Interim Results

For immediate release 30 September 2014 INTERNETQ PLC ('InternetQ', the 'Group' or the 'Company') INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014 Strong results reflect established position in mobile marketing and musicstreaming InternetQ plc (LSE-AIM: INTQ), a leading provider of mobile marketing anddigital entertainment solutions for mobile network operators and brands,announces its unaudited interim results for the six months ended 30 June 2014. Financial highlights: * Revenue up 53% to €65.7million (H1 2013: €43.0million) * + B2B revenue up 49% to €51.5million (H1 2013: €34.5million) + B2Crevenue up67% to €14.2million (H1 2013: €8.5million) * EBITDA (adjusted) up 88% to €9.8million (H1 2013: €5.2million) * Profit before tax (adjusted)up 40% to €6.0million (H1 2013: €4.3million) * Earnings per share (adjusted) up 20% to €0.14(H1 2013: €0.11) * Cash flow from operations up 56% to €8.0 million (H1 2013: €5.1 million) * Free Cash Flow of €0.5million (H1 2013:0.1million) * Net cash position €3.3million as at 30 June 2014 (FY2013: €4.7million) after acquisitions. Operational highlights: * Strong growth rates combine good organic growth with selective acquisitions * Rollout of existing solutions into new geographies accelerates growth * Global smartphone adoption combined with the growing app economy benefits both businesses - innovation and market trends accentuate synergies * Latin America accelerates following the successful integration of InternetQ LatAm (former Interacel) and the pipeline remains strong * UpMobile's integration proceeding to plan * Minimob continues to be a key driver of growth, exceeding 250 million unique SDK installs since launch and increasing at a rate of 1 to 2 million installs per day * Minimob's remarkable success has been transferrable across all layers of InternetQ's business * More ad networks in Germany, UK, China, Israel, Singapore and India were integrated with the Minimob platform * Akazoo continues to exhibit high conversion rates to paying subscribers, attracting new B2B operators and device partnerships with major global groups * Extremely successful roll-out of Akazoo into new SE Asian territories, including Thailand and Malaysia with first place rankings in the music category of the Google app store for extended periods throughout H1 2014 * Strong mobile marketing pipeline with notable projects in emerging markets and campaigns with leading operators in Argentina, Paraguay, the Dominican Republic, Ecuador, Guatemala, Honduras, Nicaragua and Costa Rica, Poland, Asia and other regions. Trading Outlook: * Strong trading momentum continues into second half * The development of new features for Minimob and Akazoo are expected to be completed in Q4 2014 Commenting on the results, Panagiotis Dimitropoulos, Founder and ChiefExecutive Officer of InternetQ said: "These results demonstrate the commanding global market position that InternetQhas developed for both its mobile marketing and music streaming divisions.Market trends continue to move in InternetQ's favour with mobile marketing nowa significant part of many company's sales strategies. Our knowledge andinsight into the markets that we service, and our deep client relationships inmultiple geographies, positions us well for the future." "We have a strong track record of delivering significant year-on-year revenueand EBITDA growth and given the progress made in the first half, we remainconfident that results for the full year will be in line with current marketexpectations." 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 FTI Consulting LLPCharles Palmer / Chris Lane / Karen Tang Tel: +44 (0)20 3727 1000 RBC Capital MarketsStephen Foss / Pierre Schreuder Tel: +44 (0)20 7653 4000 Canaccord GenuitySimon Bridges / Emma Gabriel 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 and Minimob, its smartmobile marketing and advertising platform to conduct effective and measurablecampaigns on mobile phones and achieve user engagement and appmonetization. All of InternetQ's products are underpinned by the rapid globalgrowth 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, pleaseemail: [email protected] CEO's Review Overview The first six months of the 2014 financial year have been another importantperiod in InternetQ's development as a significant player in the global mobileecosystem. InternetQ's strong performance is clearly evidenced by significant revenuegrowth to €65.7 million, an increase of more than 50 percent over the