVICES MUSIC Aspiro packages, markets and sells attractive services for mo- In 2005, Aspiro sold some 9.2 million ringtones of various ty- bile phones, mainly to mobile users aged 15 to 40. Customers pes like polyphonic, Realtones (30-second original music ring- purchase Aspiro services on the basis of three drivers: tones), Funtones (novelty sounds) and Nametones. The market • Personalization: a ringtone or background image showing is rapidly evolving with the launch of new, more sophisticated who they are/want to be; handsets, enabling higher-quality ringtones. The demand for • Entertainment: games, music, chatting or dating; more advanced ringtones like Realtones has increased progres- • Information services: directory inquiries, sports scores or sively, although polyphonic ringtones still represent a substan- speed trap warnings. tial share. Funtones and Nametones are also becoming more popular—this type of ringtone generates healthy margins for Aspiro’s services are divided into fi ve groups: music, games, Aspiro and its media partners. image/fi lm, information and community services. The sales Ringtone services are continuing to expand—Aspiro laun- split for 2005 is illustrated below. ched Wake-up tones (the ringtone as an alarm clock) and SMS tones (ringtones for incoming text messages) in the year. The ringtone segment represents a signifi cant and growing share of the music market. In 2005, Aspiro sold more than seven times NET SALES BY PRODUCT GROUP, 2005* more ringtones (some 3.7 million) in Norway than total music PRODUCT GROUP NET SALES, SEK M single sales (some 500,000). In Sweden, Aspiro sold three times

Music 121.0 more ringtones (some 3 million) than music single sales (some 1 million). Games 77.4 Image/fi lm 70.2 Information services 69.4 Community services 21.6 The Market for Ringtones is Evolving

Other 79.8 Wake-up tones

* Pro forma as if Schibsted Mobile had been consolidated from 1 January 2005. Nametones Video Videotones tones

Sales Share by Product Group, 2005 Funtones Ringbacktones SMS-tonesSMS tones

Realtones Music** 28% Games 19% Polytones Image/film16% Information services 16% Monotones Community services 5% Other 16% 2000 2001 2002 2003 2004 2005 2006

** Mainly ringtones.

22 Operations ASPIRO LAUNCHES A HIT-DRIVEN MUSIC news-based store. Making it easier for the consumers to access STORE FOR REAL SINGLES TO MOBILES the right options is important in mobile services, because dis- In early 2006, Aspiro launched its fi rst hit-driven music store plays are small, and transmission speeds are lower than on PCs. for original music downloads to mobile phones. The fi rst stores Original music will not generate substantial sales in 2006, were implemented on SurfPort, Telia’s wap portal, and at and Aspiro expects demand to gather pace when the penetra- wap.mobilehits.se. Until the present, all the sales data indicates tion of music-enabled phones with more memory hits critical that a limited selection of artists and singles are sold through mass in its target groups, expected to be a reality around year- digital distribution channels. Accordingly, Aspiro has chosen end 2007. Eventually, Aspiro will also offer music on PCs as to focus on the most in-demand offerings, developing a hit and part of its offering.

Operations 23 GAMES Multi-player mobile phone games have yet to make their Game unit sales expanded robustly in 2005 due to more people market breakthrough. But as mobile phone functionality buying more sophisticated and Java-supported handsets, plus a evolves and networks improve, demand is expected to gather bigger selection of attractive games for mass target groups. The pace. Multi-player gains open opportunities for new business acquisition of Schibsted Mobile was a contributor to signifi - models. cantly enhancing Aspiro’s games portfolio. Aspiro now has northern Europe’s most attractive and comprehensive games IMAGE/FILM portfolio. Its offering is a mix of well-known PC and console Aspiro offers a full range of color images, and games like Call of Duty II and Age of Empires II, recognized fi lm clips for mobile phones that is constantly updated. In brands like Trivial Pursuit and Harry Potter, and classic games 2005, Aspiro sold some 4.6 million products in the image/fi lm like Tetris and Monopoly. group. In the year, Aspiro secured exclusive rights to Man- chester United’s mobile phone content in the Nordic and “At present, Aspiro sells far more games for Baltic regions, and Luxembourg. Sales of images from major mobile phones than Gameboy game sales in fi lm titles like Star Wars, Madagascar, Harry Potter and King Kong expanded in the year. Celebrity images are also becoming the Nordic region. Aspiro sells 230,000 games a more popular. Aspiro can access artist images sold bundled month, and has northern Europe’s biggest games with other music-related services through its deals with record portfolio.” companies.

In 2005, Aspiro sold some 2.8 million Java games. Game down- “Eventually, it will be possible to view complete loads to mobile phones cost SEK 30 - 50, with unlimited use. fi lms on mobile phones.” Poker and Sudoku were the dominant game categories in 2005, particularly in Sweden. Aspiro launched the fi rst Sudoku game Unit sales of images and animations that people send to each for mobile phones in June, whose instant success extended to other as mobile greetings cards, expanded briskly in the year. mobile phones, and since launch, Aspiro has sold over 100,000 The biggest-selling service in the Christmas and Sudoku games in Sweden and Norway. This success was fol- New Year period was personalized mobile greetings cards. On lowed by the launch of titles in the same genre, like Pixudoku Valentine’s Day, Aspiro set a sales record in Sweden, with its and Kakuro. highest-ever mobile greetings cards sales. In early 2006, Aspiro The share of higher-end game sales, or those based on launched HIFI/MMS services, the integration of image and recognized brands, increased markedly in the year. Product sound fi les that can be used as greetings. quality has increased generally, as more phones support more Aspiro now sells images and text statements almost exclu- sophisticated games, and have bigger memories. As game sively. New, more sophisticated handsets and faster networks quality advances, greater willingness to pay is becoming very will enable new services in TV and video like video back- apparent. In comparison, games for the Gameboy platform grounds, personal video greetings, reality background video currently cost SEK 200-500. and mobile soaps.

24 Operations INFORMATION SERVICES THE RINGTONE TOP TEN IN 2005* Aspiro sells subscription services for text-based information 1. Schnappi—Das Kleine Krokodil to mobile phones, like updates on sports scores and speed traps. Text-based directory inquiries is the biggest information 2. Axel Frog—Beverly Hills Cop Theme service, where Aspiro is the market leader in Norway. The 3. Nanne—Håll om mig information services market harbors huge future potential, and 4. Timbuktu—Alla vill till himmelen men ingen vill dö there is a wealth of potential new services in this segment as the 5. James Blunt—You’re Beautiful market matures. 6. Helena Paparizou—My Number One 7. Amy Diamond—What’s In It For Me COMMUNITY, DATING AND CHAT 8. Green Day—Boulevard of Broken Dreams Early in the year, Aspiro launched its ChatUnited service in 9. Akon—Lonely Sweden and Denmark, and Lifestylers in Norway, community 10. Madonna—Hung Up services developed in-house. These services are role-play with chatting and dating elements; interaction is through aliases. * Sweden’s top ten ringtones are sales from Mobilehits, Inpoc, Cellus and Aspiro media part- ners like TeliaSonera, Tele2, 3, Halebop and MSN. You can pre-listen to these ringtones at wap.inpoc.se. “Three couples have got married after fi nding each other through Aspiro...”

GAMES TOP TEN IN 2005* Aspiro developed three new community services in the fourth 1. Limit Texas Hold ’Em quarter, and online Poker service, where players compete for play-money, a dating service and a community service for 2. World Poker Tour online cartoon show Happy Tree Friends. Online poker and 3. Sudoku Master dating services were launched in January 2006. Aspiro uses 4. Vem vill bli miljonär? an in-house unit in Malmö as a development team for more 5. Tetris sophisticated applications that may be hard to outsource. 6. Texas Hold ’Em Poker Although these services only comprise a modest revenue share, 7. Monopoly they are important for Aspiro to remain at the leading edge. 8. Aces Texas Hold ’Em Poker 9. Sudoku Master 2 Pro 10. Trivial Pursuit 20th Anniversary Edition

* Sweden’s top ten games are sales from Mobilehits, Inpoc, Cellus and Aspiro media part- ners like TeliaSonera, Tele2, 3, Halebop and MSN. The full range is at wap.inpoc.se.

Operations 25 GEOGRAPHICAL MARKETS

NET SALES BY COUNTRY, 2005*

COUNTRY NET SALES, SEK M SWEDEN

Norway 210.4 Sales share: 19% Sweden 91.0 Share of employee 22% headcount: Finland** 16.7 Proprietary distribution Inpoc, Cellus, Mobilehits and 5-4-1 Denmark 51.6 channels/brands: Baltic region 21.1 Biggest customers/part- TeliaSonera, 3, Tele2, Aftonbladet and Other countries 48.6 ners and distribution MSN channels: * Pro forma as if Schibsted Mobile had been consolidated from 1 January 2005. ** Q4 only. Market value*: SEK 400 m Market share**: 25-30% Sales Share by Country* Local competitors: Telitas, Jamba, Eurobate, Emunity, Un- wire, Bozoka, M-USE, Berazy and Cellbee

Norway 43% (Inter Actel) Sweden 19% Market summary: A few more players that market services Finland 15% via operator portals, but fewer players Denmark 10% advertising in the press. Media corpo- Baltic region 5% rations increasingly interested in the Other countries 8% mobile phone as a channel. Mobile TV, streaming and original music are examp- * After the acquisition of Mobile Avenue. les of new services on the market.

NORWAY FINLAND Sales share: 43% Sales share: 15% Share of employee 34% Share of employee 23% headcount: headcount: Proprietary distribution Inpoc, Cellus, Mobilehits, 5-4-1 and Proprietary distribution Buumi and MAF channels/brands: Boomi channels/brands: Biggest customers/part- Telenor, Netcom, NRK, VG, TV2, TV3, P4, Biggest customers/part- TeliaSonera, TeleFinland, DNA, Sau- ners and distribution Dagbladet, Egmont, Se og Hør, Her og Nå ners and distribution nalahti, Elisa, City Press and Radio NRJ channels: and Hjemmet Mortensen channels: Market value*: SEK 850 m Market value*: SEK 650 m Market share**: 30% Market share**: 15-20% Local competitors: Aller Edge, Eurobate, Unwire, Jamba and Local competitors: Zed, Mixmobile, Kiivi, Jippi, Elisa, Jamba Telitas and SmallPlanet Market summary: Continued market consolidation in 2005. Market summary: The Finnish market is less mature, and New services launches like original mu- less consolidated than the other Nordic sic and video via streaming. countries. Nokia is dominant in termi- nals. Subsidized 3G phone sales are permitted in Finland from 1 April 2006.

26 Operations DENMARK UK Sales share: 10% Sales share: 2% Share of employee 5% Share of employee 2% headcount: headcount: Proprietary distribution Smsland, Ringetoner, Inpoc, Boomi and Proprietary distribution - channels/brands: Mobilby channels/brands: Biggest customers/part- Sonofon, 3, Aller press, Egmont, Bonnier Biggest customers/part- Advertising only ners and distribution Respons, UD & SE, Chili Group, förlaget ners and distribution channels: Benjamin, Jubii.dk and Sitevision channels: Market value*: SEK 210 m Market value*: SEK 10 billion Market share**: 30% Market share**: Limited Local competitors: TDC Fly, Aller International, Responsfa- Local competitors: FTXT, iTouch, Red Circle, Mobile brikken, Tele Group Europe and Jamba Streams, Infomedia Services and Market summary: Heavily regulated market, and accor- Monstermob dingly, is not tracing the same growth as Market summary: Mobile operators driving market progress other European countries at present. The for video and original music, which is build-out of 3G is slow, although many in healthy growth. Demand for back- commentators expect 2006 to be the ground images and lower-end ringtones year value-added services break through. reducing.

BALTIC REGION SPAIN Sales share: 5% Sales share: 2% Share of employee 11% Share of employee 3% headcount: headcount: Proprietary distribution Inpoc, Super and Cellus Proprietary distribution Cellus channels/brands: channels/brands: Biggest customers/part- Tele2, Postimees, Respublika, Kanal2, Biggest customers/part- Publishing, Warner Music and ners and distribution LTV, Rate.ee, Zmones and TV5 ners and distribution TV La Mancha channels: channels: Market value*: - Market value*: - Market share**: 15-25% by country Market share**: Limited Local competitors: One, Yoyota and Jippii Local competitors: Itouch (Movilisto), Mediafusion, Buongi- Market summary: Small local markets with a multiplicity orno Vitaminic and Lanetro Zed of small players. Wap usage increasing Market summary: A mature, stable and competitive market briskly. Aspiro is the biggest player in the generating low margins. Baltic region.

* Estimated value (consumer prices excluding sales tax) of the total market for mobile services (value of premium sms/mms and wap-billing). ** Share of the total market for mobile services (value of premium sms/mms and wap-billing). Aspiro controls a far higher market share in the Nordic region in the music, games and image/fi lm product groups. Operations 27 28 Aspiro’s Stock Aspiro’s Stock

THE SHARE STOCK OPTION PLANS As of 31 December 2005, Aspiro’s share capital was SEK Aspiro currently has three outstanding stock option plans. One 333,587,082 divided between 189,538,115 shares. Each share stock option plan with warrants is targeted at the CEO, Johan confers equal rights to participation in Aspiro’s assets and Lenander, conferring the right to subscribe for one million sha- earnings and confers the holder with one vote. Upon full res at an exercise price of SEK 3.10 per share until 30 June 2006. utilization of outstanding warrants, the number of shares Another program is targeted at the company’s former CEO, could increase to 199,556,071 shares (more on the company’s conferred the right to subscribe for 17,956 shares at an exercise outstanding stock option plans in Note 4). price of SEK 23.40 per share until 15 May 2006 inclusive. The Aspiro share has been quoted on the Stockholm Stock The AGM in May 2005 resolved on a new staff stock Exchange Attract 40 since 1 January 2006, and was quoted on option plan encompassing a maximum of 10 million staff stock the Stockholm Stock Exchange O-list from 2001. Its code is options, targeted at the CEO, senior executives and other key ASP and a trading lot is 5,000 shares. At year-end 2005, the Aspiro executives. One-third of the staff stock options can be share price was SEK 4.42 and total market capitalization was utilized annually from May 2006 to May 2008 inclusive, pro- SEK 838 m. The share price high for the year, of SEK 5.10, was viding the option-holder remains an employee of the group. on 20 September, with the low of SEK 2.66 on 12 January. A Each staff stock option confers the rights to receive one warrant total value of SEK 818 m of Aspiro shares were turned over in for immediate subscription for one Aspiro share at an exercise 2005. The rate of turnover was 127%. price of SEK 3.77. The exercise price will increase to the extent the company’s payroll overheads in the plan exceed SEK 10 m. SHARE CAPITAL HISTORY As of 31 December, 7,900,000 options had been apportioned A non-cash issue was conducted coincident with the acquisi- to employees of the company. No further apportionment will tion of Schibsted Mobile, implying the number of outstanding occur. More information on the company’s stock option plans shares increasing by 77,610,162. The shares issued to Schibsted, is in Note 4. VG, Aftenposten, Aftonbladet and Svenska Dagbladet, were assigned a value of approximately SEK 228 m. STOCKHOLDERS At the turn of the month September/October Aspiro consum- Aspiro had 8,513 stockholders as of 30 December, of which 308 mated the acquisition of Boomi; at this time, the Board resolved on were foreign; 7% of shareholders were legal entities at year- a new issue of 2,965,995 shares to WapOneline OY. The new issue end, whose holdings corresponded to 81% of the share capital. decision was taken pursuant to previous AGM authorization. 92% of shareholders were natural persons domiciled in Swe- An EGM (Extraordinary General Meeting) of 21 Novem- den, with holdings corresponding to 19% of the share capital. ber authorized the Board to issue another 5,965,995 shares. Swedish fi nancial organizations and institutions held 7%, in- Together with unutilized authorization, this authorization terest groups held 1%, the public sector 0% and other Swedish encompasses 21,000,000 shares, corresponding to some 10% of companies 8% of the share capital. 36% of the share capital is the share capital after full exercise. held by shareholders domiciled in Sweden, 56% in the rest of the Nordic region and 7% in the rest of Europe. The Schibsted group is Aspiro’s main stockholder after the acquisition of Schibsted Mobile in the fi rst quarter 2005, with holdings of 43.8 percent. The biggest stockholders and their holdings as of 30 December are stated in the table on the following page.

Aspiro’s Stock 29 DIVIDENDS LARGEST STOCKHOLDERS AS OF 30 DECEMBER 2005 Aspiro has been profi table for about a year, with stable cash Stockholder No. of Shares Holding (%) fl ow and liquid funds of some SEK 89 m at year-end. The Schibsted 58,917,504 31.08 Board has also formulated an expansive strategy including corporate acquisitions and new initiatives in complementary VG 12,500,000 6.59 business segments intended to ensure the company’s profi ta- Aftonbladet 8,333,333 4.40 bility and dividend capacity for the longer term. As because Aftenposten 3,322,785 1.75 Aspiro is active in what remains a fast-changing market, the Total, Schibsted group 83,073,622 43.83 capital requirement to execute the strategy is uncertain at present, and accordingly, the Board has decided to propose to Investra ASA 8,000,000 4.22 the AGM that no dividends are paid for the fi nancial year 2005. Orkla 6,000,000 3.17 However, assuming the company’s positive progress continues, Catella Case 5,200,000 2.74 and the planned expansion can be conducted in a balanced Winger Odd 3,073,170 1.62 manner, from the dividend policy formulated at that time, it is likely to be possible to start paying dividends to the company’s WapOneline Oy 2,965,995 1.56 stockholders. Robur Sweden fund 2,682,770 1.42 Vitruvius European Equity 2,634,800 1.39 SIS Segaintersettle AG 2,434,963 1.28 3C Alpha 2,355,000 1.24 Netfonds ASA 2,164,969 1.14 Waverton Inv Plc 2,094,924 1.11 Hansen Erik 1,985,608 1.05 Manticore 1,625,000 0.86 Robur small-caps fund Sweden 1,561,400 0.82 Mitteregger Erik 1,500,000 0.79 Other stockholders 60,185,894 31.75 Total, 30 December 2005 189,538,115 100.00

Source: VPC AB

STOCKHOLDER STATISTICS, 30 DECEMBER 2005

Holding/ No. of Stockholders No. of Shares Votes (%) 1 - 500 3,644 500,614 0.26 501 – 1,000 1,096 916,750 0.48 1,001 – 5,000 2,257 7,252,250 3.83 5,001 – 10,000 722 6,401,312 3.38 10,001 – 15,000 167 2,315,270 1.22 15,001 – 20,000 225 4,364,671 2.30 20,001 – 402 167,787,248 88.52 Total 8,513 189,538,115 100

Source: VPC AB

James Blunt’s You’re Beautiful (Warner) was one of the biggest-selling ringtones in 2005. As of 31 December 2005, Aspiro’s sales of the ringtone of Madonna’s latest hit Hung Up (Warner) passed 60,000 in Sweden and Norway.

