2013 Audited Results

For Immediate Release 8 April 2014 INTERNETQ PLC ('InternetQ', the 'Group' or the 'Company') AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013 InternetQ, a leading provider of mobile marketing and digital entertainmentsolutions for mobile network operators and brands, is pleased to report itsresults for the year ended 31 December 2013. Financial Highlights * Revenue up by 42% to €104.4 million (2012: €73.4 million) (i) * EBITDA up by 36% to €14.4 million (2012: €10.6 million) (ii) * Adjusted EBITDA up by 33% to €16.2 million (2012: €12.2 million) * Profit after income tax up by 46% to €8.7 million (2012: €6.0 million) * Adjusted profit after tax up by 44% to €11.1million (2012: €7.8 million) * Operating profit up by 28% to €9.1 million (2012: €7.1 million) * Adjusted operating profit up by 32% to €11.8 million (2012: €8.9 million) * Earnings per share (basic) up by 29% to €0.24 (2012: €0.18) * Adjusted earnings per share (basic) up by 27% to €0.30 (2012: €0.24) * Cash and cash equivalents as at 31 December 2013 of €13.2 million (2012: €9.3 million) including restricted cash of €0.5 million (2012: €0.6 million) * Strong start to 2014 with trading in line with management expectations Operational Highlights * Strong traction with mobile operators and brands drives customer growth + Customer reach now includes over 165 corporate clients + Actively engaged with over 150 mobile Network operators having delivered 37 mobile marketing campaigns during the year through MobiDialog platform + New strategic relationships with key clients is expected to generate further revenues and expand the Group's end user base in 2014 * Akazoo music service continues to gain significant market presence + The Group's B2C segment grew by 40%, driven by a strong performance of the Akazoo music streaming platform + Akazoo's growth is expected to accelerate in 2014 driven by planned territory roll-outs and device manufacturer partnerships * Minimob successfully surpassed 100 million unique installations in 12 months + Advanced product features for developers and publishers expected to be a key driver into the US40 billion -dollar App economy + Monetary advantage through the use of the Minimob platform for B2B and B2C end markets * Increased geographic diversity enables the Group to access high growth mobile markets + Increased focus in MEA, now 29% (2012: 22%) of revenues and maintained focus on Asia, now 26% (2012: 33%) of the Group revenues + Expanding into new regions with Latin America 9% of Group revenues * Acquisition strategy and ongoing investment underpins the Group's market leading position + Atlas acquisition has strengthened InternetQ's revenue growth in Europe and enhanced mobile payment capabilities + Ongoing synergies post Interacel transaction coupled with the Group's mobile marketing expertise has created a strong new business pipeline in the Americas + Ongoing investment in both employees and technology Panagiotis Dimitropoulos, Founder and Chief Executive Officer of InternetQcommented: "We are delighted to report another set of excellent results, highlighting thecontinued strategic progress made across the business. This strong performancereinforces our belief that both innovation and product development foster closecustomer relationships which underpin long term success. "We continue to maintain our leading position in Mobile Marketing and the rapidroll-out of Akazoo both direct to consumers and more recently to operators anddevice manufacturers is now creating a powerful and much sought after asset.The ongoing adoption of Minimob, another example of our commitment toinnovation, continues at an unwavering pace, with over 100 million uniqueinstallations. InternetQ is now ideally placed to capitalise on a number of high-growth marketopportunities and we look forward to continuing to create value for ourshareholders." i. Acquisitions completed during the year contributed €19.3 million and €1.5 million of revenue and profit after income tax respectively, post-acquisition.ii. Adjusted numbers are presented in note 2. These are applied consistently throughout the announcement. For further details: InternetQ Tel: +44 (0) 20 3519 5250 / +30 (211) 101 1101Panagiotis Dimitropoulos, Founder and CEO Tel: +30 (697) 811 7520Veronica Nocetti, Chief Financial Officer Tel: +30 (694) 420 5275 BuchananJeremy Garcia / Gabriella Clinkard Tel: +44 (0)20 7466 5000 RBC Capital MarketsStephen Foss / Pierre Schreuder Tel: +44 (0)20 7653 4000 Canaccord GenuitySimon Bridges / Cameron Duncan Tel: +44 (0)20 7523 8000 About InternetQ plc: InternetQ is a leading digital content and mobile marketing services companywith operations spanning Asia, Europe, Africa and the Americas. It offersproprietary technology platforms to help mobile network operators, brands, andmedia companies to conduct targeted, interactive and measurable marketinginitiatives on mobile devices. Its mobile value added services include Akazoo,which allows consumers to purchase digital music content, MobiDialog, itsplatform for mobile operators to manage marketing campaigns with predictiveanalytics, and Minimob, a platform providing developers with the most advancedtools to cross-promote and monetize their apps. All underpinning the rapidglobal growth in smart devices and the thriving app economy. InternetQ is a publicly traded company listed on the AIM market of the LondonStock Exchange, under the