TIDMINTQ
31 March 2015
INTERNETQ PLC
('InternetQ', the 'Group' or the 'Company')
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
InternetQ plc (LSE-AIM: INTQ), a leading provider of mobile marketing and
digital entertainment solutions for mobile network operators and brands,
announces its audited results for the year ended 31 December 2014.
Financial Highlights
- Revenue up by 27% to EUR132.4 million (2013: EUR104.4 million)
- B2B revenue up 18% to EUR103.9 million (2013: EUR87.7 million)
- B2C revenue up 71% to EUR28.5 million (2013: EUR16.7million)
- EBITDA up by 37% to EUR19.8 million (2013: EUR14.4 million)
- Adjusted EBITDA up by 37% to EUR22.3 million (2013: EUR16.2 million)(i)with related
margin improved to 17% (2013: 16%)
- Operating profit up by 18% to EUR10.8 million (2013: EUR9.1 million)
- Adjusted operating profit up by 35% to EUR15.9 million (2013: EUR11.8 million) (i)
- Adjusted earnings per share (basic) up by 10% to EUR0.33 (2013: EUR0.30) (i)
- Cash and cash equivalents as at 31 December 2014 of EUR12.3 million (2013: EUR13.2 million)
- Strong cash from operations of EUR15.8 million (2013: EUR12.2 million) generating
positive free cash flow
- Strong start to 2015 with trading in line with management expectations
(i)Adjusted figures are explained in note 2.
Panagiotis Dimitropoulos, Founder and Chief Executive Officer of InternetQ said:
"In 2014, our focus on geographic expansion, product development and the
formation of key partnerships has delivered strong revenue and profit growth
across multiple geographies. This strong financial performance has been
achieved at the same time as we have continued to invest in both our
advertising technology and music streaming product propositions.
"The Group has, and will continue to, benefit from the ongoing adoption of
smart devices and the shift to mobile advertising. We have made a solid start
to 2015. With the strong foundations that we have secured, our demonstrable
digital expertise and the significant future growth opportunities available to
the Company, the Board is confident of continuing to deliver strong growth in
the coming year and beyond."
Operational Highlights
Mobile marketing: Strong momentum with increased traction in key geographies
and continued integration with ad networks
New clients and contract wins secured in Spain, Latin America, Dominican
Republic and South Africa.
More advertising networks integrated with the Minimob platform; mobile network
operators and brands using the platform to achieve the rapid distribution of
apps to a wider audience, significantly increase app installs and secure faster
conversions for their gaming, entertainment, utility and other apps.
New features and tools developed to allow app developers to increase user
average lifetime value and improve ARPU (average revenue per user). The new
technology enables advertisers to maximise the effectiveness of their campaigns
through performance monitoring and offer automated integration of offers and
enhanced targeting.
Digital entertainment: Awareness increased as major contracts with MNOs drive
international expansion
Contracts and partnerships secured include Orange in Poland, MTN in Cyprus,
Sony Mobile Malaysia and a global partnership with Blackberry Messenger.
Strengthened competitive proposition led to strong growth in Asia and Europe.
New features developed including automated and personalised radio streaming,
personalised music recommendations and integrated messaging.
Revenues further diversified with strong growth achieved in the Americas
Strong performance achieved in Latin America.
Full integration of Interacel and the acquisition of Up Mobile in June 2014
accelerated the Group's growth in Latin America and capitalised on synergies
with InternetQ's existing proposition and mobile marketing campaigns expertise.
The Group's global operations have been diversified with increased contribution
from the Americas: Europe accounted for 40% of total revenues (36% in 2013),
Asia for 31% (26% in 2013), Latin America for 16% (9% in 2013) and MEA for 13%
(29% in 2013).
Solid foundations and strong start to 2015
In 2014, more recognisable names were added into InternetQ's client and partner
base; sustaining good relationships will remain a Group focus in 2015.
Continued investment in proprietary technology to further strengthen the
product proposition and drive customer satisfaction and loyalty.
The Group has a robust pipeline for 2015, particularly in Latin America.