30 Aspiro’s Stock SHARE CAPITAL HISTORY

Quotient Change to Share Total Share No. of Totalt No. Year Transaction Value, SEK Capital, SEK Capital, SEK New Shares of 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 10:1 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 5:1 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 Option redemption 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 Option redemption 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 1:200 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

SHARE DATA 2005 2004 2003 2002 2001 2000

Earnings per share, SEK 0.11 -0.89 -4.96 -463.86 -700.00 -630.00 Equity per share, SEK 2.32 1.57 1.96 15.85 489.10 1 191.80 Equity per share, inc. potential shares, SEK 2.21 1.55 1.95 15.69 480.17 1 115.94 Cash fl ow per share, SEK 0.37 -0.27 -4.44 -212.74 -546.46 -773.49 Dividend, SEK ------Adj. closing stock price, SEK 4.42 2.61 2.33 15.59 68.60 - Average number of outstanding shares, 000 169,994 67,658 8,837 450 257 209 Average number of outstanding shares and potential shares, 000 176,303 68,176 8,876 456 275 227 Shares at end of year, 000 189,538 108,962 26,503 490 430 250

Aspiro’s Stock 31 32 Bolagsstyrning Corporate Governance

ASPIRO HAS APPROXIMATELY 130 EMPLOYEES in Norway, Sweden, Finland, Denmark, the UK, Spain, Estonia, Latvia, Lithuania and Luxembourg. This geographical diversifi cation puts challenging demands on decentralized controls and local accountability. Aspiro is inter- woven with and entrepreneurial spirit, featuring effective leadership with a structured collabo- ration between the Board, management and main stockholders. The growth strategy implies additional demands on functional routines in integration processes and other activities.

LEGISLATURE & ARTICLES OF ASSOCIATION or decrease the share capital, etc. Notifi cations to attend the Primarily, Aspiro observes the Swedish Companies Act, the AGM are published no earlier than six, and no later than four, regulations and recommendations ensuing from the company’s weeks before such Meeting. Proposals to the meeting should quotation on the Stockholm Stock Exchange, and the recom- be addressed to the Board, and sent in good time before the mendations issued by relevant organizations such as NBK (the notifi cation to attend is issued. The press release, minutes and Industry and Commerce Stock Exchange Committee). Aspiro presentations from the Meeting are available at the company’s also observes the stipulations of its Articles of Association. The Website. Information on the AGM 2006 is on page 71. Articles of Association are adopted by the AGM and formalize a number of mandatory points for the company. For example, ELECTION COMMITTEE they state the business the company will conduct, the amount The Election Committee represents the company’s stockhol- of share capital, the number of shares issued, the size of the ders. The AGM assigns the Election Committee to submit Board of Directors, and how stockholders’ meetings are con- proposals on the composition of the Board and to propose Di- vened. The EGM on 21 November 2005 resolved on the Board rectors’ fees. The AGM in 2005 resolved to appoint an Election of Directors’ proposals to modify the Articles of Association Committee comprising Johan Lenander (convener, not entitled to conform to Sweden’s new Companies Act. These changes to vote) Christian Ruth from Schibsted, Marianne Nilsson came into force on 1 January 2006. The Articles of Association from Robur and Ulf Strömsten from Catella. The Election are uploaded to Aspiro’s Website, www.aspiro.com. Until the Committee held one meeting in 2005, and has held another present, Aspiro has not adopted the Swedish Corporate Gover- two meetings in 2006. nance Code in its entirety. BOARD OF DIRECTORS ANNUAL GENERAL MEETING The Board of Directors is responsible for the company’s orga- The AGM is the supreme decision-making body, where every nization and administration pursuant to the Swedish Com- shareholder has the right to participate, personally or through panies Act. Aspiro’s board will comprise a minimum of three, representatives. The Board of Directors is elected at the AGM. and maximum of ten, regular members. Board members are The AGM’s other mandatory matters for consideration include elected by the AGM annually and for the period until the next adopting the company’s Income Statement and Balance Sheet, AGM. There are no rules stipulating how long a Board member resolving on the appropriation of earnings from the company’s may remain, but Aspiro’s ambition is that the Board’s compo- operations, and on discharging the Board members and Chief sition is continually adapted to refl ect Aspiro’s developmental Executive Offi cer from liability for the fi nancial year. The phase and operations. The composition of the Board should AGM also appoints the company’s auditors. AGMs or EGMs feature diversity of skills, experience and background. can also resolve to amend the Articles of Association, increase The AGM in May 2005 re-elected Johan Lenander, Erik

Corporate Governance 33 Mitteregger, Ulf Hubendick, Sverre Munck, Christian Ruth REMUNERATION COMMITTEE and Mats Eriksson as Board members and elected Bjørn Gun- Christian Ruth (Chairman), Ulf Hubendick and Erik Mitte- dersen and Gisle Glück Evensen as deputies. Johan Lenander regger have been appointed as members of the Remuneration was elected Chairman of the Board at the Board meeting Committee within the Board. The Remuneration Commit- following election. Coincident with Mr. Lenander becoming tee considers salary, pension and bonus benefi ts, and equity Aspiro’s CEO, Erik Mitteregger was appointed Chairman of the and share price-related incentive schemes for the CEO, senior Board. The EGM of 21 November elected Gunnar Strömblad, executives and other key executives. The Committee has no ex- Schibsted’s Country Manager Designate for Sweden and Bjørn ecutive autonomy, but submits proposals to the Board, which Gundersen, the Schibsted group’s Business Development Di- takes decisions on salaries, pensions and cash-based incentive rector as Board members. At this time Sverre Munck and Mats plans. Issues on equity-related incentive schemes are referred Eriksson resigned from the Board. to the AGM for resolution. The Remuneration Committee met The Board now comprises six regular members and one on two occasions in 2005, and has had another two meetings in deputy. One Board member, Johan Lenander, is an Aspiro 2006. The remuneration paid to the Board in 2005 is stated in employee. Christian Ruth, Gunnar Strömblad and Bjørn the following table and in Note 4. Gundersen are employees of the Schibsted group. Board members possess substantial know-how and experience of the INDEPEN- REMUN. REMUN. 2005, mobile services industry and media, and within business deve- ATTENDANCE DENCE* COMMITTEE SEK 000 lopment, fi nance and strategy. Erik Mitteregger 18/19 Independent Member 100 The Board of Directors has adopted procedural rules and Johan Lenander 17/19 Employee CEO 735 instructions for dividing responsibility between the Board and Ulf Hubendick 19/19 Independent Member 50 the Chief Executive Offi cer. The procedural rules are based Christian Ruth 16/16 Stockh’rs rep. Member - on the Swedish Companies Act’s overall responsibilities of the Gunnar Strömblad 0/1 Stockh’rs rep. - Board of Directors and CEO, and otherwise, on the decision- Bjørn Gundersen 0/1 Stockh’rs rep. - making process adopted by the board, with clearly delineated responsibility within the company, and the Board’s approved * Pursuant to the defi nition in the Swedish Corporate Governance Code. policies. The Board considers fi nancial statements, budgetary, major investment and acquisition issues, as well as overall MANAGEMENT GROUP AND ORGANIZATION strategic questions. The Board considers the matters relating to Written instructions formalize the division of responsibility fi nancial statements, budget, major investments and acquisi- between the Board of Directors and CEO. Aspiro’s CEO is re- tions and overall strategic issues. sponsible for ongoing operations pursuant to the Board’s gui- The board holds regular meetings pursuant to the plan sti- delines and instructions. The CEO is responsible for providing pulated in the procedural rules, which includes predetermined the Board with impartial, comprehensive and relevant infor- matters for consideration. In 2005, the Board held 19 meetings mation on the company’s operations. The CEO is responsible at which minutes were taken, four of which were held coinci- for executing Board decisions and delegating the various issues dent with the company publishing Interim Reports. Apart from to the members of the management group. the aforementioned mandatory matters for consideration, the Aspiro’s management group comprises the company’s most important issues the Board considered in the year related Chief Executive Offi cer, the Country Manager for Norway, the to the acquisitions of Schibsted Mobile, Boomi and Mobile Vice President of Other Markets/M&A, the Vice President of Avenue. The Board also considered items such as the progress Business Development, the CFO, CTO and Head of Corporate of the company’s existing product portfolio, future expansion Communications. Aspiro’s controlling is based on pronoun- plans, organizational resources and remuneration issues related ced decentralized responsibility. Each manager is responsible to the Chief Executive Offi cer and the management group. for ensuring that his/her areas of responsibility deliver results. Sophisticated statistics systems enable the daily, detailed AUDIT COMMITTEE monitoring of business and profi t and loss. The collective aim Pursuant to AGM resolution, Aspiro has no dedicated Audit within Aspiro is to turn a profi t every day, while daily opera- Committee, but rather, the whole Board of Directors performs the tions should simultaneously support the long-term strategy Audit Committee’s tasks. The Board is accountable for ensuring and enable the company to achieve its predetermined goals. In insight into, and control of, the company’s operations through 2005, the management team met regularly twice per month. reporting and ongoing contact with the company’s auditors. The remuneration paid to the CEO and management group in 2005 is stated in Note 4.

34 Corporate Governance AUDITORS • Control documents, with policies and guidelines; Auditors are appointed by the AGM for a period of four years. • A management system based on a number of well-defi ned The task of the auditors is to review the company’s annual planning, executive and supporting processes. report and accounts and the Board of Directors’ and Chief Executive Offi cer’s administration on behalf of the stockhol- The Swedish Companies Act stipulates that the Board is ac- ders. The AGM 2004 re-appointed Authorized Public Accoun- countable for the company maintaining satisfactory internal tant Ingvar Ganestam of Ernst & Young as senior auditor for controls. Responsibility for maintaining an effective control the period until the AGM 2008. Mr. Ganestam is also auditor environment and ongoing activities on internal control and of companies including Nolato, Strålfors and Alfa Laval. Mr. risk management are delegated to the group management, Ganestam does not hold any Aspiro shares. with the CFO bearing main accountability for implementing, Aspiro adopted International Financial Reporting enhancing and maintaining the group’s control routines. In Standards (IFRS) when preparing its Consolidated Financial addition, managers at various levels of the company bear this Statements from 2005 onwards. The group’s interim reports accountability for their areas of responsibility. are subject to summary review by the company’s auditors. This The management bodies of operational units, and the review conforms to the recommendations issued by FAR (the Board of Directors, conduct regular reviews of fi nancial perfor- Institute for the Accounting Profession in Sweden). Auditing mance. Moreover, each line manager is responsible for ensur- annual reports, Consolidated Financial Statements and ac- ing that their areas of responsibility turn a profi t—every day. counts, and the Board of Directors’ and CEO’s administration By using sophisticated statistics systems, operations and profi t are conducted in accordance with generally accepted auditing and loss can be monitored daily in detail. The same statistics principles in Sweden. system is also used as supporting data for regular reporting to The remuneration paid to the company’s auditors in 2005 the management group and Board. Simultaneously, all opera- is stated in Note 3. tor invoices and accounts are reconciled against the statistics to ensure the closest possible correlation between the statistics, FINANCIAL REPORTING daily updates and the fi nal accounted fi gures. Aspiro’s Board has prepared procedural rules and instructions Aspiro has information and communication channels regarding internal and external fi nancial reporting as a comple- that ensure that instructions and manuals are available for all ment to the stipulations of the Swedish Companies Act. employees. The group management ensures that all manage- The agenda in the procedural rules states the reports and ment employees digest and understand these instructions on accounting and fi nancial information to be submitted to the an ongoing basis. All control documents are regularly updated Board on an ongoing basis. The Board’s instructions for the so they refl ect the current organizational structure and division CEO designate the CEO ensuring that the Board receives the of responsibilities. necessary reporting for the Board to be able to evaluate the Extensive meeting instructions are intended to guaran- company’s and group’s fi nancial position on an ongoing basis. tee that all parts of the organization stay updated, and that The quality of external fi nancial reporting is assured activities in the various parts of the organization are mutually through a series of measures and routines. Apart from annual coordinated. Weekly priority meetings are held to discuss and fi nancial statements, the auditor also conducts a summary apportion the company’s resources between various techno- review of all quarterly reports. logy, customer and product-related projects. This forum also The CEO is responsible for ensuring that other published updates the status on all key projects. The results of these prio- fi nancial material such as press releases with fi nancial content, rity meetings are reported to the group management. presentation material for meetings with analysts, investors and the media is accurate, of high quality and satisfi es the other INVESTOR RELATIONS stipulations pursuant to the Stock Exchange’s registration Aspiro’s ambition is to promote interest in the company with contract. existing and potential investors. Aspiro achieves this by con- stantly providing fast, relevant, updated information. Open- INTERNAL CONTROL ness and maintaining the highest possible level of service to Aspiro’s internal control structures are based on: stockholders is one of Aspiro’s priorities. The CEO and Head • The division of responsibility between the Board of Directors of Corporate Communication manage all external contacts and Chief Executive Offi cer; with the markets. The company’s Website, www.aspiro.com • The group’s organizational structures with well-defi ned divi- has all published information on the company’s progress and sion of responsibility and delegation of responsibilities; stock uploaded.

Corporate Governance 35 Board of Directors & Auditors

Left to right: ERIK MITTEREGGER (CHAIRMAN) BJØRN GUNDERSEN JOHAN LENANDER Board member since May 2003. Board member since 21 November 2005, Deputy Board member since August 2002. Born: 1960 Board member since May 2005. Born: 1974 B.Sc. (Econ.), Stockholm School of Economics. Born: 1962 B.Sc. (Econ.), Stockholm School of Economics and Occupation: active stockholder. B.Sc. (Econ.), Århus School of Economics, MBA from B.Sc. (Eng.) from the Royal Institute of Technology, Other assignments: Chairman of Swesafe AB, IESE, Barcelona Stockholm. Board member of Fasadglas Bäcklin AB, Firefl y AB, Occupation: Business Development Director, Schib- Occupation: Chief Executive Offi cer of Aspiro. Aspiro Investment AB Kinnevik, Invik & Co. AB, Moderna sted ASA employee since 2004. försäkringar Liv AB and Wise Group AB. Other assignments: Chairman of Retriever and Board Other assignments: Chairman of TAT The Astonishing Experience: former senior analyst and member of member of Schibsted SØK. Tribe AB. Alfred Berg’s group management, founder, partner Experience: marketing and business development, Experience: active in mobile content services since and asset manager at Brummer & Partners Kapital- Telenor and Telenor Mobil, 2000 - 2005. Previously, the late 1990s. Founder of Picofun, a mobile games förvaltning AB. Now main stockholder and/or Board sales, marketing and business development at the enterprise. Co-founder of the Mobile Entertainment member of a number of companies, many of which Royal Scandinavia/Carlsberg group. Forum, the European and US sector body for mobile are listed. Aspiro stockholding: 0 entertainment services. Aspiro stockholding: 1,500,000 Aspiro stockholding: 701,672 GUNNAR STRÖMBLAD Staff stock options: 1,000,000 ULF HUBENDICK Board member since 21 November 2005. Warrants: 1,000,000 Board member since August 2003. Born: 1951 Born: 1944 B.Sc. (Econ.), Stockholm School of Economics. CHRISTIAN RUTH Fil. Lic. Occupation: CEO of national Swedish daily broads- Board member since 22 March 2005. Occupation: corporate management consultant. heet Svenska Dagbladet Born: 1962 Other assignments: Chairman of Enhancer AB, Board Other assignments: Chairman of Tidningarnas Tele- B.Sc. (Econ.) from Herriot-Watt University, Edinburgh member of Modular Management AB, Unlimited grambyrå AB, Metronome Film och AB. and Authorized Public Accountant, Norwegian School Travel AB and Aktiv Arbetsmedicin AB. Board member of Tidningsutgivarna, Näringsliv 24 of Economics. Experience: corporate management consultant at AB, Aftenposten AS et al. Occupation: Director of M&A, Schibsted ASA Indevo 1971 to 1991 and later with ABB Power Experience: CFO of Aftonbladet, 1987-1991, CEO Other assignments: Chairman of Scanpix Norway, Generation in China and elsewhere. Head of strategic of Aftonbladet 1992-1999 and from 2000, CEO of Board member of Scanpix Sweden, Scanpix Scandina- advisory services at Ernst & Young until 2005. Svenska Dagbladet. via, Basefarm AS, Hugin ASA, Retriever AB, Telenor Aspiro stockholding: 177,244 Aspiro stockholding: 5,000 Venture II and Eesti Media. Experience: Schibsted employee since 1997. Auditing AUDITORS and fi nancial background with Ernst & Young, Coo- Ingvar Ganestam Johan Thuresson pers & Lybrand, Norse Securities and SND Invest. Born: 1949 Born: 1964 Aspiro stockholding: 0 Authorized Public Accountant since 1978. Partner, Authorized Public Accountant since 1995. Ernst & Young, since 1984. Aspiro’s Deputy Auditor since 2004. Aspiro’s Auditor since 2000.