symbol INTQ. For investor related queries, please email: [email protected] Chairman's Statement It is a pleasure and a privilege to have joined InternetQ at such an excitingpoint in the Company's development. As Panagiotis Dimitropoulos explains in hisChief Executive's Statement, this has been an excellent year of progress andone that positions the Group extremely well for continued future growth. I would like to extend my heartfelt thanks to the outgoing ChairmanKonstantinos Korletis. I was pleased that soon after joining the board we were able to furtherstrengthen it, with the appointment of Harris Jones as Non-Executive Director.Harris brings 14 years of experience in the mobile sector to InternetQ, havingpreviously been CEO, amongst others, of Cable and Wireless International. I have been immensely impressed by the strength of InternetQ's executive team,their sense of common purpose, their disciplined approach (in particular aroundacquisitions), the abundance of technical innovation and the backing that theyreceive from their ever increasing global client base. The Group's consistentlystrong track record of growth since its IPO in 2010 is a testament to thecommitment and tireless work of this team and the dedicated and talented staffacross the world. I am delighted to report that InternetQ has maintained its strong performanceover the last 12 months, continuing its excellent track record of underlyingrevenue growth across all its business divisions. Achieving, for the fourthconsecutive year, record levels of revenue, EBITDA and earnings per sharemomentum. Including the results from acquisitions completed during the year, revenueincreased by 42% to €104.4 million. Margins improved in the second half of theyear, driving annual adjusted EBITDA to €16.2 million and after-tax adjustedprofitability of €11.1 million in the full year. Adjusted earnings per share(Note 2) increased by 27% to €0.30. Significant structural growth potential in our core markets of mobile marketingand entertainment InternetQ operates in a fast growing but rapidly evolving global marketplace.Smartphone penetration is driving mobile internet penetration and is expectedto overtake fixed broadband as soon as 2017. Mobile penetration in emergingmarkets is now tracking above Broadband and, in some regions; mobile is seen asa default option for internet access and often the standard method forelectronic payments. Conversely, mobile advertising spend is currently verysmall relative to the time consumers spend on their devices, which continues toincrease. This market dynamic underpins expectations of a significant upwardshift in mobile advertising spend globally. This powerful and dynamic marketbackdrop continues to endorse InternetQ's strategy to offer a compelling suiteof entertainment products, marketing solutions and advertising to this growingmass market of smartphone users. Furthermore, InternetQ is a clear market leader in the field of mobilemarketing. Headquartered in Athens, but with a diversified internationalfootprint, the business was founded by our CEO Panagiotis Dimitropoulos in2000, as a mobile services company. With over 13 years' experience in thesector we have developed over time deep and long lasting relationships withnetwork operators and handset providers across the world. InternetQ is therefore ideally placed to profit from these trends. We havedeveloped a broad emerging markets footprint, strong mobile marketingcapabilities, exponential growth in the Minimob software installed base (100mdownloads thus far) and a leading Music streaming/download business in Akazoo. We have developed a three pronged approach, driving up revenues from the mobilemarket. We continue to invest in our original MobiDialog marketing platform(which continues to deliver double-digit growth), have developed in-house ourown sophisticated Minimob platform which is embedded into Smartphone apps,while growing our Akazoo music streaming subscribers' base across ourinternational footprint through partnerships with Mobile networks operators. A diverse geographic footprint At the time of the IPO of InternetQ in 2010, the business was concentratedaround three core markets; Poland, Turkey and Greece. Since then, we havedeveloped a diverse geographic footprint. With Europe accounting for 36% of2013 revenues, Asia 26%, Middle East and Africa 29% and Latin America 9%. TheCompany is now well placed to leverage these global relationships by offering abroad range of products and services. Successful integration of acquisitions and a disciplined approach to theirevaluation As I have already said, the executive team has demonstrated to the board thatthey are disciplined when it comes to evaluating the large number ofacquisition opportunities available. Each opportunity must align to InternetQ'sstated strategy of broadening its geographical reach whilst further developingits service offering. InternetQ's key assessment criteria for any transactioninclude: * Immediate "plug-and-play" access to a significant number of high growth International markets. * Ability to leverage "untapped" capacity of existing direct connectivity agreements with Mobile Operators. * Immediate capability to deploy and widely promote existing products and services and more effectively cross sell assets across a wider market footprint. * Significant opportunity to take advantage of the imminent transformation to a smartphone culture via the