Link to Admission Document - InternetQ

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt aboutthe contents of this document or as to the action you should take, you should consult an independent professional adviser authorisedunder the United Kingdom Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares andother securities.InternetQ plc and its Directors, whose names appear on page 7 of this document, accept responsibility both individually andcollectively for the information contained in this document including responsibility for compliance with the AIM Rules. To thebest of the knowledge and belief of InternetQ plc and the Directors (who have taken all reasonable care to ensure this is thecase), the information contained in this document is in accordance with the facts and does not omit anything likely to affectthe import of such information.Application will be made for all of the issued and to be issued Ordinary Shares to be admitted to trading on AIM, a marketoperated by the London Stock Exchange. It is expected that Admission will become effective and that trading in the OrdinaryShares will commence on AIM on 10 December 2010. AIM is a market designed primarily for emerging or smaller companies towhich a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not admittedto the Official List of the UK Listing Authority. A prospective investor should be aware of the risks of investing in such companiesand should make the decision to invest only after careful consideration and, if appropriate, consultation with an independentfinancial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to have a nominated adviser. Thenominated adviser is required to make a declaration to the London Stock Exchange on admission in the form set out in ScheduleTwo to the AIM Rules for Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents ofthis document. The Ordinary Shares are not dealt on any other recognised investment exchange and no such other applications havebeen made.This document comprises an admission document drawn up in accordance with the AIM Rules. This document does notconstitute an offer of transferable securities to the public within the meaning of sections 85 and 102B of the Financial Servicesand Markets Act (“FSMA”). Therefore this document is not an approved prospectus for the purposes of, and as defined in,section 85 of FSMA and has not been prepared as an approved prospectus in accordance with the prospectus rules made undersection 73 of FSMA and has not been approved by the UKLA or by any other authority which would be a competent authorityfor the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”).InternetQ plc(Incorporated and registered in England and Wales under the Companies Act 2006 with Registered No. 05512988)Placing of 5,641,025 Ordinary Shares of 0.25 pence each at£1.20 per Ordinary Share andAdmission to trading on AIM, a market of the London Stock ExchangeNominated AdviserGrant Thornton Corporate FinanceBrokerJendens Securities LimitedSHARE CAPITAL IMMEDIATELY FOLLOWING PLACING AND ADMISSIONIssued and fully paidNumberAmount25,697,435 £64,243.5875All the Ordinary Shares will, on Admission, rank pari passu in all respects with the existing Ordinary Shares in issue and willrank in full for all dividends and other distributions declared, paid or made in respect of the Ordinary Shares after Admission.Grant Thornton Corporate Finance, a division of Grant Thornton UK LLP, which is authorised and regulated by theFinancial Services Authority, is the Company’s nominated adviser for the purposes of the AIM Rules and as such itsresponsibilities are owed solely to the London Stock Exchange plc and are not owed to the Company or any Director or anyother entity or person. Grant Thornton Corporate Finance will not be responsible to anyone other than the Company forproviding the protection afforded to clients of Grant Thornton Corporate Finance or for advising any other person inconnection with the Placing and Admission.Jendens Securities Limited, which is authorised and regulated by the Financial Services Authority, is acting exclusively for theCompany as its broker in relation to the Placing, and will not be responsible to anyone other than the Company for providingthe protections afforded to clients of Jendens Securities Limited or advising any other person on the Placing and the contentsof this document or any matter referred to herein.No representation or warranty, express or implied, is made by Grant Thornton Corporate Finance or Jendens SecuritiesLimited as to the contents of this document (without limiting the statutory rights of any person to whom this document isissued) and Grant Thornton Corporate Finance and Jendens Securities Limited have not checked the contents of any part ofthis document for the accuracy of any information or opinions contained in this document or for any omissions of information.Prospective investors should read the whole text and contents of this document and should be aware that an investment in theCompany is speculative and involves a high degree of risk. In particular, prospective investors’ attention is drawn to the sectionentitled “RISK FACTORS” in Part II of this document.Copies of this document will be available during normal business hours on any day (except Saturdays, Sundays and UK publicholidays) free of charge to the public at the offices of Grant Thornton Corporate Finance, 30 Finsbury Square, LondonEC2P 2YU, for one month from the date of Admission.

IMPORTANT INFORMATIONThe distribution of this document and the making of the Placing in certain jurisdictions may be restrictedby law and therefore persons into whose possession this document comes should inform themselves aboutand observe any restrictions, including those set out below. Any failure to comply with these restrictionsmay constitute a violation of the securities laws of any such jurisdiction. In particular, the issue orcirculation of this document may be prohibited in countries other than those in relation to which noticesare given below and, in such cases, only in the circumstances set out in such notices.The information below is for general guidance only and it is the responsibility of any person or personsin possession of this document and wishing to make an application for Ordinary Shares to informthemselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction.No person has been authorised by the Company to issue any advertisement or to give any informationor to make any representation in connection with the contents of this document and, if issued, givenor made, such advertisement, information or representation must not be relied upon as having beenauthorised by the Company. This document does not constitute, and may not be used for the purposesof, an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is notauthorised or to any person to whom it is unlawful to make such offer or solicitation. In particular, thisdocument does not constitute an offer to sell or the solicitation of an offer to buy any of the OrdinaryShares in Canada, Australia, South Africa, the Republic of Ireland or Japan (collectively, the“Prohibited Territories”) and this document should not be forwarded or transmitted to or into theProhibited Territories or to any resident, national, citizen or corporation, partnership or other entitycreated or organised under the laws thereof or in any other country outside the United Kingdom wheresuch distribution may lead to a breach of any legal or regulatory requirement. The distribution of thisdocument may be restricted and accordingly persons into whose possession this document comes arerequired to inform themselves about and to observe such restrictions.United StatesThe Ordinary Shares have not been, and will not be, registered under the Securities Act, or under thesecurities legislation of any state of the United States. Accordingly, the Ordinary Shares may not,directly or indirectly, be offered, sold or delivered within the United States except pursuant to anexemption from, or in a transaction not subject to, the registration requirements of the Securities Actand, subject to certain exceptions, may not be offered, sold or delivered to or for the account or benefitof any person located in the United States. Neither this document nor any copy of it may be sent ortaken into the United States nor may it be distributed to any US person (within the meaning ofRegulation S).European Economic AreaIn relation to each Member State of the European Economic Area which has implemented theProspectus Directive (each, a “Relevant Member State”) an offer to the public of the Ordinary Sharesmay not be made, without the issue of a prospectus, in that Relevant Member State, except that an offerto the public in that Relevant Member State of any Ordinary Shares may be made at any time underthe following exemptions under the Prospectus Directive, if they have been implemented in thatRelevant Member State:(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not soauthorised or regulated, whose corporate purpose is solely to invest in securities;(b) to any legal entity which has two or more of: (1) an average of at least 250 employees during thelast financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual turnoverof more than €50,000,000, as shown in its last annual or consolidated accounts;(c) by an authorised person to fewer than 100 natural or legal persons (other than qualified investorsas defined in the Prospectus Directive); or(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive,2

provided that no such offer of Ordinary Shares shall result in a requirement for the publication by theCompany or an authorised person of a prospectus pursuant to Article 3 of the Prospectus Directive.For the purpose of this provision, the expression an “offer to the public” in relation to any OrdinaryShares in any Relevant Member State means the communication in any form and by any means ofsufficient information on the terms of the offer and any Ordinary Shares to be offered so as to enablean investor to decide to purchase any Ordinary Shares, as the same may be varied in that Member Stateby any measure implementing the Prospectus Directive in that Member State and the expression“Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measurein each Relevant Member State.Neither the Company nor Jendens Securities Limited (“Jendens”) have authorised, nor do theyauthorise, the making of any offer of Ordinary Shares through any financial intermediary on theirbehalf, other than offers made by the Company or Jendens under the Placing.Each person in a Relevant Member State who receives any communication in respect of, or whoacquires any Placing Shares under the Placing, will be deemed to have represented, warranted andagreed to and with the Company and/or Jendens that:(a) it is a qualified investor within the meaning of the law in that Relevant Member Stateimplementing Article 2(1)(e) of the Prospectus Directive or it is itself acquiring Ordinary Sharesfor a total consideration of not less than €50,000; and(b) in the case of any Ordinary Shares acquired by it as a financial intermediary, as that term is usedin Article 3(2) of the Prospectus Directive, (i) the Ordinary Shares acquired by it in the Companyhave not been acquired on behalf of, nor have they been acquired with a view to their offer orresale to, persons in any Relevant Member State other than qualified investors, as that term isdefined in the Prospectus Directive, or in circumstances in which the prior consent of Jendens hasbeen given to the offer or resale; or (ii) where Ordinary Shares have been acquired by it on behalfof persons in a Relevant Member State other than qualified investors, the offer of those OrdinaryShares to it is not treated under the Prospectus Directive as having been made to such persons.FranceThis document does not constitute a general offer to investors resident in France to subscribe for theOrdinary Shares. This document will be made available only to institutional investors in the sense ofthe French Monetary and Financial Code (investisseurs qualifiés). Such institutional investors may takepart in the offer solely for their own account, as provided in Articles D. 411-1, D. 411-2, D. 734-1,D. 744-1, D. 754-1 and D. 764-1 of the French Monetary and Financial Code. The financialinstruments thus acquired cannot be distributed directly or indirectly to the public otherwise than inaccordance with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Monetary andFinancial Code.Further, the provision of this document to any person will be made for general information purposesonly and not in connection with a “public offering” as defined under Article L.411-1 of the FrenchMonetary and Financial Code and therefore not as a prospectus in the context of Article L.412-1 ofthe French Monetary and Financial Code.GreeceProspective investors should not treat the contents of this document as advice relating to legal, tax,investment or any other matters. Prospective investors should inform themselves as to: (a) the legalrequirements of their own countries for the purchase, holding, transfer or other disposal of theOrdinary Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer orother disposal of the Ordinary Shares which they might encounter; and (c) the income and other taxconsequences which may apply in their own countries as a result of the purchase, holding, transfer orother disposal of the Ordinary Shares. Prospective investors must rely upon their own representatives,including their own legal advisers and accountants, as to legal, tax, investment or any other relatedmatters concerning the Company and an investment therein. Statements made in this document arebased on the law and practice currently in force, and are subject to change. This document should be3

ead in its entirety. All Shareholders are entitled to the benefit of, and are bound by and are deemed tohave notice of, the provisions of the Articles.SwitzerlandThis document does not constitute a general offer to investors resident in Switzerland to subscribe forthe Ordinary Shares. This document will be made available only to institutional investors withprofessional treasury departments (professioneller Tresorerie). Further, the provision of this documentto any person will be made for general information purposes only and not in connection with a “publicoffering” as defined under Article 652a of the Swiss Code of Obligations (Bundesgesetz vom 30 März1911 betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht)and therefore not as a prospectus in the context of Article 652a of the Swiss Code of Obligations).FORWARD LOOKING STATEMENTSThis document contains forward-looking statements. These relate to the Company’s future prospects,developments and strategies. Forward-looking statements are identified by their use of terms andphrases such as “believe”, “could”, “envisage”, “estimate”, “intend”, “anticipate”, “seek”, “target”,“may”, “plan”, “will” or the negative of those, variations or comparable expressions, includingreferences to assumptions. The forward looking statements in this document are based on currentexpectations and involve risks and uncertainties that may cause actual results, achievements orperformances of the Group to differ materially from those expressed or implied by such forwardlooking statements. There can be no assurance that the results and events contemplated by the forwardlooking statements contained in this document will, in fact, occur. These forward looking statementsare correct, to the best of the knowledge and belief of the Directors, only as at the date of thisdocument. The Company will not undertake any obligation to release publicly any revisions to theseforward looking statements to reflect events, circumstances or unanticipated events occurring after thedate of this document except as required by applicable law or by any applicable regulatory authority.4

TABLE OF CONTENTSTABLE OF CONTENTS 5PLACING STATISTICS 6EXPECTED TIMETABLE OF PRINCIPAL EVENTS 6DIRECTORS, SECRETARY AND ADVISERS 7DEFINITIONS 9GLOSSARY OF TECHNICAL TERMS 13KEY INFORMATION 14Introduction 14Background to the mobile marketing industry 14Business description 14Market opportunity 14Summary of financial information 15Key Strengths 15The placing and use of proceeds 15PART I INFORMATION ON THE GROUP 161.1 Introduction 161.2 Background to the mobile marketing industry 161.3 Business Description 171.4 The Group’s Technology 191.5 Examples of Mobile Marketing Campaigns 221.6 Key Milestones of the Group 231.7 Market Opportunity 231.8 Strategy and Prospects 251.9 Summary of Financial Information 261.10 Current Trading and Future Prospects 261.11 Competition 271.12 Directors, Senior Management and Organisational Structure 271.13 Key Strengths 301.14 The Placing 311.15 Use of Proceeds 311.16 Dividend Policy 311.17 Incentive Plans 311.18 Taxation 321.19 CREST and Trading in Ordinary Shares 321.20 Relationship Deed 321.21 Orderly Market Arrangements 321.22 Corporate Governance 321.23 Share Dealing Code 331.24 The City Code 331.25 Further Information 33PART II RISK FACTORS 34PART III FINANCIAL INFORMATION 47PART IV ADDITIONAL INFORMATION 975

PLACING STATISTICSPlacing Price £1.20Number of Placing Shares being issued pursuant to the Placing 5,641,025Number of Ordinary Shares in issue immediately following Admission 25,697,435Placing Shares as a percentage of the Enlarged Share Capital22.0 per cent.Number of Warrants in issue immediately following Admission 169,230Estimated gross proceeds of the Placing receivable by the CompanyEstimated net proceeds of the Placing receivable by the Company(inclusive of applicable VAT)Market capitalisation of the Company at the Placing Price on Admission£6.8 million£5.7 million£31 millionEXPECTED TIMETABLE OF PRINCIPAL EVENTSAdmission effective and commencement of dealings in Ordinary Shares on AIM 10 December 2010CREST accounts credited (as applicable) 10 December 2010Expected date of despatch of definitive share certificates for Ordinary Shares 21 December 2010(if applicable)6

DIRECTORS, SECRETARY AND ADVISERSDirectorsCompany SecretaryRegistered OfficeNominated AdviserBrokerReporting AccountantsStuart Cruickshank (Chairman)Panagiotis Dimitropoulos (Vice Chairman and Founder)Konstantinos Korletis (Chief Executive Officer)Veronica Julia Nocetti (Finance Director)Iain Barrie Johnston (Non-executive Director)Michael Gordon Jolliffe (Non-executive Director)Lynne SandersonUnited Dominions House51 EastcheapLondon, EC3M 1JPUnited KingdomGrant Thornton Corporate Finance30 Finsbury SquareLondon, EC2P 2YUUnited KingdomJendens Securities Limited11-14 Grafton StreetLondon, W1S 4EWUnited KingdomUKErnst & Young LLP1 More PlaceLondon, SE1 2AFGreeceErnst & Young11th km National Road Athens – LamiaMetamorfossi AttikisAthensGR-144 51GreeceAuditors UK Auditors Greek AuditorsAG KakourisErnst & Young1 Kings Avenue 11th km National Road AthensWinchmore Hill– LamiaLondon, N21 3NAMetamorfossi AttikisUnited KingdomAthensGR-144 51GreeceSolicitors to the Company As to English law: As to Greek lawClyde & Co LLPStavros KratisUnited Dominions House 132 Afroditis Str51 Eastcheap P FaliroLondon, EC3M 1JP TK 17562United KingdomAthensGreeceSolicitors to the NominatedAdviser and BrokerOlswang LLP90 High HolbornLondon, WC1V 6XXUnited Kingdom7

Financial Public RelationsRegistrarISIN numberTradable instrumentdisplay mnemonicWebsiteBuchanan Communications Limited45 MoorfieldsLondon, EC2Y 9AEUnited KingdomShare Registrars LimitedSuite E, First Floor9 Lion and Lamb YardFarnham, GU9 7LLUnited KingdomGB00B5BJJR09INTQwww.internetq.com8

DEFINITIONSThe following definitions apply throughout this document, unless the context requires otherwise:“Act” or “Companies Act”the Companies Act 2006 of England and Wales“1985 Act” the Companies Act 1985 of England and Wales“Admission”“AIM”“AIM Rules”“Articles”“Board” or “Directors”“Business Day”“CAGR”“Certified” or “in Certified form”“CIS”“City Code”“Company”“CREST”“CREST Regulations”“Disclosure and TransparencyRules”“Enlarged Share Capital”“Escape”“EU”“Euribor”admission of the entire issued and to be issued share capital ofthe Company to trading on AIMAIM, the market of that name operated by the London StockExchangethe AIM Rules for Companies and the AIM Rules forNominated Advisers each published by the London StockExchangethe articles of association of the Company as at the date ofAdmissionthe current board of directors of the Company, whose names areset out on page 7 of this documenta day (other than Saturday or Sunday or public holidays) whenthe banks are open for business in LondonCompound Annual Growth Ratethe description of a share or other security that is not held inuncertified form (that is not CREST)Commonwealth of Independent Statesthe UK City Code on Takeovers and MergersInternetQ plc, a company incorporated in England and Waleswith registered number 05512988the relevant system (as defined in the CREST Regulations) forthe paperless settlement of share transfers and the holding ofshares in uncertificated form which is administered by Euroclearthe Uncertificated Securities Regulations 2001 (SI 2001 No.3755) (as amended from time to time)the disclosure and transparency rules made by the FSA inexercise of its function as competent authority pursuant toPart VI of FSMAthe issued share capital of the Company immediately followingAdmission, comprising of the existing Ordinary Shares in issueand the Placing SharesEscape Communications Trading Limited, the wholly-ownedsubsidiary of InternetQ Greece incorporated in CyprusEuropean UnionEuro Interbank Offered Rate9

“Euro” or “€”“Euroclear”“Financial Services Authority” or“FSA”“FSMA”the official currency of the European Monetary UnionEuroclear UK & Ireland Limitedthe Financial Services Authority of the United Kingdomthe Financial Services and Markets Act 2000, as amended“Grant Thornton Corporate the corporate finance division of Grant Thornton UK LLP,Finance” or “Nominated Adviser” which is authorised and regulated by the Financial ServicesAuthority to carry on investment business“Grant Thornton International” a non-practicing, non-trading international umbrellaorganisation comprising a network of independent member andcorrespondent firms throughout the world. Grant ThorntonInternational is not an international/global/worldwidepartnership either in relation to all of the members collectively orany two or more members together. In particular, GrantThornton UK LLP does not carry on business in the UnitedStates of America or Canada and is a separately owned andmanaged business from entities known as Grant Thornton LLPcarrying on business in those territories“Grant Thornton UK LLP”“Group”“InternetQ Brazil”“InternetQ Greece”“InternetQ Poland”“InternetQ Serbia”a limited liability partnership registered in England and Waleswhose principal place of business is Grant Thornton House,Melton Street, Euston Square, London NW1 2EP and which isthe UK member firm of Grant Thornton Internationalthe Company, InternetQ Greece, the Subsidiaries and theirsubsidiary companies from time to timeInternetQ Do Brasil Atividades De Internet Ltda., the whollyownedsubsidiary of InternetQ Greece (but for one share)incorporated in BrazilInternetQ Telecommunication & Internet Services SA, thewholly-owned subsidiary of the Company incorporated inGreeceInternetQ Poland Sp.z.o.o., the wholly-owned subsidiary ofInternetQ Greece incorporated in PolandInternetQ doo Beograd, the former wholly-owned subsidiary ofInternetQ Greece incorporated in Serbia“InternetQ Turkey” InternetQ Communication Services Trading LLC, thewholly-owned subsidiary of InternetQ Greece (but for 20 shares)incorporated in Turkey“InternetQ Ukraine”“Jendens” or “Broker”“London Stock Exchange”“MNCs”InternetQ Ukraine LLC, the wholly-owned subsidiary ofInternetQ Greece incorporated in UkraineJendens Securities LimitedLondon Stock Exchange plcMulti-National Companies10

“Mobile Dialogue”“Non-Executive DirectorsIncentive Share Plan”“Non-Executive Directors”“Official List”“Orderly Market Agreement”“Ordinary Shares”“Placee”“Placing”Mobile Dialogue Sp.z.o.o., the wholly-owned subsidiary ofInternetQ Greece incorporated in Polandthe Company’s share incentive plan for its non-executivedirectors, details of which are set out in paragraph 10 of Part IVof this documentStuart Cruickshank, Iain Johnston and Michael Jolliffethe Official List of the UK Listing Authoritythe lock-in and orderly marketing agreement entered intobetween Pitragon Investments Limited, Konstantinos Korletis,Grant Thornton UK LLP and Jendens, details of which are setout in paragraph 12.9 of Part IV of this documentordinary shares of 0.25 pence each in the share capital of theCompanya person subscribing for Placing Shares under the Placing at thePlacing Pricethe conditional placing of the Placing Shares at the Placing Price“Placing Agreement” the conditional agreement dated 6 December 2010 between (1)the Company (2) the Directors (3) Grant Thornton UK LLP and(4) Jendens relating to the Placing, further details of which areset out in paragraph 12.7 of Part IV of this document“Placing Price”“Placing Shares”“Pound Sterling” or “£”“Prospectus Rules”“Relationship Deed”“SD&BS department”“Share Incentive Plan”“Shareholders”“Subsidiaries”“UK Listing Authority” or“UKLA”£1.20 per Placing Sharethe 5,641,025 Ordinary Shares which are the subject of and areto be issued and allotted pursuant to the Placingthe lawful currency of the United Kingdomthe prospectus rules contained in the FSA handbook which arepublished and from time to time amended by the FSAan agreement entered into between the Company, PitragonInvestments Limited and Panagiotis Dimitropoulos pursuant towhich their relationship is regulated, further details of which areset out in paragraph 12.10 of Part IV of this documentSoftware Development and Business Solutions departmentthe Company’s share incentive plan for its employees, details ofwhich are summarised in paragraph 10 of Part IV of thisdocumentholders of Ordinary Sharessubsidiaries of InternetQ Greece being Escape, InternetQ Brazil,InternetQ Poland, InternetQ Turkey, InternetQ Ukraine andMobile Dialoguethe United Kingdom Listing Authority of the Financial ServicesAuthority, acting in its capacity as the competent authority forthe purposes of Part VI of FSMA11

“United Kingdom” or “UK”“US$”“US”“Warrants”the United Kingdom of Great Britain and Northern Irelandthe lawful currency of the United States of Americathe United States of Americathe warrants to subscribe for 169,230 Ordinary Shares (whichrepresent 3 per cent. of the number of Placing Shares) at thePlacing Price granted by the Company to Jendens pursuant to awarrant agreement, details of which are summarised inparagraph 12.8 of Part IV of this document12

GLOSSARY OF TECHNICAL TERMSThe following definitions apply throughout this document, unless the context requires otherwise:“API”“ARPU”“ASR”“CRM”“EMS”“ERP”“HTTP”“iOS”“IVR”“J2ME”“MAP”“MMS”“MNO”“MOs”“mobile subscribers”“MTs”“MVAS”“OS”“RPU”“SaaS”“SMS”“SOA”“TTS”“TXT”“USSD”“VOIP”“WAP”Application Programming InterfaceAverage Revenue per UserAutomatic Speech RecognitionCustomer Relationship ManagementEnhanced Messaging ServiceEnterprise Resource PlanningHypertext Transfer ProtocolInternetwork Operating ServiceInteractive Voice ResponseJava 2 Platform Micro EditionMobile Application ProtocolMultimedia Messaging ServiceMobile Network OperatorMobile Originatedsubscribers to services of mobile network operatorsMobile TerminatedMobile Value Added ServicesOperating SystemRevenue Per UserSoftware-as-a-ServiceShort Messaging ServiceService Oriented ArchitectureText-to-SpeechText Message or Short Messaging ServiceUnstructured Supplementary Service DataVoice Over Internet ProtocolWireless Application Protocol13

KEY INFORMATIONThe following information is extracted from, and should be read in conjunction with, the full text of thisdocument. Investors should read the whole document and not rely solely on the information in the “KeyInformation” section or any other information summarised in this document.IntroductionWith its first operations being established in 2000 following the incorporation of InternetQ Greece, theGroup is now a cashflow-positive, profitable technology business. The Group offers mobile marketingsolutions and digital entertainment that facilitate brands, mobile network operators and mediacompanies to design and implement targeted, interactive and measurable campaigns by engaging withand entertaining mobile network subscribers via their mobile devices.Background to the mobile marketing industryOver the last 20 years, mass media marketing techniques have changed significantly. For the majorityof this period, terrestrial broadcast television was the predominant advertising and marketing medium,using advertising breaks as a method of marketing. This form of communication suffered from thedisadvantages of being costly, difficult to change and adapt quickly, interruptive, and for manyconsumers, unwelcome and irrelevant. With the development of the internet, new methods of massmarketing have been developed to overcome many of these disadvantages. Google ad words, Facebookand recommendation engines on Amazon and iTunes are good examples of interactive andpersonalised forms of mass marketing.The global proliferation of mobile technology together with the increasing functionality andaffordability of mobile devices has helped to deliver targeted consumer-friendly mass marketing. Anera of ‘mass-market personalisation’ has been created, in which the individual and their personal needs,habits, preferences and desires can be identified, anticipated and marketed to.Business descriptionThe Group’s technology platform provides mobile marketing solutions which enable its clients to gainbetter access to and improve interaction levels with mobile subscribers. Through this mobile marketingtechnology platform, the Group also provides premium digital content directly to mobile subscribersthrough its Akazoo module, a proprietary and versatile online and mobile entertainment hub. Akazoooffers its members content within a social network environment, allowing them to interact and getrewarded for their loyalty and usage. Apart from its content driven business focus, Akazoo aims atdeveloping mobile communities.Market opportunityCurrently, there are over five billion mobile subscribers worldwide, expected to increase to over six billionby 2013. The mobile device is now regarded as an integral part of people’s daily lives with it being theonly permanently internet connected portable technology. Mobile devices therefore have the potential tobe a medium for delivering marketing messages which are highly specialised, targeted and focused.14

Summary of financial informationThe following table summarises key financial data for the Group, which is extracted from Part III ofthis document:Six monthsYear ended Year ended Year ended ended31 December 31 December 31 December 30 June2007 2008 2009 2010€m €m €m €mRevenues 9.1 14.0 17.2 18.0EBITDA 1.8 1.9 1.2 2.6Profit/(loss) before tax 1.0 0.6 (1.1) 1.4Total assets 8.0 12.7 14.2 15.2Operating cash flow 0.4 0.3 2.6 3.1The Group’s revenue CAGR over the last three years has been 29 per cent. and in the first six monthsof the current financial year, revenue has increased by 111 per cent. when compared to the firstsix months of 2009.Key strengthsThe Directors believe that the Group has, inter alia, the following key strengths to support the deliveryof its strategy:●●●●●established in 2000, a history of successful operations;an experienced management team;an integrated technology platform;long term business relations with high calibre partners; anda focus on developing markets where the Directors believe a better growth opportunity exists.The placing and use of proceedsThe Group is seeking to raise gross proceeds of approximately £6.8 million by the issue of5,641,025 Placing Shares at the Placing Price.The net proceeds of the Placing receivable by the Company are expected to be approximately£5.7 million and will be used as follows:●●●●to fund business development in the markets of interest, by way of working and investment capitalfinancing;to further develop Akazoo, the online and entertainment content module of the Group’sinteractive mobile marketing platform, including the re-design of its user interface and theenrichment of its content library;to invest in expanding network technology equipment and enhancing the mobile marketinginteractive platform; andto set up new offices in key markets that the Directors believe require a more permanent presenceand which can be used as a platform for further expansion in adjacent regions.YOUR ATTENTION IS DRAWN TO THE RISK FACTORS REFERRED TO IN PART II OFTHIS DOCUMENT.15

PART IINFORMATION ON THE GROUP1.1 IntroductionWith its first operations being established in 2000 following the incorporation of InternetQ Greece, theGroup is now a cashflow-positive, profitable technology business. The Group offers mobile marketingsolutions and digital entertainment that enable brands, mobile network operators and mediacompanies to design and implement targeted, interactive and measurable campaigns by engaging withand entertaining mobile network subscribers via their mobile devices. The Group is headquartered inAthens and, as at 30 September 2010, employed 65 people across four offices worldwide and operatestwo data centres in Greece and Luxembourg.The ownership of mobile devices and their use for voice communication and data exchange continuesto expand throughout the world. Globally, there are now over five billion mobile network subscriptionswith around 21 per cent. of these having access to high speed services (Wireless Intelligence 2010). Thishas resulted in the mobile device being increasingly used as a tool not only for communication but alsofor accessing new media, marketing and entertainment services. These services provide businesses withthe opportunity to engage directly with consumers in an interactive manner. For example, consumersmay respond to:●●●an advert by texting to a short code in order to receive further information about the promotedproduct or service; ordigital coupons transmitted to their mobile device in order to receive product discounts or top-upservices; oran offer to participate in a marketing or promotional campaign, becoming eligible to win prizesor loyalty points from their favourite brand or service.The Group offers proprietary technology, digital content and marketing services aimed at creating anengaging experience.The Group has offices in Athens, Istanbul, Warsaw and Limassol. The Group’s strategy is to focus onexpanding its business in such developing markets, which the Directors believe are more receptive tomedia and social engagement through a mobile device since more traditional communication methodsare not as established as they are in more developed economies.To date, the Group has delivered consistent growth in terms of revenue generation and is currentlyproducing positive free cash flows despite ongoing investments in improving and expanding itstechnology platform and digital content footprint. This performance is the result of, inter alia:●●●technology efficiency and scalability;focusing on developing markets, where the mobile subscriber population is growing rapidly andsocial interaction has been shaped around the use of mobile devices; anda focused approach towards managing costs and resources.The Company intends to raise approximately £5.7 million (net of expenses) by way of the Placing. Theproceeds of the Placing will provide the Company with additional working and investment capital inorder to accelerate both organic and acquisitive growth. The Directors believe that Admission willstrengthen the Group’s international profile, allow it to expand its technology in new mobile marketingapplications, develop its business in the markets of its choice and increase its chances of attractingtalented professionals. The Placing and Admission are therefore seen by the Directors as an importantpart of the growth of the Group towards its objective to become a world leader in offering mobilemarketing solutions through the use of its technology.1.2 Background to the mobile marketing industrySince the creation of mass media technology, companies have used technology to communicate withlarge numbers of people in order to advertise their products and services.16