36 Board of Directors & Auditors Senior Executives

Left to right: the late 1990s. Founder of Picofun, a mobile games PER EINAR DYBVIK MARKUS THORSTVEDT enterprise. Co-founder of the Mobile Entertainment Born: 1965 Forum, the European and US sector body for mobile Born: 1970 Vice President, Business Development entertainment services. Chief Technical Offi cer Aspiro employee since 2005. Aspiro stockholding: 701,672 Aspiro employee since 2005. B.Sc. (Eng.) from the University of Manchester. Warrants: 1,000,000 B.Sc. (Econ.) from the University of Karlstad. Experience: Schibsted Mobile employee since 2000. Staff stock options: 1,000,000 Experience: CTO at Schibsted Mobile since 2000. Co- Former Product Development Manager at Scandina- founder of e-commerce enterprise Dressmart, created via Online, consultant at Icon Medialab and CEO of implementations including the company’s technology DAVID L. LYNGSTAD Internet services provider Neo Interaktiv. Previously platform. CEO and founder of Shirtmate AB. Former Born: 1963 electronic services manager at Telenor Media and consultant at Intelligens AB and Project Manager at Chief Financial Offi cer researcher at Telenor’s research institute. Partners Reklambyrå AB. Aspiro employee since 2005. Aspiro stockholding: 0 Aspiro stockholding: 0 B.Sc. (Econ.) from the Norwegian School of Econo- Staff stock options: 1,000,000 Staff stock options: 1,000,000 mics, Bergen. Call options: 282,750 Call options: 282,750 Experience: CFO of Schibsted Mobile since 2000. Former Senior VP Business Management & Accoun- DIDRIK MICHELSEN JAN ERIK SØRGAARD ting at Telenor Mobile Communications and Head of Born: 1971 Controlling of mobile/cable TV/multimedia at o.tel.o Born: 1960 Vice President, M&A and Other Markets communications of Germany. Country Manager, Norway Aspiro employee since 2004. Aspiro stockholding: 0 Aspiro employee since 2004. B.Sc. (Econ.) from the Norwegian School of Econo- Staff stock options: 1,000,000 B.Sc. (Econ.) from BI in Norway. mics, Bergen. Call options: 282,750 Experience: senior executive with Cellus since 2001. Experience: Business Controller and Adviser, Telenor, Former partner at D’Arcy, managing digital commu- CFO of Easy Park ASA, CFO of investment vehicle nication, Product and Marketing Manager at Telenor ANN CHARLOTTE SVENSSON Investra ASA. Mobil and Telenor Residential, Marketing Manager at Born: 1973 Aspiro stockholding: 163,909 TV1000 Norway. Head of Corporate Communications & IR Staff stock options: 500,000 Aspiro stockholding: 445,814 Aspiro employee since 2004. Staff stock options: 1,000,000 M.Sc. (Econ.), the University of Stockholm and gra- duate of the Poppius School of Journalism. JOHAN LENANDER Experience: Head of Corporate Communications & IR at listed corporation Vision Park. Project Manager at Born: 1974 Funkis Digital Concept. Corporate Communications Chief Executive Offi cer Consultant focused on stock market communications B.Sc. (Econ.), Stockholm School of Economics and and investor relations at Taurus Kommunikation. B.Sc. (Eng.) from the Royal Institute of Technology, Aspiro stockholding: 0 Stockholm. Staff stock options: 200,000 Experience: active in mobile content services since

Senior Executives 37 38 Directors’ Report Directors’ Report

The Board of Directors and Chief Executive Offi cer of Aspiro AB (publ), corporate music single sales (some 1 million). Aspiro sells various types of ringtone such as identity number 556519-9998, hereby submit the Annual Report and Consolidated polyphonic, Realtones (30-second original music ringtones), Funtones (novelty Financial Statements for the operations of the parent company and group in the fi - sounds) and Nametones. Funtones and Nametones have higher margins than nancial year 1 January 2005 - 31 December 2005. Aspiro AB, with registered offi ce other ringtones because of lower expenses for products and rights. in Malmö, Sweden, is the parent company of the Aspiro group. The company was The ringtones category is continuing to evolve with new services; Aspiro laun- incorporated in autumn 1998, and is a distributor of mobile content services. ched Wake-up tones (the ringtone as an alarm clock) and SMS tones (ringtones for incoming text messages) in the year. OPERATIONS Mobile games (Java games) are another important product group. Aspiro is continuing its activities to consolidate the company’s product portfolio with pre- mium games. Aspiro sold some 2.8 million Java games in 2005. Poker and Sudoku SALES AND PROFIT games were the dominant in categories in 2005. Aspiro launched the fi rst Sudoku Aspiro’s accounts consolidated Schibsted Mobile (Inpoc) from 1 March onwards game in June 2005, and has since sold over 100,000 Sudoku games in Norway in and Boomi International OY from 1 October onwards. Sweden. Consolidated net sales were SEK 407.9 m (SEK 129.5 m) for the 12-month Text-based directory inquiries are the biggest information service, and Aspiro period. Earnings before interest and taxes, depreciation and amortization (EBITDA) is the market leader in Norway. Aspiro also offers text-based subscription services were SEK 35.6 m (SEK -6.0 m). Profi t/loss after tax for 2005 was SEK 18.0 m (SEK to mobile phones, such as various types of sports score updates and speed trap -59.9 m). Earnings per share before and after dilution for 2005 amounted to SEK warnings. 0.11 (SEK -0.89). Aspiro offers an array of color images, animations and fi lm clips for mobile pho- nes, and sold some 4.6 million products in this category in 2005. Sales of images LIQUID FUNDS AND FINANCIAL POSITION from major fi lm titles like Star Wars, Harry Potter and King Kong increased in the year. Through its deals with record companies, Aspiro has access to artist images. Consolidated shareholders’ equity was SEK 441.0 m (SEK 172.0 m). Total assets Aspiro launched its ChatUnited community services, developed in-house, in increased from SEK 225.4 m to SEK 568.20 m. The equity share was 78% (76%). early 2005. Late in the year, Aspiro developed three new community services, an The closing balance of consolidated liquid funds was SEK 89.4 m (SEK 78.0 m). online poker game, a dating service and a community service for online cartoon series Happy Tree Friends. THE SHARE After non-cash issues coincident with the acquisitions of Schibsted Mobile and SALES CHANNELS Boomi, the number of outstanding Aspiro shares is 189,538,115 on 31 December Aspiro markets and distributes services through three channels: Media Partners, 2005. The non-cash issue conducted coincident with the acquisition of Schibsted Advertising and Aspiro Channels. Mobile meant the number of outstanding shares increasing by 77,610,162. A pri- vate placement to WapOneline OY of 2,965,995 shares was conducted coincident with the acquisition of Boomi. Media Partners Aspiro contributes mobile services, marketing material and campaigns to its MARKET AND SECTOR TRENDS partners, and in exchange, receives marketing slots or direct consumer contacts. Revenues are shared between Aspiro and its media partners. Aspiro signed new The trend in the mobile content services sector is towards fewer players due to partnering agreements with Norway’s biggest commercial TV station, TV2. The mergers and acquisitions. A number of corporate transactions were conducted collaboration agreement with TV3 of Norway has been renegotiated and extended. in 2005. Monstermob of the UK acquired Chinese companies ATOP Century and Aspiro was recognized as content provider of the year at the SurfPort awards, M Dream, while Electronic Arts bought out US listed corporation Jamdat. Italy’s arranged by TeliaSonera/Netcom to recognize and inspire content providers in the Buongiorno Vitaminic acquired Freever of France and Tutch Mobile Media of the Nordic and Baltic regions. Netherlands. At present, there is a small cluster of major players in Europe selling mobile content services, and some of the major distributors are iTouch, Buongiorno Vitaminic, Monstermob, Index Multimedia and LANetro/ZED. Advertising Aspiro anticipates the demand for the products it currently sells, continuing to In its advertising sales channel, Aspiro buys marketing space, mainly in printed me- increase by an average of 10 – 15% in 2006. Demand is expected to grow more dia. In the year, Aspiro invested in advertising space to build subscription services. when the 3G subscriber base and penetration of more sophisticated handsets re- Late in the year, Aspiro concluded negotiating its advertising contracts for 2006, sulting from the extension of 3G hits critical mass in Aspiro’s target groups around thereby securing the most profi table advertising channels in the Nordic region. In year-end 2007. tandem, Aspiro chose not to extend less profi table contracts, which means that sales in this channel are expected to reduce in favor of higher margins. MOBILE SERVICES Aspiro’s mobile services are divided into fi ve product groups: music, games, image/ Aspiro Channels fi lm, information and community services. The ringtone segment has a signifi cant Aspiro channels are Aspiro’s web and wap pages, where the company markets club and growing share of the music market. In 2005, Aspiro sold more than seven memberships and its proprietary brands like Inpoc, Cellus, Boomi and Mobilehits, times more ringtones in Norway (some 3.7 million) than music singles sales (some its directory inquiry services and its membership magazine. Aspiro offers also 500,000). In Sweden, Aspiro sold three times more ringtones (some 3 million) than offers its services directly to the consumer through e-mail and text-shots. Aspiro

Directors’ Report 39 commands the highest margins in Aspiro Channels because its exposure costs Directors, Chairman and Chief Executive Offi cer. The Board follows a predetermined are lower. Aspiro’s Norwegian directory inquiries service set a new sales record in agenda with predetermined items for each meeting. Apart from the mandatory December. The number of Inpoc members passed the one million mark. Moreover, matters for consideration, the most important questions the Board considered in Aspiro launched Inpoc’s new wap portals in Norway and Sweden at year-end. the year related to the acquisitions of Schibsted Mobile, Boomi and Mobile Avenue. The Board also considered items including the progress of the company’s existing BUSINESS ACQUISITIONS product portfolio, plans for its future expansion, organizational resources and remu- neration issues relating to the Chief Executive Offi cer and management group. In the fi rst quarter 2005, Aspiro acquired Schibsted Mobile (Inpoc), a deal doubling The Board operates close to the executive management, and where necessary, its sales and making Aspiro the market leader in Norway, Sweden and Denmark. company employees participate in Board meetings to make presentations and take Around 30 September, Aspiro concluded the acquisition of Boomi, one of Finland’s minutes. The signifi cant matters for consideration in the year applied to fi nancial leading mobile content services players. Aspiro also acquired Finnish enterprise statements and the decisions reached coincident with stock issues and corporate Mobile Avenue after the end of the period. This latter acquisition means Aspiro’s acquisitions. market leadership also extends to Finland. Pursuant to AGM resolution, Aspiro has no dedicated Audit Committee, but rather the Board performs the tasks of an Audit Committee as a whole. The Board INVESTMENTS—RESEARCH AND DEVELOPMENT of Directors is responsible for ensuring insight and control through reports and ongoing contact with the company’s auditors. For more information on the Board Investments in tangible fi xed assets amounted to SEK 2.0 m (SEK 0.6 m). Mainly, and its activities, please refer to the corporate governance section and Note 4 on Aspiro’s development expenditure comprises human resources and consultants. In Human Resources. 2005, these activities primarily comprised ongoing maintenance and the migration of functionality to a new technology platform. Services developed in-house focus on the community segment. The majority of Aspiro’s development expenses are clas- RISKS sifi ed as maintenance and written off as they arise. The mobile services market remains immature and features rapid technology and market progress, a changeable competitive situation and new regulatory structu- HUMAN RESOURCES res. Apart from a number of operational risks, Aspiro’s operations and profi tability are affected by fi nancial risks such as currency risks. The risks stated below are not Aspiro had an average of 115 (65) employees in the year, and at year-end, had 112 reviewed in order of priority, and no claim is made as to completeness. This means (59) employees. The increase is the result of the acquisitions of Schibsted Mobile there are other risks that may infl uence Aspiro’s operations and profi ts: more infor- and Boomi, and hiring in strategic segments. After the acquisition of Mobile Ave- mation in the dedicated section on risks. nue, consummated after the end of the fi nancial year, Aspiro has an approximate total of 132 employees. Regulatory Conditions ENVIRONMENT Aspiro is active on a market where local regulators are active, particularly concer- ning marketing of the services. Like all players in the sector, Aspiro is exposed to The company does not conduct any activities subject to permits or reporting pursu- the risk that regulations may change. ant to Swedish environmental legislation.

BOARD ACTIVITIES Contracts with Operators To be able to conduct its business, Aspiro has distribution and invoicing agree- The AGM on 13 May 2005 re-elected Johan Lenander, Erik Mitteregger, Ulf ments with various mobile operators on its local markets. There is always a risk that Hubendick, Sverre Munck, Christian Ruth and Mats Eriksson as Board members their contract terms will alter. and elected Bjørn Gundersen and Gisle Gluck Evensen as deputy members. Johan Lenander was appointed Chairman at the Board meeting following election. Coincident with Mr. Lenander becoming Aspiro’s CEO in May, Erik Mitteregger was Competition appointed Chairman of the Board. Aspiro conducts business on a highly competitive market. The possibility that com- The AGM also approved the Election Committee, with Johan Lenander (con- petitors enter agreements with sales channels and content providers in the future, vener, not entitled to vote) Christian Ruth from Schibsted, Marianne Nilsson from on better terms than those Aspiro has at present, cannot be ruled out. Additionally, Robur and Ulf Strömsten from Catella. increased competition may raise negative price pressure in the sector. There is a The EGM of 21 November elected Gunnar Strömblad and Bjørn Gundersen as risk of increased competition resulting from the sector’s ongoing consolidation. Board members. At the same time, Sverre Munck and Mats Eriksson resigned from Competition may also increase as players from other sectors enter the consumer the Board. content services market. Erik Mitteregger, Christian Ruth (Chairman) and Ulf Hubendick were appointed as an internal Remuneration Committee within the Board of Directors. This Committee considers salary, pensions and bonus benefi ts, as well as equity and Rapid Technological and Market Progress share price-related incentive schemes for the Chief Executive Offi cer, other senior The products and services on the market where Aspiro is active feature rapid executives and key executives. technological progress. Therefore, the group’s products and services must gain The Board held 19 meetings in the fi nancial year 2005. The Board’s procedural wide acceptance from partners and consumers. If Aspiro is unable to modify its rules stipulate tasks including the division of responsibility between the Board of business to keep pace with rapid technological progress, there is a risk that the

40 Directors’ Report group will lose competitiveness, which may adversely affect profi t. Meanwhile, there SIGNIFICANT EVENTS AFTER THE END is a risk that the market reacts more slowly than expected when new products and OF THE REPORTING PERIOD applications are introduced. On 26 January 2006, Aspiro concluded the acquisition of Finnish mobile services provider Mobile Avenue, one of Finland’s largest mobile content services players. Forecasting Accuracy The purchase price comprised approximately SEK 28 m cash. The acquisition Aspiro is active on a relatively young and unstable market, obstructing opportunities meant Aspiro nearly doubling its operations in Finland, and becoming the market to evaluate the future progress of operations. Misjudgment of market progress may leader. After this acquisition, Finland is Aspiro’s third-largest market. Mobile Avenue adversely affect the group’s total profi t and liquidity. will be consolidated from 1 January 2006 onwards.

Intellectual Property PROPOSED APPROPRIATION OF Aspiro has various commitments to a range of content providers and licensors. ACCUMULATED DEFICIT There are limitations to the sale and marketing of services. There is always an ope- rational risk that Aspiro is not fully successful in fulfi lling all its commitments, and if SEK contracts are breached, Aspiro may be liable to pay compensation. Parent Company The following funds are at the disposal of the Annual General Meeting: Currency Risks Defi cit from previous year: -14,825,565.35 As the group expands internationally, it is likely that future sales and profi ts will Net loss: -94,457,698.11 be increasingly affected by currency fl uctuations. The variations on some foreign Accumulated defi cit: -109,283,263.46 currencies against the Swedish krona may exert an adverse effect on the group’s sales and operating profi t, and on the international competitiveness of its business. Aspiro is especially infl uenced by the relationship between the SEK, NOK and EUR. The Board of Directors proposes that the accumulated defi cit is appropriated as Aspiro has a currency risk linked to intra-group loans between the parent company follows: and subsidiaries, and between subsidiaries. Aspiro evaluates various strategies to Transfer from statutory reserve: -94,457,698.11 manage its currency risks on an ongoing basis. Carried forward: -14,825,565.35 ADOPTION OF IFRS Total: -109,283,263.46 From 1 January 2005, companies quoted in the EU must adopt EU-approved IFRS (International Financial Reporting Standards) for their consolidated fi nancial state- Annual General Meeting ments. Aspiro mapped the discrepancies between IFRS and generally accepted ac- The AGM will be held at 4:30 p.m. on Thursday 11 May at Östermalmsgatan 87, counting principles in Sweden ahead of the adoption, as well as the then-expected Stockholm, Sweden. effects of the adoption on Aspiro’s Consolidated Financial Statements. The majority of the recommendations implemented through the adoption of IFRS have had no, or limited, effect on the Consolidated Financial Statements. The segments where IFRS implied signifi cant discrepancies with previous principles are the valuation of goodwill and other intangible assets coincident with the accounting of corporate acquisitions (IFRS 3). Comparative fi gures have been recalculated from 1 January 2004 onwards because Aspiro publishes fi nancial information with a comparative year in its Annual Report. The Interim Report for the fi rst quarter 2005 was the fi rst fi nancial statement published pursuant to IFRS.

OUTLOOK FOR 2006 The Board’s objective is that in its current form, Aspiro will achieve a minimum EBITDA of SEK 55 m in 2006. Because of seasonality, the third and fourth quarters are generally stronger than the fi rst and second quarters each year, the Board an- ticipates that more than half of year-2006 EBITDA will be generated in the second half-year.

