Annual Report 2005 Active 24 Will Gain the Position As the Preferred Choice in the Hosting Market Contents

ANNUAL REPORT 2005 ACTIVE 24 WILL GAIN THE POSITION AS THE PREFERRED CHOICE IN THE HOSTING MARKET CONTENTS THE CONCISE ACTIVE24 2-7 Key Figures and Highlights 2005 2 Rising To The Challenge, Letter from CEO Jaap Zuiderveld 3 Flexible Business Model 4 Mission and Vision 4 Experience and Presence in Europe 5 The Management 6 Business Strategy 7 OUR PRODUCTS 8-13 5 Pillars of Delivery 8–9 A Refocused Portfolio 10 Product Delivery 11 ActiveHome/Active Business 12 What’s In It For You? 13 ACTIVE24 IN DEPTH 14-17 About The Market 14–15 Financial Discipline, CFO Thomas Christensen 16–17 ANNUAL REPORT 18-59 Board of Directors Report 2004 18–20 Presentation of the Board of Directors 19 Group Accounts Profit & Loss 21 Balance 22–23 Cash Flow 24 Equity 25 Accounting Principles 26–28 Notes 29–44 Parent Accounts Profit & Loss 45 Balance 46–47 Cash Flow 48 Equity 49 Accounting Principles 50 Notes 51–59 SHAREHOLDER INFORMATION AND CORPORATE GOVERNANCE 60-64 Shareholder Policy 60 Shareholders 61 Corporate Governance Principles 62–64 Glossary Backcover WE SOLVE COMPLEXITY AND OFFER COMPLETENESS KEY FIGURES NOK million Q1 05 Q2 05 Q3 05 Q4 05 2004 2005 (All figures in accordance with IFRS) Revenue 54.5 55.4 51.5 53.3 211.9 214.7 EBITDA 7.9 8.7 2.3 0.7 5.6 19.5 Operating Result 3.4 4.2 -5.5 -16.0 -10.3 -14.0 Net Earnings 4.1 1.5 -7.1 -12.6 -9.0 -14.1 * Rounding differences may appear Highlights 2005 ACQUISITION OF CP ONLINE, CY- CONSOLIDATION OF DATA BERNETIX, INTERNET CLUB LTD, CENTERS TO NORWAY AND LOOPIA AND MILLENICUM AMSTERDAM OEM DEAL SIGNED WITH FINDEXA LAUNCH OF MICROSOFT HOSTED EXCHANGE CUSTOMER AND DOMAIN GROWTH DUE TO PRICE REDUCTION REPLACEMENT OF 5 PROPRI- ETARY BACK OFFICE SYSTEMS WITH ONE INDUSTRY STANDARD SYSTEM �� ACTIVE 24 ACTIVE �� ANNUAL REPORT 2005 | REPORT ANNUAL �� 2 RISING TO THE CHALLENGE CEO KEYNOTE Active 24 had a dynamic and challenging year in 2005. Whilst we experienced strong growth in customers and number of domains, we also achieved lower than expected revenue. Now why is that? The picture is somewhat complex but over- We are confident that our repackaged products will become all there was a real price pressure in the market that became the shining stars of the industry in 2006. more and more apparent during the spring of 2005. ACQUISITIONS & HIGHLIGHTS After thoroughly analysing various approaches to the chal- During 2005 we acquired the fastest growing hosting com- lenge, our first response was to drop prices to increase our pany in Sweden, Loopia. This gave us 35 000 new domains, attractiveness in the marketplace. This was one of the factors primarily in the consumer and small office segment. Further, that reduced our top line in Q3 and Q4. However, its nega- we strengthened our position as the Czech web hosting mar- tive impact was offset by a positive net growth in customers ket leader with the acquisitions of CP Online and Internet and domains that will benefit us in the longer perspective. Club Ltd. We also expanded geographically to Poland through Approximately half of our growth in 2005 was organic and the acquisition of Cybernetix. The Polish market is growing the rest through acquired companies. fast and we experienced a compound annual growth rate in excess of 70 %. THE WAY FORWARD Our second response to the competitive challenge will be In 2005 we added MS hosted exchange to our offering. It delivered to the market in Q2 2006. It is a major restructuring is a high-end mail solution providing cost-effective mobility. of our go-to-market strategy based on the understanding We also signed up Findexa (Yellow pages directory) as our that, with underlying growth back on track, our focus should first major OEM partner. Its successful launch gave us a new be long-term revenue generation. Given that both average sales channel. revenue per user and customer longevity is being challenged by market price pressure, the solution involves realigning our During 2005 we replaced our proprietary back office systems product delivery strategy. with a single industry standard system. This major task placed heavy strains on our organisation due to the sheer size of the A customer survey gave us clear-cut and encouraging feed- data involved. All the energy and efforts put into making this back. Firstly, it revealed that the requested delivery was within project a success took away some of our ability to deliver on the limits of our ability to execute. Secondly, customers´ our sales ambitions. Despite this, the longer term benefits wishes pushed us to improve all aspects of our business, are already evident in our increased organisational efficiency. from customer service and a simplified product administra- We also consolidated our data centers and centralised our tion to a clearer differentiation of our offering to the business customer services to better position our operations for im- and consumer segments. proved scalability and standardisation. In this respect, 2006 will give us