The history of mass media has been characterised by paradigm shifts in the underlying communicationtechnology, such as the development of the printing press in the 15th century, audio and photographicrecordings in the 19th century, radio in the 1920s and television in the 1940s. The emergence of theinternet in 1994 marked another development in the ability to communicate with a mass audience withthe added advantage of being able to tailor the mass message to the individual.Over the last 20 years, mass media marketing techniques have changed significantly. For the majorityof this period, terrestrial broadcast television was the predominant advertising and marketing medium,using advertising breaks as a method of marketing. This form of communication suffered from thedisadvantages of being costly, difficult to change and adapt quickly, interruptive, and for manyconsumers, unwelcome and irrelevant. With the development of the internet, new methods of massmarketing have been developed to overcome many of these disadvantages. Google ad words, Facebookand recommendation engines on Amazon and iTunes are good examples of interactive andpersonalised forms of mass marketing.The global proliferation of mobile technology together with the increasing functionality andaffordability of mobile devices has helped to deliver targeted consumer-friendly mass marketing. Anera of ‘mass-market personalisation’ has been created, in which the individual and their personal needs,habits, preferences and desires can be identified, anticipated and marketed to.With the development of mobile networks as a widely recognised platform of communication,combined with sophisticated database management and associated computer technologies, new massmarketing techniques have evolved beyond online marketing. This new marketing model, termed‘mobile marketing’, allows businesses to actively engage directly with the mobile subscriber. It benefitsfrom the fact that mobile devices are usually turned on and kept within personal reach of the user,resulting in a greater target audience. This means that the mobile device is typically open for directcommunication and the marketer has the added ability to choose the timing of the receipt of themarketing message as well as the identity of the recipient. Together, these factors increase the chancesof eliciting a response from the mobile subscriber in contrast to passive forms of advertising which relyon a mobile subscriber going on the internet and then reacting to a marketing message.The Directors believe that during the course of the past six years, the Group has remained focused onthe design of its interactive mobile technology platform and the delivery of marketing solutions whichgenerate revenue and profit growth.1.3 Business DescriptionThe Group’s technology platform provides mobile marketing solutions which enable its clients to gainbetter access to and improve interaction levels with mobile subscribers. Through this mobile marketingtechnology platform, the Group also provides premium digital content directly to mobile subscribersthrough its Akazoo module, a proprietary and versatile online and mobile entertainment hub. Akazoooffers its members content within a social network environment, allowing them to interact and getrewarded for their loyalty and usage. Apart from its content driven business focus, Akazoo aims atdeveloping mobile communities.The Group maintains connectivity agreements with mobile network operators in the territories inwhich it operates and, in most cases, transacts with its business partners through revenue sharingarrangements under which the net revenues generated from the relevant mobile marketing initiativesare divided. In several cases, those mobile marketing initiatives are devised in cooperation with theoperators themselves. In other instances, campaigns are instigated by the Group and may be rolled outconcurrently across several mobile operator networks and in a number of different countries.More specifically, through the use of its mobile marketing platform, the Group tries to attract as manymobile subscribers to participate in any given campaign and then make them engage with the content.To attract potential mobile subscribers, the Group employs promotional seeding techniques whichinclude the use of traditional media, the use of mobile and also its Akazoo network. Once mobilesubscribers are initially attracted, the Group tries to make them engage by offering exciting mobileutilities or providing incentives. The pool of mobile subscribers that eventually engage is analysed and17

profiled into categories in order for the Group to design the appropriate loyalty building programs andreward schemes.The ongoing management of mobile marketing campaigns provides the Group with a growingdatabase of performance and response statistics. The knowledge and experience of these campaignsprovides important feedback for the Group’s future campaigns and is also reflected in improvementsto the Group’s technology platform in order to maximise its efficacy.The Group focuses its business activities on such developing markets, where the Directors believe thereis a better growth opportunity than in developed markets. The main reasons for this are based on thefollowing:●●●The number of mobile devices in developing markets grows approximately three times faster thanin developed markets. Therefore, the number of mobile network subscribers is expected to growfaster than in developed markets.The age profile of mobile subscribers in developing markets is lower than in developed markets.People are more accustomed to using mobile internet than in developed markets and are,therefore, more receptive to mobile marketing.Consequently, the Group has focused or intends to focus its business development activities in Russiaand certain CIS countries, Turkey and the wider Middle East, certain African countries, Brazil andLatin America, selected countries of Southeast Asia and, in respect of Akazoo, Spain. This is shownin the picture below.Markets in which the Group operated in 2009Markets into which the Group entered in 2010Markets into which the Group intends to expand into over the next 24 monthsCurrent and Expected Revenue StreamsThe Group currently generates the majority of its revenues from mobile marketing and mobileentertainment activities which include premium SMS subscriptions, music and video downloads andmobile gaming downloads (Akazoo content hub).In the future, the Directors believe that the Group can generate revenue from the advertising andpromotion of brands, the sale of mobile applications and the development and marketing of virtualgoods (such as virtual gifts and Avatar enhancements).18

1.4 The Group’s TechnologyThe Group’s Interactive PlatformExtended Core Functional ServicesThe Group’s interactive platform is offered as a managed or SaaS self-service product, supportingtechnologies for a global mobile audience. The core services supported by the Group’s platform includeSMS, MMS, IVR and mobile internet services.The Group’s platform supports recurring user subscriptions and mobile billing services in cooperationwith the mobile network operators on either a pre-paid or post-paid basis.In addition, the Group has developed services supporting digital content for mobile managementsystems and digital content delivery gateways which are designed to offer mobile network operatorsand multimedia content providers with media management solutions that cater for most of their needs.Execution & Usage QualitiesThe Group’s platform complements the core services with monitoring and diagnostics interactive toolsand services for the immediate identification and resolution of typical campaign management issuesincluding, inter alia, communication failures, system failures, overload or performance issues andsubscriber response profiles.The services and tools included in the Group’s platform are designed to scale horizontally with theaddition of multiple instances of the same service to the same or different hosts (virtual or physical),but also scale vertically, taking advantage of all additional host resources (i.e. CPU, memory) withoutsacrificing any of the platform’s reliability or manageability.All of the platform’s services are designed with integrated authentication and authorisation support,providing the Group with the ability to customise user roles according to the requirements of theGroup’s customers. Furthermore, the platform supports delegated administration, which means thatrequested users can perform the management of the Group’s systems themselves.The platform’s services are based on service templates which encapsulate the common corefunctionality for customers. This design, combined with the Group’s ready to use services repositoryand alongside customised ad-hoc functionality, provides the platform with an efficient time-to-marketservice delivery which maximises the reusability of the products through tested components.19

Distributed ApproachThe Group’s platform is based on a SOA which is characterised by compliance to industry standardsand by an extended use of web services as web application program interfaces that are accessed viaHTTP and can be executed on a remote system which hosts the requested services.The platform also makes excessive use of specialised gateways for the following reasons:● The isolation of difficult communication protocols under an easy to use open-web service basedcall interface, allowing simplification of service usage.●The inclusion of capabilities for the achievement of higher performance, automated monitoringand web based monitoring interfaces. High performance of these gateways is performed withasynchronous parallel operations (with the utilisation of the OS’s multi-threading capabilities).The utilisation of middleware for reliable messaging (message queuing) is another characteristic of theGroup’s platform. By using this, the Group can achieve a higher level of reliability and asynchronousexecution which results in an enhanced performance. Asynchronous message passing and dataprocessing architecture can handle difficult failures such as complete host failure (OS crashes andhardware failure) with the highest possible reliability.Evolution QualitiesPattern driven programming is one of the platform’s most important qualities for the efficiency of itssoftware solutions. This technique has been proven to facilitate efficient application development andmaintenance and enhances a developer’s productivity in both the creation and maintenance phases ofa platform’s development lifecycle. Other benefits of this approach are enhanced reliability andpredictability of the coding activity as well as enhanced maintainability of code.Another characteristic of the Group’s platform is the extensive use of open standards which providesinteroperability, embedding and integration of the platform services with other platforms and systems.Furthermore, the platform provides software developers and engineers of the Group well defined APIs,sample codes templates and wizards for easier ‘new features’ creation and effective reuse of existingcomponents.Using an integrated software development and software operations life cycle, combined with iterativedevelopment of frequent releases, the Group has managed to achieve rapid development andprototyping of a continuously evolving platform, in both functionality and quality.Finally, the development life cycle is supported by integrated wiki based documentation, issue trackingand source revision control tools for ensuring fast and accurate know-how sharing.The Group’s Interactive Platform ModulesMobile ContestsMobile VotingShort Code MarketingCampaignsMobile SurveysInternetQInteractivePlatformMobile CRM&RewardsMobile CouponsLoyalty &Incentive ProgramsAkazoo Digital Content20

Technology production processTechnology is a key component in implementing the Group’s business strategy. Therefore, it is criticalto know the potential of the technology and how to make it work. In order to be able to respond tothese, the Group has formed a SD&BS department as the Group’s main technology team. Resourcesfrom this department combine a broad knowledge of the potential value in emerging technologies, andan understanding of how these technologies can affect the Group’s business. The SD&BS department’smain goal is to evaluate different paths towards achieving the business goals; to develop the Group’sbusiness solutions and to explore the latest high-risk and high-return application technologies with anaim to create new revenue streams through innovation.Once a product, an application, or a service has been specified according to the business objectives, theSD&BS department becomes involved in all aspects of delivering a technological solution. Thesesolutions are based on:●●●already assimilated technologies;the creation of new technologies for bridging the heterogeneity that characterises the systems,methodologies and policies applied of all involved parties (such as MNOs and media agencies);andthe release of improvements included in the Group’s infrastructure evolution plan which arederived from previous experiences in similar projects.The Group is focused on the following main technology areas for delivering its solutions:● mobile messaging: SMS, EMS, MMS;● mobile applications: WAP and mobile internet, J2ME, iOS, Android and Adobe Air;● web and internet applications;● digital content management including aggregation, publishing, adaptation, protection and delivery;and●mobile payments: premium MOs, premium MTs, silent billing, recurring subscriptions.In order to successfully achieve its objectives, the SD&BS department implements a fast paced, iterativemodel. Appropriate resources have been identified and organised in task forces according to thefollowing types of business objectives:●●Project delivery task force: For each project, a group is defined consisting of parties interested inthe project and a dedicated development team from the SD&BS department. The main goal is toget fast turnover through short delivery lifecycles. The workflow is small and iterative and thegroup follows an agile application development approach. This approach breaks each task intosmall increments with minimal planning and does not directly involve long-term planning.Iterations are short time frames which typically last from one to two weeks. Each iterationinvolves a team working through a full software development cycle including planning,requirements analysis, design, coding, unit testing and acceptance testing when a working solutionprototype is demonstrated to interested parties. This minimises overall risk and allows the projectto adapt to changes quickly. Interested parties produce documentation as required. The goal is tohave an available and stable release (with a given quality) at the end of each iteration. Multipleiterations may be required to release a product or new features. Most of the deliverables from thistask force are not retired at the end of their lifecycle but are instead evaluated to provide feedbackfor improvements in future projects.Technology adoption task force: The resources for this group are gathered from the ITdepartment’s experts and the SD&BS department’s team leaders. The workflow is longer than theone for project delivery (lasting between four and eight weeks) but also iterative and the goal is toextend the current knowledge base through research, isolation of new engineering solutionsapplied during the previous project deliveries and also transformation of them into reusabletechnology infrastructure components. The deliverables of this task force are extensions of thecurrent collection of already assimilated technologies which thus enable faster modelling, analysisand design of new future business objectives.21

●Product evolution task force: Interested parties join the SD&BS department’s team leaders in thisgroup to define and plan the evolution path of existing products. It is also a long term iterativeprocess (iteration lasting between four to eight weeks) that includes a full cycle of the product’sfunctionality evolution.One of the Group’s main advantages is the internal organisation of resources, by which all the taskforce members work together on each business objective and, therefore, any knowledge sharing,parallel work on different tasks or the deliverables’ evolution is easier to achieve. At the same time,business objective leaders are defining the main technology and architecture paths, making sure thelessons learned from previous projects are identified, registered and shared, prioritising the risks and,on that basis, defining the task distribution in each project.The Group faces challenges to bridge, develop and invent new technologies. Almost all of its partnersand customers use different applications, technologies and architectures. However, the Group’sadopted production model allows for an easy and efficient accomplishment of the business goals of theGroup and its customers through technology upgrades. Despite the different requirements the Groupfaces each time, it is able to quickly adapt due to its internally proven practices such as:●●●●●identification and standardisation of adoptive processes for different business objectives;balancing of competing stakeholder priorities;advanced collaboration running across task forces;the ability to elevate the level of abstraction by re-using already built components and focusing onarchitecture during the early stages; andprogressive approach for extending functionality on top of quality.Technology Support and Client CareThe Group provides adequate and dedicated technical support and customer care for the needs of amobile marketing campaign on a 24/7 basis. This enables the Group to maintain a high qualitycustomer service.First and second level support for incidents are handled by the dedicated promotion call centre. TheGroup’s support team receives requests from the call centre which are then classified as either critical,major or minor. Response times range from 1 hour to 8 hours with resolve times varying from 8 hoursto 48 hours.1.5 Examples of Mobile Marketing CampaignsRotanaBackground:The Rotana Group (“Rotana”) is one of the Arab world’s largest entertainment companies, consistingof six TV stations, one magazine, seven radio stations, a film production unit and a record label.91 per cent. of Rotana is owned by the Saudi Prince Al-Waleed bin Talal and the remaining 9 per cent.by News Corporation. In the summer of 2010, Rotana was faced with a short deadline to source amobile marketing specialist that would engage the diverse Rotana audience (spanning 15 countries,several time zones and languages) with fun and interactive services. Given the technical complexity ofthe project, Rotana chose the Group because of its proven media experience and technical know-howin carrying out such campaigns.Idea:The Group was faced with the challenge of finding an exciting concept which would maximise theengagement and entertainment of the mobile subscriber populations of Algeria, Egypt, Iraq, Jordan,the Kingdom of Saudi Arabia, Kuwait, Lebanon, Mauritania, Morocco, Oman, Palestine, Qatar,Sudan, Syria and Tunisia. The Group designed a series of skill-based quizzes with different thematiccategories for each region and the campaign is currently rolled out across 30 mobile network operatorssimultaneously, making it the largest cross-operator campaign that the Group has performed to date.22

Results:The campaign started on 22 July 2010. So far, the campaign has attracted more than 100,000 activeparticipants, with a gradually growing participation and has, to date, generated total project revenuesof approximately US$1 million. The Directors can confirm that the Group has already starteddiscussions with Rotana, for future projects following the success of the current mobile marketingcooperation.OrangeIn 2009, the Group partnered with a local Polish company to bid for a large-scale mobile marketingcampaign of Orange in Poland. The Group, together with its partner for the project, were awarded themanagement of that campaign which they carried out successfully.On the back of that success, the Group managed to be awarded the execution of Orange’s second largescalePolish mobile marketing campaign. During this second campaign, the Group managed to yieldan even higher response from mobile subscribers, as evidenced by the increased revenue streams.Consequently, the Group was also awarded the management of Orange’s third consecutive campaignand most recently the Group has been chosen as the partner for the fourth and most recent campaignof Orange, subject to signing a binding contract.The above series of successful campaigns is testament to the Group’s ability to deliver satisfactoryservices to key clients like Orange.1.6 Key Milestones of the GroupIn 2001, the Group launched the first interactive SMS service in Greece in partnership with a leadingmobile network operator.In 2002, the Group acquired its first set of short codes and started to market non-mobile networkoperator branded mobile services. These services appeared throughout the whole spectrum oftraditional media, including national TV networks, consumer magazines, newspapers and the radio.In 2003, the Group marketed its first mobile content in Greece. This service was designed to operateprimarily through SMS interactive dialogues. At the same time, the Group invested in acquiring thetechnology to support premium voice services and to create a complete TTS and ASR/IVR platform,to support Call TV concepts.In 2006, the Group established operations in Poland where it executed its first large-scale SMSpromotion.In 2007, the Group developed the blueprints for a web/mobile digital content hub enriched with socialnetwork characteristics, naming it Akazoo and continued to invest in improving the capabilities of itstechnology platform in order to be able to handle more sophisticated and complex mobile marketingcampaigns.In 2009, the Group carried out 11 large-scale mobile network operator campaigns and establishedbusiness partnerships with mobile network operators, media companies and brands in countries suchas Poland, Turkey and Greece.In 2010, the Group entered the Brazilian and South African markets, as well as several countries in theMiddle East. In addition, the Group organised and executed its first multi-lingual, cross-operatormobile marketing campaign across 15 countries simultaneously in partnership with Rotana.1.7 Market OpportunityCurrently, there are over five billion mobile subscribers worldwide, expected to increase to over sixbillion by 2013. The mobile device is now regarded as an integral part of people’s daily lives with itbeing the only permanently internet connected portable technology. Mobile devices therefore have the23

potential to be a medium for delivering marketing messages which are highly specialised, targetedand focused.According to ABI Research, as at 2009, mobile marketing and advertising expenditure is expected toincrease from around US$4.0 billion in 2008 to nearly US$29.0 billion in 2014. Mobile entertainmentrevenues (including music, games and video) were estimated to total around US$29.5 billion for 2009and are forecast to increase to US$47.2 billion by 2013 globally and within that, video services areexpected to increase from 31 per cent. of the total revenues to 38 per cent.Research has also shown that globally mobile internet users are expected to increase fromapproximately 500 million in 2009 to almost 1.2 billion by 2012. Specifically, social network users areforecast to increase from 1.9 per cent. of mobile subscribers in 2008 to 8.4 per cent. of mobilesubscribers by 2012.The following key drivers support this view of the market’s future development and opportunity forgrowth:●●●●●As a result of decreasing mobile device prices and voice tariffs, better value-for-money offeringsfor data subscribers and favourable regulatory telecom policies worldwide, the number of mobilesubscriptions is increasing globally.The rapid adoption of smart phones is driving the consumption of mobile content and facilitatingmobile marketing initiatives.The number of mobile phone users accessing the internet and using data services is steadilyincreasing in both developed and developing economies. According to Tomi Ahonen, in 2008 thetotal number of users who occasionally accessed the internet via mobile devices surpassed thetotal number of users who occasionally accessed it via a personal computer.Mobile network operators are focusing on data subscriptions due to the market commoditisationof voice services. At the end of 2009, global mobile data services revenue was estimated to havereached US$182.9 billion and is expected to reach US$290.8 billion by the end of 2013 (PortioResearch as at 2009).Technological advancements in high speed networks and advanced mobile devices have allowedmobile network operators to offer mobile entertainment services. In 2008, mobile entertainmentservices (including mobile music, mobile games and mobile video and TV services) generated24

evenues of nearly US$24.0 billion worldwide and are projected to grow to US$47.2 billion by2013 (Portio Research as at 2009).●●Mobile messaging continues to expand, offering mobile marketers the opportunity for ever greaterengagement. In January 2010, the world’s messaging traffic averaged 12 billion SMS text messagesper day, at a global average price of US$0.025 per SMS. This industry generates US$1 million ofrevenue every 4.5 minutes. SMS traffic keeps growing annually as does SMS use in emergingmarkets. While 79 per cent. of all SMS text messaging revenue relates to person-to-personinteraction, a growing portion of revenue is derived from the use of ‘premium SMS’ services, suchas paying for digital content, engaging in contests and other games and interacting with brands.Mobile network operators traditionally limited the ability of their mobile subscribers to accessthird-party services, but more recently they have been enabling the provision of third partycontent, applications and data services in an effort to retain their subscription base and boostmobile data revenue growth.1.8 Strategy and ProspectsThe Group is operating in an expanding market. Mobile devices are increasingly being used formarketing campaigns because they are effective at reaching the advertisers’ target audience directly andin a manner in which the responses of the end-user can be measured.Mobile network operators, who are the Group’s principal customers, are keen to encourage and usethese services because marketing campaigns are often designed to be interactive with the mobilesubscriber. Through the subsequent engagement, mobile network operators can drive the ARPU higher.The Group is seeking to become a leading provider of mobile marketing solutions, including theprovision of digital content. The principal elements of its strategy are as follows:● Acquire new clients in the markets in which the Group already operates inThe Group intends to make use of its existing relationships with principal mobile network operatorsin the markets in which it currently operates in order to broaden its customer base. The Directorsbelieve that the development of these markets will cause the brands, mobile network operators andmedia companies to use mobile marketing as an integral part of their marketing strategy. With a trackrecord of successful campaigns, the Group’s ideas can be adopted by new customers, who will need tobe educated about the advantages of mobile marketing, the breadth and distinctiveness of the Group’ssolutions and ideas and its ability to satisfy their marketing requirements. Accordingly, the Directorsbelieve that the Group can grow its business presence in each of the markets in which it alreadyoperates.● Penetrate new emerging marketsThe Directors have identified a number of markets which satisfy the Group’s principal businessdevelopment criteria. These include Russia and certain of the CIS countries, South East Asia, theMiddle East and Africa. The Directors are preparing to increase the Group’s efforts to penetrate thesemarkets by building and strengthening relationships with key mobile network operators in their chosenarea of operation.● Continue to invest in the technology platformThe Directors believe it is key to continue to invest and enhance the functionality of the Group’s mobilemarketing platform, by developing new technology solutions that will further strengthen and broadenthe platform’s capabilities and its user applications. A significant part of that investment will be focusedon improving the Akazoo hub, both in terms of user interface as well as content provision andmanagement.● Pursue strategic acquisitionsThe Group intends to continue its geographic expansion into new markets. Consequently, the Directorswill evaluate and pursue acquisitions in those markets in which they feel the Group can gain acompetitive advantage and in a faster and more cost effective manner. In addition, the Directors mayevaluate acquisition propositions which will enhance the technological capabilities of the Group or giveit access to important new client relationships.25

● Expand sales coverage in new and existing marketsThe Group bases its business development on its ability to expand into markets adjacent to those inwhich the Group is already present. For example, the Group will use its presence in Brazil to consideropportunities in the wider South American continent or Latin American region. In addition havingpenetrated new markets, it is the Directors’ intention to expand throughout new territories such asRussia, South East Asia and Africa. To achieve that, the Group needs to continue to invest in growingits physical presence in key locations and strengthen its sales force in existing locations.● Strengthening the organisational structureAs the Group’s strategy entails a strong emphasis on both technology design and quality, the functionsof technology design and software development have been separated into two distinct and focuseddepartments. This allows for the provision of reliable interfaces and applications that fulfil the end-userdemands and needs, whilst freeing up the development team to focus on innovation and harnessing newtechnologies.Furthermore, the Group intends to enhance its technology design and software developmentdepartment with talented new staff, increase the number of experienced professionals working in themobile marketing units for MNOs, media and entertainment companies and increase the number offinance and administration staff to take control of growing operations.1.9 Summary of Financial InformationThe following table summarises key financial data for the Group, which is extracted from Part III ofthis document:Six monthsYear ended Year ended Year ended ended31 December 31 December 31 December 30 June2007 2008 2009 2010€m €m €m €mRevenues 9.1 14.0 17.2 18.0EBITDA 1.8 1.9 1.2 2.6Profit/(loss) before tax 1.0 0.6 (1.1) 1.4Total assets 8.0 12.7 14.2 15.2Operating cash flow 0.4 0.3 2.6 3.1The Group’s revenue CAGR over the last three years has been 29 per cent. and in the first six monthsof the current financial year, revenue has increased by 111 per cent. when compared to the firstsix months of 2009.1.10 Current Trading and Future ProspectsSince 30 June 2010, the Group has continued to trade profitably, generating revenues of approximately€12.6 million for the four months to 31 October 2010. The Group is currently connected with 55 mobilenetwork operators in 24 different countries, reaching over 573 million mobile subscribers.The Directors believe that the mobile marketing industry is in the early stages of its development andthere are still opportunities to be taken advantage of, especially in the developing markets of Russiaand the CIS, Turkey and the Middle East, Brazil and Latin America and Southeast Asia. For example,in November of 2010, the Group initiated a relationship with Azercell, Azerbaijan’s largest mobilenetwork operator and a subsidiary of Turkcell. Furthermore, the Group extended its cooperation withRotana, a leading satellite TV network in the Middle East and the joint mobile marketing campaignthat was already under execution has been extended until the end of 2010. Moreover, the Group wasawarded another ORANGE Poland mobile marketing campaign, to start towards the end of thiscalendar year and extend well into 2011.26

1.11 CompetitionThe Directors believe the MVAS market to be highly fragmented, with a large number of smaller localparticipants and a few participants who are operating on an international basis. They also believe thatthe MVAS market will start to consolidate, resulting in fewer, more significant competitors, covering awide range of marketing applications in large territories.The Group’s competitors with international experience and a more expanded presence include Veltiplc, Zed Group, TIMw.e., Upstream S.A., Buongiorno Spa, WIN plc and Eservglobal plc. Whilst allthese companies operate within the MVAS market, their business models differ substantially from eachother and from that of the Group.Velti plc focuses on offering its services through an on-demand, SaaS model. It offers no digital contenteither as a separate business line or integrated in its engagement platform. Velti plc’s platforms providevarious applications and systems which are used by mobile network operators for their services such asringtones, sendtones, games, wallpapers, horoscopes and fashion and beauty alerts.Zed Group focuses predominately on producing and distributing digital entertainment content acrossseveral media platforms, including mobile devices. However, Zed Group has also developed atechnology platform to execute and manage large scale mobile marketing campaigns and has so farexecuted more than 46 such projects in several different countries.Buongiorno Spa is also a mobile entertainment company, focusing on delivering digital content tomobile subscribers. The Directors believe that the company has not developed any notable mobilemarketing activity and remains focused on the entertainment niche of the MVAS industry.TIMw.e. is predominately involved in digital content sales, in several different countries of the world.The Directors believe that TIMw.e. competes directly with both Buongiorno Spa and Zed Group.TIMw.e. has developed moderate mobile marketing skills, but this is not believed to be its core business.The Directors believe Upstream S.A. focuses entirely on large scale mobile marketing campaigns, nothaving any other significant business activities in the wider MVAS industry, including the mobileentertainment niche.WIN plc (recently acquired by IMImobile Europe Limited) is broadly competing in the MVASbusiness, although it has rarely competed for large scale mobile marketing campaigns. The Directorsbelieve that WIN plc focuses more on selling digital content and less on providing integrated mobilemarketing solutions for operators, media companies or brands.Eservglobal plc specialises in mobile money solutions and value-added services to helptelecommunication service providers increase their revenue and gain and maintain customer ownership.The Directors believe that the company’s mobile money solutions business applications are moreextended than their services in promotions, loyalty, messaging and multiplay.1.12 Directors, Senior Management and Organisational StructureThe Group has adopted an organisational structure which provides flexibility and allows for focus on thedevelopment of each different business unit. An executive committee has been formed comprising theFounder, the Chief Executive Officer, the Finance Director and three other executives. This committeemeets on a weekly basis to monitor and control the Group’s operations and ongoing performance.27

Brief biographical details of the Directors and senior management are set out below:DirectorsStuart Cruickshank, aged 56, ChairmanStuart is currently a non-executive director of Psion plc and of Cambridge Building Society. He wasa non-executive director of Barking, Havering and Redbridge University NHS Trust from 2008 to 2010and had consulting roles with Ernst & Young LLP and Gerson Lehrman Inc from 2008 to 2009. Hewas Director General and Chief Finance Officer at HM Revenue and Customs and has considerabletechnology sector experience, having served as CFO of technology services group Morse plc and asGroup Finance Director of the video games company Eidos plc between 2001 and 2006. Earlier in hisexecutive career he worked at Kingfisher as Finance Director of Woolworths PLC and held senior rolesin United Biscuits, Diageo/Grand Metropolitan and Whitbread.Panagiotis Dimitropoulos, aged 39, Deputy Chairman and FounderPanagiotis founded the Group in 2000 following a brief career in Alpha Bank and academic studies inLaw at the Athens University and an MBA from ALBA. Panagiotis is considered a pioneer in theMVAS industry and has grown the business to one with international presence and operations.Konstantinos Korletis, aged 41, Chief Executive OfficerKonstantinos joined the Group as a non-executive in 2008 and assumed his current role this year. Heholds an MSc in Marketing and an MBA from the New York University Stern School of Business.Lead positions include Vice President of Citigroup’s Corporate Finance Division in Greece, ChiefFinance Officer of AGP, a major industrial group and General Manager of Liberis Media, the leadingconsumer magazine publisher and radio operator in Greece. Konstantinos has managed companieswith numbers of employees ranging from 500 to 2,000 and turnover from €75 million to €250 million.Furthermore he has worked in public companies and has managed several M&A transactions, capitalraising initiatives such as IPOs, delistings and business and operational reorganisations.Veronica Nocetti, aged 41, Finance DirectorVeronica joined the Group as Finance Director in August 2010. She has a degree in Economics fromNorth Carolina State University and a Masters in International Management from ThunderbirdA.G.S.I.M. She has extensive international experience in project financing and internationaldevelopment, having worked in Sudan, the Middle East, Malaysia, Romania and Greece. Prior tojoining the Group she worked for four years in Sudan as Chief Finance Officer of the Real EstateDivision of the largest conglomerate in the country. Her managerial experience also includes five yearsin a senior role in a FTSE-40 listed company in Greece.Michael Jolliffe, aged 60, Non-executive directorMichael is Deputy Chairman of Tsakos Energy Navigation SA, a shipping company which owns 51tankers and is quoted on the New York Stock Exchange. He is also Chairman of StealthGas Inc, ashipping company with a fleet of 46 LPG and product tankers quoted on the Nasdaq National Market.28

