Eniro Annual Report 2006

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Eniro Annual Report 2006

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Eniro 2006 1

CEO´s comments 2

Strategic focus 4

Market overview 10

Market Sweden 12

Market Norway 15

Market Finland 18

Market Denmark 20

Market Poland 21

Market Germany 22

Eniro´s revenue models 23

Employees 24

Environment 26

Risk management 28

The share 30

Corporate Governance Report 2006 32

Board of Directors and Auditors 41

Group Management 43

Board of Directors´ report 44

Consolidated income statement 48

Consolidated balance sheet 49

Changes in consolidated equity 50

Consolidated cash flow statement 50

Parent Company income statement 51

Parent Company balance sheet 52

Changes in equity, Parent Company 53

Parent Company cash flow statement 53

Accounting principles 54

Notes 61

Certification by the Board of Directors and the President 71

Audit report 71

Multi-year Summary and Definitions 72

Quarterly Summary 74

Annual General Meeting and addresses 76

Dates for financial information 77

Contents

This annual report has been prepared in Swedish and translated into English.

In the event of any discrepancies between the Swedish and the translation, the former shall have precedence.

The formal financial report that was prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU is presented on pages 44 to 75. Only the formal financial report was reviewed by the Company’s auditors.

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9% 4%

Sweden

Eniro Gula Sidorna

Gula Sidorna – på väg Din Del

Emfas

41% 48%

eniro.se emfas.com dindel.se passagen.se bilweb.se 118118office.com dittpris.se leta.se bubblare.se

Eniro 118 118 Eniro 118 119 Eniro 118 118 sms

mobil.eniro.se Share of Group

operating revenues EBITDA Internet

services Directory

assistance Mobile services

Gule Sider Telefonkatalogen Ditt Distrikt Proff

32% 39%

gulesidor.no kvasir.no sol.no proff.no dinpris.no

Gule Sider 1880 wap.sol.no wap.gulesider.no wap.telefonkatalogen.no wap.tlf.no

GuleSider 1880 sms

Norway

Eniro Telephone Directories Kaupunki-Info

Yritystele

eniro.fi yritystele.fi suomi24.fi

Eniro 0100100 118

wap.eniro.fi 16123 search service

Finland

Mostrup Vejviser Eniro local directories

7% 2%

eniro.dk sol.dk

Eniro sms 1928 wap.eniro.dk

Denmark

Panorama Firm Panorama Lokalna Panorama Budownictwa Panorama Do Samochodu

6% 4%

pf.pl Panorama Firm

118 118

Poland

5% 3%

wlw.com wlw.de

Germany

Markets Directories

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mobil.eniro.se

wap.sol.no wap.gulesider.no wap.telefonkatalogen.no wap.tlf.no

GuleSider 1880 sms

wap.eniro.fi 16123 search service

Eniro sms 1928 wap.eniro.dk

Operating revenues by market,

SEK M Operating revenues by channel,

SEK M Operating revenues, SEK M and

EBITDA margin, %

Key data

SEK M 2006

proforma¹⁾

2005 2005 2004

Operating revenues 6,697 6,628 4,827 4,745

EBITDA excluding cost related to aquisition 2,290 2,093 1,234 1,324

Cost related to aquisition –113

Operating income before depreciation (EBITDA) 2,290 1,980 1,234 1,324

Earnings before tax 1,336 1,017 1,131

Net income per share, SEK 5.82 5.84 4.62

Cash earnings per share, SEK 8.13 6.88 5.20

Dividend per share, SEK 4.40²⁾ 2.20 2.20

Return on equity, % 22 42 35

Interest-bearing net debt 8,872 10,564 2,832

Interest-bearing net debt/EBITDA, times 3.9 5.0 8.6 2.1

Average number of full-time employees 4,801 4,754 4,752

1) Eniro pro forma including Findexa 2005.

2) Board of Director’s proposal.

2006 2005

2004

� Offline

� Online � Voice EBITDA margin

2,704 1,250 791

28 26

34

2,621 1,422 784

3,852 1,938 907

Germany Poland Denmark Finland Norway Sweden

� 2005

� 2006

2,772 2,779 2,121 293

642 637 442 396 395 375 325 347

118-tjänster/nummerupplysning (voice) Internet och mibniltjänster (online Tryckta kataloger (offline)

2004 2005 2006

� Internet and mobil services (online)

� Print (offline)

� 118 services/directory assistance (voice) 3,852

2,621

2,704 1,938

1,422

1,250 907

784

791

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During 2006, the foundation was established for accelerated online growth. Eniro became the Nordic market leader in search through inte- gration of Findexa in Norway. Operational EBITDA margins improved in all markets. The Board of Directors’ proposal to the Annual General Meet- ing is a dividend of SEK 4.40 per share. The proposed dividend cor- responds to a total of SEK 797 M or 76 percent of net income for the year.

Eniro 2006 – the leading Nordic search company

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2 E N I R O A N N U A L R E P O R T 2 0 0 6

C E O ’ S C O M M E N T S

Focus on revenue growth

During 2006, Eniro’s strong growth in Internet continued, with increases in both Internet revenues and usage ﬁ gures in all markets. Although the revenues for printed directories remains under pressure, we made con- siderable progress towards stabilization of the revenues in most markets. The Norwegian directory market remains a challenge. For 118 services, we succeeded in maintaining and strengthening our positions.

Through continued tight cost controls and leveraging of syner- gies, margins were strengthened during the year. Strong market positions and favorable cash ﬂ ows also mean that we will be able to continue to provide high returns for our shareholders.

Eniro’s business developed well during 2006.

Despite tough competition in all markets, Internet revenues continued to show strong growth. All Nordic markets reported double- digit growth fi gures, and the share of Internet revenues, as a proportion of total revenues were 29 percent. Traffi c to Eniro sites in the various countries also continued to increase, in total by more than 20 percent.

At the same time as the revenue shares from Internet advertising and 118 services are increasing, the revenue share for Eniro’s printed directories is declining. In fi ve years, our dependency on print revenues has declined from 80 percent to 57 percent.

However, we believe that printed directories will continue to fi ll a great need for both users and advertisers for a long time. Our chal- lenge lies in increasing usability as far as possible while enhancing the offer to adver- tisers and stimulating demand for printed directories.

With the increased use of mobile phones and demand for a higher level of service, we anticipate stable development of 118 ser- vices. The introduction of new concepts and services contribute to increasing revenues from this type of services.