Directors’ Report 41 Risk and Sensitivity Analysis

The market for mobile content services is still immature and is characterised by PRODUCT LIABILITY, INTELLECTUAL a changing competitive situation and new regulatory structures. In addition to a PROPERTY AND DISPUTES number of operational risks, Aspiro’s operations and profi tability are affected by fi - nancial risks such as currency risks. The following risks have not been stated in any Potential faults on Aspiro’s products could result in liability and damages claims. particular order, nor make any claims to be comprehensive. This means that there However, the Board considers that Aspiro has satisfactory cover for product liability, are other risks than those stated that may affect Aspiro’s operations and earnings. and accordingly, the direct risk should be considered limited. The amount insured for personal damages is SEK 10 m, although subject to an annual maximum of SEK 20 m during the insurance term (worldwide coverage). The policy excess is 20% of MACROECONOMICS a basic amount (currently SEK 8,000) per claim. Aspiro regularly applies for protection for its trademarks and brands. Neither The macroeconomic effect on the market for mobile content services is considered Aspiro nor its subsidiaries are currently party to any dispute, legal proceedings or limited. For Aspiro, this means that any revenue cyclicality is insignifi cant. arbitration proceedings that the Board considers to be of material signifi cance. Nor is the Board aware of any other circumstances that could be expected to result in REGULATORY RISKS disputes or action by the authorities, and that the Board considers could materially Aspiro sell services to mobile customers; the telecom market as a whole is covered affect Aspiro’s fi nancial position. by a series of regulations in terms of services offerings, pricing and margins. Until the present, the authorities have concentrated on the former state telecom mono- DEPENDENCY ON MOBILE OPERATORS polies and their market position. Looking ahead, there is a risk that the market for The majority of Aspiro’s revenues are billed by mobile operators, either by debiting content services will also become more regulated. customers’ prepaid cards, or via mobile phone bills. The robust growth within The market for mobile content services is relatively immature, with custom and mobile content services would not have been possible without this billing method. practice in development. Local authorities play an active role, particularly in terms Using mobile phones for payments in other segments has not achieved anything of marketing and services. Several relevant regulations and guidelines were imple- like the same proliferation and popularity as the CPA (content provider access) mented after pressure from consumer authorities in various countries. There is a solution to mobile operators. To a great extent, future growth and success will be risk that existing and future regulations exert a negative impact on market progress dependent on sustained positive collaboration between mobile operators and the and the sales potential for Aspiro’s existing and new services. enhancement of existing payment models. At present, mobile operators receive 20 Until now, the mobile telephone itself has not been a signifi cant marketing – 35% of consumer pricing, dependent on tariff class, mobile operator and country. channel, but like other players in the telecom and advertising sectors, Aspiro anti- There is potential for higher margins if pricing levels for this payment model are cipates them becoming an important future marketing channel. The mobile phone subject to pressure. enables offerings to be targeted more precisely, and the mobile phone interface is Moreover, mobile operators are an important partner for Aspiro. There is always easier to control. Until now, regulatory structures around marketing to customers a risk that operators choose to collaborate with Aspiro’s competitors, or choose to via mobile phones have been relatively indistinct. A relaxation of regulatory structu- source content directly from content providers. res would enable a signifi cant commercial advance within mobile marketing. To minimize the risks further, Aspiro constantly endeavors to satisfy, and Approximately one-quarter of Aspiro’s current sales are generated from exceed, customer expectations in terms of its services’ topicality, quality and ringtones. Copyrighting organizations like NCB and IFPI manage music rights on service levels. Additionally, the dependency on individual customers reduces with assignment from the music industry. There is a risk that the price of these rights an expanding customer base. is subject to upward pressure, which would reduce the margins on Aspiro’s music sales. Alternatively, higher consumer pricing may result in fewer unit sales, and generally lower product acceptance. DEPENDENCY ON CONTENT PROVIDERS It is essential that Aspiro constantly offers attractive services to its customers, TECHNOLOGICAL PROGRESS whether this is ringtones, games, background images or other services. Access to the best content requires contracts with leading content providers. There is a risk The services on the market where Aspiro is active feature rapid technological that content providers choose to sell services via Aspiro’s competitors or direct to progress. Accordingly, the group’s services must enjoy broad acceptance with its mobile operators. If content providers increase the prices of various services, to partners and consumers. If Aspiro is unable to adapt its operations to rapid tech- avoid margin deterioration, Aspiro will also be forced to increase consumer prices, nological progress, there is a risk of the group’s competitiveness being negatively with the risk of sales volumes contracting. affected, which can adversely affect earnings. Meanwhile, there is a risk that the market reacts more slowly than expected when new products and applications are introduced. Terminal producers (like Nokia, SonyEricsson and Samsung) play an FORECASTING RELIABILITY important role in terms of the development and growth on the mobile content servi- Aspiro is active on a relatively new and unstable market, limiting the possibility of ces market, because more sophisticated handsets result in increased demands for evaluating the future progress of operations. Inaccurate assessments of market more value-added services. progress may adversely affect the group’s aggregate earnings and liquidity.

42 Risk and Sensitivity Analysis FINANCIAL RISKS SENSITIVITY ANALYSIS In its operations, Aspiro is exposed to various fi nancial risks. The Board considers Aspiro’s profi ts are infl uenced by a number of factors. The effects of changes in that fi rst and foremost, Aspiro is exposed to currency risk, i.e. the risk of the value some of the key factors are illustrated below. of a fi nancial instrument changing due to fl uctuations in exchange rates. This relates primarily to intragroup transactions. Interest and credit risks are considered SENSITIVITY ANALYSIS, 31 DECEMBER 2005* marginal, because at present, Aspiro does not have any external funding, while al- most all sales are generated through major telecom corporations, with consistently Change in Operating high credit ratings. Change Variable Change Profi t/loss Net sales +/- 10% +/- SEK 17 m OTHER RISKS Direct expenses +/- 5% +/- SEK 13 m The group and its constituent companies have the customary Board liability insurance. Aspiro evaluates the group’s insurance cover on an ongoing basis. Personnel expenses +/- 5% +/- SEK 4 m Other feasible risks can be classifi ed as data infringement. Aspiro considers that its protection in this segment is very comprehensive, because its primary technology Other expenses +/- 5% +/- SEK 2 m platform is hosted on one of Scandinavia’s most secure technology environments. * Assumptions based on pro forma fi gures for 2005.

Aspiro sells content with complex underlying legal structures. There is a risk of infringements in individual countries or in marketing through an individual channel, with the ensuing damages.

Risk and Sensitivity Analysis 43 Five-year Summary

SEK 000 2005 2004 - IFRS 2004 2003 2002 2001

INCOME STATEMENT Net sales 407,864 129,525 129,525 18,156 34,164 43,944 Other operating revenues 2,932 850 742 2,168 1,683 1,620 Capitalized development costs - 757 757 666 - - Operating expenses -386,031 -191,270 -191,076 -56,804 -127,937 -267,064 Operating profi t/loss 24,765 -60,138 -60,052 -35,814 -92,090 -221,500 Profi t/loss from fi nancial investments 497 -665 -665 436 -7,815 1,455 Profi t/loss before tax 25,262 -60,803 -60,717 -35,378 -99,905 -220,045 Tax on net profi t -7,213 913 -158 -8,464 -108,916 39,886 Net profi t/loss 18,049 -59,890 -60,875 -43,842 -208,821 -180,159

BALANCE SHEET Intangible fi xed assets 378,234 131,425 126,237 32,180 7,819 15,287 Tangible fi xed assets 3,613 1,264 1,264 787 7,075 11,732 Financial fi xed assets 286 216 216 58 8,531 126,540 Deferred tax asset 3,381 - - - - - Current receivables 93,285 55,568 55,568 11,665 17,418 24,662 Liquid funds 89,407 36,957 36,957 20,779 7,313 95,897 Total assets 568,206 225,430 220,242 65,469 48,156 274,118 Equity 441,024 171,956 170,963 51,862 7,767 210,407 Minority interest - - 8 24 - - Provisions - - 2,273 2,068 10,914 19,530 Non-current liabilities 12,371 4,620 1 1 1,084 4,637 Current liabilities 114,811 48,854 46,997 11,514 28,391 39,544 Total equity and liabilities 568,206 225,430 220,242 65,469 48,156 274,118

CASH FLOW Cash fl ow from operating activities 62,229 -18,442 -18,442 -39,249 -95,735 -140,667 Cash fl ow from investing activities -581 -62,296 -62,296 -67 7,318 -922 Cash fl ow from fi nancing activities -12,990 97,337 97,337 52,874 - 78,231 Cash fl ow for the year 48,658 16,599 16,599 13,558 -88,417 -63,358 Liquid funds, opening balance 36,957 20,779 20,779 7,313 95,897 159,016 Exchange rate difference in liquid funds 3,792 -421 -421 -92 -167 239 Liquid funds, closing balance 89,407 36,957 36,957 20,779 7,313 95,897

KEY FIGURES Ave. no. of employees 115 65 65 30 62 110 Net sales, SEK 000 407,864 129,525 129,525 18,156 34,164 43,944 Operating profi t/loss, SEK 000 24,765 -60,138 -60,052 -35,814 -92,090 -221,500 Equity, SEK 000 441,024 171,956 170,963 51,862 7,767 210,407 Capital employed, SEK 000 441,024 171,956 170,971 51,886 8,851 215,044 Total assets, SEK 000 568,206 225,430 220,242 65,469 48,156 274,118 Equity/assets ratio, % 78 76 78 79 16 77 Debt/equity ratio, % - - - - 14 2 Interest coverage ratio, % 5 203 neg. neg. neg. neg. neg. Acid test ratio, % 159 76 79 282 87 305 Profi t margin, % 6.2 neg. neg. neg. neg. neg. Operating margin, % 6.1 neg. neg. neg. neg. neg. Return on equity, % 5.9 neg. neg. neg. neg. neg. Return on total capital, % 6.5 neg. neg. neg. neg. neg. Return on capital employed, % 8.4 neg. neg. neg. neg. neg.

44 Five-year Summary Defi nitions of Key Figures

MARGINS Acid test ratio Profi t margin Current assets excluding inventories as a percentage of current Profi t/loss after fi nancial items as a percentage of net sales. liabilities.

Operating margin STOCK-RELATED KEY FIGURES Operating profi t/loss as a percentage of net sales Average number of outstanding shares RETURNS Weighted average of outstanding shares in the period.

Return on equity Average number of outstanding shares and potential shares Profi t/loss after tax as a percentage of average equity including Weighted average of outstanding shares and potential shares in 72% of untaxed reserves. the period.

Return on total capital Earnings per share Profi t/loss after fi nancial items plus fi nancial expenses as a Profi t/loss after tax divided by average number of outstanding percentage of average total assets. shares.

Return on capital employed Stockholders’ equity per share Profi t/loss after fi nancial items plus fi nancial expenses as a Stockholders’ equity divided by number of outstanding shares percentage of average capital employed. at the end of the period.

CAPITAL STRUCTURE Cash fl ow per share Cash fl ow from operating activities divided by average number Stockholders’ Equity of outstanding shares. Accounted equity plus untaxed reserves less deferred tax at applicable tax rate. HUMAN RESOURCES

Capital employed Number of employees Total assets less non interest-bearing liabilities including defer- Average number of full-time employees. red tax liabilities in untaxed reserves. Value-added per employee Equity/assets ratio Net sales less expenses for services and goods for resale divided Adjusted stockholders’ equity (including minority) as a percen- by number of employees. tage of total assets. Net sales per employee Debt/equity ratio Net sales divided by number of employees. Interest-bearing liabilities in relation to stockholders’ equity. Payroll expenses per employee Interest coverage ratio Total salaries and other remuneration divided by number of Profi t/loss after fi nancial items plus fi nancial expenses divided employees. by fi nancial expenses.

Definitions of Key Figures 45 Consolidated Income Statement

SEK 000 NOTE 1 JAN. - 31 DEC. 2005 1 JAN. - 31 DEC. 2004

Net sales 1 407,864 129,525 Other operating revenues 2,932 850 Total 410,796 130,375

Capitalized development costs - 757 Services and goods for resale -77,245 -22,738 Other external expenses 2,3 -213,741 -79,721 Personnel expenses 4 -82,256 -33,593 Depreciation and write-downs of tangible fi xed assets 5 -2,048 -844 Depreciation and write-downs of intangible fi xed assets 5 -8,758 -53,259 Other operating expenses -1,983 -1,115 Total -386,031 -190,513 Operating profi t/loss 6 24,765 -60,138

Profi t/loss from participations in group companies 9 -18 - Interest income and similar profi t/loss items 9 1,010 2,164 Interest expenses and similar profi t/loss items 9 -495 -2,829 Total 497 -665 Profi t/loss before tax 25,262 -60,803 Tax 10 -7,213 913 Net profi t/loss* 18,049 -59,890

* Attributable to equity holders of the parent 18,049 -59,888 Attributable to minority interest - -2

Earnings per share before dilution (SEK) 20 0.11 -0.89 Earnings per share after dilution (SEK) 20 0.11 -0.89

Exchange rate differences affecting operating profi t/loss 258 -469 Financial exchange rate differences -216 -1,573

46 Income Statement Parent Company Income Statement

SEK 000 NOTE 1 JAN. - 31 DEC. 2005 1 JAN. - 31 DEC. 2004

Operating revenues Net sales 1 69,302 17,267 Capitalized development costs - 645 Other operating revenues 1,851 591 Total 71,153 18,503

Operating expenses Services and goods for resale -42,041 -5,814 Other external expenses 2,3 -14,185 -9,698 Personnel expenses 4 -15,534 -12,893 Depreciation and write-downs of tangible fi xed assets 5 -113 -87 Depreciation and write-downs of intangible fi xed assets 5 -35 -1,303 Other operating expenses -1,335 -697 Total -73,243 -30,492 Operating profi t/loss 6 -2,090 -11,989

Profi t/loss from fi nancial investments 9 Profi t/loss from participations in group companies -94,018 -39,888 Interest income and similar profi t/loss items 1,722 790 Interest expenses and similar profi t/loss items -72 -412 Total -92,368 -39,510 Profi t/loss after fi nancial items -94,458 -51,499

Tax on net profi t 10 - - Net profi t/loss -94,458 -51,499

Exchange rate differences affecting operating profi t/loss 526 -446 Financial exchange rate differences 553 -244

Income Statement 47 Consolidated Balance Sheet

SEK 000 NOTE 31 DEC. 2005 31 DEC. 2004

ASSETS FIXED ASSETS 5 Goodwill 331,241 116,905 Other intangible assets 46,993 14,520 Equipment 3,613 1,264 Other stockholdings 8 27 8 Deferred tax asset 10 3,381 - Other long-term receivables 259 208 Total fi xed assets 385,514 132,905

CURRENT ASSETS Accounts receivable 65,567 36,977 Other receivables 5,436 4,488 Prepaid expenses and accrued income 11 22,282 14,103 Liquid funds 89,407 36,957 Total current assets 182,692 92,525 TOTAL ASSETS 568,206 225,430

48 Balance Sheet Consolidated Balance Sheet, cont.

SEK 000 NOTE 31 DEC. 2005 31 DEC. 2004

EQUITY AND LIABILITIES STOCKHOLDERS’ EQUITY Equity attributable to equity holders of the parent Share capital (189,538,115 shares) 18 333,587 191,773 Other contributed equity 232,380 131,699 Reserves 7,452 -1,080 Retained earnings -150,444 -90,556 Net profi t/loss 18,049 -59,888 Total 441,024 171,948

Minority interest - 8 Total equity 441,024 171,956

NON-CURRENT LIABILITIES 13 Other liabilities 1 1 Deferred tax liabilities 10 12,206 4,140 Other provisions 12 164 479 Total non-current liabilities 12,371 4,620

CURRENT LIABILITIES Accounts payable 38,973 17,510 Current tax liabilities 9,168 462 Other liabilities 13,049 15,419 Accrued expenses and deferred income 14 48,472 13,747 Other provisions 12 5,149 1,716 Total current liabilities 114,811 48,854 Total liabilities 127,182 53,474 TOTAL EQUITY AND LIABILITIES 568,206 225,430

MEMORANDUM ITEMS 15 Pledged assets 114 626 Contingent liabilities None None

Balance Sheet 49 Parent Company Balance Sheet

SEK 000 NOTE 31 DEC. 2005 31 DEC. 2004

ASSETS FIXED ASSETS 5 Intangible fi xed assets Capitalized development costs 644 - Licenses and trademarks 2,500 - Total intangible fi xed assets 3,144 -

Tangible fi xed assets Equipment 560 223 Total tangible fi xed assets 560 223

Financial fi xed assets Participations in group companies 7 362,124 167,461 Other long-term receivables - 8 Total fi nancial fi xed assets 362,124 167,469 Total fi xed assets 365,828 167,692

CURRENT ASSETS Current receivables Accounts receivable 5,768 7,244 Receivables from group companies 19 37,640 17,737 Other receivables 368 878 Prepaid expenses and accrued income 11 1,505 1,140 Total current receivables 45,281 26,999

Cash and bank balances 16,627 20,354 Total current assets 61,908 47,353 TOTAL ASSETS 427,736 215,045

50 Balance Sheet Parent Company Balance Sheet, cont.

SEK 000 NOTE 31 DEC. 2005 31 DEC. 2004

EQUITY AND LIABILITIES STOCKHOLDERS’ EQUITY Restricted equity Share capital (189,538,115 shares, quotient value SEK 1.76) 18 333,587 191,773 Share premium reserve - 39,098 Statutory reserve 110,620 9,939 Total restricted equity 444,207 240,810

Accumulated defi cit Retained earnings -14,826 -709 Net profi t/loss -94,458 -51,499 Total accumulated defi cit -109,284 -52,208 Total equity 334,923 188,602

Provisions Provisions 12 4,732 1,777 Total provisions 4,732 1,777

Non-current liabilities 13 Liabilities to group companies 19 2,521 2,428 Total non-current liabilities 2,521 2,428

Current liabilities Accounts payable 9,533 2,125 Liabilities to group companies 19 59,494 9,597 Other liabilities 733 6,786 Accrued expenses and deferred income 14 15,800 3,730 Total current liabilities 85,560 22,238 TOTAL EQUITY AND LIABILITIES 427,736 215,045

Memorandum items 15 Pledged assets 42 3,554 Contingent liabilities None None

Balance Sheet 51 Cash Flow Statement

GROUP PARENT COMPANY SEK 000 NOTE 1 JAN. - 31 DEC. 2005 1 JAN. - 31 DEC. 2004 1 JAN. - 31 DEC. 2005 1 JAN. - 31 DEC. 2004

OPERATING ACTIVITIES 16 Net profi t/loss 18,049 -59,890 -94,458 -51,499 Adjustment for items not included in cash fl ow 8,239 49,997 92,218 43,279 Cash fl ow from operating activities before changes in working capital 26,288 -9,893 -2,240 -8,220

CASH FLOW FROM CHANGES IN WORKING CAPITAL Change in operating receivables 3,206 -6,578 -18,282 -13,760 Change in operating liabilities 32,735 -1,971 63,322 439 Cash fl ow from operating activities 62,229 -18,442 42,800 -21,541

INVESTING ACTIVITIES Acquisitions of subsidiaries 2,050 -60,883 -41,458 -83,416 Acquisitions of intangible fi xed assets -986 -757 -3,179 -645 Acquisitions of tangible fi xed assets -2,014 -656 -445 -233 Change in long-term receivables 369 - 8 - Cash fl ow from investing activities -581 -62,296 -45,074 -84,294

FINANCING ACTIVITIES New issue and options - 95,041 -5 95,041 Group contribution - - -1,716 -400 Change in fi nancial liabilities -12,990 2,296 93 14,669 Cash fl ow from fi nancing activities -12,990 97,337 -1,628 109,310

Cash fl ow for the year 48,658 16,599 -3,902 3,475

Liquid funds, opening balance 36,957 20,779 20,354 16,886 Exchange rate difference in liquid funds 3,792 -421 175 -7 Liquid funds, closing balance 89,407 36,957 16,627 20,354

Interest paid, group Interest paid in the period amounted to SEK 189,000 (SEK 30,000). Interest received in the period amounted to SEK 1,036,000 (SEK 594,000).

