INTERNETQ PLC
For immediate release 30 September 2014
INTERNETQ PLC
('InternetQ', the 'Group' or the 'Company')
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
Strong results reflect established position in mobile marketing and music
streaming
InternetQ plc (LSE-AIM: INTQ), a leading provider of mobile marketing and
digital entertainment solutions for mobile network operators and brands,
announces its unaudited interim results for the six months ended 30 June 2014.
Financial highlights:
* Revenue up 53% to €65.7million (H1 2013: €43.0million)
*
+ B2B revenue up 49% to €51.5million (H1 2013: €34.5million)
+ B2Crevenue up67% to €14.2million (H1 2013: €8.5million)
* EBITDA (adjusted) up 88% to €9.8million (H1 2013: €5.2million)
* Profit before tax (adjusted)up 40% to €6.0million (H1 2013: €4.3million)
* Earnings per share (adjusted) up 20% to €0.14(H1 2013: €0.11)
* Cash flow from operations up 56% to €8.0 million (H1 2013: €5.1 million)
* Free Cash Flow of €0.5million (H1 2013:0.1million)
* Net cash position €3.3million as at 30 June 2014 (FY2013: €4.7million)
after acquisitions.
Operational highlights:
* Strong growth rates combine good organic growth with selective acquisitions
* Rollout of existing solutions into new geographies accelerates growth
* Global smartphone adoption combined with the growing app economy benefits
both businesses - innovation and market trends accentuate synergies
* Latin America accelerates following the successful integration of InternetQ
LatAm (former Interacel) and the pipeline remains strong
* UpMobile's integration proceeding to plan
* Minimob continues to be a key driver of growth, exceeding 250 million
unique SDK installs since launch and increasing at a rate of 1 to 2 million
installs per day
* Minimob's remarkable success has been transferrable across all layers of
InternetQ's business
* More ad networks in Germany, UK, China, Israel, Singapore and India were
integrated with the Minimob platform
* Akazoo continues to exhibit high conversion rates to paying subscribers,
attracting new B2B operators and device partnerships with major
global groups
* Extremely successful roll-out of Akazoo into new SE Asian territories,
including Thailand and Malaysia with first place rankings in the music
category of the Google app store for extended periods throughout H1 2014
* Strong mobile marketing pipeline with notable projects in emerging markets
and campaigns with leading operators in Argentina, Paraguay, the Dominican
Republic, Ecuador, Guatemala, Honduras, Nicaragua and Costa Rica, Poland,
Asia and other regions.
Trading Outlook:
* Strong trading momentum continues into second half
* The development of new features for Minimob and Akazoo are expected to be
completed in Q4 2014
Commenting on the results, Panagiotis Dimitropoulos, Founder and Chief
Executive Officer of InternetQ said:
"These results demonstrate the commanding global market position that InternetQ
has developed for both its mobile marketing and music streaming divisions.
Market trends continue to move in InternetQ's favour with mobile marketing now
a significant part of many company's sales strategies. Our knowledge and
insight into the markets that we service, and our deep client relationships in
multiple geographies, positions us well for the future."
"We have a strong track record of delivering significant year-on-year revenue
and EBITDA growth and given the progress made in the first half, we remain
confident that results for the full year will be in line with current market
expectations."
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
Stephen Foss / Pierre Schreuder 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
CEO's Review
Overview
The first six months of the 2014 financial year have been another important
period in InternetQ's development as a significant player in the global mobile
ecosystem.
InternetQ's strong performance is clearly evidenced by significant revenue
growth to €65.7 million, an increase of more than 50 percent over the previous
year. These strong growth rates have been achieved both organically and through
acquisitions. In the first six months of the current financial year the
successful integration of businesses acquired in Latin America and Germany has
improved our geographic diversity, while organic growth has been driven by the
development of our mobile marketing and digital entertainment businesses, which
continue to evolve with new functionalities and commercial arrangements.
Adjusted underlying EBITDA has risen significantly as well to €9.8 million. The
Group has continued to invest to secure future growth with €7.1 million
invested into technology platforms and upgraded customer functionalities and €3
million in an acquisition in Mexico to complement our Latin American business.
These investments have been financed from existing cash resources and the
Company's net cash position as at 30 June 2014 was €3.3 million.