previousyear. These strong growth rates have been achieved both organically and throughacquisitions. In the first six months of the current financial year thesuccessful integration of businesses acquired in Latin America and Germany hasimproved our geographic diversity, while organic growth has been driven by thedevelopment of our mobile marketing and digital entertainment businesses, whichcontinue to evolve with new functionalities and commercial arrangements.Adjusted underlying EBITDA has risen significantly as well to €9.8 million. TheGroup has continued to invest to secure future growth with €7.1 millioninvested into technology platforms and upgraded customer functionalities and €3million in an acquisition in Mexico to complement our Latin American business.These investments have been financed from existing cash resources and theCompany's net cash position as at 30 June 2014 was €3.3 million. InternetQ's growth has been accelerated by the acquisitions that we have madewhich have enabled the Company to achieve rapid deployment of its existingsolutions into new geographies and new customers. From a strategic perspective, InternetQ has streamlined its activities into twomain, highly synergistic and progressive lines of business: B2B (MobileMarketing) and B2C (Digital Entertainment). Overall, we see significant futureopportunities in our markets for both mobile marketing and digitalentertainment on the back of the success we have already achieved across LatinAmerica, Europe and Asia. With global smartphone adoption continuing apace and the resulting increaseduse of smart devices, vendors and brands are increasingly able to reachconsumers in a more targeted and therefore more profitable way. With theongoing focus on customer acquisition and the deeper levels of consumer insightthat are now available to us, InternetQ has developed a performance-basedadvertising model that we have successfully taken to a dynamic new client base.This new client base includes game companies and large-scale Ad networks thatare increasingly giving us demand-based mobile advertising campaigns to manage.Our unique offering to support the current trend for `App install' campaignshas enabled InternetQ to build a commanding market presence supported by deepclient relationships. Our focus on innovation will continue to drive our business and we are wellplaced to benefit from the ongoing increase in daily consumption of Apps and InApp purchase activities regardless of whether they evolve from a mobileoperator, an App store, or a large scale game portal. We will continue toinnovate to connect the advertiser to the end-user in a profitable manner. B2B (Mobile Marketing): The Mobile Marketing landscape has changed significantly in recent years,primarily as a result of substantial global smartphone adoption. Strategically,InternetQ has pre-empted this change by deploying its Minimob platform veryearly in the cycle, thereby being able to offer both existing and new clientsthe option to run their campaigns into greater and more widely dispersedchannels. The Minimob offering is an exciting addition to InternetQ's product suite anddemonstrates our ability to innovate and bring to market new technologies thatchange how our customer base interacts with their end users. With the launch ofMinimob and its recently upgraded Software Development Kit ("SDK"), InternetQis capable of providing its client base with the technology and the opportunityto successfully launch campaigns that target the "over-the-top" world of smartdevices and app ecosystems which their subscribers inhabit. Minimob now countsmore than 250 million installs, and this is increasing at a rate of 1 to 2million installs per day. This network that InternetQ has developed over thepast 15 years is essentially a large `private network' that, using ourtechnology, our clients can effectively advertise into. The proprietary cross-selling capabilities that are available with the latestrelease of the Minimob SDK are unique to InternetQ and truly differentiate usin the marketplace. These algorithms offer our clients a number of advantagesand we are dedicated to constantly improving and adapting our offer to maximizethe financial potential of this network. We have achieved strong growth in the first six months, particularly inemerging markets with notable mobile marketing projects undertaken inArgentina, Paraguay, the Dominican Republic, Ecuador, Guatemala, Honduras,Nicaragua and Costa Rica. The importance of our product for our clients