Annual Review & Accounts 2013

Annual Review & Accounts 2013

Contents 04 Chairman s Statement 06 CEO s Statement 11 CFO s Statement 16 Our Locations 18 Board of Directors 20 Financial Report Founded in 1997, Host Europe Group provides domain registration, mass hosting, customised managed hosting, cloud hosting and has a growing software-as-a-service offering to over 1.7 million customers. As the biggest domain registrar in the UK and largest virtualisation provider in Europe, Host Europe Group is the leading hosting provider for businesses seeking a high quality service combined with an excellent price / performance ratio. With its brands 123-reg, Heart Internet, Host Europe, domainfactory, Webfusion, Domainmonster, RedCoruna and Domainbox, the Group has a strong market presence in the UK, Germany, Austria, Switzerland and Spain. Host Europe Group is the largest privately owned hosting company in Europe. HOST EUROPE GROUP ANNUAL REVIEW 3

HOST EUROPE GROUP ANNUAL REVIEW Chairman s Statement I am delighted that in my first year as Chairman of Host Europe Group I can report a year of excellent progress. We have invested - and will continue to invest - in our people, processes, and customers to ensure that we can continue to offer the highest levels of service, and meet the needs of a fast changing and dynamic market. Important changes The past year has seen the Group go through a number of important changes including being acquired in August 2013 by Cinven from Montagu Private Equity. Host Europe Group s growth, strong earnings, and dynamic leadership team, made for a compelling investment. Thomas Vollrath, the then Chief Executive Officer, decided to step down from his position to pursue other business opportunities following the acquisition. He remains a significant investor in Host Europe Group. His dedication to the position and the Group was self-evident, and we would like to wish him well in his future endeavours. His role was subsequently filled by Patrick Pulvermüller, who, having worked with Host Europe Group for many years, knows the organisation intimately and is well placed to help drive the business forward. I joined the Board as Non-Executive Chairman in November 2013 and was immediately impressed by the Group s commitment to delivering best practice and quality assurance in all that we do. The European hosting market is currently undergoing an intense period of change and consolidation. Host Europe Group is playing a central role in this movement, very much to the benefit of our customers, who have access to a wider talent pool of committed individuals, greater expertise, and a large diverse product portfolio. Host Europe Group has an ambitious growth strategy. 2013 saw the Group undertake two major acquisitions that significantly enhanced our market offering, broadened our portfolio, and increased our customer base. The first of two acquisitions took place in October, when we added Telefónica Germany Online Services GmbH -a leading enterprise managed hosting provider and subsidiary of Telefónica Deutschland - to our Group portfolio. Its high-end hosting expertise complemented our product portfolio and business capabilities, making it a particularly attractive business proposition. Our current brand portfolio: 4 HOST EUROPE GROUP ANNUAL REVIEW

Later in the year, we acquired German hosting provider domainfactory, further enhancing Host Europe s presence and capabilities in the German mass hosting market. At the time it was acquired, domainfactory was managing 1.1 million domains and serving approximately 173,000 customers. As a result of the acquisition, we now have almost 400,00 German customers, and we are comfortably placed as the number 3 hosting provider in Germany. is The European hosting market is currently undergoing an intense period of change and consolidation. Host Europe Group playing a central role in this. Lord Birt Chairman Untapped potential Looking to the coming period, opportunities abound in the hosting space. Most SMEs do not have an online presence, and/or still manage their IT infrastructure themselves. As the economy increasingly moves online, the services we provide are critical to business success. We have an outstanding team, and our commitment to the Group s development and growth is recognised by all that work for and with us. We are confident that our strategy has created a strong base from which we can continue to develop and we look forward to delivering long-term growth for our stakeholders. Lord Birt Chairman HOST EUROPE GROUP ANNUAL REVIEW 5

HOST EUROPE GROUP ANNUAL REVIEW CEO s Statement Leading the European hosting market Host Europe Group has performed extremely well in the past year, and in spite of challenging economic conditions. We have in place an ambitious growth strategy that will see us continue to build on this momentum and I believe our future will be both exciting and extremely successful. We are firmly committed to being the key enabler of success for businesses online, and it is our vision to be the first choice for companies looking to make the most out of the web. Over the past few years, our brands collectively have made significant progress in this regard. Compared with our immediate competitors, we rank number one in the direct sale and resale of domains in the UK, while in Germany our cloud hosting and managed hosting businesses also come in first place. In fact, two-thirds of our revenues are derived from segments where we are number one, and we are on target to increase our overall market share in the year ahead. Customer-centric approach It is important to recognise, however, that the market in which we operate is crowded and highly competitive. In the hosting industry, technology is no longer the key differentiator it once was; there are many hosting providers all offering similar solutions to the end user. With this being the case, customer service and support become increasingly important. Fortunately, these are areas in which Host Europe Group excels. Customer service is very much part of our DNA. Our mission and value statements are focused heavily towards our customers; we listen to our customers, solve their problems, and deliver the best possible support. This customer-centric approach pays dividends. We currently have around 1.7 million customers: a number that is growing at circa 11 per cent per annum. Moreover, we experience competitive rates of customer churn and our largest customer acquisition channels are through referrals and direct search. This, of course, would not be possible without our staff, who have played a significant role in our journey. Having been with the company for more than a decade, I ve seen Host Europe Group undergo 123-reg fantastic support Written on 29/05/2014 by Brynlee (1 review written) From something simple to something mind boggling, 123-reg can and will help you out no matter what it is. Value for money a great number of changes, leading us to become the multi-national corporation that we are today. Good, motivated staff have been a constant throughout this evolution, and for that, I would like to take this opportunity to thank the management team and our entire body of employees. 6 HOST EUROPE GROUP ANNUAL REVIEW

Influence and recognition Host Europe Group has won a number of plaudits from the industry in the past year. We were particularly pleased when our cloud hosting capabilities were recognised through the Experton Vendor Benchmark 2013 which listed Host Europe in the leader quadrant of the category Public Cloud IaaS solutions. We achieved this accolade on the strength of our market position, and the attractiveness of our product portfolio. In the UK our Reseller Hosting Brand Heart Internet was the number 1 web host for 2013 (PC Pro Awards). The PC Pro Excellence Awards are based on the largest independent IT survey in the UK. Votes are entirely from the readers of PC Pro, and the web hosting award goes to the company that has provided the best customer satisfaction in their opinion. Our success to date has been supported by a strong ethos of customer support, which remains a key focus for the business. Early on we adopted a philosophy of unlimited support to retain and grow customers. This philosophy has served the business well and stands as a key brand differentiator across Europe. We lead the way in online marketing. In the UK we are well ahead of our direct competitors in terms of website traffic and generate over 1.25 million visitors every month, while in Germany we are ranked third. Our customer ratings on Google are, by any standards, impressive. domainfactory has been awarded 4.8 stars out of a maximum of 5 over the last 12 months on Google, Host Europe has earned 4.5 stars, while 123-reg has been given 4 stars. These ratings, given by our customers, provide invaluable customer insight into each one of our brands, letting us know where we are performing well, while allowing us to immediately identify any areas that require attention. We also actively measure our Net Promoter Score (NPS), which is an important indicator of customer loyalty and satisfaction. It is part of our ethos to ensure every customer interaction with our brands is a positive experience. All customer touchpoints are monitored and measured. We measure our NPS score (collectively and by brand). Currently, for example, the NPS for Host Europe in Germany stands at 51per cent which is an exceptionally positive indicator when compared to others in our industry and in similar technical organisations. Heart Internet - WINNER Number 1 web host for 2013 (PC Pro Awards) 51% NPS Score - 51% (Host Europe.de) HOST EUROPE GROUP ANNUAL REVIEW 7