Eniro’s position as the leading search company in the Nordic region was strength- ened. In 2006, 1.4 billion searches were per- formed in Eniro’s Internet networks. During the year, we worked with integrating the dur- ing 2005 acquired company Findexa with our previous Norwegian operations. The two units Findexa AS and Eniro AS are now com- pletely integrated, and employees have moved to joint offi ces. Findexa’s name has been changed to Eniro AS. The promised cost synergies of SEK 50 M during 2006 were realized, and we intend to achieve an addi- tional SEK 50 M in 2007.

The work to increase cost awareness within the Group has continued to produce results. Operating income before deprecia- tion (EBITDA) for the year increased by 9 per- cent to SEK 2,290 M (2,093), including a cap- ital gain of SEK 43 M. Our market outlook was an improvement by 5–7 percent. Exclud-

ing the capital gain the outcome was in the higher end of the range and the EBITDA-mar- gin was 34 percent. Net income per share amounted to SEK 5.82, and the dividend proposal to the Annual General Meeting means that 76 percent of net income will be returned to the shareholders.

Our ambition

Eniro’s ambition is to achieve revenue growth of 3–5 percent per year with a sustained EBITDA margin exceeding 30 percent over the medium-long term. The balance sheet will be continuously optimized with consider- ation taken to fi nancial fl exibility and stability.

The goal is a an effi cient capital structure with a net debt in relation to EBITDA of up to 5 times. Eniro’s business generates high cash fl ows, while investment requirements are lim- ited, thus permitting a high return to share- holders. Eniro’s dividend policy is a dividend corresponding to 75 percent of net income.

Our challenge going forward is primarily growth. During 2006, revenues increased organically by 1 percent. To achieve the goal of 3–5 percent growth, we must accelerate the growth rate in Internet revenues, increase revenues from 118 services and reduce rev- enue losses for printed directories. We must retain cost controls, but also become better at realizing Group synergies. Above all, we must better leverage the benefi ts of our Nor- dic Internet position.

Accelerated Internet revenue growth Norway, Finland, Denmark and Poland are experiencing high growth in Internet reve- nues. The challenge lies in increasing growth in Germany and Sweden. To meet user requirements and to increase Internet traffi c, new versions of eniro.se, eniro.fi , eniro.dk, gulesider.no and kvasir.no were launched with a new design and improved functional- ity. In addition to development of new func- tions and improved functionality for our Inter- net services, signifi cant effort is being devot- ed to new customer offerings based on transaction-based payment. These solutions enable Eniro to be an active participant in the

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E N I R O 3 A N N U A L R E P O R T 2 0 0 6

fastest growing market segment, which is the market for sponsored links. As of 2006, Eniro also has spe- cialized Internet sales representatives in all markets.

Stable or somewhat higher revenues from 118 services

The ambition is that revenues from 118 services will be retained or increase somewhat in Sweden and Norway and grow in Finland. Eniro will continue to develop its service concept and offer a broader ser- vice than previously that includes driving directions and web searches.

Reduced revenue decline from directories Revenues from printed directories declined by 5 percent during 2006. The ambition is to reduce and preferably stabilize the revenue decline. Denmark and Poland already report stable print revenues.

Sweden and Finland are making satisfactory prog- ress, while Norway is the market in which Eniro cur- rently faces the greatest challenge. The keys to success are continuous product development that stimulates usage while increasing the effect of advertising, our ability to lead and develop the sales force based on Eniro’s sales concept, and our abil- ity to demonstrate the value of advertising for our advertisers.

Realizing Group synergies

Synergies within the Eniro Group are currently cre- ated primarily within purchasing, product develop- ment and IT through common platforms that can be used by several of the Nordic countries. We believe that there are opportunities for realizing further syn- ergies in these areas.

Future

Over the past two years, we have succeeded in accelerating Internet revenue growth, decreasing the decline in print revenues and stabilize revenues from 118 services in most markets while improving our profi tability. This gives us strength and a strong belief in our ability to succeed in achieving even higher improvements. We have an organization of skilled and loyal employees to whom I wish to extend my warmest thanks. I am convinced that we can continue to increase shareholder value over the coming years through continued focus on organic growth with high profi tability.

Tomas Franzén VD och koncernchef Stockholm, February 2007

Tomas Franzén President and CEO

C E O ’ S C O M M E N T S

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The leading Nordic search company – today and tomorrow

S T R A T E G I C F O C U S

Cornerstones in Eniro’s business

Eniro offers search facilities via printed directories, Internet services, 118 services and mobile services.

Through these channels, Eniro makes information available to users wherever and whenever they want it while advertisers are exposed to users in one or more search channels based on their particular needs.

High usage of the services creates value for advertisers, and relevant information from many advertisers increases value for the users.

Eniro’s channels are distinguished by buyers who take the initiative to look for sell- ers and suppliers. Through active users close to a transaction, Eniro’s search servic- es become effective marketing channels for advertisers.

Eniro’s services are to a large extent advertising-financed and free for users.

However, 118 services are user-fi nanced.

Vision

“Eniro is the leading search company in the Nordic media market.”

Eniro as the leading search company shall act as the leading search company and be perceived as the leading search company.

Business concept

“For users searching for a business, person, place, product or service, Eniro provides rel- evant, local, high-quality information – easy to ﬁ nd and evaluate, accessible wherever the need arises.

For advertisers aiming at customers close to the transaction, Eniro provides effective sales-generating advertising solutions – easy to manage and measure, customized to advertiser needs in multiple channels.”

Through this focus in its offering to users and advertisers, Eniro will continue to be successful and retain and enhance its posi- tion as the industry leader.

Mission

“With a commitment to innovative search services, Eniro is the helper that makes everyone a ﬁ nder.”

This is the fundamental idea behind Eniro as a company and the mission that ultimately drives Eniro’s employees forward.

Financial targets

The Eniro Group has as its overall objective to achieve a number of fi nancial targets that when balanced, create both favorable returns for shareholders as well as fi nancial stability for the business.

The financial targets that have been established by the Eniro Board of Directors for the medium-long term, meaning 3–5 years, are presented and commented in the table on the following page.

Via printed directories, 118 ser- vices, the Internet and mobile phones, Eniro offers the best search opportunities for buyers and sellers who want to ﬁ nd each other easily. Strong brands and high usage of Eniro’s prod- ucts and services make it valu- able for advertisers to be present in Eniro’s search channels.

directories

118 services Internet

mobil services ENIRO’S CHANNELS

USER

reaches out via all search channels ADVERTISER chooses search channel based on needs and s

ituatio n

The advertiser gains exposure via a number of search channels – and meets the user on the user’s terms.