Minimob smart advertising platform. * Utilise the strength of the management team and ongoing media relationships to effectively exploit the vast regional potential arising from the dramatic adoption of the mobile internet. I am pleased to report that Atlas Interactive, which was acquired in July 2013,continues to trade well following its successful and swift integration. Theexecutive team remains confident that the combination of its expansive Europeanfootprint and connectivity agreements with Mobile Network Operators worldwidewill create significant cross selling opportunities. Indeed a number of new andexisting customers have already increased their spending as a result of theacquisition. Improving cash position and strengthening balance sheet I am also pleased to report that cash flow has improved with operating cashflow of €13.2 million (2012: €1.9 million) or 92% (18%)of EBITDA so we end theyear with a stronger balance sheet and cash and cash equivalents at year-end of€13.2 million (2012: €9.3 million) including restricted cash of €0.5 million(2012: €0.6 million). This solid financial position provides sufficientcapacity to support future growth, especially as smartphone adoption and usagebecomes commonplace across multiple emerging and developed markets. Prospects for the business This set of results is further evidence of InternetQ's progress in our chosenmarkets. With the ever increasing growth in smartphone penetration set tocontinue, the coming years hold great opportunity for InternetQ. We willremain flexible and evolve our businesses to take full advantage of thesemarket trends. Chief Executive Officer's Review As CEO, I am delighted to report another tremendous year of development andgrowth driven by product and geographic expansion, which now includes 23countries, as well as our continued global sales momentum. As such, we believe that this year's results are highly positive and capturethe energy of our industry and further outlines the significant opportunitythat mobile consumerism will create for InternetQ in the coming years. Strong sales growth, greater market access Our audited figures, which include revenue growth of 42% and profit growth of46% for the year, are once again impressive. This strong growth demonstratesthe potential of InternetQ's proposition as the Group's platforms find new endmarkets, gather greater commercial momentum and leverage the ability to scale,beyond the more traditional Telco business, as services are propagated intomultiple new distribution channels. Setting a firm foundation for global expansion From a corporate perspective, our targeted M&A activity has certainly given usgreater scope and capability to drive profitable business across all the areasoutlined in last year's report. In particular, 2013 saw InternetQ acquire andsuccessfully integrate the German billing and messaging aggregation leader,Atlas Interactive, and Interacel Holdings in Latin America cementing a dominantposition in central Europe and the Americas. Making Music and Apps work harmoniously There have been great strides made in the Music industry in recent years andthe provision of streaming music platforms has become a highly fertile area forthe business; for its part, our Akazoo platform has grown some 80% year-on-yearwith even more deals in the immediate pipeline. Investment in our product extensibility has reaped dividends too, with theMinimob platform becoming a major proposition for developers and publishersalike. We believe this line of business, namely in-app and deep linked mobilemarketing and advertising will become a fundamental driver; into the burgeoningUSD40 billion-dollar App economy. The interconnected future In my opinion, there is no company better positioned to take advantage of thiswholesale shift to smart devices, always-on Internet and the desire forconsumers everywhere to transact instantly. Our business has never beenstronger and our end markets have the potential to drive significant growthover the coming years. Chief Financial Officer's Review Review of the Group's business The Group's financial results for the year are once again the Company's bestever in terms of revenues and profits, allowing us to look to 2014 withoptimism. The market environment is very positive, with ever increasing numbersof Smartphones and an increasing breadth of functions and services providedthrough such devices. InternetQ has continued to extend geographically and alsoto develop new value added services which will maintain our momentum in yearsto come. The Company's performance, and ability to drive profitable growth during thepast year is not only a result of the healthy market, the strength of ourmarket proposition and operational execution, but can also be attributed to ourapproach to managing costs, cash flow and our balance sheet. In addition, 2013 was marked by the completion of two important acquisitions,Atlas Interactive in Germany and Interacel in Latin America. As such, by theend of 2013 the Group held a strong position, having achieved the objectives ofglobalizing its operations, improving its competitiveness and creating abalanced portfolio of products, setting a strong foundation for future growth. Group revenues generated 42% growth in 2013, with both segments deliveringsubstantial sales growth. Revenues from B2B activities grew by 43% to € 87.7million (2012: €61.5 million) while revenues from B2C grew by 40% to € 