Interest paid, parent company Interest paid in the period amounted to SEK 14,000 (SEK 3,000). Interest received in the period amounted to SEK 208,000 (SEK 548,000).

Income tax paid by the group amounted to SEK 196,000 (SEK 56,000) Income tax paid by the parent company amounted to SEK 0 (SEK 0)

52 Cash Flow Statement Consolidated Statement of Changes in Stockholders’ Equity

MINORITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY INTEREST OTHER CONTRIBUTED RETAINED NET PROFIT GROUP SHARE CAPITAL EQUITY RESERVES EARNINGS /LOSS TOTAL

Stockholders’ equity, 31 December 2003 66,258 106,985 - -77,563 -43,818 51,862 Effects from transition to IFRS - - - - - 24 24 Adjusted opening balance, 1 January 2004, IFRS 66,258 106,985 - -77,563 -43,818 24 51,886 Effects from transition to IFRS - 175 1,119 - - 1,294 Allocation of previous year’s earnings - - - -43,818 43,818 - -- Reduction of share capital -29,706 - - 29,706 - - - Private placement 20,000 2,247 - - - - 22,247 New share issue, acquisition of Emode 14,101 6,103 - - - - 20,204 New share issue, preferential 70,652 1,564 - - - - 72,216 New share issue, acquisition of Cellus 50,468 14,047 - - - - 64,515 Options - 178 - - - - 178 Repaid VAT, issue expenses - 400 - - - - 400 Change in minority interest ------14 -14 Change in translation reserve - - -1,080 - - - -1,080 Total changes in net worth accounted directly against stockholders’ equity 125,515 24,714 -1,080 -12,993 43,818 -14 179,960 Net profi t/loss - - - - -59,888 -2 -59,890 Closing balance, 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 Allocation 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 Change 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 profi t/loss - - - - 18,049 - 18,049 Closing balance, stockholders’ equity, 31 December 2005 333,587 232,380 7,452 -150,444 18,049 - 441,024

No currency hedging has been used to reduce exchange rate differences. Issue expenses of SEK 5,000 (SEK 9,446,000) reduced injected capital.

Statement of Changes in Stockholders’ Equity 53 Parent Company Statement of Changes in Stockholders’ Equity

SHARE SHARE PREM- STATUTORY RETAINED NET PROFIT PARENT COMPANY CAPITAL IUM RESERVE RESERVE EARNINGS /LOSS TOTAL

Opening balance, stockholders’ equity, 1 January 2004 66,258 14,559 9,939 - -30,015 60,741 Allocation of previous year’s earnings -30,015 30,015 - Private placement 20,000 2,247 22,247 New share issue, acquisition of Emode 14,101 6,103 20,204 Reduction of share capital -29,706 29,706 - New share issue, preferential 70,652 1,564 72,216 New share issue, acquisition of Cellus 50,468 14,047 64,515 Group contribution paid -400 -400 Options 178 178 Repaid VAT, issue expenses 400 400 Total changes in net worth accounted directly against stockholders’ equity 125,515 24,539 - -709 30,015 179,360 Net profi t/loss -51,499 -51,499 Closing balance, stockholders’ equity, 31 December 2004 191,773 39,098 9,939 -709 -51,499 188,602

Opening balance, stockholders’ equity, 1 January 2005 191,773 39,098 9,939 -709 -51,499 188,602 Allocation of previous year’s earnings -39,098 -12,401 51,499 - 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 Group contribution paid -1,716 -1,716 Transfer of share premium reserve to statutory reserve -100,681 100,681 - Total changes in net worth accounted directly against stockholders’ equity 141,814 - 100,681 -14,117 51,499 279,877 Net profi t/loss -94,458 -94,458 Closing balance, stockholders’ equity, 31 December 2005 333,587 - 110,620 -14,826 -94,458 334,923

Issue expenses of SEK 5,000 (SEK 9,446,000) reduced injected capital.

54 Statement of Changes in Stockholders’ Equity Subsidiaries are consolidated from the acquisition date until the divestment date Accounting Principles inclusive. The liquidation of Aspiro Development AB i likvidation (in liquidation) was not yet complete as of the balance sheet date, 31 December 2005. Accordingly, The Consolidated Financial Statements have been prepared pursuant to Interna- adjusted fi gures for Aspiro Development AB i likvidation have been consolidated to tional Financial Reporting Standards (IFRS/IAS) and interpretations statements enable reconciliation of intragroup items. Aspiro’s former US subsidiary, Aspiro Inc., from the International Financial Reporting Interpretations Committee (IFRIC/SIC) as has been closed down, but not formally liquidated. Aspiro Inc. is not consolidated. endorsed by the EU Commission. The Annual Report for 2005 is the fi rst complete Intragroup receivables and liabilities, revenues and expenses and unrealized fi nancial statement the group has prepared completely pursuant to IFRS. The adop- gains and losses are eliminated in their entirety when the Consolidated Financial tion of IFRS is formalized through IFRS 1, First-time Adoption of International Finan- Statements are prepared. Assets and liabilities of foreign operations are converted cial Reporting Standards. Additionally, the Swedish Financial Accounting Standards from functional currency to Swedish kronor at year-end. Revenues and expenses Council’s (RR), recommendation RR 30, Supplementary Accounting Rules for of foreign operations are converted to Swedish kronor at average exchange rates. Groups, and applicable Emerging Issues Task Force statements have been applied. The following conversion rates have been applied: The consolidated fi nancial statements are based on historical acquisition values. The parent company observes the same accounting principles as the group apart EXCHANGE RATE NOK EUR CHF DKK GBP from those cases stated below in the ‘Parent company accounting principles’ section. 31 December 2003 - 9.0940 - - - Conditions for Preparing the Parent Company and Consoli- 28 February 2004 1.0525 - - - - dated Financial Statements 30 June 2004 1.0900 9.1330 5.9800 1.2290 13.6325 The parent company’s functional currency is the Swedish krona, which is also the 31 December 2004 1.0880 9.0070 5.8270 1.2115 12.7100 reporting currency of the parent company and group. Thus, the fi nancial statements are published in Swedish kronor. All amounts are rounded to the nearest thousand Average 2004 1.0955 9.1266 5.9216 1.2222 13.3035 Swedish kronor (SEK 000) unless stated otherwise. 1 March 2005 1.0960 9.0475 - - - Preparing the fi nancial statements pursuant to IFRS necessitates the corporate management making evaluations, estimates and assumptions that infl uence the 1 October 2005 1.1910 9.3405 - - - application of the accounting principles and the stated amounts for revenues, ex- penses, assets and liabilities. In the year, divisions of acquisition values coincident 31 December 2005 1.1760 9.4300 6.0580 1.2640 13.7325 with corporate acquisitions have necessitated more extensive evaluations and Average 2005 1.1591 9.2813 5.9950 1.2455 13.5720 estimates regarding useful lives and future cash fl ows. Estimates and assumptions are based on historical experience and are reviewed regularly. Changes to estima- tes are accounted in the period the change is made if the change only affects that Translation differences that arise coincident with the conversion of foreign net period, or the period the change is made and future periods if the change affects investments are accounted directly in a translation reserve in stockholders’ equity. both current and future periods. The following accounting principles are applied consistently for the periods Revenue Recognition published in the Consolidated Financial Statements, unless stated otherwise below, Revenues are the gross infl ows of fi nancial benefi ts that arise in the company’s and when preparing the group’s opening balance pursuant to IFRS as of 1 January operating activities in a period that increase the company’s stockholders’ equity, 2004, which explains the transfer from previous accounting principles to IFRS. with the exception of increases that depend on contributions from stockholders. Revenues only encompass the gross infl ow of fi nancial benefi ts that the company Revised Accounting Principles receives, or may receive, on its own behalf. Amounts accrued on behalf of another For the group, the transition to accounting pursuant to IFRS has been accounted party, such as sales tax, goods and tax on services and value-added tax, are not pursuant to IFRS 1, and is stated in Note 22. The exemption from the general rule accounted as revenues. Revenues are valued at the fair value of what is received of IFRS 1 that Aspiro has chosen to adopt is to re-set translation difference in stock- or will be received. Revenues are recognized when the company has transferred holders’ equity to zero as of 1 January 2004. Pursuant to the voluntary exemption the essential risks and benefi ts associated with ownership of the products and the of IFRS 1, IAS 39 has not been adopted on comparative fi gures for 2004, but in company no longer exerts any material control over the sold products. advance, from 1 January 2005. Aspiro’s revenues can be divided between downloading charges and fi xed and variable usage charges. When services usage starts, fi xed and variable charges are recognized monthly. The majority of usage charges are based on revenue Classifi cation, etc. sharing with the relevant operator/distribution channel. Aspiro recognizes its share Essentially, fi xed assets and non-current liabilities exclusively comprise amounts ex- of total revenues based on its own user statistics and fi nal reconciliation with the pected to be recovered or paid after more than 12 months from year-end. Essentially, customer. The majority of revenues of Cellus, Inpoc and Mobilehits are charges for the parent company’s and group’s current assets and current liabilities exclusively downloading services such as ringtones, images and games. comprise amounts expected to be recovered or paid within 12 months of year-end. Financial Revenue and Expenses Consolidated Financial Statements Financial revenue and expenses comprise interest income on bank balances and The Consolidated Financial Statements encompass the parent company and receivables, interest expenses on liabilities and exchange rate differences. Ex- companies in which the parent company holds more than half of the vote directly or change rate differences on intragroup receivables and liabilities are accounted net. indirectly, or exerts a controlling infl uence in some other manner. All subsidiaries are accounted pursuant to acquisition accounting, which means that the acqui- Financial Instruments sition value of the business combination is divided by accounting the identifi able assets, liabilities and contingent liabilities of the acquired company that satisfy the Financial instruments are valued and accounted pursuant to IAS 39 from 1 January terms for accounting pursuant to IFRS at fair value at the time of acquisition. The 2005 onwards without retroactive recalculation of the comparative year. On the acquisition value is calculated as the total of the fair value of assets received, ari- assets side, fi nancial instruments accounted in the Balance Sheet include liquid sing, or liabilities taken over, and the equity instruments issued in exchange for the funds, accounts receivable and shareholdings. The equity and liabilities side inclu- controlling infl uence over the acquired unit, and all expenses directly attributable des accounts payable and equity instruments issued. Initially, fi nancial instruments to the business combination, as of the transaction date. When the acquisition are accounted at acquisition value corresponding to the instrument’s fair value, value of the business combination exceeds the net fair value of the acquired plus transaction expenses. share of identifi able assets, liabilities and accounted contingent liabilities, the dif- A fi nancial asset or liability is accounted in the Balance Sheet when the com- ference is accounted as goodwill. When this difference is negative, it is accounted pany becomes party to the instrument’s contracted terms. Accounts receivable are directly in the Income Statement.

Accounting Principles 55 accounted in the Balance Sheet when the invoice is sent. Liabilities are recognized price directly attributable to the asset to bring it to the place and condition for use when the counterparty has performed and there is a contracted obligation for pay- in the manner the company intended. The carrying amount of the asset is removed ment, even if no invoice has been received yet. Accounts payable are recognized from the Balance Sheet upon disposal or divestment, or when no future fi nancial when the relevant invoice is received. benefi ts are expected from the use or disposal/divestment of the asset. The gain or A fi nancial asset is removed from the Balance Sheet when the contracted loss that results when a tangible fi xed asset is removed from the Balance Sheet is rights are realized, mature or the company relinquishes control over them. The accounted in the Income Statement. The gain or loss is calculated as the difference same applies to parts of a fi nancial asset. The company evaluates whether there between the potential net revenue from the divestment and the asset’s carrying is any objective indication that a fi nancial asset needs to be written down at each amount. occasion when a report is prepared. The group’s balances in bank accounts including foreign currency accounts and DEPRECIATION incoming funds are included in the parent company’s and group’s liquid funds. Con- solidated liquid funds are only subject to an insignifi cant risk of value fl uctuations. Intangible Fixed Assets Accounts receivable are accounted at the amount expected to be received after After fi rst-time accounting, intangible fi xed assets are accounted in the Balance deducting for doubtful debt, which is evaluated on a case-by-case basis. Because Sheet at acquisition value less deductions for potential accumulated depreciation the expected term of accounts receivable is short, values are accounted at nominal and write-downs. For intangible fi xed assets with fi nite useful lives, depreciation is amount without discounting. Write-downs on accounts receivable are accounted linear over the asset’s estimated useful life. Intangible fi xed assets with indeter- in operating expenses as other external expenses. Accounts receivable not settled minable useful lives are not depreciated. Instead, an impairment test is applied within 90 days after their due date are accounted as doubtful debt unless there pursuant to IAS 36 by comparing the asset’s recoverable value and its carrying are specifi c reasons to assume that payment will be received. Examples of specifi c amount. This test is conducted annually, or at any time there are indications of reasons may be an agreement on payment by installments. value impairment of the intangible asset. Evaluations of depreciation methods and Liabilities are classifi ed as other fi nancial liabilities, which means that initially, useful lives are conducted annually. they are accounted at the amount received. After the acquisition date, loans are accounted at acquisition value pursuant to the effective interest method. Accounts The following depreciation periods are applied: payable are classifi ed as other fi nancial liabilities. Because accounts payable have short expected terms, values are accounted at nominal amount without discoun- Licenses and trademarks 3-10 år ting. There are no derivative instruments to cover the risk of exchange rate fl uctua- Capitalized development costs 3 years tions within the group. IT systems 5 years

INTANGIBLE ASSETS Tangible Fixed Assets Goodwill After fi rst-time accounting, tangible fi xed assets are accounted in the Balance Goodwill is the positive difference between the acquisition value of a business Sheet at acquisition value less accumulated depreciation and potential accumula- combination and the net fair value of acquired identifi able assets, liabilities and ted write-downs. The depreciation is linear over the asset’s estimated useful life. contingent liabilities. Goodwill can be viewed as a payment for future fi nancial be- Evaluations of depreciation methods and useful lives are conducted annually. nefi ts that cannot be separately identifi ed, nor accounted separately. The group has not adopted IFRS retroactively for acquisitions conducted before 1 January 2004, The following depreciation periods are applied: which means that going forward, the carrying amount of goodwill as of 1 January 2004 will consist of the group’s acquisition value after impairment testing. Offi ce equipment 5 years Goodwill is valued at acquisition value less potential accumulated write-downs. Goodwill is divided to cash-generating units and is no longer amortized but subject Computer equipment 3 years to impairment tests at least annually, see the ‘write-downs’ heading below.

Write-downs Other Intangible Assets Carrying amounts for the group’s assets are verifi ed at each year-end to determine Acquired intangible assets are accounted at acquisition value less accumulated whether there is any indication that the asset’s value may have reduced. If so, the depreciation and write-downs. Development costs are only capitalized if the asset’s recoverable value is calculated, defi ned as the greater of fair value less expenses are expected to result in identifi able future fi nancial benefi ts that are selling expenses and value in use. When calculating value in use, future payments under the control of the company, and it is technologically and fi nancially possible surpluses the asset is expected to generate are discounted at a rate corresponding to complete the asset. The costs that can be capitalized are costs that are invoiced to risk-free interest and the risk associated with the specifi c asset. The recoverable externally, direct costs for labor and a reasonable portion of indirect costs. Other value of the cash-generating unit to which the asset belongs is calculated for assets development costs are expensed in the Income Statement as they arise. Capita- that do not generate cash fl ow that is essentially independent of other assets. If lized development costs are accounted at acquisition value, less deductions for the recoverable value of the asset is less than the carrying amount, a write-down is accumulated depreciation. Supplementary expenditure for capitalized intangible effected. Write-downs are posted to the Income Statement. assets is accounted as an asset only if it increases the future fi nancial benefi ts Regardless of whether there is any indication of value reduction, tests are for the specifi c asset to which they are attributable. The carrying amount of the conducted on assets with indeterminable useful lives and intangible assets that asset is removed from the Balance Sheet upon disposal or investment, or when no are not yet ready for use. Impairment tests should incorporate goodwill acquired in future fi nancial benefi ts are expected from the use or disposal/divestment of the business combinations, from the acquisition date onwards, divided between each asset. The gain or loss resulting when an intangible fi xed asset is removed from the of the acquirer’s cash-generating units or groups of cash-generating units that are Balance Sheet is accounted in the Income Statement. The gain or loss is calculated expected to benefi t from the synergies of the acquisition. Each unit or group of units as the difference between the potential net revenue from the divestment and the over which goodwill is divided will correspond to the lowest level in the company at asset’s carrying amount. which goodwill in question is monitored in internal controls, and may not be greater than a segment based either on the company’s primary or secondary basis for divi- Tangible fi xed assets sion pursuant to IAS 14, Segment Reporting. Aspiro has divided acquired goodwill Expenditure for tangible fi xed assets is accounted in the Balance Sheet when it is on the basis of the secondary segment, i.e. geographical regions. Impairment tests likely that the future fi nancial benefi ts associated with the asset will arise for the were conducted on goodwill for the fi rst time as of 1 January 2004. At this time, company and the asset’s acquisition value can be reliably calculated. Tangible fi xed there was no need for write-downs. Coincident with the Interim Report for January- assets are accounted at acquisition value less accumulated depreciation according June 2004, the carrying amount of goodwill was subjected to another impairment to plan and potential write-downs. The acquisition value comprises the purchase test, with the justifi cation for the test being that the acquisitions of Emode and