For further details:
InternetQ Tel: +44 (0) 20 3519 5250 / +30 (211) 101 1101
Panagiotis Dimitropoulos, Founder and CEO Tel: +30 (697) 811 7520
Veronica Nocetti, Chief Financial Officer Tel: +30 (694) 420 5275
FTI Consulting LLP
Charles Palmer / Chris Lane / Karen Tang Tel: +44 (0)20 3727 1000
RBC Capital Markets
Pierre Schreuder / Ema Jakasovic Tel: +44 (0)20 7653 4000
Canaccord Genuity
Simon Bridges / Emma Gabriel Tel: +44 (0)20 7523 8000
About InternetQ plc:
InternetQ is a leading digital content and mobile marketing services company
with operations spanning Asia, Europe, Africa and the Americas. It offers
proprietary technology platforms to help mobile network operators, brands, and
media companies to conduct targeted, interactive and measurable marketing
initiatives on mobile devices. Its mobile value added services include Akazoo,
which allows consumers to purchase digital music content and Minimob, its smart
mobile marketing and advertising platform to conduct effective and measurable
campaigns on mobile phones and achieve user engagement and app
monetization. All of InternetQ's products are underpinned by the rapid global
growth in smart devices and the thriving app economy.
InternetQ is a publicly traded company listed on the AIM market of the London
Stock Exchange, under the symbol INTQ. For investor related queries, please
email: ir@internetq.com
Chairman's Statement
It has been an honour to have served as InternetQ's Chairman over the last two
years and, even in this short time, to have seen the Company continue to expand
its footprint in the fast moving and rapidly growing marketplace we operate in.
Our clearly defined strategy, strong leadership, focus on driving growth and
dedicated global team, combined with the latest technology aligned to the
rapidly shifting requirements of the market, have all meant that I have the
pleasure of once again reporting that 2014 has been a successful year for
InternetQ.
Four years on from the IPO, InternetQ continues to deliver strong financial and
commercial performance, driven by the increased demand and international growth
of both our mobile marketing and digital entertainment divisions. In these last
four years, the Group's revenues have almost quadrupled, exceeding EUR132 million
in FY2014 (versus EUR37.3 million in 2010).
2014 has been an exciting year for multiple reasons. Commercially, across both
businesses, the Company secured major contracts with successful launches taking
place throughout the year and has a strong pipeline going into 2015.
Operationally, the Group further strengthened its presence in Latin America
through the successful acquisition of Up Mobile in Mexico. InternetQ has also
continued to invest heavily in enhancing its technology. During the period it
launched new Minimob and Akazoo platforms with additional features and
functionality that make both offerings more attractive, efficient and easier to
monetise, as well as taking advantage of the substantial opportunities in
mobile advertising.
Strong revenue growth across both B2B and B2C divisions
I am delighted to report that InternetQ has maintained its strong financial
performance over the last 12 months, continuing its excellent track record of
revenue growth across both business divisions. For the fourth consecutive year,
the Company achieved record revenues, EBITDA and earnings per share. Revenues
in 2014 exceeded EUR132 million (27% increase YOY), with the B2B (Mobile
Marketing) segment contributing 78% and the B2C (Digital Entertainment) 22%.
Margins improved in the second half of the year, driving annual adjusted EBITDA
to over EUR22 million (note 2) and adjusted profit after tax to EUR13.1 million
(note 2). InternetQ maintains a strong balance sheet with cash as at 31
December 2014 in excess of EUR12.3 million. Despite significant investment, the
Company generated positive free cash flow with cash generated from operations
close to EUR15.6 million. These solid financial results position the Company well
for future growth, especially as smartphone adoption and usage become
commonplace across both emerging and developed markets and advertisers
increasingly look to target mobile customers.
International expansion with strong growth in Asia and Latin America
With offices in 24 cities and profitable operations in four continents,
InternetQ has evolved into a truly global mobile marketing and digital
entertainment company. During the year, the Group has continued to increase its
presence in Asia, while also capitalising on new business opportunities in the
fast-evolving Latin American market. In 2013, Europe accounted for 36% of the
Group's annual revenues, Asia for 26%, the Middle East and Africa for 29% and
Latin America for 9%. In 2014, the contribution of Asia rose to 31% while that
of Latin America exceeded 16%, demonstrating the diversification of our
business and the fast adoption of our product offerings in the new markets that
we enter.