HOST EUROPE GROUP ANNUAL REVIEW Our Vision, Mission and Values The intrinsic values we believe in, the frame-work by which we make decisions, hire, evaluate and promote people is central to our business culture. Our Vision To cloud enable businesses like no other. We want to be the first choice for companies looking to make the most of the web Our Mission We listen to our customers, solve their problems, and deliver the best possible support Our People We find and inspire the best people for our business Our Practice We seek to improve everything we do Our Customers We deliver the best possible support to our customers Our Products We listen to our customers and develop products which solve their problems Our Planning We focus on the future and anticipate the changes it brings Our Partners We foster valuable relationships with our suppliers and partners Working together with Host Europe was effective and straightforward. The deadlines and the quality standards were met perfectly. Michael Jorissen - Director IT Dealer Networks Renault Deutschland AG 8 HOST EUROPE GROUP ANNUAL REVIEW

CEO s Statement - continued Continual improvement It is our belief that good service is as much about meeting customer demands today as anticipating what they will be in five years time. As part of the Group s development plans there will be significant continued investment in products, technical infrastructure, acquisitions and customer support. Group governance and CSR We are commited to meeting the requirements of corporate governance and CSR. We have established a Compliance Committee with representation across the entire Group. The remit of this Committee is to develop our compliance framework to ensure that we can deliver against our key KPIs, and to establish consistent policies across all companies, against which we can be measured. We actively monitor and measure our energy usage, NPS and Klout scores in this context, and these are reported on and reviewed on a monthly basis. and our data centres, we are firmly committed to driving down our carbon footprint, and we are making significant progress in this regard. In Germany we have a Plant-a-Tree programme, with our partner PRIMAKLIMA -weltweit- e.v whereby for every server that we sell we offer our customers the chance to plant a tree. We have approximately 500 customers every month who choose to do so with so far more than 80,000 trees having been planted. We monitor our PUE (Power Usage Effectiveness) at a country level on a monthly basis and have seen positive declines in both Germany and the UK, spurred on, in part, by the use of more energyefficient technologies in our data centres in Cologne and Leeds. Our average PUE rating in Germany, for example, declined from 1.62 in 2012 to 1.58 in 2013. We expect this figure to reduce further still in the coming year. Our core KPIs for the Group relate to a range of different areas, including the environment, customer loyalty and Group reputation. Environmental sustainability forms a key component of our governance framework, our KPIs, and, indeed, our strategy for corporate social responsibility. As a business that is fully dependent upon technology HOST EUROPE GROUP ANNUAL REVIEW 9

HOST EUROPE GROUP ANNUAL REVIEW CEO s Statement - continued Host Europe Group is committed to integrating environmental best practice into our business activities and we accept our responsibilities to protect and improve the environment. Examples of this within the workplace include: Actively encouraging all employees to print double sided Encouraging employees to turn off lights, computers and printers We have replaced tube lights with energy saving LED panels in our recently refurbished Romanian office We give our old servers to a recycling company that separates the different materials in the servers We are equally as committed to being a socially responsible company, and wherever possible seek to contribute to the local communities in which our operations are based. For example we donate to a number of children s charities in Romania and we run a matched funding scheme in Germany whereby for every Euro that is donated by our employees, Host Europe provides another 2. Compliance with reporting guidelines As a private equity owned company, Host Europe Group is committed to providing full and transparent reporting of its performance as detailed in the guidelines established by the Walker Review in 2007 five It is our belief that service excellence is as much about meeting customer demands today as anticipating what they will be in years time. Patrick Pulvermüller CEO and updated by the Guidelines Monitoring Group in 2010. Future strategy We remain dedicated to offering our customers the highest standards of support and service. I am confident we have in place the platforms, the systems, the people and the product set to allow us to continue to grow organically and by strategic acquisition. We have built an excellent model for future growth and sustainability and our values and capabilities will drive the future success of the Group. Patrick Pulvermüller CEO 10 HOST EUROPE GROUP ANNUAL REVIEW

CFO s Statement This is currently a very exciting time to be in the domain and hosting industry. The market is moving at pace, spurred on not least by the ever-increasing demand for cloud services, the on-going proliferation of the domains market, and the boom in mobile devices. These factors have, in part, contributed enormously to our success to date, and will continue to do so in the future. We are acutely aware of the need to ensure that our infrastructure can meet the needs of our customers today, whilst also anticipating the needs of our customers tomorrow. As such, we have invested heavily, and will continue to invest, in our networks and data centres. This continued investment in our IT will help to build a foundation on which we can base our growth and consolidation plans for the coming years. The cloud opportunity Cloud computing has been hailed as the next big frontier in business. In just a few short years, businesses have grown increasingly comfortable with outsourcing some or all of their IT to an external provider, but there remains a section of the market that is yet to embrace this technology. However, all signs suggest that it is only a matter of time until they do so. Looking specifically at the UK, the Cloud Industry Forum estimates that 68 per cent of businesses currently using cloud services will extend their use of cloud over the next 12 months, while around a third of organisations that do not use a cloud service today are expected to use their first service during the next 12 months. The continued investment into our own IT capabilities will allow Host Europe Group to take advantage of this emerging market. The domains opportunity The domain industry will undergo the biggest change since the internet began, with hundreds of new gtlds set to enter the market throughout 2014. In total, approximately 1,300 new domains will launch, and Host Europe Group is in a strong position to take advantage of this new market opportunity. Looking to more traditional domains such as.co.uk and.com, sales remain buoyant. As the UK s number one domain registrar, we sell and manage more.uk domains every day than any other registrar. In fact, one in three new.uk domains are sold by 123-reg in the UK. HOST EUROPE GROUP ANNUAL REVIEW 11

HOST EUROPE GROUP ANNUAL REVIEW Central to our market success has been the broad and diverse product portfolio on offer. Our mix of hosting and managed hosting services, combined with our customer on-boarding and customer service facilities, mean that we are able to win new customers, meet a wide range of needs, and, importantly, retain them. Empowering the digital economy There is no doubt that the economy is shifting online which in turn is driving the demand for hosting services. This change will positively accelerate our growth potential. Businesses rely more and more on gaining new customers through the internet, and are steadily increasing their online advertising spend to drive traffic to their sites. Performance Turnover on a like-for-like basis was 142.8 million in 2013 compared with 126.5 million in 2012. Turnover for the Group is expected to increase further in 2014 driven by scheduled price increases and a forecasted increase in the Group s customer base. EBITDA on a like-for-like basis was 54.0 million in 2013 compared with 43.5 million in 2012 and this is forecasted to continue to increase in 2014. The Group has a positive cash balance as of 31 December 2013, and this is expected to remain the case throughout this calendar year. It is clear that there is a great deal more growth to come, especially in the SME space in which we operate. As and when this occurs, we will be in a good position to capitalise on the shifting business IT landscape. Tobias Mohr CFO 12 HOST EUROPE GROUP ANNUAL REVIEW

Our year in numbers: Turnover - 142.8 million 143 Like for like compared to 126.5 million in 2012.* 54 EBITDA- 54.0 million The results for the Group for the whole 12 months show an adjusted EBITDA of 54.0 million on a like-for-like basis.* more growth to come, especially in the SME space in which we operate. It is clear that there is a great deal Tobias Mohr CFO *Please refer to the reconciliation on page 24 of the financial statements. HOST EUROPE GROUP ANNUAL REVIEW 13

HOST EUROPE GROUP ANNUAL REVIEW The explosion of mobile devices will create additional demand for domains and hosting services Internet Usage: 2002 9.1% of the world s population 2012 33% of the world s population 2002 46 minutes a day 2012 4 hours a day 2002 Total Websites: 2002 3 million 2012 555 million Social Media: Friendster launched in 2002 with 3 million users 2012 Facebook had circa 900 million users 2012 Statistics source: http://mashable.com/2012/08/22/the-internet-a-decade-later/ 14 HOST EUROPE GROUP ANNUAL REVIEW