758 titles of printed directories published 1.4 billion Internet searches in the Eniro network

Approximately 60 million inquiries to the 118 services in Sweden

D U R I N G 2 0 0 6

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S T R A T E G I S K I N R I K T N I N G

Targets Background

Outcome

2006 (2005) Comments

Annual revenue growth of 3–5

percent in the mid-term.

Corresponds to a growth level on par with industry leaders.

1.0%

¹⁾

(1.7%) Through strong Internet growth, despite some pressure on print revenues, Eniro has improved revenue levels slightly in 2006. The goal of 3-5 percent growth will be reached through accelerated growth in online revenues, improved revenues from voice and reduced revenue decline in offl ine.

Sustained EBITDA margin of above 30 percent and a strong cash fl ow.

Target set against weighted assess- ment of Eniro’s respective market positions, changes in the markets, growth rate and cost development.

34% (26%) Through cost savings in the Group, Eniro has improved the margin during 2006. To be able to achieve the target in future, Eniro must increase revenue growth, maintain cost controls and exploit Group synergies. Eniro’s need for capital expenditures is limited to approximately 2 percent of total revenues. Therefore the cash conversion rate from EBITDA is high.

An effi cient capital structure with a net debt in relation to EBITDA of up to 5 times.

The level was set based on effective use of Eniro’s capital while maintaining a sound level of operational risk.

3.9 (5.0 Pro forma incl.

Findexa 2005)

The acquisition of Findexa on December 5, 2005 increased Eniro’s debt. At January 1, 2006, net debt was a multiple of 8.6 times EBITDA, which based on pro forma accounts for the new Eniro Group including Findexa and excluding non-recurring costs corresponds to a multiple of 5.0 times EBITDA. The level at December 31, 2006 was 3.9.

Dividend to shareholders corresponding to 75 percent of net income.

The goal is based on Eniro’s estimated capital expenditure requirements and the target for net debt in relation to EBITDA.

76% (43%) Due to the acquisition of Findexa, the dividend for 2005 was below the target. The proposed dividend in 2007 for the 2006 fi scal year meets the target. The outcome for 2006 of 76 percent of net income is based on the board of director’s proposal of a dividend of SEK 4.40 per share, which is to be decided by the AGM on March 30, 2007.

Revenue growth, SEK M EBITDA margin,% Cash fl ow from current

operations, SEK M

0 1000 2000 3000 4000 5000 6000 7000

2006 2005 2004

6,697

4,827

4,745 28

26 34

2006 2005

2004 0

300 600 900 200 500

2006 2005 2004

1,016 1,007

1,436

Net debt in relation to EBITDA, times

0 2 4 6 8 10

2006 2005 2004

2.1 8.6

3.9

The strong improvement in revenues 2006 is mainly due to the acquisition of Findexa December 5, 2005. Revenues increased organically by 1 percent in 2006.

The acquisition of Findexa positively affected the 2006 EBITDA margin. During 2006, the operational EBITDA margin improved in all our business units.

January 1, 2006, net debt in relation to EBITDA was 5 times EBITDA (pro forma including Find- exa and excluding costs related to the aquisition). At the end of 2006, net debt in relation to EBITDA was 3.9 times.

The need for capital expenditures is limited to approximately 2 percent of total revenues.

Therefore the cash conversion rate from EBITDA is high.

1) Compared with pro forma incl. Findexa 2005.

High usage of Eniro’s services creates value for advertisers, and relevant information from many advertisers increases value for the users.

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S T R A T E G I C F O C U S

Strategic success factors

Information and content in the search services, a strong brand and sales force are some of the factors that are prerequisites for Eniro’s ability to meet ﬁ nancial targets and to succeed in meet- ing the business challenges ahead.

Product development

The development of new products and ser- vices – through own product development and in alliances with various business part- ners – is a central component in Eniro’s strategy to strengthen and enhance its posi- tion as the leading Nordic search company.

High usage is the primary factor that drives the value of the search channel for advertis- ers and thus advertising revenues.

To be able to remain leading, Eniro works constantly to deepen its knowledge of user patterns, user needs and usability, in part through surveys, test panels and beta test- ing. Directories, Internet and mobile servic- es are constantly being enhanced to make them easier to use. Based on an under- standing of how new technology can be lev- eraged and how different search channels can be combined to meet changes in user patterns, Eniro evaluates its service offering and adapts the product portfolio.

Product development is focused on ser- vices for users who are looking for commer- cial information, meaning services that are close to the actual transaction between buyer and seller, as well as services in which the value of the customer’s advertising becomes clear and measurable.

The common platform for Internet servic- es comprising eniro.se, eniro.fi and eniro.dk, which were launched in January 2007, will result in faster and more effi cient product development. The platform is an example of how synergies can be exploited within the Group.

The offering for advertisers is also being enhanced. Previously, Eniro primarily charged for advertisements based on inser- tions in directories or on the Internet. Today, Eniro also offers customers paid search advertising in which the advertiser pays per click and also has access to a network of media partners through which Eniro’s adver- tisers can advertise with sponsored links in editorial environments.

Sales force and value-based sales Leading the sales force in an effective man-

ner is of critical importance for Eniro’s suc- cess. To increase effi ciency and to offer customers more specialized expertise, part of the sales force in several of Eniro’s mar- kets focus on a single brand and/or a search service. There are specialized Inter- net sales forces in all of Eniro’s markets.

The sales force is managed and devel- oped based on Eniro’s sales concept, which provides structure and focus for sales efforts. The concept, which includes plan- ning, conducting meetings, joint visits, sales training and key data for follow-ups, is ori- ented towards result-promoting behavior and focused on developing both the individ- ual and the team.

A focus area for Eniro and the sales force is value-based sales in which the value of advertising with Eniro is clarifi ed and the gap between perceived and actual value is nar- rowed. Tools to support the sales force in this work include call measurements, web statistics and surveys.

The sales force also performs an impor- tant function in collecting and quality-assur- ing information for the search channels.

Local and high-quality content

Information and content in the search chan- nels that is perceived as relevant, local and of high quality is an important competitive factor for Eniro being able to offer the best search assistance in every individual geo- graphic market. A very important part of achieving this is that the established sales force with customer contacts ensures the quality and depth of information.

To an increasing extent, users are also contributing content, not only to Eniro’s por- tal services, but also through updating per- sonal information, submitting opinions of various suppliers and creating classifi ed ads, for example.

Strong brand

Eniro wants to be the self-evident choice when users seek companies, persons, places, products or services. In addition to quality offerings, this demands a strong

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S T R A T E G I S K I N R I K T N I N G

brand. Particularly for Internet search ser- vices where the step from need to action is short, it is important to be the user’s fi rst choice.