Growing team of experts
I would like to thank the team at InternetQ for their enormous contribution
over the year, which has been integral to helping the Company to continue to
grow. At 31 December 2013 the Group had 155 employees, whereas by the end of
2014 we employed 162 people. We invest in our team, ensuring we continue to
have the best people in place to help drive continuous growth, geographic
expansion, client diversification and technological innovation. The InternetQ
team represents 32 different nationalities and speaks 23 languages. As Chairman
of the Board, I can confirm that we are dedicated to continuing to motivate and
reward these talented individuals going forward.
Well positioned for the future
InternetQ operates in a fast growing and rapidly evolving global marketplace.
We have therefore adopted a three-pillar strategy to remain competitive and
position InternetQ for continued growth: expansion of our geographic footprint,
investment in technology and product development, and establishment of key
partnerships that secure a strong pipeline in both the B2B and B2C segments of
the business. I remain confident that our strategy positions us for further
revenue and geographic growth in the coming year.
Chief Executive Officer's Review
Introduction
I am pleased to report that 2014 was another year of significant progress.
InternetQ's stated strategy is to broaden its geographic reach, further enhance
its offering through continued product development and increase the number of
key partner relationships. In 2014, we achieved these objectives with both our
B2B and B2C divisions delivering strong revenue and profit growth across
multiple geographies.
InternetQ's growth has largely been driven organically with acquisitions
enabling the Company to sell its core products into new geographies through
existing sales channels. We have further established our footprint in Latin
America, Asia and Europe in the period, signing major contracts with both
existing and new clients. At the same time, we have continued to invest in our
technology and this has ensured that our products remain best-in-class,
offering unrivalled functionality and features.
With the ongoing adoption of smart devices alongside the growing shift to
mobile advertising increasing market confidence, we see clear opportunities for
additional growth in existing and new geographic markets. International
expansion, retaining our competitiveness and enhancing our portfolio of
products remain at the core of our vision.
Strong growth in revenues and profitability across multiple geographies
The audited accounts for 2014 highlight another strong period of growth for
InternetQ. Group revenue increased by 27% to EUR132.4 million with a particular
focus on improving profit margins across business lines leading to adjusted
EBITDA up 37% to EUR22.3 million (note 2).
InternetQ achieved revenue growth across multiple geographies in 2014. Revenues
in Europe represent 40% of total revenues (2013: 36%), revenues in Asia reached
31% (2013: 26%) while revenues in Latin America reached 16% (2013: 9%) and
revenues in MEA represented 13% (2013: 29%).
B2B (Mobile Marketing)
The mobile marketing landscape has evolved in recent years. InternetQ has
anticipated these trends and is well positioned to benefit further from the
adoption of smart devices and the increased demand for mobile advertising. Our
addressable market is vast and, with four billion people expected to be using
smartphones by 2020, InternetQ's mobile marketing has the potential to reach 80
percent of the global adult population . Accompanying this growth in smartphone
usage, mobile is expected to be the biggest driver of global advertising
growth, contributing 51% of all additional spend (amounting to USD$42.4billion)
between 2014 and 2017 .
InternetQ has streamlined its operations in response to industry change and
client demand. This has placed its Minimob platform at the core of the business
and covers all legacy and new mobile marketing revenue generation.
We have also gained traction across our key geographies, and in the twelve
month period secured several new clients and contract wins, including Movistar
in Spain and Latin America, Viva in the Dominican Republic, and CellC in South
Africa. This is part of a growing pipeline for Mobile Network Operators
("MNOs") campaigns that have been integrated with Minimob.
Minimob's success is in large part due to our increased investment into the
platform. In December 2014, we launched a new Minimob SDK version, which
provides sophisticated new features and tools that allow app developers to
increase average user lifetime value and improve average revenue per user
("ARPU"). We have also added analysis and measurement functionality which
differentiates our service from competitors by maximising the effectiveness of
campaigns. This is achieved by effective monitoring and analysis of real time
performance, increasingly automated integration of offers and more
sophisticated and accurate targeting of customers. This new, unrivalled
functionality enables cross-selling capabilities and opens up new sources of
incremental advertising revenues as we can specifically target relevant mobile
users.