16.7million (2012: €11.9 million). Selling and administration costs increased by 49%, primarily due to theacquisitions and the geographic expansion of the business. Adjusted EBITDA(after adjustment for share incentive plans and share based payments amountingto €1,412,997) (Note 9) grew by 33% to €16.2 million (2012: €12.3 million) amargin of 16% (2012: 17%). The profit after tax for the year reached €8.7million compared to €6 million for 2012. Investment in the Akazoo and Minimob platforms resulted in an increase incapital expenditure. Total capital expenditure including fixed and intangiblesassets for the year ended 31 December 2013 stood at €14.4 million, an increaseof 82% from the previous year (2012: €7.9 million). The Group ended 2013 with €4.7 million (2012: €2.2 million) net cash, whichconsisted of €13.2 million (2012: €9.3 million) cash and cash equivalents andrestricted cash and €8.5 million of bank debt (2012: €7.1 million). The Groupraised €11.1 million of capital in July 2013 in order to finance theacquisition of Atlas Interactive in Germany and the expansion of its businessinternationally. The terms and conditions of the Group's borrowing agreementscontinue to be relatively favorable. Our €4 million term loan matures in March2022 and another €2 million loan arrangement matures in April 2017. InternetQGermany also obtained a €2 million overdraft facility for the financing of itsexpanding business with gaming companies, from which, the utilized portion asof year-end was €1.1 million. Summary InternetQ is entering 2014 in a stronger financial position than at the startof the previous year. We have delivered strong financial results with acontinued dedication to cost control, selective investments, and improved cashconversion. All in all, we have completed a year of considered corporate recalibration toposition the Group more strongly from an operational, as well as, from afinancial standpoint providing a base to capitalize on in the future. For all of us in the Group's Management, our foremost concern is to takecareful and measured steps to offset risks and to safeguard the interests ofthe Group, of our people, of our shareholders and of our partners. In otherwords, of all those who put their trust in us and who assist us in our efforts. Income StatementsFor the years ended 31 December 2013 and 2012(Amounts in Euro except share information, per share data and unless otherwise stated) Group Notes 2013 2012 Revenues 3 104,417,905 73,417,104 Cost of sales (48,980,504) (35,183,726) Gross profit 55,437,401 38,233,378 Other operating income 415,987 188,673 Selling and distribution costs (42,571,855) (26,511,544) Administrative expenses (4,144,801) (4,783,467) Operating profit 9,136,732 7,127,040 Finance costs (735,540) (586,818) Finance income 609,262 361,065 Profit before tax 9,010,454 6,901,287 Income tax 4 (269,869) (899,587) Profit after income tax 8,740,585 6,001,700 Attributable to: Ownersof the parent 8,740,585 6,001,700 Earnings per share basic 5 0.24 0.18 Earnings per share diluted 5 0.23 0.18 Adjusted Results: 2 2,404,765 1,764,311 Adjusted profit after income tax 2 11,145,350 7,766,011 Adjusted earnings per share basic 2 0.30 0.21 Adjusted earnings per share diluted 2 0.30 0.21 Statements of comprehensive incomeFor the years ended 31 December 2013 and 2012(Amounts in Euro except share information, per share data and unless otherwise stated) Group 2013 2012 Profit for the year 8,740,585 6,001,700 Other comprehensive income Exchange differences on translation of foreign (665,655) 511,432operations Other comprehensive (loss)/income for the year (665,655) 511,432 Total comprehensive income for the year 8,074,930 6,513,132 Attributable to:Equity holders of the parent 8,074,930 6,513,132 Statements of financial positionAs at 31 December 2013 and 2012(Amounts in Euro except share information, per share data and unless otherwise stated) Group 2013 2012 Assets Non-current assets Property, plant and equipment 2,190,605 2,185,663 Investment properties 470,000 505,700 Goodwill 15,086,546 3,097,051 Intangible assets 6 39,797,278 11,292,011 Non-current financial assets 2,813,690 2,602,605 Other non-current assets 926,248 102,607 Deferred tax assets 895,927 452,121 Total non-current assets 62,180,294 20,237,758 Current assets Trade receivables 26,917,507 30,406,390 Prepayments and other receivables 9,465,579 2,889,232 Current financial assets 108,513 102,519 Cash and cash equivalents 7 12,695,021 8,697,402 Restricted cash 7 522,876 633,538 Total current assets 49,709,496 42,729,081 Total assets 111,889,790 62,966,839 Equity and liabilities Equity attributable to equity holdersof the parent company Share capital 117,553 105,345 Share premium 47,500,518 34,227,669 Other components of equity 14,558,856 1,199,047 Other capital reserves 154,712 - Exchange differences (34,743) 647,671 Retained Earnings 19,629,955 10,889,370 Total equity 81,926,851 47,069,102 Non-current liabilities Interest-bearing loans and borrowings 8 5,106,700 240,100 Employee benefits liability 43,585 42,500 Provisions 156,145 51,830 Other non-current liabilities 9,167 - Deferred tax liability 5,025,409 173,467 Total non-current liabilities 10,341,006 507,897 Current liabilities Trade payables 11,435,963 10,807,890 Interest-bearing loans and borrowings 8 2,531,726 1,380,509 Current portion of interest-bearing 8 833,300 601,800loans and borrowings Income tax payable 863,646 673,677 Accruals