The Eniro brand, which was established in 2000, started to expand during 2003 to become an umbrella brand under which the various products and services were gath- ered. Eniro has developed into a strong brand in the Nordic region. In addition to Eniro, there are strong local product brands, such as Gule Sider® in Norway and Pan- orama Firm® in Poland.

During 2006, branding work was focused on emphasizing the different channels and loading the brand with emotional values, such that Eniro is helpful and always knows where information is available.

Multi-channel strategy

How people want to seek and fi nd informa- tion varies over time, between individuals and with the same person, depending on the situation. Eniro has therefore chosen a strat-

egy that entails offering all relevant and local content in several ways via different chan- nels and search services. There is thus always a product or service that meets user needs and provides excellent opportunities for advertisers to customize their exposure.

Geographic focus

The search industry and directories in par- ticular are characterized by a strong correla- tion between market position and profi tabil- ity. Accordingly, Eniro focuses on the Nordic countries and Poland, which are markets in which Eniro is the leading player or among the leaders. Eniro’s German operations in

“Wer liefert Was?” are to be considered a fi nancial investment that Eniro will retain and develop as long as they are deemed to cre- ate added value for shareholders. Between 2003 and 2006, Eniro divested operations with weaker market positions in Ukraine, Estonia, Latvia, Lithuania, Russia and Belar- us. During 2005, Eniro acquired Findexa, the leading search company in Norway.

Eniro

¹⁾

December 2005

December 2006

Sweden 93 94

Norway 47 46

Norway – Gule Sider 95

²⁾

97 Finland 69 82

Denmark 46

³⁾

40

³⁾

1) Brand recognition includes both spontaneous and aided recognition Source: Research International (Sifo).

2) Measurement conducted in January 2006.

3) Measurement conducted in November.

B R A N D R E C O G N I T I O N A focus area for Eniro and the sales force is value-based sales in which the value of advertising with

Eniro is clarifi ed and the gap between perceived and actual value is narrowed.

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S T R A T E G I C F O C U S

Challenges and results 2006

Based on market and competi- tive conditions, ﬁ nancial targets and strategic choices, Eniro’s management every autumn identiﬁ es the most important challenges for the coming year.

During 2006, the focus was on ﬁ ve core challenges for Eniro’s management and its employees.

These challenges and the results are described in this section.

1. Revenue development for printed directories in Sweden and Norway

Challenge

In both Sweden and Norway, organic reve- nues from printed directories have declined in recent years. After new initiatives were taken, the revenue decline in Sweden was limited to –2 percent during 2005. At the beginning of 2006, the target was organically unchanged print revenues, compared with 2005, which later was revised to a decline of 2 percent, organically. For Norway, the 2006 target was a print revenue decline of about 10 percent, organically.

Actions

In Sweden, directory renewal has been in progress since 2004. The 2007 edition of Gula Sidorna featured a new layout, improved index and search pages and a new Health &

Medical Care guide to make it even easier for users to fi nd information. During 2006, a pocket version, Gula Sidorna – på väg, was distributed for the fi rst time in the Stockholm region. The sales force was divided into one unit for printed directories and one for Inter- net in order to increase sales focus on respec- tive offering. More fl exible payment forms were introduced for customers, and mea- sures were implemented to be able to better demonstrate the value of the advertising.

In Norway, the 2007 editions of Gule Sider will include four themed guides for Restaurants, Weddings, Health & Beauty and 24-hour Service. Mobile telephone numbers are also included in the white pages. The local directory Ditt Distrikt has been improved with respect to both con- tents and usability. Demonstrating the value of advertising remained a priority for the sales force during 2006. More customized presentation materials for each sales chan- nel have increased effi ciency, as did a cen- tralization of previously fragmented function within telephone sales. Pricing and the offer- ing were simplifi ed.

Results

Revenues from printed directories in Swe- den declined organically by 2 percent, which was in line with the revised outlook for 2006, but not in line with the initial target.

In Norway, revenues from printed direc- tories declined organically by 7 percent dur- ing 2006, which was a somewhat better result than expected. However, the chal- lenge remains during 2007 since the Norwe- gian revenue decline has not been halted.

Actual offl ine revenues and organic revenue decline, SEK M

0 500 1000 1500

2006 2005

1,598

Sweden Norway

1,443 1,522 –2%

–7%

1,344

2. Address the changed market conditions in Finland

Challenge

Due to changes in the market situation in which both Eniro and Fonecta published directly competing regional directories, the revenues from printed directories in Helsinki and Tampere declined by 27 percent for Eniro in 2005. Lower revenues plus in creased costs for establishing Eniro’s own sales organization and a national directory offer- ing meant that the EBITDA margin for the Finnish operations was 8 percent in 2005.

The challenge for 2006 was to regain lost revenues, increase effi ciency in the organi- zation and accelerate the Internet and 118 services to achieve an EBITDA margin greater than 10 percent.

Actions

The focus during the year was on increasing the organization’s effi ciency and reducing costs. During 2006, Eniro Finland changed

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S T R A T E G I C F O C U S

the organization at the management level and in sales and back-offi ce functions. The sales force’s effi ciency increased in part through improved campaign planning, as well as clearer management by objectives and follow-ups. At the same time, prepara- tions were made for future product develop- ment and increased brand awareness.

Results

The competition in printed directories remains intense in Helsinki and Tampere, but revenues in the rest of Finland are increasing. Internet revenues showed a strong increase, and directory assistance services captured market share. Eniro increased revenues in Finland somewhat to SEK 642 (637). The EBITDA margin for 2006 was 13 percent (5), an improvement from the target.

3. Enchance the Internet offering

Challenge

Usage and advertising revenues on the Internet are growing at the same time as competition is increasing. Eniro’s challenge for 2006 was to increase traffic and to enhance its offering and packaging of ser- vices for advertisers. One goal was also to move users to a greater extend closer to the actual transaction.

Actions

During the fi rst quarter of 2006, Eniro decid- ed to invest an additional SEK 50 M each year in Internet product development. The single largest result was the new eniro.se, eniro.fi and eniro.dk sites that were launched in January 2007. Previously during the year, a number of functions were developed to move users closer to a purchase, such as more advanced search functions for prod- ucts and services, click-to-call functions, user reviews and a price-comparison ser- vice. Statistical tools were developed to

support sales personnel in a dialogue on the value of advertising in Eniro’s networks. For sponsored links, new pricing models were introduced and developed.

Results

Eniro’s product development was positively received by customers and users. The Group’s online revenues increased organi- cally by 14 percent during the year, and the number of searches in Eniro’s networks increased to 1.4 billion (1.1).

