RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

InternetQ plc

('InternetQ', the 'Group' or the 'Company')

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

InternetQ, a leading global mobile marketing, digital entertainment and advertising technology company, is pleased to report interim results for the six months ended 30 June 2013.

Financial Highlights 

· Revenue up 31% to €43.0 million (H1 2012: €32.8 million)

· Earnings per share up 80% to €0.10 (H1 2012: €0.05)

· EBITDA up 29% to €4.6 million (H1 2012: €3.6 million)

· Adjusted EBITDA up 25% to €5.2 million (H1 2012: €4.1 million)

· Cash and cash equivalents of €8.5 million (H1 2012: €5.6 million)

· Operating cash flow of €5.1 million (H1 2012: €0.0 million)

· Free cash flow of €0.1 million H1 2012: €(2.6) million

Reconciliation with the respective adjusted figures included in the Annual Report and Accounts is presented in Note 8.

Operational Highlights

· Strong operational performance with revenues of €43 million, up 31% compared to last year

· Targeted geographical expansion with strong growth in Africa and Latin America

· Continued organic growth in mobile marketing with revenues of €33.3 million

· 30% revenue growth from social music platform Akazoo, now with more than 600,000 paying subscribers

· Launch of new Smart App advertising platform, Minimob, already achieved more than 32 million downloads in first 90 days

· Recent acquisition of Atlas now integrated and generating cross selling opportunities

· Continued strategic progress made on product expansion, geographic expansion and customer diversification

· Further improvement in working capital management and cash conversion with over €5m net cash from operating activities.

· Current trading remains strong and is in line with market expectations

Panagiotis Dimitropoulos, Chief Executive Officer of InternetQ remarked:

"InternetQ continues to make substantial progress across all of our strategic objectives. We have delivered strong revenue growth and secured major client partnerships that extend our reach and distribution into key emerging markets. I am also pleased to report a further improvement in cash conversion, resulting in positive net cash flow.

Future growth has been underpinned by the successful launch of our new Smart App advertising platform, Minimob, which has already more than 32 million downloads in the first 90 days.

The recent acquisition of Atlas Interactive GmbH significantly extends our reach, adding over 300 Mobile Network Operator connectivity relationships. This delivers a number of exciting cross-selling opportunities and I am pleased that the integration of the business is proceeding well and to plan.

Our focus on fast growing markets and the associated leap in smartphone adoption provide continued momentum to InternetQ. Therefore, our trading prospects remain strong and I fully expect our organic growth to continue."

For further details:

InternetQ Tel: +30 (211) 101 1101

Panagiotis Dimitropoulos, Founder and CEO Tel: +30 (697) 811 7520

Veronica Nocetti, Chief Financial Officer Tel: +30 (694) 420 5275

Buchanan

Jeremy Garcia/Gabriella Clinkard Tel: +44 (0)20 7466 5000

RBC Capital Markets

Stephen Foss / Pierre Schreuder / Daniel Conti Tel: +44 (0)20 7653 4000

Chief Executive Officer's Review

Introduction

I am delighted to report another strong six months trading for the Group fuelled by continued demand for our mobile marketing and Akazoo products. This excellent performance highlights the strength of the broader global mobile market and underpins our long term future prospects. I believe we are well positioned to capitalise on these strong sector dynamics.

InternetQ remains focused on its three core operational growth drivers:

· Product Expansion; to leverage carrier relationships particularly with direct billing services to expand the Mobile Marketing product portfolio (e.g. Mcommerce, traffic networks, Mobile apps, or digital content).

· Geographic Expansion; to accelerate customer acquisition, partner development and local content agreements or music rights for Akazoo, with particular focus on Latin America and MENA.

· Customer Diversification; to diversify the current customer base and acquire relationships in non-carrier segments such as handset manufacturers and corporate brands.

Building on an impressive 2012, as an entrepreneurial company, we continue to focus on operational effectiveness and product innovation. The combination of our increasing international exposure and the significant growth in our chosen markets has enabled the Group to achieve record performance metrics for campaigns executed over the last six months.

The acquisition of Atlas Interactive ('Altas') in Germany will accelerate the Company's billing network expansion and increase our exposure to key growth markets. It also brings us closer to over 300 mobile operators and delivers a number of substantial cross selling opportunities.

We have continued to invest in product development, in particular, the range of Apps for Akazoo and the extension of smart advertising formats for Minimob.