HOST EUROPE GROUP ANNUAL REVIEW Our Locations Host Europe Group is renowned for providing high quality hosting products with comprehensive technical support to its many customers around the world. 4 3 2 1 6 8 7 5 Offices Across Europe 1. London (United Kingdom) 2. Bromsgrove (United Kingdom) 3. Nottingham (United Kingdom) 4. Leeds (United Kingdom) 5. Lugo (Spain) 6. Cologne (Germany) 7. Iasi (Romania) 8. Lucerne (Switzerland) 16 HOST EUROPE GROUP ANNUAL REVIEW

HOST EUROPE GROUP ANNUAL REVIEW Management and Chairman 01 02 01. Lord Birt 02. Patrick Pulvermüller 03. Tobias Mohr 04. David Barker 05. Florian Luther 06. Thomas Railhac 03 04 05 06 18 HOST EUROPE GROUP ANNUAL REVIEW

01. Lord Birt Chairman After a successful career in ITV, Lord Birt was the BBC s Director-General from 1992 until 2000. During his tenure, Birt won plaudits for equipping the corporation for the digital age. 02. Patrick Pulvermüller CEO Host Europe Group Patrick Pulvermüller is the CEO at Host Europe Group Europe`s largest privately owned hosting provider. Patrick joined the Group in 2001 as a sales manager. From 2003 he was the Head of Operations. Following his time at the BBC, Birt has held a number of high profile positions, including Chairman of PayPal Europe. Birt became a crossbencher in the House of Lords in 2000, and was Strategy Adviser to the Prime Minister from 2000-2005. In 2013, Lord Birt was appointed non-executive Chairman of Host Europe Group. With the establishment and development of new business areas such as managed hosting and cloud hosting he has been instrumental in driving the Group`s success and growth. Thanks to Patrick`s dedication, Host Europe today is the largest virtualisation provider in Europe and the leading Managed Hosting player in Germany. Patrick Pulvermüller has an MBA from the Open University Business School and is an expert in operational management and strategic financial planning. 03. Tobias Mohr CFO Host Europe Group Tobias Mohr joined the Host Europe Group in April 2008, and since then he has been responsible for the set-up and streamlining of the Group s financial systems. Tobias is also involved in the improvement of controlling and reporting processes within the Group and has been heavily involved in repositioning the Host Europe Group s product offering in the UK. Prior to joining the Host Europe Group, Tobias worked for 5 years for United Internet / 1&1 Internet AG as the Head of Financial Controlling for the Webhosting Division in Germany and internationally. Tobias has also held various financial positions within the private banking and asset management sectors. HOST EUROPE GROUP ANNUAL REVIEW 19

HOST EUROPE GROUP ANNUAL REVIEW 04. David Barker Executive Director David joined Cinven in 1996 and is a member of the Industrials and TMT sector teams. He has since been involved in numerous transactions including Aprovia, CPA Global, Eutelsat, Host Europe Group, MediMedia, Springer, Ufinet and Ziggo. David has a BA in Natural Sciences from Cambridge University and is a Chartered Accountant. 05. Florian Luther Executive Director Florian joined Cinven in 2007 and is a member of the TMT sector team. He has worked on a number of transactions including Host Europe Group, JOST and SLV. Prior to joining Cinven, Florian worked in corporate finance at UBS, advising companies within the metals and mining sector. Previously, he was at Hewlett-Packard. Florian has a joint MA in Business Administration and Computer Engineering and an MA in Computer Science, from the Technical University of Berlin. 06. Thomas Railhac Executive Director Thomas joined Cinven in 2008 and is a member of the TMT sector team. He has been involved in a number of transactions including Host Europe Group, Numericable Group and Ufinet. Prior to joining Cinven, Thomas spent over four years in the private equity division of Goldman Sachs (GS Principal Investment Area) in London. Thomas has a MSc in Engineering from the Ecole Centrale Paris. 20 HOST EUROPE GROUP ANNUAL REVIEW

About Cinven Cinven is a leading European private equity firm, founded in 1977, with offices in Guernsey, London, Frankfurt, Paris, Milan,Luxembourg and Hong Kong. It acquires European-based companies that require an equity investment of 100 million or more. Its European focus and expertise are complemented by an ability to capitalise on global growth opportunities through its Asian Portfolio team. It focuses on six sectors: Healthcare, Business Services, Consumer, Financial Services, Industrials and Technology, Media and Telecommunications (TMT). Cinven acquires successful, high-quality companies and works with them to help them grow and develop, using its proven value creation strategies. It takes a responsible approach towards its portfolio companies, their employees, suppliers and local communities, the environment and society. HOST EUROPE GROUP ANNUAL REVIEW 21

HOST EUROPE GROUP ANNUAL REVIEW Financial Report Officers and professional advisers Directors Lord Birt D Barker F Luther T Railhac T Mohr M Mansell Patrick Pulvermüller Secretary J Shutler Registered Office 5 Roundwood Avenue Stockley Park Uxbridge Middlesex UB11 1FF Bank Lloyds Bank Plc City Office 11-15 Monument Street London EC3V 9JA Auditor Deloitte LLP Reading United Kingdom 22 HOST EUROPE GROUP ANNUAL REVIEW

Financial Report Strategic report Principal activity and future developments Host Europe Holdings Limited and its subsidiaries (the Group) provides web hosting, application hosting, managed hosting services and internet domain names mainly to SME customers. The Group plans to continue its existing activities. Incorporation and change of name The company was incorporated on 18 July 2013 under the name Devon Topco Limited. On 25 September 2013 it changed its name to Host Europe Holdings Limited. Business review On 30 August 2013 the Group acquired HEL Holding Limited for 471.0 million consideration including costs of 21.9 million. The consideration and costs were paid in cash. The acquisition was funded by bank loans (as detailed in note 16) and the issue of loan notes to the main holders of ordinary shares. These loan notes are held in Host Europe Finance Co Limited, which is an intermediate holding company in the Group of Host Europe Holdings Limited. On 29 November 2013 the Group acquired Domain Factory GmbH and its subsidiaries for 123.4 million consideration including costs of 1.5 million. The acquisition was funded by bank loans (as detailed in note 16) and the issue of loan notes to the main holders of ordinary shares. These loan notes are held in Host Europe Finance Co Limited. Turnover on a like-for-like basis (for the full 2013 and 2012 calendar years for the acquired companies including any pre-acquisition periods) was 142.8 million for 2013, compared with 126.5 million for 2012. Turnover for the Group is expected to increase further in 2014 driven by scheduled price increases and forecasted increase in the Group s customer base. It should be noted that the results for the period consist of the first 123 days of operations from 31 August to 31 December 2013. The results for the Group for the whole 12 months show an adjusted EBITDA of 40.4 million compared to total senior debt of 287.4 million. With 21.4 million of cash liquidity and with revenues and EBITDA expected to grow, the business appears well funded for the foreseeable future. On 31 October 2013 the Group acquired Telefonica Germany Online Services GmbH for 36.6 million including costs of 0.6 million. The consideration and costs were paid in cash. The acquisition was funded by bank loans (as detailed in note 16). HOST EUROPE GROUP ANNUAL REVIEW 23

HOST EUROPE GROUP ANNUAL REVIEW Financial Report Strategic report - continued In the 4 months from 30 August to 31 December 2013 the Group generated revenue of 39.9 million and a loss on ordinary activities of 22.2 million. An analysis of the like-for-like comparison is shown below: Year ended 31 December 2010 (unaudited) Year ended 31 December 2011 (unaudited) Year ended 31 December 2012 (unaudited) Year ended 31 December 2013 (unaudited) Compound Annual Growth Rate Note m m m m Turnover Like-for-like adjustment* 2 61.2 25.4 72.8 26.0 90.6 35.9 110.2 32.6 Like-for-like Turnover 86.6 98.8 126.5 142.8 18.1% Adjusted EBITDA** Like-for-like adjustment* 2 23.7 10.7 27.4 11.0 32.0 11.5 40.4 13.6 Like-for-like Adjusted EBITDA 34.4 38.4 43.5 54.0 16.2% *Pro-forma retrospective adjustment for the results of Host Europe Solutions GmbH (formerly Telefonica Germany Online Services GmbH), Domain Factory GmbH, Heart Internet Limited, Mesh Digital Limited, RedCoruna SLU and Host Europe Suisse AG (formerly dynamic-net.ch AG) for the relevant periods pre-acquisition so that the like-forlike figures above include full year results for each subsidiary for each year shown. **EBITDA is adjusted for any non-recurring income or expense as defined in the accounting policies (see note 1). The Group has financial key performance indicators (KPIs) as follows: 24 HOST EUROPE GROUP ANNUAL REVIEW

