InternetQ plc Preliminary Results

 
TIDMINTQ 
 
31 March 2015 
 
                                 INTERNETQ PLC 
                  ('InternetQ', the 'Group' or the 'Company') 
 
 
              AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014 
 
 
InternetQ plc (LSE-AIM: INTQ), a leading provider of mobile marketing and 
digital entertainment solutions for mobile network operators and brands, 
announces its audited results for the year ended 31 December 2014. 
 
 
 
Financial Highlights 
 
- Revenue up by 27% to EUR132.4 million (2013: EUR104.4 million) 
  - B2B revenue up 18% to EUR103.9 million (2013: EUR87.7 million) 
  - B2C revenue up 71% to EUR28.5 million (2013: EUR16.7million) 
- EBITDA up by 37% to EUR19.8 million (2013: EUR14.4 million) 
- Adjusted EBITDA up by 37% to EUR22.3 million (2013: EUR16.2 million)(i)with related 
  margin improved to 17% (2013: 16%) 
- Operating profit up by 18% to EUR10.8 million (2013: EUR9.1 million) 
- Adjusted operating profit up by 35% to EUR15.9 million (2013: EUR11.8 million) (i) 
- Adjusted earnings per share (basic) up by 10% to EUR0.33 (2013: EUR0.30) (i) 
- Cash and cash equivalents as at 31 December 2014 of EUR12.3 million (2013: EUR13.2 million) 
- Strong cash from operations of EUR15.8 million (2013: EUR12.2 million) generating 
  positive free cash flow 
- Strong start to 2015 with trading in line with management expectations 
 
(i)Adjusted figures are explained in note 2. 
 
 
 
Panagiotis Dimitropoulos, Founder and Chief Executive Officer of InternetQ said: 
 
"In 2014, our focus on geographic expansion, product development and the 
formation of key partnerships has delivered strong revenue and profit growth 
across multiple geographies. This strong financial performance has been 
achieved at the same time as we have continued to invest in both our 
advertising technology and music streaming product propositions. 
 
"The Group has, and will continue to, benefit from the ongoing adoption of 
smart devices and the shift to mobile advertising. We have made a solid start 
to 2015. With the strong foundations that we have secured, our demonstrable 
digital expertise and the significant future growth opportunities available to 
the Company, the Board is confident of continuing to deliver strong growth in 
the coming year and beyond." 
 
 
 
Operational Highlights 
 
Mobile marketing: Strong momentum with increased traction in key geographies 
and continued integration with ad networks 
 
New clients and contract wins secured in Spain, Latin America, Dominican 
Republic and South Africa. 
 
More advertising networks integrated with the Minimob platform; mobile network 
operators and brands using the platform to achieve the rapid distribution of 
apps to a wider audience, significantly increase app installs and secure faster 
conversions for their gaming, entertainment, utility and other apps. 
 
New features and tools developed to allow app developers to increase user 
average lifetime value and improve ARPU (average revenue per user). The new 
technology enables advertisers to maximise the effectiveness of their campaigns 
through performance monitoring and offer automated integration of offers and 
enhanced targeting. 
 
 
 
Digital entertainment: Awareness increased as major contracts with MNOs drive 
international expansion 
 
Contracts and partnerships secured include Orange in Poland, MTN in Cyprus, 
Sony Mobile Malaysia and a global partnership with Blackberry Messenger. 
 
Strengthened competitive proposition led to strong growth in Asia and Europe. 
 
New features developed including automated and personalised radio streaming, 
personalised music recommendations and integrated messaging. 
 
 
 
Revenues further diversified with strong growth achieved in the Americas 
 
Strong performance achieved in Latin America. 
 
Full integration of Interacel and the acquisition of Up Mobile in June 2014 
accelerated the Group's growth in Latin America and capitalised on synergies 
with InternetQ's existing proposition and mobile marketing campaigns expertise. 
 
The Group's global operations have been diversified with increased contribution 
from the Americas: Europe accounted for 40% of total revenues (36% in 2013), 
Asia for 31% (26% in 2013), Latin America for 16% (9% in 2013) and MEA for 13% 
(29% in 2013). 
 
 
 
Solid foundations and strong start to 2015 
 
In 2014, more recognisable names were added into InternetQ's client and partner 
base; sustaining good relationships will remain a Group focus in 2015. 
 
Continued investment in proprietary technology to further strengthen the 
product proposition and drive customer satisfaction and loyalty. 
 
The Group has a robust pipeline for 2015, particularly in Latin America. 
 