The acquisition of Up Mobile, the mobile marketing and interactive TV and radio
content provider in Mexico, in May 2014 gave InternetQ increased reach in Latin
America, whilst also bringing opportunities for further distribution of the
Company's performance-based advertising and music streaming services. With Up
Mobile already the number one provider of interactive solutions for radio
stations and a key provider of mobile solutions to the public sector in a
buoyant Mexican market of 100 million mobile connections and 33 million
smartphone users, this acquisition has established InternetQ as a serious
player in the country.
B2C (Digital Entertainment)
The field of digital entertainment is expanding rapidly thanks to the impact of
the App Economy on consumers. Akazoo, the Group's music streaming service, is a
turnkey solution for our partners and is continuing to gain good traction in
the marketplace.
Akazoo has enjoyed further success during the year, achieving strong revenue
performance across multiple geographies. Major contracts with MNOs have helped
to drive international expansion, with key partnerships with Sony Mobile and
Orange Poland secured during the period.
The strong revenue performance over the period was largely driven by our focus
on improving the competitive proposition of Akazoo's music streaming service.
We invested in our Akazoo technology, adding new features such as automated and
personalised radio streaming, personalised music recommendations and integrated
messaging. Our more sophisticated technology also now enables us to develop
additional business intelligence on our users, helping us to take a more
targeted approach and offer very tailored services. We have also sought to make
our Akazoo proposition more competitive with significant label renegotiations,
facilitating quicker multi-territory expansion and lower content costs.
The biggest geographic growth in the period was seen in Asia and Europe. We
secured multiple new contracts in the Asian market, including a pilot launch in
Thailand; a successful launch with Ninetology and OEM brand partner of Gmobi in
Malaysia; the launch of the BlackBerry Messenger (BBM) partnership in eight
countries (largely in Indonesia); and the launch of a co-marketing initiative
with device manufacturer, Smartfren, in Indonesia to promote an add-on service
offering.
We also continued to strengthen Akazoo's position in Europe through the launch
of a bundle agreement with Orange in Poland and the release of a co-branded
add-on service offering with MTN in Cyprus. We have good visibility going in to
2015, with a strong pipeline of launches and partnerships with leading MNOs,
Internet Service Providers ("ISPs") and device manufacturers in Indonesia,
Singapore and other markets. We also plan to launch Akazoo in another western
European market in the coming months.
1. http://www.forbes.com/sites/louiscolumbus/2014/11/09/mobile-is-eating-the-world/
2. http://www.marketingprofs.com/charts/2015/26727/projected-2015-2017-ad-spend-growth-by-region-and-channel
Industry dynamics
Global 'geos', multiple markets
With the digital shift to so-called over-the-top internet services ("OTT") and
the focus of today's consumer being almost entirely on downloading and using
Mobile Applications (known as Apps) that enable them to make the most of the
time they spend on their smartphones, geography itself has now become a major
part of InternetQ's compelling proposition.
InternetQ can run automated campaigns in hundreds of countries (known as geo's)
and mobile marketing clients look set to favour companies which can deliver in
multiple markets by providing a 'one stop shop' that delivers a global
footprint.
Game on! The App Economy
The importance of the App Economy cannot be underestimated. In the field of
digital entertainment, game publishers for example, are set to benefit from an
increase in customer activation and mobile game downloads are expected to rise
from 30 to 60 billion in the next three years . It is another fast-growing
industry segment to which Minimob now delivers a significant number of
campaigns, including for games such as Tribal Wars, Puzzle Coin Hunter, Brave
Frontier and Dragon Nest.
An evolving business model
Put quite simply, InternetQ's role has always been to convert a mobile consumer
into a paying customer but - as is increasingly the case - we are now being
rewarded with a specific payment by a third party for encouraging a mobile
consumer to effect a transaction, be it making an App download or signing-up
for subscription services. This additional revenue - whether it comes directly
from brand names like BBM and WeChat or from third party 'demand side' ad
networks and agencies working for major clients - is a line of business that
will feature more prominently in 2015.
Outlook
We have made a solid start to 2015. With the strong foundations that we have
secured and the significant future growth opportunities available to the
Company, the Board is confident of delivering further growth in 2015 and
beyond.