and other current liabilities 3,957,298 1,925,964 Total current liabilities 19,621,933 15,389,840 Total liabilities 29,962,939 15,897,737 Total equity and liabilities 111,889,790 62,966,839 Statements of changes in equityFor the years ended 31 December 2013 and 2012(Amounts in Euro except share information, per share data and unless otherwise stated) Group Share Share Other Other Exchange Retained Total capital premium components capital differences Earnings of equity reserves Balance at 94,884 25,376,214 936,057 - 136,239 4,898,707 31,442,1011 January 2012 Profit after - - - - - 6,001,700 6,001,700income tax Other - - - - 511,432 - 511,432comprehensiveincome Total - - - - 511,432 6,001,700 6,513,132comprehensiveincome Provision for - - - - - (11,037) (11,037)employeebenefitliabilities Total - - - - 511,432 5,990,663 6,502,095comprehensiveincome afterpensionrelatedliabilities Share capital 10,461 8,522,109 - - - - 8,532,570increase Transaction - (379,835) - - - - (379,835)costs Share - - 232,781 - - - 232,781incentiveplan Contingent - 709,181 (522,445) - - - 186,736consideration Share based - - 552,654 - - - 552,654payments Balance at 105,345 34,227,669 1,199,047 - 647,671 10,889,370 47,069,10231 December 2012 Profit after - - - - - 8,740,585 8,740,585income tax Other - - - - (682,414) - (682,414)comprehensiveincome/(loss) Total - - - - (682,414) 8,740,585 8,058,171comprehensiveincome /(loss) Share capital 12,208 13,787,778 - - - - 13,799,986increase Transaction - (514,929) - - - - (514,929)costs Employees - - 771,681 - - - 771,681Shareincentiveplan Non-Executive - - 11,050 - - - 11,050directorsshare basedpayments Contingent - - 12,577,078 154,712 - - 12,731,790consideration Balance at 117,553 47,500,518 14,558,856 154,712 (34,743) 19,629,955 81,926,85131 December 2013 Statements of cash flowsFor the years ended 31 December 2013 and 2012(Amounts in Euro except share information, per share data and unless otherwise stated) Group 2013 2012 Cash flows from operating activities Profitbefore income tax 9,010,454 6,901,287 Adjustments for: Depreciation and amortisation 5,273,261 3,449,939 Valuation of investment property 35,700 29,300 Increase / (decrease) in provisions 104,315 (14,300) Provision for employee benefits 12,285 85,592liability Allowance for doubtful trade and other 98,942 122,438receivables Amortisation of investment grants (35,830) - Employees Share incentive plan expense 1,179,080 487,917 Non-Executive Directors share based 233,917 269,598payments Business combinations share based - 895,518payments Losses on disposal of property, plant, and equipment (4,931) 10,076 Finance income (162,243) (181,896) Finance costs 469,354 390,394 Net cash before working capital changes 16,214,304 12,445,863 (Increase)/ decrease in: Trade receivables 10,767,905 (18,023,830) Prepayments and other receivables (5,580,079) 10,449,686 Restricted cash 110,662 292,599 Increase/ (decrease) in: Trade payables (8,935,874) 2,853,344 Accruals and other current liabilities 827,406 (5,629,414) Other non-current liabilities 1,714 - Income taxes paid (150,846) (387,521) Employee benefits liabilities paid (11,200) (81,797) Net cash from operating activities 13,243,992 1,918,930 Cash flows from investing activities Capital expenditure for property, plant and (370,491) (723,966)equipment Proceeds from disposals of property, plant and 10,674 43,591equipment Capital expenditure for intangible (13,588,761) (6,936,563)assets Acquisition of subsidiaries (net of (10,721,396) -cash acquired) Proceeds from investment grants 43,283 - Interest and related income received 46,811 106,500 Net cash (used in) / from Investing (24,579,880) (7,510,438)Activities Cash flows from financing activities Proceeds from the issuance of share 11,105,965 7,281,368capital Purchase of financial assets (86,754) (2,639,886) Proceeds from long term borrowings: 5,940,000 - Payments of long term borrowings (841,900) (143,468) Proceeds from short term borrowings 1,150,000 - Payment of short term borrowings - (723) Other non-current assets (809,104) (13,074) Finance costs paid (459,045) (364,035) Net Cash used in Financing Activities 15,999,162 4,120,182 Effect of exchange rates' changes on flows and cash (665,655) 511,432 Net increase/(decrease) in cash and cash equivalents 3,997,619 (959,894) Cash and cash equivalents at beginning 8,697,402 9,657,296of year Cash and cash equivalents at end of the 7 12,695,021 8,697,402year 1. Business combinations a. InternetQ Germany (prior Atlas Germany GmbH) acquisition: On 11 July 2013, the Group completed the acquisition of 100% of the votingrights of Atlas Germany GmbH (renamed to InternetQ Germany GmbH), a Germanybased mobile and media services company. InternetQ Germany is a leader inaccess, billing and digital content distribution in more than 120 countries,connecting with more than 300 Mobile Network Operators ('MNOs') worldwide andoperating a database of over 3 million opt-in users for mobile marketingcampaigns. The acquisition of InternetQ Germany is in line with InternetQ's statedstrategy of broadening its geographical reach whilst further developing itsservice offering. Assets acquired and liabilities assumed The fair value of the assets and liabilities acquired amounted to €16.9 millionand €10.2 million, respectively. The goodwill amounted to €8.9 million and mainly represents the benefits thatthe Group is expecting from the increased Mobile Marketing activity with