 
 
 
 
For further details: 
 
 
 
InternetQ                   Tel: [phone] 
Panagiotis Dimitropoulos, Founder and CEO          Tel: [phone] 
Veronica Nocetti, Chief Financial Officer          Tel: [phone] 
 
FTI Consulting LLP 
Charles Palmer / Chris Lane / Karen Tang           Tel: [phone] 
 
RBC Capital Markets 
Pierre Schreuder / Ema Jakasovic                   Tel: [phone] 
 
Canaccord Genuity 
Simon Bridges / Emma Gabriel                       Tel: [phone] 
 
 
 
About InternetQ plc: 
 
InternetQ is a leading digital content and mobile marketing services company 
with operations spanning Asia, Europe, Africa and the Americas. It offers 
proprietary technology platforms to help mobile network operators, brands, and 
media companies to conduct targeted, interactive and measurable marketing 
initiatives on mobile devices. Its mobile value added services include Akazoo, 
which allows consumers to purchase digital music content and Minimob, its smart 
mobile marketing and advertising platform to conduct effective and measurable 
campaigns on mobile phones and achieve user engagement and app 
monetization. All of InternetQ's products are underpinned by the rapid global 
growth in smart devices and the thriving app economy. 
 
 
 
InternetQ is a publicly traded company listed on the AIM market of the London 
Stock Exchange, under the symbol INTQ.  For investor related queries, please 
email: [e-mail] 
 
 
 
Chairman's Statement 
 
It has been an honour to have served as InternetQ's Chairman over the last two 
years and, even in this short time, to have seen the Company continue to expand 
its footprint in the fast moving and rapidly growing marketplace we operate in. 
Our clearly defined strategy, strong leadership, focus on driving growth and 
dedicated global team, combined with the latest technology aligned to the 
rapidly shifting requirements of the market, have all meant that I have the 
pleasure of once again reporting that 2014 has been a successful year for 
InternetQ. 
 
Four years on from the IPO, InternetQ continues to deliver strong financial and 
commercial performance, driven by the increased demand and international growth 
of both our mobile marketing and digital entertainment divisions. In these last 
four years, the Group's revenues have almost quadrupled, exceeding EUR132 million 
in FY2014 (versus EUR37.3 million in 2010). 
 
2014 has been an exciting year for multiple reasons. Commercially, across both 
businesses, the Company secured major contracts with successful launches taking 
place throughout the year and has a strong pipeline going into 2015. 
Operationally, the Group further strengthened its presence in Latin America 
through the successful acquisition of Up Mobile in Mexico. InternetQ has also 
continued to invest heavily in enhancing its technology. During the period it 
launched new Minimob and Akazoo platforms with additional features and 
functionality that make both offerings more attractive, efficient and easier to 
monetise, as well as taking advantage of the substantial opportunities in 
mobile advertising. 
 
Strong revenue growth across both B2B and B2C divisions 
 
I am delighted to report that InternetQ has maintained its strong financial 
performance over the last 12 months, continuing its excellent track record of 
revenue growth across both business divisions. For the fourth consecutive year, 
the Company achieved record revenues, EBITDA and earnings per share. Revenues 
in 2014 exceeded EUR132 million (27% increase YOY), with the B2B (Mobile 
Marketing) segment contributing 78% and the B2C (Digital Entertainment) 22%. 
Margins improved in the second half of the year, driving annual adjusted EBITDA 
to over EUR22 million (note 2) and adjusted profit after tax to EUR13.1 million 
(note 2). InternetQ maintains a strong balance sheet with cash as at 31 
December 2014 in excess of EUR12.3 million. Despite significant investment, the 
Company generated positive free cash flow with cash generated from operations 
close to EUR15.6 million. These solid financial results position the Company well 
for future growth, especially as smartphone adoption and usage become 
commonplace across both emerging and developed markets and advertisers 
increasingly look to target mobile customers. 
 
International expansion with strong growth in Asia and Latin America 
 
With offices in 24 cities and profitable operations in four continents, 
InternetQ has evolved into a truly global mobile marketing and digital 
entertainment company. During the year, the Group has continued to increase its 
presence in Asia, while also capitalising on new business opportunities in the 
fast-evolving Latin American market. In 2013, Europe accounted for 36% of the 
Group's annual revenues, Asia for 26%, the Middle East and Africa for 29% and 
Latin America for 9%. In 2014, the contribution of Asia rose to 31% while that 
of Latin America exceeded 16%, demonstrating the diversification of our 
business and the fast adoption of our product offerings in the new markets that 
we enter. 
 
Growing team of experts 
 
I would like to thank the team at InternetQ for their enormous contribution 
over the year, which has been integral to helping the Company to continue to 
grow. At 31 December 2013 the Group had 155 employees, whereas by the end of 
2014 we employed 162 people. We invest in our team, ensuring we continue to 
have the best people in place to help drive continuous growth, geographic 
expansion, client diversification and technological innovation. The InternetQ 
team represents 32 different nationalities and speaks 23 languages. As Chairman 
of the Board, I can confirm that we are dedicated to continuing to motivate and 
reward these talented individuals going forward. 
 
Well positioned for the future 
 
InternetQ operates in a fast growing and rapidly evolving global marketplace. 
We have therefore adopted a three-pillar strategy to remain competitive and 
position InternetQ for continued growth: expansion of our geographic footprint, 
investment in technology and product development, and establishment of key 
partnerships that secure a strong pipeline in both the B2B and B2C segments of 
the business. I remain confident that our strategy positions us for further 
revenue and geographic growth in the coming year. 
 