56 Accounting Principles Cellus resulted in major changes to the group’s structure. The impairment test ments are calculated without discounting because the payments for all these plans resulted in goodwill being written down by SEK 40 m. When converting the year- become due for payment within 12 months. 2004 accounts to IFRS, the fi rst half-year’s depreciation, and the aforementioned Provisions are only accounted coincident with termination of employees if the write-down, were still accounted as a goodwill write-down. No need for write-downs company has demonstrably committed to conclude employment before the normal emerged from the impairment test conducted as of 31 December 2005. time, or when remuneration is paid to encourage voluntary redundancy. In those The company determines whether there is any indication that the previous cases the company issues redundancy notices, a detailed plan, which as a mini- write-down of an asset, apart from goodwill, is no longer justifi ed wholly or partly at mum, includes information on workplaces, positions and the approximate number each year-end. A reversal of write-downs is only effected to the extent the asset’s of people affected, and the remuneration for each employee category, or positions carrying amount is not greater than the company would have accounted (after de- and the time for conducting the plan. preciation) if the company had not written down the asset. Reversals of write-downs Staff stock options are settled through new share issues. The staff stock option are accounted in the Income Statement. plan is reviewed in Note 4. The expenses for staff stock options have been cal- culated pursuant to IFRS 2. The fair value of options has been calculated pursuant Foreign Currencies to the Black & Scholes general model for valuing options, without adjusting for potential dilution. The expense is divided linearly over the term of the options, of 36 Foreign currencies are converted to the functional currency at the exchange rate on months. Provisioning for social security contributions is effected proceeding from the transaction date. Foreign currency receivables and liabilities have been conver- the fair value of the stock options at each year-end. ted at year-end exchange rates, pursuant to IAS 21. Exchange rate differences on trading receivables and liabilities are included in operating profi t/loss. Differences in fi nancial receivables and liabilities are accounted in fi nancial items. Exchange Earnings per Share rate differences on monetary intragroup items are included in the Consolidated Earnings per share have been calculated pursuant to IAS 33. Earnings per share Income Statement. The group does not use any fi nancial instruments to hedge before dilution are calculated by earnings attributable to holders of ordinary shares exchange rates. of the parent company are divided by the weighted average number of outstanding ordinary shares in the period. The number of outstanding shares is adjusted for Leasing bonus issues, splits and reverse splits for comparability.’ When calculating potential dilution because of outstanding warrants, the Leasing contracts are classifi ed according to the extent to which the fi nancial risks value of the subscription price is compared with the fair value of the shares. The and benefi ts associated with ownership of the relevant leasing assets are with the presumed payments from warrants are considered to have been received on the lessor or lessee. A leasing contract is classifi ed as fi nance leasing if it implies that issuance of ordinary shares at an average quoted price for ordinary shares in the essentially, the fi nancial benefi ts and risks associated with ownership of the asset period. The difference between the number of issued ordinary shares and the are transferred from the lessor to the lessee. A leasing contract is classifi ed as number of ordinary shares that would have been issued at an average market price operating leasing if it means that essentially, the benefi ts and risks are transferred of ordinary shares in the period is treated as an issue of ordinary shares without to the lessee. Finance leasing is accounted as assets and liabilities in the Balance payment. Warrants only give rise to a dilution effect when the average price of ordi- Sheet, which means that depreciation and interest expenses for each period are nary shares in the period is greater than the exercise price of the stock options. accounted in the Income Statement. For operating leasing, leasing charges are written off linearly over the leasing term, providing there is no better way of refl ec- ting the company’s fi nancial benefi t over time. Aspiro has no signifi cant leasing Provisions contracts. There were only a few leasing contracts regarding company cars, dispen- Provisions are accounted in the Balance Sheet when a legal or informal com- sing machines and PCs for home use remaining at year-end 2005, accounted as mitment arises as a consequence of an event that has occurred and it is likely operating leasing in the parent company and group. that an outfl ow of fi nancial benefi ts will be necessary to settle the commitment and a reliable estimate of the amount is possible. The provision is accounted at an Tax amount corresponding to the best estimate of the disbursement necessary to settle the commitment. Provisions are liabilities that are uncertain in terms of the amount The group accounts income tax pursuant to IAS 12, Income Taxes. Tax is accounted or timing of when they will be settled. Aspiro accounts provisions for restructuring in the Income Statement apart from when the underlying transaction is accounted expenses. In addition to the general criteria for provisions, this means that the directly against equity. Current tax is tax to be paid or received in the current year, company has a detailed formal plan for restructuring, which state the operations including potential adjustments of current tax attributable to previous periods. and sites affected, the number of employees that will receive severance pay, other Deferred tax is calculated pursuant to the balance sheet method, proceeding from expenses the company will incur, and when the measures will be conducted. The temporary differences between the carrying amounts and taxable values of assets creation of a well-founded expectation with the parties affected is another precondi- and liabilities. The amounts are calculated based on how the temporary differences tion for accounting provisions for restructuring measures. are expected to even out, and by applying those tax rates and rules that are resol- ved or announced as of year-end. Temporary differences are not considered in consolidated goodwill, nor in Contingent Liabilities differences attributable to participations in subsidiaries that are not expected to Contingent liabilities are potential commitments sourced from events that have oc- become subject to tax in the foreseeable future. For legal entities, untaxed reserves curred and whose incidence may be confi rmed only by one or more uncertain future are accounted including deferred tax liabilities. However, the Consolidated Finan- events occurring or not occurring, which do not lie entirely within the company’s cial Statements divide untaxed reserves between deferred tax liabilities and equity. control. Contingent liabilities may also be existing commitments sourced from The deferred tax receivables in deductible temporary differences and loss carry- events that have occurred but that are not accounted as a liability or provision forwards are only accounted to the extent that it is likely that they will imply lower because it is unlikely that an outfl ow of resources will be necessary to settle the future tax payments. commitment, or the size of the commitment cannot be estimated with suffi cient reliability. Employee Benefi ts The group accounts employee benefi ts pursuant to IAS 19. Employee benefi ts are Borrowing Costs accounted with salaries paid and accrued remuneration. Full reserves are made for Borrowing costs are accounted to earnings for the period to which they are attribu- various assumptions such as vacations, social security contributions and pensions. table. No borrowing costs have been incorporated in the acquisition value of assets. All the group’s pension contracts have been classifi ed as defi ned-contribution plans, which means that the company pays predetermined charges to a separate Cash Flow Statement legal entity, and has no legal or informal commitment to pay further charges if the legal entity does not have suffi cient assets to pay all benefi ts for employee service The Cash Flow Statement has been prepared pursuant to the indirect method. during current and previous periods. Pension expenses for defi ned-contribution Cash fl ow from operating activities is calculated proceeding from net profi t/loss. plans are accounted to earnings as employees conduct service. These commit- The profi t-loss is adjusted for transactions not involving payments made or recei-

Accounting Principles 57 ved, changes in trade-related receivables and liabilities, and for items attributable The parent company does not utilize the valuation rules of IFRS 39. The parent to investing or fi nancing activities. company values fi nancial fi xed assets at acquisition value less potential write- downs and fi nancial current assets pursuant to the lower of cost or market. Finan- Liquid Funds cial receivables and liabilities are converted to the functional currency at year-end exchange rates. Liquid funds comprise cash and bank balances. At present, the group has no short- term investments. Tax Segment Reporting The parent company accounts potential untaxed reserves including deferred tax liabilities. The consolidated fi nancial statement divides untaxed reserves between Pursuant to IAS 14, the group should submit information on business segments deferred tax liabilities and equity (retained earnings). and geographical regions. A business segment is a part of the company identifi able in accounting terms that provides goods and services, and that is exposed to risks and opportunities that differ from other business segments. Geographical regions Mergers means a part of the company identifi able in accounting terms that provides goods The group consummated ten mergers in the year, none of which with Aspiro AB. and services within a defi ned geographical region, and that is exposed to risks and These mergers have been accounted pursuant to BFNAR 1999:1 on mergers opportunities that differ from other geographical regions. The group must consider of wholly owned limited companies. The ‘consolidated value method’ has been whether business segments or geographical regions are its primary basis for applied, which means that the assets and liabilities of the merged subsidiaries division. The type of risks and opportunities that predominate are decisive to this have been accounted in each company’s merger parent at the value they had in the choice. The acquisitions of Emode, Cellus and Schibsted Mobile in 2004 and 2005 Consolidated Financial Statements. radically changed the group’s structure. The primary basis for division by segment are the various channels to end-customers, i.e. Advertising, Media Partners and Aspiro Channels. Thus, sales channels within Aspiro correspond to differing busi- ness segments. Geographical markets are secondary segments. Assets, liabilities and investments cannot be divided by segment in a reaso- nable and reliable manner because operations are fully integrated in terms of technology platform.

PARENT COMPANY ACCOUNTING PRINCIPLES The parent company prepares its Annual Report pursuant to the Swedish Annual Accounts Act (1995:1554) and RR’s Recommendation 32:05, Accounting for Legal Entities. RR 32:05 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 Financial Statements. Accordingly, in its Annual Report for the legal entity, the parent company applies those 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. RR 32:05 states the exceptions and supple- ments to be made from and to IFRS. The difference between the group’s and the parent company’s accounting principles are stated below. The stated accounting principles of the parent company have been applied consistently for all periods published in the parent company’s fi nancial statements.

Classifi cation and Presentation The parent company’s Income Statement and Balance Sheet are presented in the format stipulated by the Swedish Annual Accounts Act. The primary discrepancy from IAS 1 relates to the accounting of equity and the incidence of provisions as an independent title in the Balance Sheet.

Group and Shareholders’ Contributions Group contributions paid are accounted as an increase in the participations in sub- sidiaries item of the issuer. Because the contribution is intended to cover losses, the group’s participations in subsidiaries have been subjected to an impairment test subsequently. With the recipient, the shareholders’ contribution is accounted directly against non-restricted equity. Group contributions are accounted pursuant to their accounting implications. This means that group contributions received or paid with the intention of affecting the group’s total tax expense are accounted directly against retained earnings after deducting for their current tax effect.

Leasing The parent company accounts all leasing contracts pursuant to operating leasing stipulations.

Financial Instruments

58 Accounting Principles Notes The following amounts are in SEK 000 unless otherwise stated.

NOTE 1 NET SALES AND SEGMENT REPORTING

GROUP PARENT COMPANY 2005 % 2004 % 2005 % 2004 % NET SALES BY GROUP AND OTHER COMPANIES Net sales to group companies - - - - 46,690 67 - - Net sales to other companies 407,864 100 129,525 100 22,612 33 17,267 100 Total net sales 407,864 100 129,525 100 69,302 100 17,267 100

EXTERNAL EXPENSES BY GROUP AND OTHER COMPANIES Other external expenses, group companies - - - - 7,500 53 1,731 18 Other external expenses, other companies 213,741 100 79,721 100 6,685 47 7,967 82 Total other external expenses 213,741 100 79,721 100 14,185 100 9,698 100

Accounting by Primary Segment—Sales Channels

MEDIA PARTNERS ADVERTISING ASPIRO CHANNELS OTHER TOTAL GROUP 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 REVENUES External sales 226,580 68,967 102,691 48,419 78,593 12,139 - - 407,864 129,525 Other operating revenues ------2,932 850 2,932 850 Total 226,580 68,967 102,691 48,419 78,593 12,139 2,932 850 410,796 130,375

PROFIT/LOSS Revenues 226,580 68,967 102,691 48,419 78,593 12,139 2,932 850 410,796 130,375 Direct expenses* -135,000 -38,240 -80,800 -35,592 -31,900 -2,138 - - -247,700 -75,970 Unclassifi ed expenses -138,331 -114,543 Operating profi t/loss 24,765 -60,138 Financial income and expenses 497 -665 Tax on net profi t -7,213 913 Consolidated net profi t/loss 18,049 -59,890

* Direct expenses are expenses for purchased content, advertising and revenue sharing.

Accounting by Secondary Segments—Regions

GROUP 2005 2004 Other Information No reasonable and representative division of assets and liabilities is possible be- Nordic region 341,470 85,281 cause operations are fully integrated in terms of technology platform. Additionally, Rest of Europe, US and Canada 66,394 44,244 operating receivables and operating liabilities comprise mixed items, because Total net sales by region 407,864 129,525 a high proportion of procurement from suppliers and sales to customers are on multiple channels.

Notes 59 NOTE 2 LEASING CHARGES NOTE 3 AUDIT FEES AND REMUNERATION

GROUP PARENT COMPANY GROUP PARENT COMPANY 2005 2004 2005 2004 2005 2004 2005 2004 Total leasing charges for the fi n. year 567 738 188 313 Ernst&Young AB Auditing 1,132 435 375 429 Leasing charges due for payment in the coming years Other assignments 759 227 759 220 2005 - 366 - 209 Total, Ernst,&,Young 1,891 662 1,134 649 2006 264 289 190 176 2007 71 140 49 133 Other auditors 2008 20 20 11 20 Auditing - 345 - - Total leasing charges due for Other assignments 270 16 270 - payment in the coming years 355 815 250 538 Total, other auditors 270 361 270 -

Rental contracts due for payment in the coming years Total auditors’ fees and remuneration 2,161 1,023 1,404 - 2005 - 1,344 - 262 2006 2,185 62 360 62 2007 2,126 - 360 - 2008 1,006 - 360 - 2009 90 - 90 - Total rental contracts due for payment in the coming years 5,407 1,406 1,170 324

For reasons of their signifi cance, all leasing contracts have been accounted as operating leasing. There are only a few company car leasing contracts within the group, some for staff and dispensing machines.

NOTE 4 STAFF

GROUP PARENT COMPANY SUBSIDIARIES 2005 2004 2005 2004 2005 2004 AVERAGE NO. OF EMPLOYEES Employees in Sweden 38 28 18 11 20 17 Of which men in Sweden 29 24 12 9 17 15 Employees in Luxembourg 1 1 1 1 Of which men in Luxembourg 1 1 1 1 Employees in Spain 5 4 5 4 Of which men in Spain 3 3 3 3 Employees in Norway 36 27 36 27 Of which men in Norway 33 23 33 23 Employees in Denmark 9 9 Of which men in Denmark 5 5 Employees in Switzerland 2 2 2 2 Of which men in Switzerland 2 2 2 2 Employees in the UK 1 3 1 3 Of which men in the UK 1 1 1 1 Employees in the Baltic region 13 13 Of which men in the Baltic region 9 9 Employees in Finland 10 10 Of which men in Finland 7 7 Total average no. of employees 115 65 18 11 88 54 Total, of which men 90 54 12 9 73 45

60 Notes NOTE 4 STAFF, CONT.

GROUP PARENT COMPANY SUBSIDIARIES 2005 2004 2005 2004 2005 2004 SALARY AND OTHER REMUNERATION BY COUNTRY AND BETWEEN BOARD MEMBERS, ETC. AND EMPLOYEES Board of Directors and CEO, Sweden 3,692 3,553 3,100 3,141 592 412 Other employees, Sweden 10,546 10,811 6,918 5,946 3,628 4,865 Other employees, Norway 31,502 8,496 31,502 8,496 Other employees, Luxembourg 995 825 995 825 Other employees, the UK 1,186 778 1,186 778 Other employees, Spain 1,520 875 1,520 875 Board of Directors and CEO, Switzerland 2,050 1,143 2,050 1,143 Other employees, Switzerland 1,013 507 1,013 507 Other employees, the Baltic region 1,646 1,646 Other employees, Denmark 4,116 4,116 Other employees, Finland 1,128 1,128 Total, Board of Directors and CEO 5,742 4,696 3,100 3,141 2,642 1,555 Total, other employees 53,652 22,292 6,918 5,946 46,734 16,346

GROUP PARENT COMPANY SUBSIDIARIES 2005 2004 2005 2004 2005 2004 SALARY, OTHER REMUNERATION AND PAYROLL OVERHEADS Total salary and other remuneration 59,394 26,988 10,018 9,087 49,376 17,901 Total payroll overheads 15,479 8,330 5,243 4,617 10,236 3,713 of which pension expenses 2,682 1,889 1,536 1,554 1,146 335

Of the parent company’s pension expenses of SEK 1,536,000 (SEK 1, 554,000), SEK 280,000 (SEK 522,000) relates to the Board of Directors and CEO. Of consolidated pension expenses of SEK 2,682,000 (SEK 1,889,000), SEK 364,000 (SEK 569,000) relates to the Board of Directors and CEO.

Senior executives’ employment terms and remuneration The AGM resolved on SEK 150,000 (SEK 250,000) of Directors’ fees for the period until the next AGM.

DIRECTORS’ FEES SALARY TOTAL THE FOLLOWING PAYMENTS WERE MADE TO THE BOARD OF DIRECTORS (SEK): Erik Mitteregger, Chairman of the Board 100,000 100,000 Johan Lenander, Executive Chairman until May inclusive 734,560 734,560 Ulf Hubendick 50,000 50,000 Marie Persson Björkman 50,000 50,000 Alf Rasmussen 50,000 50,000 Christian Ruth - Gunnar Strömblad - Björn Gundersen - Sverre Munck - Mats Eriksson - 250,000 734,560 984,560

The Chief Executive Offi cer’s employment term is terminable subject to a six-month The employment terms of other senior executives are determined by consultation notice period. Coincident with termination initiated by the company, severance pay between the CEO and Board of Directors. Other members of the corporate mana- of six months’ salary is payable. The Chief Executive Offi cer’s fi xed salary is SEK gement are subject to mutual notice periods of three to six months. Severance 1,680,000. The bonus for 2005 was paid in 2006 at the maximum amount of SEK pay is payable to one executive, maximized at 24 months’ salary. Pension benefi ts 525,000 because of satisfaction of operating profi t and operating margin targets. to senior executives correspond to the ITP (supplementary pensions for salaried Other benefi ts comprise premium-based pension assurance with SEB Trygg employees) and SEB Tryggplan scheme, while one senior executive has a right to Liv of SEK 23,000 monthly and company car. Otherwise the CEO is subject to pension at 75% of pensionable salary pursuant to the ITP scheme between age 60 the same employment terms as other employees, on the basis of legislation (ref. and 65. All pension commitments are underwritten by insurance companies. 1962:381) with retirement at age 65. Salary and employment terms of the CEO are In 2005, total fi xed remuneration of SEK 7,488,000 was paid to other senior determined by the Board’s Remuneration Committee. Total payroll expenses and executives in the group management, totaling ten people in the year. Pension severance pay to the Chief Executive Offi cers were SEK 4,137,000 in 2005. expenses for this group amounted to SEK 431,000.