InternetQ's growth has been accelerated by the acquisitions that we have made
which have enabled the Company to achieve rapid deployment of its existing
solutions into new geographies and new customers.
From a strategic perspective, InternetQ has streamlined its activities into two
main, highly synergistic and progressive lines of business: B2B (Mobile
Marketing) and B2C (Digital Entertainment). Overall, we see significant future
opportunities in our markets for both mobile marketing and digital
entertainment on the back of the success we have already achieved across Latin
America, Europe and Asia.
With global smartphone adoption continuing apace and the resulting increased
use of smart devices, vendors and brands are increasingly able to reach
consumers in a more targeted and therefore more profitable way. With the
ongoing focus on customer acquisition and the deeper levels of consumer insight
that are now available to us, InternetQ has developed a performance-based
advertising model that we have successfully taken to a dynamic new client base.
This new client base includes game companies and large-scale Ad networks that
are increasingly giving us demand-based mobile advertising campaigns to manage.
Our unique offering to support the current trend for `App install' campaigns
has enabled InternetQ to build a commanding market presence supported by deep
client relationships.
Our focus on innovation will continue to drive our business and we are well
placed to benefit from the ongoing increase in daily consumption of Apps and In
App purchase activities regardless of whether they evolve from a mobile
operator, an App store, or a large scale game portal. We will continue to
innovate to connect the advertiser to the end-user in a profitable manner.
B2B (Mobile Marketing):
The Mobile Marketing landscape has changed significantly in recent years,
primarily as a result of substantial global smartphone adoption. Strategically,
InternetQ has pre-empted this change by deploying its Minimob platform very
early in the cycle, thereby being able to offer both existing and new clients
the option to run their campaigns into greater and more widely dispersed
channels.
The Minimob offering is an exciting addition to InternetQ's product suite and
demonstrates our ability to innovate and bring to market new technologies that
change how our customer base interacts with their end users. With the launch of
Minimob and its recently upgraded Software Development Kit ("SDK"), InternetQ
is capable of providing its client base with the technology and the opportunity
to successfully launch campaigns that target the "over-the-top" world of smart
devices and app ecosystems which their subscribers inhabit. Minimob now counts
more than 250 million installs, and this is increasing at a rate of 1 to 2
million installs per day. This network that InternetQ has developed over the
past 15 years is essentially a large `private network' that, using our
technology, our clients can effectively advertise into.
The proprietary cross-selling capabilities that are available with the latest
release of the Minimob SDK are unique to InternetQ and truly differentiate us
in the marketplace. These algorithms offer our clients a number of advantages
and we are dedicated to constantly improving and adapting our offer to maximize
the financial potential of this network.
We have achieved strong growth in the first six months, particularly in
emerging markets with notable mobile marketing projects undertaken in
Argentina, Paraguay, the Dominican Republic, Ecuador, Guatemala, Honduras,
Nicaragua and Costa Rica. The importance of our product for our clients is
demonstrated by the fact that a good number of campaigns operating in the Latin
American region were extended from the first quarter into the second. Looking
forward, we have a strong mobile marketing pipeline which includes
cross-operator projects in Poland, projects in Asia and campaigns with leading
operators in other regions.
B2C (Digital Entertainment):
Digital Entertainment continues to be a major growth driver for our business,
especially the Akazoo music streaming service, which is delivered to customers
through our strong relationships with mobile operators, handset manufacturers
and even ISP's. Thanks to the synergies of Minimob with its advanced App
marketing capability, the rapid and impressive growth of Akazoo continues
unabated. The potential for direct-to-consumer expansion has also offered
additional opportunities for product and service extension.
In H1 2014, following the conclusion of a successful open tender, InternetQ was
selected to run the Orange Poland music service. This service has launched
well, and as we move through the year, Akazoo has a growing pipeline of
potential business-to-business partnerships with launches stretching in 2015
thus providing good forward visibility. Operationally speaking, the conversion
rates (to paid subscriptions) remain high at 20 to 35 percent, driving a
significant increase in streaming revenues
Investing in Akazoo will lead to the introduction of a number of new features
and functions in the second half which will further enhance the key automation
and personalisation aspects of the service and strengthen its position in the
marketplace.
Financial review:
Group revenues increased by 53% in the first half of 2014 to €65.7 million (HY
2013: €43.0 million), with both segments delivering substantial sales growth.