 
 
 
 
Chief Executive Officer's Review 
 
Introduction 
 
I am pleased to report that 2014 was another year of significant progress. 
InternetQ's stated strategy is to broaden its geographic reach, further enhance 
its offering through continued product development and increase the number of 
key partner relationships. In 2014, we achieved these objectives with both our 
B2B and B2C divisions delivering strong revenue and profit growth across 
multiple geographies. 
 
InternetQ's growth has largely been driven organically with acquisitions 
enabling the Company to sell its core products into new geographies through 
existing sales channels. We have further established our footprint in Latin 
America, Asia and Europe in the period, signing major contracts with both 
existing and new clients.  At the same time, we have continued to invest in our 
technology and this has ensured that our products remain best-in-class, 
offering unrivalled functionality and features. 
 
With the ongoing adoption of smart devices alongside the growing shift to 
mobile advertising increasing market confidence, we see clear opportunities for 
additional growth in existing and new geographic markets. International 
expansion, retaining our competitiveness and enhancing our portfolio of 
products remain at the core of our vision. 
 
Strong growth in revenues and profitability across multiple geographies 
 
The audited accounts for 2014 highlight another strong period of growth for 
InternetQ. Group revenue increased by 27% to EUR132.4 million with a particular 
focus on improving profit margins across business lines leading to adjusted 
EBITDA up 37% to EUR22.3 million (note 2). 
 
InternetQ achieved revenue growth across multiple geographies in 2014. Revenues 
in Europe represent 40% of total revenues (2013: 36%), revenues in Asia reached 
31% (2013: 26%) while revenues in Latin America reached 16% (2013: 9%) and 
revenues in MEA represented 13% (2013: 29%). 
 
B2B (Mobile Marketing) 
 
The mobile marketing landscape has evolved in recent years.  InternetQ has 
anticipated these trends and is well positioned to benefit further from the 
adoption of smart devices and the increased demand for mobile advertising.  Our 
addressable market is vast and, with four billion people expected to be using 
smartphones by 2020, InternetQ's mobile marketing has the potential to reach 80 
percent of the global adult population . Accompanying this growth in smartphone 
usage, mobile is expected to be the biggest driver of global advertising 
growth, contributing 51% of all additional spend (amounting to USD$42.4billion) 
between 2014 and 2017 . 
 
InternetQ has streamlined its operations in response to industry change and 
client demand. This has placed its Minimob platform at the core of the business 
and covers all legacy and new mobile marketing revenue generation. 
 
We have also gained traction across our key geographies, and in the twelve 
month period secured several new clients and contract wins, including Movistar 
in Spain and Latin America, Viva in the Dominican Republic, and CellC in South 
Africa.  This is part of a growing pipeline for Mobile Network Operators 
("MNOs") campaigns that have been integrated with Minimob. 
 
Minimob's success is in large part due to our increased investment into the 
platform. In December 2014, we launched a new Minimob SDK version, which 
provides sophisticated new features and tools that allow app developers to 
increase average user lifetime value and improve average revenue per user 
("ARPU").  We have also added analysis and measurement functionality which 
differentiates our service from competitors by maximising the effectiveness of 
campaigns. This is achieved by effective monitoring and analysis of real time 
performance, increasingly automated integration of offers and more 
sophisticated and accurate targeting of customers. This new, unrivalled 
functionality enables cross-selling capabilities and opens up new sources of 
incremental advertising revenues as we can specifically target relevant mobile 
users. 
 
The acquisition of Up Mobile, the mobile marketing and interactive TV and radio 
content provider in Mexico, in May 2014 gave InternetQ increased reach in Latin 
America, whilst also bringing opportunities for further distribution of the 
Company's performance-based advertising and music streaming services. With Up 
Mobile already the number one provider of interactive solutions for radio 
stations and a key provider of mobile solutions to the public sector in a 
buoyant Mexican market of 100 million mobile connections and 33 million 
smartphone users, this acquisition has established InternetQ as a serious 
player in the country. 
 
 
 
B2C (Digital Entertainment) 
 
The field of digital entertainment is expanding rapidly thanks to the impact of 
the App Economy on consumers. Akazoo, the Group's music streaming service, is a 
turnkey solution for our partners and is continuing to gain good traction in 
the marketplace. 
 
Akazoo has enjoyed further success during the year, achieving strong revenue 
performance across multiple geographies.  Major contracts with MNOs have helped 
to drive international expansion, with key partnerships with Sony Mobile and 
Orange Poland secured during the period. 
 
The strong revenue performance over the period was largely driven by our focus 
on improving the competitive proposition of Akazoo's music streaming service. 
We invested in our Akazoo technology, adding new features such as automated and 
personalised radio streaming, personalised music recommendations and integrated 
messaging. Our more sophisticated technology also now enables us to develop 
additional business intelligence on our users, helping us to take a more 
targeted approach and offer very tailored services. We have also sought to make 
our Akazoo proposition more competitive with significant label renegotiations, 
facilitating quicker multi-territory expansion and lower content costs. 
 