In addition, he is a Chairman of Wigham-Richardson Shipbrokers Ltd, one of the oldest establishedshipbroking companies in the City of London, and of Shipping Spares Repairs and Supplies Ltd, anagency company based in Piraeus, Greece. Furthermore, he is the Joint President and DeputyChairman of Hanjin Eurobulk Ltd, a joint venture between Hanjin Shipping Co. Ltd of Seoul, Koreaand Wigham-Richardson Shipbrokers Ltd. Mr. Jolliffe is also Chief Executive Officer of TitansMaritime Ltd., a newly established shipping company in the process of purchasing modern but secondhandcontainer and dry bulk ships.Iain Johnston, aged 44, Non-executive directorIain is a non-executive director of Alterian PLC. He is Chief Executive Officer of Loewy Group, a fastgrowing group of eight specialised branding and marketing communications businesses. Previously, hewas managing director of customer database management start-up, GB Information Management,from its foundation in 1990 to its listed status in 1998, culminating with it being awarded a place onThe Independent Top 100 and Virgin Fasttrack 100 and the Financial Times Top 100 Companies ofthe Future. Formerly a board member of the Direct Marketing Association, Iain has been a nonexecutivefor a number of fast-growth marketing and technology businesses, including EventMarketing Solutions, a fast-growth experiential marketing business where he is Chairman.Senior ManagementKostas Papoutsis, Chief Operating OfficerKostas joined in 2009. He holds a degree in Electrical & Computer Engineering and an MBA fromLeuven/UCI. Prior to joining the Company, he was Vice President of Mobile Marketing at Velti plc,where he was acknowledged as being among the industry innovators in large scale mobile marketingcampaigns. He has held senior positions at BT, Vodafone Greece, Vizzavi and GM Germany.Thodoris Kondilis, Chief Development OfficerThodoris has headed the Software Development & Business Solutions Department at the Group since2001. He holds a degree in Computer Engineering & Informatics. Mr Kondilis directs the developmentof business solutions and leads the implementation of corporate strategy in exploring the latest highrisk& high-return application technologies with an aim to create new revenue streams throughinnovation.Michalis Zervakis, Chief Technology OfficerMichael has been with the Group since 2002. He is the chief architect of the IT infrastructure thathosts over 500 services and supports global operations, managing server rooms in three differentcountries. He is a graduate of Athens University in Business & Economics.Apostolos Zervos, Chief Strategy OfficerApostolos joined in 2010 and is responsible for developing the Group’s strategy in respect of theAkazoo module. He holds a degree in Philosophy & Economics from Yale University. Prior to joining,he was at Velti plc, where he served as a Corporate Program Manager for Product & SolutionMarketing and as Senior Manager of Innovation. He has held other senior management positions atEllemedia Technologies, Lucent Technologies, Bell labs as well as Algosystems. Apostolos has alsobeen an active member of the film entertainment industry.Yiannis Liaroloulos, Chief Commercial OfficerYiannis joined the Group in 2004. He has a BEng in Electronics and an MSc in Telematics fromMiddlesex University, which he completed in 1998. Yiannis has extensive work experience in mediaincluding a position as Sales Advertising Director for the television division of a major Greek mediagroup.Grzegorz Witerski, Country Manager for PolandGrzegorz is a graduate from the Warsaw School of Economics, with a specialisation in Marketing andManagement. During the last 12 years, he has worked for international media agencies including Caratand Aegis Media. Grzegorz has acted as an advisor in acquisitions of independent media andinteractive agencies in several countries including Poland, Turkey, Russia and South Africa.29

Mustafa Serez, Country Manager for TurkeyMustafa began his career in the media and advertising industry. In 2005, he made his move to theMVAS market as a Managing Director of Turkey’s first interactive TV channel. He held lead positionsin companies like ATV Europe, Nielsen, BBDO and American Broadcasters. Two years ago Mustafajoined the Group with a scope to expand the business in Central Asia and CIS countries.Roman Smirnov, Country Manager for RussiaRoman has an engineering background and appropriate experience having run more than forty MVASprojects worldwide. He was Head of MVAS with the first private mobile operator to launch in Nepal,which gives him an excellent understanding of the requirements of mobile operators in developingmarkets. Roman joined the Group in 2008.Alessandra Silvestri, Country Manager for BrazilAlessandra is responsible for the expansion of the Group in Latin America. She is a graduate of theAmerican University of Paris, with a degree in International Markets and holds a degree inInternational Relations & Film from University of California, Los Angeles.Maja Lapcevic, Corporate Affairs OfficerMaja joined in July 2010 to head the Corporate Affairs function of the Group. She is experienced inthe field of brand management, advertising and business diplomacy and has worked on a project basisin 42 countries around the world, acting as an independent advisor to governments, corporations andorganisations leading successful global and country-centric brand management campaigns. Maja holdsjoint BAs in Government and Economics with a specialism in International Affairs from GeorgetownUniversity.Furthermore, the Group employs 65 professionals and contracts with approximately 20 freelanceconsultants, designers, copywriters and marketers. Approximately 45 of the Group’s employees aretechnology staff, including software developers, database managers, computer technology engineersand information technology and telecommunication specialists.1.13 Key StrengthsThe Directors believe that the Group has, inter alia, the following key strengths to support the deliveryof its strategy:●●●●●Established in 2000, a history of successful operations, which has developed a profitable and cashgenerative business that is proving to be scalable.An experienced management team.An integrated technology platform that enables the Group to develop its mobile marketingactivities, including the provision of digital content, without having to adapt its applications foreach different network operator’s data gateway or the configuration of the various mobile devicesused by consumers.Long-term business relations with high calibre telecom operators, media companies and brandsaround the world including amongst others: Vodafone; Orange; Wind; COSMOTE; Vimpel;Turkcell; Oi; MTV Network; Leo Burnett; Mindshare; Euro RSCG; Imako Media, a licensee ofTime Warner magazines in Greece; Bauer Media; Liberis Publications, a licensee of Conde Nastmagazines in several countries of the Balkans; SHOW TV; MTV; Bloomberg television in Turkey;the Rotana satellite TV network in the Middle East; and PLAY4.The Group focuses its business activities on developing markets, where the Directors believe abetter growth opportunity exists. The main reasons for this are the following:– The number of mobile devices used in these markets is growing faster than in developedmarkets, hence the number of mobile subscribers in these markets is expected to grow muchfaster accordingly.– The age profiles in lesser developed markets are more favourable for the use of mobiledevices than in developed territories.– In these developing markets people are more accustomed to using mobile internet than indeveloped markets.30

1.14 The PlacingOn Admission, the Company will have 25,697,435 Ordinary Shares in issue and a market capitalisationof £31 million at the Placing Price. The Placing involves the issue of 5,641,025 Placing Shares to raise£5.7 million, net of expenses for the Company.795,000 Placing Shares are being placed by the Company directly. Pursuant to the Placing Agreement,Jendens has agreed to place, as agent for the Company, 4,846,025 Placing Shares at the Placing Price.The total number of Placing Shares will represent 22.0 per cent. of the Enlarged Share Capital. ThePlacing Shares are being placed with institutional and other investors.The Placing, which is not underwritten, is conditional, inter alia, on Admission taking place on10 December 2010, or such later date as Jendens, Grant Thornton Corporate Finance and theCompany may agree, not being later than 31 December 2010. The Placing Shares will rank pari passuin all respects with the existing Ordinary Shares. Placees not electing to receive Placing Shares pursuantto the Placing in uncertificated form will receive such Placing Shares in certificated form. It is expectedthat certificates will be despatched by post, within five Business Days of the date of Admission.Following Admission, the Directors directly or indirectly will hold 19,150,000 Ordinary Shares,representing approximately 74.5 per cent. of the Enlarged Share Capital. Certain other substantialShareholders, as referred to in paragraph 7 of Part IV of this document, will each hold three per cent.or more of the Enlarged Share Capital.Further details of the Placing Agreement are set out in paragraph 12.7 of Part IV of this document.1.15 Use of ProceedsThe net proceeds of the Placing receivable by the Company are expected to be approximately£5.7 million and will be used as follows:●●●●to fund business development in the markets of interest, by way of working and investment capitalfinancing;to further develop Akazoo, the online and entertainment content module of the Group’sinteractive mobile marketing platform, including the re-design of its user interface and theenrichment of its content library;to invest in expanding network technology equipment and enhancing the mobile marketinginteractive platform; andto set up new offices in key markets that the Directors believe require a more permanent presenceand which can be used as a platform for further expansion in adjacent regions.1.16 Dividend PolicyFollowing Admission, when it is commercially prudent to do so and subject to the availability ofdistributable reserves, the Directors may approve the payment of dividends. However, at present, theDirectors consider that it may be more prudent to retain cash to fund the expansion of the Group andas a result, feel it is inappropriate to give an indication of the likely level or timing of any futuredividend payout.1.17 Incentive PlansThe Company will operate the Share Incentive Plan which will last for a period of three years underwhich an employee, consultant or director may be determined by the Board to be eligible to acquire theOrdinary Shares in the capital of the Company at a nominal value, subject to meeting Group-wideearnings-based performance targets. The number of Ordinary Shares which may be issued pursuant tothe Share Incentive Plan over the period of three years may not exceed in aggregate 7 per cent. of theissued share capital of the Company on Admission, excluding the Placing Shares. In addition, underthe Non-Executive Directors Incentive Share Plan, non-executive directors of the Company may beentitled to receive a number of shares in the Company which shall satisfy payment of part of theirremuneration. For further details please see paragraph 10 of Part IV.31

1.18 TaxationThe attention of investors is drawn to the information regarding taxation which is set out inparagraph 16 of Part IV of this document. These details are, however, intended only as a general guideto the current taxation law position in the United Kingdom for certain types of investor. Investors whoare in any doubt as to their tax position or who are subject to tax in jurisdictions other than the aboveare strongly advised to consult their professional advisers.1.19 CREST and Trading in Ordinary SharesCREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by acertificate and transferred otherwise than by written instrument in accordance with the CRESTRegulations. The Articles permit the holding and transfer of Ordinary Shares to be evidenced inuncertified form in accordance with the CREST requirement.CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain sharecertificates will be able to do so. It is expected that, where Placees have asked to hold their OrdinaryShares in uncertificated form they will have their CREST accounts credited with Ordinary Shares onthe day of Admission. Where Placees have requested to receive their Ordinary Shares in certificatedform, share certificates will be despatched within five Business Days of the date of Admission. Notemporary documents of title will be issued. Pending the receipt of definitive share certificates inrespect of the Placing Shares, transfers will be certified against the register.Application will be made for the Ordinary Shares to be admitted to AIM and separately for theOrdinary Shares to be eligible for admission to CREST with effect from Admission. It is expected thatAdmission will take place and dealings in the Ordinary Shares will commence on 10 December 2010.1.20 Relationship DeedThe Company has entered into the Relationship Deed providing for certain matters in respect of therelationship between the Group, Panagiotis Dimitropoulos and Pitragon Investments Limited.Further details of this agreement are set out in paragraph 12.10 of Part IV of this document.1.21 Orderly Market ArrangementsPitragon Investments Limited and Konstantinos Korletis, who will, following Admission, in aggregate,have an interest in approximately 74.5 per cent. of the issued share capital, have given undertakings inthe Orderly Market Agreement not to sell, charge or grant any interests over any Ordinary Shares heldby them at Admission (subject to certain exemptions) for the 12-month period commencing onAdmission. In addition, they have undertaken to make any disposal through Jendens for a 12-monthperiod thereafter.1.22 Corporate GovernanceThe Directors intend to take account of the requirements of the Corporate Governance Guidelines ofthe Quoted Companies Alliance to the extent that they consider it appropriate and having regard to theCompany’s size, board structure, stage of development and resources.Upon Admission, the Board will consist of six directors, three of whom will be independentnon-executive Directors.The Company will hold regular board meetings. The Directors will be responsible for formulating,reviewing and approving the Company’s strategy, budget and major items of capital expenditure. TheDirectors have established an audit committee, a remuneration committee and a nomination committeewith formally delegated rules and responsibilities. Each of these committees will meet as and whenappropriate save in the case of the remuneration and audit committees which will meet at least twiceeach year.32

On Admission the audit committee will be comprised of the Non-Executive Directors and will bechaired by Stuart Cruickshank. The audit committee will, inter alia, determine and examine mattersrelating to the financial affairs of the Company including the terms of engagement of the Company’sauditors and, in consultation with the auditors, the scope of the audit. It will receive and review reportsfrom management and the Company’s auditors relating to the half yearly and annual accounts and theaccounting and the internal control systems in use throughout the Company.On Admission, the remuneration committee will be comprised of the Non-Executive Directors and willbe chaired by Iain Johnston. The remuneration committee will review and make recommendations inrespect of the Directors’ remuneration and benefits packages, including share options and the terms oftheir appointment. The remuneration committee will also make recommendations to the Boardconcerning the allocation of share options to employees under the Share Incentive Plan.On Admission the nomination committee will comprise of Michael Jolliffe, Iain Johnston andPanagiotis Dimitropoulos and will be chaired by Michael Jolliffe. The nomination committee willmonitor the size and composition of the Board and the other Board committees, be responsible foridentifying suitable candidates for board membership and monitor the performance and suitability ofthe current Board on an ongoing basis.1.23 Share Dealing CodeThe Company has adopted a share dealing code for Directors and applicable employees of theCompany, which is compliant with the AIM Rules, and will take proper steps to ensure compliance bysuch persons.1.24 The City CodeThe City Code applies, inter alia, to offers for all public companies (other than open ended investmentcompanies) which have their registered office in the United Kingdom, the Channel Islands or the Isleof Man. However, the Panel on Takeovers and Mergers will normally consider a company resident inthe United Kingdom, the Channel Islands or the Isle of Man only if it is incorporated in one of thosejurisdictions and has its place of central management in one of those jurisdictions. Whilst theCompany believes that its place of central management will be in United Kingdom, the ChannelIslands or the Isle of Man, the Panel on Takeovers and Mergers may not regard the Company as havingits place of central management in the United Kingdom, the Channel Islands or the Isle of Man, inwhich case, the Panel on Takeovers and Mergers may decline to apply the City Code to the Companywith the result that Shareholders may not receive the benefit of the takeover offer protections providedby the City Code.1.25 Further InformationPotential investors should read the whole of this document which provides additional information onthe Company and the Placing and not rely on summaries or individual parts only. Investors’ attentionis drawn, in particular, to the Risk Factors set out in Part II of this document and the additionalinformation set out in Part IV of this document.33

PART IIRISK FACTORSInvesting in the Ordinary Shares involves a high degree of risk. Potential investors should carefullyconsider the risks described below, which the Directors believe are the material risks of the Group’sbusiness, its industry and the Placing, before making an investment decision. Additional risks not presentlyknown by the Directors or that the Directors currently deem immaterial may also impair the Group’sbusiness operations. If any of the following risks actually occur, the Group’s business, financial conditionand operating results could be harmed. In that case, the trading price of the beneficial interests in theOrdinary Shares, and the underlying Ordinary Shares, could decline and investors might lose all or part oftheir investment in the Ordinary Shares. In assessing these risks, potential investors should also refer to theother information contained in this document, including (without limitation) the Group’s consolidatedfinancial statements and the related notes thereto.Risks Related to the Group’s BusinessBusiness risksThe Group faces risks, uncertainties and potential difficulties relating to:● retaining current economic arrangements with customers, including brands, advertising agencies,mobile network operators and media companies;●●●●●●●managing evolving pricing models;maintaining and expanding current, and developing new, customer relationships;developing new, innovative mobile marketing strategies that achieve market acceptance and areseen as superior to alternatives that may emerge over time;maintaining a stable service infrastructure and reliable service delivery for the Group’s productsand services offering;managing a rapidly growing business that since inception has operated in several countries, manyof which are lesser developed and generally known as being relatively difficult to conduct businessin while ensuring appropriate levels of internal controls as well as compliance with local laws andregulations;executing business and marketing strategies successfully, including gaining acceptance for theGroup’s brand and the practice of mobile marketing in general; andattracting, integrating and retaining qualified personnel.Failure to achieve any of these objectives will harm the Group’s business. In addition, the costs ofpreventing any of these risks may be more expensive than planned, which could adversely impact onthe operating results and financial condition of the Group.Under the Group’s revenue recognition policies, revenue may not be recognised in the period in which theGroup contracts with a customer, and downturns or upturns in sales may be reflected in operating resultsin future periods.The Group recognises revenue from performance-based fees when specific quantitative goals are metor when the milestones are achieved, from usage-based fees on a percentage-of-completion basis, andfrom managed service arrangements, ratably over the term of the contract. As a result, revenuegenerated during any period typically results from agreements entered into during a previous period. Areduction in sales in any period therefore may not significantly reduce revenue for that period, butcould negatively affect revenue in future periods. In particular, if such a reduction were to occur in thefourth quarter, it may be more difficult for the Group to significantly increase its customer sales in timeto reduce the impact in future periods, as the Group has historically entered into a significant portionof new, or expanded the scope of existing, customer agreements during the fourth quarter. This isprimarily because traditional marketing and advertising spending is heaviest during the holiday season,and towards the end of a calendar year, brands, advertising agencies, mobile network operators andmedia companies often close out annual budgets. In addition, the Directors may be unable to adjust34

the Group’s cost structure to match the impact of the reduction in revenue in future periods.Accordingly, the effect of significant downturns in sales may not be fully reflected in the Group’s resultsor operations until later periods. The Group’s pricing model may also make it difficult for it to rapidlyincrease revenue through additional sales in any period, as revenue from new customers will only berecognised if and when the quantitative goals are met or the milestone is achieved, when services arecompleted, or rateably over the term of the contract.The Group may not recognise revenue from its customers in the period in which the Group incurs costsassociated with generating customer agreements, and because its costs of revenue include allocatedamortisation of capitalised software costs and computer software expenses, costs of revenue may notincrease or decrease in direct proportion to the generation of revenue.Costs of revenue may not increase or decrease in direct proportion to the generation of revenue for twoprincipal reasons. Firstly, cost of revenue may not be recognised in the same period that the Grouprecognises revenue on such sale. Accordingly, in a particular period, costs of revenue from a particularagreement may exceed revenue from such agreement, especially towards the beginning of anagreement’s term and even though the agreement is expected to be profitable over the course of suchterm. Secondly, costs of revenue include expenses from both internal and third party softwaredevelopment activities that the Group capitalises when it incurs them. The Group amortises these costsover time and therefore costs of revenue in future periods may contain significant amounts of suchexpenses. For both of these reasons, costs of revenue may not be a consistent percentage over time andfluctuations in costs of revenue are unlikely to be directly proportionate to changes in revenue.The Group’s sales process requires significant time and could hinder its ability to expand its customer baseand increase revenue.Attracting new customers requires substantial time and expense and no assurance can be given that theGroup will be successful in establishing new, or maintaining or advancing current, relationships. Forexample, it may be difficult to identify, engage and market to customers who do not currently performmobile marketing or advertising or are unfamiliar with our current services or platform. Further, manyof the Group’s customers typically require one or more internal levels of approval. As a result, duringthe Group’s sales effort, it must identify multiple people involved in the purchasing decision and devotea significant amount of time to presenting its products and services to those individuals. The newnessand complexity of the Group’s services often require the Group to spend substantial time and effortassisting potential customers in evaluating its products and services including providingdemonstrations and benchmarking the Group’s services against other available technologies. Thisprocess can be costly and time consuming. It is expected that the Group’s sales process will become lessburdensome as the Group’s products and services become more widely known and used and as itspresence grows in markets where it is already established. However, if this change does not occur, theDirectors might not be able to expand the Group’s sales as quickly as anticipated and sales growth maybe adversely affected.The Directors may not be able to enhance the Group’s mobile marketing platform to keep pace withtechnological and market developments, or to remain competitive against potential new entrants in theGroup’s markets.The market for mobile marketing and related services is emerging and is characterised by evolvingindustry standards and frequent introductions of new services. Some solutions that the Group mayoffer may not be acceptable or attractive to its customers. To keep pace with technologicaldevelopments, satisfy customer requirements and achieve a wider acceptance of the Group’s mobilemarketing campaigns, the Group will need to continually improve its current technology platform andsystematically introduce new modules, applications and solutions on a timely basis and at competitiveprices. The Group’s inability to enhance, develop, introduce and deliver compelling mobile marketingservices in a timely manner, or at all, in response to changing market conditions, technologies orcustomer expectations, could have a material adverse effect on operating results or could result in theGroup’s mobile marketing services platform becoming wholly or partly obsolete. The Group’s abilityto compete successfully will depend in large measure on the Group’s ability to retain technically skilleddevelopment and engineering staff and to adapt to technological changes and advances in the industry,including providing for the continued compatibility of the Group’s mobile marketing services platformwith evolving industry standards and protocols.35

Appearances of new competitors could weaken the Group’s competitive position.As the Directors believe that the mobile marketing market is likely to grow substantially, othercompanies which are larger and have significantly more capital to invest in development than theGroup may emerge as new competitors. In addition, if two or more of the Group’s competitors wereto merge or enter into partnership arrangements or joint ventures, the resulting change in thecompetitive landscape could adversely affect the Group’s ability to compete effectively. Suchconsolidation could result in new, larger entrants to the market.For example, in November 2009, Google, Inc. announced that it had entered into a contract to acquireAdmob, Inc. In January 2010, Apple, Inc. acquired Quattro Wireless, Inc. Although neither Admobnor Quattro Wireless directly competes with the Group at present, these transactions are indicative ofthe level of interest among potential acquirers in the mobile marketing and advertising industry.Direct competitors may also establish or strengthen co-operative relationships with their mobileoperator partners, sales channel partners or other parties with whom the Group has strategicrelationships, thereby limiting its ability to promote its products and services. New entrants could seekto gain market share by introducing new technology or reducing prices. This may make it more difficultfor the Group to sell its products and services, could result in increased pricing pressure, reduced profitmargins, increased sales and marketing costs or the loss of present or expected market shares. Any ofthe above events or disruptions in the business of the Group caused by these events could reducerevenue and adversely affect the business, operating results and financial condition of the Group.The Group does not have longer or medium term agreements with many of its customers and it may notbe able to obtain repeat agreements with its key customers or attract new customers to replace suchcustomers as a source of comparable revenues.Most of the Group’s contracts with its customers are short term contracts although may provide repeatbusiness for the Group. The Directors cannot be sure that the Group’s customers will continue to useits products and services or that the Group will be able to replace, in a timely or effective manner,departing customers with new customers that will generate comparable revenues. Further, the Directorscannot assure you that the Group will continue to generate consistent amounts of revenues over time.The Group’s failure to develop and sustain long-term relationships with its customers would materiallyaffect the Group’s operating results.The Group’s customer contracts lack uniformity, are often complex and based on the terms and conditionsset by its customers which may lead to business and other risks.The Group’s customers include some of the largest mobile network operators which have substantialpurchasing power and negotiating leverage. As a result, the Group typically negotiates contracts on acustomer-by-customer basis and, in order to close a transaction, the Group sometimes accepts onerouscontract terms, in return for a commercial benefit including indemnities, no limitations on the liability ofthe Group, refund obligations, penalties or unfavourable invoicing terms or such other terms that couldexpose the Group to significant financial or operating risk. For instance, the Group has several litigations(details of which are set out in Part IV of this document) against customers to recover unpaid invoices,the settlement of which may take a long period of time. If the Group is unable to effectively negotiate orimpose invoicing terms in a timely manner pursuant to its contracts with key customers, the business andoperating results of the Group may be adversely affected. In addition, the Group could be unable totimely recognise revenue from contracts and this would further adversely impact its financial results.The Group has contractual indemnification obligations to its customers, most of which areunlimited. If the Group is required to fulfill its indemnification obligations relating to third partycontent or operating systems that the Group provides to its customers, the Group intends to seekindemnification from its suppliers, vendors and content providers to the full extent of theirresponsibility. However, even if the agreement with such suppliers, vendors or content providerscontains indemnity provisions, these may not cover a particular claim or type of claim or may belimited in amount or scope. As a result, the Group may not have sufficient indemnification from thirdparties to recover fully the amounts or types of claims that might be made against it. Any significantindemnification obligation to its customers could have a material adverse effect on its business,operating results and financial condition.36

The international nature of the Group’s business subjects it to additional costs and risks that mayadversely affect its operating results.Developing MarketsThe Group has offices in 4 countries and has a market presence in over 20 countries, many of whichare emerging economies. As such, it is subject to international laws and regulations which may beuncommon or different from those applicable in developed countries and which may increase the costof doing business in these countries. Possible violations of such laws and regulations could result infines and/or criminal sanctions against the Group’s officers or its employees. Any such violation couldalso result in restrictions or prohibitions on the Group’s ability to offer its products and services in oneor more countries, could delay or prevent potential acquisitions and could also materially damage itsreputation, brand, international expansion efforts, ability to attract and retain employees, andoperating results. The Group’s success depends, in part, on its ability to anticipate these risks andmanage these difficulties. The Group monitors its international operations and investigates allegationsof improprieties relating to transactions and the way in which such transactions are recorded. Wherecircumstances warrant, the Group provides information and reports its findings to governmentauthorities, but no assurance can be given that action will not be taken by such authorities.Risk Resulting from International OperationsThe Group is also subject to a variety of other risks and challenges in managing an organisationoperating in various countries, including those related to:●●●●●●●●●●●challenges caused by distance, language and cultural differences;general economic conditions in each country or region;fluctuations in currency exchange rates;frequent regulatory changes in less established legal systems;political unrest, terrorism and the potential for other hostilities;public health risks, particularly in areas in which the Group has significant operations;longer payment cycles and difficulties in collecting accounts receivable;overlapping tax regimes;the Group’s ability to repatriate funds held by its international subsidiaries at favourable tax ratesor at all;difficulties in transferring funds to or from certain countries; andreduced protection for intellectual property rights in some countries.If the Directors are unable to manage the foregoing international aspects of the Group’s business, itsoperating results and overall business will be significantly and adversely affected.The Group’s services are provided on mobile communications networks that are owned and operated bythird parties which the Group does not control and any performance failure on the part of any of thesenetworks would adversely affect its ability to deliver services to its customers.The effective execution of mobile marketing campaigns depends on the reliability of mobile networkoperators which maintain sophisticated and complex communication networks. Such mobile networkshave historically, and particularly in recent years, been subject to both rapid growth and technologicalchange. If the network of a mobile network operator with which the Group is integrated should fail,including as a result of incompatability with new technology, the degradation of network performanceunder the strain of too many mobile consumers using it, or a general failure resulting from naturaldisaster or political or regulatory shut-down, the Group will not be able to provide its services to itscustomers through such mobile network. This in turn, would impair the Group’s reputation andbusiness, potentially resulting in a material adverse effect on its financial results.37

The success of the Group’s business depends, in part, on mobile network operators continuing to accept theGroup’s customer messages for delivery to their subscriber base.The Group depends on mobile network operators to deliver its customers’ messages to their subscriberbase. Mobile network operators often impose standards of conduct or practice that significantly exceedcurrent legal requirements and potentially classify its messages as ‘‘spam’’ despite the Group’s differentclassification. In addition, the mobile network operators use technical and other measures to attemptto block non-compliant senders from transmitting messages to their customers. For example, mobilenetwork operators block short codes or internet protocol addresses associated with those senders.There can be no guarantee that the Group, or short codes registered to it, will not be blocked orblacklisted or that the Group will be able to successfully remove itself from those lists. Blocking of thistype could interfere with its ability to market products and services of its customers and communicatewith end users and could undermine the effectiveness of its customers’ marketing campaigns, all ofwhich could have an adverse effect on its business and the results of its operations.The Group depends on third party providers for a reliable internet infrastructure and any failure of suchthird parties, or the internet in general, for any reason would significantly impair ability to conduct itsbusiness.The Group outsources all of its data centre facility management to third parties who host the actualservers and provide power and security in multiple data centres in each geographic location in whichthe Group does business. These third party facilities require uninterrupted access to the internet. If theoperation of its servers is interrupted for any reason, including natural disaster, financial insolvency ofa third party provider, or malicious electronic intrusion into the data centre, the Group’s businesswould be significantly damaged. As has occurred with many internet-based businesses on occasion inthe past, the Group has been subject to ‘‘denial-of-service’’ attacks in which unknown individualsbombarded its computer servers with requests for data, thereby degrading the servers’ performance.While the Group has historically been successful in relatively quickly identifying and neutralising theseattacks, the Directors cannot be certain that the Group will be able to do so in the future. If either athird party facility fails, or the Group’s ability to access the internet is interfered with because of thefailure of internet equipment in general or the Group becomes subject to malicious attacks ofcomputer intruders, its business and operating results will be materially adversely affected.Several of the Group’s larger customers require the Group to maintain specified levels of servicecommitments and failure to meet these levels would both adversely impact on the Group’s customerrelationships as well as overall business.Many of the Group’s customers require the Group to contractually commit to maintain specified levelsof customer service under service level agreements. In particular, because of the importance thatmobile customers in general attach to the reliability of a mobile network, mobile network operators areespecially known for their rigorous service level requirements. Although to date the Group has notexperienced any significant interruption of service, if it were to be unable to meet its contractuallycommitted service level obligations, it would both be subject to contractual liability to its customers aswell as adverse effects on the Group’s reputation. Both of these factors would in turn materially harmits business.Failure to adequately manage the Group’s growth may seriously harm the Group’s business.The Group operates in an emerging technology market and has experienced, and may continue toexperience, significant growth in its business. If the Directors do not effectively manage the Group’sgrowth, the quality of its products and services may suffer. This could negatively affect the Group’sbrand and operating results. Growth has placed, and is expected to continue to place, a significantstrain on managerial, administrative, operational and financial resources and infrastructure. Futuresuccess will depend, in part, upon the ability of senior management to manage growth effectively. Thiswill require the Group, among other things to:●●●implement additional management information systems;further develop operating, administrative, financial and accounting systems and controls;hire additional personnel;38

●●●develop additional levels of management within the Group;locate additional office space in various countries; andmaintain close co-ordination among engineering, operations, legal, finance, sales and marketingand customer service and support organisations.The net proceeds from the Placing will help to control these risks.Moreover, as sales increase, the Directors may be required to concurrently deploy the Group’s servicesinfrastructure at multiple additional locations or provide increased levels of customisation. The Groupmay lack the resources to deploy mobile marketing services on a timely and cost-effective basis due tothe lack of available resources. Failure to accomplish any of these requirements would seriously harmthe Group’s ability to deliver the Group’s mobile marketing services platform in a timely fashion, fulfilexisting customer commitments and attract and retain new customers.The Group may be required to reduce its prices to compete successfully, or it may incur increased orunexpected costs, which could have a material adverse effect on the Group’s operating results and financialcondition.The intensely competitive market in which the Group conducts its business may require it to reduceprices, which could negatively impact operating results. The market is highly fragmented with a numberof companies providing one or more competitive offerings to the Group’s marketing and advertisingplatform. New entrants seeking to gain market share by introducing new technology, products orservices may make it more difficult for the Group to sell its products and services and could result inincreased pricing pressure, reduced profit margins, increased sales and marketing expenses or the lossof market share or expected market share, any of which may significantly harm the Group’s business,operating results and financial condition.Moreover, the Group may experience cost increases or unexpected costs which may also negativelyimpact on operating results, including increased or unexpected costs related to:●●●●the implementation of new data centres and expansion of existing data centres, as well asincreased data centre rent, hosting and bandwidth costs;the replacement of ageing equipment;acquiring key technologies to support or expand the Group’s mobile marketing services solution;andacquiring new technologies to comply with newly implemented regulations.Any unanticipated costs associated with the foregoing items would have a material adverse effect onbusiness, operating results and the financial condition of the Group.Acquisitions or investments may be unsuccessful and may divert management’s attention and consumesignificant resources.The Directors seek to evaluate acquisitions or make investments in other businesses, or acquireindividual products and technologies. Any future acquisition or investment may require the Group touse significant amounts of cash, issue potentially dilutive equity securities or incur debt. In addition,acquisitions involve numerous risks, any of which could harm the Group’s business, including:●●●●●●difficulties in integrating the operations, technologies, services and personnel of any acquiredbusinesses;cultural challenges associated with integrating employees from the acquired company into theGroup’s organisation;ineffectiveness or incompatibility of acquired technologies or services;additional financing required to make contingent payments;potential loss of key employees of acquired businesses;inability to maintain the key business relationships and the reputations of acquired businesses;39