Notes 61 The following applies to bonuses to the management group for 2005 (six people) NOTE 5 FIXED ASSETS pursuant to Board decision: bonus is based wholly on EBITDA targets. The mana- gement group can receive a maximum of 50% of annual salary as bonus. No salary Intangible fi xed assets increases were payable to the management group for 2005. GROUP PARENT COMPANY Stock Option Plans 2005 2004 2005 2004 Aspiro issued debt instruments with detachable options for subscribing for new CAPITALIZED DEVELOPMENT COSTS shares in 2004 and 2005. Acquisition values, opening balance 1,750 666 1,311 666 Employees and Board members acquired options on market terms, apart from the staff stock option plan issued in 2005. The transfer price was determined Capitalized develop. costs for the year 1,043 645 679 645 pursuant to a customary valuation model, conducted by an independent valuation Increase via acquisitions - 439 - - institution. The debt instruments issued have been redeemed. The total number Exchange rate difference 12 - - - of shares increased by a total of 1,364,546 through the redemption of options. All options and stock option plans apart from three had expired by year-end 2005. Acquisition values, closing balance 2,805 1,750 1,990 1,311 The remaining stock option plans were subscribed by previous Chief Executive Offi cer Håkan Persson and current Chief Executive Offi cer Johan Lenander. The Accumulated depreciation and write- company also had a staff stock option plan inaugurated in 2005. Mr. Persson pos- downs, opening balance -1,750 -8 -1,311 -8 sesses the right to subscribe for 17,956 shares at an exercise price of SEK 23.40 Depreciation -67 -541 -35 -102 per share until 15 May 2006 inclusive. Mr. Lenander possesses the right to subscri- be for 1,000,000 shares at an exercise price of SEK 3.10 per share until 30 June Write-downs - -1,201 - -1,201 2006 inclusive. CEO, senior executives and other key executives of Aspiro received Accumulated depreciation and write- staff stock options. A total of 7,900,000 staff stock options were apportioned to downs, closing balance -1,817 -1,750 -1,346 -1,311 employees. Each staff stock option confers the right to subscribe for one Aspiro Carrying amount, closing balance 988 - 644 - share at an exercise price of SEK 3.77. This exercise price should increase to the extent the company’s payroll overheads for the plan exceed SEK 10 m. One-third of staff stock options can be utilized each year from May 2006 to May 2008. Consulting fees and licenses for the enhancement of Aspiro’s technology platform and community products were capitalized in the year.

2005 2004 GROUP PARENT COMPANY 2005 2004 2005 2004 SICKNESS ABSENCE (EMPLOYEES IN SWEDEN) Total absence, % 2.6 4.0 LICENSES AND TRADEMARKS Men 2.9 4.8 Acquisition values, opening balance 18,816 285 - - Women 1.2 0.5 Increase, acquisitions of subsidiaries 3,318 34 - - Purchases 37,404 18,497 2,500 - Pursuant to Chap. 5 para. 18a §2 cl.3 of the Swedish Annual Accounts Act, Exchange rate difference 11 - - - sickness absence is not disclosed separately because there are less than 10 Acquisition values, closing balance 59,549 18,816 2,500 - employees in the defi ned groups.

Accumulated depreciation and write- 2005 2004 downs, opening balance -4,296 -85 - - AT THE OF WHICH AT THE OF WHICH Increase via acquisitions of subsidiaries -567 -16 - - END OF THE MEN END OF THE MEN Depreciation -8,681 -3,852 - - PERIOD % PERIOD % Write-downs - -343 - - DIVISION BETWEEN THE SEXES, SENIOR EXECUTIVES Accumulated depreciation and write- Group downs, closing balance -13,544 -4,296 - - Board members 14 100 20 95 Carrying amount, closing balance 46,005 14,520 2,500 - CEO and management group 7 85 7 85 Coincident with the acquisitions of Schibsted Mobile (Inpoc) and Boomi, trade- Parent Company marks were identifi ed and accounted as separate assets. They were not assigned any value in the acquired companies’ Balance Sheets. Purchases of trademarks of Board members 6 100 5 80 SEK 2,500,000 for the parent company relate to an intragroup transaction. CEO and management group 7 85 7 85 GROUP PARENT COMPANY 2005 2004 2005 2004 GOODWILL Acquisition value, opening balance 192,574 31,322 - - Acquisitions of subsidiaries 214,346 130,338 - - Minority share of goodwill in sub-group - -20 - - Acquisition value, closing balance 406,920 161,640 - -

62 Notes GROUP PARENT COMPANY NOTE 6 DISCLOSURE FOR COMPARATIVE PURPOSES 2005 2004 2005 2004 GROUP PARENT COMPANY GOODWILL, CONT. 2005 2004 2005 2004 Accumulated depreciation and write- Restructuring expenses 7,670 11,298 419 4,484 downs, opening balance -75,669 - - - Included in other operating revenues - 108 Write-downs - -44,731 - - Included in services and goods for resale - - - -577 Depreciation, minority share Included in other external expenses -1,593 -4,045 -215 -1,181 of sub-group -10 -4 - - Included in personnel expenses -6,077 -4,405 -204 -2,726 Accumulated depreciation and write-downs, closing balance -75,679 -44,735 - - Included in depreciation and write- downs of intangible assets - -2,586 - - Carrying amount, closing balance 331,241 116,905 - - Included in other operating expenses - -370 - - Total carrying amount of intangible fi xed assets, closing balance 378,234 131,425 3,144 - Total -7,670 -11,298 -419 -4,484

Segment Goodwill In the Annual Report for 2004, Aspiro classifi ed expenses directly linked to restruc- turing, and not connected to the company’s continuing operations, as restructuring Norway 254,384 expenses. From the fi rst quarter 2005, restructuring expenses have been accoun- Finland 48,592 ted in each cost item as above. Sweden 28,265 The comparative fi gures for 2004 have been recalculated. The restructuring mainly relates to remuneration for terminated staff and rental expenses. Because Total 331,241 there are no discontinued operations pursuant to IFRS 5, there is no separate ac- counting in the Income Statement and Balance Sheet. Impairment Test for Cash-generating Units Including Goodwill After group restructuring, goodwill has been apportioned to the geographical regions of Norway, Sweden and Finland. The primary basis for this division was the units’ share of consolidated sales. However, the special status of Norway, with its high market share, justifi es a higher proportion of goodwill being assigned to this segment. The division as of 31 December 2005 is stated in the table. The impairment test was based on calculated value in use, based on cash fl ow forecasts totaling 20 years, with the fi rst year based on budgeted net cash fl ows. For the remaining years, the same nominal amounts have been forecast, i.e. without any growth rate. The present value of cash fl ows was calculated by applying a discount rate of 16% before tax. The recoverable value of each segment exceeds the carrying amount.

Tangible Fixed Assets

GROUP PARENT COMPANY 2005 2004 2005 2004 OFFICE AND COMPUTER EQUIPMENT Acquisition values, opening balance 4,217 7,210 288 710 Increase, acquisitions of subsidiaries 7,557 1,281 - - Purchases 1,650 656 445 233 Divestiture and disposal -1,735 -4,930 - -655 Exchange rate difference 438 - - - Acquisition values, closing balance 12,127 4,217 733 288

Accumulated depreciation and write- downs, opening balance -2,954 -6,423 -66 -633 Increase, acquisitions of subsidiaries -5,247 -524 - - Divestiture and disposal 1,735 4,836 6 655 Depreciation -2,048 -844 -113 -87 Exchange rate difference - 2 - - Accumulated depreciation and write- downs, opening balance -8,514 -2,953 -173 -65 Carrying amount, closing balance 3,613 1,264 560 223

Notes 63 NOTE 7 PARTICIPATIONS IN GROUP COMPANIES

PARENT COMPANY 2005 2004 Acquisition value, opening balance 207,461 85,509 Acquisition/stockholders’ contribution for the year 288,663 171,224 Sales/concluded bankruptcy/liquidation for the year - -49,272 Acquisition value, closing balance 496,124 207,461

Write-downs, opening balance -40,000 -45,985 Write-downs, remaining shares -94,000 -40,000 Sales/concluded bankruptcy/liquidation for the year - 45,985 Accumulated write-downs, closing balance -134,000 -40,000 Carrying amount, closing balance 362,124 167,461

CORPORATE NO. OF EQUITY VOTE CARRYING ID NO REG. OFFICE SHARES HOLDING, % HOLDING, % AMOUNT MODERBOLAG Aspiro Development AB i likvidation 556557-7169 Malmö 1,000 100 100 300 Aspiro Innovation AB 556598-3888 Malmö 1,000 100 100 3,251 Aspiro International SA R C B31743 Luxembourg 399 99.75 99.75 344 Aspiro AS 981 656 652 Oslo 100 100 100 255,597 Aspiro Cellus AB 556615-3606 Stockholm 1,000 100 100 3,689 Aspiro Inpoc AB 556598-2781 Stockholm 3,378,666 45.8 45.8 29,377 Cellus Masp Spain S.L B83042606 Madrid 501 100 100 - Aspiro UK Ltd 4160539 London 1,000 100 100 534 Masp AG i likvidation CH-280.3.004.563-4 Liestal 18,116 100 100 10,847 Melody Interactive Solutions AB 556558-1229 Stockholm 8,528,116 100 100 2,923 Boomi International OY 1853423-8 Lohja 8000 100 100 37,099 WapOneline Norway AS 884667232 Oslo 100 100 100 18,163 Total, parent company 362,124

SUBSIDIARIES Owned by Aspiro Innovation AB: Aspiro International,SA R C B31743 Luxembourg 1 0.25 0.25 1 Owned by Melody Interactive Solutions AB: Aspiro Mobile S.L B-82953290 Madrid 500 100 100 3,074 Owned by Aspiro Cellus AB Emode Mobile Services AB 556609-7944 Stockholm 1,000,000 100 100 360 Owned by Aspiro AS: Aspiro Denmark A/S 10 07 60 21 Copenhagen 328 100 100 15,368 Aspiro Inpoc AB 556598-2781 Stockholm 3,998,334 54.2 54.2 29,487 Aspiro Baltics AS 10768920 Tallin 40,020 100 100 3,263 Owned by Aspiro Baltics AS: Aspiro Latvia SIA 355874 Riga 2,000 100 100 - Aspiro Lithuania UAB 211762840 Vilnius 100 100 100 - Owned by Aspiro Denmark AS: SMS Selskapet af 2001 ApS 26 09 18 10 Copenhagen 1,350 100 100 19 Total, subsidiaries 51,572

64 Notes NOTE 8 OTHER STOCKHOLDINGS NOTE 10 TAX ON NET PROFIT

GROUP GROUP MODERBOLAG 2005 2 004 2005 2004 2005 2004 OTHER STOCKHOLDINGS Current tax -11,065 -139 - - Deferred tax on temporary difference 3,852 1,052 - - Acquisition values, opening balance 1,008 1,008 Total tax on net profi t -7,213 913 - - Increase via acquisition of subsidiaries 19 - Purchases - -Accumulated consolidated deductible defi cits amount to some SEK 600 m. The majority of this defi cit is in the parent company, and accordingly, there is no time- Divestiture - - limit for utilization of signifi cant amounts. A limited portion of subsidiaries’ defi cits Accumulated acquisition values, closing balance 1,027 1,008 have been met by lock-in effects due to mergers. Deferred tax assets attributable to parent company loss carry-forwards have not been accounted in the Balance Sheet. Write-downs, opening balance -1,000 -1,000 Divestiture - - GROUP Write-downs - - 2005 2004 Accumulated write-downs, closing balance -1,000 -1,000 RECONCILIATION OF EFFECTIVE TAX Carrying amount, closing balance 27 8 Profi t/loss before tax 25,262 -60,803 Tax at applicable tax rate for OTHER CORPORATE NO. OF EQUITY CARRYING parent company, 28% -7,073 17,025 STOCKHOLDINGS ID NO. REG. OFFICE SHARES HOLDING, % AMOUNT Tax effect of non-deductible expenses -2,767 -12,676 Sport Business Nordic AB 556653-1207 Stockhom 20,563 1,9% 8 Tax effect of non-taxable revenues 1 13 SMS Selskapet af 2001 Aps 26 09 18 10 Copenhagen 1,350 100% 19 Change in valuation of temporary differences 2,626 1,052 Total 27 Increase in loss carry-forwards without the corresponding capitalization of deferred tax - -4,501 SMS Selskapet af 2001 Aps is a dormant company owned by Aspiro Danmark AS. Accounted tax on net profi t -7,213 913 This company is not consolidated.

Deferred tax liabilities are accounted for temporary differences on the group’s ac- NOTE 9 PROFIT/LOSS FROM FINANCIAL INVESTMENTS quired intangible assets. The opening balance of the carrying amount is SEK 4.1 m. Deferred tax liabilities increased by SEK 10.5 m in the year coincident with GROUP MODERBOLAG business combinations. Deferred tax liabilities reduced by SEK 2.4 m coincident 2005 2004 2005 2004 with the depreciation of acquired intangible assets; the closing balance of the ac- counted deferred liability is SEK 12.2 m. PROFIT/LOSS FROM PARTICIPATIONS IN GROUP COMPANIES Deferred tax assets of SEK 3.4 (-) m comprise deferred tax revenues attributa- Profi t/loss from sales of shares in ble to intragroup sales of technology platforms of SEK 1.0 m, deferred tax revenues subsidiaries/bankruptcy/liquidation -18 - -18 487 coincident with mergers in Norway and Denmark of SEK 1.1 m, capitalized loss Write-downs of participations carry-forwards in the UK of SEK 0.9 m and acquired deductible goodwill on acqui- in subsidiaries - - -94,000 -40,375 red net assets in Finland of SEK 0.4 m. Total profi t/loss from participations in group companies -18 - -94,018 -39,888 NOTE 11 PREPAID EXPENSES AND ACCRUED INCOME

INTEREST INCOME AND SIMILAR PROFIT/LOSS ITEMS GROUP MODERBOLAG Other fi nancial revenues, subsidiaries - - 945 27 2005 2004 2005 2004 Exchange rate differences, net - - 553 -Prepaid rent 347 320 149 163 Other fi nancial revenues 1,010 2,164 224 763 Prepaid leasing charges 37 25 18 25 Total interest income and Accrued interest on income 109 7 19 7 similar profi t/loss items 1,010 2,164 1,722 790 Other accrued income 17,951 11,117 - 192 Other prepaid expenses 3,838 2,634 1,319 753 INTEREST EXPENSES AND SIMILAR PROFIT/LOSS ITEMS Total prepaid expenses Exchange rate differences, net -136 - - - and accrued income 22,282 14,103 1,505 1,140 Other fi nancial expenses -359 -2,829 -72 -412 Total interest expenses and similar profi t/loss items -495 -2,829 -72 -412 Total profi t/loss from fi nancial investments 497 -665 -92,368 -39,510

Notes 65 NOTE 12 PROVISIONS NOTE 15 PLEDGED ASSETS AND

GROUP STAFF RENT OTHER TOTAL CONTINGENT LIABILITIES Opening balance 1,709 486 - 2,195 GROUP PARENT COMPANY Amount utilized -1,376 -261 - -1,637 2005 2004 2005 2004 New provisions 85 - 4,670 4,755 Pledged assets Unutilized amount reversed - - - - Chattel mortgage - 500 - 3,500 Closing balance 418 225 4,670 5,313 Internal commitments 114 126 42 54 Total pledged assets 114 626 42 3,554 The group’s provisions relate to staff, unutilized premises and a supplementary purchase price for Boomi International OY. All provisions apart from SEK 164,000 Contingent liabilities None None None None regarding a doubtful rental payment are expected to result in payments within 12 months of year-end. NOTE 16 CASH FLOW STATEMENT PARENT COMPANY STAFF RENT OTHER TOTAL GROUP PARENT COMPANY Opening balance 1,454 323 - 1,777 2005 2004 2005 2004 Amount utilized -1,454 -261 - -1,715 ADJUSTMENT FOR ITEMS NOT INCLUDED IN CASH FLOW New provisions - - 4,670 4,670 Depreciation and write-downs 10,806 54,103 94,166 41,765 Unutilized amount reversed - - - - Provisions -1,794 -215 -1,715 1,657 Closing balance - 62 4,670 4,732 Profi t/loss from divestiture of fi xed assets - - - -487 Provisions for rent maturing in the fi rst quarter 2006 relate to unutilized premises. Other provisions relate to the estimated supplementary purchase price for the Deferred tax on temporary difference -3,852 -1,071 - - acquisition of Boomi International OY, expected to be paid in 2006. Other 3,079 -2,820 -233 344 Total adjustment for items not included in cash fl ow 8,239 49,997 92,218 43,279 NOTE 13 NON-CURRENT LIABILITIES

GROUP PARENT COMPANY GROUP 2005 2004 2005 2004 2005 2004 Liabilities to group companies - - 2,521 2,428 ACQUISITIONS OF SUBSIDIARIES Other non-current liabilities 1 1 - -Goodwill 214,347 130,338 Deferred tax liabilities 12,206 4,140 - -Other intangible fi xed assets 40,065 21,206 Other provisions 164 479 - -Tangible fi xed assets 2,225 770 Total non-current liabilities 12,371 4,620 2,521 2,428 Financial fi xed assets 911 161 Current receivables 58,937 36,768 The group’s other liabilities relate to a previous stock option plan within Melody Liquid funds 43,675 13,448 Interactive Solutions AB. Repayment has not been possible because the option- Non-current liabilities - -5,680 holders are not accessible. The parent company’s long-term liabilities to subsidiaries have no predetermi- Provisions, including deferred tax -10,473 -5,213 ned maturity. Current liabilities -61,199 -30,225 Purchase price 288,488 161,434 Purchase price paid -41,625 -74,331 NOTE 14 ACCRUED EXPENSES Liquid funds in acquired companies 43,675 13,448 AND DEFERRED INCOME Effect on consolidated liquid funds 2,050 -60,883 GROUP PARENT COMPANY 2005 2004 2005 2004 Signifi cant Transactions not Implying Payments The acquisitions of Emode and Cellus in 2004 were partly funded through non-cash Accrued salary 10,571 1,790 2,837 823 issues of SEK 84,722,000. Accrued social security contributions 3,396 1,228 1,861 1,105 The acquisitions of Schibsted Mobile and Boomi International OY in 2005 were partly funded through non-cash issues of SEK 242,495,000. Other accrued expenses and deferred income 34,300 10,634 11,002 1,707 GROUP PARENT COMPANY Deferred income 205 95 100 95 2005 2004 2005 2004 Total accrued expenses and deferred income 48,472 13,747 15,800 3,730 LIQUID FUNDS Cash and bank balances 89,407 36,957 16,627 20,354 Total liquid funds 89,407 36,957 16,627 20,354

The above items have been classifi ed as liquid funds because they have insig- nifi cant risk of value fl uctuations, can be readily converted to cash and have a maximum maturity of three months from acquisition date.