The biggest geographic growth in the period was seen in Asia and Europe. We 
secured multiple new contracts in the Asian market, including a pilot launch in 
Thailand; a successful launch with Ninetology and OEM brand partner of Gmobi in 
Malaysia; the launch of the BlackBerry Messenger (BBM) partnership in eight 
countries (largely in Indonesia); and the launch of a co-marketing initiative 
with device manufacturer, Smartfren, in Indonesia to promote an add-on service 
offering. 
 
We also continued to strengthen Akazoo's position in Europe through the launch 
of a bundle agreement with Orange in Poland and the release of a co-branded 
add-on service offering with MTN in Cyprus. We have good visibility going in to 
2015, with a strong pipeline of launches and partnerships with leading MNOs, 
Internet Service Providers ("ISPs") and device manufacturers in Indonesia, 
Singapore and other markets. We also plan to launch Akazoo in another western 
European market in the coming months. 
 
 
1. http://www.forbes.com/sites/louiscolumbus/2014/11/09/mobile-is-eating-the-world/ 
2. http://www.marketingprofs.com/charts/2015/26727/projected-2015-2017-ad-spend-growth-by-region-and-channel 
 
 
Industry dynamics 
 
Global 'geos', multiple markets 
 
With the digital shift to so-called over-the-top internet services ("OTT") and 
the focus of today's consumer being almost entirely on downloading and using 
Mobile Applications (known as Apps) that enable them to make the most of the 
time they spend on their smartphones, geography itself has now become a major 
part of InternetQ's compelling proposition. 
 
InternetQ can run automated campaigns in hundreds of countries (known as geo's) 
and mobile marketing clients look set to favour companies which can deliver in 
multiple markets by providing a 'one stop shop' that delivers a global 
footprint. 
 
Game on! The App Economy 
 
The importance of the App Economy cannot be underestimated. In the field of 
digital entertainment, game publishers for example, are set to benefit from an 
increase in customer activation and mobile game downloads are expected to rise 
from 30 to 60 billion in the next three years . It is another fast-growing 
industry segment to which Minimob now delivers a significant number of 
campaigns, including for games such as Tribal Wars, Puzzle Coin Hunter, Brave 
Frontier and Dragon Nest. 
 
An evolving business model 
 
Put quite simply, InternetQ's role has always been to convert a mobile consumer 
into a paying customer but - as is increasingly the case - we are now being 
rewarded with a specific payment by a third party for encouraging a mobile 
consumer to effect a transaction, be it making an App download or signing-up 
for subscription services. This additional revenue - whether it comes directly 
from brand names like BBM and WeChat or from third party 'demand side' ad 
networks and agencies working for major clients - is a line of business that 
will feature more prominently in 2015. 
 
 
 
Outlook 
 
We have made a solid start to 2015. With the strong foundations that we have 
secured and the significant future growth opportunities available to the 
Company, the Board is confident of delivering further growth in 2015 and 
beyond. 
 
3. http://www.idc.com/getdoc.jsp?containerId=252450 
 
 
Chief Financial Officer's Review 
 
 
 
Improved market confidence, reflected in increased smartphone sales and demand 
for more advanced functionality and services, have ensured InternetQ's 
continued growth across its B2B and B2C businesses in 2014. The Company 
remained focused on delivering on its business strategy, successfully expanding 
its international portfolio and consolidating its presence in Latin America 
through the acquisition of Up Mobile in the period. InternetQ's solid 
performance is reflected in its 2014 financial results, as evidenced by the 
robust overall financial performance and a strong start to 2015. 
 
 
 
Group revenues increased by 27% in 2014, with both the B2B and B2C businesses 
delivering substantial sales growth. Revenues from B2B activities grew by 18% 
to EUR103.9 million (2013: EUR87.7 million) while revenues from B2C grew by 71% to 
EUR28.5 million (2013: EUR16.7 million).  Acquisitions completed during the year 
contributed EUR0.9 million (post acquisition) (2013: EUR19.3 million) to Group 
revenues. 
 
 
 
Operating costs increased by 37%, primarily due to costs incurred following 
acquisitions and geographic expansion. Adjusted EBITDA (note 2) grew by 37% to 
EUR22.3 million (2013: EUR16.2 million), a margin of 17% (2013: 16%). The adjusted 
profit after income tax for the year reached EUR13.1 million compared to EUR11.1 
million for 2013. Acquisitions completed during the year did not contribute to 
the Group's profit after income tax post acquisition. 
 
 
 
Investment in the Akazoo and Minimob platforms resulted in an increase in 
capital expenditure. Total capital expenditure including fixed and intangibles 
assets for the year ended 31 December 2014 stood at EUR14.7 million, an increase 
of 5% from the previous year (2013: EUR13.9 million). 
 