isdemonstrated by the fact that a good number of campaigns operating in the LatinAmerican region were extended from the first quarter into the second. Lookingforward, we have a strong mobile marketing pipeline which includescross-operator projects in Poland, projects in Asia and campaigns with leadingoperators in other regions. B2C (Digital Entertainment): Digital Entertainment continues to be a major growth driver for our business,especially the Akazoo music streaming service, which is delivered to customersthrough our strong relationships with mobile operators, handset manufacturersand even ISP's. Thanks to the synergies of Minimob with its advanced Appmarketing capability, the rapid and impressive growth of Akazoo continuesunabated. The potential for direct-to-consumer expansion has also offeredadditional opportunities for product and service extension. In H1 2014, following the conclusion of a successful open tender, InternetQ wasselected to run the Orange Poland music service. This service has launchedwell, and as we move through the year, Akazoo has a growing pipeline ofpotential business-to-business partnerships with launches stretching in 2015thus providing good forward visibility. Operationally speaking, the conversionrates (to paid subscriptions) remain high at 20 to 35 percent, driving asignificant increase in streaming revenues Investing in Akazoo will lead to the introduction of a number of new featuresand functions in the second half which will further enhance the key automationand personalisation aspects of the service and strengthen its position in themarketplace. Financial review: Group revenues increased by 53% in the first half of 2014 to €65.7 million (HY2013: €43.0 million), with both segments delivering substantial sales growth.Revenues from B2B activities grew by 49% to €51.5 million (HY 2013: €34.5million) and revenues from B2C grew by 67% to €14.2 million (HY 2013: €8.5million). InternetQ now benefits from further geographic diversity withrevenues spread across a broad range of growth markets - 34% from Europe, 32%from Asia, 18% from the Americas, 16% from the Middle East & Africa. Operationscontinue to be managed and coordinated from existing locations. Selling and administration costs increased by 35%, primarily due toacquisitions and the geographic expansion of the business. Adjusted EBITDA(after adjustment for share based payments and acquisition costs amounting to €1.3 million) grew by 88% to €9.8 million (HY 2013: €5.2 million) a margin of15% (HY 2013: 12%). Profit after tax for the half year remained stable at €3.2million compared to €3.3 million for the HY 2013, with this attributable to theincrease in operating profits being offset by amortisation of intangibles and aone-off, unrealized currency movement on intercompany balances between the UKholding company and Euro denominated subsidiaries. As in previous periods,these gains and losses are unlikely to be realized but lead to a non-cash P&Ladjustment. Investment in the Akazoo, Minimob platforms and related applications resultedin capital expenditure for the half year ended 30 June 2014 of €7.1 million, anincrease of 40% from the previous year (HY 2013: €5 million). A slightly loweramount will be invested in the second half and cash will continue to improve. Cash from operations was €8.0 million, reflecting the strong underlyingfinancial performance. Investing activities comprised €7.1 million in softwaredevelopment and €3.0 million in a synergistic acquisition in Mexico. The Groupended the first half of the year with €3.3 million net cash after acquisitions,which consisted of €12 million (HY 2013: €8.7 million) cash and €8.7 million ofbank debt (HY 2013: €3.4 million). We remain dedicated to executing our growth strategy and have carefullypositioned the Company to take full advantage of the boom in mobile advertisingto smart devices being driven by the App Economy. InternetQ has made excellent progress during the first half, in line withmarket expectations and I am confident we are well placed to continue tobenefit from the strong growth in mobile marketing and digital entertainment. The mobile ecosystem has altered to become a majority "smart device" one.Having anticipated this shift, InternetQ is now reaping considerable benefitsfrom this changing landscape and we have developed innovative products that areperfectly attuned to this huge market opportunity. Our products and services are receiving very strong demand from both existingand new customers and sales