Period ended 31 December 2013 m Revenue 39.9 Gross profit 28.6 Adjusted EBITDA 15.0 Capital expenditure 5.5 The Group s net debt at 31 December 2013 was as follows: 2013 m Cash (21.4) Bank loans 287.4 Loan notes 316.3 Finance leases 1.2 Total net debt 583.5 HOST EUROPE GROUP ANNUAL REVIEW 25

HOST EUROPE GROUP ANNUAL REVIEW Financial Report Strategic report - continued Financial risk management objectives and policies Senior management are aware of their responsibility for managing risks within their business units. Each business unit head reports to the board on the status of these risks through management reports. Risk is regularly reviewed at board level to ensure that risk management is being implemented and monitored effectively. The board s policy is to ensure that the business units are empowered to run their business effectively and appropriately, bearing in mind the requirements for timely decision making and commercial reality. Through management reports, risks are highlighted and monitored to identify potential business risk areas and to quantify and address the risk wherever possible. Commercial and general risk Standard form contracts are provided for commercial use and to assist the commercial function to negotiate within approved parameters. Insurance policies are regularly reviewed to ensure these are adequate and appropriate, in line with the nature, size and complexity of the business. Interest rate risk out an interest rate swap to remove its exposure to floating exchange rates on bank debt. Credit risk The majority of the Group s customers pay in advance for services. Where services are supplied without advance payment, a credit review of the customer is performed when the order is received and subsequently on a periodic basis. Liquidity risk The Group actively maintains a mixture of long-term and short-term debt finance that is designed to ensure the company has sufficient available funds for its operations. Currency risk The Group is exposed to movements in foreign currency exchange rates in respect of foreign currency denominated transactions and movements in respect of the translation of net assets and profit and loss of foreign subsidiaries. The Group does not hedge the translation effect of exchange rate movements in the profit and loss or balance sheet of foreign subsidiaries. The Group has arranged for the majority of its debt to be on a fixed interest basis. The Group has taken 26 HOST EUROPE GROUP ANNUAL REVIEW

Going concern The Group has net current liabilities of 1,103,000 as set out in the balance sheet on page 34. Excluding an accrual for shareholder interest the Group has net assets of 10,179,000 and made a loss in the period of 26,007,000 as set out in the profit and loss statement on page 31. In assessing whether the going concern basis is appropriate, the directors take into account all available information about the future, which is at least, but is not limited to, 12 months from the date of approval of these financial statements. The directors have performed this review at a company level and have also performed a review for the entire Group. The directors have a reasonable expectation that despite the current economic uncertainty the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing these financial statements. Approved by the Board of Directors and signed on behalf of the Board James Shutler Secretary 14 April 2014 HOST EUROPE GROUP ANNUAL REVIEW 27

HOST EUROPE GROUP ANNUAL REVIEW Directors Report The directors present their report together with the audited financial statements for the period ended 31 December 2013. Results and dividends The profit and loss account is set out on page 33 and shows the result for the period. The directors do not recommend the payment of a dividend. Directors The directors of the company during the period and to the date of approval of the financial statements were: David Barker (appointed 18 July 2013) Thomas Railhac (appointed 18 July 2013) Thilo Sautter (appointed 18 July 2013) (resigned 30 August 2013) Thomas Vollrath (appointed 30 August 2013) (resigned 4 February 2014) Employment of disabled persons Applications for employment by disabled persons are always fully considered, bearing in mind the respective aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and the appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of a disabled person should, as far as possible, be identical to that of a person who does not suffer from a disability. Employee participation Consultation with employees or their representatives has continued at all levels, with the aim of ensuring that their views are taken into account when decisions are made that are likely to affect their interests and that all employees are aware of the financial and economic performance of their business units. Florian Luther (appointed 30 August 2013) P. Pulvermueller (appointed 30 August 2013) Tobias Mohr (appointed 30 August 2013) Lord Birt (appointed 25 November 2013) 28 HOST EUROPE GROUP ANNUAL REVIEW

Auditor and disclosure of information to auditor Each of the persons who is a director at the date of approval of this report confirms that: So far as the director is aware, there is no relevant audit information of which the company s auditor is unaware; and The director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company s auditor is aware of that information. Deloitte LLP have expressed their willingness to continue in office and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. Approved by the Board of Directors and signed on behalf of the Board James Shutler Secretary 14 April 2014 HOST EUROPE GROUP ANNUAL REVIEW 29

HOST EUROPE GROUP ANNUAL REVIEW Directors Responsibilities Statement The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: Select suitable accounting policies and then apply them consistently; Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Make judgments and accounting estimates that are reasonable and prudent; State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 30 HOST EUROPE GROUP ANNUAL REVIEW

Independent auditor s report to the members of Host Europe Holdings Limited We have audited the financial statements of Host Europe Holdings Limited for the period ended 31 December 2013 which comprise the consolidated profit and loss account, the consolidated statement of total recognised gains and losses, the consolidated and company balance sheets, the consolidated cash flow statement and the related notes 1 to 30. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the company s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the HOST EUROPE GROUP ANNUAL REVIEW 31

HOST EUROPE GROUP ANNUAL REVIEW Independent auditor s report to the members of Host Europe Holdings Limited - continued accounting policies are appropriate to the company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: Give a true and fair view of the state of the Group s and of the parents company s affairs as of 31 December 2013 and of the Group s loss for the period then ended Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion: Proper accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or The financial statements are not in agreement with the accounting records and returns; or Certain disclosures of directors remuneration specified by law are not made; or We have not received all the information and explanations we require for our audit. Andrew Bond ACA (Senior Statutory Auditor) for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor Reading, United Kingdom 14 April 2014 Have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991. 32 HOST EUROPE GROUP ANNUAL REVIEW

Consolidated profit and loss account 18 July to 31 December 2013 Note 18 July to 31 December 2013 Turnover 2 39,900 Cost of sales (11,287) Gross profit 28,613 Amortisation of goodwill and other intangibles (16,146) Other administrative expenses (18,779) Operating loss 5 (6,312) Interest receivable and similar income 6 20 Interest payable and similar charges 7 (15,945) Loss on ordinary activities before taxation (22,237) Taxation on loss from ordinary activities 9 (3,770) Loss for the financial period 19 (26,007) All amounts relate to continuing operations. Consolidated statement of total recognised gains and losses 18th July to 31st December 2013 Loss for the financial period (26,007) Exchange translation differences on consolidation 19 1,123 Total recognised losses for the financial period (24,884) HOST EUROPE GROUP ANNUAL REVIEW 33

HOST EUROPE GROUP ANNUAL REVIEW Consolidated balance sheet at 31 December 2013 Note 2013 Fixed assets Intangible assets 10 561,762 Tangible assets 11 35,484 597,246 Current assets Debtors 13 13,905 Cash at bank and in hand 21,407 35,312 Creditors: amounts falling due within one year 14 (36,415) Net current liabilities (1,103) Total assets less current liabilities 596,143 Creditors: amounts falling due after more than one year 15 (593,647) Deferred income (10,541) Provisions for liabilities 17 (1,554) Net liabilities (9,599) Capital and reserves Called up share capital 18 15,285 Profit and loss account 19 (24,884) Shareholder s deficit 20 (9,599) The financial statements of Host Europe Holdings Limited, registered number 113541, were approved by the Board of Directors and authorised for issue on 14 April 2014. Signed on behalf of the Board of Directors Tobias Mohr CFO 34 HOST EUROPE GROUP ANNUAL REVIEW