●●●●●●diversion of management’s attention from other business concerns;inability to maintain internal standards, controls, procedures and policies, which could affect theGroup’s ability to receive an unqualified attestation from independent accountants regarding theeffectiveness of reporting procedures of the Group;litigation for activities of the acquired companies, including claims from dismissed employees,customers, former shareholders or other third parties;in the case of foreign acquisitions, the need to integrate operations across different cultures andlanguages and to address the particular economic, currency, political and regulatory risksassociated with specific countries;failure to successfully further develop the acquired technology; andincreased fixed costs.Any of the above difficulties, if not overcome, may undermine the success of an acquisition or mergerand therefore could have a significant adverse impact on the financial position of the Group.The Group depends on the services of key personnel to implement its strategy. If the Group loses theservices of its key personnel or is unable to attract and retain other qualified personnel, the Group may beunable to implement its strategy.The Directors believe that the future success of the Group’s business depends on the services of anumber of key management and operating personnel, including Panagiotis Dimitropoulos (theFounder of the Group), Konstantinos Korletis (Chief Executive Officer), Veronica Nocetti (FinanceDirector), Kostas Papoutsis (Chief Operating Officer), Thodoris Kondilis (Chief Development Officer)and Michael Zervakis (Chief Technology Officer). The Group does not maintain any key-person lifeinsurance policies. Some of these key employees have strong relationships with customers and businessmay be harmed if these employees leave the Group and the Group is unable to hire suitablereplacements within the applicable notice periods. The loss of members of the Group’s keymanagement and certain other members of its operating personnel could materially adversely affectbusiness, operating results and the financial condition of the Group. For instance, although the ChiefExecutive Officer has recently been successfully treated for a potentially life-threatening illness, therecan be no assurance that there will not be relapse or recurrence of his illness which could prevent himfrom or impair him in discharging his functions as the Chief Executive Officer of the Company.In addition, the Directors’ ability to manage the Group’s growth depends, in part, on their ability toidentify, hire and retain additional qualified employees, including technically skilled development andengineering staff. The Group faces intense competition for qualified individuals from numeroustechnology, marketing and mobile software and service companies. Competition for qualifiedpersonnel is particularly intense in many of the large, international metropolitan markets in which theGroup has offices. The Group requires a mix of highly talented engineers as well as individuals in salesand support who are familiar with the marketing and advertising industry. In addition, new hires insales positions require significant training and may, in some cases, take more than a year before theyachieve full productivity. Recent sales force hires and planned hires may not become as productive asthe Directors would like, and the Group may be unable to hire sufficient numbers of qualifiedindividuals in the future in the markets where it does business. Further, given the rapid pace of theGroup’s expansion to date, the Group may be unable to attract and retain suitably qualified individualswho are capable of meeting the growing creative, operational and managerial requirements of theGroup, or may be required to pay increased compensation in order to do so. If the Group isunsuccessful in attracting and retaining these key personnel, the Directors’ ability to operate theGroup’s business effectively would be negatively affected and the business, operating results andfinancial condition of the Group would be adversely affected.The Group may need to raise additional capital to grow its business, and the Group may not be able toraise capital on terms acceptable to it or at all.The operation of the Group’s business and its efforts to grow the business further will requiresignificant cash outlays and commitments. The timing and amount of the Group’s cash needs may varysignificantly from current expectation depending on numerous factors, including but not limited to:40

●●●●market acceptance of its mobile marketing and advertising services;the need to adapt to changing technologies and technical requirements;the need to adapt to changing regulations requiring changes to processes or platform; andthe existence of opportunities for expansion.If existing working capital, borrowings available under existing loan agreements and the net proceedsfrom the Placing are not sufficient to meet cash requirements, the Group will need to seek additionalcapital, potentially through debt, or other equity financings to fund growth earlier than presentlyanticipated. The Group may not be able to raise cash on terms acceptable to the Group or at all.Financing, if available, may be on terms that are dilutive to Shareholders, and the prices at which newinvestors would be willing to purchase the Group’s securities may be lower than the Placing Price ofthe Ordinary Shares. The holders of new securities may also receive rights, preferences or privileges thatare senior to those of existing Shareholders. If new sources of financing are required but areinsufficient or unavailable, the Directors would be required to modify the Group’s growth andoperating plans to the extent of available funding, which could harm the Group’s ability to grow itsbusiness in accordance with its plans.The Group’s business involves the use, transmission and storage of confidential information, and the failureto properly safeguard such information could result in significant reputational harm and monetarydamages.The Group’s business activities involve the use, transmission and storage of confidential information.While the Directors believe that the Group takes reasonable steps to protect the security, integrity andconfidentiality of the information the Group collects and stores, there is no guarantee that inadvertentor unauthorised disclosure will not occur or that third parties will not gain unauthorised access to thisinformation despite the Group’s efforts. For instance, during an inspection carried out in September2009, ADAE (the Greek data protection authority) identified certain weaknesses in the Group’s dataprotection systems. If such unauthorised disclosure or access does occur, the Group may be required,under existing and proposed laws, to notify persons whose information was disclosed or accessed. TheGroup may also be subject to claims of breach of contract for such disclosure, investigation andpenalties by regulatory authorities and potential claims by persons whose information was disclosed.The unauthorised disclosure of information may result in the termination of one or more of theGroup’s commercial relationships and/or a reduction in customer confidence and usage of the Group’sservices, which would have a material adverse effect on the business, operating results and financialcondition of the Group.Activities of customers could damage the Group’s reputation or give rise to legal claims against the Group.The Group’s customers’ promotion of their products and services may not comply with all applicablefederal, state and local laws, including, but not limited to, laws and regulations relating to mobilecommunications. Failure of customers to comply with such federal, state or local laws or the Group’spolicies could damage its reputation and adversely affect business, operating results or financialcondition. The Directors cannot predict whether the Group’s role in facilitating customers’ marketingactivities would expose the Group to liability under these laws. Any claims made against the Groupcould be costly and time-consuming to defend. If the Group is exposed to this kind of liability, theGroup could be required to pay substantial fines or penalties, redesign business methods, discontinuesome of its services or otherwise expend resources to avoid liability.Potential infringements of intellectual property rights by the Group’s customers may result in liabilities forthe Group.The Group may be held liable to third parties for content in the advertising that the Group delivers onbehalf of its customers if the music, artwork, text or other content involved violates the copyright,trademark or other intellectual property rights of such third parties or if the content is defamatory,deceptive or otherwise violates applicable laws or regulations. Any claims or counterclaims could betime consuming, result in costly litigation and divert management’s attention.41

If the Group is unable to protect its intellectual property and proprietary rights, the Group’s competitiveposition and business could be harmed.Although each employee of the Group is subject to an agreement pursuant to which all rights tointellectual property which is developed by them are assigned to the Group, such intellectual propertyrights may still be held to be the property of the employees. In addition, the Group has numerous layersof physical security and encryption to secure its software assets. However, if any of these levels ofprotection or security were to fail, the Directors cannot guarantee that the Group’s business andreputation would misappropriate the Group’s intellectual property. Historically, the Group’sconsultancy agreements did not include sufficient provisions to ensure that the ownership of theintellectual property rights created by the consultants was assigned to the Group. Although, the Groupsubsequently entered into assignment agreements with its consultants, there is a potential risk thatsome consultants may dispute the validity of such assignment.Software and components that the Group incorporates into its mobile marketing services may containerrors or defects, which could have an adverse effect on business.The Group uses a combination of custom and third party software, including open source software, inbuilding the Group’s mobile marketing services platform. Although the Group tests certain softwarebefore incorporating it into the platform, the Directors cannot guarantee that all of the third partytechnology that the Group incorporates will not contain errors, defects or bugs. In addition, should anythird party licensor of the Group terminate its licence of its product to the Group, it could bedetrimental to the Group’s own rights.If errors or defects occur in products and services that the Group utilises in its mobile marketingservices platform, it could result in damage to the Group’s reputation, lost revenues and diverteddevelopment resources.The Group uses data centres to deliver its platform and services. Any disruption of service at thesefacilities could harm the Group’s business.The Group hosts its services and serves all of its customers from two data centre facilities located inLuxembourg and Greece. The Group does not control the operations at these third party facilities. Allof these facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires,terrorist attacks, power losses, telecommunications failures and similar events. They could also besubject to break-ins, computer viruses, denial of service attacks, sabotage, intentional acts of vandalismand other misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to closethe third party facilities without adequate notice or other unanticipated problems could result inlengthy interruptions in the Group’s services. Although the Group maintains off-site tape backups ofcustomers’ data, the Group does not currently operate or maintain a backup data centre for any of itsservices, which increases the Group’s vulnerability to interruptions or delays in service. Interruptionsin services might harm the Group’s reputation, reduce revenue, cause the Group to incur financialpenalties, subject the Group to potential liability and cause customers to terminate their contracts.The Group may have exposure to greater than anticipated tax liabilities.The Group’s future income taxes could be adversely affected by earnings being lower than anticipatedin jurisdictions where the Group has lower statutory tax rates and higher than anticipated injurisdictions where the Group has higher statutory tax rates, by changes in the valuation of deferredtax assets and liabilities or changes in tax laws, regulations, accounting principles or interpretationsthereof. In addition, there is a risk that amounts paid or received under arrangements between variousinternational subsidiaries in the past and/or the future could be deemed for transfer tax purposes to belower or higher than the Group previously recognised or expected to recognise.Determination of tax liability is always subject to review by applicable tax authorities. Any adverseoutcome of such a review could have a negative effect on the operating results and financial conditionof the Group. In addition, the determination of worldwide provision for income taxes and other taxliabilities requires significant judgment, and there are many transactions and calculations where theultimate tax determination is uncertain. Although the Directors believe the Group’s estimates arereasonable, the ultimate tax outcome may differ from the amounts recorded in the Group’s financial42

statements and may materially affect financial results of the Group in the period or periods for whichsuch determination is made.Continuing unfavourable global economic conditions could have a material adverse effect on our business,operating results and financial condition.The crisis in the financial and credit markets has led to a global economic slowdown, with numerouseconomies showing significant signs of weakness. If the economies in which the Group operatesweaken further or fail to improve, customers may reduce or postpone their marketing and advertisingspending significantly, which would materially adversely affect business, operating results and financialcondition of the Group. Several credit rating agencies in recent months have downgraded the creditrating of Greek government debt, prompting additional investor concerns with respect to macroeconomicissues. Were the Greek economy to be affected by an economic crisis similar to thoseexperienced in, for example, Iceland, the ability of the Group’s businesses to have access to an efficientbanking and financial system may be impaired.Risks Related to the Mobile Communications IndustryThe mobile advertising or marketing market may deteriorate or develop more slowly than expected, anyof which could harm the Group’s business.If the market for mobile advertising or marketing deteriorates, or develops more slowly than theDirectors expect, the Group’s business could suffer. Future success is highly dependent on an increasein the use of mobile communications, the commitment of advertisers and marketers to mobilecommunications as an advertising and marketing medium, the willingness of potential clients tooutsource their mobile advertising and marketing needs, and the Group’s ability to sell technologyservices to advertising agencies and brands. Due to the rapidly evolving nature of the mobileadvertising and marketing market, future demand and market acceptance for mobile advertising,marketing and technology services is uncertain. Many of the Group’s current or potential clients havelittle or no experience of using mobile communications for advertising or marketing purposes and haveallocated only a limited portion of their advertising or marketing budgets to mobile communicationsadvertising or marketing. There is no certainty that they will continue to allocate at least as much ormore funds for innovation in the future, if any. Also, the Group must compete with traditionaladvertising media, including television, print, radio and outdoor advertising, for a share of its clients’total advertising budgets.Businesses, including current and potential clients, may find mobile advertising or marketing to be lesseffective than traditional advertising media or marketing methods or other technologies for promotingtheir products and services, and therefore the market for mobile communications advertising,marketing and technology services may deteriorate or develop slower than expected. These challengescould significantly undermine the commercial viability of mobile advertising and seriously harm thebusiness, operating results and financial condition of the Group.Changes in the wireless communications industry may adversely affect the Group’s business.The wireless communications industry may experience significant growth and change which couldadversely affect the Group’s business. Technologies such as 4G mobile broadband, Wi-Fi, worldwideinteroperability for microwave access, or WiMAX, and VOIP are challenging existing wirelesscommunication technologies. The Directors believe the Group will be able to adapt to futuretechnologies changes; however, in order to do so, the Group may require significant additionalinvestment in order to keep pace with such technological innovation. This could have an adverse effecton the business, operating results and financial condition of the Group if it were unable to raise thenecessary finance.Changes in government regulation of the wireless communications industry may adversely affect theGroup’s business.Depending on the products and services that they offer, mobile data service providers are or may besubject to regulations and laws applicable to providers of mobile, internet and VOIP services bothdomestically and internationally.43

The application of existing laws and regulations relating to issues such as user privacy, defamation,pricing, advertising, gambling, promotions, consumer protection, content regulation,telecommunications and intellectual property ownership to wireless industry providers and platformsin many instances is unclear or unsettled.Further, the application to the Group of existing laws regulating or requiring licences for certainbusinesses of advertisers can be unclear. It is possible that laws and regulations may be adopted in thecountries where the Group operates that may be inconsistent and that could restrict the wirelesscommunications industry, including laws and regulations regarding lawful interception of personal data,taxation, content suitability, content marketing and advertising, copyright, distribution and antitrust.The growth and development of the market for electronic storage of personal information may promptcalls for more stringent consumer protection laws that may impose additional burdens, including costs oncompanies such as the Group who store personal information. The Directors anticipate that regulationof the Group’s industry will increase and that the Directors will be required to devote legal and otherresources to address this regulation. Changes in current laws or regulations or the imposition of new lawsand regulations regarding the media and wireless communications industries may lessen the growth ofwireless communications services and may materially reduce the Group’s ability to increase or maintainsales of mobile marketing services. The Group may incur substantial liabilities for expenses necessary tocomply with these laws and regulations, or to investigate or defend litigation in respect of suchcompliances as well as incur potentially substantial penalties for any failure to comply. Compliance withthese laws and regulations may also cause us to change or limit the Group’s business practices in a manneradverse to the Group’s business.The Group could be adversely affected if domestic or international legislation or regulations are expandedto require changes in business practices or if governing jurisdictions interpret or implement their legislationor regulations in ways that negatively affect its business. Many of the proposed laws or regulations are inearly stages and the Directors cannot yet determine the impact that these regulations may have on theGroup’s business over time. The Directors cannot assure you that the Group’s practice with respect to thesematters will be found sufficient to protect the Group from liability or adverse publicity in this area.In addition, because various foreign jurisdictions have different laws and regulations concerning thestorage and transmission of personal information, the Group may face unknown requirements that posecompliance challenges in new international markets that the Group seeks to enter. Such variation couldsubject the Group to costs, liabilities or negative publicity that could impair its ability to expand operationsinto some countries and therefore limit future growth. A number of studies have examined the healtheffects of mobile device use, and the results of some of the studies have been interpreted as evidence thatmobile device use causes adverse health effects. The establishment of a link between the use of mobiledevices and health problems, or any media reports suggesting such a link, could increase governmentregulation of, and reduce demand for, mobile devices and, accordingly, the demand for mobile marketingservices, which could harm the business, operating results and financial condition of the Group.The gathering, transmission, storage and sharing or use of personal information could give rise toliabilities or additional costs of operation as a result of governmental regulation, legal requirements, civilactions or differing views of personal privacy rights.The Group transmits and stores a large volume of personal information in the course of providing itsservices. International laws and regulations govern the collection, use, retention, sharing and securityof data that the Group receives from customers and their users. The Group may be contractually liableto indemnify and hold harmless customers from the costs or consequences of inadvertent orunauthorised disclosure of their customers’ personal data which the Group stores or handles as part ofproviding its services. The interpretation and application of privacy, data protection and data retentionlaws and regulations are currently unsettled internationally, particularly with regard to location-basedservices, use of customer data to target advertisements and communication with consumers via mobiledevices. Such laws may be interpreted and applied inconsistently from country to country andinconsistently with current data protection policies and practices. Complying with these varyinginternational requirements could cause the Group to incur substantial costs or require the Group tochange business practices in a manner adverse to its business, operating results or financial condition.As privacy and data protection have become more sensitive issues, the Group may also become exposedto potential liabilities as a result of differing views on the privacy of personal information. These andother privacy concerns, including security breaches, could adversely impact the business, operatingresults and financial condition of the Group.44

Risks Related to the Placing and Admission and the Ordinary SharesThere has been no prior public market in the Ordinary Shares, the trading price of the Ordinary Shares islikely to be volatile, and you might not be able to sell your shares at or above the Placing Price.An active or liquid market in the Ordinary Shares may not develop upon completion of the Placing or,if it does develop, it may not be sustainable. The Placing Price may not be indicative of the market priceof the Ordinary Shares after Admission and therefore it may vary from the market price of theOrdinary Shares after Admission. As a result of these and other factors, you may be unable to resellyour Ordinary Shares at or above the Placing Price.The following factors, in addition to other risks described in this document, may have a significanteffect on the market price of the Ordinary Shares:●●●●●●●●●●variations in operating results;actual or anticipated changes in the estimates of operating results or changes in stock marketanalyst recommendations regarding the Ordinary Shares, other comparable companies or theindustry generally;macro-economic conditions in the numerous countries in which the Group does business;foreign currency exchange fluctuations and the denominations in which the Group conductsbusiness and holds cash reserves;market conditions in the industry, the industries of customers and the economy as a whole;actual or expected changes in the Group’s growth rates or competitors’ growth rates;changes in the market valuation of similar companies;trading volume of the Ordinary Shares;sales of the Ordinary Shares by the Directors or Shareholders; andadoption or modification of regulations, policies, procedures or programs applicable to theGroup’s business.In addition, if the market for technology stocks or the stock market in general experiences loss ofinvestor confidence, the trading price of the Ordinary Shares could decline for reasons unrelated to theGroup’s business, financial condition or operating results. The trading price of the Ordinary Sharesmight also decline in reaction to events that affect other companies in the industry, even if these eventsdo not directly affect the Group. Each of these factors, among others, could harm the value of yourinvestment in the Ordinary Shares. In the past, following periods of volatility in the market, securitieslitigation has often been instituted against companies. Such litigation, if instituted against the Group,could result in substantial costs and diversion of management’s attention and resources, which couldmaterially and adversely affect the business, operating results and financial condition of the Group.Future equity issuances or sales of the Ordinary Shares in the public market could cause the share priceto decline.If the Company issues equity securities in the future or if Shareholders sell a substantial number of theOrdinary Shares in the public market after the Admission, or if there is a perception that these sales orissuances might occur, the market price of the Ordinary Shares could decline.The Company may issue Ordinary Shares, or other securities, from time to time as consideration forfuture acquisitions and investments. In the event any such acquisition or investment is significant, thenumber of Ordinary Shares, or the number or aggregate principal amount, as the case may be, of othersecurities that the Company may issue may in turn be significant, causing further downward pressureon the Company’s share price.Mr Panagiotis Dimitropoulos will continue to have substantial control over the Group after the Placingand will be able to exercise significant influence over matters subject to Shareholder approval.Mr Panagiotis Dimitropoulos will beneficially own approximately 70.63 per cent. of the OrdinaryShares as at Admission. Accordingly, he will be able to exercise influence over all matters requiring45

Shareholder approval, including the election of Directors and approval of corporate transactions, suchas a merger or other sale of the Group or its assets, for the foreseeable future. This concentration ofownership could have the effect of delaying or preventing a change in control or otherwise discouraginga potential acquirer from attempting to obtain control of the Group, which in turn could have amaterial adverse effect on the market value of the Ordinary Shares.The Group’s management will have broad discretion over the use and investment of the net proceeds thatit receives in the Placing and might not apply the proceeds in ways that increase the value of yourinvestment.The management will have broad discretion over the use and investment of the net proceeds from thePlacing and Shareholders will be relying on the judgment of the management regarding the applicationof these net proceeds. The management intends to use the net proceeds from the Placing for generalcorporate purposes and working and investment capital, including funding the strategic plan for globalexpansion and making further investments in technology solutions. The Group may also use a portionof the net proceeds to acquire other businesses, products or technologies. The Group does not,however, have any agreements or commitments for any specific acquisitions. The management mightnot be able to yield a significant return, if any, on any investment of these net proceeds. You will nothave the opportunity to influence decisions on how the net proceeds from the Placing are used.If securities or industry analysts do not publish research or publish unfavourable or inaccurate researchabout the business, of the Group the share price and trading volume could decline.The trading market for the Ordinary Shares will depend, in part, on the research and reports thatsecurities or industry analysts publish about the Group or its business. The Directors may be unable tosustain coverage by well-regarded securities and industry analysts. If either none or only a limitednumber of securities or industry analysts maintain coverage of the Company, or if these securities orindustry analysts are not widely respected within the general investment community, the trading pricefor the Ordinary Shares would be negatively impacted. In the event the Group obtains securities orindustry analyst coverage, if one or more of the analysts who cover the Company downgrade theOrdinary Shares or publish inaccurate or unfavourable research about the Group’s business, the shareprice would be likely to decline. If one or more of these analysts cease coverage of the Company or failto publish reports regularly, demand for the Ordinary Shares could decrease, which might cause theshare price and trading volume to decline.If the Group fails to maintain proper and effective internal controls, its ability to produce accurate andtimely financial statements could be impaired and investors’ views of the Group could be harmed.The Group has systems and controls in place to allow it to produce accurate and timely financialstatements. If any of these systems or controls were to fail the Group may be unable to produce interimand annual financial statements accurately or on a timely basis. As such, investors may have concernsboth over the lack of available financial information and the controls the Group has in place whichcould adversely affect the Company’s share price.The Company has never declared or paid dividends on the Ordinary Shares and it does not anticipatepaying dividends in the foreseeable future.The Company has never declared or paid cash dividends on the Ordinary Shares. The Directorscurrently intend to retain all available funds and any future earnings to support the operation of andto finance the growth and development of the business. Any future determination to declare cashdividends will be made at the discretion of the Board, subject to compliance with applicable laws andcovenants under current or future credit facilities, which may restrict or limit the ability to paydividends, and will depend on financial condition, operating results, capital requirements, generalbusiness conditions and other factors that the Board may deem relevant. The Directors do notanticipate paying any cash dividends on the Ordinary Shares in the foreseeable future. As a result, areturn on your investment will only occur if the share price appreciates.46

PART IIIFINANCIAL INFORMATIONSet out below is the text of a report by Ernst & Young LLP, covering the financial information of theGroup for the three years and six months ended 30 June 2010.SECTION A: ACCOUNTANTS’ REPORTERNST&YOUNGThe DirectorsInternetQ plc51 EastcheapLondon EC3M 1JPDear Sirs6 December 2010InternetQ plcWe report on the financial information for the years ended 31 December 2007, 2008 and 2009 and thesix months ended 30 June 2010 set out in Section B of Part III of the AIM Admission Document. Thisfinancial information has been prepared for inclusion in the AIM admission document dated6 December 2010 of InternetQ plc on the basis of the accounting policies set out in paragraph 2.2 ofSection B of this Part III. This report is required by Schedule Two of the AIM Rules for Companiesand is given for the purpose of complying with that schedule and for no other purpose.Save for any responsibility arising under Schedule Two of the AIM Rules for Companies to any personas and to the extent there provided, to the fullest extent permitted by law we do not assume anyresponsibility and will not accept any liability to any other person for any loss suffered by any suchother person as a result of, arising out of, or in connection with this report or our statement, requiredby and given solely for the purposes of complying with Schedule Two of the AIM Rules for Companies,consenting to its inclusion in the AIM admission document.We have not audited or reviewed the financial information for the 6 month period ended 30 June 2009and accordingly do not express an opinion thereon.ResponsibilitiesThe Directors of InternetQ plc are responsible for preparing the financial information on the basis ofpreparation set out in note 2.1 to the financial information and in accordance with InternationalFinancial Reporting Standards as adopted by the European Union.It is our responsibility to form an opinion as to whether the financial information gives a true and fairview, for the purposes of the AIM admission document, and to report our opinion to you.Basis of opinionWe conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the financial information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the financial informationand whether the accounting policies are appropriate to the entity’s circumstances, consistently appliedand adequately disclosed.47

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement whether caused by fraud or otherirregularity or error.Our work has not been carried out in accordance with auditing or other standards and practicesgenerally accepted in other jurisdictions and accordingly should not be relied upon as if it had beencarried out in accordance with those standards and practices.OpinionIn our opinion, the financial information gives, for the purposes of the AIM admission documentdated 6 December 2010, a true and fair view of the state of affairs of InternetQ plc as at the dates statedand of its profits, cash flows and recognised gains and losses/changes in equity for the periods thenended in accordance with International Financial Reporting Standards as adopted by the EuropeanUnion.DeclarationFor the purposes of paragraph (a) of Schedule Two of the AIM Rules for Companies we areresponsible for this report as part of the AIM admission document and declare that we have taken allreasonable care to ensure that the information contained in this report is, to the best of our knowledge,in accordance with the facts and contains no omission likely to affect its import. This declaration isincluded in the AIM admission document in compliance with Schedule Two of the AIM Rules forCompanies.Yours faithfullyErnst & Young LLP48

SECTION B: HISTORICAL FINANCIAL INFORMATIONINTERNETQ LIMITEDConsolidated income statements for the years ended 31 December 2007, 2008 and 2009 andperiods ended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)(Unaudited)01.01- 01.01- 01.01- 01.01- 01.01-Notes 31.12.2007 31.12.2008 31.12.2009 30.06.2009 30.06.2010Revenues 5 9,097,483 13,985,633 17,234,429 8,525,055 17,969,405Cost of revenues excluding exceptional costs 6 (4,057,460) (6,644,970) (7,375,429) (4,453,113) (10,132,628)Exceptional costs of revenues 6,23 ––––––––––––––––––––––––(734,525)–––––––––––––––––––––––––––––––––––Gross profit 5,040,023–––––––––––7,340,663–––––––––––9,124,475–––––––––––4,071,942–––––––––––7,836,777–––––––––––Other operating income 46,064 104,270 98,261 17,669 87,062Selling and distribution costs 6 (2,850,094) (5,463,868) (8,217,670) (4,906,857) (5,202,467)Administrative expenses 6 (990,729)–––––––––––(1,126,054)–––––––––––(1,252,882)–––––––––––(838,363)–––––––––––(968,324)–––––––––––Operating profit/(loss) 1,245,264–––––––––––855,011–––––––––––(247,816)–––––––––––(1,655,609)–––––––––––1,753,048–––––––––––Finance costs 7 (260,429) (336,140) (922,042) (605,824) (375,846)Finance income 7 30,683–––––––––––105,206–––––––––––79,228–––––––––––17,346–––––––––––55,463–––––––––––Profit/(loss) before tax 1,015,518–––––––––––624,077–––––––––––(1,090,630)–––––––––––(2,244,087)–––––––––––1,432,665–––––––––––Income tax 8 (198,414)–––––––––––(399,165)–––––––––––9,248–––––––––––(114,973)–––––––––––(445,779)–––––––––––Profit/(loss) after income tax 817,104 224,912 (1,081,382) (2,359,060) 986,886––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Attributable to:Equity holders of the parent 817,104 224,912 (1,081,382) (2,359,060) 986,886––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Earnings/(loss) per share (Basic and Diluted) 9 0.49 0.14 (0.65) (1.43) 0.60––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––The accompanying notes are an integral part of the consolidated financial statements.49

INTERNETQ LIMITEDConsolidated statements of comprehensive income for the years ended 31 December 2007, 2008 and2009 and periods ended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)(Unaudited)01.01- 01.01- 01.01- 01.01- 01.01-31.12.2007 31.12.2008 31.12.2009 30.06.2009 30.06.2010Profit/(loss) for the year 817,104–––––––––––224,912–––––––––––(1,081,382)–––––––––––(2,359,060)–––––––––––986,886–––––––––––Other comprehensive incomeExchange differences on translation offoreign operations (35,098)–––––––––––(212,964)–––––––––––36,044–––––––––––26,908–––––––––––(168,561)–––––––––––Other comprehensive income/(loss) for the year,net of tax (35,098)–––––––––––(212,964)–––––––––––36,044–––––––––––26,908–––––––––––(168,561)–––––––––––Total comprehensive income/(loss) for the year,net of tax 782,006 11,948 (1,045,338) (2,332,152) 818,325––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Attributable to:Equity holders of the parent 782,006 11,948 (1,045,338) (2,332,152) 818,325––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––The accompanying notes are an integral part of the consolidated financial statements.50