Revenues from B2B activities grew by 49% to €51.5 million (HY 2013: €34.5
million) and revenues from B2C grew by 67% to €14.2 million (HY 2013: €8.5
million). InternetQ now benefits from further geographic diversity with
revenues spread across a broad range of growth markets - 34% from Europe, 32%
from Asia, 18% from the Americas, 16% from the Middle East & Africa. Operations
continue to be managed and coordinated from existing locations.
Selling and administration costs increased by 35%, primarily due to
acquisitions and the geographic expansion of the business. Adjusted EBITDA
(after adjustment for share based payments and acquisition costs amounting to €
1.3 million) grew by 88% to €9.8 million (HY 2013: €5.2 million) a margin of
15% (HY 2013: 12%). Profit after tax for the half year remained stable at €3.2
million compared to €3.3 million for the HY 2013, with this attributable to the
increase in operating profits being offset by amortisation of intangibles and a
one-off, unrealized currency movement on intercompany balances between the UK
holding company and Euro denominated subsidiaries. As in previous periods,
these gains and losses are unlikely to be realized but lead to a non-cash P&L
adjustment.
Investment in the Akazoo, Minimob platforms and related applications resulted
in capital expenditure for the half year ended 30 June 2014 of €7.1 million, an
increase of 40% from the previous year (HY 2013: €5 million). A slightly lower
amount will be invested in the second half and cash will continue to improve.
Cash from operations was €8.0 million, reflecting the strong underlying
financial performance. Investing activities comprised €7.1 million in software
development and €3.0 million in a synergistic acquisition in Mexico. The Group
ended the first half of the year with €3.3 million net cash after acquisitions,
which consisted of €12 million (HY 2013: €8.7 million) cash and €8.7 million of
bank debt (HY 2013: €3.4 million).
We remain dedicated to executing our growth strategy and have carefully
positioned the Company to take full advantage of the boom in mobile advertising
to smart devices being driven by the App Economy.
InternetQ has made excellent progress during the first half, in line with
market expectations and I am confident we are well placed to continue to
benefit from the strong growth in mobile marketing and digital entertainment.
The mobile ecosystem has altered to become a majority "smart device" one.
Having anticipated this shift, InternetQ is now reaping considerable benefits
from this changing landscape and we have developed innovative products that are
perfectly attuned to this huge market opportunity.
Our products and services are receiving very strong demand from both existing
and new customers and sales post-period end have been strong. With the industry
growth pushing billions upon billions of transactions and spending on all
things mobile; we fully expect another strong year ahead and are confident of
taking the Company to even greater heights.
The consistent and sustainable nature of the InternetQ's commercial success,
coupled with the strong revenue and EBITDA growth achieved in the first six
months, gives the Board confidence that that results for the full year will be
in line with current expectations.
InternetQ will hold an Investors' Day on 11 November 2014.
Unaudited Consolidated Income Statement for the period ended 30 June 2014
(Amounts in Euro, except share information, per share data and unless otherwise
stated)
Group
Notes Period ended Period ended
30 June 2014 30 June 2013
Revenues 3 65,712,940 43,001,100
Cost of sales (36,602,636) (22,313,004)
Gross profit 29,110,304 20,688,096
Other operating income 110,400 276,488
Selling and distribution costs (22,183,426) (16,775,394)
Administrative expenses (2,595,691) (1,577,124)
Operating profit 4,441,587 2,612,066
Finance costs (1,216,416) (245,134)
Finance income 4 251,713 1,232,734
Profit before income tax 3,476,884 3,599,666
Income tax (255,868) (274,640)
Profit after income tax 3,221,016 3,325,026
Attributable to:
Owners of the parent 3,221,016 3,325,026
Earnings per share basic 5 0.08 0.10
Earnings per share diluted 5 0.08 0.09
Adjustments to profit after tax 1 2,193,172 677,929
Adjusted profit after income tax 1 5,414,188 4,002,955
Adjusted earnings per share basic 5 0.14 0.11
Adjusted earnings per share diluted 5 0.14 0.11
The accompanying notes are an integral part of the interim financial
statements.
All results are derived from continuing operations.