Company balance sheet at 31 December 2013 Note 2013 Fixed assets Investments 12 12,830 Current assets Debtors 13 2,493 Net assets 15,323 Capital and reserves Called up share capital 18 15,285 Profit and loss account 19 38 Shareholders' funds 20 15,323 The financial statements of Host Europe Holdings Limited, registered number 113541, were approved by the Board of Directors and authorised for issue on 14 April 2014. Signed on behalf of the Board of Directors Tobias Mohr CFO HOST EUROPE GROUP ANNUAL REVIEW 35

HOST EUROPE GROUP ANNUAL REVIEW Consolidated cash flow statement 18 July to 31 December 2013 Note 18 July to 31 December 2013 Net cash inflow from operating activities 26 10,382 Returns on investments and servicing of finance Bank loan interest paid (2,705) Interest on loan notes (53,838) Amortisation of debt issue costs (522) Interest element of finance leases payments (135) Bank interest received 20 Net cash outflow from investments and servicing of finance (57,180) Taxation paid (1,482) Capital expenditure and financial investment Payments to acquire fixed assets (5,680) Net cash outflow from capital expenditure and financial investment (5,680) Acquisitions and disposals Purchase of shares in subsidiary undertakings (347,840) Cash acquired with subsidiary undertakings 28,657 Net cash outflow from acquisitions and disposals (319,183) Net cash outflow before financing (308,471) 36 HOST EUROPE GROUP ANNUAL REVIEW

Note 18 July to 31 December 2013 Financing New bank loans (net of debt fees) 280,285 Shareholder debt repayment (135,055) Proceeds from issue of loan notes 316,270 Proceeds from issue of ordinary shares 15,285 Repayment of bank loans (81,569) New finance leases less capital element repaid (546) Net cash inflow from financing 394,670 Total cash flow 21,527 Exchange differences (120) Increase in cash 21,407 HOST EUROPE GROUP ANNUAL REVIEW 37

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 1. Accounting policies The financial statements are prepared in accordance with applicable United Kingdom accounting standards. Accounting convention The financial statements have been prepared under the historical cost convention and in accordance with United Kingdom generally Accepted Accounting Practice. The particular accounting policies adopted, which have been applied consistently throughout the current period, are described below. Basis of consolidation The consolidated financial statements incorporate those of the parent undertaking and each of its subsidiary undertakings made up to 31 December 2013. The results of subsidiaries acquired are included in the profit and loss account from the date effective control passed. Going concern The Group has net current liabilities of 1,103,000 as set out in the balance sheet on page 34, and made a loss in the period of 26,007,000 as set out in the profit and loss statement on page 33. available information about the future, which is at least, but is not limited to, 12 months from the date of approval of these financial statements. The directors have a reasonable expectation that despite the current economic uncertainty the company has adequate resources to continue in operational existence for the foreseeable future. The financial statements have been prepared on the going concern basis, notwithstanding net current liabilities of 1.1 million, which the directors believe to be appropriate for the following reasons: EBITDA is profitable (earnings before goodwill amortisation, depreciation and exceptional items) and this is forecast to continue in 2014. The Group has a positive cash balance at 31 December 2013 of 21.4 million. The directors forecast positive cash flows for 12 months from the date of signing these accounts. The business acquired Host Europe Solutions GmbH (formerly Telefonica Germany Online Services GmbH) and Domain Factory GmbH during the year. These acquisitions are expected to provide a number of growth opportunities for the Group. In assessing whether the going concern basis is appropriate, the directors take into account all 38 HOST EUROPE GROUP ANNUAL REVIEW

At the date of approval of these financial statements the Directors believe that the Group will continue to operate successfully for the foreseeable future and be able to meet its liabilities as and when they fall due and that the Group will continue to comfortably meet its banking covenants. Turnover Turnover comprises the value of web hosting and network services provided, and internet domain names issued, net of value added tax. Fees for web hosting and network services are deferred and recognised evenly over the period of the contract. Income from the issue of domain names is recognised in full on registration of the domain names. Non-recurring and other items Non-recurring and other items are material items of income or expense that are disclosed separately due to their nature or amount as defined by the debt agreement. Goodwill Goodwill arising on the acquisition of a business is the difference between the fair value of the consideration paid and the aggregate fair value of the assets and liabilities acquired. Goodwill is capitalised and amortised on a straight- line basis over 10 years, which is the directors estimate of the useful economic life. Intangible assets customer lists Customer lists are included at cost and depreciated in equal annual instalments over a period of four years which is their estimated useful economic life. Provision is made for any impairment. Investments Fixed asset investments are shown at cost less provision for impairment. They are disclosed and described separately in the accounts where it is necessary to do so to provide further understanding of the financial performance of the Group. HOST EUROPE GROUP ANNUAL REVIEW 39

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 1. Accounting policies - continued Tangible fixed assets Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line basis over its expected useful life, as follows: Freehold buildings 20 to 25 years Leasehold improvements shorter of the lease term or useful economic life Network infrastructure Plant and Machinery Office equipment 2 to 10 years 2 to 10 years 3 to 7 years Residual value is calculated on prices prevailing at the date of acquisition or revaluation. Taxation Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. DeferredTaxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the Group s taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses on tax assessments in periods different from those in which they are recognised in the financial statements A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial statements. Neither is deferred tax recognised when fixed assets are sold as it is more likely than not that the taxable gain will be rolled over, being charged to tax only if and when the replacement assets are sold. 40 HOST EUROPE GROUP ANNUAL REVIEW

Deferred taxation - continued Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future has been entered into by the subsidiary or associate. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non-discounted basis. Where an instrument contains a feature of a financial liability, a liability is recognised initially only to the extent that future obligations to the holder are either fixed or can be determined. Financial liability and equity Financial liabilities and equity are classified according to the substance of the financial instrument s contractual obligations, rather than the financial instrument s legal form. Financial instruments are measured initially and subsequently at cost. Where an instrument contains a feature of a financial liability, a liability is recognised initially only to the extent that future obligations to the holder are either fixed or can be determined. Leased assets Where assets are financed by leasing arrangement that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments during the lease term. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to the profit and loss account. Lease payments are analysed between capital and interest components. The interest element of the payment is charged to the profit and loss account over the period of the lease and is calculated so that it represents a constant proportion of the balance of the capital repayments outstanding. The capital part reduces the amounts payable to the lessor. All other leases are treated as operating leases. Their annual rentals are charged to the profit and loss account on a straight-line basis over the term of the lease. Reverse premiums and similar incentives received to enter into operating lease agreements are released to the profit and loss account over the period to the date on which the rent is first expected to be adjusted to the prevailing market rate. HOST EUROPE GROUP ANNUAL REVIEW 41

