Preliminary Results

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 anddigital 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 €132.4 million (2013: €104.4 million) - B2B revenue up 18% to €103.9 million (2013: €87.7 million) - B2C revenue up 71% to €28.5 million (2013: €16.7million)- EBITDA up by 37% to €19.8 million (2013: €14.4 million)- Adjusted EBITDA up by 37% to €22.3 million (2013: €16.2 million)(i)with related margin improved to 17% (2013: 16%)- Operating profit up by 18% to €10.8 million (2013: €9.1 million)- Adjusted operating profit up by 35% to €15.9 million (2013: €11.8 million) (i)- Adjusted earnings per share (basic) up by 10% to €0.33 (2013: €0.30) (i)- Cash and cash equivalents as at 31 December 2014 of €12.3 million (2013: €13.2 million)- Strong cash from operations of €15.8 million (2013: €12.2 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 theformation of key partnerships has delivered strong revenue and profit growthacross multiple geographies. This strong financial performance has beenachieved at the same time as we have continued to invest in both ouradvertising technology and music streaming product propositions. "The Group has, and will continue to, benefit from the ongoing adoption ofsmart devices and the shift to mobile advertising. We have made a solid startto 2015. With the strong foundations that we have secured, our demonstrabledigital expertise and the significant future growth opportunities available tothe Company, the Board is confident of continuing to deliver strong growth inthe coming year and beyond." Operational Highlights Mobile marketing: Strong momentum with increased traction in key geographiesand continued integration with ad networks New clients and contract wins secured in Spain, Latin America, DominicanRepublic and South Africa. More advertising networks integrated with the Minimob platform; mobile networkoperators and brands using the platform to achieve the rapid distribution ofapps to a wider audience, significantly increase app installs and secure fasterconversions for their gaming, entertainment, utility and other apps. New features and tools developed to allow app developers to increase useraverage lifetime value and improve ARPU (average revenue per user). The newtechnology enables advertisers to maximise the effectiveness of their campaignsthrough performance monitoring and offer automated integration of offers andenhanced targeting. Digital entertainment: Awareness increased as major contracts with MNOs driveinternational 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 2014accelerated the Group's growth in Latin America and capitalised on synergieswith InternetQ's existing proposition and mobile marketing campaigns expertise. The Group's global operations have been diversified with increased contributionfrom 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 partnerbase; sustaining good relationships will remain a Group focus in 2015. Continued investment in proprietary technology to further strengthen theproduct proposition and drive customer satisfaction and loyalty. The Group has a robust pipeline for 2015, particularly in Latin America. 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 MarketsPierre Schreuder / Ema Jakasovic 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: ir@internetq.com Chairman's Statement It has been an honour to have served as InternetQ's Chairman over the last twoyears and, even in this short time, to have seen the Company continue to expandits footprint in the fast moving and rapidly growing marketplace we operate in.Our clearly defined strategy, strong leadership, focus on driving growth anddedicated global team, combined with the latest technology aligned to therapidly shifting requirements of the market, have all meant that I have thepleasure of once again reporting that 2014 has been a successful year forInternetQ. Four years on from the IPO, InternetQ continues to deliver strong financial andcommercial performance, driven by the increased demand and international growthof both our mobile marketing and digital entertainment divisions. In these lastfour years, the Group's revenues have almost quadrupled, exceeding €132 millionin FY2014 (versus €37.3 million in 2010). 2014 has been an exciting year for multiple reasons. Commercially, across bothbusinesses, the Company secured major contracts with successful launches takingplace throughout the year and has a strong pipeline going into 2015.Operationally, the Group further strengthened its presence in Latin Americathrough the successful acquisition of Up Mobile in Mexico. InternetQ has alsocontinued to invest heavily in enhancing its technology. During the period itlaunched new Minimob and Akazoo platforms with additional features andfunctionality that make both offerings more attractive, efficient and easier tomonetise, as well as taking advantage of the substantial opportunities inmobile advertising. Strong revenue growth across both B2B and B2C divisions I am delighted to report that InternetQ has maintained its strong financialperformance over the last 12 months, continuing its excellent track record ofrevenue growth across both business divisions. For the fourth consecutive year,the Company achieved record revenues, EBITDA and earnings per share. Revenuesin 2014 exceeded €132 million (27% increase YOY), with the B2B (MobileMarketing) segment contributing 78% and the B2C (Digital Entertainment) 22%.Margins improved in the second half of the year, driving annual adjusted EBITDAto over €22 