66 Notes NOTE 17 BUSINESS COMBINATIONS NOTE 18 SHARE CAPITAL AND DIVIDENDS The group acquired Schibsted Mobile (Inpoc) and Boomi International OY (Boomi) in the year. Inpoc was consolidated from 1 March onwards and Boomi from 1 October Number of shares onwards. In both cases, 100% of the shares were acquired. The purchase price for Number of outstanding shares, opening balance 108,961,958 Inpoc was 77,610,162 Aspiro shares at a price of SEK 2.94 per share. Payments in the form of various fees amounted to SEK 5 m. Thus the total purchase price was SEK 233 m. Specifi cation of change The purchase price for Boomi comprised 2,965,995 Aspiro shares at a price Private placement, acquisition of Schibsted Mobile 77,610,162 of SEK 4.83 per share and a SEK 38 m cash consideration, including estimated Private placement, acquisition of Boomi 2,965,995 supplementary purchase price. Other acquisition expenses amounted to SEK 3 m. Number of outstanding shares, closing balance 189,538,115 Thus the total purchase price was SEK 55 m.

The acquisitions have the following effect on consolidated assets and liabilities: Aspiro has only one share class, with all shares having equal voting rights. As of 31 December 2005, the quotient value per share was SEK 1.76. No treasury shares CARRYING AMOUNTS FAIR FAIR were repurchased or sold. BEFORE VALUE, VALUE, ACQUISITION ADJUSTMENT GROUP Dividends The Board of Directors has decided to propose to the Meeting that no dividends are Tangible fi xed assets 2,225 2,225 paid for the fi nancial year 2005. Intangible fi xed assets 2,661 37,404 40,065 Financial fi xed assets 498 413 911 NOTE 19 RELATED PARTIES Current receivables 58,937 - 58,937 Liquid funds 43,675 - 43,675 The parent company has close relations with its subsidiaries. Purchases from and Non-current liabilities - - - sales to subsidiaries are stated in Note 1. Transactions between group companies are conducted at cost plus a certain Deferred tax - -10,473 -10,473 margin. As of 31 December 2005, the parent company had SEK 37.6 m in receiva- Current liabilities -61,199 - -61,199 bles from group companies and SEK 62.0 m of liabilities to group companies. Identifi ed assets and liabilities, net 46,797 27,344 74,141 Transactions with the main owner, Schibsted ASA and its subsidiaries are exclusively on market terms. Consolidated goodwill 214,347 Acquisition value 288,488 Cash purchase price paid* 41,625 NOTE 20 EARNINGS PER SHARE Payment as shares 242,495 2005 2004 Liquid funds in acquired companies -43,675 EARNINGS PER SHARE BEFORE DILUTION Net effect on liquid funds 2,050 Net profi t/loss 18,049 -59,888

The goodwill arising related mainly to synergy effects, primarily the coordination of Average number of outstanding shares (000) 169,994 67,658 sales, procurement and technology platforms. The acquisitions enabled Aspiro to Earnings per share before dilution 0,11 -0,89 achieve market leadership in each country. At the acquisition of Inpoc, trademarks and technology were identifi ed as separate intangible assets. At the acquisition of EARNINGS PER SHARE AFTER DILUTION Boomi, trademarks and advertising contracts were identifi ed as separate intangible Net profi t/loss 18,049 -59,888 assets. If the acquisition of Inpoc had occurred as of 1 January, consolidated net sales Average number of outstanding shares (000) 170,128 67,658 would have been some SEK 31 m higher and consolidated net profi t/loss some Earnings per share after dilution 0,11 -0,89 SEK 2.5 m higher. Because of the mergers and group restructuring in the year, Inpoc’s share of consolidated total sales and profi ts can no longer be accounted Earnings per share before dilution are based on the net profi t/loss attributable to separately. parent company’s stockholders and a weighted average number of outstanding Because Boomi did not exist in its current form before Aspiro’s acquisition, shares. no pro forma fi gures as if the acquisition had occurred as of 1 January can be Earnings per share after dilution are based on net profi t/loss attributable to produced. parent company’s stockholders and a weighted average number of outstanding Boomi contributes SEK 16.7 m to consolidated net sales. The profi t effect is shares with a supplement for the dilution effect of potential shares. For 2005, negligible. dilution only arises related to the warrants program held by the Chief Executive Offi cer. The average share price for 2005 was SEK 3.58. The exercise price is SEK *Excluding supplementary purchase price. 3.10. The staff stock options have an exercise price of SEK 3.77, and accordingly, no dilution effect arises.

NOTE 21 EVENTS AFTER YEAR-END

On 26 January, Aspiro completed the acquisition of Finnish mobile services provider Mobile Avenue, one of Finland’s largest mobile content services companies. The purchase price comprised a cash payment of some SEK 28 m. Mobile Avenue will be consolidated from 1 January 2006 onwards. The corpo- rate management expects this acquisition to contribute annualized sales of some SEK 28 m and EBITDA of some SEK 3 m.

Notes 67 NOTE 22 DISCLOSURES REGARDING THE ADOPTION OF IFRS

IFRS were adopted in the consolidated fi nancial statements from 1 January 2005, counting of business combinations has signifi cantly affected the group’s fi nancial as stated in the section on accounting principles. The accounting principles stated statements. have been applied when preparing the consolidated fi nancial statements for the The transition from previous accounting principles to IFRS is reviewed in the fi nancial year 2005 and for the comparative year 2004, as well as for the group’s following tables summarizing balance sheets and income statements. There are opening balance as of 1 January 2004. no signifi cant differences between the previous principles used for preparation and Compared to the Income Statement and Balance Sheet for 2004, the ac- IFRS regarding the cash fl ow statement.

IFRS Adjustment

CONSOLIDATED BALANCE SHEET 1 JAN. ’04 1 JAN. 2004 AMOUNTS IN SEK 000 31 DEC. 2003 IFRS 31 DEC. 2004 IFRS* 31 DEC. 2004 ASSETS Fixed assets Goodwill 31,322 31,322 126,224 -9,319 116,905 Other intangible fi xed assets 858 858 13 14,507 14,520 Tangible fi xed assets 787 787 1,264 1,264 Other stockholdings 8 58 8 8 Other long-term receivables 50 208 208 Total fi xed assets 33,025 33,025 127,717 132,905 Accounts receivable and other receivables 11,665 11,665 55,568 55,568 Liquid funds 20,779 20,779 36,957 36,957 Total current assets 32,444 32,444 92,525 92,525 Total assets 65,469 65,469 220,242 5,188 225,430

EQUITY AND LIABILITIES Equity attributable to parent company’s stockholders Share capital 66,258 66,258 191,773 191,773 Other contributed equity 106,985 106,985 138,774 351 139,125 Reserves - - -1,080 -1,080 Retained earnings including net profi t/loss -121,381 -121,381 -158,504 634 -157,870 Total 51,862 51,862 170,963 985 171,948 Minority interest 24 24 8 8 Total equity 51,886 51,886 170,971 985 171,956

Non-current liabilities Other liabilities 1 1 1 1 Deferred tax liabilities 78 4,062 4,140 Other provisions 435 435 479 479 Total non-current liabilities 436 436 558 4,062 4,620

Current liabilities Accounts payable and liabilities 11,514 11,514 46,535 141 46,676 Current tax liabilities - - 462 462 Other provisions 1,633 1,633 1,716 1,716 Total current liabilities 13,147 13,147 48,713 141 48,854 Total liabilities 13,583 13,583 49,271 4,203 53,474 Total equity and liabilities 65,469 65,469 220,242 5,188 225,430

A revised acquisition analysis of Cellus has resulted in intangible assets, separate from goodwill, being accounted. Deferred tax liabilities have been calculated using a 28% tax rate. Goodwill amortization in the second half-year has been reversed.

68 Notes NOTE 22 DISCLOSURES REGARDING THE ADOPTION OF IFRS

IFRS Adjustments

CONSOLIDATED INCOME STATEMENT JAN-DEC 2004 AMOUNTS IN SEK 000 JAN-DEC 2004 IFRS 3 IFRS Net sales 129,525 129,525 Other operating revenues 850 850 Total 130,375 130,375 Capitalized development costs 757 757 Services and goods for resale -22,738 -22,738 Other external expenses -79,721 -79,721 Personnel expenses -33,593 -33,593 Depreciation and write-downs of tangible fi xed assets -844 -844 Depreciation and write-downs of intangible fi xed assets* -53,173 3,740 -3,826 -53,259 Other operating expenses -1,115 -1,115 Total -190,427 -190,513 Operating profi t/loss -60,052 -60,138 Financial income/expenses -665 -665 Profi t/loss before tax -60,717 -60,803 Tax -158 1,071 913 Net profi t/loss -60,875 -59,890

Earnings per share before dilution (SEK) -0.90 -0.89 Earnings per share after dilution (SEK) -0.90 -0.89

* Previously accounted depreciation and goodwill write-downs in Q1 and Q2 have been accounted as goodwill write-downs. The previously accounted goodwill amortization accounted in the second half-year 2004 (3,740) has been reversed.

To the best of their knowledge, the Board of Directors and Chief Executive Offi cer offer their assurances:

- that the Annual Report has been prepared in accordance with generally accepted accounting principles for listed companies; - that the information submitted is consistent with actual circumstances; - that no material omissions have been made that could affect the impression of the company created by the Annual Report.

Erik Mitteregger Chairman

Bjørn Gundersen

Ulf Hubendick

Johan Lenander Chief Executive Offi cer

Christian Ruth

Gunnar Strömblad

Malmö, Sweden, 13 April 2006

Notes 69 Audit Report

To the Annual General Meeting of Aspiro AB (publ) Corporate ID no. 556519-9998

I have audited the annual accounts, the consolidated fi nancial state- signifi cant decisions, actions taken and circumstances of the company ments, the accounting records and the administration of the Board in order to be able to determine the liability, if any, to the company of any of Directors and the Chief Executive Offi cer of Aspiro AB (publ) for the Board member or the Chief Executive Offi cer. I also examined whether fi nancial year 2005. Responsibility for the accounts, administration and any Board member or the Chief Executive Offi cer has, in any other way, for the Swedish Annual Accounts Act being observed when the annual acted in contravention of the Companies Act, the Annual Accounts Act or accounts are being prepared, and IFRS as endorsed by the EU, and the Swedish Annual Accounts Act being observed when the consolidated fi - the Articles of Association. I believe that my audit provides a reasonable nancial statements are being prepared, rests with the Board of Directors foundation to make the following statements. and the Chief Executive Offi cer. My responsibility is to express an opinion The annual accounts have been prepared in accordance with the on the annual accounts, the consolidated fi nancial statements and admi- Annual Accounts Act and, thereby, give a true and fair view of the nistration based on my audit. company’s profi t and position in accordance with generally accepted I conducted my audit in accordance with generally accepted auditing accounting principles in Sweden. The consolidated fi nancial statements principles in Sweden. These standards require that I plan and perform have been prepared in accordance with IFRS as endorsed by the EU, the audit to obtain a high, but not absolute, level of assurance that the and the Swedish Annual Accounts Act, and thus offer a true and fair view annual accounts and the consolidated fi nancial statements are free of of the group’s profi t and position. The Directors’ Report is consistent material misstatement. An audit includes examining, on a test basis, evi- with other parts of the Annual accounts and the consolidated fi nancial dence supporting the amounts and disclosures in the accounts. An audit statements. also includes assessing the accounting principles and their application I recommend to the Annual General Meeting that the Income State- by the Board of Directors and the Chief Executive Offi cer, an assessment ment and Balance Sheet of the parent company and group be adopted, of the signifi cant estimates of the Board of Directors and Chief Executive that the defi cit of the parent company be dealt with in accordance with Offi cer when preparing the annual accounts and consolidated fi nancial the proposal in the Directors’ Report and that the members of the Board statements as well as evaluating the overall presentation of information of Directors and the Chief Executive Offi cer be discharged from liability in the annual accounts and the consolidated fi nancial statements. As for the fi nancial year. a basis for my opinion concerning discharge from liability, I examined

Ingvar Ganestam Authorized Public Accountant

Malmö, Sweden, 18 April 2006

70 Audit Report Glossary

MUSIC IMAGE AND FILM Original Music Film clips Original music are AAC-formatted music fi les directly down- Aspiro’s offerings include pay an array of video clips including loadable to mobile phones via wap. exciting effects and comedy situations. 3G enables longer clips to be downloaded faster, and eventually, TV episodes and full- Ringtones length fi lms will be downloadable. Ringtones are available in several formats: monophonic, polyphonic and superpolyphonic, as well as Funtones (novelty Background images sounds), Realtones (30-second original music clips), Name- Images that can be used as display backgrounds, or sent as tones (sing the user’s name when the phone rings) and Pal- greetings by mms. These images have various categories like tones (sing the caller’s name). Ringtones are compatible with celebrities, cartoon fi gures, animals and messages. most of the market’s mobile phone models. Animations Ringbacktones Moving images that can be used as mobile phone display back- Ringbacktones enable the user to select what callers listen to grounds, or mms attachments. before they answer. Ringbacktones are available in Realtone and Funtone formats. INFORMATION SERVICES Searching SMS tones Text-based directory inquiries Tones suitable for alerts for incoming text messages. Speed trap warnings Wake-up tones Text subscription service on the location of police speed- Tones suitable for use with mobile phone alarm clock func- checks. tions. Results service GAMES Text information on sports scores or rally lap times, for Premium games example. Premium games are games of generally higher quality, creating a more enjoyable gaming experience. They are often based on Share price information PC and console titles, or games created with links to recognized Text-based real-time share price information. brands like Trivial Pursuit or Fifa 2006. COMMUNITY SERVICES Standard Java games Aspiro’s ChatUnited service enables consumers to chat using Aspiro offers an array of standard quality games, normally their mobile phones and PCs. Souldate and Datinggame are priced lower than their higher-end counterparts. Classics like mobile dating services. chess and various types of Patience are popular, although there are also sport, adventure, racing, strategy and action games.

Multi-player games Aspiro already offers some multi-player games enabling several players to challenge each other and compete, each using their own phones. Aspiro also has proprietary titles like Lifestylers and Dating Game, enabling more users to role play with each other.

Glossary 71 72 ANNUAL GENERAL MEETING 2006 ADDRESSES

Time and Location Sweden Luxembourg Aspiro’s AGM (Annual General Meeting) 2006 will be held at 4:30 p.m. on Head Offi ce Aspiro International S.A. Thursday, 11 May 2006 at Östermalmsgatan 87, Stockholm, Sweden. Aspiro AB (publ) 13, Place d’Armes Gråbrödersgatan 2 L-1136 Luxembourg Who Can Participate? SE-211 21 Malmö Tel: +352 2647 8391 To participate and be entitled to vote, stockholders must: Tel: +46 40 630 03 00 Fax: +352 4661 6120 • Be included in the share register maintained by VPC (the Swedish Fax: +46 40 57 97 71 Central Securities Depository & Clearing Organization); • Notify the company. Spain Aspiro AB Östermalmsgatan 87 D Cellus Masp Spain S.L How Do You Get on the Share Register? SE-114 59 Stockholm c/ Atocha 20, 2Iqz Shares can be recorded in the share register maintained by VPC in the Tel: +46 8 441 19 00 28012 Madrid, Spain shareholder’s own name or their nominee’s. Stockholders with nominee- Fax: +46 8 441 19 10 Tel: +34 913 692 432 registered holdings must request temporary re-registration of their shares Fax: +34 913 692 432 in their own name to be entitled to participate at the AGM. This re-regist- ration must be complete by Friday, 5 May 2006. Please note that this Norway Estonia procedure also applies to stockholders that utilize bank custody accounts Aspiro AS and those that trade on the Internet. Øvre Slottsgate 25 Aspiro Baltics AS P.O. Box 8710 Youngstorget Maakri 23A How Do You Notify the Company? N-0028 Oslo 10145 Tallinn, Estonia The company must receive notifi cation of participation by 4 p.m. on Tel: +47 452 86 900 Tel: +372 6662350 Friday, 5 May 2006. Notifi cation is possible directly on Aspiro’s Website Fax: +47 22 37 36 59 Fax: +372 6662351 www.aspiro.com, by mail to Aspiro AB, “Bolagsstämma”, Östermalmsga- tan 87 D, SE-114 59 Stockholm, Sweden, by fax on +46 (0)8 441 19 10 Mobile Avenue Estonia Oü Finland or e-mail [email protected]. Müürivahe 41 Notifi cation should state stockholders’ names, personal or corporate Boomi International Oy 10140 Tallinn, Estonia identity numbers, address and phone numbers, number of shares and Laurinkatu 57 B Tel: +372 56987943 the number of representatives (maximum two) the stockholder wishes FIN-08100 Lohja to bring to the AGM. If participation is through power of attorney, Aspiro Tel: +358 10 80 118 Latvia must have received this power of attorney before the AGM. Fax: +358 19 318 283 Aspiro Latvia SIA Mobile Avenue Finland Oy 13. Janvara Street 33 FINANCIAL INFORMATION IN 2006 P.O.Box 294, Bulevardi 13 A LV-1050, Riga, Latvia FIN-00121 Helsinki Tel: +371 7226177 Aspiro will publish the following fi nancial information for 2006: Tel: +358 9 7511 5000 Fax: +371 7226176 Fax: +358 9 7511 5050 Interim Report January - March 2006 11 May Lithuania Interim Report January - June 2006 17 August Interim Report January - September 2006 2 November Denmark Aspiro Lithuania UAB Year-end Report 2006 8 February 2007 Aspiro Denmark A/S J. Jasinskio St. 16 Annual Report 2006 April 2007 Nannasgade 28 01112 Vilnius, Lithuania DK-2200 København N Tel: +370 52526669 Investor Relations Tel: +45 7020 8987 Fax: +370 52526669 Updated information on Aspiro is uploaded at www.aspiro.com. You can Fax: +45 7020 8985 also contact the company by e-mail at [email protected], tel US (agent) +46 (0)8 441 19 00, fax + 46 (0)8 441 19 10 or by mail: UK Mobile Fun Solutions Inc. 1547 Palos Verdes 325 Aspiro AB (publ) Aspiro UK Ltd Walnut Creek, CA 94597, US Investor Relations 306 Harbour Yard Tel: +1 925 949 0851 Östermalmsgatan 87 D Chelsea Harbour Fax: +1 925 949 0852 SE-114 59 Stockholm, Sweden London SW10 0XD, UK Tel: +44 207 351 5965 Parties interested in subscribing for information by e-mail from the com- Fax: +44 207 351 5944 pany will receive fi nancial reports direct. This Annual Report will be mailed to those stockholders who request it.

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.

Production: Aspiro/hkdesign • Photo: Janne Danielsson, Warner • Print: Intellecta Strålins • Translation: Turner & Turner, www.turner.se

Annual General Meeting, Financial Information and Addresses 73