3. http://www.idc.com/getdoc.jsp?containerId=252450
Chief Financial Officer's Review
Improved market confidence, reflected in increased smartphone sales and demand
for more advanced functionality and services, have ensured InternetQ's
continued growth across its B2B and B2C businesses in 2014. The Company
remained focused on delivering on its business strategy, successfully expanding
its international portfolio and consolidating its presence in Latin America
through the acquisition of Up Mobile in the period. InternetQ's solid
performance is reflected in its 2014 financial results, as evidenced by the
robust overall financial performance and a strong start to 2015.
Group revenues increased by 27% in 2014, with both the B2B and B2C businesses
delivering substantial sales growth. Revenues from B2B activities grew by 18%
to EUR103.9 million (2013: EUR87.7 million) while revenues from B2C grew by 71% to
EUR28.5 million (2013: EUR16.7 million). Acquisitions completed during the year
contributed EUR0.9 million (post acquisition) (2013: EUR19.3 million) to Group
revenues.
Operating costs increased by 37%, primarily due to costs incurred following
acquisitions and geographic expansion. Adjusted EBITDA (note 2) grew by 37% to
EUR22.3 million (2013: EUR16.2 million), a margin of 17% (2013: 16%). The adjusted
profit after income tax for the year reached EUR13.1 million compared to EUR11.1
million for 2013. Acquisitions completed during the year did not contribute to
the Group's profit after income tax post acquisition.
Investment in the Akazoo and Minimob platforms resulted in an increase in
capital expenditure. Total capital expenditure including fixed and intangibles
assets for the year ended 31 December 2014 stood at EUR14.7 million, an increase
of 5% from the previous year (2013: EUR13.9 million).
The Group ended 2014 with EUR0.2 million (2013: EUR4.7 million) net cash, which
consisted of EUR12.3 million cash, cash equivalents and restricted cash (2013: EUR
13.2 million) and EUR12.1 million of bank debt (2013: EUR8.5 million). The terms
and conditions of the Group's borrowing agreements continue to be relatively
favourable. Our EUR4 million term loan matures in March 2022 and another EUR2
million loan arrangement matures in May 2017. InternetQ Germany also obtained a
EUR3 million overdraft facility to finance its expansion into gaming, the
utilised portion as of year-end was EUR2.8million.
The Group generated EUR15.8 million (2013: EUR12.2 million) in cash from operating
activities and reduced the receivables days outstanding to 96 days (2013: 108
days) and its cash conversion cycle to 43 days (2013: 63 days).
Summary
InternetQ is entering 2015 in a stronger financial position than at the start
of the 2014 financial year. We are pleased that our focus on balancing strict
cost control with selective investment, managing working capital and increasing
cash conversion, is showing through in our solid financial results.
Overall we have completed a year of considered corporate recalibration which
positions the Group strongly from an operational and a financial standpoint,
providing a base to capitalise on in 2015 and beyond.
Income Statements
For the years ended 31 December 2014 and 2013
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
Notes 2014 2013
Revenues 3 132,393,324 104,417,905
Direct cost of revenues (101,024,290) (81,615,894)
Gross profit 31,369,034 22,802,011
Other operating income 462,499 415,987
Operating expenses (11,799,775) (8,686,081)
Other operating expenses (246,116) (121,924)
Depreciation and amortisation (9,016,648) (5,273,261)
Operating profit 10,768,994 9,136,732
Finance costs (2,403,637) (735,540)
Finance income 919,118 609,262
Profit/(loss) before income tax 9,284,475 9,010,454
Income tax (610,278) (269,869)
Profit/(loss) after income tax 8,674,197 8,740,585
Attributable to:
Owners of the parent 8,674,197 8,740,585
Earnings per share basic 4 0.22 0.24
Earnings per share diluted 4 0.21 0.23
Adjusted Results: 2 4,435,447 2,404,765
Adjusted profit after income tax 2 13,109,644 11,145,350
Adjusted earnings per share basic 2 0.33 0.30
Adjusted earnings per share diluted 2 0.32 0.30
Change in the Income Statement presentation
As the company's business evolves, it is our commitment to find more clear and
relevant ways to present the information to the readers of the financial
statements. Thus, the company has decided to change the cost classification
used in the Income Statement and modify its format, previously categorised by
function (cost of sales, selling administrative) to a grouping by nature
(direct costs, operating expenses, depreciation etc).