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 1. Accounting policies - continued Onerous leases Where the unavoidable costs of a lease exceed the economic benefit expected to be received from it, a provision is made for the present value of the obligations under the lease applying a discount rate equivalent to the group s cost of capital. Pension contributions The Group contributes to the personal pension schemes of certain employees. Amounts charged in the profit and loss account represent amounts payable in the period. Foreign currency translation In accordance with SSAP 20, foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are translated at the rate of exchange ruling at the balance sheet date. Any differences are taken to the profit and loss account. The profits and losses of the foreign subsidiaries are translated into sterling at average exchange rates and the year end net assets of these companies are translated at the rate ruling at the balance sheet date. Exchange differences which arise from the translation of the opening net assets of foreign subsidiary undertakings are taken to reserves. Finance costs Finance costs are charged to profit over the term of the debt so that the amount charged is at a constant rate of the carrying amount. Finance costs include issue costs, which are initially recognised as a reduction in the proceeds of the associated capital instrument. Derivative financial instruments The Group uses derivative financial instruments to reduce exposure to foreign exchange risk and interest rate movements. The Group does not hold or issue derivative financial instruments for speculative purposes. For an interest rate swap to be treated as a hedge the instrument must be related to actual assets or liabilities or a probable commitment and must change the nature of the interest rate by converting a fixed rate to a variable rate or vice versa. Interest differentials under these swaps are recognised by adjusting net interest payable over the periods of the contracts. Non-recurring and other items Non-recurring and other items are material items of income or expense that are disclosed separately due to their nature or amount. They are disclosed and described separately in the accounts where it is necessary to provide further understanding of the financial performance of the Group. 42 HOST EUROPE GROUP ANNUAL REVIEW

2. Segmental Information The Group had a single class of business and consequently presents segmental information on a geographic basis only. Turnover Profit/ (loss) before tax Net assets/ (liabilities) Origin: United Kingdom 19,203 (23,549) (74,081) Germany 19,475 1,258 63,462 Other countries 952 54 1,020 39,900 22,237 9,599 HOST EUROPE GROUP ANNUAL REVIEW 43

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 2. Segmental Information Analysis of operating loss and EBITDA: Period 1 January 2013 to 30 August 2013 (unaudited) Period 31 August 2013 to 31 December 2013 (audited) Total Year ended 31 December 2013 Turnover 70,285 39,900 110,185 Cost of sales (21,019) (11,287) (32,306) Gross profit 49,266 28,613 77,879 Amortisation of goodwill (18,477) (16,146) (34,623) Other administrative expenses (32,546) (18,779) (51,325) Operating loss (1,757) (6,312) (8,069) Add: Depreciation 7,209 3,273 10,482 Amortisation of goodwill 18,477 16,146 34,623 EBITDA 23,929 13,107 37,036 Add non-recurring items: Other 1,147 1,830 2,977 Add recurring non-operational items: Other 269 87 356 Adjusted EBITDA 25,345 15,024 40,369 44 HOST EUROPE GROUP ANNUAL REVIEW

3. Employees Staff costs consist of: Group 18 July to 31 December 2013 Wages and salaries 7,303 Social security costs 1,501 Other pension costs 39 8,843 The average monthly number of employees (including directors) during the period was: Group 18 July to 31 December 2013 Company 18 July to 31 December 2013 Technical and customer service 554 - Sales and marketing 125 - Management and administration 101 5 780 5 4. Directors Directors emoluments: Group 18 July to 31 December 2013 Emoluments for qualifying services 486 The total amount payable to the highest paid director in respect of emoluments was 402,000 which includes payments in lieu of notice of 273,000. HOST EUROPE GROUP ANNUAL REVIEW 45

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 5. Operating Loss This has been arrived at after charging: Group 18 July to 31 December 2013 Depreciation - owned assets 2,953 - assets held under finance leases 320 Amortisation - goodwill, patents and licenses and customer lists 16,146 Auditors remuneration fees payable to the company s auditor for the audit of the company and it s subsidiaries annual accounts 246 fees payable to the company s auditor and their associates for due diligence and other fees in relation to the acquisition of subsidiaries 1,388 fees payable to the company s auditors and their associates for tax services 258 Operating lease rentals - land and buildings 303 - other 220 46 HOST EUROPE GROUP ANNUAL REVIEW

6. Interest receivable and similar income Group 18 July to 31 December 2013 Bank interest 20 20 7. Interest payable and similar charges Group 18 July to 31 December 2013 Bank interest 4,067 Interest on loan notes 11,282 Interest payable on finance leases 33 Amortisation of debt issue costs 522 Other 41 15,945 HOST EUROPE GROUP ANNUAL REVIEW 47

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 8. Result of parent company The company has taken advantage of the exemption under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The Group loss for the period includes a profit for the parent company after tax of 38,000. 9. Taxation on loss on ordinary activities (a) Analysis of tax charge for the period Group 18 July to 31 December 2013 UK corporation tax - Foreign tax 1,358 1,358 Adjustments in respect of prior periods: UK corporation tax - Foreign tax 750 750 Total current tax 2,108 Deferred tax: Origination and reversal of timing differences 2,966 Adjustments in respect of prior periods (1,304) Total deferred tax 1,662 Total tax charge 3,770 48 HOST EUROPE GROUP ANNUAL REVIEW

(b) Factors affecting tax charge for the period The tax charge for the period is higher than the standard rate of corporation tax in the UK. The differences are explained below: Group 18 July to 31 December 2013 Loss on ordinary activities before tax (22,237) Loss on ordinary activities at the standard rate of corporation tax in the UK of 23% (5,115) Effects of: Expenses not deductible for tax purposes 5,016 Income not taxable for tax purposes (319) Depreciation in excess of capital allowances (165) Other short-term timing differences (1,175) Adjustments to tax charge in respect of previous periods 750 Effect of different tax rates for overseas subsidiaries 566 Unrelieved tax losses and other deductions arising in the period 2,550 Current tax charge for period 2,108 (c) Factors that may affect tax charge for future periods The Finance Act 2013, which provides for reductions in the main rate of corporation tax from 23% to 21% effective from 1 April 2014 and to 20% effective from 1 April 2015, was substantively enacted on 2 July 2013. These rate reductions have been reflected in the calculation of deferred tax at the balance sheet date. HOST EUROPE GROUP ANNUAL REVIEW 49

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 9. Taxation on loss on ordinary activities - continued (d ) Temporary differences for which deferred tax asset is recognised At 31 December 2013, the Group had a potential deferred tax asset in relation to unrelieved losses, fixed asset timing differences and short term timing differences of 4,426,000. A net deferred tax asset of 1,359,000 has been recognised in relation to those group entities that, in the opinion of the directors, will utilise these timing differences. These relate to difference arising from the conversion of foreign subsidiaries to UK GAAP, and fixed asset and short term timing differences. A potential tax asset of 3,067,000 in relation to unrelieved losses has not been recognised. 50 HOST EUROPE GROUP ANNUAL REVIEW

10. Intangible assets Goodwill Patents and Customer lists Total licenses Group Cost or valuation Acquired with subsidiary - 723 375 1,098 Additions (note 22) 576,635 175-576,810 At 31 December 2013 576,635 898 375 577,908 Amortisation Charge for the period 16,087 28 31 16,146 At 31 December 2013 16,087 28 31 16,146 Net book value At 31 December 2013 560,548 870 344 561,762 The goodwill arose on acquisitions during the period (see note 22). HOST EUROPE GROUP ANNUAL REVIEW 51

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 11. Tangible fixed assets Land and Leasehold Network Plant and Office Total freehold improve- infra- machinery equipment buildings ments structure Group Cost Acquired with subsidiaries 714 9,558 22,390 104 1,039 33,805 Additions - 2,176 3,257 30 41 5,504 Disposals - - - (7) - (7) Exchange differences (15) (129) (412) (1) (11) (568) At 31 December 2013 699 11,605 25,235 126 1,069 38,734 Depreciation Charge for the period - 73 3,067 10 123 3,273 Eliminated on disposal - - - (7) - (7) Exchange differences - (1) (14) - (1) (16) At 31 December 2013-72 3,053 3 122 3,250 Net book value At 31 December 2013 699 11,533 22,182 123 947 35,484 The net book value of tangible fixed assets includes an amount of 6,594,000 in respect of assets held under finance leases and hire purchase contracts. The related depreciation charge on these assets for the period was 320,000. 52 HOST EUROPE GROUP ANNUAL REVIEW