Unaudited Consolidated Statement of Comprehensive Income for the period ended
30 June 2014
(Amounts in Euro, except share information, per share data and unless otherwise
stated)
Group
Period ended Period ended 30
30 June 2014 June 2013
Profit for the period 3,221,016 3,325,026
Other comprehensive income
Exchange differences on translation of foreign 687,008 (1,354,877)
operations
Other comprehensive income /(loss)/ for 687,008 (1,354,877)
the year
Total comprehensive income for the year 3,908,024 1,970,149
Attributable to:
Equity holders of the parent 3,908,024 1,970,149
Unaudited Consolidated Statement of Financial Position as at 30 June 2014
(Amounts in Euro, except share information, per share data and unless otherwise
stated)
Group
30 June 2014 31 December 2013
Assets
Non-current assets
Property, plant and equipment 2,126,245 2,190,605
Investment properties 470,000 470,000
Goodwill 19,396,322 15,086,546
Intangible assets 47,880,478 39,797,278
Non-current financial assets 2,836,754 2,813,690
Other non-current assets 570,655 926,248
Deferred tax assets 716,935 895,927
Total non-current assets 73,997,389 62,180,294
Current assets
Trade receivables 36,157,358 26,917,507
Prepayments and other receivables 4,431,301 9,465,579
Current financial assets 111,503 108,513
Cash and cash equivalents 11,322,079 12,695,021
Restricted cash 691,400 522,876
Total current assets 52,713,641 49,709,496
Total assets 126,711,030 111,889,790
Equity and liabilities
Equity attributable to equity holders of
the parent company
Share capital 120,323 117,553
Share premium 50,478,994 47,500,518
Treasury shares (13,276) -
Other components of equity 16,088,278 14,558,856
Other capital reserves 154,712 154,712
Exchange differences 654,219 (34,743)
Retained Earnings 22,850,971 19,629,955
Total equity 90,334,221 81,926,851
Non-current liabilities
Interest-bearing loans and borrowings 5,041,700 5,106,700
Employee benefits liability 46,085 43,585
Provisions 156,145 156,145
Other non-current liabilities 127,222 9,167
Deferred tax liability 5,614,179 5,025,409
Total non-current liabilities 10,985,331 10,341,006
Current liabilities
Trade payables 17,627,027 11,435,963
Interest-bearing loans and borrowings 2,914,736 2,531,726
Current portion of interest-bearing loans 833,300 833,300
and borrowings
Income tax payable 1,180,712 863,646
Accruals and other current liabilities 2,835,703 3,957,298
Total current liabilities 25,391,478 19,621,933
Total liabilities 36,376,809 29,962,939
Total equity and liabilities 126,711,030 111,889,790
The accompanying notes are an integral part of the interim financial
statements.
Unaudited Consolidated Statement of Changes in Equity for the period ended 30
June 2014
(Amounts in Euro, except share information, per share data and unless otherwise
stated)
Group Share Share Treasury Other Other Exchange Retained Total
capital premium shares components capital differences Earnings
of equity reserves
Balance at 1 105,345 34,227,669 - 1,199,047 - 647,671 10,889,370 47,069,102
January 2013
Profit after - - - - - - 8,740,585 8,740,585
income tax
Other - - - - - (682,414) - (682,414)
comprehensive
loss
Total - - - - - (682,414) 8,740,585 8,058,171
comprehensive
income /
(loss)
Share capital 12,208 13,787,778 - - - - - 13,799,986
increase
Transaction - (514,929) - - - - - (514,929)
costs
Share - - - 771,681 - - - 771,681
incentive
plan
Non-Executive - - - 11,050 - - - 11,050
directors
share based
payments
Contingent - - - 12,577,078 154,712 - - 12,731,790
consideration
Balance at 31 117,553 47,500,518 - 14,558,856 154,712 (34,743) 19,629,955 81,926,851
December 2013
Profit after - - - - - - 3,221,016 3,221,016
income tax
Other - - - - - 688,962 - 688,962
comprehensive
income
Total - - - - - 688,962 3,221,016 3,909,978
comprehensive
income
Share capital 2,770 2,978,476 (13,276) (2,545,295) - - - 422,675
increase
Employees - - - 600,067 - - - 600,067
Share
incentive
plan
Non-Executive - - - - - - - -
directors
share based
payments
Contingent - - - 3,474,650 - - - 3,474,650
consideration
Balance at 30 120,323 50,478,994 (13,276) 16,088,278 154,712 654,219 22,850,971 90,334,221
June 2014
The accompanying notes are an integral part of the interim financialstatements.