Unique browsers in the entire Eniro Internet network

4. Cost levels

Challenge

The cost level was too high.

Actions

During 2004, a cost-savings program was implemented to reduce Eniro’s total cost levels calculated in fi xed prices and speci- fi ed as net savings compared with the 2003 cost level. After adjustment of the program for the increased investment pace for Inter- net-related product development, the inten- tion was that SEK 300 M would be saved, with SEK 100 M realized in 2005, an addi- tional SEK 100 M in 2006 and yet another SEK 100 M in 2007.

The cost-savings during 2006 were among other things realized within purchas- ing and IT.

Results

For 2006, the cost savings were in line with the target of SEK 200 M accumulated sav- ings. The cost-saving target for 2007 is retained.

5. Integration of Findexa

Challenge

To integrate Findexa into the Eniro Group.

The goal was that the merger would gener- ate cost synergies of SEK 50 M during 2006 and SEK 100 M during 2007, through the integration of the two Norwegian operations.

In addition, work with group synergy issues in such areas as product development, mar- keting and IT was to be initiated.

Actions

The work with the practical integration of the Norwegian operations was conducted, as was work to realize the cost synergies aris- ing from the merger. The employees have relocated to joint premises, and Findexa’s name was changed to Eniro as of October 1, 2006. The number of brands was reduced, and Eniro elected to focus on the market- leading brands Gule Sider

^®

and Kvasir

^®

.

A project aiming at identifying and plan- ning the realization of group synergies was completed.

Results

The two Norwegian operations are now fully integrated. The target for cost synergies of SEK 50 M for 2006 was achieved and the target of a total of SEK 100 M for 2007 is retained.

During 2007, realization of the identifi ed group synergies within purchasing, IT and product development will be in focus.

0 2,000,000 4,000,000 6,000,000 8,000,000

2006 2005

2004

Number of unique browsers, weekly average by month.

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1 0 E N I R O A N N U A L R E P O R T 2 0 0 6

M A R K E T O V E R V I E W

Search market in transition

The Nordic search market com- prises printed directories, Inter- net services, mobile services and directory assistance (118) ser- vices. Changes in user patterns and technical solutions that cre- ate more sophisticated advertis- ing opportunities place demands on continuous development of products, services and business models at the same time as the industry has undergone a dis- tinct consolidation in recent years.

The advertising market for Internet and mo- bile services is growing rapidly. Entry barri- ers for starting a service in the newer chan- nels are lower than in the directory market, but the importance of functionality, strong brands, high-quality content and a large sales force nonetheless pose a challenge for new players in successfully launching and capitalizing on new products and services.

The Nordic directory market is mature, and the usage of printed directories remains at a high level. The market is dominated by a few players, and entry barriers are high.

Market trends

Europe accounts for approximately 30 per- cent of the global search market, according to estimates by The Kelsey Group (US). The Nordic countries, combined with the US, still have the highest proportion of search-relat- ed advertising in relation to total advertising and the highest proportion of investments per capita in search-related media. Histori- cally, the Nordic markets were characterized by a single company with a strong position, often spin-offs from telecom operators. Fol- lowing European Directories’ (EDSA) acqui- sition of TDC Förlag and Fonecta, the Nor- dic market has been transformed and is di- vided between two leading companies:

Eniro and EDSA.

The Nordic search market is estimated by The Kelsey Group to show average annu- al growth of 4.5 percent between 2005 and 2010, with growth primarily in Internet and mobile services.

Most traditional search companies in Eu- rope, meaning Eniro’s industry colleagues, have expanded their portfolios from primar- ily distributing printed Yellow Page directo- ries to Internet solutions, directory assis- tance and mobile services.

Strong growth in Internet advertising Internet usage is increasing, and the Internet is becoming an increasingly self-evident tool among both professional and private users and for business, as well as for pleasure. In Sweden and Norway, for example, approxi-

mately half of all households are estimated to have access to broadband in their homes.

This enables scope for increasingly sophis- ticated and bandwidth-demanding services.

Much of the development of Internet servic- es in recent years has been driven by tech- nology, and the Web 2.0 concept has be- come established. Web 2.0 services allow users to communicate and interact more via the Internet and to share information in new ways.

Given these conditions, search compa- nies are developing new advertising con- cepts to persuade advertisers to advertise and encourage users to click on the adver- tisements. One example of market growth is that IRM, Institutet för Reklam och Media- statistik (Institute for Advertising and Media Statistics) estimates that the Swedish mar- ket for Internet advertising amounted to SEK 2.6 billion in 2006 and is expected to grow by 30 percent in 2007.

If Web 2.0 is the most prominent technol- ogy trend, then paid search marketing is the fastest growing advertising trend in many markets. In Sweden, IRM estimated that paid search marketing increased by about 260 percent in 2006 and will grow by 70 per- cent in 2007. Paid search advertising means that advertisers buy advertising space linked to a given keyword on a search engine or In- ternet directory.

Directories retain their strong position Printed directories have a strong position in Europe, with high revenues and high usage.

To meet changes in user patterns and in- creasing Internet usage, Nordic search com- panies have increased their investments in product development for both printed direc- tories and Internet and mobile services.

New competitive situation

Many search companies have high profi t margins and stable cash fl ows, making them attractive take-over targets. In recent years, the industry has been consolidated to a great extent. Above all, venture capital com- panies have been active in this consolida- Market data used in the annual report has

been compiled using the following sources:

IRM, WARC, IAB, TNS Adex, Dansk Oplagskontrol, ZAW, BVDW, CR Media Consulting and Eniro estimates. The ﬁ gures for 2005 were adjusted in consideration of changed market data from the various institutes and changes in sources.

Advertising in traditional media includes daily press, magazines, tv, radio, cinema and outdoor adevertising.

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E N I R O 1 1 A N N U A L R E P O R T 2 0 0 6

M A R K N A D S Ö V E R S I K T

tion, but there have also been industrial ac- quisitions by media companies, for exam- ple, that wish to expand their offering by combining news, maps and company searches. Some of the most recent transac- tions were Yell in the UK, which acquired TPI, and the venture capital company KKR, which acquired a majority shareholding in France’s Pages Jaunes.

In recent years, the traditional search companies have faced competition from new players in that the Internet has become a general tool for searching for information.

In the various local markets, traditional search companies face competition from global search engines, as well as smaller, local Internet-based search companies. The global Internet search companies have con- tinued to establish operations in smaller local markets and have launched search services customized for the local market.