Overall, with a stronger cash balance, a broadening of our product mix in fast growing end markets and continued focus on selective bolt-on acquisitions such as i-POP in Asia and Atlas, we remain well placed for further growth.

Mobile Marketing

Our ability to support the changing needs and demands of mobile operators around the world has enabled InternetQ to help broaden their direct marketing initiatives and therefore enhance our own revenue growth.

Emerging markets have been an important part of the Company's focus and expansion and during last six months. We have undertaken planned and prioritized geographic expansion, which has led to growth in revenues from MENA (up 55% from H1 2012) and LATAM (up 100% from H1 2012).

Akazoo

Akazoo has grown significantly during the last six months, underpinned by a number of partnerships where we have offered music streaming and music content services for smartphones and tablets to both mobile operator and Internet Service Providers.

Our new partnership agreements with Samsung in Europe, Gmobi in Asia and SONY Mobile in Malaysia represent exciting opportunities for InternetQ and should result in an accelerated take-up of Akazoo in those territories.

Overall, the development of Akazoo from web to mobile to tablet, its innovative design and easy-to-use interface means we are able to offer creative bundled product promotions for all clients. Akazoo's cloud-based streaming catalogue is a considerable strength and is set to increase to 20 million tracks by the year end.

Over the first half of 2013 we have extended Akazoo's direct market reach to include another 7 million prospective subscribers and grown the user base by circa 25% with further deployment of the music streaming into two new territories. This increase in both subscriber and revenue growth looks set to continue. 

Minimob

One of the most important global shifts in Mobile consumer activity has been the rapid establishment of the App economy. An enormous ecosystem of both well-known and independent App stores which contain millions of Apps are now downloaded by the millions of user on a monthly basis.

InternetQ's Minimob platform has been designed and launched to offer developers and publishers a direct route to monetize their Apps, and also provide third party's with the opportunity to advertise like more traditional mobile advertising networks.

The Minimob Software Development Kit ('SDK') has achieved considerable success with 32 million installations in a short space of time and is targeting over 80-100 million installations by year end.

The most recent platform update has created a range of exciting options for advertisers such as AdWalls, Icon Ads and interstitials, which lead to responsive services including: Click-to-URL, Click-to-Call, Click-to-Text, and Click-to-Market all of which drive real-time commercial gain.

Atlas Acquisition & Integration

Atlas is a leader in access, billing and digital content distribution, providing services in more than 120 countries and connecting with more than 300 Mobile Network Operators ("MNOs") worldwide. The acquisition of Atlas is in line with InternetQ's stated strategy of broadening its geographical reach whilst further developing its service offering. 

The acquisition of Atlas will enable InternetQ to accelerate the roll out of both Akazoo and Minimob in European markets whilst reinforcing its leading mobile marketing presence globally. The acquisition is expected to be earnings enhancing in its first full year.

The technical integration of Atlas is well under way and further improvements are set to be instigated.

Market Outlook

We have developed a very robust business model fuelled by the astonishing rise of mobile communication and the plethora of services created around the appetite for interactive engagement and premium entertainment. InternetQ now has a very clear development roadmap that blends our core mobile marketing skill sets to support our leading social media and App development platforms.

The Company's business pipeline has been further boosted by partnering with some of the biggest names in the consumer and mobile marketplace and we are continuing to generate the right balance between organic growth and strategic bolt-on acquisitions.

We remain confident of meeting market expectations for growth in revenue and earnings for the full year, whilst keeping a tight rein upon the Company's operating expenses. Prudent management and providential foresight continue to form the business ethos that will drive the performance of InternetQ.

Panagiotis Dimitropoulos, Chief Executive Officer

Unaudited Consolidated Income Statement for the period ended 30 June 2013

(Amounts in Euro, except share information, per share data and unless otherwise stated)

The accompanying notes are an integral part of the interim financial statements.

Unaudited Consolidated Statement of Comprehensive Income for the period ended 30 June 2013

(Amounts in Euro, except share information, per share data and unless otherwise stated)

The accompanying notes are an integral part of the interim financial statements.

Unaudited Consolidated Statement of Financial Position as at 30 June 2013

(Amounts in Euro, except share information, per share data and unless otherwise stated)

The accompanying notes are an integral part of the interim financial statements.

Unaudited Consolidated Statement of Changes in Equity for the period ended 30 June 2013

(Amounts in Euro, except share information, per share data and unless otherwise stated)

The accompanying notes are an integral part of the interim financial statements.