Unaudited Consolidated Cash Flow Statement for the period ended 30 June 2014
(Amounts in Euro, except share information, per share data and unless otherwise
stated)
Group
Period ended 30 Period ended 30
June 2014 June 2013
Cash flows from operating activities
Profit/ (loss) before income taxes 3,476,884 3,599,666
Adjustments for:
Depreciation and amortisation 4,001,571 2,012,531
Provision for employee benefits 10,098 15,894
liability
Allowance for doubtful trade and - 27,840
other receivables
Amortisation of investment grants (27,290) -
Employees share incentive plan 942,417 464,812
expense
Non-Executive Directors share based 53,840 102,893
payments
(Losses) /gains on disposal of property, plant, 15,695 (4,896)
and equipment
Finance income (62,260) (81,455)
Finance costs 382,172 147,880
Net cash before working capital 8,793,127 6,285,165
changes
(Increase)/ decrease in:
Trade receivables (9,080,537) 758,533
Prepayments and other receivables 5,172,712 (2,238,341)
Restricted cash (168,524) 448,137
Increase/ (decrease) in:
Trade payables 4,692,141 (1,100,749)
Accruals and other current (1,275,000) 987,592
liabilities
Other non-current liabilities (1,714) -
Income taxes paid (153,286) (31,716)
Employee benefits liabilities paid (7,598) (11,200)
Net cash from operating activities 7,971,321 5,097,421
Cash flows from investing activities
Capital expenditure for property, plant and (338,202) (58,462)
equipment
Proceeds from disposals of property, plant and 27,792 5,818
equipment
Capital expenditure for intangible (7,150,862) (4,946,548)
assets
Acquisition of subsidiaries (net of (2,969,031) -
cash acquired)
Proceeds from investment grants 127,290 -
Interest and related income received 35,991 81,582
Net cash used in Investing Activities (10,267,022) (4,917,610)
Cash flows from financing activities
Proceeds from the issuance of share - -
capital
Proceeds from long term borrowings: 60,000 2,000,000
Payments of long term borrowings (125,000) (841,900)
Proceeds from short term borrowings 383,009 -
Payments of short term borrowings - (478)
Other non-current assets 355,593 (19,308)
Finance costs paid (437,851) (194,469)
Net cash used in Financing Activities 235,751 943,845
Effect of exchange rates' changes on flows and 687,008 (1,354,877)
cash
Net decrease in cash and cash equivalents (1,372,942) (231,221)
Cash and cash equivalents at 12,695,021 8,697,402
beginning of year
Cash and cash equivalents at end of 11,322,079 8,466,181
the period
The accompanying notes are an integral part of the interim financial statements
Notes to the unaudited Interim Consolidated financial Statements
(Amounts in Euro except share information, per share data and unless otherwise
stated)
1. EBITDA and adjusted results
The tables below present a reconciliation from profit after income tax to
EBITDA.
Group
Period ended Period ended 30
30 June 2014 June 2013
Profit after income tax 3,221,016 3,325,026
Income tax 255,868 274,640
Finance costs 1,216,416 245,134
Finance Income (251,713) (1,232,734)
Depreciation and amortisation 4,001,571 2,012,531
EBITDA 8,443,158 4,624,597
Adjusted for:
Share based compensation 996,258 567,705
One-off acquisition costs 313,869 -
EBITDA Adjusted 9,753,285 5,192,302
Adjusted results, which are non-GAAP financial measures, are presented in order
to improve investors understanding of financial results and improve
comparability of financial information from period to period.