INTERNETQ LIMITEDConsolidated statements of financial position for the years ended 31 December 2007, 2008 and 2009 andperiods ended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)As at As at As at As at31 December 31 December 31 December 30 JuneNotes 2007 2008 2009 2010ASSETSNon-current assetsProperty, plant and equipment 10 646,474 856,059 896,269 938,795Investment properties 11 727,000 709,000 665,000 641,000Intangible assets 12 683,659 1,613,343 2,651,705 2,260,287Deferred tax asset 8 – – 339,089 339,089Other non-current financial assets 3,216 6,544 8,090 8,453––––––––––– ––––––––––– ––––––––––– –––––––––––Total non-current assets 2,060,349 3,184,946 4,560,153 4,187,624––––––––––– ––––––––––– ––––––––––– –––––––––––Current assetsTrade receivables 13 2,719,913 7,034,433 6,476,322 5,586,935Prepayments and other receivables 14 2,241,000 1,336,280 1,796,452 2,111,709Cash and cash equivalents 15 687,237 884,113 1,122,991 2,841,095Restricted cash 15 271,245 240,579 205,990 443,015––––––––––– ––––––––––– ––––––––––– –––––––––––Total current assets 5,919,395 9,495,405 9,601,755 10,982,753––––––––––– ––––––––––– ––––––––––– –––––––––––TOTAL ASSETS 7,979,744 12,680,351 14,161,908 15,170,378––––––––––– ––––––––––– ––––––––––– –––––––––––EQUITY AND LIABILITIESEquity attributable to equity holders of theparent companyShare capital 16 24,016 24,016 24,016 24,016Share premium 16 2,428,698 2,428,698 2,428,698 2,428,698Exchange differences (1,312) (214,276) (178,232) (346,793)Retained earnings 1,003,657 1,228,569 147,187 1,134,073––––––––––– ––––––––––– ––––––––––– –––––––––––Total equity 3,455,059 3,467,007 2,421,669 3,239,994––––––––––– ––––––––––– ––––––––––– –––––––––––Non-current liabilitiesInterest-bearing loans and borrowings 17 749,100 1,147,300 1,128,834 1,057,101Employee benefits liability 20 9,769 9,859 13,448 14,697Deferred tax liability 8 131,876 207,530 121,965 93,563––––––––––– ––––––––––– ––––––––––– –––––––––––Total non-current liabilities 890,745 1,364,689 1,264,247 1,165,361––––––––––– ––––––––––– ––––––––––– –––––––––––Current liabilitiesTrade payables 18 897,780 2,605,295 3,497,288 4,548,480Interest-bearing loans and borrowings 17 2,054,511 3,827,856 3,924,773 3,480,756Current portion of interest-bearing loansand borrowings 17 50,900 101,800 143,466 143,466Derivatives 62,500 23,823 20,044 33,698Income tax payable 227,402 350,300 476,351 792,614Accruals and other current liabilities 19 340,847 939,581 2,414,070 1,766,009––––––––––– ––––––––––– ––––––––––– –––––––––––Total current liabilities 3,633,940 7,848,655 10,475,992 10,765,023––––––––––– ––––––––––– ––––––––––– –––––––––––Total liabilities 4,524,685 9,213,344 11,740,239 11,930,384––––––––––– ––––––––––– ––––––––––– –––––––––––TOTAL EQUITY AND LIABILITIES 7,979,744 12,680,351 14,161,908 15,170,378––––––––––– ––––––––––– ––––––––––– –––––––––––The accompanying notes are an integral part of the consolidated financial statements.51

INTERNETQ LIMITEDConsolidated statements of changes in equity for the years ended 31 December 2007, 2008 and 2009 andperiods ended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)Share Share Exchange Retainedcapital premium differences earnings Total equityBalance at 1 January 2007 24,016 2,428,698 33,786 186,553 2,673,053––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Profit after income tax – – – 817,104 817,104Other comprehensive income/(loss) – – (35,098) – (35,098)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total comprehensive income – – (35,098) 817,104 782,006––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 31 December 2007 24,016 2,428,698 (1,312) 1,003,657 3,455,059––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Profit after income tax – – – 224,912 224,912Other comprehensive income/(loss) – – (212,964) – (212,964)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total comprehensive income – – (212,964) 224,912 11,948––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 31 December 2008 24,016 2,428,698 (214,276) 1,228,569 3,467,007––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Profit after income tax – – – (1,081,382) (1,081,382)Other comprehensive income/(loss) – – 36,044 – 36,044––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total comprehensive income – – 36,044 (1,081,382) (1,045,338)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 31 December 2009 24,016 2,428,698 (178,232) 147,187 2,421,669––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Profit after income tax – – – 986,886 986,886Other comprehensive income/(loss) – – (168,561) – (168,561)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total comprehensive income – – (168,561) 986,886 818,325––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 30 June 2010 24,016 2,428,698 (346,793) 1,134,073 3,239,994––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 1 January 2009 24,016 2,428,698 (214,276) 1,228,569 3,467,007––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Profit after income tax (unaudited) – – – (2,359,060) (2,359,060)Other comprehensive income/(loss)(unaudited) – – 26,908 – 26,908––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total comprehensive income (unaudited) – – 26,908 (2,359,060) (2,332,152)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Balance at 30 June 2009 (unaudited) 24,016 2,428,698 (187,368) (1,130,491) 1,134,855––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––The accompanying notes are an integral part of the consolidated financial statements.52

INTERNETQ LIMITEDConsolidated cash flow statements for the years ended 31 December 2007, 2008 and 2009 and periodsended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 JuneNotes 2007 2008 2009 2009 2010Cash Flows from Operating ActivitiesProfit/(loss) before income taxes 1,015,518 624,077 (1,090,630) (2,244,087) 1,432,665Adjustments for:Depreciation and amortisation 6 579,176 1,000,250 1,497,359 706,303 862,067Valuation of investment properties 11 105,854 18,000 44,000 – 24,000Gain on disposal of property, plant,equipment – – (5,468) – (6,055)Finance income 7 (17,564) (38,295) (20,322) (14,332) (15,932)Finance costs 7 202,006 322,187 433,598 224,253 262,848Valuation of derivatives 7 23,971 (38,678) (3,780) (1,890) 13,655Allowance for doubtful accountsreceivable 14 200,000 58,571 44,417 – –Provision for employee benefits liability 20 6,228–––––––––––9,303–––––––––––15,413–––––––––––7,707–––––––––––19,500–––––––––––Profit before working capital changes 2,115,189–––––––––––1,955,415–––––––––––914,587–––––––––––(1,322,046)–––––––––––2,592,748–––––––––––(Increase)/decrease in:Trade receivables (355,202) (4,314,520) 558,511 2,777,841 889,385Prepayments and other receivables (736,717) 846,148 (504,589) (127,952) (315,254)Increase/(decrease) in:Trade payables (394,391) 1,707,515 891,993 594,363 1,051,192Accruals and other current liabilities (44,651) 598,736 1,474,089 390,575 (648,061)Income taxes paid (20,705) (200,614) (289,499) – (157,919)Interest paid (202,006) (322,187) (433,598) (224,253) (262,848)Payment of employee benefits liability 20 (3,357) (9,212) (11,824) (6,174) (18,251)(Increase)/decrease in other non-currentassets 3,450–––––––––––(3,328)–––––––––––(1,546)–––––––––––(1,546)–––––––––––(363)–––––––––––Net Cash from Operating Activities 361,610–––––––––––257,953–––––––––––2,598,124–––––––––––2,080,808–––––––––––3,130,629–––––––––––Cash Flows from Investing ActivitiesCapital expenditure for property, plantand equipment 10 (613,075) (549,675) (424,345) (147,875) (278,453)Proceeds from disposals of property, plantand equipment 45,129 – 38,305 – 42,193Increase in intangible assets 12 (667,201) (1,589,844) (2,184,278) (1,615,775) (270,861)Capital expenditure for investment 11 (135,854) – – – –properties(Increase)/decrease in restricted bank accounts (166,834) 30,666 34,589 (264,302) (237,025)Interest and related income received 17,564–––––––––––38,295–––––––––––20,322–––––––––––14,332–––––––––––15,932–––––––––––Net Cash used in Investing Activities (1,520,271)–––––––––––(2,070,558)–––––––––––(2,515,407)–––––––––––(2,013,620)–––––––––––(728,214)–––––––––––Cash Flows from Financing ActivitiesNet change in borrowings 976,038–––––––––––2,222,445–––––––––––120,117–––––––––––(237,644)–––––––––––(515,750)–––––––––––Net Cash from Financing Activities 976,038–––––––––––2,222,445–––––––––––120,117–––––––––––(237,644)–––––––––––(515,750)–––––––––––Effect of exchange rates’ changes on flowsand cash (35,098) (212,964) 36,044 26,908 (168,561)Net increase/(decrease) in cash and cashequivalents (217,721) 196,876 238,878 (143,548) 1,718,104Cash and cash equivalents at beginningof year 15 904,958 687,237 884,113 884,113 1,122,991––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Cash and cash equivalents at end of year 15 687,237 884,113 1,122,991 740,565 2,841,095––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––The accompanying notes are an integral part of the consolidated financial statements.53

INTERNETQ LIMITEDNotes to the historical financial information for the years ended 31 December 2007, 2008 and 2009and periods ended 30 June 2009 and 2010(Amounts in Euro, except share, per share data and unless otherwise stated)1. Corporate InformationINTERNETQ LIMITED (hereinafter referred to as “INTERNETQ LIMITED” or the “Company”),was incorporated in England and Wales on 19 July 2005 under the Companies Act 1985 (Company’sNo. 5512988) as a private limited company. The Company’s registered office is located in BroadgateTower Third Floor, 20 Primrose street London EC2A 2RS United Kingdom. The Company’s keyshareholder is Mr. Panagiotis Dimitropoulos, holding the 59.73 per cent. of the voting shares.INTERNETQ LIMITED and its subsidiaries (hereinafter the “Group”) are mainly engaged in tradingand development of software and related products and services used in wireless communication andtelecommunication. Moreover, the Group’s operations involved export and import of the technicalequipment and software required for the set-up, maintenance, repair, technical service, support andassistance activities for the mentioned purposes and all types of consulting relating to such softwareand products mentioned above, and to provide relative support services including specialized trainingand education to the consumers and their personnel regarding the above stated activities.The Group’s number of employees as at 30 June 2010, amounted to 65 (2009:59, 2008:48, 2007:34).The activities of the Group are described in notes 2.1(d) and 5.2.1 Basis of Preparation(a) Basis of preparation and statement of compliance: The accompanying consolidated financialstatements have been prepared under the historical cost convention except for investmentproperties and derivative financial instruments that have been measured at fair value. Thefinancial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) as endorsed by the European Union (EU).The preparation of consolidated financial statements, in accordance with IFRS as endorsed bythe EU, requires the use of critical accounting estimates. It also requires management to exerciseits judgment in the process of applying the accounting policies which have been adopted. Theareas involving a higher degree of judgment or complexity, or areas where assumptions andestimates are significant to the consolidated financial statements are disclosed in Note 3.(b)Statutory Financial Statements: The Company maintains its accounting records and prepares itsfinancial statements for statutory purposes in accordance with United Kingdom GeneralAccepted Accounting Principles (UK GAAP), the Companies Act 1985 for the years ended up to31 December 2008, IFRS and the Companies Act 2006 for the year ended 31 December 2009.Accordingly, the subsidiaries of the Company prepare their financial statements for statutorypurposes in accordance with the applicable laws and legislations of the countries of theirincorporation. For the preparation of the accompanying consolidated financial statements, theCompany’s and its subsidiaries statutory financial statements have been appropriately adjustedand reclassified to conform with the IFRSs.The Company did not prepare or file consolidated financial statements under UK GAAP on thebasis of the exemption provided in section 248 of the Companies Act 1985 for medium sizedgroups. As a result the financial information does not include a reconciliation of the equity of theGroup as at 1 January 2007 and 31 December 2008 and of its total comprehensive income for theyear ended 31 December 2008, from previous UK GAAP to IFRS. The Company did prepareconsolidated financial statements under IFRS for the year ended 31 December 2009.(c)Approval of Financial Statements: The Board of Directors of the Company approved theconsolidated financial information for the year ended 31 December 2007, 2008 and 2009 and theperiod ended 30 June 2010, on 29 October 2010.54

(d)Basis of Consolidation: The consolidated financial statements include the financial statements ofINTERNETQ LIMITED and its subsidiaries. The financial statements of the subsidiaries areprepared for the same reporting period as the parent company, using consistent accountingpolicies. All intercompany balances, transactions, income and expense, and profits and lossesresulting from intra-group transactions that are recognized in assets, have been eliminated in theconsolidation. The Company’s directly and indirectly wholly owned subsidiaries as at31 December 2009, 2008 and 2007 and as at 30 June 2010 are listed below:Ownership interestCountry ofEntity incorporation 31.12.2007 31.12.2008 31.12.2009 30.06.2010Internet Q Telecommunicationand internet services S.A Greece 100% 100% 100% 100%Escape CommunicationsTrading Limited Cyprus 100% 100% 100% 100%Acalendra Enterprises Limited Cyprus 100% 100% 100% 100%Internet Q Kazakhstan LLC Kazakhstan – 100% 100% –Internet Q Ukraine LLC Ukraine – 100% 100% 100%Internet Q Belgrade Ltd Serbia – 100% – –Internetq CommunicationServices Trading LLC Turkey – 99.98% 99.98% 99.98%InternetQ Poland SPzoo Poland – – 100% 100%Mobile Dialogue SPZoo Poland – – 100%Internet Q DO BrazilAtividates de Internet LTDA Brazil – – – 100%Internet Q Telecommunication and internet services S.A. was incorporated in Greece, in March2000, and its principal activities, in accordance with Article 3 of its Articles of Incorporation, isto engage in businesses of trading and development of software and related products and servicesused in wireless communication and telecommunication and to export and import of the technicalequipment and software required for the set-up, maintenance, repair, technical service, supportand assistance activities for the purposes mentioned and consulting relating to such software andproducts above mentioned, and to provide and install various other support services includingspecialized training and education to the consumers and their personnel regarding the abovestated activities. The Company holds directly 100 per cent. of voting shares.Escape Communications Trading Limited was incorporated in Cyprus on 30 March 1999 and itsprincipal activities are relevant to rendering of internet services, audio text and SMS services,media buying and programming and the provision of bandwidth lease services. The Companyholds indirectly 100 per cent. of voting shares.Acalendra Enterprises Limited was incorporated in Cyprus on 22 April 2007, as a wholly ownedsubsidiary of Escape Communication Trading Limited, and operates in the investmentproperties business.Internet Q Kazakhstan LLC was incorporated on 9 December 2008, as a wholly owned subsidiaryof Internet Q Telecommunication and internet services S.A, in Almaty of Kazakhstan and itsprincipal activities are the development, implementation, and support of internet solutions.Internet Q Ukraine LLC was incorporated on 15 September 2008, as a wholly owned subsidiaryof Internet Q Telecommunication and internet services S.A in Kiev of Ukraine and its principalactivities consists of rendering telecommunication services and organising the advertisingcampaigns through the mass media.Internet Q Belgrade Ltd was incorporated on 6 February 2008, as a wholly owned subsidiary ofInternet Q Telecommunication and internet services S.A, in Belgrade of Serbia and its principalactivities are the rendering of telecommunication services. During 2009 Internet Q Belgrade Ltdwas liquidated.Internetq Communication Services Trading LLC was incorporated on 16 July 2008, as a subsidiaryof Internet Q Telecommunication and internet services S.A, in Istanbul of Turkey. Its principal55

activities refer to the rendering of telecommunication services and value added services via GSMoperators. Internet Q Telecommunication and internet services S.A holds a participation of99.98 per cent., while the remaining percentage of 0.02 per cent. is controlled by Mr. PanagiotisDimitropoulos, the Company’s key shareholder. As at the reporting dates, the non controllinginterest were wholly immaterial for the Group’s financial statements and therefore, they were notaccounted for.InternetQ Poland SPzoo was incorporated on 9 January 2009, as a subsidiary of Internet QTelecommunication and internet services S.A, in Warszawa of Poland. Its principal activities referto rendering of internet and telecommunication services.Mobile Dialogue SPzoo was incorporated on 9 January 2010 as a subsidiary of Internet QTelecommunication and internet services S.A, in Warszawa of Poland. Its principal activities referto rendering of internet and telecommunication services.Internet Q DO Brazil Atividates de Internet LTDA was incorporated on 9 February 2010 as asubsidiary of Internet Q Telecommunication and internet services S.A, in Sao Paulo of Brazil. Itsprincipal activities refer to rendering of internet and telecommunication services. Internet QTelecommunication and internet services S.A holds a participation of 99.99 per cent., while theremaining percentage of 0.01 per cent. is controlled by Mr. Panagiotis Dimitropoulos, theCompany’s key shareholder. As at the reporting dates, the non controlling interest were totallyimmaterial for the Group’s financial statements and therefore, they were not accounted for.Subsidiaries are consolidated from the date on which control is transferred to the Group and ceaseto be consolidated from the date on which control is transferred out of the Group. When there isa loss of control of a subsidiary the consolidated financial statements include the results for thepart of the reporting period during which the parent had control.A change in the ownership interest of a subsidiary, without a change of control, is accounted foras an equity transaction. Losses are attributed to the non-controlling interest even if that resultsin a deficit balance.If the Group loses control over a subsidiary, it:● Derecognises the assets (including goodwill) and liabilities of the subsidiary● Derecognises the carrying amount of any non-controlling interest● Derecognises the cumulative translation differences, recorded in equity● Recognises the fair value of the consideration received● Recognises the fair value of any investment retained● Recognises any surplus or deficit in profit or loss● Reclassifies the parent’s share of components previously recognised in other comprehensiveincome to profit or loss.2.2 Summary of Significant Accounting PoliciesThe Group adopted the following new and amended IFRS and IFRIC interpretations as of 1 January2010:●●●●IFRIC 17 Distributions of Non-cash Assets to OwnersIAS 39 Financial Instruments: Recognition and Measurement (Amended) – eligible hedged itemsIFRS 2 Group Cash-settled Share-based Payment Transactions (Amended)IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate FinancialStatements (Amended)● Improvements to IFRSs (May 2008) All amendments issued are effective as at 31 December 2009,apart from the following: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations:clarifies when a subsidiary is classified as held for sale, all its assets and liabilities are classified as56

held for sale, even when the entity remains a non-controlling interest after the sale transaction.The amendment is applied prospectively.● Improvements to IFRSs (April 2009)When the adoption of the standard or interpretation is deemed to have an impact on the financialstatements or performance of the Group, its impact is described below:●IFRIC 17 Distributions of Non-cash Assets to OwnersThe interpretation provides guidance on how to account for non-cash distributions to owners. Theinterpretation clarifies when to recognize a liability, how to measure it and the associated assets,and when to derecognize the asset and liability. IFRIC 17 did not have an impact in theconsolidated financial statements as the Group has not made non-cash distributions toshareholders in the past.●IAS 39 Financial Instruments: Recognition and Measurement (Amended) – eligible hedged itemsThe amendment clarifies that an entity is permitted to designate a portion of the fair valuechanges or cash flow variability of a financial instrument as hedged item. This also covers thedesignation of inflation as a hedged risk or portion in particular situations. The amendment didnot have any impact on the financial position or performance of the Group, as it has not enteredinto any such hedges.●IFRS 1 Additional Exemptions for First-time Adopters (Amended)According to this amendment entities which adopt IFRS for the first time are able: a) Not toreconsider if an existing agreement contains a lease (in accordance with IFRIC 4) in case suchevaluation has been already performed in accordance with previous GAAP, b) To measure, uponconversion to IFRS, the deemed cost of oil products and natural gas at each carrying value inaccordance with previous GAAP (regards companies which operate in oil and natural gasindustry). The amendment did not have any impact on the financial position or performance ofthe Group.●IFRS 2 Group Cash-settled Share-based Payment Transactions (Amended)This amendment clarifies the accounting for group cash-settled share-based payment transactionsand how such transactions should be arranged in the individual financial statements of the subsidiary.●IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate FinancialStatements (Amended)The revised IFRS 3 introduces a number of changes in the accounting for business combinationswhich will impact the amount of goodwill recognised, the reported results in the period that anacquisition occurs, and future reported results. Such changes include the expensing of acquisitionrelatedcosts and recognising subsequent changes in fair value of contingent consideration in theprofit or loss (rather than by adjusting goodwill). The amended IAS 27 requires that a change inownership interest of a subsidiary is accounted for as an equity transaction. Therefore such achange will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore theamended standard changes the accounting for losses incurred by the subsidiary as well as the lossof control of a subsidiary.●Amendments resulting from improvements to IFRSs (April 2009) to the following standards whichdid not have an effect on the accounting policies, financial position or performance of the Group:● IFRS 2 Share-based Payment●●●●IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsIFRS 8 Operating Segment InformationIAS 1 Presentation of Financial StatementsIAS 7 Statement of Cash Flows57

●●●●●●●IAS 17 LeasesIAS 18 RevenueIAS 36 Impairment of AssetsIAS 38 Intangible AssetsIAS 39 Financial Instruments: Recognition and MeasurementIFRIC 9 Reassessment of Embedded DerivativesIFRIC 16 Hedges of a Net Investment in a Foreign OperationThe principal accounting policies adopted in the preparation of the accompanying financial statementsare as follows:(a)(b)Presentation of Financial Statements under IAS 1 Revised: The revised standard requires that thestatement of changes in equity includes only transactions with shareholders; introduces a newstatement of comprehensive income that combines all items of income and expense recognised inprofit or loss together with “other comprehensive income” (either in one single statement or in twolinked statements); and requires the inclusion of a third column on the balance sheet to presentthe effect of restatements of financial statements or retrospective application of a new accountingpolicy as at the beginning of the earliest comparative period. The Group made the necessarychanges to the presentation of its financial statements in 2009 and has elected to present twolinked statements for the statement of comprehensive income.Foreign currency translation: The Company’s functional currency is the UK Pound, while eachentity in the Group determines its own functional currency and the items included in the financialstatements of each entity are measured using that functional currency. However, the Group’sconsolidated financial statements are presented in Euro, in the context that this presentationreflects better the substance of the Group’ activities.Transactions and balancesTransactions in foreign currencies are initially recorded by the Group entities at their respectivefunctional currency rates prevailing at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are retranslated at the functional currency spot rate ofexchange ruling at the reporting date.All differences are taken to the income statement. Non-monetary items that are measured in termsof historical cost in a foreign currency are translated using the exchange rates as at the dates ofthe initial transactions. Non-monetary items measured at fair value in a foreign currency aretranslated using the exchange rates at the date when the fair value is determined.Group companiesThe assets and liabilities of foreign operations are translated into Euro at the rate of exchangeprevailing at the reporting date and their income statements are translated at average exchangerates of the year that they related to. The exchange differences arising on the translation arerecognised in other comprehensive income. On disposal of a foreign operation, the component ofother comprehensive income relating to that particular foreign operation is recognised in theincome statement.(c)Revenue recognition: Revenue is recognised to the extent that it is probable that the economicbenefits will flow to the Group and the revenue can be reliably measured. Revenue is measured atthe fair value of the consideration received, excluding discounts, rebates, and sales taxes or duty.The Group assesses its revenue arrangements against specific criteria in order to determine if it isacting as principal or agent. The Group has concluded that it is acting as a principal in all of itsrevenue arrangements. The following specific recognition criteria must also be met before revenueis recognised:58

Revenue from servicesRevenues of the Group mainly consist of telecommunications traffic (premium rate telephoneminutes and SMS messages) that are generated from the end users/ subscribers. Revenues arerecognised at the time such services are provided to subscribers – customers.(d)TaxesCurrent income taxCurrent income tax assets and liabilities for the current and prior periods are measured at theamount expected to be recovered from or paid to the taxation authorities. The tax rates and taxlaws used to compute the amount are those that are enacted or substantively enacted, by thereporting date, in the countries where the Group operates and generates taxable income.Current income tax relating to items recognised directly in equity is recognised in equity and notin the income statement. Management periodically evaluates positions taken in the tax returnswith respect to situations in which applicable tax regulations are subject to interpretation andestablishes provisions where appropriate.Deferred taxDeferred tax is provided using the liability method on temporary differences at the reportingdate between the tax bases of assets and liabilities and their carrying amounts for financialreporting purposes.Deferred tax liabilities are recognised for all taxable temporary differences, except:● Where the deferred tax liability arises from the initial recognition of goodwill or of an assetor liability in a transaction that is not a business combination and, at the time of thetransaction, affects neither the accounting profit nor taxable profit or loss.●In respect of taxable temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, where the timing of the reversal of the temporarydifferences can be controlled and it is probable that the temporary differences will not reversein the foreseeable future.Deferred tax assets are recognised for all deductible temporary differences, carry forward ofunused tax credits and unused tax losses, to the extent that it is probable that taxable profit willbe available against which the deductible temporary differences, and the carry forward of unusedtax credits and unused tax losses can be utilised except:●●Where the deferred tax asset relating to the deductible temporary difference arises from theinitial recognition of an asset or liability in a transaction that is not a business combination and,at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.In respect of deductible temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, deferred tax assets are recognised only to the extentthat it is probable that the temporary differences will reverse in the foreseeable future andtaxable profit will be available against which the temporary differences can be utilised.The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to theextent that it is no longer probable that sufficient taxable profit will be available to allow all or partof the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at eachreporting date and are recognised to the extent that it has become probable that future taxableprofits will allow the deferred tax asset to be recovered.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in theyear when the asset is realised or the liability is settled, based on tax rates (and tax laws) that havebeen enacted or substantively enacted at the reporting date.Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss.Deferred tax items are recognised in correlation to the underlying transaction either in othercomprehensive income or directly in equity.59

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to setoff current tax assets against current income tax liabilities and the deferred taxes relate to thesame taxable entity and the same taxation authority.Sales taxRevenues, expenses and assets are recognised net of the amount of sales tax except:● Where the sales tax incurred on a purchase of assets or services is not recoverable from thetaxation authority, in which case the sales tax is recognised as part of the cost of acquisitionof the asset or as part of the expense item as applicable.●Receivables and payables that are stated with the amount of sales tax included.The net amount of sales tax recoverable from, or payable to, the taxation authority is included aspart of receivables or payables in the statement of financial position.(e)Financial instruments – initial recognition and subsequent measurement(i) Financial assetsInitial recognition and measurementFinancial assets within the scope of IAS 39 are classified as financial assets at fair value throughprofit or loss, loans and receivables, held-to-maturity investments, available-for-sale financialassets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.The Group determines the classification of its financial assets at initial recognition.All financial assets are recognised initially at fair value plus, in the case of investments not atfair value through profit or loss, directly attributable transaction costs. Purchases or sales offinancial assets that require delivery of assets within a time frame established by regulationor convention in the marketplace (regular way trades) are recognised on the trade date, i.e.,the date that the Group commits to purchase or sell the asset.The Group’s financial assets include cash and short-term deposits, trade and otherreceivables, loans and other receivables, and derivative financial instruments.Subsequent measurementThe subsequent measurement of financial assets depends on their classification as follows:Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinablepayments that are not quoted in an active market. After initial measurement, such financialassets are subsequently measured at amortised cost using the effective interest rate method(EIR), less impairment. Amortised cost is calculated by taking into account any discount orpremium on acquisition and fee or costs that are an integral part of the EIR. The EIRamortisation is included in finance income in the income statement. The losses arising fromimpairment are recognised in the income statement in finance costs.DerecognitionA financial asset (or, where applicable a part of a financial asset or part of a group of similarfinancial assets) is derecognised when:●●The rights to receive cash flows from the asset have expiredThe Group has transferred its rights to receive cash flows from the asset or has assumedan obligation to pay the received cash flows in full without material delay to a thirdparty under a ‘pass-through’ arrangement; and either (a) the Group has transferredsubstantially all the risks and rewards of the asset, or (b) the Group has neithertransferred nor retained substantially all the risks and rewards of the asset, but hastransferred control of the asset.When the Group has transferred its rights to receive cash flows from an asset or has enteredinto a pass-through arrangement, and has neither transferred nor retained substantially all60

the risks and rewards of the asset nor transferred control of the asset, the asset is recognisedto the extent of the Group’s continuing involvement in the asset.In that case, the Group also recognises an associated liability. The transferred asset and theassociated liability are measured on a basis that reflects the rights and obligations that theGroup has retained. Continuing involvement that takes the form of a guarantee over thetransferred asset, is measured at the lower of the original carrying amount of the asset andthe maximum amount of consideration that the Group could be required to repay.(ii)Impairment of financial assetsThe Group assesses at each reporting date whether there is any objective evidence that afinancial asset or a group of financial assets is impaired. A financial asset or a group offinancial assets is deemed to be impaired if, and only if, there is objective evidence ofimpairment as a result of one or more events that has occurred after the initial recognitionof the asset (an incurred ‘loss event’) and that loss event has an impact on the estimatedfuture cash flows of the financial asset or the group of financial assets that can be reliablyestimated. Evidence of impairment may include indications that the debtors or a group ofdebtors is experiencing significant financial difficulty, default or delinquency in interest orprincipal payments, the probability that they will enter bankruptcy or other financialreorganisation and where observable data indicate that there is a measurable decrease in theestimated future cash flows, such as changes in arrears or economic conditions that correlatewith defaults.Financial assets carried at amortised costFor financial assets carried at amortised cost the Group first assesses individually whetherobjective evidence of impairment exists individually for financial assets that are individuallysignificant, or collectively for financial assets that are not individually significant. If theGroup determines that no objective evidence of impairment exists for an individuallyassessed financial asset, whether significant or not, it includes the asset in a group offinancial assets with similar credit risk characteristics and collectively assesses them forimpairment. Assets that are individually assessed for impairment and for which animpairment loss is, or continues to be, recognised are not included in a collective assessmentof impairment.If there is objective evidence that an impairment loss has incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value ofestimated future cash flows (excluding future expected credit losses that have not yet beenincurred). The present value of the estimated future cash flows is discounted at the financialassets original effective interest rate. If a loan has a variable interest rate, the discount ratefor measuring any impairment loss is the current effective interest rate.The carrying amount of the asset is reduced through the use of an allowance account andthe amount of the loss is recognised in the income statement. Interest income continues tobe accrued on the reduced carrying amount and is accrued using the rate of interest used todiscount the future cash flows for the purpose of measuring the impairment loss. The interestincome is recorded as part of finance income in the income statement. Loans together withthe associated allowance are written off when there is no realistic prospect of future recoveryand all collateral has been realised or has been transferred to the Group. If, in a subsequentyear, the amount of the estimated impairment loss increases or decreases because of an eventoccurring after the impairment was recognised, the previously recognised impairment loss isincreased or reduced by adjusting the allowance account. If a future write-off is laterrecovered, the recovery is credited to finance costs in the income statement.(iii) Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fairvalue through profit or loss, loans and borrowings, or as derivatives designated as hedginginstruments in an effective hedge, as appropriate. The Group determines the classification ofits financial liabilities at initial recognition.61