some clear indications of Overall, the market outlook for 2006 seems good and we the viability of our new strategy. We believe that the hosting will focus on delivering on our promises to the market and ACTIVE 24 ACTIVE industry is still undergoing considerable change and that the our shareholders. larger pure hosting companies will deliver a product completeness and simplicity that the smaller or less focused players ANNUAL REPORT 2005 | REPORT ANNUAL will not be able to match. In our response we have laboured hard to create the product quality that our customers want. Jaap Zuiderveld Chief Executive Officer 3 FLEXIBLE BUSINESS MODEL Active 24 has a flexible business model based on proactive development of the product and service portfolio to leverage upsales opportunities represented by customers’ product migration. The core in the business model is centralised management, The business model is attractive because revenue comes product development, strengthened with local sales and mar- entirely from subscription-based customer contracts, three- ket knowledge. Economy of scale is an essential key success quarters of which are recurring. Customers are provided prod- factor for retaining high margins on the products sold. Ac- ucts which are renewed by default annually unless cancelled. tive 24 achieves this by automation of production and daily New contracts and renewed contracts are invoiced up front product delivery to its customers. for the 12 month product cycle and revenues are booked over the contract period. Total recognised revenue consists of both The Company’s main assets are the human capital and recurring and new sales. New sales stem from both intake of the highly developed back-office infrastructure. The long new customer contracts and up-sales to existing customers. standing experience and skills of the employees makes The recurring revenue relates to renewed contracts and with Active 24 continuously a better competitor in the web-host- adequate churn prevention measures it provides a good vis- ing market. ibility in revenue forecasting. MISSION: VISION: Active 24 will provide complete Gain the position as the preferred and cost-efficient hosting services, choice in the hosting market. combining highly relevant, standardised products with exceptional user-friendliness to consumer and small and medium-sized European businesses. Company History The company was founded in 1998 as Active ISP in Oslo, Norway. Since then it has grown steadily and been a consoli- dator in the market by acquiring Carambole (2001) and Loopia (2005) in Sweden, Ladot (2002) in the Netherlands, Virtual Internet (2003) in the UK, Globe Internet (2004), Internet Club (2005) and CP Online (2005) in the Czech Republic and Cybernetix (2005) in Poland. The company and all subsidiaries were re-branded as Active 24 in 2004 ACTIVE 24 ACTIVE and were listed on the Oslo Stock Exchange on 12 of November the same year under the ticker ‘Active’. At year end 2005 Active 24 had 250 000 customers and 335 000 domains. It aims to have 400 000 registered ANNUAL REPORT 2005 | REPORT ANNUAL domains by year end 2006. 4 EXPERIENCE & PRESENCE IN EUROPE Active 24 is a leading network-independent, pan-European provider of Internet hosting services in Europe. Active 24 provides services throughout fifteen operational markets. Active 24 is a leading network-independent, pan-European provider of Internet hosting services in Europe and provides services throughout fifteen operational markets. Active 24 has its headquarters in Oslo, Norway. Sales and marketing is performed from regional offices in the UK, Sweden, the Netherlands, Poland and the Czech Republic. These offices also serve the virtual presence in Denmark, Finland, Switzerland, France, Germany, Belgium, Slovakia, Spain and Austria. All markets have local language support provided by multilingual staff in Sweden and Holland. Today the company has 235 employees. Active 24 provides small and medium sized companies and consumers with complete and cost efficient Internet solutions that combine relevant, scalable and standardised products and user-friendliness. Active 24 gives customers the tools they need to focus on their core business and succeed in the marketplace. Active 24 is an ICANN accredited registrar for generic top level domains (gTLD’s) and a registrar for around 30 country code top-level domains. Active 24 continually in- troduces new products and services based on customer demand, in line with the ambition: Powerful hosting – Surprisingly easy. ACTIVE 24 ACTIVE ANNUAL REPORT 2005 | REPORT ANNUAL Local country operations Sales representations Re-sellers 5 THE MANAGEMENT JAAP ZUIDERVELD JAN SVERRE LARSEN Chief Executive Officer > Born 1964 Chief Operating Officer > Born 1960 Zuiderveld has an Economics de- Larsen holds an Engineering gree from Erasmus University, degree from NTNU, Trondheim Rotterdam (1989) and began his (1983) and has more than 25 career in sales and marketing in years experience from the IT Rank Xerox.

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