Reconciliation of the adjusted results for the period ended 30 June 2014 and
2013:
for the period ended 30 June 2014
Income Adjustments Adjusted
Statement Results
EBITDA 8,443,158 1,310,127 9,753,285
Operating Profit 4,441,587 2,540,074 6,981,661
Profit after tax 3,221,016 2,193,172 5,414,188
for the period ended 30 June 2013
Income Adjustments Adjusted
Statement Results
EBITDA 4,624,597 567,705 5,192,302
Operating Profit 2,612,066 701,011 3,313,077
Profit after tax 3,325,026 677,929 4,002,955
Reconciliation of the adjusted earnings per share basic for the period ended 30
June 2014 and 2013:
Group
Period ended Period ended
30 June 2014 30 June 2013
Adjusted Profit after tax 5,414,188 4,002,955
Weighted average number of ordinary shares for 39,290,395 34,894,942
basic earnings per share
Earnings per share basic Adjusted 0.14 0.11
Analysis of the adjustments for the period ended 30 June 2014 and 2013:
Group
Period ended Period ended
30 June 2014 30 June 2013
Employees Share Incentive Plans 942,417 464,812
Non-Executive directors share based payments 53,841 102,893
Acquisition costs and share based payments from 313,869 -
business combinations
Adjustments to EBITDA 1,310,127 567,705
Amortisation of assets identified through 1,229,947 133,306
Business combinations
Adjustments to operating profit 2,540,074 701,011
Deferred tax charges on amortisation of assets (346,902) (23,082)
identified through business combinations
Adjustments to profit after tax 2,193,172 677,929
2. Business Combinations
Up Mobile Acquisition
0n 14 May 2014, the Group completed the acquisition of 100% of the voting
rights of UpMobile. UpMobile is the number one provider of interactive
solutions for radio stations in Mexico, and also provides mobile solutions to
media organisations and the public sector in Mexico, a market that currently
has more than 100 million mobile connections and 33 million smartphone users.
The acquisition of UpMobile is in line with InternetQ's stated strategy of
broadening its geographical reach whilst further developing its service
offering. The key benefits of the transaction will be to accelerate the
expansion of InternetQ's services into Latin America considering that Mexico is
the fastest growing smartphone market in Latin America and to enable the Group
to cross-sell its Minimob marketing solution and Akazoo music streaming service
to UpMobile's customers
Consideration Transferred
The preliminary assessment of the fair value of the consideration transferred
recognised in the 30 June 2014 financial statements was determined to be €
6,479,796 while the preliminary fair value of the deferred consideration was
determined to be €3,494,722 and was treated as a component of equity.
Transaction costs of €207,116 were expensed in the year ended 31 December 2013,
and were included in the administrative expenses.
Preliminary fair value recognised on the acquisition
The fair value of the intangible assets amounting to €4,622,187 consists of IT
platform software of €1,460,100 and customers' relationships (agreements with
mobile operators and content providers) of €3,162,087. As a result of the
intangible assets identified on acquisition, a deferred tax liability amounting
to €948,626 has been recognised.
The preliminary assessment of goodwill amounted to €4,325,881 and mainly
represents the benefits that the Group is expecting from the increased Mobile
Marketing activity with MNOs, where UpMobile has direct commercial agreements,
as well as from the roll out of Akazoo and Minimob in Mexico.
At the reporting date, no contingent liabilities have been identified as
existing as at the acquisition date.
3. Operating 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 organizations. It allows the
Group to sell its products or services to other companies or organizations
that resell them, use them in their products or services or use them to
support their operations.
* Business to Consumer (B2C) segment: B2C revenues are those resulting from
marketing of InternetQ's products directly to consumers as the Group's
target market.
In the past two years the Group has driven the scale of the business to the
next level with a further push into new territories by acquiring Atlas Germany
and Interacel Holdings, providing commercial synergies based on increased
breadth of distribution.
Following this, the Group has changed its segments to align with the strategy,
allow management to take quick decisions and points to the opportunities and
accommodate and anticipate changes in the business and in customer behaviors.
This presentation is therefore consistent with how the business operates and
how performance is assessed.
As such InternetQ's management has decided to report two clearly defined
categories that better reflect the Group's customer types, namely B2B and B2C.
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 are
eliminated on consolidation.
The following table represents revenue and profit information regarding the
Group's operating segments for the period ended 30 June 2014.
For the period 30 June 2014 B2B B2C Adjustments Consolidated
and
eliminations
Revenue
External customer 51,494,968 14,217,972 65,712,940
Inter-segment 366,721 2,580,102 (2,946,823) -
Total revenue 51,861,689 16,798,074 (2,946,823) 65,712,940
Segment Operating profit /(loss) 6,268,964 (1,827,377) - 4,441,587
Depreciation and amortisation 2,520,322 1,481,249 - 4,001,571
Segment EBITDA 8,809,286 (366,128) - 8,443,158
Adjustments (note 1) 909,352 400,775 - 1,310,127
Segment adjusted EBITDA 9,698,638 54,647 - 9,753,285
The following table represents revenue and profit information regarding the
Group's operating segments for the period ended 30 June 2013, restated
according to the current basis of reporting discussed above.