million (note 2) and adjusted profit after tax to €13.1 million(note 2). InternetQ maintains a strong balance sheet with cash as at 31December 2014 in excess of €12.3 million. Despite significant investment, theCompany generated positive free cash flow with cash generated from operationsclose to €15.6 million. These solid financial results position the Company wellfor future growth, especially as smartphone adoption and usage becomecommonplace across both emerging and developed markets and advertisersincreasingly 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 digitalentertainment company. During the year, the Group has continued to increase itspresence in Asia, while also capitalising on new business opportunities in thefast-evolving Latin American market. In 2013, Europe accounted for 36% of theGroup's annual revenues, Asia for 26%, the Middle East and Africa for 29% andLatin America for 9%. In 2014, the contribution of Asia rose to 31% while thatof Latin America exceeded 16%, demonstrating the diversification of ourbusiness and the fast adoption of our product offerings in the new markets thatwe enter. Growing team of experts I would like to thank the team at InternetQ for their enormous contributionover the year, which has been integral to helping the Company to continue togrow. At 31 December 2013 the Group had 155 employees, whereas by the end of2014 we employed 162 people. We invest in our team, ensuring we continue tohave the best people in place to help drive continuous growth, geographicexpansion, client diversification and technological innovation. The InternetQteam represents 32 different nationalities and speaks 23 languages. As Chairmanof the Board, I can confirm that we are dedicated to continuing to motivate andreward 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 andposition InternetQ for continued growth: expansion of our geographic footprint,investment in technology and product development, and establishment of keypartnerships that secure a strong pipeline in both the B2B and B2C segments ofthe business. I remain confident that our strategy positions us for furtherrevenue 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 enhanceits offering through continued product development and increase the number ofkey partner relationships. In 2014, we achieved these objectives with both ourB2B and B2C divisions delivering strong revenue and profit growth acrossmultiple geographies. InternetQ's growth has largely been driven organically with acquisitionsenabling the Company to sell its core products into new geographies throughexisting sales channels. We have further established our footprint in LatinAmerica, Asia and Europe in the period, signing major contracts with bothexisting and new clients. At the same time, we have continued to invest in ourtechnology 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 tomobile advertising increasing market confidence, we see clear opportunities foradditional growth in existing and new geographic markets. Internationalexpansion, retaining our competitiveness and enhancing our portfolio ofproducts 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 forInternetQ. Group revenue increased by 27% to €132.4 million with a particularfocus on improving profit margins across business lines leading to adjustedEBITDA up 37% to €22.3 million (note 2). InternetQ achieved revenue growth across multiple geographies in 2014. Revenuesin Europe represent 40% of total revenues (2013: 36%), revenues in Asia reached31% (2013: 26%) while revenues in Latin America reached 16% (2013: 9%) andrevenues in MEA represented 13% (2013: 29%). B2B (Mobile Marketing) The mobile marketing landscape has evolved in recent years. InternetQ hasanticipated these trends and is well positioned to benefit further from theadoption of smart devices and the increased demand for mobile advertising. Ouraddressable market is vast and, with four billion people expected to be usingsmartphones by 2020, InternetQ's mobile marketing has the potential to reach 80percent of the global adult population . Accompanying this growth in smartphoneusage, mobile is expected to be the biggest driver of global advertisinggrowth, 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 andclient demand. This has placed its Minimob platform at the core of the businessand covers all legacy and new mobile marketing revenue generation. We have also gained traction across our key geographies, and in the twelvemonth period secured several new clients and contract wins, including Movistarin Spain and Latin America, Viva in the Dominican Republic, and CellC in SouthAfrica. 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 theplatform. In December 2014, we launched a new Minimob SDK version, whichprovides sophisticated new features and tools that allow app developers toincrease average user lifetime value and improve average revenue per user("ARPU"). We have also added analysis and measurement functionality whichdifferentiates our service from competitors by maximising the effectiveness ofcampaigns. This is achieved by effective monitoring and analysis of real timeperformance, increasingly automated integration of offers and moresophisticated and accurate targeting of customers. This new, unrivalledfunctionality enables cross-selling capabilities and opens up new sources ofincremental advertising revenues as we can specifically target relevant mobileusers. The acquisition of Up Mobile, the mobile marketing and interactive TV and radiocontent provider in Mexico, in May 2014 