 
 
The Group ended 2014 with EUR0.2 million (2013: EUR4.7 million) net cash, which 
consisted of EUR12.3 million cash, cash equivalents and restricted cash (2013: EUR 
13.2 million) and EUR12.1 million of bank debt (2013: EUR8.5 million). The terms 
and conditions of the Group's borrowing agreements continue to be relatively 
favourable. Our EUR4 million term loan matures in March 2022 and another EUR2 
million loan arrangement matures in May 2017. InternetQ Germany also obtained a 
EUR3 million overdraft facility to finance its expansion into gaming, the 
utilised portion as of year-end was EUR2.8million. 
 
 
 
The Group generated EUR15.8 million (2013: EUR12.2 million) in cash from operating 
activities and reduced the receivables days outstanding to 96 days (2013: 108 
days) and its cash conversion cycle to 43 days (2013: 63 days). 
 
 
 
Summary 
 
InternetQ is entering 2015 in a stronger financial position than at the start 
of the 2014 financial year. We are pleased that our focus on balancing strict 
cost control with selective investment, managing working capital and increasing 
cash conversion, is showing through in our solid financial results. 
 
 
 
Overall we have completed a year of considered corporate recalibration which 
positions the Group strongly from an operational and a financial standpoint, 
providing a base to capitalise on in 2015 and beyond. 
 
 
 
 
 
Income Statements 
For the years ended 31 December 2014 and 2013 
(Amounts in Euro except share information, per share data and unless otherwise stated) 
 
 
 
                                                                   Group 
 
                                          Notes             2014           2013 
 
 
 
Revenues                                    3        132,393,324    104,417,905 
 
Direct cost of revenues                            (101,024,290)   (81,615,894) 
 
Gross profit                                          31,369,034     22,802,011 
 
 
 
Other operating income                                   462,499        415,987 
 
Operating expenses                                  (11,799,775)    (8,686,081) 
 
Other operating expenses                               (246,116)      (121,924) 
 
Depreciation and amortisation                        (9,016,648)    (5,273,261) 
 
Operating profit                                      10,768,994      9,136,732 
 
Finance costs                                        (2,403,637)      (735,540) 
 
Finance income                                           919,118        609,262 
 
Profit/(loss) before income tax                        9,284,475      9,010,454 
 
Income tax                                             (610,278)      (269,869) 
 
Profit/(loss) after income tax                         8,674,197      8,740,585 
 
 
 
Attributable to: 
 
Owners of the parent                                   8,674,197      8,740,585 
 
Earnings  per share basic                   4               0.22           0.24 
 
Earnings  per share diluted                 4               0.21           0.23 
 
 
 
Adjusted Results:                           2          4,435,447      2,404,765 
 
Adjusted profit after income tax            2         13,109,644     11,145,350 
 
Adjusted earnings per share basic           2               0.33           0.30 
 
Adjusted earnings per share diluted         2               0.32           0.30 
 
 
 
 
 
 
Change in the Income Statement presentation 
 
As the company's business evolves, it is our commitment to find more clear and 
relevant ways to present the information to the readers of the financial 
statements. Thus, the company has decided to change the cost classification 
used in the Income Statement and modify its format, previously categorised by 
function (cost of sales, selling administrative) to a grouping by nature 
(direct costs, operating expenses, depreciation etc). 
 
 
 
Statements of financial position 
As at 31 December 2014 and 2013 
(Amounts in Euro except share information, per share data and unless otherwise stated) 
 
 
 
                                                                   Group 
 
                                           Notes            2014           2013 
 
Assets 
 
Non-current assets 
 
Property, plant and equipment                          2,006,772      2,190,605 
 
Investment properties                                    442,500        470,000 
 
Goodwill                                     1        19,422,360     15,086,546 
 
Intangible assets                                     51,377,318     39,797,278 
 
Non-current financial assets                           2,847,769      2,813,690 
 
Other non-current assets                                 582,913        926,248 
 
Deferred tax assets                                      240,673        895,927 
 
Total non-current assets                              76,920,305     62,180,294 
 
Current assets 
 
Trade receivables                                     37,802,307     26,917,507 
 
Other receivables                                     10,949,384      9,465,579 
 
Current financial assets                                 114,521        108,513 
 
Cash and cash equivalents                             11,585,860     12,695,021 
 
Restricted cash                                          755,209        522,876 
 
Total current assets                                  61,207,281     49,709,496 
 
Total assets                                         138,127,586    111,889,790 
 
Equity and liabilities 
 
Equity attributable to equity holders 
of the parent company 
 
Share capital                                            120,323        117,553 
 
Share premium                                         50,590,884     47,500,518 
 
Treasury shares                                         (13,276)              - 
 
Other components of equity                            15,613,892     14,558,856 
 
Other capital reserves                                 (106,699)        154,712 
 
Exchange differences                                   1,451,728       (34,743) 
 