Classifi ed ad, price comparison and auction sites have become increasingly popular for fi nding and evaluating products. Facing this challenge, the traditional search companies have supplemented their original business

models and matched their competitors with attractive services and advertising solutions for Internet and mobile services.

The search market faces major challeng- es in terms of users and products, as well as structurally. The changes in the form of in- dustry consolidation, product development of both existing and new products and new strategic alliances that have occurred in re- cent years will most probably also continue over the coming years.

Unlisted companies Primary markets Owner Primary market positions Revenues 2005 (approx.)

European Directories Denmark, Austria, Finland, Sweden and Netherlands

Macquarie Capital Alliance Group, Caisse de Depot et Placement du Qubéc and Nikko Principal Investment Ltd

No. 1 in Denmark and Austria SEK 5.6 billion

World Directories Group Netherlands, Belgium, Ireland and Portugal

Apax Partners Worldwide LLP and Cinven Limited

No. 1 in Belgium, Ireland and Portugal

SEK 4.5 billion

Listed companies

Eniro Sweden, Norway, Finland,

Denmark and Poland

Listed in Stockholm No. 1 in Sweden, Norway and Poland

SEK 6.6 billion pro forma incl. Findexa

Pages Jaunes France and Spain Listed in Paris No. 1 in France SEK 9.8 billion

SEAT Italy, Germany and UK Listed in Milan No. 1 in Italy SEK 13.2 billion

Yell UK, USA and Spain Listed in London No. 1 in UK and Spain SEK 22.0 billion

Some of Eniro’s industry colleagues with operations in Europe. Out of these, Eniro competes directly only with European Directories in the Finnish, Danish and Swedish markets.

Eniro’s industry colleagues

The Nordic countries, combined with the US, have the highest proportion of search-related advertising in relation to total advertising.

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M A R K E T

• Eniro.se: Aerial photos, price comparison service and a click-to-call solution are some of the functions added during the year. A new version of eniro.se with a new design and improved functionality was launched.

• The Eniro Gula Sidorna

^®

directory was enhanced with an improved layout and headings. As well as guides to restaurants, weddings and body & soul, as well as improved public service information.

• The Stockholm edition of Gula Sidorna was published in a pocket format with a selection of 280 headings. The pocket directory was distributed in 250,000 copies.

• In December, Din Del launched local Internet portals for Sweden’s municipali- ties.

• Telenor selected Eniro 118 118 as the supplier of its Swedish directory assistance service for a two-year period.

• Eniro 118 118 received awards as

“Europe’s best personal search service”

and “Best search site for mobile users”

from 118tracker.

• mobil.eniro.se was appointed the best mobile service in Sweden by Internetworld.

Key data , SEK M 2006 2005 2004

Revenues 2,772 2,779 2,786

Of which Offl ine 1,522 1,598 1,645

Of which Online 653 581 522

Of which Voice 597 600 619

EBITDA 1,143 1,116 1,097

EBITDA-margin

total, % 41 40 39

EBITDA-margin Sweden exkl.

Voice, % 46 46 44

EBITDA-marginal

Sverige Voice, % 23 20 22

No. of full-time

employees 1,459 1,522 1,507

T H E Y E A R I N B R I E F

Sweden

During 2006, online revenues in Sweden increased organically by 13 percent, while revenues from 118 services declined by 1 per- cent and ofﬂ ine revenues de- creased organically by 2 percent.

Operating income before depre- ciation (EBITDA) increased as a result of good cost control.

Market

Sweden is Eniro’s largest market. In Swe- den, Eniro has a strong position in all market segments: The market share in printed di- rectories amounted to about 78 percent (82), and in the strongly growing market for Inter- net advertising, Eniro’s market share was 26 percent (33). Eniro is the market leader in di- rectory assistance services in Sweden and retained its market share during 2006.

Offering

Eniro is the only company in the Swedish market with a complete market offering comprising printed directories, Internet ser- vices, 118 and mobile services. Eniro is the market leader in all of these areas.

With a combined basic insertion in Gula Sidorna

^®

, the advertiser’s information is in- cluded not only in the printed directory, but also in Eniro’s Internet and mobile services and 118 services.

Both in the printed directory as well as on the Internet, advertisers are offered a com- plete range of advertisment.

Competitors

Competitors are found in the individual mar- ket segments. Eniro has a leading position in regional and local directories. Eniro’s largest competitor is EDSA Förlag, which published the local directory Lokaldelen and the busi- ness directory Stortele.

Competition in Internet services comes from a number of players. These include global and local search engines, such as Google and Sesam, and web sites for infor-

mation about private persons and business- es, such as Hitta, as well as shopping sites, such as Kelkoo, and classifi ed ad sites, such as Blocket.

Within directory assistance services, Eniro’s main competitors are Ahhaaa and Tele2. There are also a number of smaller players within personal number assistance and SMS-based number assistance.

Customers

Eniro estimates that there are some 300,000 potential business customers in Sweden.

Eniro’s customer base is comprised of small and medium-size companies, as well as larg- er companies and organizations. During 2006, the number of invoiced business cus- tomers increased to 171,000, compared with 166,000 in the preceding year. The increase is primarily attributable to Din Del, but the number of customers for other products also increased. Of total customers, approximatel- ty 37,000 purchased advertisements in addi- tion to the basic insertion on the Internet, and approximately 82,000 customers pur- chased advertisements in addition to the basic insertion in the printed directory. Dur- ing 2006, development of tools to more clearly demonstrate the value of advertising for customers continued.

During 2006, about 56 percent of Swe- den’s population used one of Eniro’s 118 services one or more times during the year.

A total of nearly 60 million inquiries are han- dled each year.

Directories

The Gula Sidorna

^®

(Yellow Pages) directory is Eniro’s single largest product, with reve- nues corresponding to 29 percent of total revenues for printed products in the Group. It contains advertisements from companies, organizations, county councils and munici- palities and is produced for all households and businesses in 28 regions, with Stock- holm, Gothenburg and Malmö as the largest editions. The total circulation during 2006 amounted to about 5.9 million copies.

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M A R K E T S W E D E N

Number of unique web browsers weekly average by month During the year, Gula Sidorna had about

151,000 invoiced customers. The retention rate for Gula Sidorna during the year was 89 percent (89). A study by Research Interna- tional (Sifo) showed that 95 percent of all Swedes between the ages of 15 and 79 use the printed edition of Gula Sidorna.

During the spring of 2006, a pocket ver- sion of Gula Sidorna was produced in Stock- holm called Gula Sidorna – På Väg (Yellow Pages – On the Move) with a selection of slightly more than 280 headings. It was dis- tributed at gas stations and in shopping cen- ters. The 2007 edition of Gula Sidorna – På Väg will be published in Stockholm, Gothen- burg and Malmö, and the number of head- ings will be increased to 350.