All financial liabilities are recognised initially at fair value and in the case of loans andborrowings, plus directly attributable transaction costs. The Group’s financial liabilitiesinclude trade and other payables, bank overdraft, loans and borrowings, and derivativefinancial instruments.Subsequent measurementThe measurement of financial liabilities depends on their classification as follows:Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss includes financial liabilities held fortrading and financial liabilities designated upon initial recognition as at fair value throughprofit or loss.Financial liabilities are classified as held for trading if they are acquired for the purpose ofselling in the near term. This category includes derivative financial instruments entered intoby the Group that are not designated as hedging instruments in hedge relationships asdefined by IAS 39. Separated embedded derivatives are also classified as held for tradingunless they are designated as effective hedging instruments.Gains or losses on liabilities held for trading are recognised in the income statement. TheGroup has not designated any financial liabilities upon initial recognition as at fair valuethrough profit or loss.Loans and borrowingsAfter initial recognition, interest bearing loans and borrowings are subsequently measuredat amortised cost using the effective interest rate method. Gains and losses are recognised inthe income statement when the liabilities are derecognised as well as through the effectiveinterest rate method (EIR) amortisation process.Amortised cost is calculated by taking into account any discount or premium on acquisitionand fee or costs that are an integral part of the EIR. The EIR amortisation is included infinance cost in the income statement.DerecognitionA financial liability is derecognised when the obligation under the liability is discharged orcancelled or expires. When an existing financial liability is replaced by another from the samelender on substantially different terms, or the terms of an existing liability are substantiallymodified, such an exchange or modification is treated as a derecognition of the originalliability and the recognition of a new liability, and the difference in the respective carryingamounts is recognised in the income statement.(iv)(v)Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in theconsolidated statement of financial position if, and only if, there is a currently enforceablelegal right to offset the recognised amounts and there is an intention to settle on a net basis,or to realise the assets and settle the liabilities simultaneously.Fair value of financial instrumentsThe fair value of financial instruments that are traded in active markets at each reporting dateis determined by reference to quoted market prices or dealer price quotations (bid price forlong positions and ask price for short positions), without any deduction for transaction costs.For financial instruments not traded in an active market, the fair value is determined usingappropriate valuation techniques. Such techniques may include using recent arm’s lengthmarket transactions; reference to the current fair value of another instrument that issubstantially the same; discounted cash flow analysis or other valuation models.62

(f)Derivative financial instruments and hedge accountingInitial recognition and subsequent measurementThe Group uses derivative financial instruments such as interest rate swaps to hedge its interestrate risks. Such derivative financial instruments are initially recognised at fair value on the date onwhich a derivative contract is entered into and are subsequently remeasured at fair value.Derivatives are carried as financial assets when the fair value is positive and as financial liabilitieswhen the fair value is negative.Any gains or losses arising from changes in fair value on derivatives are taken directly to theincome statement, except for the effective portion of cash flow hedges, which is recognised in othercomprehensive income. The Group has entered into one interest rate swap (IRS) and the changesin the fair value on the specific instrument are directly recognised in the income statement.(g)Property, plant and equipmentProperty, plant and equipment is stated at cost, net of accumulated depreciation and/oraccumulated impairment losses, if any. Repair and maintenance costs are recognised in theincome statement as incurred. Significant improvements are capitalized to the cost of the relatedasset if the recognition criteria are satisfied.DepreciationDepreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:● Leasehold improvements: 10 years● Network equipment: 3 years● Transportation assets: 7 years● Computer hardware: 3 years● Furniture and other equipment: 5 yearsAn item of property, plant and equipment and any significant part initially recognised isderecognised upon disposal or when no future economic benefits are expected from its use ordisposal. Any gain or loss arising on derecognition of the asset (calculated as the differencebetween the net disposal proceeds and the carrying amount of the asset) is included in the incomestatement when the asset is derecognised.The assets’ residual values, useful lives and methods of depreciation are reviewed at each financialyear end, and adjusted prospectively, if appropriate.(h)LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance ofthe arrangement at inception date: whether fulfillment of the arrangement is dependent on the useof a specific asset or assets or the arrangement conveys a right to use the asset.Group as a lesseeFinance leases, which transfer to the Group substantially all the risks and benefits incidental toownership of the leased item, are capitalised at the commencement of the lease at the fair valueof the leased property or, if lower, at the present value of the minimum lease payments. Leasepayments are apportioned between finance charges and reduction of the lease liability so as toachieve a constant rate of interest on the remaining balance of the liability. Finance charges arerecognised in the income statement.Leased assets are depreciated over the useful life of the asset. However, if there is no reasonablecertainty that the Group will obtain ownership by the end of the lease term, the asset isdepreciated over the shorter of the estimated useful life of the asset and the lease term.Operating lease payments are recognised as an expense in the income statement on a straight linebasis over the lease term.63

Group as a lessorLeases where the Group does not transfer substantially all the risks and benefits of ownership ofthe assets are classified as operating leases. Initial direct costs incurred in negotiating an operatinglease are added to the carrying amount of the leased asset and recognized over the lease term onthe same bases as rental income. Contingent rents are recognized as revenue in the period in whichthey are earned.(i)(j)Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an assetthat necessarily takes a substantial period of time to get ready for its intended use or sale arecapitalised as part of the cost of the respective assets. All other borrowing costs are expensed inthe period they occur. Borrowing costs consist of interest and other costs that an entity incurs inconnection with the borrowing of funds. The Group has no qualifying assets (as defined by thestandard) for relevant capitalisation of borrowing costs.Investment propertiesInvestment properties are measured initially at cost, including transaction costs. The carryingamount includes the cost of replacing part of an existing investment property at the time that costis incurred if the recognition criteria are met; and excludes the costs of day to day servicing of aninvestment property. Subsequent to initial recognition, investment properties are stated at fairvalue, which reflects market conditions at the reporting date. The market price is determined byindependent appraisals. The Group’s objective is to obtain benefit from rentals and/or increasesin market prices of investment properties.Gains or losses arising from changes in the fair values of investment properties are included in theincome statement in the period in which they arise. Investment properties are derecognised wheneither they have been disposed of or when the investment property is permanently withdrawnfrom use and no future economic benefit is expected from its disposal. The difference between thenet disposal proceeds and the carrying amount of the asset is recognised in the income statementin the period of derecognition.Transfers are made to or from investment property only when there is a change in use. For atransfer from investment property to owner occupied property, the deemed cost for subsequentaccounting is the fair value at the date of change in use. If owner occupied property becomes aninvestment property, the Group accounts for such property in accordance with the policy statedunder property, plant and equipment up to the date of change in use.(k)Intangible assetsIntangible assets include both purchased and internally generated software and various licenses.Intangible assets acquired separately are measured on initial recognition at cost. The cost ofintangible assets acquired in a business combination is its fair value as at the date of acquisition.Internally generated software includes costs such as payroll, materials and services received and anyother expenditure directly incurred in developing computer software and applications in order tobring the software and applications into their intended use. Following initial recognition, intangibleassets are carried at cost less any accumulated amortisation and any accumulated impairment losses.Intangible assets are amortised over the useful economic life and assessed for impairmentwhenever there is an indication that the intangible asset may be impaired. The amortisation periodand the amortisation method for an intangible asset with a finite useful life are reviewed at leastat each financial year end. Changes in the expected useful life or the expected pattern ofconsumption of future economic benefits embodied in the asset is accounted for by changing theamortisation period or method, as appropriate, and are treated as changes in accountingestimates. The amortisation expense on intangible assets with finite lives is recognised in theincome statement in the expense category consistent with the function of the intangible asset.64

Gains or losses arising from derecognition of an intangible asset are measured as the differencebetween the net disposal proceeds and the carrying amount of the asset and are recognised in theincome statement when the asset is derecognised.AmortisationAmortisation is calculated on a straight-line basis over the estimated useful life of the assetas follows:● Computer software: 3 years● Internally generated Software: 3 years(l)Impairment of non-financial assetsThe Group assesses at each reporting date whether there is an indication that an asset may beimpaired. If any indication exists, or when annual impairment testing for an asset is required, theGroup estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of anasset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and isdetermined for an individual asset, unless the asset does not generate cash inflows that are largelyindependent of those from other assets or groups of assets. Where the carrying amount of an assetor CGU exceeds its recoverable amount, the asset is considered impaired and is written down to itsrecoverable amount. In assessing value in use, the estimated future cash flows are discounted totheir present value using a pre-tax discount rate that reflects current market assessments of the timevalue of money and the risks specific to the asset. In determining fair value less costs to sell, anappropriate valuation model is used. These calculations are corroborated by valuation multiples,quoted share prices for publicly traded subsidiaries or other available fair value indicators.Impairment losses of continuing operations are recognised in the income statement in thoseexpense categories consistent with the function of the impaired asset, except for propertypreviously revalued where the revaluation was taken to other comprehensive income. In this case,the impairment is also recognised in other comprehensive income up to the amount of anyprevious revaluation.For assets excluding goodwill, an assessment is made at each reporting date as to whether there isany indication that previously recognised impairment losses may no longer exist or may havedecreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’srecoverable amount. A previously recognised impairment loss is reversed only if there has been achange in the assumptions used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. The reversal is limited so that the carrying amount of the asset doesnot exceed its recoverable amount, nor exceed the carrying amount that would have beendetermined, net of depreciation, had no impairment loss been recognised for the asset in prior years.Such reversal is recognised in the income statement unless the asset is carried at a revaluedamount, in which case the reversal is treated as a revaluation increase.(m) Cash and cash equivalentsCash and cash equivalents in the statement of financial position comprise cash at banks and onhand and short-term deposits with an original maturity of three months or less. For the purposesof the consolidated statement of cash flows, cash and cash equivalents consist of amounts asdefined above excluding restricted cash.(n)Share CapitalShare capital represents the par value of the Company’s shares in issue. Any excess of the fairvalue of the consideration received over the par value of the shares issued is recognised as the“share premium” in shareholders’ equity. Incremental external costs directly attributable to theissue of new shares are shown as a deduction from the proceeds in equity, net of tax.65

(o)(p)Dividend DistributionDividend distribution to the Company’s shareholders is recognised as a liability in the Group’sfinancial statements in the period in which the dividends are approved by the General Meeting ofthe Company’s Shareholders.Provisions and contingenciesProvisions are recognised when the Group has a present obligation (legal or constructive) as aresult of a past event, it is probable that an outflow of resources embodying economic benefitswill be required to settle the obligation and a reliable estimate can be made of the amount of theobligation. Where the Group expects some or all of a provision to be reimbursed, for exampleunder an insurance contract, the reimbursement is recognised as a separate asset but only whenthe reimbursement is virtually certain. The expense relating to any provision is presented in theincome statement net of any reimbursement. If the effect of the time value of money is material,provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risksspecific to the liability. Where discounting is used, the increase in the provision due to the passageof time is recognised as a finance cost.Contingent liabilities are not recognized in the financial statements, but are disclosed, unless thepossibility of an outflow of resources embodying economic benefits is remote. Contingent assetsare not recognized in the financial statements, but are disclosed when an inflow of economicbenefits is probable.(q)(r)Employee benefits obligationsStaff retirement obligations are calculated at the present value of the future retirement benefitsdeemed to have accrued at year-end, based on the employees earning retirement benefit rightssteadily throughout the working period. The reserve for retirement obligations is calculated on thebasis of financial and actuarial assumptions detailed in Note 20 and are determined using theprojected unit credit actuarial valuation method. Net pension costs for the period are included inpayroll in the accompanying statements of income and consist of the present value of benefitsearned in the year, interest cost on the benefit obligation, prior service cost, actuarial gains orlosses and the cost of additional pension charges. Past service costs are recognised on astraight-line basis over the average period until the benefits under the plan become vested.Actuarial gains or losses are recognised based on the corridor approach over the averageremaining service period of active employees and included as a component of net pension cost fora year if, as of the beginning of the year it exceeds 10 per cent. of the projected benefit obligation.The retirement benefit obligations are not funded.Interest incomeFor all financial instruments measured at amortised cost interest income is recorded using theeffective interest rate (EIR), which is the rate that exactly discounts the estimated future cashpayments or receipts through the expected life of the financial instrument or a shorter period,where appropriate, to the net carrying amount of the financial asset or liability. Interest income isincluded in finance income in the income statement.3. Significant Accounting Judgments, Estimates and AssumptionsThe preparation of the Group’s consolidated financial statements requires management to makejudgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assetsand liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. Estimatesand judgments are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.However, uncertainty about these assumptions and estimates could result in outcomes that require amaterial adjustment to the carrying amount of the asset or liability affected in future periods.In the process of applying the Group’s accounting policies, the management has made the followingjudgments, key estimates and assumptions that may have a risk of causing a material adjustment andsignificant effect on the amounts recognised in the consolidated financial statements:66

Internally generated software: Development Costs referring to internally generated software arecapitalised in accordance with the accounting policy in Note 2.3. Initial capitalisation of costs is basedon management’s judgment that technological and economical feasibility is confirmed. At 31 December2007, 2008 and 2009, the carrying amount of internally generated software costs was €627,443,€1,006,434 and €1,402,946 respectively. At 30 June 2010, the carrying amount of internally generatedsoftware costs was €1,317,198.Provision for income taxes: Uncertainties exist with respect to certain interpretation of the taxregulations and the amount and timing of future taxable income. Given the wide range of internationalbusiness relationships and the long-term nature and complexity of existing contractual agreements,differences arising between the actual results and the assumptions made, or future changes to suchassumptions, could necessitate future adjustments to tax income and expense already recorded. TheGroup establishes provisions, based on reasonable estimates, for possible consequences of audits by thetax authorities of the respective counties in which it operates. The amount of such provisions is basedon various factors, such as experience of previous tax audits and differing interpretations of taxregulations by the taxable entity and the responsible tax authority. Such differences of interpretationmay arise on a wide variety of issues depending on the conditions prevailing in the respective Groupcompanies’ domicile. As a result of the above the Group has established provisions for unaudited taxyears, the carrying amount of which as at 31 December 2007, 2008 and 2009 was nil, €105,000 and€306,000 respectively, while as at 30 June 2010 was €355,000.Allowance for doubtful receivables: The Group’s management periodically reassesses the adequacy ofthe allowance for doubtful receivables in conjunction with its credit policy and taking intoconsideration reports from its legal advisors, which are prepared following the processing of historicaldata and recent developments of the cases they are handling. As further explained in Note 13, Group’smanagement assessed that no additional provision to the recorded one, is required for past duereceivables since these are not considered impaired.4. Standards issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the Group’s financial statements arelisted below. They have not been early adopted and the Group and the Company are in the process ofassessing their impact, if any, on the financial statements:IFRIC 17 “Distributions of Non-cash Assets to Owners”, this interpretation is effective for annualperiods beginning on or after 1 July 2009 with early application permitted. The interpretation providesguidance on how to account for non-cash distributions to owners. The interpretation clarifies when torecognize a liability, how to measure it and the associated assets, and when to derecognize the asset andliability. The Group does not expect IFRIC 17 to have an impact in the consolidated financialstatements as the Group has not made non-cash distributions to shareholders in the past.IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”, the interpretation is effectivefor annual periods beginning on or after 1 July 2010. This interpretation addresses the accountingtreatment when there is a renegotiation between the entity and the creditor regarding the terms of afinancial liability and the creditor agrees to accept the entity’s equity instruments to settle the financialliability fully or partially. IFRIC 19 clarifies such equity instruments are “consideration paid” inaccordance with paragraph 41 of IAS 39. As a result, the financial liability is derecognised and theequity instruments issued are treated as consideration paid to extinguish that financial liability. TheGroup does not expect IFRIC 19 to have an impact in the consolidated financial statements as theGroup has not settle any liabilities with Group’s equity instruments in the past.Amendment to IFRIC 14 “Prepayments of a Minimum Funding Requirement”, the amendment iseffective for annual periods beginning on or after 1 January 2011. The purpose of this amendment wasto permit entities to recognise as an asset some voluntary prepayments for minimum fundingcontributions. This Earlier application permitted and must be applied retrospectively. The Group doesnot expect this amendment to affect its consolidated financial statements.Amendment to IFRS 3 “Business Combinations (Revised)” and IAS 27 “Consolidated and SeparateFinancial Statements”, the revision and amendment is effective for annual periods beginning on or after1 July 2009. The revised IFRS 3 introduces a number of changes in the accounting for businesscombinations which will impact the amount of goodwill recognised, the reported results in the periodthat an acquisition occurs, and future reported results. Such changes include the expensing ofacquisition-related costs and recognising subsequent changes in fair value of contingent consideration67

in the profit or loss (rather than by adjusting goodwill). The amended IAS 27 requires that a change inownership interest of a subsidiary is accounted for as an equity transaction. Therefore such a changewill have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore the amendedstandard changes the accounting for losses incurred by the subsidiary as well as the loss of control ofa subsidiary. The changes introduced by IFRS 3 (Revised) and IAS 27 (Amendment) must be appliedprospectively and will affect future acquisitions and transactions with minority interests.IAS 39 “Financial Instruments: Recognition and Measurement (Amended) – eligible hedged items”, theamendment is effective for annual periods beginning on or after 1 July 2009.The amendment clarifiesthat an entity is permitted to designate a portion of the fair value changes or cash flow variability of afinancial instrument as hedged item. This also covers the designation of inflation as a hedged risk orportion in particular situations. The Group does not expect that the amendment will have any impacton the financial position or performance of the Group, as it has not entered into any such hedges.IFRS 9 “Financial Instruments – Phase 1 financial assets, classification and measurement”, the newstandard is effective for annual periods beginning on or after 1 January 2013. Phase 1 of this new IFRSintroduces new requirements for classifying and measuring financial assets. Early adoption ispermitted. This standard has not yet been endorsed by the EU. The Group is in the process of assessingthe impact of the new standard on the financial position or performance of the Group.IFRS 2 “Group Cash-settled Share-based Payment Transactions (Amended)”, the amendment iseffective for annual periods beginning on or after 1 January 2010. This amendment clarifies theaccounting for group cash-settled share-based payment transactions and how such transactions shouldbe arranged in the individual financial statements of the subsidiary. This interpretation has not yetbeen endorsed by the EU. The Group does not expect that this amendment will have an impact on thefinancial position or performance of the GroupIAS 32 “Classification on Rights Issues (Amended)”, the amendment is effective for annual periodsbeginning on or after 1 February 2010. This amendment relates to the rights issues offered for a fixedamount of foreign currency which were treated as derivative liabilities by the existing standard. Theamendment states that if certain criteria are met, these should be classified as equity regardless of thecurrency in which the exercise price is denominated. The amendment is to be applied retrospectively.The Group does not expect that this amendment will have an impact on the financial position orperformance of the Group.IAS 24 “Related Party Disclosures (Revised)”, the revision is effective for annual periods beginning onor after 1 January 2011.This revision relates to the judgment which is required so as to assess whethera government and entities known to the reporting entity to be under the control of that governmentare considered a single customer. In assessing this, the reporting entity shall consider the extent ofeconomic integration between those entities. Early application is permitted and adoption shall beapplied retrospectively. This interpretation has not yet been endorsed by the EU. The Group does notexpect that this amendment will have an impact on the financial position or performance of the Groupbut it may affect future disclosures.IFRS 1 “Additional Exemptions for First-time Adopters (Amended)”, the standard is effective for annualperiods beginning on or after 1 January 2010. According to this amendment entities which adopt IFRSfor the first time are able: a) Not to reconsider if an existing agreement contains a leasing (inaccordance with IFRIC 4) in case such evaluation has been already performed in accordance withprevious GAAP, b) To measure, upon conversion to IFRS, the deemed cost of oil products and naturalgas at each carrying value in accordance with previous GAAP (regards companies which operate in oiland natural gas industry). The Group does not expect that this amendment will have an impact on thefinancial position or performance of the Group.IFRS 1 “Limited Exemption from Comparative IFRS 7 Disclosures for first time adopters (Amended)”,the standard is effective for annual periods beginning on or after 1 July 2010. This amendment wasissued on January 28,2010 and exempts first-time adopters of IFRSs from providing the additionaldisclosures introduced by IFRS 7 on 5 March 2009. The Group does not expect that this amendmentwill have an impact on the financial position or performance of the Group.In April 2009 the International Accounting Standards Board (IASB) issued its second omnibus ofamendments to its standards, primarily with a view to removing inconsistencies and clarifying wording.The effective dates of the improvements are various and the earliest is for the financial year beginning1 July 2009. This annual improvements project has not yet been endorsed by the EU. The Group is inthe process of evaluating the impact of these amendments on the financial statements.68

● IFRS 2 Share-based Payment, effective for annual periods beginning on or after 1 July 2009.Clarifies that the contribution of a business on formation of a joint venture and combinationsunder common control are not within the scope of IFRS 2 even though they are out of scope ofIFRS 3 (revised). If an entity applies IFRS 3 (revised) for an earlier period, the amendment shallalso be applied for that earlier period.●●●IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, effective for annual periodsbeginning on or after 1 January 2010. Clarifies that the disclosures required in respect ofnon-current assets and disposal groups classified as held for sale or discontinued operations areonly those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specificallyrequired for such non-current assets or discontinued operations.IFRS 8 Operating Segment Information, effective for annual periods beginning on or after1 January 2010. Clarifies that segment assets and liabilities need only be reported when thoseassets and liabilities are included in measures that are used by the chief operating decision maker.IAS 1 Presentation of Financial Statements, effective for annual periods beginning on or after1 January 2010. The terms of a liability that could result, at any time, in its settlement by theissuance of equity instruments at the option of the counterparty do not affect its classification.● IAS 7 Statement of Cash Flows, effective for annual periods beginning on or after 1 January 2010.Explicitly states that only expenditure that results in recognising an asset can be classified as acash flow from investing activities. This amendment will impact the presentation in the statementof cash flows of the contingent consideration on the business combination completed in 2009upon cash settlement.●●IAS 17 Leases, effective for annual periods beginning on or after 1 January 2010. The amendmentremoves the specific guidance on classifying land as a lease so that only the general guidance remains.IAS 18 Revenue, The Board has added guidance (which accompanies the standard) to determinewhether an entity is acting as a principal or as an agent. The features to consider are whetherthe entity:●●●●Has primary responsibility for providing the goods or serviceHas inventory riskHas discretion in establishing pricesBears the credit risk● IAS 36 Impairment of Assets, effective for annual periods beginning on or after 1 January 2010.The amendment clarified that the largest unit permitted for allocating goodwill, acquired in abusiness combination, is the operating segment as defined in IFRS 8 before aggregation forreporting purposes.●●IAS 38 Intangible Assets, effective for annual periods beginning on or after 1 July 2009. Clarifiesthat if an intangible asset acquired in business combination is identifiable only with anotherintangible asset, the acquirer may recognise the group of intangible assets as a single assetprovided the individual assets have similar useful lives. Also, clarifies that the valuation techniquespresented for determining the fair value of intangible assets acquired in a business combinationthat are not traded in active markets are only examples and are not restrictive on the methods thatcan be used. If an entity applies IFRS 3 (revised) for an earlier period, the amendment shall alsobe applied for that earlier period.IAS 39 Financial Instruments: Recognition and Measurement, effective for annual periodsbeginning on or after 1 January 2010. The amendment clarifies that:●●A prepayment option is considered closely related to the host contract when the exerciseprice of a prepayment option reimburses the lender up to the approximate present value oflost interest for the remaining term of the host contract.The scope exemption for contracts between an acquirer and a vendor in a businesscombination to buy or sell an acquiree at a future date, applies only to binding forwardcontracts, and not derivative contracts where further actions by either party are still to betaken (Applicable to all unexpired contracts for annual periods beginning on or after1 January 2010)69

●●●Gains and losses on cash flow hedges of a forecast transaction that subsequently results inthe recognition of a financial instrument or on cash flow hedges of recognised financialinstruments should be reclassified in the period that the hedged forecast cash flows affectprofit or loss (Applicable to all unexpired contracts for annual periods beginning on or after1 January 2010)IFRIC 9 Reassessment of Embedded Derivatives, effective for annual periods beginning on or after1 July 2009. The Board amended the scope paragraph of IFRIC 9 to clarify that it does not applyto possible reassessment, at the date of acquisition, to embedded derivatives in contracts acquiredin a combination between entities or business under common control or the formation of a jointventure. If an entity applies IFRS 3 (revised) for an earlier period, the amendment shall also beapplied for that earlier period.IFRIC 16 Hedges of a Net Investment in a Foreign Operation, effective for annual periodsbeginning on or after 1 July 2009. The amendment states that, in a hedge of a net investment in aforeign operation, qualifying hedging instruments may be held by any entity or entities within thegroup, including the foreign operation itself, as long as the designation, documentation andeffectiveness requirements of IAS 39 that relate to a net investment hedge are satisfied.Improvements to IFRSs (issued in May 2010)The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. Theamendments have not been adopted as they become effective for annual periods on or after either1 July 2010 or 1 January 2011.The amendments listed below, are considered to have a reasonable possible impact on the Group:● IFRS 3 Business Combinations●●●●IFRS 7 Financial Instruments: DisclosuresIAS 1 Presentation of Financial StatementsIAS 27 Consolidated and Separate Financial StatementsIFRIC 13 Customer Loyalty ProgrammesThe Group, however, expects no impact from the adoptions of the amendments on its financialposition or performance.5. Operating Segment InformationFor management purposes, the Group is organised into business units based on their products andservices and has two reportable operating segments as follows:●●The Mobile Marketing operating segment: Specially designed for campaigns on mobiletelecommunications networks.The Mobile Entertainment operating segment: Services offering access to digital content (music,games, subscriptions.)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 makingdecisions about resource allocation and performance assessment. Segment performance is evaluatedbased on operating profit or loss and is measured consistently with operating profit or loss in theconsolidated financial statements.Transfer prices between operating segments are on an arm’s length basis in a manner similar totransactions with third parties. Segment income, expenses and results will include those transfersbetween business segments which will then be eliminated on consolidation.70

Year ended 31 December 2007Mobile Mobile Adjustments andMarketing Entertainment Eliminations TotalRevenueExternal customer 3,372,587 5,724,896 – 9,097,483Inter-segment 3,136,203 – (3,136,203) 1 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total revenue 6,508,790 5,724,896 (3,136,203) 9,097,483––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit 2,376,400 1,881,176 (3,136,203) 1 1,121,373 2Segment profit/(loss) includesthe following:Depreciation and amortisation (181,199) (397,977) – (579,176)Finance costs (115,644) (144,785) – (260,429)Finance income 11,353 19,330 – 30,683––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating assets 3,292,674 5,378,081 (1,418,012) 7,252,743 3––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating liabilities 2,591,731 2,929,189 (1,418,012) 4,102,908 4––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Other disclosuresCapital expenditure 5 401,083 879,193 – 1,280,276Revenues from one client amounted to €3,206,000 arising from revenues by the mobile marketingsegment, while revenues from four clients amounted to €5,511,000 arising from revenues by the mobileentertainment segment.1. Inter-segment revenues and profits are eliminated on consolidation.2. Profit for each operating segment does not include fair value loss from investment properties valuation (€105,854).3. Segment assets do not include investment property (€727,000), as this asset is managed on a group basis.4. Segment liabilities do not include deferred tax (€131,876), current income tax payable (€227,402), and derivatives(€62,500) as these liabilities are managed on a group basis.5. Capital expenditure consists of additions of property, plant and equipment and intangible assets.71

Year ended 31 December 2008Mobile Mobile Adjustments andMarketing Entertainment Eliminations TotalRevenueExternal customer 9,092,756 4,882,877 – 13,975,633Inter-segment 6,791,145 – (6,791,145) 1 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total revenue 15,883,901 4,882,877 (6,791,145) 13,975,633––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit/(loss) 5,410,908 2,012,314 (6,791,145) 1 632,077 2Segment profit/(loss) includesthe following:Depreciation and amortisation (251,659) (748,591) – (1,000,250)Finance costs (239,326) (96,814) – (336,140)Finance income 68,475 36,731 – 105,206––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating assets 7,685,746 7,791,969 (3,506,364) 11,971,351 3Operating liabilities 8,115,299 4,022,755 (3,506,364) 8,631,690 4––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Other disclosuresCapital expenditure 5 666,319 1,473,200 – 2,139,519Revenues from two clients amounted to €8,634,000 arising from revenues by the mobilemarketing segment.1. Inter-segment revenues and profits are eliminated on consolidation.2. Profit for each operating segment does not include income from the investment property rental (€10,000) and fair valueloss from derivatives and investment properties valuation (€18,000).3. Segment assets do not include investment properties (€709,000), as this asset is managed on a group basis.4. Segment liabilities do not include deferred tax (€207,530), current income tax payable (€350,300), and derivatives(€23,823) as these liabilities are managed on a group basis.5. Capital expenditure consists of additions of property, plant and equipment and intangible assets.72

Year ended 31 December 2009Mobile Mobile Adjustments andMarketing Entertainment Eliminations TotalRevenueExternal customer 11,771,412 5,449,267 – 17,220,679Inter-segment 5,053,823 – (5,053,823) 1 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total revenue 16,825,235 5,449,267 (5,053,823) 17,220,679––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit/(loss) 2,428,228 1,585,713 (5,074,323) 1 (1,060,381) 2Segment profit/(loss) includesthe following:Depreciation and amortisation (526,134) (971,225) – (1,497,359)Finance costs (638,099) (263,443) (20,500) (922,042)Finance income 56,369 22,859 – 79,228––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating assets 9,754,446 8,229,435 (3,348,452) 3 14,635,429 3––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating liabilities 11,159,056 3,311,275 (3,348,452) 4 11,121,879 4––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Other disclosuresCapital expenditure 5 1,126,224 1,482,399 – 2,608,623Revenues from two clients amounted to €9,760,000 arising from revenues by the mobile marketingsegment, while revenues from one client amounted to €2,228,000 arising from revenues by the mobileentertainment segment.1. Inter-segment revenues and profits are eliminated on consolidation.2. Profit for each operating segment does not include income from the investment properties rental (€13,750) and fair valueloss from derivatives and investment property valuation (€44,000).3. Segment assets do not include deferred tax asset (€339,089) and investment properties (€665,000), as this asset ismanaged on a group basis.4. Segment liabilities do not include deferred tax (€121,965), current income tax payable (€476,351), and derivatives(€20,044) as these liabilities are managed on a group basis.5. Capital expenditure consists of additions of property, plant and equipment and intangible assets.Period ended 30 June 2009 (Unaudited)Mobile Mobile Adjustments andMarketing Entertainment Eliminations TotalRevenueExternal customer 5,575,289 2,949,766 – 8,525,055Inter-segment 1,347,189 – (1,347,189) 1 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total revenue 6,922,478 2,949,766 (1,347,189) 8,525,055––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit/loss 505,365 (1,404,153) (1,347,189) 1 (2,245,977) 2Segment profit/(loss) includesthe following:Depreciation and amortisation (233,403) (472,899) – (706,302)Finance costs (396,202) (209,622) – (605,824)Finance income 11,344 6,002 – 17,346Revenues from two clients amounted to €4,880,000 arising from revenues by the mobile marketingsegment, while revenues from one client amounted to €1,144,000 arising from revenues by the mobileentertainment segment.1. Inter-segment revenues and profits are eliminated on consolidation.2. Profit for each operating segment does not include fair value gains from derivatives (€1,890).73