MNOs,where Atlas has direct commercial agreements, as well as from the roll out ofAkazoo in the area of Western Europe and Central & Eastern Europe. Since the date of acquisition and until 31 December 2013, InternetQ Germany hascontributed €18,610,162 of revenue and €1,463,445 profit after tax to theGroup. If the acquisition had taken place at the beginning of 2013 year and noton 11 July 2013, the revenue contribution to the Group would have been €31,785,951 and the negative contribution to the profit before tax of the Groupwould have been €1,270,787. b. Interacel Holdings LLC acquisition: On 14 November 2013, the Group completed the acquisition of 100% of the votingrights of Interacel Holdings. Interacel was founded in 2011 and operatesdirectly or through subsidiaries in Argentina, Chile, Ecuador, Paraguay, Peru,Costa Rica, Dominican Republic, Guatemala, Honduras and Nicaragua. Interacel isactive in some of the world's fastest growing mobile markets and has directconnectivity agreements with mobile network operators in 11 countries acrossthe Americas. Interacel also holds strategic partnerships with national mediacompanies and radio stations across Latin America. This acquisition will accelerate InternetQ's growth across Latin America,providing an established platform from which to upsell the Company's mobilemarketing, Akazoo music streaming and Minimob smart advertising servicesdirectly to mobile network operators and media brands. Assets acquired and liabilities assumed The fair value of the assets and liabilities acquired amounted to €11.7 millionand €5.1 million respectively. The goodwill amounted to €3,097,212 mainly represents the benefits that theGroup is expecting from the increase Mobile Marketing activity with MNOs whereInteracel has direct commercial agreements as well as from the roll out ofAkazoo in the area of Latin America. Since the date of acquisition and until 31 December 2013, Interacel hascontributed €707,710 of revenue and the negative contribution to the profitafter tax of the Group is amounted €56,151. If the acquisition had taken placeat the beginning of 2013 year and not on 14 November 2013, the revenuecontribution to the Group would have been €10,426,429 and the negativecontribution to the profit after tax of the Group would have been €556,773. 2. EBITDA and Adjusted Results The tables below present a reconciliation from profit after income tax to EBITDA. Group 2013 2012 Profit after income tax 8,740,585 6,001,700 Income tax 269,869 899,587 Finance costs 735,540 586,818 Finance Income (609,262) (361,065) Depreciation and amortization 5,273,261 3,449,939 EBITDA 14,409,993 10,576,979 Adjusted for: Share based compensation 1,412,997 757,516 One-off acquisition costs 398,087 895,518 Adjusted EBITDA 16,221,077 12,230,013 Adjusted results, which are non-GAAP financial measures, are presented in orderto improve investors understanding of financial results and improvecomparability of financial information from period to period. Reconciliation of the adjusted results 2013 Income Adjustments Adjusted Statement Resutls 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 2,404,766 11,145,351 2012 Income Adjustments Adjusted Statement Resutls EBITDA 10,576,979 1,653,034 12,230,013 Operating Profit 7,127,040 1,787,614 8,914,654 Profit after tax 6,001,700 1,764,311 7,766,011 Adjustments: 2013 2012 Employees Share Incentive Plans 1.179.080 487.918 Non-Executive directors share based payments 233.917 269.598 Acquisition costs and share based payments from 398.087 895.518business combinations 1.811.084 1.653.034 Amortisation of assets identified through 838.352 134.580Business combinations 2.649.436 1.787.614 Deferred tax charges on amortisation of assets (244.670) (23.303)identified through business combinations Total 2.404.766 1.764.311 Reconciliation of the adjusted earnings per share basic Group 2013 2012 Adjusted Profit after tax 11,145,350 7,766,011 Weighted average number of ordinary shares for basic 36,973,217 32,648,605earnings per share Earnings per share basic Adjusted 0.30 0.24 3. Segment Information For management purposes the Group is separated into business units based on itscustomer types. Consequently, the Group has two reportable operating segmentsas follows: * Business to Business (B2B) segment: B2B revenues are those that arise from the marketing of InternetQ's products to other organizations. It allows the Group to sell its products or services to other companies or organizations 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. In the past two years the Group has driven the scale of the business to thenext level with a further push into new territories by acquiring Atlas Germanyand Interacel Holdings, providing commercial synergies based on increasedbreadth of distribution. Following this, the Group has changed its segments to align with the strategy,allow management to take quick decisions and point to the opportunities andaccommodates and anticipates changes in the business and in customers'behaviors. From the marketing perspective, segments should ultimately fit theorganisation's ability to identify and respond to customers. This presentationis therefore consistent with how the business operates and how performance isassessed. As such InternetQ's management has decided to report two clearly definedcategories that better reflect the Group's customer types, namely B2B and B2C. The following table represents revenue and profit information regarding theGroup's operating segments for the year ended 31 December 2013. 