Din Del

^®

is Sweden’s most frequently used local directory with information about local companies in a town or city district, ac- cording to Research International (Sifo). In 2006, it was published for 181 local retail areas with a total circulation of about 4.5 million copies. The number of invoiced Din Del customers was just under 70,000. Of Sweden’s population between the ages of 15 and 79, 75 percent use Din Del at least once a year, according to Research Interna- tional (Sifo).

As of December 2006, Din Del is also available on the Internet with local portals in all municipalities.

Emfas

^®

is one of the leading business di- rectories with detailed information about some 200,000 companies and their prod- ucts. Emfas is published in a printed edition of 130,000 copies and is also available on the Internet. In addition to basic information, the Internet service contains annual reports, information about credit worthiness, fi nan- cial key data and information regarding pub- lic procurements.

Internet services

With some 2.5 million unique web browsers on average per week in December 2006 (2.5), Eniro’s Internet network is one of Swe- den’s largest in terms of usage. Eniro’s net- work comprises eniro.se, passagen.se, bil-

Sweden’s advertising market in 2006, SEK 22.1 billion (20.1)

Internet 12%

Directories 9%

Traditional media 79%

Eniro’s share of the Swedish directory advertising market in 2006

78%

Eniro’s share of the Swedish Internet advertising market in 2006

26%

eniro.se Eniro’s Internet services, total 0

500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

2006 2005

2004

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M A R K E T S W E D E N

Eniro offers customers call measuring. A unique telephone number is placed in the customer’s directory advertisement, making it easy to measure the number of calls that the advertisement generates. Here are the industry averages for advertisements under the heading Lawyers in Gula Sidorna:

Number of measured calls per month: 27.5 Proportion of calls resulting in purchase: 62%

¹⁾

Average order value: SEK 8,500

¹⁾

Revenue per month from the advertisement:

approximately SEK 145,000 Ad investment per month: SEK 4,900 Net revenue per month from advertisement:

SEK 140,100

k The customer gains about SEK 30 in sales revenue for each SEK 1 invested with Eniro.

1) Source: Research International (SIFO)

E F F E C T I V E A D V E R T I S E M E N T S

web.se, dindel.se and emfas.com. At the beginning of 2007, leta.se and bubblare.se were aquired.

Eniro.se is one of Sweden’s most fre- quently used web sites. On eniro.se, users can search in Gula Sidorna, fi nd private per- sons, obtain maps and driving directions and access the Internet’s most extensive search service. The site also contains a large number of other useful services, such as Buy & Sell, price comparison, news search- es, job searches and a popular link guide.

During 2006, eniro.se was expanded with aerial photos and functions for making it eas- ier for users to fi nd products and services. A new version of eniro.se with enhanced func- tionality and design was launched. Advertis- ers on eniro.se are also offered an opportuni- ty to advertise via sponsored links and ban- ner ads.

Dindel.se is an Internet service that ag- gregates 290 local portals with company in- formation plus local information that includes sports, events, news and weather. The con- tents are derived from the DinDel directory, as well as from several business partners.

Dindel.se was launched in November 2006.

Passagen.se is one of Sweden’s largest portals with content that is created based on user interests. Bilweb.se is a service for selling new and used cars on the Internet.

Eniro’s advertisers are offered an opportuni- ty via passagen.se and bilweb.se for expo- sure for large and attractive user groups.

118 services

118 118

^®

is Sweden’s most frequently used directory assistance service. In addition to telephone numbers and addresses, opera- tors can assist users with e-mail addresses, opening hours, web searches on eniro.se, for example, and driving directions. Opera- tors can guide users to the nearest ATM or fl orist, for example, and can send maps and driving directions to their mobile phones.

The customer can also be connected at no extra charge and receive the requested in- formation in a sms message.

118 118 is the only service in Sweden that can assist users with names and addresses outside Sweden. The service is directly con- nected to 20 different databases with more than 500 million numbers and can provide information from nearly the entire world. The service can also be reached directly via 118 119

^®

or from outside Sweden via +46 649 118 118.

With 118 118 SMS, users can obtain as- sistance with telephone numbers, address- es and names via SMS. Users can also fi nd the nearest pizzeria or pharmacy, for exam- ple. The result can be presented with a map, driving directions and opening hours. The service is accessed by sending an SMS to 118 118.

Mobile services

Eniro’s search services are aggregated on mobil.eniro.se. Via their mobile phones, users can search for information on compa- nies in Gula Sidorna, fi nd information about private persons and obtain maps and driv- ing directions. Usage of mobil.eniro.se has increased strongly in recent years, and in July 2006 the start page was visited more than 300,000 times.

Priorities for 2007

Through continuous product development, investments in value-based sales and be- coming more skilled in showing the custom- er value of exposure in Eniro’s search chan- nels, Eniro’s ambition is that the offl ine reve- nues should decline in line with 2006, while accelerating revenues from Internet and mo- bile services.

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M A R K E T

Norway

The integration of Findexa and Eniro is now complete, and the cost synergies are being realized according to plan. In 2006, Nor- way showed strong online growth with an organic increase in reve- nues of 23 percent

¹⁾

. Ofﬂ ine reve- nues declined organically by 7 percent, while revenues from di- rectory assistance services de- clined organically by 3 percent.

Market

Norway is Eniro’s second largest market. Fol- lowing the acquisition of Findexa in Decem- ber 2005, Eniro has a very strong position in Norway. In the Internet advertising market, in which Eniro has been active since the acqui- sition of Scandinavia Online in 2001, Eniro has the most frequently used search services with gulesider.no and kvasir.no and a market share of 31 percent (34). The Norwegian In- ternet advertising market is the second larg- est in the Nordic region in terms of revenues.

The Norwegian directory assistance market was deregulated in 2002, and in the same year, Findexa took over the company that

provided the manual directory assistance service Telefonkatalogen 1880. With this ser- vice, which is now called Gule Sider 1880, Eniro is now number two in the market for di- rectory assistance.

Offering

Following the acquisition of Findexa, Eniro has a complete multi-channel offering in the Norwegian market with printed directories, Internet services, directory assistance and mobile services. Eniro is the only company in the Norwegian market that offers users information in all search channels.

With a combined basic insertion, the ad- vertiser’s information is presented both in the Gule Sider® directory and on the Inter- net service gulesider.no. In addition to the combined basic insertion, Eniro offers a va- riety of advertising opportunities in directo- ries and on the Internet. On the Internet ser- vices gulesider.no, kvasir.no and sol.no, ad- vertisers are offered exposure not only via information pages, but also via sponsored links and banner ads.