Period ended 30 June 2010Mobile Mobile Adjustments andMarketing Entertainment Eliminations TotalRevenueExternal customer 15,020,232 2,940,173 – 17,960,405Inter-segment 2,574,804 – (2,574,804) 1 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total revenue 17,595,036 2,940,173 (2,574,804) 17,960,405––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit/(loss) 4,441,099 (376,729) (2,574,804) 1 1,489,566 2––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Segment profit/(loss) includesthe following:Depreciation and amortisation (375,042) (487,025) – (862,067)Finance costs (314,350) (61,496) – (375,846)Finance income 39,532 15,931 – 55,643––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating assets 11,094,784 8,991,408 (4,343,815) 3 15,742,377––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Operating liabilities 11,297,257 4,057,064 (4,343,815) 4 11,010,506––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Other disclosuresCapital expenditure 5 236,735 312,579 – 549,314Revenues from three clients amounted to €12,496,000 arising from revenues by the mobile marketingsegment.1. Inter-segment revenues and profits are eliminated on consolidation.2. Profit for each operating segment does not include income from the investment property rental (€9,000) and fair valueloss from derivatives and investment properties valuation (€24,000).3. Segment assets do not include investment properties (€641,000), as this asset is managed on a group basis as well asdeferred tax asset (€339,089).4. Segment liabilities do not include deferred tax (€93,563), current income tax payable (€792,614), and derivatives (€33,698)as these liabilities are managed on a group basis.5. Capital expenditure consists of additions of property, plant and equipment and intangible assets.Geographic informationRevenues from external customer(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Europe 9,006,393 11,068,392 14,594,584 7,836,530 14,280,121Latin America 91,090 – 59,121 – 2,848,942CommonwealthIndependent States(CIS) – 2,907,241 1,592,251 532,125 823,321Middle Eastand Africa – – 974,723 156,400 8,021––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total segment revenues 9,097,483 13,975,633 17,220,679 8,525,055 17,960,405––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––The Company has no operating activities and therefore, the above refer exclusively to amountsgenerated outside the United Kingdom.74

Non–current assetsAs at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Europe 2,057,133 3,160,747 4,147,550 3,829,893Latin America – – – –Commonwealth IndependentStates (CIS) – – – –Middle East and Africa – 17,655 65,424 10,189––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total non-current assets 2,057,133 3,178,402 4,212,974 3,840,082––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Non-current assets include property, plant and equipment, intangible assets, and investment properties.The Company has no operating activities and therefore, the above refer exclusively to assets outside theUnited Kingdom.6. Analysis of ExpensesExpenses (cost of revenues, selling and distribution and administrative) in the accompanying financialstatements are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Advertising andpromotion costs 1,981,270 4,754,853 6,206,731 4,008,592 4,171,417Costs for services 3,351,265 4,782,094 6,045,694 3,052,376 6,978,468Payroll andrelated costs 934,879 1,331,351 1,850,364 919,440 1,014,725Depreciation andamortisation 579,176 1,000,250 1,497,359 706,302 862,067Third party feesand services 864,629 987,273 1,500,798 1,002,481 1,475,384Rent expenses 234,455 279,352 383,785 217,447 165,698Allowance for doubtfulaccounts receivable (note 14) 200,000 58,571 44,417 – –Licence fees – – – – 1,051,577Travelling expenses 175,848 259,963 349,986 212,820 147,710Valuation of investmentproperties at fair (note 11) 105,854 18,000 44,000 – 24,000Other expenses 104,314 557,373 696,233 449,737 722,742Less: amountscapitalised (633,407) (794,188) (1,038,861) (370,862) (310,369)–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total expenses 7,898,283 13,234,892 17,580,506 10,198,333 16,303,419–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––75

The above expenses are categorized in the consolidated income statement as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Cost of revenuesexcluding exceptionalcosts 4,057,460 6,644,970 7,375,429 4,453,113 10,132,628Exceptional costof revenue – – 734,525 – –Selling anddistribution costs 2,850,094 5,463,868 8,217,670 4,906,857 5,202,467Administrativeexpenses 990,729 1,126,054 1,252,882 838,363 968,324–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total expenses 7,898,283 13,234,892 17,580,506 10,198,333 16,303,419–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Payroll and related costs in the accompanying financial statements are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Wages and salaries 719,089 1,039,806 1,416,273 652,019 693,141Social security costs 196,378 253,766 388,485 171,255 161,704Employeebenefits liability (Note 20) 6,228 9,303 15,413 7,707 19,500Other staff costs 13,184 28,476 30,193 88,459 140,380–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total 934,879 1,331,351 1,850,364 919,440 1,014,725Less: Amountcapitalised (291,726) (321,114) (558,058) (251,083) (110,815)–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Payroll andrelated costs 643,153 1,010,237 1,292,306 668,357 903,910–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––76

Depreciation and amortisation in the accompanying financial statements are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Depreciationon buildings 1,085 9,369 23,233 9,402 16,102Depreciation onfurniture and otherequipment 92,309 137,888 136,776 37,434 59,148Depreciation ontransportation means 15 1,642 1,984 60 7,312Depreciation onnetwork equipment 197,784 191,192 189,450 112,670 117,226–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total depreciation(Note 10) 291,193 340,091 351,443 159,566 199,788Amortisation oninternally generatedintangible assets 214,736 415,197 642,349 316,148 339,425Amortisation onpurchased softwareand otherintangible assets 73,247 244,962 503,567 230,588 322,854–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total amortisation(Note 12) 287,983 660,159 1,145,916 546,736 662,279–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Depreciation andamortisation 579,176 1,000,250 1,497,359 706,302 862,067–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––7. Finance Income/(Costs)Finance income/(costs) in the accompanying financial statements are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Interest on short-termborrowings (Note 17) (131,946) (183,122) (313,357) (166,981) (146,057)Interest on long-termborrowings (Note 17) (41,983) (84,895) (62,539) (32,494) (18,744)Derivatives valuation (23,971) – – – (13,655)Exchange differences (34,452) (13,953) (488,444) (381,571) (99,343)Other financial costs (28,077) (54,170) (57,702) (24,778) (98,047)–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total finance costs (260,429) (336,140) (922,042) (605,824) (375,846)Interest earned(Note 15) 17,564 38,295 20,322 14,332 15,932Derivatives valuation – 38,678 3,780 1,890 –Exchange differences 13,119 28,233 55,126 1,124 39,531–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total finance income 30,683 105,206 79,228 17,346 55,463–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total financeincome/(costs), net (229,746) (230,934) (842,814) (588,478) (320,383)–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––77

8. Income TaxThe amounts of income taxes which are reflected in the accompanying consolidated income statementsare analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Current income taxes 188,167 323,511 415,406 239,972 474,181Deferred tax 10,247 75,654 (424,654) (124,999) (28,402)–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Total charge/(credit)for income taxes 198,414 399,165 (9,248) 114,973 445,779–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––The reconciliation of income taxes reflected in the income statements and the amount of income taxesdetermined by the application of the Company’s statutory tax rate to pretax income is summarizedas follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Profit/(loss) beforeincome taxes 1,015,518 624,077 (1,090,630) (2,244,087) 1,432,665–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Income tax calculatedat the nominalapplicable tax rate (28%) 284,345 174,741 (305,376) (628,344) 401,146Effect of income/losssubject to differenttax rates (109,482) (22,164) 197,044 12,357 (57,088)Reversing/originatingtemporary differences 2,051 – (472,372) – –Tax effect on tax lossesfor which no deferredtax was recognised – – 271,399 560,260 39,772Tax effect of non taxdeductible expenses andnon taxable income – 136,588 58,857 10,100 12,949Provisions forunaudited tax years 21,500 110,000 241,200 160,600 49,000–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––Income tax 198,414 399,165 (9,248) 114,973 445,779–––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––(a)Current income taxThe Company is obliged to file its tax returns in accordance with the applicable tax law in Englandand Wales. No income tax is payable on the net income deriving from subsidiaries with foreignoperations. The Group’s subsidiaries file their tax returns in the countries in which they areestablished and/or operate.The tax rates at 30 June 2010 of the countries where the most significant operations of the Groupare located are the following:●●●Greece 24 per cent. (2009: 25 per cent., 2008: 25 per cent., 2007:25 per cent.)Poland 19 per cent. (2009:19 per cent., 2008:19 per cent., 2007: 19 per cent.)Cyprus 10 per cent. (2009: 10 per cent., 2008: 10 per cent., 2007:10 per cent.)78

The Greek nominal tax rate for the year 2010 is 24 per cent.. This tax rate is to be graduallydecreased by a 1 per cent. per annum and will be set, by year 2014, at 20 per cent. The abovementioned tax refers only to the non distributed profits to shareholders. The profits distributed inthe form of remunerations and percentages of profits towards the Board of Directors membersand managers, remunerations to the employees apart from the salaries, dividends or interimdividends, are taxed at 40 per cent. irrespective of being paid in cash or in shares. The aboveprovisions as regards the distribution of profits are applicable for profits deriving from balancesheets dated as of 31.12.2010 onwards.The tax returns are submitted annually; however, they remain provisional until such time as thetax authorities examine the books and records of the respective branches and subsidiaries. In afuture tax examination of the tax unaudited years, additional tax and penalties may be assessedby the tax authorities. For the unaudited years it is not possible to determine with accuracy anyadditional tax and penalties that may be assessed, as these will depend on the findings of thetax authorities.As of 30 June 2010, the Greek and Cypriot subsidiaries have been audited by the tax authoritiesup to 31 December 2007 and 2002 respectively, while for the rest subsidiaries no tax audit has beenperformed (due to the recent dates of incorporation).(b)Deferred income taxThe movement of the deferred tax asset/(liability) net is as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Opening balance at 1 January (121,629) (131,876) (207,530) 217,124Release/(charge) for the year (10,247) (75,654) 424,654 28,402–––––––––––– –––––––––––– –––––––––––– ––––––––––––Closing balance (131,876) (207,530) 217,124 245,526–––––––––––– –––––––––––– –––––––––––– ––––––––––––The detailed movement in deferred tax assets and liabilities for the years ended 31 December 2007,2008 and 2009 and for the period ended 30 June 2010 are as follows:(Debit)/credit1 January to statement 31 December2007 of Income 2007Deferred tax assetsWrite off of pre-operating expenses andintangible assets – 3,461 3,461Employee benefits liability 1,725 720 2,445–––––––––––– –––––––––––– ––––––––––––Total 1,725 4,181 5,906Deferred tax liabilitiesWrite off of pre-operating expenses andintangible assets (3,454) 3,454 –Reversal of debit exchange differences – (2,051) (2,051)Capitalisation of internally generated software (52,193) (83,538) (135,731)Fair value of investment property (67,707) 67,707 ––––––––––––– –––––––––––– ––––––––––––Total (123,354) (14,428) (137,782)–––––––––––– –––––––––––– ––––––––––––Deferered tax (liability) net (121,629) (10,247) (131,876)–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––Reflected in the statement of financialposition as follows:Deferred tax assets – –Deferred tax (liabilities) (121,629) (131,876)–––––––––––– ––––––––––––Deferred tax (liability) net (121,629) (131,876)–––––––––––– –––––––––––––––––––––––– ––––––––––––79

(Debit)/credit1 January to statement 31 December2008 of Income 2008Deferred tax assetsWrite off of pre-operating expensesand intangible assets 3,461 – 3,461Employee benefits liability 2,445 20 2,465–––––––––––– –––––––––––– ––––––––––––Total 5,906 20 5,926Deferred tax liabilitiesWrite off of pre-operating expensesand intangible assets – (1,395) (1,395)Reversal of debit exchange differences (2,051) (4,998) (7,049)Capitalisation of internallygenerated software (135,731) (69,281) (205,012)–––––––––––– –––––––––––– ––––––––––––Total (137,782) (75,674) (213,456)–––––––––––– –––––––––––– ––––––––––––Deferred tax (liability) net (131,876) (75,654) (207,530)–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––Reflected in the statement of financialposition as follows:Deferred tax assets – –Deferred tax liabilities (131,876) (207,530)–––––––––––– ––––––––––––Deferred tax (liability) net (131,876) (207,530)–––––––––––– –––––––––––––––––––––––– ––––––––––––(Debit)/credit1 January to statement 31 December2009 of Income 2009Deferred tax assetsWrite off of pre-operating expensesand intangible assets 3,461 (2,080) 1,381Revenue recognition – 328,119 328,119Accrued expenses – 10,970 10,970Employee benefits liability 2,465 763 3,228Provision for doubtful receivables – 133,283 133,283–––––––––––– –––––––––––– ––––––––––––Total 5,926 471,055 476,981Deferred tax (liabilities)Write off of pre-operating expensesand intangible assets (1,395) – (1,395)Reversal of debit exchange differences (7,049) 2,636 (4,413)Capitalisation of internally generated software (205,012) (49,037) (254,049)–––––––––––– –––––––––––– ––––––––––––Total (213,456) (46,401) (259,857)–––––––––––– –––––––––––– ––––––––––––Deferred tax asset/(liability) net (207,530) 424,654 217,124–––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– ––––––––––––Reflected in the statement of financialposition as follows:Deferred tax assets – 339,089Deferred tax (liabilities) (207,530) (121,965)–––––––––––– ––––––––––––Deferred tax asset/(liability) net (207,530) 217,124–––––––––––– –––––––––––––––––––––––– ––––––––––––80

(Debit)/credit1 January to statement 30 June2010 of Income 2010Deferred tax assetsWrite off of pre-operating expenses andintangible assets 1,381 5,368 6,749Revenue recognition 328,119 – 328,119Accrued expenses 10,970 – 10,970Employee benefits liability 3,228 (289) 2,939Provision for doubtful receivables 133,283 – 133,283––––––––––––– ––––––––––––– –––––––––––––Total 476,981 5,079 482,060Deferred tax liabilitiesWrite off of pre-operating expenses andintangible assets (1,395) 1,395 –Reversal of debit exchange differences (4,413) – (4,413)Capitalisation of internally generated software (254,049) 21,928 (232,121)––––––––––––– ––––––––––––– –––––––––––––Total (259,857) 23,323 (236,534)––––––––––––– ––––––––––––– –––––––––––––Deferred tax asset net 217,124 28,402 245,526––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Reflected in the statement of financial positionas follows:Deferred tax assets 339,089 339,089Deferred tax liabilities (121,965) (93,563)––––––––––––– –––––––––––––Deferred tax asset net 217,124 245,526––––––––––––– –––––––––––––––––––––––––– –––––––––––––The deferred tax asset recognised refer to one subsidiary of the Group for which sufficient taxableprofits are anticipated in order for this asset to be recovered. On the other hand, another subsidiary ofthe Group incurred losses in 2009 and 2010; however, no deferred tax is recognised due to uncertaintyaround occurrence of future taxable profits given the current facts and circumstances. Theunrecognised tax losses amount to €1,000,000.9. Earnings/(losses) per shareBasic earnings/(losses) per share amounts are calculated by dividing net profit (loss) for the yearattributable to ordinary equity holders of the parent by the weighted average number of ordinaryshares outstanding during the year. Diluted earnings per share amounts are calculated by dividing thenet profit/(loss) attributable to ordinary equity holders of the parent (after adjusting for interest on theconvertible preference shares) by the weighted average number of ordinary shares outstanding duringthe year plus the weighted average number of ordinary shares that would be issued on conversion ofall the dilutive potential ordinary shares into ordinary shares.(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Net profit/(loss) attributable toordinary equity holders of theparent from continuing operations 817,104 224,912 (1,081,382) (2,359,060) 986,886Weighted average number ofordinary shares for basic anddiluted earnings per share 1,652,839 1,652,839 1,652,839 1,652,839 1,652,839––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Earnings/(losses) per sharebasic and diluted 0.49 0.14 (0.65) (1.43) 0.60––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––81

10. Property, Plant and EquipmentProperty, plant and equipment in the accompanying financial statements are analyzed as follows:Furniture &Leasehold other Transportation Networkimprovements equipment means equipment TotalCOSTAt 1 January 2007 4,614 419,112 – 891,033 1,314,759Additions 37,126 152,179 1,450 422,320 613,075Sales/Write offs-disposals – (46,086) – – (46,086)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2007 41,740 525,205 1,450 1,313,353 1,881,748––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Additions 116,465 252,543 15,589 165,078 549,675––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2008 158,205 777,748 17,039 1,478,431 2,431,423––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Additions 158,099 137,154 – 129,092 424,345Sales/Write offs – (979) (7,283) (29,970) (38,232)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2009 316,304 913,923 9,756 1,577,553 2,817,536––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Additions 18,413 33,248 122,300 104,492 278,453Sales/write offs – (23,800) (2,984) (13,693) (40,477)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 30 June 2010 334,717 923,371 129,072 1,668,352 3,055,512––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––DEPRECIATIONAt 1 January 2007 (2,755) (216,612) – (725,671) (945,038)Depreciation expense (1,085) (92,309) (15) (197,784) (291,193)Sales/Write offs – 957 – – 957––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2007 (3,840) (307,964) (15) (923,455) (1,235,274)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Depreciation expense (9,369) (137,888) (1,642) (191,192) (340,091)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2008 (13,209) (445,852) (1,657) (1,114,647) (1,575,365)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Depreciation expense (23,233) (136,776) (1,984) (189,450) (351,443)Sales/Write offs – 98 1,186 4,257 5,541––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 31 December 2009 (36,442) (582,530) (2,455) (1,299,840) (1,921,267)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Depreciation expense (16,102) (59,148) (7,312) (117,226) (199,788)Sales/write offs – 431 2,984 924 4,339––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––At 30 June 2010 (52,544) (641,247) (6,783) (1,416,142) (2,116,717)––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––NET BOOK VALUEAt 31 December 2007 37,900 217,241 1,435 389,898 646,474At 31 December 2008 144,996 331,896 15,382 363,784 856,059At 31 December 2009 279,862 331,393 7,301 277,713 896,269At 30 June 2010 282,173 282,124 122,289 252,210 938,795There is no property, plant and equipment that have been pledged as security.82

11. Investment PropertiesThe movement of investment properties is analysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Opening balance at 1 January 697,000 727,000 709,000 665,000Additions 135,854 – – –Valuation of investment propertiesat fair value (Note 6) (105,854) (18,000) (44,000) (24,000)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Closing balance at 31 December 727,000 709,000 665,000 641,000––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Investment property is stated at fair value, which has been determined based on valuations performedby American Appraisal (Hellas) Limited an accredited independent valuator as at 31 December 2007,2008 and 2009 and as at 30 June 2010. The fair value represents the amount at which the assets couldbe exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’slength transaction at the date of valuation, in accordance with International Valuation Standards.On October 10, 2006 the investment property was secured by mortgage for the amount of €1,000,000as collateral of short term interest bearing loan and borrowing was secured by mortgage for theamount of €1,000,000 as collateral of short term interest bearing loan and borrowing.On August 30, 2007 the ownership of the investment property was transferred from Internet QTelecommunication and internet services S.A. to Acalendra Enterprises Limited, both subsidiaries ofthe Group.83

12. Intangible AssetsIntangible assets in the accompanying financial statements of the Group are analysed as follows:InternallyPurchased generatedSoftware software TotalCOSTAt 1 January 2007 287,916 245,614 533,530Additions 33,794 633,407 667,201––––––––––––– ––––––––––––– –––––––––––––At 31 December 2007 321,710 879,021 1,200,731––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Additions 795,656 794,188 1,589,844––––––––––––– ––––––––––––– –––––––––––––At 31 December 2008 1,117,366 1,673,209 2,790,575––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Additions 1,145,417 1,038,861 2,184,278––––––––––––– ––––––––––––– –––––––––––––At 31 December 2009 2,262,783 2,712,070 4,974,853––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Additions 17,184 253,677 270,861––––––––––––– ––––––––––––– –––––––––––––At 30 June 2010 2,279,967 2,965,747 5,245,714––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––AMORTISATIONAt 1 January 2007 (192,248) (36,842) (229,090)Amortisation expense (73,247) (214,736) (287,983)––––––––––––– ––––––––––––– –––––––––––––At 31 December 2007 (265,495) (251,578) (517,073)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Amortisation expense (244,962) (415,197) (660,159)––––––––––––– ––––––––––––– –––––––––––––At 31 December 2008 (510,457) (666,775) (1,177,232)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Amortisation expense (503,567) (642,349) (1,145,916)––––––––––––– ––––––––––––– –––––––––––––At 31 December 2009 (1,014,024) (1,309,124) (2,323,148)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––Amortisation expense (322,854) (339,425) (662,279)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––At 30 June 2010 (1,336,878) (1,648,549) (2,985,427)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––NET BOOK VALUEAt 31 December 2007 56,215 627,443 683,658At 31 December 2008 606,909 1,006,434 1,613,343At 31 December 2009 1,248,759 1,402,946 2,651,705At 30 June 2010 943,089 1,317,198 2,260,28784

13. Trade ReceivablesTrade receivables in the accompanying financial statements are analysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Domestic and foreign customers 2,182,108 6,891,678 6,817,227 5,479,916Accrued revenues 937,805 542,755 59,095 507,019––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––3,119,913 7,434,433 6,876,322 5,986,935Less: Allowance for doubtfulaccounts receivable (400,000) (400,000) (400,000) (400,000)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total trade receivables 2,719,913 7,034,433 6,476,322 5,586,935––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––The ageing analysis of trade receivables is as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Neither past due nor impaired: 2,331,818 6,766,361 6,326,414 5,447,795Past due not impaired:90-180 days 388,095 268,072 5,775 22,767181-365 days – – 35,477 7,717>365 days – – 108,656 108,656––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total 2,719,913 7,034,433 6,476,322 5,586,935––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Trade receivables are non-interest bearing and are normally settled on 0-90 days’ terms.14. Prepayments and Other ReceivablesPrepayments and other receivables in the accompanying financial statements are analysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Income and other tax advances 156,192 131,996 595,959 772,331Prepaid expenses 18,706 223,157 214,465 442,751Loans due from related parties (Note 21) 665,097 713,832 – –Advances to service providers 2,107,621 1,222,935 1,696,866 1,575,876Other debtors 193,384 2,931 189,162 220,751––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––3,141,000 2,294,851 2,696,452 3,011,709Less: Allowance for doubtful accounts (900,000) (958,571) (900,000) (900,000)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total 2,241,000 1,336,280 1,796,452 2,111,709––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––85

The movement in the allowance for doubtful accounts is as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Opening balance as of 1 January 700,000 900,000 958,571 900,000Provision (Note 6) 200,000 58,571 44,417 –Utilisation – – (102,988) –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Closing balance 900,000 958,571 900,000 900,000––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––For terms and conditions relating to related parties loans and receivables, refer to Note 21.15. Cash and Cash Equivalents and Restricted CashCash and cash equivalents and restricted cash in the accompanying financial statements are analysedas follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Cash in hand 1,655 10,662 12,384 10,416Cash at banks 685,582 873,451 1,110,607 2,830,679––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Cash and cash equivalents 687,237 884,113 1,122,991 2,841,095Restricted cash 271,245 240,579 205,990 443,015––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total cash and cash equivalentsand restricted cash 958,482 1,124,692 1,328,981 3,284,110––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Cash at banks earns interest at floating rates based on monthly bank deposit rates. Interest earned oncash at banks and time deposits is accounted for on an accrual basis and for the years ended31 December 2007, 2008, 2009 was €17,564, €38,295 and €20,322 respectively and for the periods ended30 June 2009 and 2010 amounted to €14,332 and €15,932 respectively, and is included in financialincome (Note 7) in the accompanying income statement.Restricted cash represents the amounts for the issuance of bank guarantees arising in the ordinarycourse of business (Note 23).16. Share CapitalThe Company’s authorized share capital as at 31 December 2007, 2008 and 2009 and as at 30 June 2010was divided into 1,149,500 ordinary shares and 825,000 preferred ordinary shares of £0.01 par value each.The Company’s issued share capital as at 31 December 2007, 2008 and 2009 was divided into 987,233ordinary shares and 665,606 preferred ordinary shares of £0,01par value each. All issued shares arefully paid. The share capital translated into Euro using the historical rates amounted to €24,016.The Company’s issued share capital as at 30 June 2010 is divided into 1,357,015 ordinary shares and295,824 preferred ordinary shares of £0,01par value each. All issued shares are fully paid. The sharecapital translated into Euro using the historical rates amounted to €24,016.The preferred ordinary shares rank senior to all other classes or series of shares and entitle the holdersto rights as regards dividend and capital on a liquidation event, reduction of capital or otherwise,voting in General Meetings and conversion to ordinary shares.The share premium of €2,428,698 is the result of the participation of new shareholders in the sharecapital increases that took place on August 5, 2005 and May 31, 2006.86

17. Interest-Bearing Loans and Borrowings(a) Long-term loans:Long-term loans for the Group at 31 December 2007, 2008 and 2007 and at 30 June 2010 areanalysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Bond loan 800,000 1,249,100 1,147,300 1,096,400Other loans – – 125,000 104,167––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total 800,000 1,249,100 1,272,300 1,200,567Less current portion:– Bond loan (50,900) (101,800) (101,800) (101,800)– Other loan – – (41,666) (41,666)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total current portion (50,900) (101,800) (143,466) (143,466)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Long-term portion 749,100 1,147,300 1,128,834 1,057,101––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––The Group has entered into two Bond Loans agreements as follows:●●During March 2007, the Group entered into a Bond Loan agreement for a principal amountof €800,000 which bears interest at the six-month Euribor plus a margin of 2.3 per cent.. Therepayment of the Bond is in 12 semiannual installments. The first 11 installments are equaland amount to €50,900. The final installment will be made on the Bond’s maturity(20/03/2014) and amount to €240,100. First installment was paid on September 22, 2008.During March 2008, the Group entered into a Bond Loan agreement for a principal amountof €500,000 which bears interest at the six-month Euribor plus a margin of 2.0 per cent.. Thepayment will be made by one installment in April 8, 2013.The purpose of the above Bond Loans is the refinancing of existing bank indebtedness and thefinancing of a portion of the Group’s capital expenditure.The total interest expense for long-term borrowings for the years ended 31 December 2007, 2008 and2009 amounted to €41,983, €84,895 and €62,539 respectively and for the periods ended 30 June 2009and 2010 amounted to €32,494 and €18,744 respectively and is included in financial expenses(Note 7), in the accompanying consolidated income statements.(b)Short-term borrowings:The Group has short-term borrowings (overdraft facilities) with annual variable interest rateswhich vary from 5 per cent. to 8 per cent. The table below presents the available credit lines of theCompany together with the utilized portion.As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Credit lines available 5,450,000 6,500,000 4,500,000 4,500,000Unused portion (3,395,489) (2,672,144) (575,227) (1,019,244)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Used portion 2,054,511 3,827,856 3,924,773 3,480,756––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––The total interest expense for short-term borrowings for the years ended 31 December 2007, 2008and 2009, amounted to €131,946, €183,122 and €313,357, respectively, and is included in financecosts (Note 7), in the accompanying consolidated income statements. The total interest expense forshort-term borrowings for the periods ended 30 June 2009 and 2010, amounted to €166,981 and87

€146,057 respectively and is included in financial expenses (Note 7), in the accompanying financialstatements.18. Trade PayablesTrade accounts payable in the accompanying financial statements are analysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Payables to suppliers 897,780 2,605,295 3,497,288 4,548,480––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––897,780 2,605,295 3,497,288 4,548,480––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––19. Accruals and other Current LiabilitiesAccrued and other current liabilities in the accompanying financial statements are analysed as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Value added tax 95,918 377,442 1,178,164 440,935Accrued expenses 67,090 245,742 808,426 965,229Social security payable 120,534 67,375 78,079 42,889Other taxes and duties 27,461 42,479 132,516 222,353Customer advances – 157,152 185,000 45,944Other current liabilities 29,844 49,391 31,885 48,659––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––340,847 939,581 2,414,070 1,766,009––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––20. Employee Benefits LiabilityThe employee benefits liability refers only to the Greek subsidiary since the majority of the personnelis employed by the Greek entity. Additionally, the Greek subsidiary supports through the employedpersonnel the operations as regards to the other subsidiaries and therefore, the amount of therespective reserve for the other operations is considered as not material for the Group in total.Under Greek labour law, employees and workers are entitled to termination payments in the event ofdismissal or retirement with the amount of payment varying in relation to the employee’s or worker’scompensation, length of service and manner of termination (dismissed or retired). Employees orworkers who resign or are dismissed with cause are not entitled to termination payments. Theindemnity payable in case of retirement is equal to 40 per cent. of the amount which would be payableupon dismissal without cause. In Greece, local practice is that pension plans are not funded. Inaccordance with this practice, the company does not fund these plans.The company charges the income statement for benefits earned in each period with a correspondingincrease in employee benefits liability. Benefits payments made each period to retirees are chargedagainst this liability.88