2013 Adjustments and B2B B2C eliminations ConsolidatedRevenue External customer 87,739,600 16,678,305 - 104,417,905 Inter-segment 3,221,792 3,517,298 (6,739,090) - Total revenue 90,961,392 20,195,603 (6,739,090) 104,417,905 Segment operating profit /(loss) 10,050,708 (515,889) 9,534,819 Segment operating profit / (loss)includes the following: Depreciation and amortisation (3,239,270) (2,033,991) - (5,273,261) Operating Assets 81,377,570 26,224,090 - 107,601,660 Operating Liabilities 10,302,804 5,299,354 - 15,602,158 Other disclosures Capital expenditure 11,955,306 2,396,620 - 14,351,926 Revenues from three clients (partners with which the Group conducts campaignsin the regions of Middle East, Africa and Russia) which amounted to €67,638,770(77% of total B2B revenues) are included within the B2B segment, revenues fromone client which amounted to €5,299,447 (32% of total B2C revenues) areincluded within the B2C segment. The following table presents revenue and profit information regarding theGroup's operating segments for the year ended 31 December 2012. 2012 Adjustments and B2B B2C eliminations ConsolidatedRevenue External customers 61,523,198 11,893,906 - 73,417,104 Inter-segment 4,467,941 3,268,290 (7,736,231) - Total revenue 65,991,139 15,162,196 (7,736,231) 73,417,104 Segment Operating profit /(loss) 9,068,617 (1,046,059) - 8,022,558 Segment profit / (loss) includesthe following: Depreciation and amortisation (1,938,393) (1,511,546) - (3,449,939) Operating Assets 46,797,435 12,506,459 - 59,303,894 Operating Liabilities 11,415,623 1,412,561 - 12,828,184 Other disclosures Capital expenditure 6,393,472 1,502,453 - 7,895,925 Revenues from three clients (partners with which the Group conducts campaignsin the regions of Middle East, Africa and Russia) which amounted to €49,331,188(80% of total B2B revenues) are included within the B2B segment, revenues fromfive clients which amounted to €6,518,499 (55% of total B2C revenues) areincluded within the B2C segment. Acquisition costs, finance income, finance costs and income taxes are notallocated to individual segments as the underlying instruments are managed onan overall Group basis. Investment property, non-current and current financial assets, deferred taxasset and liabilities, income taxes payable and loans and borrowings are notallocated to segments as they are also managed on an overall Group basis. Geographic information The Company being only the holding company of the Group has no operations inthe country of domicile. Revenues from external customers 2013 2012 Europe 37,297,300 33,452,234 Latin America 9,070,945 22,552 Middle East and Africa 30,726,774 15,951,913 Asia 27,322,886 23,990,405 Total Revenues 104,417,905 73,417,104 Revenues in Europe mainly includes revenue in Russia, Poland, Greece andGermany corresponding to 19% (2012:21%), 7% (2012: 9%), 4% (2012:4%) and 2%(2012:0%) of the Groups revenues. 4. Income tax The amounts of income taxes which are reflected in the accompanying incomestatements are analysed as follows: Group 2013 2012 Current income taxes 289,954 407,978 Deferred tax (20,085) 491,609 Total charge for income taxes 269,869 899,587 The reconciliation of income taxes reflected in the income statements and theamount of income taxes determined by the application of the Company's statutorytax rate to pretax income is summarized as follows: Group 2013 2012 Profit before income taxes 9,010,454 6,901,287 Income tax calculated at the nominal applicable rate 2,072,404 1,690,815(23%) (2012: 24.5 %) Effect of income/(loss) subject to (572,476) (969,769)different tax rates Tax effect on non-tax deductible expenses and non-tax (476,740) (123,506)deductible income Tax effect on-tax losses for which no 57,846 342,562deferred tax was recognised Capital allowances for tax incentive (811,165) (40,515)plans Total charge for income taxes 269,869 899,587 5. Earnings per share Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary equity holders of the parent bythe weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profitattributable to ordinary equity holders of the parent by the weighted averagenumber of ordinary shares outstanding during the year plus the weighted averagenumber of ordinary shares that would be issued on conversion of all thedilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the basic and dilutedearnings per share computations: Group 2013 2012 Net profit attributable to ordinary equity holders of 8,740,585 6,001,700the parent from continuous operations Weighted average number of ordinary shares for basic 36,973,217 32,648,605earnings per share Earnings per share basic 0.24 0.18 Weighted average number of ordinary shares for basic 36,973,217 32,648,605earnings per share Effect on dilution: Deferred consideration shares 138,456 62,826 Acquisition costs / share based payments - 50,556 Share incentive plan 352,311 290,889 490,767 404,271 Weighted average number of ordinary shares adjusted for 37,463,984 33,052,876the effect of dilution Earnings per share diluted 0.23 0.18 6. Intangible assets Intangible assets in the accompanying financial statements of the Group areanalysed as follows: Purchased Internally Software Customers Non Total Software generated under relationships compete software Development agreement Cost At 1 January 5,028,942 5,705,884 1,505,582 595,083 203,186 