post-period end have been strong. With the industrygrowth pushing billions upon billions of transactions and spending on allthings mobile; we fully expect another strong year ahead and are confident oftaking the Company to even greater heights. The consistent and sustainable nature of the InternetQ's commercial success,coupled with the strong revenue and EBITDA growth achieved in the first sixmonths, gives the Board confidence that that results for the full year will bein line with current expectations. InternetQ will hold an Investors' Day on 11 November 2014. Unaudited Consolidated Income Statement for the period ended 30 June 2014 (Amounts in Euro, except share information, per share data and unless otherwisestated) Group Notes Period ended Period ended 30 June 2014 30 June 2013 Revenues 3 65,712,940 43,001,100 Cost of sales (36,602,636) (22,313,004) Gross profit 29,110,304 20,688,096 Other operating income 110,400 276,488 Selling and distribution costs (22,183,426) (16,775,394) Administrative expenses (2,595,691) (1,577,124) Operating profit 4,441,587 2,612,066 Finance costs (1,216,416) (245,134) Finance income 4 251,713 1,232,734 Profit before income tax 3,476,884 3,599,666 Income tax (255,868) (274,640) Profit after income tax 3,221,016 3,325,026 Attributable to: Owners of the parent 3,221,016 3,325,026 Earnings per share basic 5 0.08 0.10 Earnings per share diluted 5 0.08 0.09 Adjustments to profit after tax 1 2,193,172 677,929 Adjusted profit after income tax 1 5,414,188 4,002,955 Adjusted earnings per share basic 5 0.14 0.11 Adjusted earnings per share diluted 5 0.14 0.11 The accompanying notes are an integral part of the interim financialstatements. All results are derived from continuing operations. Unaudited Consolidated Statement of Comprehensive Income for the period ended30 June 2014 (Amounts in Euro, except share information, per share data and unless otherwisestated) Group Period ended Period ended 30 30 June 2014 June 2013 Profit for the period 3,221,016 3,325,026 Other comprehensive income Exchange differences on translation of foreign 687,008 (1,354,877)operations Other comprehensive income /(loss)/ for 687,008 (1,354,877)the year Total comprehensive income for the year 3,908,024 1,970,149 Attributable to: Equity holders of the parent 3,908,024 1,970,149 Unaudited Consolidated Statement of Financial Position as at 30 June 2014 (Amounts in Euro, except share information, per share data and unless otherwisestated) Group 30 June 2014 31 December 2013 Assets Non-current assets Property, plant and equipment 2,126,245 2,190,605 Investment properties 470,000 470,000 Goodwill 19,396,322 15,086,546 Intangible assets 47,880,478 39,797,278 Non-current financial assets 2,836,754 2,813,690 Other non-current assets 570,655 926,248 Deferred tax assets 716,935 895,927 Total non-current assets 73,997,389 62,180,294 Current assets Trade receivables 36,157,358 26,917,507 Prepayments and other receivables 4,431,301 9,465,579 Current financial assets 111,503 108,513 Cash and cash equivalents 11,322,079 12,695,021 Restricted cash 691,400 522,876 Total current assets 52,713,641 49,709,496 Total assets 126,711,030 111,889,790 Equity and liabilities Equity attributable to equity holders ofthe parent company Share capital 120,323 117,553 Share premium 50,478,994 47,500,518 Treasury shares (13,276) - Other components of equity 16,088,278 14,558,856 Other capital reserves 154,712 154,712 Exchange differences 654,219 (34,743) Retained Earnings 22,850,971 19,629,955 Total equity 90,334,221 81,926,851 Non-current liabilities Interest-bearing loans and borrowings 5,041,700 5,106,700 Employee benefits liability 46,085 43,585 Provisions 156,145 156,145 Other non-current liabilities 127,222 9,167 Deferred tax liability 5,614,179 5,025,409 Total non-current liabilities 10,985,331 10,341,006 Current liabilities Trade payables 17,627,027 11,435,963 Interest-bearing loans and borrowings 2,914,736 2,531,726 Current portion of interest-bearing loans 833,300 833,300and borrowings Income tax payable 1,180,712 863,646 Accruals and other current liabilities 2,835,703 3,957,298 Total current liabilities 25,391,478 19,621,933 Total liabilities 36,376,809 29,962,939 Total equity and liabilities 126,711,030 111,889,790 The accompanying notes are an integral part of the interim financialstatements. Unaudited Consolidated Statement of Changes in Equity for the period ended 30June 2014 (Amounts in Euro, except share information, per share data and unless otherwisestated) Group