Competitors

Within regional and local directories and in business directories, Eniro has a market- leading position.

• Findexa and Eniro were integrated and the personnel moved to joint premises.

• Four new guides were introduced in the printed directory Gule Sider for weddings, restaurants and health, plus a special guide for 24-hour service.

• New versions of the Internet services gulesider.no and kvasir.no were launched.

• The portal SOL was augmented with increased media expertise through a partnership with Aller. The jointly owned company is consolidated in Eniro Norway as of January 1, 2007.

Key data, SEK M 2006 2005 2004

Revenues 2,121 293 179

Of which Offl ine 1,344 13 n/a

Of which Online 675 274 179

Of which Voice 102 6 n/a

EBITDA 925 –39 –15

EBITDA margin, % 44 –13 –8

No. of full-time

employees 1,069 1,156 218

T H E Y E A R I N B R I E F

M A R K E T

Norway

1) Compared with pro forma 2005 incl. Findexa.

Norway is Eniro’s second largest market and following the acquisition of Findexa, Eniro has a very strong position in Norway.

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M A R K E T N O R W A Y

The Norwegian Internet advertising market is very competitive. Competitors in Internet services include several global and local search engines, including Google and Sesam.

Within directory assistance services, the largest competitor is Opplysningen 1881.

Customers

Eniro estimates that there are some 220,000 potential business customers in Norway. The customer base consists of small and medi- um-size companies, as well as large compa- nies and organizations. During 2006, the total number of invoiced business custom- ers amounted to about 143,000.

Directories

Telefonkatalogen

^®

with an overview of all telephone subscribers is distributed to Nor- wegian households, companies and organi- zations together with Gule Sider.

Gule Sider

^®

, which is the leading region- al directory in Norway, contains information and advertisements from companies. It is published in 13 editions, of which the Oslo edition is the largest. During 2006, it was published in a total number of 2.7 million copies. Gule Sider accounts for the major share of Eniro’s revenues from printed direc- tories in Norway and has a market share of about 73 percent.

During 2006, Gule Sider had about 134,000 invoiced customers. The retention rate for Gule Sider during the year was 83 percent.

For the Oslo region, Eniro also publishes a pocket version of Gule Sider. The pocket directory is distributed via Statoil stations in the Oslo region and has a total circulation of 80,000 copies.

Ditt Distrikt

^®

is a local directory pub- lished in 73 editions with a total circulation of 1.9 million copies. Ditt Distrikt contains local information about companies and pri- vate persons, municipal information, cultur- al information and other useful information.

The directory is distributed to all house- holds, companies and organizations, as well

as to summer homes in each region. During 2006, the number of invoiced customers for Ditt Distrikt was about 34,000. For 2007, Ditt Distrikt has a new layout.

Proff

^®

is a business-oriented B2B direc- tory with information about 220,000 com- panies published in a total number of 70,000 copies. Proff, which was previously called BizKit, is also available via the Inter- net and on CD. Proff contains business-re- lated information targeted to professional users with additional content, such as fi - nancial information and presentation of board members.

Internet services

Eniro has one of the largest Internet net- works in Norway with more than 1.8 million unique web browsers on average per week in December 2006. Eniro’s network of Norwe- gian Internet services primarily includes the search services gulesider.no and kvasir.no and the portal sol.no.

Gulesider.no

^®

is one of Norway’s most frequently used Internet services. On gule- sider.no, users can search in Gule Sider, fi nd private persons and classifi ed ads, obtain maps, aerial photos and driving directions and perform web searches. There is also a wide range of other useful functions, such as a price comparison service.

During 2006, a new version of gulesider.no was launched with a new design and an im- proved map function that included the intro- duction of aerial photos. A tab for classifi ed ads was launched, and on the information pages, functionality was added to enable advertisers to be exposed via video.

Kvasir

^®

is one of the most visited Inter- net services in Norway. In addition to gener- al web searches, Kvasir has an extensive link guide. Via Kvasir Firmasök, users can search for companies, products and servic- es. There are also maps and driving direc- tions. Kvasir recently received a new look in October 2006. At the same time, functional- ity was introduced to support advertising via sponsored links.

Number of unique web browsers weekly average by month Norway’s advertising market in 2006,

SEK 19.1 billion (15.8)

Internet 11%

Directories 7%

Traditional media 82%

Eniro’s share of the Norwegian directory advertising market in 2006

97%

Eniro’s share of the Norwegian Internet advertising market in 2006

31%

0 400,000 800,000 1,200,000 1,600,000 2,000,000

2006 2005

2004 kvasir.no

Eniro’s Internet services, total gulesider.no

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SOL

^®

is one of Norway’s leading Internet portals with a broad offering that includes news, entertainment, chat and community services, as well as the Kvasir search ser- vice. The independent web site bilguiden.no, a marketplace for new and used cars, is linked to the portal. In December, Eniro and Norsk Aller AS reached an agreement to op- erate sol.no as of January 1, 2007 via a joint- ly owned company in which Eniro owns 50.1 percent.

Proff

^®

, the business-oriented B2B direc- tory, is also available via the Internet.

Directory assistance

Gule Sider 1880

^®

is a directory assistance service that provides telephone numbers and contact information for Norwegian tele- phone subscribers. Users are offered to be connected and can also receive the informa-

tion via SMS without charge. Gule Sider 1880 is distinguished as Norway’s most economical directory assistance service.

The service is also available via SMS.

Mobile services

Eniro has several mobile services in Nor- way. On wap.gulesider.no, wap.tele- fonkatalogen.no and wap.tlf.no, users can search for companies and private per- sons and obtain maps with their mobile phones. The mobile service wap.sol.no in- cludes news summaries.

Priorities for 2007

During 2007, Eniro Norway will focus on re- ducing the negative revenue trend within printed products, maintaining the strong growth in Internet with respect to both usage and revenues and realize synergies.

Ekenberg Restaurant in Oslo has an advertisement on Eniro Norway’s Internet service Gule Sider. These are the statistics for what their advertisement under the heading Restaurants generated during August 2006:

1,250 clicks on the information page, the map page or through to the restaurants own web site.

608 direct phone calls (via call metering) 50 calls via the Free Call function in the advertisement.

25 e-mail messages sent via the Send function in the advertisement.

G U L E S I D E R . N O D E L I V E R S C U S T O M E R S

In 2006, Norway showed strong online growth with an organic increase in revenues of 23 percent.

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