Unaudited Consolidated Cash Flow Statement for the period ended 30 June 2013

(Amounts in Euro, except share information, per share data and unless otherwise stated)

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 otherwise stated)

1. Operating segment information

For management purposes the Group is organised into business units based on its services. Consequently, the Group has five reportable operating segments as follows:

· The Mobile Marketing operating segment: Specially designed for campaigns on mobile telecommunications networks.

· The Akazoo operating segment: Services offering access to digital content (music, games, subscriptions) from the Group's Platform Akazoo.

· The Legacy operating segment: Media Services involving audience through compelling promotions, programs and live shows that draw attention to content.

· The Aggregation Services operating segment: Services that enable customers' billing directly via the users' mobile phone.

· Investment Properties: Rental income from operating leases.

No operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss (minus any costs that are not allocated to segments).

Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties. Segment income, expenses and results will include those transfers between business segments which eliminated on consolidation. The following tables represent revenue and profit information regarding the Group's operating segments for the six months ended 30 June 2013 and 2012, respectively.

Finance income, finance costs and income taxes are not allocated to individual segments as the underlying instruments are managed on an overall group basis.

Non-current and current financial assets, deferred tax asset and liabilities, income taxes payable and loans and borrowings are not allocated to segments as they are also managed on an overall group basis.

Geographic information

Non-current assets

Non-current assets include property, plant, and equipment, intangible assets and goodwill, investment properties, non-current financial assets and other non-current assets.

2. Finance income / (costs)

Finance income / (costs) in the accompanying interim financial statements are analysed as follows:

Gains on exchange differences of 655,842 euro represent the unrealised foreign exchange gains on intercompany loans between InternetQ Plc (UK holding company) and the various subsidiaries.  

3. Income tax

The amounts of income taxes which are reflected in the accompanying interim financial statements are analysed as follows:

4. Earnings /(loss) per share

Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the reporting period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the respective period.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

5. Intangible assets

Intangible assets in the accompanying interim financial statements of the Group are analysed as follows:

"Software under development" relates to the development of the new version of the Akazoo platform. Akazoo 2 introduces to the market amongst other, the following new core features; unlimited music streaming on the web and on mobile through smartphone applications, automated sharing of music activity between socially connected users, connection to social ecosystems (i.e. Facebook), new intelligent search platform, flexible and multichannel billing methods.

At the year-end 2012 an amount of €497,484, related to development costs for some additional new features of the Akazoo 2, not yet released, is presented as software under development. These new features relate mainly to the development of applications for access across all Android, IOS and blackberry devices, mobile phones and Tablets and Smart TVs, as well as for the development of sophisticated recommendation engines and Akazoo 2 API. Most of these new features were launched until April 2013 and consequently the amount of €396,121 was reallocated to internally generated software while the amortisation of the related development costs commenced at the same time.

Additions in purchased software amounted to €5,117,788 relate to the development of the Mini-mob mobile advertisement Platform. Mini-mob platform provides a full suite of messaging and content delivery tools, including push notifications, rich media messaging and subscriptions. The platform enables App developers to reach customers from any device by allowing them to set up promotional campaigns and build a communication strategy sending timed and targeted push notifications or shortcut icons to their mobile phone or tablet.

Customer relationships and non-compete agreement refer to the intangible assets recognised separately from the acquisition of I-POP Networks Pte Ltd. The relative amortisation of the non-compete agreement commenced in September 2012 after the termination of the prior managing and advising shareholders of I-POP.

6. Share capital and share premium

The movement of the Company's share capital and share premium is analysed as follows:

On 2 April 2012 and 10 May 2012, 36,457 and 4,629 ordinary shares 0.25 pence each were issued at a price of £2.365 and £2.65 to the non-executive directors of the Company. These shares were issued in consideration of the release of the Company's liability to pay a portion of their annual fee.

On 31 July 2012, 2,860,000 ordinary shares of 0.25 pence each were allotted and fully paid in cash at a price of £2.10 (resulting to total net proceeds of €7,281,368 (after transactions costs of €379,835).

On 25 September 2012, 12,000 ordinary shares of 0.25 pence each were issued at a price of £2.295. These shares were issued to Mr. Stuart Cruickshank in consideration of the release of the Company›s liability to pay a portion of his annual fee.

On 25 September 2012, 88,761 ordinary shares of 0.25 pence each we issued at a price of £2.92 resulting in an increase of

€286,885 in share capital and share premium and an equivalent decrease in the account "other components of equity. These shares were issued to the prior managing shareholders of I-POP Networks PTE LTD in respect of their contingent consideration and after achieving the performance conditions for the fiscal year 2011, under the terms of the sell and purchase agreement of I-POP Networks PTE LTD.