Share Share Treasury Other Other Exchange Retained Total capital premium shares components capital differences Earnings of equity reserves Balance at 1 105,345 34,227,669 - 1,199,047 - 647,671 10,889,370 47,069,102January 2013 Profit after - - - - - - 8,740,585 8,740,585income tax Other - - - - - (682,414) - (682,414)comprehensiveloss 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 Share - - - 771,681 - - - 771,681incentiveplan Non-Executive - - - 11,050 - - - 11,050directorsshare basedpayments Contingent - - - 12,577,078 154,712 - - 12,731,790consideration Balance at 31 117,553 47,500,518 - 14,558,856 154,712 (34,743) 19,629,955 81,926,851December 2013 Profit after - - - - - - 3,221,016 3,221,016income tax Other - - - - - 688,962 - 688,962comprehensiveincome Total - - - - - 688,962 3,221,016 3,909,978comprehensiveincome Share capital 2,770 2,978,476 (13,276) (2,545,295) - - - 422,675increase Employees - - - 600,067 - - - 600,067Shareincentiveplan Non-Executive - - - - - - - -directorsshare basedpayments Contingent - - - 3,474,650 - - - 3,474,650consideration Balance at 30 120,323 50,478,994 (13,276) 16,088,278 154,712 654,219 22,850,971 90,334,221June 2014 The accompanying notes are an integral part of the interim financialstatements. Unaudited Consolidated Cash Flow Statement for the period ended 30 June 2014 (Amounts in Euro, except share information, per share data and unless otherwisestated) Group Period ended 30 Period ended 30 June 2014 June 2013 Cash flows from operating activities Profit/ (loss) before income taxes 3,476,884 3,599,666 Adjustments for: Depreciation and amortisation 4,001,571 2,012,531 Provision for employee benefits 10,098 15,894liability Allowance for doubtful trade and - 27,840other receivables Amortisation of investment grants (27,290) - Employees share incentive plan 942,417 464,812expense Non-Executive Directors share based 53,840 102,893payments (Losses) /gains on disposal of property, plant, 15,695 (4,896)and equipment Finance income (62,260) (81,455) Finance costs 382,172 147,880 Net cash before working capital 8,793,127 6,285,165changes (Increase)/ decrease in: Trade receivables (9,080,537) 758,533 Prepayments and other receivables 5,172,712 (2,238,341) Restricted cash (168,524) 448,137 Increase/ (decrease) in: Trade payables 4,692,141 (1,100,749) Accruals and other current (1,275,000) 987,592liabilities Other non-current liabilities (1,714) - Income taxes paid (153,286) (31,716) Employee benefits liabilities paid (7,598) (11,200) Net cash from operating activities 7,971,321 5,097,421 Cash flows from investing activities Capital expenditure for property, plant and (338,202) (58,462)equipment Proceeds from disposals of property, plant and 27,792 5,818equipment Capital expenditure for intangible (7,150,862) (4,946,548)assets Acquisition of subsidiaries (net of (2,969,031) -cash acquired) Proceeds from investment grants 127,290 - Interest and related income received 35,991 81,582 Net cash used in Investing Activities (10,267,022) (4,917,610) Cash flows from financing activities Proceeds from the issuance of share - -capital Proceeds from long term borrowings: 60,000 2,000,000 Payments of long term borrowings (125,000) (841,900) Proceeds from short term borrowings 383,009 - Payments of short term borrowings - (478) Other non-current assets 355,593 (19,308) Finance costs paid (437,851) (194,469) Net cash used in Financing Activities 235,751 943,845 Effect of exchange rates' changes on flows and 687,008 (1,354,877)cash Net decrease in cash and cash equivalents (1,372,942) (231,221) Cash and cash equivalents at 12,695,021 8,697,402beginning of year Cash and cash equivalents at end of 11,322,079 8,466,181the period The accompanying notes are an integral part of the interim financial statements Notes to the unaudited Interim Consolidated financial Statements (Amounts in Euro except share information, per share data and unless otherwisestated) 1. EBITDA and adjusted results The tables below present a reconciliation from profit after income tax toEBITDA. Group Period ended Period ended 30 30 June 2014 June 2013 Profit after income tax 3,221,016 3,325,026 Income tax 255,868 274,640 Finance costs 1,216,416 245,134 Finance Income (251,713) (1,232,734) Depreciation and amortisation 4,001,571 2,012,531 EBITDA 8,443,158 4,624,597 Adjusted for: Share based compensation 996,258 567,705 One-off acquisition costs 313,869 - EBITDA Adjusted 9,753,285 5,192,302 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 for the