Retained earnings                                     28,304,152     19,629,955 
 
Total equity                                          95,961,004     81,926,851 
 
Non-current liabilities 
 
Long term loans                                        4,525,100      5,106,700 
 
Provisions                                                94,688        156,145 
 
Other non-current liabilities                            104,112         52,752 
 
Deferred tax liabilities                               5,731,449      5,025,409 
 
Total non-current liabilities                         10,455,349     10,341,006 
 
Current liabilities 
 
Trade payables                                        20,600,124     11,435,963 
 
Short term loans                                       6,203,929      2,531,726 
 
Current portion of long term loans                     1,391,600        833,300 
 
Income tax payable                                       987,321        863,646 
 
Other liabilities                                      2,528,259      3,957,298 
 
Total current liabilities                             31,711,233     19,621,933 
 
Total liabilities                                     42,166,582     29,962,939 
 
Total equity and liabilities                         138,127,586    111,889,790 
 
 
 
 
Statements of cash flows 
As at 31 December 2014 and 2013 
(Amounts in Euro except share information, per share data and unless otherwise stated) 
 
 
                                                                   Group 
 
                                                             2014          2013 
 
Cash flows from operating activities 
 
Profit/(loss) before income tax                         9,284,475     9,010,454 
 
Adjustments for: 
 
Depreciation and amortisation                           9,016,648     5,273,261 
 
Revaluation of investment property                         27,500        35,700 
 
Revaluation of financial assets                            67,929             - 
 
Increase in other provisions                               58,816       104,315 
 
Provision for employee benefits liability                  10,846        12,285 
 
Allowance for doubtful trade and other receivables        310,821        98,942 
 
Amortisation of investment grants                       (131,867)      (35,830) 
 
Employees Share incentive plan expense                  2,056,028     1,179,080 
 
Non-executive Directors share based payments               97,499       233,917 
 
Losses /(gains) on disposal of property,                   30,274       (4,931) 
plant, and equipment 
 
Finance income                                          (121,112)     (162,243) 
 
foreign exchange differences                            1,026,749     (444,027) 
 
Finance costs                                             831,537       469,354 
 
Net cash before working capital changes                22,566,143    15,770,277 
 
Movement in working capital: 
 
Trade receivables                                    (10,382,091)    10,546,277 
 
Other receivables                                     (1,397,509)   (5,580,079) 
 
Restricted cash                                         (232,333)       110,662 
 
Other non-current assets                                  343,335     (809,104) 
 
Trade payables                                          6,898,633   (8,537,787) 
 
Other liabilities                                     (1,582,826)       827,406 
 
Other non-current liabilities                                 756         1,714 
 
Income taxes paid                                       (268,753)     (150,846) 
 
Liabilities arising from other provisions paid          (120,273)             - 
 
Employee benefits liabilities paid                              -      (11,200) 
 
Net cash from operating activities                     15,825,082    12,167,320 
 
Cash flows from investing activities 
 
Payments for property, plant and equipment              (694,929)     (370,491) 
 
Proceeds from disposals of property,                       93,829        10,674 
plant and equipment 
 
Payments for intangible assets                       (14,028,902)  (13,588,761) 
 
Proceeds from disposals of intangible assets               32,779             - 
 
Acquisition of subsidiaries (net of cash acquired)    (5,238,829)  (11,119,483) 
 
Payments to acquire financial assets                            -      (86,754) 
 
Proceeds from investment grants                           127,263        43,283 
 
Finance income received                                    12,858        46,811 
 
Net cash used in investing activities                (19,695,931)  (25,064,721) 
 
Cash flows from financing activities 
 
Proceeds from the issuance of share capital                     -    11,105,965 
 
Proceeds from long term borrowings:                       560,000     5,940,000 
 
Payments of long term borrowings                        (583,300)     (841,900) 
 
Proceeds from short term borrowings                     3,672,203     1,150,000 
 
Payment of short term borrowings                                -             - 
 
Finance costs paid                                      (887,215)     (459,045) 
 
Net Cash from Financing activities                      2,761,688    16,895,020 
 
Net (decrease) / increase in cash                     (1,109,161)     3,997,619 
and cash equivalents 
 
Cash and cash equivalents at beginning of year         12,695,021     8,697,402 
 
Cash and cash equivalents at end of the year           11,585,860    12,695,021 
 
 
 
 
1. Business combinations 
 
On 14 May 2014, the Group completed the acquisition of 100% of the voting rights 
of Up Mobile Holdings LLC, a mobile marketing and interactive TV and radio content 
provider in Mexico. 
 
 
 
Up Mobile is the number one provider of interactive solutions for radio stations, 
and also provides mobile solutions to media organisations and the public sector in 
Mexico, a market of over 100 million mobile connections and 33 million smartphone 
users currently. The acquisition of Up Mobile is in line with InternetQ's stated 
strategy of broadening its geographical reach whilst further developing its service 
offering. The key benefits of the acquisition are as follows, it: 
 
- significantly increases InternetQ's existing presence in Latin America following the 
  successful acquisition of Interacel Holdings; 
 
- provides InternetQ's entry into Mexico's dynamic market and secures the promotion of 
  its offerings through Up Mobile's channels; and 
 
- builds increased value by capitalising on the synergies of both companies' clients, 
   services and expertise. 
 