On 25 September 2012, 15,000 ordinary shares of 0.25 pence each were issued at a price of £2.295 to certain eligible employees of the Company under the terms of the Company's share incentive plan.

On 25 September 2012, 52,493 ordinary shares of 0.25 pence each were issued at a price of £2.295 (total amount €151,251) to the prior managing and advising shareholders of I-POP as part of the compensation package for the termination of their services as directors of I-POP Networks PTE LTD and its subsidiaries according to the sale and purchase Agreement.

On 15 October 2012, 100,000 ordinary shares in total of 0.25 pence each were issued at a price of £2.92 in respect of the contingent consideration upon the acquisition of I-POP Networks PTE LTD to the prior shareholder and CEO of the company.

On 22 October 2012, 4,505 ordinary shares of 0.25 pence each were issued at a price of £2.10 to Stuart Cruickshank as part of the compensation package for the termination of his services as a non-executive director of the Company.

On 22 October 2012, 40,000 ordinary shares of 0.25 pence each were issued at a price of £2.18 to Konstantinos Korletis in accordance with the terms of an agreement by which Mr. Konstantinos Korletis was appointed as the Company›s Executive Chairman.

On 7 December 2012, 100,000 ordinary shares of 0.25 pence each were issued to the prior shareholder and CEO of I-POP Networks PTE LTD. 30,657 of these shares were issued at a price of £2.92 in respect of the contingent consideration in relation to the acquisition of I-POP Networks PTE LTD. 69,343 of these shares were issued at a price of £2.16 in respect of his compensation package for the termination of his services (Note 7).

On 15 March 2013 and 06 June 2013, a total of 200,000 ordinary shares of 0.25 pence each were issued at a price of £2.16 in respect of the contingent consideration upon the acquisition of I-POP Networks PTE LTD to the prior shareholder and CEO of the company.

On 28 March 2013, 187,500 ordinary shares of 0.25 pence each were issued and allotted each at a price of £2.17 to certain eligible employees of the Company. These shares were issued under the Share Incentive Plan following the achievement of the certain performance targets for the financial year ended 31 December 2011.

On 3 April 2013, 40,000 ordinary shares 0.25 pence each were issued at a price of £2.98 to Mr. Konstantinos Korletis (former Chief Executive Officer and Executive Chairman) in respect of outstanding consideration according to his contract.

On 11 April 2013, 26,427 ordinary shares 0.25 pence each were issued at a price of £2.98 to the non-executive directors of the Company. These shares were issued in consideration of the release of the Company's liability to pay a portion of their annual fee.

As a result of the 453.927 new ordinary shares issued within the period ended 30 June 2013 (2012: 3,313,845 ordinary shares), the Company has a total of 35,149,395 ordinary shares of 0.25 pence each as at 30 June 2013 (2012: 34,695,468), with voting rights, in issue. The Company's ordinary shares have no preferences and restrictions including restrictions on the distribution of dividends.

7. Events after the reporting period

Successful placement of 3,448,400 new ordinary shares

On 2 July 2013, the Group has successfully completed the placement of 3,448,400 new ordinary shares at a price of 2.90 pounds per share. The total amount of gross proceeds raised amounted approximately 11.7 million Euro (10 million pounds) . The net proceeds of the placing will be deployed by the Group to acquire Atlas Interactive Deutschland GmbH and to accelerate organic growth. 

Acquisition of Atlas Interactive Deutschland GmbH

On 11 July 2013 the Group has successfully completed the acquisition of Atlas Interactive Deutschland GmbH. The acquisition of Atlas is in line with the Group's strategy of broadening its geographical reach whilst further developing its service offering.

Atlas is a leader in access, billing and digital content distribution in more than 120 countries, connecting with more than 300 Mobile Network Operators worldwide and operating a database of over 3 million opt-in users for mobile marketing campaigns.

The key benefits of the transaction are as follows:

- Accelerate the expansion of the Group's services into Western Europe and Central & Eastern Europe, which constitute c.90% of Atlas revenue in 2012, namely Germany, Poland, Hungary and Czech Republic.

- Increase Mobile Marketing activity with MNOs where Atlas has direct commercial agreements and very little overlap with the Group's current business.

8. Other information

Reconciliation of adjusted figures with figures presented in the Interim Report and Accounts

a) EBITDA adjusted

b) Profit after tax adjusted

c) Earnings per share adjusted