12. Investments Shares in subsidiary Company undertakings Cost and book value At 18 July - Acquisitions 12,830 At 31 December 2013 12,830 On 30 August 2013 the company subscribed for 12,250,348 ordinary 1 shares of Host Europe Finance Co Limited for 12,250,348. On 29 November 2013 the company subscribed for a further 579,179 ordinary 1 shares of Host Europe Finance Co Limited for 579,179. HOST EUROPE GROUP ANNUAL REVIEW 53

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 12. Investments - continued Host Europe Holdings Limited or its wholly owned subsidiaries own 100% of the ordinary share capital and voting rights of the following companies, all of which are incorporated in England and Wales except where noted below: Name Place of Incorporation Principal activity Directly held Host Europe Finance Co Limited Jersey Intermediate Holding Company Indirectly held Host Europe Investments Limited Host Europe Group Limited HEL Holding Limited HEL Bidco Limited HEL Midco Limited HEL Finco Limited 123-Reg Limited DomainBox limited DomainMonster Limited Intermediate Holding Company Intermediate Holding Company Intermediate Holding Company Intermediate Holding Company Intermediate Holding Company Intermediate Holding Company Dormant Telecommunications Telecommunications DomainMonster.com Inc. United States of America Telecommunications Domain Factory GmbH Germany Telecommunications Fourty Six Media GmbH Germany Telecommunications FOURTYSIX Rechenzentrum GmbH Germany Telecommunications Donhost Limited Webfusion Limited Heart Internet Limited Dormant Telecommunications Telecommunications Host Europe Deutschland GmbH Germany Intermediate Holding Company Host Europe GmbH Germany Telecommunications Host Europe Internet GmbH Germany Intermediate holding company 54 HOST EUROPE GROUP ANNUAL REVIEW

Name Place of Incorporation Principal activity Host Europe Solutions GmbH (formerly Telefonica Germany Online Germany Telecommunications Services GmbH) Host Europe Suisse AG Switzerland Telecommunications Host Europe Limited Identity Protect Limited Mesh Digital Limited Intermediate Holding Company Dormant Telecommunications RedCoruna SLU Spain Telecommunications Supanames Limited Swann & Turner Limited Webfusion Internet Limited Dormant Debt Collection Dormant Webfusion Internet Solutions Inc United States of America Telecommunications Webfusion Internet Solutions Limited Intermediate Holding Company Webfusion SRL Romania Telecommunications Webfusion Internet Solutions SL Spain Telecommunications HOST EUROPE GROUP ANNUAL REVIEW 55

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 13. Debtors 2013 Group 2013 Company Trade debtors 5,965 - Taxation and social security 2,433 - Other debtors 3,752 1,126 Prepayments and accrued income 1,755 - Amounts owed by group undertakings - 1,367 13,905 2,493 Alll amounts shown under debtors above fall due within one year, with the exception of Taxation and social security which contains an amount of 1,701,000 of deferred tax assets. 14. Creditors: amounts falling due within one year 2013 Group Bank loans secured and net of borrowing costs (note 16) 800 Finance leases 982 Trade creditors 8,787 Corporation tax 3,337 Other taxation and social security costs 1,811 Other creditors 3,630 Accruals 17,068 36,415 Bank loans are secured by way of fixed and floating charges over the assets of certain group companies. 56 HOST EUROPE GROUP ANNUAL REVIEW

15. Creditors: amounts falling due after more than one year 2013 Group Bank loans secured and net of borrowing costs (note 16) 277,135 Unsecured loan notes (note 16) 316,270 Finance leases 242 593,647 Bank loans are secured by way of fixed and floating charges over the assets of certain group companies. HOST EUROPE GROUP ANNUAL REVIEW 57

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 16. Borrowings Group The aggregate amount of loans and finance leases are as follows: 31 December 2013 Bank loans Loan Notes Finance leases Total Within one year or on demand 2,477-982 3,459 Between one and two years 6,439-242 6,681 Between two and five years 54,398 - - 54,398 After five years or more 224,121 316,270-540,391 Gross liability 287,435 316,270 1,224 604,929 Less: unamortised issue costs (9,500) - - (9,500) 277,935 316,270 1,224 595,429 227,466,000 ( 189,935,000) of the Bank Loan balance is denominated in the Euro, the remaining balance is denominated in sterling. The loans of the Group are secured by fixed and floating charges over the assets of certain group companies. Bank loans are stated net of issue costs of 9,500,000 (within one year 1,677,000, after one year 7,823,000). These costs are being amortised over the life of the loans. Interest on bank loans is payable at least every three months. Interest is payable on the loan notes every three months at the Group s option with the interest being rolled up into the loans. The Group has entered into fixed interest rate swaps to manage its floating interest rate risk on the bank loans. The fair value of these swaps at 31 December 2013 was an asset of 1,158,000. Disclosures relating to the objectives, risks and strategies in relation to financial instruments are given in the Strategic report. 58 HOST EUROPE GROUP ANNUAL REVIEW

Bank loans are summarised as follows: Loan 2013 Repayment period Interest Term loan A 49,532 Instalments between 31 December Variable based on Libor/Euribor 2014 and 30 August 2019 plus 4.50%/4.25% Capex Facility 49,360 Instalments between 31 March Variable based on Euribor plus 2018 and 30 August 2019 4.25% Variable based on Libor/Euribor Term loan B 188,543 In full on 30 August 2019 plus 5.00%/4.75% Total loans 287,435 A loan notes 304,375 In full on 30 August 2023 12% Fixed B loan notes 11,895 In full on 30 August 2023 12% Fixed Total unsecured loan notes 316,270 HOST EUROPE GROUP ANNUAL REVIEW 59

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 17. Provisions for liabilities Deferred tax Property provision Total Acquired with subsidiaries - 1,599 1,599 Charged / (credited) to profit and loss 342 (387) (45) At 31 December 2013 342 1,212 1,554 Property Provision The property provisions relate to leases on unutilised office space which expire at various dates up to 2021 and dilapidation provisions. The duration of exposure on unutilised office space is uncertain and will depend on whether the space can be successfully sub-let. Where relevant, sub-letting income has been reasonably estimated and accrued for. Deferred Tax The amount provided in respect of deferred tax is as follows: 2013 Short term timing differences - Differences arising from conversion of foreign subsidiaries to UK GAAP 342 342 60 HOST EUROPE GROUP ANNUAL REVIEW

18. Share capital Authorised 2013 2013 Issued A Class ordinary shares of 1 12,071,445 12,071 B Class ordinary shares of 1 565,557 566 C Class ordinary shares of 1 2,500,000 2,500 D Class ordinary shares of 1 147,059 147 E Class ordinary shares of 1 1,000 1 15,285,061 15,285 All class of ordinary shares were issued at par. Shareholders of all class of ordinary shares are entitled to one vote for every share, except for holders of E class ordinary shares who are not entitled to vote. Shareholders of all class of ordinary shares have entitlement to dividends, except for holders of E class ordinary shares who are not entitled to dividends. 19. Profit and loss account 2013 Group 2013 Company At 18 July - - (Loss)/profit for financial period (26,007) 38 Exchange differences 1,123 - At 31 December 2013 (24,884) 38 The exchange differences resulted from revaluation to closing rates of the net assets of the overseas subsidiaries and revaluation of the Euro denominated loans. HOST EUROPE GROUP ANNUAL REVIEW 61

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 20. Reconciliation of movement in shareholders funds 2013 Group 2013 Company Opening shareholder s funds - - Issue of share capital 15,285 15,285 (Loss)/profit for financial period (26,007) 38 Exchange differences 1,123 - Closing shareholders (deficit)/funds (9,599) 15,323 21. Pensions The Group operates a stakeholder pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. At 31 December 2013, there were contributions payable of 2,000. During the period 39,000 was charged to the profit and loss account in relation to pensions. 62 HOST EUROPE GROUP ANNUAL REVIEW