gave InternetQ increased reach in LatinAmerica, whilst also bringing opportunities for further distribution of theCompany's performance-based advertising and music streaming services. With UpMobile already the number one provider of interactive solutions for radiostations and a key provider of mobile solutions to the public sector in abuoyant Mexican market of 100 million mobile connections and 33 millionsmartphone users, this acquisition has established InternetQ as a seriousplayer in the country. B2C (Digital Entertainment) The field of digital entertainment is expanding rapidly thanks to the impact ofthe App Economy on consumers. Akazoo, the Group's music streaming service, is aturnkey solution for our partners and is continuing to gain good traction inthe marketplace. Akazoo has enjoyed further success during the year, achieving strong revenueperformance across multiple geographies. Major contracts with MNOs have helpedto drive international expansion, with key partnerships with Sony Mobile andOrange Poland secured during the period. The strong revenue performance over the period was largely driven by our focuson improving the competitive proposition of Akazoo's music streaming service.We invested in our Akazoo technology, adding new features such as automated andpersonalised radio streaming, personalised music recommendations and integratedmessaging. Our more sophisticated technology also now enables us to developadditional business intelligence on our users, helping us to take a moretargeted approach and offer very tailored services. We have also sought to makeour 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. Wesecured multiple new contracts in the Asian market, including a pilot launch inThailand; a successful launch with Ninetology and OEM brand partner of Gmobi inMalaysia; the launch of the BlackBerry Messenger (BBM) partnership in eightcountries (largely in Indonesia); and the launch of a co-marketing initiativewith device manufacturer, Smartfren, in Indonesia to promote an add-on serviceoffering. We also continued to strengthen Akazoo's position in Europe through the launchof a bundle agreement with Orange in Poland and the release of a co-brandedadd-on service offering with MTN in Cyprus. We have good visibility going in to2015, 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 westernEuropean 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") andthe focus of today's consumer being almost entirely on downloading and usingMobile Applications (known as Apps) that enable them to make the most of thetime they spend on their smartphones, geography itself has now become a majorpart 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 inmultiple markets by providing a 'one stop shop' that delivers a globalfootprint. Game on! The App Economy The importance of the App Economy cannot be underestimated. In the field ofdigital entertainment, game publishers for example, are set to benefit from anincrease in customer activation and mobile game downloads are expected to risefrom 30 to 60 billion in the next three years . It is another fast-growingindustry segment to which Minimob now delivers a significant number ofcampaigns, including for games such as Tribal Wars, Puzzle Coin Hunter, BraveFrontier and Dragon Nest. An evolving business model Put quite simply, InternetQ's role has always been to convert a mobile consumerinto a paying customer but - as is increasingly the case - we are now beingrewarded with a specific payment by a third party for encouraging a mobileconsumer to effect a transaction, be it making an App download or signing-upfor subscription services. This additional revenue - whether it comes directlyfrom brand names like BBM and WeChat or from third party 'demand side' adnetworks and agencies working for major clients - is a line of business thatwill feature more prominently in 2015. Outlook We have made a solid start to 2015. With the strong foundations that we havesecured and the significant future growth opportunities available to theCompany, the Board is confident of delivering further growth in 2015 andbeyond. 3. http://www.idc.com/getdoc.jsp?containerId=252450 Chief Financial Officer's Review Improved market confidence, reflected in increased smartphone sales and demandfor more advanced functionality and services, have ensured InternetQ'scontinued growth across its B2B and B2C businesses in 2014. The Companyremained focused on delivering on its business strategy, successfully expandingits international portfolio and consolidating its presence in Latin Americathrough the acquisition of Up Mobile in the period. InternetQ's solidperformance is reflected in its 2014 financial results, as evidenced by therobust overall financial performance and a strong start to 2015. Group revenues increased by 27% in 2014, with both the B2B and B2C businessesdelivering substantial sales growth. Revenues from B2B activities grew by 18%to €103.9 million (2013: €87.7 million) while revenues from B2C grew by 71% to€28.5 million (2013: €16.7 million). Acquisitions completed during the yearcontributed €0.9 million (post acquisition) (2013: €19.3 million) to Grouprevenues. Operating costs increased by 37%, primarily due to costs incurred followingacquisitions and geographic expansion. Adjusted EBITDA (note 2) grew by 37% to€22.3 million (2013: €16.2 million), a margin of 17% (2013: 16%). The adjustedprofit after income tax for the year reached €13.1 million compared to €11.1million for 2013. Acquisitions completed during the year did not contribute tothe Group's profit after income tax post acquisition. 