period ended 30 June 2014 and2013: for the period ended 30 June 2014 Income Adjustments Adjusted Statement Results EBITDA 8,443,158 1,310,127 9,753,285 Operating Profit 4,441,587 2,540,074 6,981,661 Profit after tax 3,221,016 2,193,172 5,414,188 for the period ended 30 June 2013 Income Adjustments Adjusted Statement Results EBITDA 4,624,597 567,705 5,192,302 Operating Profit 2,612,066 701,011 3,313,077 Profit after tax 3,325,026 677,929 4,002,955 Reconciliation of the adjusted earnings per share basic for the period ended 30June 2014 and 2013: Group Period ended Period ended 30 June 2014 30 June 2013 Adjusted Profit after tax 5,414,188 4,002,955 Weighted average number of ordinary shares for 39,290,395 34,894,942basic earnings per share Earnings per share basic Adjusted 0.14 0.11 Analysis of the adjustments for the period ended 30 June 2014 and 2013: Group Period ended Period ended 30 June 2014 30 June 2013 Employees Share Incentive Plans 942,417 464,812 Non-Executive directors share based payments 53,841 102,893 Acquisition costs and share based payments from 313,869 -business combinations Adjustments to EBITDA 1,310,127 567,705 Amortisation of assets identified through 1,229,947 133,306Business combinations Adjustments to operating profit 2,540,074 701,011 Deferred tax charges on amortisation of assets (346,902) (23,082)identified through business combinations Adjustments to profit after tax 2,193,172 677,929 2. Business Combinations Up Mobile Acquisition 0n 14 May 2014, the Group completed the acquisition of 100% of the votingrights of UpMobile. UpMobile is the number one provider of interactivesolutions for radio stations in Mexico, and also provides mobile solutions tomedia organisations and the public sector in Mexico, a market that currentlyhas more than 100 million mobile connections and 33 million smartphone users. The acquisition of UpMobile is in line with InternetQ's stated strategy ofbroadening its geographical reach whilst further developing its serviceoffering. The key benefits of the transaction will be to accelerate theexpansion of InternetQ's services into Latin America considering that Mexico isthe fastest growing smartphone market in Latin America and to enable the Groupto cross-sell its Minimob marketing solution and Akazoo music streaming serviceto UpMobile's customers Consideration Transferred The preliminary assessment of the fair value of the consideration transferredrecognised in the 30 June 2014 financial statements was determined to be €6,479,796 while the preliminary fair value of the deferred consideration wasdetermined to be €3,494,722 and was treated as a component of equity. Transaction costs of €207,116 were expensed in the year ended 31 December 2013,and were included in the administrative expenses. Preliminary fair value recognised on the acquisition The fair value of the intangible assets amounting to €4,622,187 consists of ITplatform software of €1,460,100 and customers' relationships (agreements withmobile operators and content providers) of €3,162,087. As a result of theintangible assets identified on acquisition, a deferred tax liability amountingto €948,626 has been recognised. The preliminary assessment of goodwill amounted to €4,325,881 and mainlyrepresents the benefits that the Group is expecting from the increased MobileMarketing activity with MNOs, where UpMobile has direct commercial agreements,as well as from the roll out of Akazoo and Minimob in Mexico. At the reporting date, no contingent liabilities have been identified asexisting as at the acquisition date. 3. Operating 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 points to the opportunities andaccommodate and anticipate changes in the business and in customer behaviors.This presentation is therefore consistent with how the business operates andhow performance is assessed. As such InternetQ's management has decided to report two clearly definedcategories that better reflect the Group's customer types, namely B2B and B2C. Management monitors the operating results of its segments separately for thepurpose of making decisions about resource allocation and performanceassessment. 