22. Acquisitions (a) HEL Holding Limited On 30 August 2013, the Group acquired the entire share capital of 1,131,111,112 ordinary shares of HEL Holding Limited for a total consideration of 471,000,000 including costs of 21,919,000. Of the 21,919,000 costs, 12,667,000 have included in the cost of acquisition and 9,252,000 bank issue costs have been capitalised and offset against the bank loans. The consideration and costs were satisfied by cash and repayment of existing loans. The total fair value of net liabilities and assets acquired was 25,486,000 and goodwill of 436,262,000 was generated. The purchase has been accounted for using acquisition accounting. The fair values are provisional and will be subject to review in the next financial statements in accordance with UK GAAP. The provisional fair values of HEL Holding Limited at 30 August 2013 are as follows: Book value and Provisional fair value Fixed assets 31,529 Debtors 8,101 Cash 13,894 Creditors (26,439) Provisions (1,599) Net assets 25,486 Total consideration 471,000 Less: Bank fees capitalised (9,252) Net consideration 461,748 Goodwill generated upon acquisition 436,262 HOST EUROPE GROUP ANNUAL REVIEW 63

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 22. Acquisitions - continued The above adjustments bring assets and liabilities in line with the fair value as estimated by the directors. Revaluations of tangible fixed assets were made based on their remaining useful economic life at the time of acquisition. Accounting policy alignments were made, as required, to align the accounting policies of the acquired companies to those of the Group. The results of HEL Holding Limited for the year ended 31 December 2013 are set out below: 2013 Turnover 105,630 Operating expenses (102,557) Operating profit 3,673 Loss before tax (10,266) Taxation (4,814) Loss after tax (15,080) 64 HOST EUROPE GROUP ANNUAL REVIEW

(b) Telefonica Germany Online Services GmbH On 31 October 2013, the Group acquired the entire share capital of 25,100 ordinary shares of Telefonica Germany Online Services GmbH for a total consideration of 36,603,000 including costs of 623,000. All of the 623,000 costs have been included in the cost of acquisition. The consideration and costs were satisfied by cash. The total fair value of net liabilities and assets acquired was 9,373,000 and goodwill of 27,231,000 was generated. The purchase has been accounted for using acquisition accounting. The fair values are provisional and will be subject to review in the next financial statements in accordance with UK GAAP. The provisional fair values of Telefonica Germany Online Services GmbH as at 31 October 2013 are as follows: Book value and Provisional fair value Fixed assets 4,467 Debtors 3,770 Cash 3,772 Creditors (2,636) Net assets 9,373 Total consideration 36,603 Goodwill generated upon acquisition 27,231 HOST EUROPE GROUP ANNUAL REVIEW 65

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 22. Acquisitions - continued The above adjustments bring assets and liabilities in line with the fair value as estimated by the directors. Revaluations of tangible fixed assets were made based on their remaining useful economic life at the time of acquisition. Accounting policy alignments were made, as required, to align the accounting policies of the acquired companies to those of the Group. The results of Telefonica Germany Online Services GmbH for the year ended 31 December 2013 are set out below: 2013 Turnover 15,250 Operating expenses (16,486) Operating loss (1,236) Loss before tax (1,217) Taxation - Loss after tax (1,217) 66 HOST EUROPE GROUP ANNUAL REVIEW

c) Domain Factory GmbH On 29 November 2013, the Group acquired the entire share capital of 37,500 ordinary shares of Domain Factory GmbH for a total consideration of 123,373,000 including costs of 1,460,000. Of the 1,460,000 costs, 658,000 have been included in the cost of acquisition and 802,000 bank issue costs have been capitalised and offset against the bank loans. The consideration and costs were satisfied by cash. The total fair value of net liabilities and assets acquired was 9,429,000 and goodwill of 113,142,000 was generated. The purchase has been accounted for using acquisition accounting. The fair values are provisional and will be subject to review in the next financial statements in accordance with UK GAAP. The provisional fair values of Domain Factory GmbH as at 29 November 2013 are as follows: Book value and Provisional fair value 000 Fixed assets 2,497 Debtors 1,471 Cash 10,991 Creditors (5,529) Net assets 9,429 Total consideration 123,373 Less: Bank fees capitalised (802) Net consideration 122,571 Goodwill generated upon acquisition 113,142 HOST EUROPE GROUP ANNUAL REVIEW 67

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 22. Acquisitions - continued The above adjustments bring assets and liabilities in line with the fair value as estimated by the directors. Revaluations of tangible fixed assets were made based on their remaining useful economic life at the time of acquisition. Accounting policy alignments were made, as required, to align the accounting policies of the acquired companies to those of the Group. The results of Domain Factory GmbH for the year ended 31 December 2013 are set out below: 2013 Turnover 21,944 Operating expenses (12,196) Operating profit 9,748 Profit before tax 9,762 Taxation (2,988) Profit after tax 6,774 68 HOST EUROPE GROUP ANNUAL REVIEW

23. Commitments under operating leases As at 31 December 2013, the Group had annual commitments under non-cancellable operating leases as set out below: Other Land and buildings Total Group 2013 2013 2013 Operating leases which expire: Within one year - 465 465 In two to five years 592 201 793 Over five years - 79 79 592 745 1,337 24. Capital commitments The Group has entered in to an agreement to refurbish the Leeds Data Centre. The total cost of this refurbishment remaining is 402,000. 25. Related party transactions The company has taken advantage of the exemptions permitted under FRS 8 not to disclosure transactions between members of the Group which eliminate on consolidation. During the period monitoring fees of 67,000 were charged to the Group by the major shareholder, Cinven Private Equity, for stewardship of the Group. The amount outstanding at the year end was Nil. HOST EUROPE GROUP ANNUAL REVIEW 69

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 26. Reconciliation of operating loss to net cash outflow from operating activities As at 31 December 2013, the Group had annual commitments under non-cancellable operating leases as set out below: 18 July to 31 December 2013 Operating loss (6,312) Amortisation of intangible assets 16,146 Depreciation 3,273 Increase in debtors (2,225) Decrease in creditors (112) Decrease in provisions (388) Net cash inflow from operating activities 10,382 26. Reconciliation of net cash flow to movement in net debt 18 July to 31 December 2013 Total cash flow 21,527 Cash flow from changes in debt (325,487) (303,960) Shareholder debt acquired (188,893) Finance leases acquired (1,811) Bank loans acquired (81,569) Amortisation of issue costs (522) Loan interest rolled up (12,606) Exchange rate movements 2,732 Increase in net debt (586,629) 70 HOST EUROPE GROUP ANNUAL REVIEW

28. Analysis of net debt At Acquisition Date Cash flow Exchange differences Other At 31 December 2013 Cash in hand and at bank - 21,527 (120) - 21,407 Debt due within one year (10,179) 10,179 - (801) (801) Debt due after one year (260,283) (336,212) 2,811 (12,327) (606,011) Finance leases due within one year (1,365) 546 31 (194) (982) Finance leases due after one year (446) - 10 194 (242) Total (272,273) (303,960) 2,732 (13,128) (586,629) Non-cash changes relate to the amortisation of capitalised finance costs 522,000, accrued interest 12,606,000 and movements in the maturity profile as a result of the passage of time. 29. Derivatives not included at fair value Principal 31 December 2013 000 s Fair value 31 December 2013 000 s Interest rate swap contracts Lloyds interest rate swap 81.6m 81,573 82,417 Lloyds interest rate swap 122.4m 122,445 122,822 HOST EUROPE GROUP ANNUAL REVIEW 71

HOST EUROPE GROUP ANNUAL REVIEW Notes to the financial statements 18 July to 31 December 2013 30. Ultimate controlling party The ultimate controlling party is Cinven Private Equity LP which holds the majority of the shares in the company. 72 HOST EUROPE GROUP ANNUAL REVIEW

5 Roundwood Avenue Stockley Park Uxbridge UB11 1FF Telephone: 0208 061 1500 www.heg.com HOST EUROPE GROUP ANNUAL REVIEW 73