 
 
The goodwill arising from the acquisition amounted to EUR4.5 million mainly 
represents the benefits that the Group is expecting from the increased Mobile 
Marketing activity with MNOs, where Up Mobile has direct commercial agreements, 
as well as from the roll out of Akazoo. 
 
 
 
Since the date of acquisition and until 31 December 2014, Up Mobile has 
contributed EUR894,548 of revenue and a loss of EUR35,296 to the Group's profit 
after tax. 
 
 
 
2. EBITDA and Adjusted Results 
 
EBITDA is defined by adding back to (or subtracting form) profit after tax, 
income tax, finance costs and finance income and depreciation and amortization 
expenses. 
 
 
 
The table below presents a reconciliation from profit after income tax to EBITDA 
 
 
 
                                                               Group 
 
                                                        2014             2013 
 
Profit after income tax                            8,674,197        8,740,585 
 
Income tax                                           610,278          269,869 
 
Finance costs                                      2,403,637          735,540 
 
Finance income                                     (919,118)        (609,262) 
 
Depreciation and amortisation                      9,016,648        5,273,261 
 
EBITDA                                            19,785,642       14,409,993 
 
 
 
 
Adjusted results, which are non-GAAP financial measures, are presented in the 
accompanying financial statements in order to improve investors understanding 
of financial results and improve comparability of financial information from 
period to period. 
 
 
 
The table below presents the adjusted amounts to the Group's financial results 
for the year ended 31 December 2014 and 2013: 
 
 
 
                                                                     Group 
 
                                                                 2014      2013 
 
Employees share incentive plan expense                      2,056,028 1,179,080 
 
Non-executive directors share based payments                   97,499   233,917 
 
Acquisition costs from business combinations                  346,673   398,087 
 
Adjustments to EBITDA                                       2,500,200 1,811,084 
 
Amortisation of assets identified in 
business combinations                                       2,602,237   838,352 
 
Adjustments to operating profit                             5,102,437 2,649,436 
 
Losses from revaluation on financial assets                    67,929         - 
 
Deferred tax income on amortisation of the assets 
 identified in business combinations:                       (734,919) (244,671) 
 
Adjustments to profit after income tax                      4,435,447 2,404,765 
 
 
 
 
 
 
Reconciliation of the adjusted results for the year ended 31 December 2014: 
 
 
 
                                                  2014 
 
                             Income Statement   Adjustments    Adjusted results 
 
EBITDA                             19,785,642     2,500,200          22,285,842 
 
Operating profit                   10,768,994     5,102,437          15,871,431 
 
Profit after tax                    8,674,197     4,435,447          13,109,644 
 
 
 
 
Reconciliation of the adjusted results for the year ended 31 December 2013: 
 
 
 
                                                  2013 
 
                             Income Statement   Adjustments    Adjusted results 
 
EBITDA                             14,409,993     1,811,084          16,221,077 
 
Operating profit                    9,136,732     2,649,436          11,786,168 
 
Profit after tax                    8,740,585     2,404,765          11,145,350 
 
 
 
 
Reconciliation of the adjusted earnings per share basic and diluted for the 
year ended 31 December 2014 and 2013: 
 
 
 
                                                                     Group 
 
                                                               2014        2013 
 
Adjusted profit after tax                                13,109,644  11,145,350 
 
Weighted average number of ordinary shares               40,151,167  36,973,217 
for basic earnings per share 
 
Earnings per share basic adjusted                              0.33        0.30 
 
 
 
 
                                                                     Group 
 
                                                               2014        2013 
 
Adjusted profit after tax                                13,109,644  11,145,350 
 
Weighted average number of ordinary shares               40,364,680  37,408,290 
for basic earnings per share 
 
Earnings per share diluted adjusted                            0.32        0.30 
 
 
 
 
 
 
3. Segment Information 
 
For management purposes the Group is separated into business units based on its 
customer types. Consequently, the Group has two reportable operating segments 
as follows: 
 
Business to Business (B2B) segment: B2B revenues are those that arise from the 
marketing of InternetQ's products to other organisations. It allows the Group 
to sell its products or services to other companies or organisations that 
resell them, use them in their products or services or use them to support 
their operations. 
 
Business to Consumer (B2C) segment: B2C revenues are those resulting from 
marketing of InternetQ's products directly to consumers as the Group's target 
market. 
 
 
 
Management monitors the operating results of its segments separately for the 
purpose of making decisions about resource allocation and performance 
assessment. Segment performance is evaluated based on operating profit or loss 
(minus any costs that are not allocated to segments). 
 
 
 
Transfer prices between operating segments are on an arm's length basis in a 
manner similar to transactions with third parties. Segment income, expenses and 
results will include those transfers between business segments which eliminated 
on consolidation. 
 