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 amanner similar to transactions with third parties. Segment income, expenses andresults will include those transfers between business segments which areeliminated on consolidation. The following table represents revenue and profit information regarding theGroup's operating segments for the period ended 30 June 2014. For the period 30 June 2014 B2B B2C Adjustments Consolidated and eliminations Revenue External customer 51,494,968 14,217,972 65,712,940 Inter-segment 366,721 2,580,102 (2,946,823) - Total revenue 51,861,689 16,798,074 (2,946,823) 65,712,940 Segment Operating profit /(loss) 6,268,964 (1,827,377) - 4,441,587 Depreciation and amortisation 2,520,322 1,481,249 - 4,001,571 Segment EBITDA 8,809,286 (366,128) - 8,443,158 Adjustments (note 1) 909,352 400,775 - 1,310,127 Segment adjusted EBITDA 9,698,638 54,647 - 9,753,285 The following table represents revenue and profit information regarding theGroup's operating segments for the period ended 30 June 2013, restatedaccording to the current basis of reporting discussed above. For the period 30 June 2013 B2B B2C Adjustments Consolidated and eliminations Revenue External customer 34,465,063 8,536,037 43,001,100 Inter-segment 741,593 1,581,586 (2,323,179) - Total revenue 35,206,656 10,117,623 (2,323,179) 43,001,100 Segment Operating profit /(loss) 3,230,777 (618,711) - 2,612,066 Depreciation and amortisation 1,032,630 979,901 - 2,012,531 Segment EBITDA 4,263,407 361,190 - 4,624,597 Adjustments (note 1) 447,031 120,674 - 567,705 Segment adjusted EBITDA 4,710,438 481,864 - 5,192,302 Finance income, finance costs and income taxes are not allocated to individualsegments as the underlying instruments are managed on an overall Group basis. A reconciliation between segment profit and corresponding amounts in theGroup's income statements for the period ended 30 June 2014 and 2013 ispresented below: Group Reconciliation of segment profit Period ended Period ended 30 30 June 2014 June 2013 Segment profit: 4,441,587 2,612,066 Finance income 251,713 1,232,734 Finance costs (1,216,416) (245,134) Income taxes (255,868) (274,640) Profit after tax 3,221,016 3,325,026 Geographic information Group Revenues from external customers Period ended 30 Period ended 30 June 2014 June 2013 Europe 22,371,253 15,376,898 Latin America 11,998,467 2,590,355 Middle East and Africa 10,224,584 12,148,258 Asia 21,118,636 12,885,589 Total Revenues 65,712,940 43,001,100 4. Finance income / (costs) Finance income / (costs) in the accompanying interim financial statements areanalysed as follows: Group Period ended 30 Period ended 30 June 2014 June 2013 Interest earned 61,901 81,639 Exchange differences 189,453 1,150,910 Other finance income 359 185 Total finance income 251,713 1,232,734 Interest on short term borrowings (52,766) (35,964) Interest on long term borrowings (176,880) (16,564) Exchange differences (834,244) (97,254) Other finance costs (152,526) (95,352) Total finance costs (1,216,416) (245,134) Total finance income/ (costs) net (964,703) 987,600 Losses on exchange differences of €499,222 (30 June 2013: gains €655,842)represent the unrealised foreign exchange losses on intercompany loans betweenInternetQ Plc (UK holding company) and the various subsidiaries. 5. Earnings / (loss) per share Basic earnings per share amounts are calculated by dividing net profit/ (loss)for the reporting period attributable to ordinary equity holders of the parentby the weighted average number of ordinary shares outstanding during therespective period. 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. Group Period ended Period ended 30 June 2014 30 June 2013 Net profit attributable to ordinary equity holders 3,221,016 3,325,026of the parent from continuous operations Weighted average number of ordinary shares for 39,957,195 34,894,942basic earnings per share Earnings per share basic 0.08 0.10 Weighted average number of ordinary shares for 39,290,395 34,894,942basic earnings per share Effect on dilution: Deferred consideration shares 80,103 62,826 Share incentive plan 586,697 106,000 Weighted average number of ordinary shares adjusted 39,957,195 35,063,768for the effect of dilution Earnings per share diluted 0.08 0.09 A reconciliation of the adjusted earnings per share basic and adjusted earningsper share diluted for the period ended 30 June 2014 and 2013 is presentedbelow. Group Period ended Period ended 30 June 2014 30 June 2013 Adjusted Profit after tax 5,414,188 4,002,955 Weighted average number of ordinary shares for 39,290,395 34,894,942basic earnings per share Earnings per share basic Adjusted 0.14 0.11 Weighted average number of ordinary shares adjusted 39,957,195 35,063,768for the effect of dilution Earnings per share diluted Adjusted 0.14 0.11 6. Events after the reporting period There are no significant events after the reporting period.