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 2014 stood at €14.7 million, an increaseof 5% from the previous year (2013: €13.9 million). The Group ended 2014 with €0.2 million (2013: €4.7 million) net cash, whichconsisted of €12.3 million cash, cash equivalents and restricted cash (2013: €13.2 million) and €12.1 million of bank debt (2013: €8.5 million). The termsand conditions of the Group's borrowing agreements continue to be relativelyfavourable. Our €4 million term loan matures in March 2022 and another €2million loan arrangement matures in May 2017. InternetQ Germany also obtained a€3 million overdraft facility to finance its expansion into gaming, theutilised portion as of year-end was €2.8million. The Group generated €15.8 million (2013: €12.2 million) in cash from operatingactivities and reduced the receivables days outstanding to 96 days (2013: 108days) and its cash conversion cycle to 43 days (2013: 63 days). Summary InternetQ is entering 2015 in a stronger financial position than at the startof the 2014 financial year. We are pleased that our focus on balancing strictcost control with selective investment, managing working capital and increasingcash conversion, is showing through in our solid financial results. Overall we have completed a year of considered corporate recalibration whichpositions the Group strongly from an operational and a financial standpoint,providing a base to capitalise on in 2015 and beyond. Income StatementsFor 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 andrelevant ways to present the information to the readers of the financialstatements. Thus, the company has decided to change the cost classificationused in the Income Statement and modify its format, previously categorised byfunction (cost of sales, selling administrative) to a grouping by nature(direct costs, operating expenses, depreciation etc). Statements of financial positionAs 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 holdersof 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 flowsAs 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 10,674plant 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) 3,997,619and 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 rightsof Up Mobile Holdings LLC, a mobile marketing and interactive TV and radio contentprovider 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 inMexico, a market of over 100 million mobile connections and 33 million smartphoneusers currently. The acquisition of Up Mobile is in line with InternetQ's statedstrategy of broadening its geographical reach whilst further developing its serviceoffering. 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 €4.5 million mainlyrepresents the benefits that the Group is expecting from the increased MobileMarketing 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 hascontributed €894,548 of revenue and a loss of €35,296 to the Group's profitafter 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 amortizationexpenses. 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 theaccompanying financial statements in order to improve investors understandingof financial results and improve comparability of financial information fromperiod to period. The table below presents the adjusted amounts to the Group's financial resultsfor 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 inbusiness 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 theyear 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 36,973,217for 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 37,408,290for 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 itscustomer types. Consequently, the Group has two reportable operating segmentsas follows: Business to Business (B2B) segment: B2B revenues are those that arise from themarketing of InternetQ's products to other organisations. It allows the Groupto sell its products or services to other companies or organisations thatresell them, use them in their products or services or use them to supporttheir operations. Business to Consumer (B2C) segment: B2C revenues are those resulting frommarketing of InternetQ's products directly to consumers as the Group's targetmarket. 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 eliminatedon consolidation. The following table presents revenue and profit information regarding theGroup'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 theGroup'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 inthe 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 theyear attributable to ordinary equity holders of the parent by the weightedaverage 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 2014 2013 Net profit attributable to ordinaryequity holders of the parent from 8,674,197 8,740,585 continuous operations Weighted average number of ordinary shares 40,151,167 36,973,217for 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 36,973,217for 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 37,408,290adjusted 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 outabove is not the Company's Statutory Accounts. This financial information forthe year ended 31 December 2014 has been extracted from the 2014 Annual Reportand Accounts and, is prepared on the same basis as set out in the 2014 AnnualReport and Accounts. The 2014 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 2014 are expected to be filed with theCompany's Registrar following the Company's Annual General Meeting to be heldon June 2015.