13,038,6772012 Additions 5,234,892 1,253,511 497,484 - - 6,985,887 Additions - - - - - -fromAcquisitions Transfers 1,140,143 365,439 (1,505,582) - - Sales/ write - - - - - -offs At 31 11,403,977 7,324,834 497,484 595,083 203,186 20,024,564December2012 Additions 6,621,495 649,622 6,509,145 - - 13,780,262 Additions 1,588,104 7,618,242 - 8,485,704 1,627,357 19,319,407fromAcquisitions* Transfers 396,121 101,363 (497,484) - - - Sales/ write - (791,430) - - - (791,430)offs At 31 20,009,697 14,902,631 6,509,145 9,080,787 1,830,543 52,332,803December2013 Amortisation At 1 January (2,975,782) (3,025,461) - (19,836) - (6,021,079)2012 Additions (1,550,101) (1,055,684) - (39,672) (66,017) (2,711,474) Sales/ write - - - - - -offs At 31 (4,525,883) (4,081,145) - (59,508) (66,017) (8,732,553)December2012 Additions (2,849,154) (1,436,272) - (236,362) (72,614) (4,594,402) Sales / - 791,430 - - - 791,430write offs At 31 (7,375,037) (4,725,987) - (295,870) (138,631) (12,535,525)December2013 Net book 2,053,160 2,680,423 1,505,582 575,247 203,186 7,017,598value at 1January 2012 Net book 6,878,094 3,243,689 497,484 535,575 137,169 11,292,011value at 31December2012 Net book 12,634,660 10,176,644 6,509,145 8,784,917 1,691,912 39,797,278value at 31December2013 * These additions relate to the acquisition of InternetQ Germany GmbH andInteracel Holdings, for further details please refer to note 7. The accumulateddepreciation of these assets was eliminated against the gross carrying amountof the assets. 7. Cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash in the accompanying financialstatements are analysed as follows: Group 2013 2012 Cash in hand 12,752 84,614 Cash at banks 12,682,269 8,612,788 Total cash and cash equivalents 12,695,021 8,697,402 Restricted cash 522,876 633,538 Total cash and cash equivalents and 13,217,897 9,330,940restricted cash Cash at banks earns interest at floating rates based on monthly bank depositrates. Interest earned on cash at banks and time deposits is accounted for onan accrual basis and for the year ended 31 December 2013 amounted to €34.165(2012: €73,623) for the Group. Restricted cash represents funds deposited as collateral, for the issuance ofbank guarantees arising in the ordinary course of the business. The Groupmaintains several bank facilities amounting to €5 million for the issuance ofletter of guarantees. 8. Interest Bearing Loans and Borrowings a) Long-term loans: Long-term loans in the accompanying financial statements are analysed as follows: Group 2013 2012 Bond loans - 841,900 Other loans 5,940,000 - Total 5,940,000 841,900 Less: current portion - bond loans - (601,800) - other loans (833,300) - Total current portion (833,300) (601,800) Long term portion 5,106,700 240,100 The Group has entered into two Bond Loan agreements as follows: * In March 2007 the Group entered into a Bond Loan agreement for a principal amount of €800,000 which bears interest at the six-month Euribor plus a margin of 2.3%. The repayment of the Bond is in 12 semi-annual installments. The loan was fully repaid within 2013. * In March 2008 the Group entered into a Bond Loan agreement for a principal amount of €500,000 which bears interest at the six-month Euribor plus a margin of 2.0%. The loan was fully repaid within 2013. Moreover the Group has entered into two new loans within 2013 as follows: * In May 2013 the Group entered into a Loan agreement for a principal amount of €2,000,000 which bears interest at 6.25%. The repayment of the loan is in 6 semi-annual installments. The first installment will be paid in November 2014 while the last installment will be paid in May 2017. * In December 2013 the Group entered into a Loan agreement for a principal amount of €4,000,000 (€3.940.000 have been utilised within the year 2013) which bears interest at three-months Euribor plus a margin of 5.5%. The repayment of the loan is in thirty two quarterly instalments. The first instalment will be paid in March 2014 while the last instalment will be paid in March 2022. The total interest expense for long-term borrowings for the year ended 31December 2013 amounted to €131,557 (2012: €47,270) for the Group and isincluded in the financial expenses. b) Short-term borrowings: The Group has short-term borrowings (overdraft facilities) with annual variableinterest rates which vary from 5% to 8%. The table below presents the available credit lines of the Company togetherwith the utilized portion. Group 2013 2012 Credit lines available 7,350,000 5,350,000 Unused portion (4,818,274) (3,969,491) Used Portion 2,531,726 1,380,509 The total interest expense for short-term borrowings for the year ended 31December 2013, amounted to €87,340 (2012: €116,708) and is included infinancial expenses. 9. Other Information The summary financial information for the year ended 31 December 2013 set outabove is not the Company's Statutory Accounts. This financial information forthe year ended 31 December 2013 has been extracted from the 2013 Annual Reportand Accounts and, is prepared on the same basis as set out in the 2013 AnnualReport and Accounts. The 2013 Annual Report and Accounts have been audited byDeloitte LLP who has issued an unqualified audit report, containing nostatements under 498(2) or 5498(3) of the Companies Act 2006. The Accounts (Financial Statements) for 2013 are expected to be filed with theCompany's Registrar following the Company's Annual General Meeting to be heldon June 2014.