Statements of financial position
As at 31 December 2014 and 2013
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
Notes 2014 2013
Assets
Non-current assets
Property, plant and equipment 2,006,772 2,190,605
Investment properties 442,500 470,000
Goodwill 1 19,422,360 15,086,546
Intangible assets 51,377,318 39,797,278
Non-current financial assets 2,847,769 2,813,690
Other non-current assets 582,913 926,248
Deferred tax assets 240,673 895,927
Total non-current assets 76,920,305 62,180,294
Current assets
Trade receivables 37,802,307 26,917,507
Other receivables 10,949,384 9,465,579
Current financial assets 114,521 108,513
Cash and cash equivalents 11,585,860 12,695,021
Restricted cash 755,209 522,876
Total current assets 61,207,281 49,709,496
Total assets 138,127,586 111,889,790
Equity and liabilities
Equity attributable to equity holders
of the parent company
Share capital 120,323 117,553
Share premium 50,590,884 47,500,518
Treasury shares (13,276) -
Other components of equity 15,613,892 14,558,856
Other capital reserves (106,699) 154,712
Exchange differences 1,451,728 (34,743)
Retained earnings 28,304,152 19,629,955
Total equity 95,961,004 81,926,851
Non-current liabilities
Long term loans 4,525,100 5,106,700
Provisions 94,688 156,145
Other non-current liabilities 104,112 52,752
Deferred tax liabilities 5,731,449 5,025,409
Total non-current liabilities 10,455,349 10,341,006
Current liabilities
Trade payables 20,600,124 11,435,963
Short term loans 6,203,929 2,531,726
Current portion of long term loans 1,391,600 833,300
Income tax payable 987,321 863,646
Other liabilities 2,528,259 3,957,298
Total current liabilities 31,711,233 19,621,933
Total liabilities 42,166,582 29,962,939
Total equity and liabilities 138,127,586 111,889,790
Statements of cash flows
As at 31 December 2014 and 2013
(Amounts in Euro except share information, per share data and unless otherwise stated)
Group
2014 2013
Cash flows from operating activities
Profit/(loss) before income tax 9,284,475 9,010,454
Adjustments for:
Depreciation and amortisation 9,016,648 5,273,261
Revaluation of investment property 27,500 35,700
Revaluation of financial assets 67,929 -
Increase in other provisions 58,816 104,315
Provision for employee benefits liability 10,846 12,285
Allowance for doubtful trade and other receivables 310,821 98,942
Amortisation of investment grants (131,867) (35,830)
Employees Share incentive plan expense 2,056,028 1,179,080
Non-executive Directors share based payments 97,499 233,917
Losses /(gains) on disposal of property, 30,274 (4,931)
plant, and equipment
Finance income (121,112) (162,243)
foreign exchange differences 1,026,749 (444,027)
Finance costs 831,537 469,354
Net cash before working capital changes 22,566,143 15,770,277
Movement in working capital:
Trade receivables (10,382,091) 10,546,277
Other receivables (1,397,509) (5,580,079)
Restricted cash (232,333) 110,662
Other non-current assets 343,335 (809,104)
Trade payables 6,898,633 (8,537,787)
Other liabilities (1,582,826) 827,406
Other non-current liabilities 756 1,714
Income taxes paid (268,753) (150,846)
Liabilities arising from other provisions paid (120,273) -
Employee benefits liabilities paid - (11,200)
Net cash from operating activities 15,825,082 12,167,320
Cash flows from investing activities
Payments for property, plant and equipment (694,929) (370,491)
Proceeds from disposals of property, 93,829 10,674
plant and equipment
Payments for intangible assets (14,028,902) (13,588,761)
Proceeds from disposals of intangible assets 32,779 -
Acquisition of subsidiaries (net of cash acquired) (5,238,829) (11,119,483)
Payments to acquire financial assets - (86,754)
Proceeds from investment grants 127,263 43,283
Finance income received 12,858 46,811
Net cash used in investing activities (19,695,931) (25,064,721)
Cash flows from financing activities
Proceeds from the issuance of share capital - 11,105,965
Proceeds from long term borrowings: 560,000 5,940,000
Payments of long term borrowings (583,300) (841,900)
Proceeds from short term borrowings 3,672,203 1,150,000
Payment of short term borrowings - -
Finance costs paid (887,215) (459,045)
Net Cash from Financing activities 2,761,688 16,895,020
Net (decrease) / increase in cash (1,109,161) 3,997,619
and cash equivalents
Cash and cash equivalents at beginning of year 12,695,021 8,697,402
Cash and cash equivalents at end of the year 11,585,860 12,695,021
1. Business combinations
On 14 May 2014, the Group completed the acquisition of 100% of the voting rights
of Up Mobile Holdings LLC, a mobile marketing and interactive TV and radio content
provider in Mexico.