 
The following table presents revenue and profit information regarding the 
Group's operating segments for the year ended 31 December 2014: 
 
 
 
2014                                               B2B         B2C Consolidated 
 
 
 
Revenues                                   103,890,805  28,502,519  132,393,324 
 
Segment EBITDA                              18,865,699     919,943   19,785,642 
 
 
 
Depreciation and amortisation              (5,646,413) (3,370,235)  (9,016,648) 
 
Segment operating profit /(loss)            13,219,286 (2,450,292)   10,768,994 
 
 
 
Adjustments (note 2)                         1,610,535     889,665    2,500,200 
 
Adjusted segment EBITDA                     20,476,234   1,809,608   22,285,842 
 
Adjustments (note 2)                         3,417,633   1,684,804    5,102,437 
 
Adjusted segment operating profit/(loss)    16,636,919   (765,488)   15,871,431 
 
Other disclosures: 
 
Operating assets                            99,702,791  34,779,332  134,482,123 
 
Operating liabilities                       17,519,032   5,808,151   23,327,183 
 
Capital expenditure                          8,787,125   6,872,194   15,659,319 
 
 
 
 
The following table presents revenue and profit information regarding the 
Group's operating segments for the year ended 31 December 2013: 
 
 
 
2013                                               B2B         B2C Consolidated 
 
 
 
Revenues                                    87,739,600  16,678,305  104,417,905 
 
Segment EBITDA                              13,166,132   1,243,861   14,409,993 
 
 
 
Depreciation and amortisation              (3,239,270) (2,033,991)  (5,273,261) 
 
Segment operating profit /(loss)             9,926,862   (790,130)    9,136,732 
 
 
 
Adjustments (note 2)                         1,166,673     644,411    1,811,084 
 
Adjusted segment EBITDA                     14,332,805   1,888,272   16,221,077 
 
Adjustments (note 2)                         1,917,406     732,030    2,649,436 
 
Adjusted segment operating profit/(loss)    11,844,268    (58,100)   11,786,168 
 
Other disclosures: 
 
Operating assets                            81,377,570  26,224,090  107,601,660 
 
Operating liabilities                       10,302,804   5,299,354   15,602,158 
 
Capital expenditure                         11,955,306   2,396,620   14,351,926 
 
 
 
 
 
 
Geographic information 
 
The Company being only the holding company of the Group has no operations in 
the country of domicile. 
 
 
 
                                                               Group 
 
                                                        2014            2013 
 
 
 
Europe                                            52,424,236      37,297,300 
 
Latin America                                     21,887,934       9,070,945 
 
Middle East and Africa                            17,638,223      30,726,774 
 
Asia                                              40,442,931      27,322,886 
 
Total Revenues                                   132,393,324     104,417,905 
 
 
 
 
4. Earnings per share 
 
Basic earnings per share amounts are calculated by dividing net profit for the 
year attributable to ordinary equity holders of the parent by the weighted 
average number of ordinary shares outstanding during the year. 
 
 
 
Diluted earnings per share amounts are calculated by dividing the net profit 
attributable to ordinary equity holders of the parent by the weighted average 
number of ordinary shares outstanding during the year plus the weighted average 
number of ordinary shares that would be issued on conversion of all the 
dilutive potential ordinary shares into ordinary shares. 
 
 
 
The following reflects the income and share data used in the basic and diluted 
earnings per share computations: 
 
 
 
                                                                    Group 
 
                                                               2014        2013 
 
Net profit attributable to ordinary 
equity holders of the parent from                         8,674,197   8,740,585 
 continuous operations 
 
Weighted average number of ordinary shares               40,151,167  36,973,217 
for basic earnings per share 
 
Earnings per share basic                                       0.22        0.24 
 
Adjusted earnings per share basic (note 2)                     0.33        0.30 
 
 
 
Weighted average number of ordinary shares               40,151,167  36,973,217 
for basic earnings per share 
 
Effect on dilution: 
 
Deferred consideration shares                                     -      82,761 
 
Share incentive plan to Employees                           213,513     349,674 
 
Share based payments to Non-executive directors                   -       2,638 
 
                                                            213,513     435,073 
 
Weighted average number of ordinary shares               40,364,680  37,408,290 
adjusted for the effect of dilution 
 
Earnings per share diluted                                     0.21        0.23 
 
Adjusted earnings per share diluted (note 2)                   0.32        0.30 
 
 
 
 
 
 
5. Other Information 
 
 
 
The summary financial information for the year ended 31 December 2014 set out 
above is not the Company's Statutory Accounts. This financial information for 
the year ended 31 December 2014 has been extracted from the 2014 Annual Report 
and Accounts and, is prepared on the same basis as set out in the 2014 Annual 
Report and Accounts. The 2014 Annual Report and Accounts have been audited by 
Deloitte LLP who has issued an unqualified audit report, containing no 
statements under 498(2) or 5498(3) of the Companies Act 2006. 
 
 
 
The Accounts (Financial Statements) for 2014 are expected to be filed with the 
Company's Registrar following the Company's Annual General Meeting to be held 
on June 2015. 
 
 
 
 
 
 
 
END