For the period 30 June 2013 B2B B2C Adjustments Consolidated
and
eliminations
Revenue
External customer 34,465,063 8,536,037 43,001,100
Inter-segment 741,593 1,581,586 (2,323,179) -
Total revenue 35,206,656 10,117,623 (2,323,179) 43,001,100
Segment Operating profit /(loss) 3,230,777 (618,711) - 2,612,066
Depreciation and amortisation 1,032,630 979,901 - 2,012,531
Segment EBITDA 4,263,407 361,190 - 4,624,597
Adjustments (note 1) 447,031 120,674 - 567,705
Segment adjusted EBITDA 4,710,438 481,864 - 5,192,302
Finance income, finance costs and income taxes are not allocated to individual
segments as the underlying instruments are managed on an overall Group basis.
A reconciliation between segment profit and corresponding amounts in the
Group's income statements for the period ended 30 June 2014 and 2013 is
presented below:
Group
Reconciliation of segment profit Period ended Period ended 30
30 June 2014 June 2013
Segment profit: 4,441,587 2,612,066
Finance income 251,713 1,232,734
Finance costs (1,216,416) (245,134)
Income taxes (255,868) (274,640)
Profit after tax 3,221,016 3,325,026
Geographic information
Group
Revenues from external customers Period ended 30 Period ended 30
June 2014 June 2013
Europe 22,371,253 15,376,898
Latin America 11,998,467 2,590,355
Middle East and Africa 10,224,584 12,148,258
Asia 21,118,636 12,885,589
Total Revenues 65,712,940 43,001,100
4. Finance income / (costs)
Finance income / (costs) in the accompanying interim financial statements are
analysed as follows:
Group
Period ended 30 Period ended 30
June 2014 June 2013
Interest earned 61,901 81,639
Exchange differences 189,453 1,150,910
Other finance income 359 185
Total finance income 251,713 1,232,734
Interest on short term borrowings (52,766) (35,964)
Interest on long term borrowings (176,880) (16,564)
Exchange differences (834,244) (97,254)
Other finance costs (152,526) (95,352)
Total finance costs (1,216,416) (245,134)
Total finance income/ (costs) net (964,703) 987,600
Losses on exchange differences of €499,222 (30 June 2013: gains €655,842)
represent the unrealised foreign exchange losses on intercompany loans between
InternetQ Plc (UK holding company) and the various subsidiaries.
5. Earnings / (loss) per share
Basic earnings per share amounts are calculated by dividing net profit/ (loss)
for the reporting period attributable to ordinary equity holders of the 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 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.
Group
Period ended Period ended
30 June 2014 30 June 2013
Net profit attributable to ordinary equity holders 3,221,016 3,325,026
of the parent from continuous operations
Weighted average number of ordinary shares for 39,957,195 34,894,942
basic earnings per share
Earnings per share basic 0.08 0.10
Weighted average number of ordinary shares for 39,290,395 34,894,942
basic earnings per share
Effect on dilution:
Deferred consideration shares 80,103 62,826
Share incentive plan 586,697 106,000
Weighted average number of ordinary shares adjusted 39,957,195 35,063,768
for the effect of dilution
Earnings per share diluted 0.08 0.09
A reconciliation of the adjusted earnings per share basic and adjusted earnings
per share diluted for the period ended 30 June 2014 and 2013 is presented
below.
Group
Period ended Period ended
30 June 2014 30 June 2013
Adjusted Profit after tax 5,414,188 4,002,955
Weighted average number of ordinary shares for 39,290,395 34,894,942
basic earnings per share
Earnings per share basic Adjusted 0.14 0.11
Weighted average number of ordinary shares adjusted 39,957,195 35,063,768
for the effect of dilution
Earnings per share diluted Adjusted 0.14 0.11
6. Events after the reporting period
There are no significant events after the reporting period.InternetQ : Interim Results
September 30, 2014 at 02:01 am EDT
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