Up Mobile is the number one provider of interactive solutions for radio stations,
and also provides mobile solutions to media organisations and the public sector in
Mexico, a market of over 100 million mobile connections and 33 million smartphone
users currently. The acquisition of Up Mobile is in line with InternetQ's stated
strategy of broadening its geographical reach whilst further developing its service
offering. The key benefits of the acquisition are as follows, it:
- significantly increases InternetQ's existing presence in Latin America following the
successful acquisition of Interacel Holdings;
- provides InternetQ's entry into Mexico's dynamic market and secures the promotion of
its offerings through Up Mobile's channels; and
- builds increased value by capitalising on the synergies of both companies' clients,
services and expertise.
The goodwill arising from the acquisition amounted to EUR4.5 million mainly
represents the benefits that the Group is expecting from the increased Mobile
Marketing activity with MNOs, where Up Mobile has direct commercial agreements,
as well as from the roll out of Akazoo.
Since the date of acquisition and until 31 December 2014, Up Mobile has
contributed EUR894,548 of revenue and a loss of EUR35,296 to the Group's profit
after tax.
2. EBITDA and Adjusted Results
EBITDA is defined by adding back to (or subtracting form) profit after tax,
income tax, finance costs and finance income and depreciation and amortization
expenses.
The table below presents a reconciliation from profit after income tax to EBITDA
Group
2014 2013
Profit after income tax 8,674,197 8,740,585
Income tax 610,278 269,869
Finance costs 2,403,637 735,540
Finance income (919,118) (609,262)
Depreciation and amortisation 9,016,648 5,273,261
EBITDA 19,785,642 14,409,993
Adjusted results, which are non-GAAP financial measures, are presented in the
accompanying financial statements in order to improve investors understanding
of financial results and improve comparability of financial information from
period to period.
The table below presents the adjusted amounts to the Group's financial results
for the year ended 31 December 2014 and 2013:
Group
2014 2013
Employees share incentive plan expense 2,056,028 1,179,080
Non-executive directors share based payments 97,499 233,917
Acquisition costs from business combinations 346,673 398,087
Adjustments to EBITDA 2,500,200 1,811,084
Amortisation of assets identified in
business combinations 2,602,237 838,352
Adjustments to operating profit 5,102,437 2,649,436
Losses from revaluation on financial assets 67,929 -
Deferred tax income on amortisation of the assets
identified in business combinations: (734,919) (244,671)
Adjustments to profit after income tax 4,435,447 2,404,765
Reconciliation of the adjusted results for the year ended 31 December 2014:
2014
Income Statement Adjustments Adjusted results
EBITDA 19,785,642 2,500,200 22,285,842
Operating profit 10,768,994 5,102,437 15,871,431
Profit after tax 8,674,197 4,435,447 13,109,644
Reconciliation of the adjusted results for the year ended 31 December 2013:
2013
Income Statement Adjustments Adjusted results
EBITDA 14,409,993 1,811,084 16,221,077
Operating profit 9,136,732 2,649,436 11,786,168
Profit after tax 8,740,585 2,404,765 11,145,350
Reconciliation of the adjusted earnings per share basic and diluted for the
year ended 31 December 2014 and 2013:
Group
2014 2013
Adjusted profit after tax 13,109,644 11,145,350
Weighted average number of ordinary shares 40,151,167 36,973,217
for basic earnings per share
Earnings per share basic adjusted 0.33 0.30
Group
2014 2013
Adjusted profit after tax 13,109,644 11,145,350
Weighted average number of ordinary shares 40,364,680 37,408,290
for basic earnings per share
Earnings per share diluted adjusted 0.32 0.30
3. Segment Information
For management purposes the Group is separated into business units based on its
customer types. Consequently, the Group has two reportable operating segments
as follows:
Business to Business (B2B) segment: B2B revenues are those that arise from the
marketing of InternetQ's products to other organisations. It allows the Group
to sell its products or services to other companies or organisations that
resell them, use them in their products or services or use them to support
their operations.
Business to Consumer (B2C) segment: B2C revenues are those resulting from
marketing of InternetQ's products directly to consumers as the Group's target
market.
Management monitors the operating results of its segments separately for the
purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss
(minus any costs that are not allocated to segments).
Transfer prices between operating segments are on an arm's length basis in a
manner similar to transactions with third parties. Segment income, expenses and
results will include those transfers between business segments which eliminated
on consolidation.
The following table presents revenue and profit information regarding the
Group's operating segments for the year ended 31 December 2014:
2014 B2B B2C Consolidated
Revenues 103,890,805 28,502,519 132,393,324
Segment EBITDA 18,865,699 919,943 19,785,642
Depreciation and amortisation (5,646,413) (3,370,235) (9,016,648)
Segment operating profit /(loss) 13,219,286 (2,450,292) 10,768,994
Adjustments (note 2) 1,610,535 889,665 2,500,200
Adjusted segment EBITDA 20,476,234 1,809,608 22,285,842
Adjustments (note 2) 3,417,633 1,684,804 5,102,437
Adjusted segment operating profit/(loss) 16,636,919 (765,488) 15,871,431
Other disclosures:
Operating assets 99,702,791 34,779,332 134,482,123
Operating liabilities 17,519,032 5,808,151 23,327,183
Capital expenditure 8,787,125 6,872,194 15,659,319
The following table presents revenue and profit information regarding the
Group's operating segments for the year ended 31 December 2013:
2013 B2B B2C Consolidated
Revenues 87,739,600 16,678,305 104,417,905
Segment EBITDA 13,166,132 1,243,861 14,409,993
Depreciation and amortisation (3,239,270) (2,033,991) (5,273,261)
Segment operating profit /(loss) 9,926,862 (790,130) 9,136,732
Adjustments (note 2) 1,166,673 644,411 1,811,084
Adjusted segment EBITDA 14,332,805 1,888,272 16,221,077
Adjustments (note 2) 1,917,406 732,030 2,649,436
Adjusted segment operating profit/(loss) 11,844,268 (58,100) 11,786,168
Other disclosures:
Operating assets 81,377,570 26,224,090 107,601,660
Operating liabilities 10,302,804 5,299,354 15,602,158
Capital expenditure 11,955,306 2,396,620 14,351,926
Geographic information
The Company being only the holding company of the Group has no operations in
the country of domicile.
Group
2014 2013
Europe 52,424,236 37,297,300
Latin America 21,887,934 9,070,945
Middle East and Africa 17,638,223 30,726,774
Asia 40,442,931 27,322,886
Total Revenues 132,393,324 104,417,905
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Group
2014 2013
Net profit attributable to ordinary
equity holders of the parent from 8,674,197 8,740,585
continuous operations
Weighted average number of ordinary shares 40,151,167 36,973,217
for basic earnings per share
Earnings per share basic 0.22 0.24
Adjusted earnings per share basic (note 2) 0.33 0.30
Weighted average number of ordinary shares 40,151,167 36,973,217
for basic earnings per share
Effect on dilution:
Deferred consideration shares - 82,761
Share incentive plan to Employees 213,513 349,674
Share based payments to Non-executive directors - 2,638
213,513 435,073
Weighted average number of ordinary shares 40,364,680 37,408,290
adjusted for the effect of dilution
Earnings per share diluted 0.21 0.23
Adjusted earnings per share diluted (note 2) 0.32 0.30
5. Other Information
The summary financial information for the year ended 31 December 2014 set out
above is not the Company's Statutory Accounts. This financial information for
the year ended 31 December 2014 has been extracted from the 2014 Annual Report
and Accounts and, is prepared on the same basis as set out in the 2014 Annual
Report and Accounts. The 2014 Annual Report and Accounts have been audited by
Deloitte LLP who has issued an unqualified audit report, containing no
statements under 498(2) or 5498(3) of the Companies Act 2006.
The Accounts (Financial Statements) for 2014 are expected to be filed with the
Company's Registrar following the Company's Annual General Meeting to be held
on June 2015.
END
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