An international firm of independent actuaries evaluated the Greek subsidiary’s liabilities arising fromthe obligation to pay employee benefits. The details and principal assumptions of the actuarial studyas at 31 December 2007, 2008 and 2009 and as at 30 June 2010 have as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Present value of unfunded obligations 9,461 8,686 16,299 14,697Unrecognised actuarial net loss 308 1,173 (2,851) –––––––––––– ––––––––––– ––––––––––– –––––––––––Net liability in the consolidatedstatement of financial position 9,769 9,859 13,448 14,697––––––––––– ––––––––––– ––––––––––– –––––––––––Components of net periodicpension cost:Service cost 4,263 1,682 3,574 4,524Interest cost 304 473 496 626Amortization of unrecognisedactuarial loss – – (25) –––––––––––– ––––––––––– ––––––––––– –––––––––––Regular charge to operations 4,567 2,155 4,045 5,150Employee liability accrued foradditional voluntary contributions 1,661 7,148 11,368 14,350––––––––––– ––––––––––– ––––––––––– –––––––––––Total charge to operations 6,228 9,303 15,413 19,500Net liability at beginning of year 6,898 9,768 9,859 13,448Actual benefits paid by the Company (3,357) (9,212) (11,824) (18,251)Expense recognized in the consolidatedincome statements 6,228 9,303 15,413 19,500––––––––––– ––––––––––– ––––––––––– –––––––––––Net liability at end of year 9,769 9,859 13,448 14,697––––––––––– ––––––––––– ––––––––––– –––––––––––Net liability at start of period 6,898 9,460 8,696 13,448Service cost 4,263 1,682 3,574 4,524Interest cost 304 473 496 626Benefits paid (3,357) (9,212) (11,824) (18,251)Employee liability accrued foradditional voluntary contributions 1,661 7,138 11,384 14,350Actuarial net loss (308) (855) 3,973 –––––––––––– ––––––––––– ––––––––––– –––––––––––Present value of obligation at endof period 9,461 8,686 16,299 14,697––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– –––––––––––Principal AssumptionsDiscount rate 5.00% 5.70% 5.09% 5.09%Inflation rate 2.00% 2.00% 2.00% 2.00%Rate of compensation increase 4.00% 3.00% 3.00% 3.00%21. Related PartiesRelated parties consist of companies that have a significant influence or control over the Group(shareholders) or are companies which are owned by the Group’s shareholders. All transactions withrelated parties have been eliminated in the consolidated financial statements.89

The following table provides the total amount of transactions that have been entered into with relatedparties for the relevant financial years and respective balances (for information regarding outstandingloan balances at 31 December 2007, 2008 and 2009 and at 30 June 2010 (refer to Note 14):loans TotalSales to Purchases owed by AmountsGroup related from related related owed byRelated Party relation Fiscal years parties parties parties related partiesInternet Q CommonInc. shareholder 2007 94,556 – 665,097 894,4552008 – 478,341 713,832 713,8322009 – – – –30.06.2010 – – – –––––––––––– ––––––––––– ––––––––––– –––––––––––Totals 2007 94,556 – 665,097 894,455––––––––––– ––––––––––– ––––––––––– –––––––––––2008 – 478,341 713,832 713,832––––––––––– ––––––––––– ––––––––––– –––––––––––2009 – – – –––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– –––––––––––30.06.2010 – – – –––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– –––––––––––Terms and conditions with transactions with related parties:The sales to and purchases from related parties are made at terms equivalent to those that prevail inarm’s length transactions. Outstanding balances at the year-end are unsecured, interest free andsettlement occurs in cash. There have been no guarantees provided or received for any related partyreceivables and payables. For the years ended 31 December 2007, 2008 and 2009, the Group has notrecorded any impairment of receivables relating to amounts owed by related parties. This assessment isundertaken each financial year through examining the financial position of the related party and themarket in which the related party operates.For the year ended 31 December 2009 and the period ended 30 June 2010 the Group has not recordedany impairment of receivables relating to amounts owed by related parties. This assessment isundertaken each financial year through examining the financial position of the related party and themarket in which the related party operates.During the year 2006, the subsidiary of the Group Internet Q Telecommunication and internet servicesS.A. granted a loan amounted to €250.000 to Internet Q inc., a company under common control with theGroup, which was intended to finance the short-term working capital needs. As at 31 December 2008 theoutstanding balance of the above loan was amounted to €204,866 (2007: €250,000). The loan was fullyrepaid in 2009.During the year 2007, the subsidiary Escape Communication Trading Ltd granted a loan to Internet Q Inc.a company under common control with the Group, which bears interest 1 per cent. above Euribor and isrepayable upon first written demand of the lender to the borrower. It was intended to finance theshort-term working capital needs. As at 31 December 2008 the outstanding balance of the above loan wasamounted to €508,966 (2007: €415,097). The loan was fully repaid in 2009.90

Salaries and fees for the members the Board of Directors (“BoD”) and the senior management of theGroup for the years ended 31 December 2007, 2008 and 2009 and for the period ended 30 June 2010are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Salaries and fees forexecutive membersof the BoD 94,655 150,655 268,430 138,113 173,928Salaries and fees fornon-executivemembers of the BoD – 28,000 72,000 36,000 18,000Salaries and fees forSenior Management 156,443 208,022 397,370 198,685 151,439––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total 251,098 386,677 737,800 372,798 343,367––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––In respect of the highestpaid director:––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Aggregated remuneration 94,655 150,655 268,430 138,113 142,619––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––22. Auditors’ RemunerationThe remuneration of the auditors for the years ended 31 December 2007, 2008 and 2009 and for theperiod ended 30 June 2010 are analysed as follows:(Unaudited)Year ended Year ended Year ended Period ended Period ended31 December 31 December 31 December 30 June 30 June2007 2008 2009 2009 2010Audit of the financialstatements 1 56,936 87,517 86,468 – 78,220Other fees to auditors:Other services 2 – – – – 4,380––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total 56,936 87,517 86,468 – 82,600––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––1. The audit fees relates to the Company for the year ended 31 December 2007, 2008 and 2009 and for the period ended30 June 2010 are €2,536, €3,717, €4,380 and Nil respectively.2. The amount relates to the Company.23. Commitments and ContingenciesContingent assets (Litigation and Claims)The Group is currently involved in a number of legal proceedings and has various claims pendingarising in the ordinary course of business. A claim that could significantly impact the Group’soperating results or financial position is described below.From May to August 2009, Internetq Poland SPzoo organized on behalf of a local mobile operator(PTK Centertel/Orange) a successful mobile marketing campaign. This campaign was run inconjunction with a local firm called EL2 Sp, a subsidiary of MIT Group which is a listed company onthe Warsaw stock exchange. The role of Internetq Poland SPzoo was focused on providing marketingand technological support. Internetq Poland SPzoo contributed to the project’s operating costs and inreturn it was contractually entitled to invoice EL2 Sp a sum of €2m, dependent upon the success of thecampaign.91

The Directors understand that PTK Centertel/Orange was satisfied with the service provided to itssubscribers and the Group has continued to work with PTK Centertel/Orange without EL2 Sp’sparticipation on subsequent, successful campaigns. The Group is satisfied that it fulfilled all itscontractual obligations, including both technical service delivery and full contribution to the relevantcampaign operating costs. Accordingly the company issued an invoice for approximately €2,000,000 inNovember 2009. EL2 Sp has refused to pay the invoice, despite collecting all funds due to it from PTKCentertel/Orange, arguing that Internetq Poland SPzoo had not delivered the contracted services. InJanuary 2010 Internetq Poland SPzoo filed a lawsuit against EL2 Sp. This initial proceeding has beensuperseded by a revised proceeding, including new relevant evidence that the Directors believe castssignificant doubt on the allegations of EL2 Sp on which it based its refusal of payment. On25 November 2010 the Group filed with the Regional Court in Warsaw a lawsuit requesting fullpayment of the amounts outstanding. On the basis of discussions with the Group’s legal advisors thedirectors believe this strategy significantly strengthens the Group’s legal position and the likelihood ofa favourable resolution.In the event that the legal proceeding is successful but the Group is unable to recover the amountreceivable from EL2 Sp, the Group’s legal advice is that it can pursue legal proceedings against theparent entity and wider MIT Group.While at the time of issuing the invoice the Directors were confident that the company had met itscontractual obligations, the deterioration in the relationship with EL2 Sp that was already evident atthat point and the realisation that amounts would only be recovered as a result of legal proceedingscaused management to conclude that it was premature to recognise any revenue at that stage. At thetime of approving these financial statements the Directors remain confident that its legal proceedingswill be successful and that the invoiced value will be recovered. However, the likelihood of success isnot sufficiently certain to merit recognition of an asset under IFRS.The direct costs that were attributable to this campaign of €734,525 have been recorded in the incomestatement as an exceptional item within cost of revenues.CommitmentsThe Group has entered into commercial operating lease agreements for the lease of office space andoffices and cars. These lease agreements have an average life of 5 to 10 years with renewal termsincluded in certain contracts. Future minimum rentals payable under non-cancelable operating leasesas at 31 December 2007, 2008 and 2009 and as at 30 June 2010 are as follows:As at As at As at As at31 December 31 December 31 December 30 June2007 2008 2009 2010Within one year 185,760 219,300 288,472 290,218After one year but notmore than five years 533,963 511,255 965,582 1,138,328More than five years 234,451 159,874 716,320 414,653––––––––––– ––––––––––– ––––––––––– –––––––––––Total 954,174 890,429 1,970,374 1,843,199––––––––––– ––––––––––– ––––––––––– –––––––––––GuaranteesThe Group has contingent liabilities in respect of performance bank guarantees arising in the ordinarycourse of business. These guarantees for the years ended 31 December 2007, 2008 and 2009 amountedto €271,245, €240,579 and €205,990 respectively and for the period ended 30 June 2010 €443,015.92

24. Financial Risk Management Objectives and PoliciesFair ValueThe carrying amounts reflected in the accompanying balance sheets for cash and cash equivalents,trade and other accounts receivable, prepayments, trade and other accounts payable and accrued andother current liabilities approximate their respective fair values due to the relatively short-term maturityof these financial instruments. The fair values of available for sale financial assets and assets held fortrading are reflected in the accompanying consolidated balance sheets. The fair value of variable rateloans and borrowings approximate the amounts appearing in the statements of financial position.The Group is exposed to market risk, credit risk and liquidity risk. The Group has developed a riskmanagement process to monitor and control these risks. The Group’s overall risk managementprogram focuses on the unpredictability of the financial markets and seeks to minimise potentialadverse effects on the group’s financial performance.The Board of Directors and senior management carry out the risk management function. The Groupdoes not undertake any transactions of a speculative nature or which are unrelated to its activities.Market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market prices. Market risk, for the Group, comprises mainly interest rate riskand currency risk. Financial instruments affected by market risk include loans and borrowings,deposits, available-for-sale investments, and derivative financial instruments.Interest Rate Risk: Interest rate risk is the risk that the fair value or future cash flows of a financialinstrument will fluctuate because of changes in market interest rates. The Group’s exposure to the riskof changes in market interest rates relates primarily to the Group’s long-term debt obligations withfloating interest rates. With respect to long-term borrowings, Management monitors on a constantbasis the interest rate variances and evaluates the need for assuming certain positions for the hedgingof such risks.The following table demonstrates the sensitivity of the Group’ profit before tax (through the impact ofthe outstanding floating rate borrowings at the end of the period on profits) to reasonable changes ininterest rates, with all other variables held constant.31 December 2007 31 December 2008 31 December 2009 30 June 2010Interest Interest Interest InterestRate Effect on Rate Effect on Rate Effect on Rate Effect onVariation income Variation income Variation income Variation incomeEURO 1.00% (23,655) 1.00% (39,657) 1.00% (57,332) 1.00% (45,318)(1.00)% 23,655 (1.00)% 39,657 (1.00)% 57,332 (1.00)% 45,318The positive impact of interest received from deposits is excluded from the above analysis.Foreign Currency Risk: Foreign currency risk is the risk that the fair value or future cash flows of afinancial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposureto the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities(when revenue or expense are denominated in a different currency from the Group’s functionalcurrency) and the Group’s net investments in foreign subsidiaries. The Group is active internationallyand is exposed to variations in foreign currency exchange rate which arise mainly from Poland ZLOTY(effectively from 2008 when the operations commenced). The Group’s exposure to foreign currencychanges for all other currencies is not material.The following table presents the sensitivity to a reasonably possible change in the ZLOTY exchangerate with all other variables held constant of the Group’s profit before tax (due to changes in the fairvalue of monetary assets and liabilities).93

If the Euro had increased against the ZLOTY by a percentage of 5 per cent., then the result for theyear would have the following effect:01.01-31.12.2008 01.01-31.12.2009 01.01-30.06.2010Result for the year (47,870) (62,998) (157,971)If the Euro had decreased against the ZLOTY by a percentage of 5 per cent., then the result for theyear would have the following effect:01.01-31.12.2008 01.01-31.12.2009 01.01-30.06.2010Result for the year 47,870 62,998 157,971The calculation of the effect on the result before tax is based on year average foreign exchange rates.The Group’s foreign exchange rates exposure varies within the year depending on the volume of thetransactions in foreign exchange. Although the analysis above is considered to be representative of thecompany’s currency risk exposure.Credit RiskCredit risk is the risk that counterparty will not meet its obligations under a financial instrument orcustomer contract, leading to a financial loss. The Group is exposed to credit risk from its operatingactivities (primarily for trade receivables and loan notes) and from its financing activities, includingdeposits with banks and financial institutions, foreign exchange transactions and otherfinancial instruments.The Group’s maximum exposure to credit risk, due to the failure of counter parties to perform theirobligations as at 31 December 2007, 2008 and 2009, in relation to each class of recognised financialassets, is the carrying amount of those assets as indicated in the accompanying balance sheets. TheGroup closely monitors its trade receivables. Trade receivables are subject to credit limits, control andapproval procedures in all companies of the group. The Group has no significant concentrations ofcredit risk with any single counter party.Liquidity RiskThe Group manages liquidity risk by monitoring forecasted cash flows and ensuring that adequatebanking facilities and reserve borrowing facilities are maintained. The Group has sufficient undrawncommitted and uncommitted borrowing facilities that can be utilized to fund any potential shortfall incash resources.Prudent liquidity risk management implies the availability of funding through adequate amounts ofcommitted credit facilities, cash and marketable securities and the ability to close out those positionsas and when required by the business or project.The table below summarizes the maturity profile of financial liabilities at 31 December 2007, 2008 and2009 respectively and at 30 June 2010, based on contractual payments.As at31 December Less than 6 to 122007 On demand 6 months months 1 to 5 years >5 years TotalBank debt 2,054,511 50,900 52,800 594,100 248,023 3,000,334Tradepayables – 897,780 – – – 897,780Accrued andcurrentliabilities – 340,847 – – – 340,847––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total 2,054,511 1,289,527 52,800 594,100 248,023 4,238,961––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––94

As at31 December Less than 6 to 122008 On demand 6 months months 1 to 5 years >5 years TotalBank debt 3,827,856 96,432 60,740 1,021,928 248,023 5,254,979Tradepayables – 2,605,295 – – – 2,605,295Accrued andcurrentliabilities – 206,543 – – – 206,543––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Total 3,827,856 2,908,270 60,740 1,021,928 248,023 8,066,817––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––As at31 December Less than 6 to 122009 On demand 6 months months 1 to 5 years >5 years TotalBank debt 3,924,773 107,914 79,894 1,234,985 – 5,347,566Tradepayables – 3,497,288 – – – 3,497,288Accrued andcurrentliabilities – 216,855 – – – 216,855––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––Total 3,924,773 3,822,057 79,894 1,234,985 – 9,061,709––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––As at Less than 6 to 1230 June 2010 On demand 6 months months 1 to 5 years >5 years TotalBank debt 3,480,756 79,894 79,894 1,153,411 – 4,793,955Trade payables – 4,548,480 – – – 4,548,480Accruals andcurrentliabilities – 94,603 – – – 94,603––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––Total 3,480,756 4,722,977 79,894 1,153,411 – 9,437,038––––––––––– ––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––––Capital ManagementThe primary objective of the Group’s capital management is to ensure that it maintains a stronginternal calculation credit rating and healthy capital ratios in order to support its operations andmaximize shareholder value. The Group’s policy is to maintain leverage targets in line with aninvestment grade profile. The Group monitors capital using Net Debt to EBITDA ratio. The Groupincludes within net debt, interest bearing loans and borrowings, less cash and cash equivalents.EBITDA is defined by adding back to (or subtracting form) profit after tax, income tax, finance costsand finance income and depreciation and amortization expenses.95

Year ended Year ended Year ended Period ended31 December 31 December 31 December 30 June2007 2008 2009 2010Long Term Borrowings (note 17) 749,100 1,147,300 1,128,834 1,057,101Short Term Borrowings (note 17) 2,105,411 3,929,656 4,068,239 3,624,222––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Total Debt 2,854,511 5,076,956 5,197,073 4,681,323Less: Cash and cash equivalents(note 15) (687,237) (884,113) (1,122,991) (2,841,095)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Net Debt 2,167,274 4,192,843 4,074,082 1,840,228––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––EBITDA 1,824,440 1,855,261 1,249,543 2,573,211Exceptional costs of revenues – – 734,525 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Adjusted EBITDA 1,824,440 1,855,261 1,984,068 2,573,211––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Net Debt/EBITDA 1.19 2.26 3.26 0.71––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––Net Debt/Adjusted EBITDA – – 2.05 –––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––London, 6 December 2010On behalf of the Board of DirectorsDimitropoulos Nocetti KorletisPanagiotis Veronica KonstantinosChief AccountantRoumeliotakisDimitris96

PART IVADDITIONAL INFORMATION1. The Company1.1 The Company was incorporated and registered in England and Wales on 19 July 2005 under the1985 Act as a private limited company with the name InternetQ Limited. The Company’sregistered number is 05512988. The principal legislation under which the Company operates is the1985 Act and the Companies Act and the regulations made thereunder.AIM Rules,sch 2 PDAnnex 15.1.1, 5.1.2& 5.1.41.2 The principal purpose of the Company is to hold InternetQ Greece and the Subsidiaries as awholly owned subsidiary.5.1.51.3 On 29 October 2010, pursuant to a written resolution of the sole shareholder dated 28 October 2010,the Company was re-registered as a public limited company and the Registrar of Companies issuedthe Company with a certificate under section 761 of the Act entitling it to commence business.1.4 The Company’s registered office is at 51 Eastcheap, London EC3M 1JP and the telephone numberis 0207 623 1244. The principal place of business of the Company is located at 17 Troias Street,112 57 Athens, Greece and the telephone number is +30 211 101 1101. The liability of theCompany’s members is limited. The financial year end of the Company is 31 December.5.1.35.1.41.5 The Company is a member of a group. The Company has one wholly-owned subsidiary,InternetQ Greece, a company incorporated in Greece (company number 45657/01/B/00/186).1.6 InternetQ Greece has the following subsidiary companies:(a) InternetQ Turkey, a company incorporated and registered in Turkey;(b) InternetQ Poland, a company incorporated and registered in Poland;(c) Mobile Dialogue, a company incorporated and registered in Poland;(d) Escape, a company incorporated and registered in Cyprus;(e) InternetQ Ukraine, a company incorporated and registered in Ukraine; and(f) InternetQ Brazil, a company incorporated and registered in Brazil.5.1.5, 7.1 & 7.221.1.1(a) &21.1.1(b)1.7 The entire issued share capital of InternetQ Greece was acquired by the Company pursuant tocapital contribution agreements described in paragraphs 2.3, 2.7 and 2.9 of this Part IV.2. Share Capital2.1 The Company was incorporated with an authorised share capital of £1,000 divided into 100,000ordinary shares of £0.01 each of which 954 were issued fully paid up to Panagiotis Dimitropoulosand 46 were issued to Nikolaos Grivas, both subscribers to the Memorandum of Association.2.2 By ordinary resolutions dated 3 August 2005:(a) the authorised share capital of the Company was increased to £10,000 divided into 1,000,000ordinary shares of £0.01 each;(b) the board of directors was authorised generally and unconditionally pursuant to and inaccordance with section 80 of the 1985 Act to allot relevant securities (within the terms of thatsection) up to a maximum nominal amount equal to the nominal amount of the authorised butunissued share capital of the Company for a period of five years expiring on 5 August 2010.2.3 On 3 August 2005 pursuant to a capital contribution agreement between PanagiotisDimitropoulos and the Company, Panagiotis Dimitropoulos contributed 7,100 ordinary shares ofEUR 29.35 each held by him and representing 83.5 per cent. of the issued share capital ofInternetQ Greece to the Company. The consideration for such contribution was 954 ordinaryshares of £0.01 each already held by Panagiotis Dimitropoulos and the issue of fully paid up21.1.210.197

953,069 ordinary shares of £0.01 each. On the same date 45,931 ordinary shares of £0.01 eachwere issued and allotted fully paid to Nikolaos Grivas.2.4 On 5 August 2005:(a) by ordinary resolution the authorised share capital of the Company was increased to £16,500divided into 1,000,000 ordinary shares of £0.01 each and 650,000 Preferred Ordinary Shares(as defined below);(b) by special resolution each of 143,678 ordinary shares of £0.01 each to be transferred fromPanagiotis Dimitropoulos to NBG Technology LP was, on registration of NBG TechnologyLP as the registered holder of such ordinary shares, redesignated as 5 per cent. convertiblepreferred ordinary shares of £0.01 each (“Preferred Ordinary Shares”) in the share capital ofthe Company having the rights attached to them as set out in Article 2.2 of the Company’sarticles of association adopted on 5 August 2005 (by special resolution) and amended on 14September 2007; and(c) by ordinary resolution the board of directors was authorised generally and unconditionallypursuant to and in accordance with section 80 of the 1985 Act to allot relevant securities(within the terms of that section) up to a maximum nominal amount equal to the nominalamount of the authorised but unissued share capital of the Company for a period of fiveyears expiring on 5 August 2010.2.5 On 5 August 2005 326,541 Preferred Ordinary Shares and 45,931 ordinary shares of £0.01 eachwere issued to NBG Technology LP fully paid.2.6 On 7 November 2005 by ordinary resolution the authorised share capital of the Company wasincreased to £17,075 divided into 1,057,500 ordinary shares of £0.01 each and 650,000 PreferredOrdinary Shares by creation of 92,000 new ordinary shares of £0.01 each.2.7 Pursuant to a capital contribution agreement dated 7 November 2005 between PanagiotisDimitropoulos and the Company, Panagiotis Dimitropoulos contributed 425 ordinary shares ofEUR 29.35 each held by him and representing 5 per cent. of the issued share capital of InternetQGreece to the Company in consideration for issue of 57,471 ordinary shares of £0.01 each fullypaid in the capital of the Company.2.8 By ordinary resolutions dated 28 December 2005:(a) the authorised share capital of the Company was increased to £17,995 divided into 1,149,500ordinary shares of £0.01 each and 650,000 Preferred Ordinary Shares by creation of 92,000new ordinary shares of £0.01 each; and(b) the board of directors was authorised generally and unconditionally pursuant to and inaccordance with section 80 of the 1985 Act to allot relevant securities (within the terms ofthat section) up to a maximum nominal amount equal to the nominal amount of theauthorised but unissued share capital of the Company for a period of five years expiring on28 December 2010.2.9 Pursuant to a capital contribution agreement dated 28 December 2005 between PanagiotisDimitropoulos and the Company, Panagiotis Dimitropoulos contributed 680 ordinary shares ofEUR 29.35 each held by him and representing 8 per cent. of the issued share capital of InternetQGreece to the Company in consideration for issue of 91,955 ordinary shares of £0.01 each in thecapital of the Company fully paid.2.10 By ordinary resolutions dated 25 May 2006:(a) the authorised share capital of the Company was increased to £19,745 divided into 1,149,500ordinary shares of £0.01 each and 825,000 Preferred Ordinary Shares by creation of 175,000new Preferred Ordinary Shares; and(b) the board of directors was authorised generally and unconditionally pursuant to and inaccordance with section 80 of the 1985 Act to allot relevant securities (within the terms ofthat section) up to a maximum nominal amount equal to the nominal amount of the21.2.121.2.221.2.310.1 & 21.2.898

authorised but unissued share capital of the Company for the time being for a period of fiveyears expiring on 25 May 2011.2.11 On 31 May 2006 176,872 Preferred Ordinary Shares were issued to NBG Technology LP fullypaid.2.12 By an ordinary resolution dated 11 June 2007 18,515 ordinary shares of £0.01 each registered inthe name of NBG Technology LP were redesignated as Preferred Ordinary Shares.20.7.12.13 Pursuant to an agreement for acquisition of shares in the Company dated 11 June 2007 andentered into among NBG Technology LP, Nikolaos Grivas and Panagiotis Dimitropoulos,Nikolaos Grivas sold 27,462 ordinary shares of £0.01 each to Panagiotis Dimitropoulos and18,515 ordinary shares of £0.01 each to NBG Technology LP.2.14 By written resolution dated 14 September 2007 the authorised share capital of the Company wasincreased to £20,614.92 by creation of 86,992 B ordinary shares of £0.01 each (“B OrdinaryShares”). No B Ordinary Shares were ever issued.2.15 In December 2009 Pitragon Investments Limited and NBG Technology LP entered into a sharesale and purchase agreement pursuant to which Pitragon Investments Limited agreed to buy665,606 Preferred Ordinary Shares. The final agreement between the parties in relation to sale andpurchase of Preferred Ordinary Shares was entered into on 4 May 2010 which governed themechanics of the transfer. The transfer of these shares was done in three steps with the last steptaking place on 30 September 2010. Following the transfer all of the transferred PreferredOrdinary Shares were redesignated as ordinary shares of £0.01 each by a special resolution dated30 September 2010.2.16 By a members’ written resolution dated 27 October 2010 it was resolved that:(a) 86,992 B Ordinary Shares in the capital of the Company be re-designated as ordinary sharesof £0.01 each;(b) the Memorandum of Association of the Company be cancelled and thereby the restrictionon the Company’s authorised share capital removed;(c) the articles of association of the Company be amended to include a provision stating thatthe members’ liability is limited;(d) the directors be authorised to issue and allot shares in the Company up to an aggregatenominal amount of £100,000.10.12.17 The board of directors by a resolution passed at a meeting held on 27 October 2010 issued andallotted as fully paid 3,347,161 ordinary shares of £0.01 each in consideration for an aggregatesubscription price of £33,471.61 paid in cash to Pitragon Investments Limited thereby increasingthe Company’s issued share capital to £50,000.2.18 On 27 October 2010 Panagiotis Dimitropoulos transferred his 987,233 ordinary shares of £0.01each to Pitragon Investments Limited by way of gift and the board of directors by a resolutionpassed at its meeting held on the same day approved the registration of Pitragon InvestmentsLimited in the register of members of the Company as the sole shareholder of the Company.2.19 Pursuant to a written resolution of the sole shareholder dated 28 October 2010 the Company wasre-registered as a public limited company on 29 October 2010, and the Articles were adopted.2.20 The sole shareholder of the Company passed the following resolutions at a meeting held at shortnotice on 29 October 2010 to:(a) sub-divide each ordinary share of £0.01 each into 4 Ordinary Shares of 0.25 pence each;(b) authorise the board of directors to issue and allot Ordinary Shares up to an aggregatenominal amount of £20,000;(c) disapply statutory pre-emption rights with respect to securities up to an aggregate amount of£20,000; and9921.2.6

(d)give authority to buy back Ordinary Shares up to an aggregate nominal value of £1,600 inthe capital of the Company at a minimum price of 0.25 pence each.2.21 On 3 November 2010 Pitragon Investments Limited transferred by way of a gift such number ofOrdinary Shares and to such transferees as set out below:(a) Konstantinos Korletis 1,000,000 Ordinary Shares(b) Nahia Trading Limited 200,000 Ordinary Shares(c) Apalia Limited 120,000 Ordinary Shares(d) Sofora Limited 100,000 Ordinary Shares(e) Ander Trading Limited 80,000 Ordinary SharesOn 25 November 2010 Pitragon Investments Limited transferred a further 350,000 OrdinaryShares to Nahia Trading Limited bringing its total holding to 550,000 Ordinary Shares.Each of the above transfers were approved by the board of directors at meetings held on therespective days and the transferees registered at the register of members of the Companyaccordingly.2.22 No securities of the Company are currently in issue with a fixed date on which entitlement to adividend arises and there are no arrangements in force whereby future dividends are waived oragreed to be waived.2.23 Save as disclosed in paragraphs 2.3, 2.7, 2.9 and 10 of this Part IV and apart from the issue ofOrdinary Shares pursuant to the Placing and the Warrants:(a) no share or loan capital of the Company has, since the date of incorporation of theCompany, been issued or been agreed to be issued, fully or partly paid, either for cash or fora consideration other than cash and no such issue is now proposed;(b) no commissions, discounts, brokerages or other special terms have been granted by theCompany since the date of its incorporation in connection with the issue or sale of any suchshare or loan capital; and(c) no share or loan capital of the Company is under option or is agreed conditionally orunconditionally to be put under option.21.2.43. Articles of AssociationThe Company’s Articles contain, inter alia, provisions to the following effect:3.1 Annual General MeetingsAt least 21 clear days’ notice of every Annual General Meeting and at least 14 clear days’ noticeof every other Extraordinary and General Meeting shall be given in writing to all the members,the Directors and to the auditors.The Directors may make whatever arrangements they consider appropriate to enable thoseattending a General Meeting to exercise their rights to speak or vote at it. In determiningattendance at a General Meeting, it is immaterial whether any two or more members attending itare in the same place as each other. Two or more persons who are not in the same place as eachother attend a General Meeting if their circumstances are such that if they have (or were to have)rights to speak and vote at that meeting, they are (or would be) able to exercise them.3.2 VotingSubject to the provisions of the Act, the Articles and to any special rights or restrictions as tovoting attached to any shares which may have been issued or may for the time being be held andto any suspension or abrogation of voting rights pursuant to the Articles, at any general meeting,every member who (being an individual) is present in person or (being a corporation) is presentby a duly authorised representative shall, on a show of hands, have one vote, and on a poll, every100

member so present in person or by proxy shall have one vote for every ordinary share of which heis a holder. A proxy need not be member of the Company.3.3 Variation of rightsSubject to the provisions of the Act, any of the rights or privileges for the time being attached toany class of shares may be varied or abrogated while the Company is a going concern or duringor in contemplation of a winding-up, in such manner (if any) as may be provided by such rightsor, in the absence of any such provision, either with the consent in writing of the holders of notless than three-quarters in nominal value of the issued shares of that class or with the sanction ofa special resolution passed at a separate general meeting of the holders of the shares of that class.To every such separate meeting (except an adjourned meeting) the quorum shall be not less thantwo persons holding or representing by proxy at least one-third in nominal value of the issuedshares of that class or his proxy.3.4 DividendsSubject to the provisions of the Act and the Articles, the Company may, by ordinary resolution,declare dividends to be paid to members according to their respective rights and interests in theprofits of the Company, but so that no dividend shall exceed the amount recommended by theDirectors. The Board may declare and pay such interim dividends (including any dividend payableat a fixed rate) as appear to them to be justified by the financial position of the Company. TheCompany may, by ordinary resolution on the recommendation of the Board, decide to pay all orpart of a dividend or other distribution payable in respect of a share by transferring non-cashassets of equivalent value (including without limitation, shares or other securities in anycompany). The Board may, with the prior sanction of an ordinary resolution, offer the holders ofordinary shares the right to elect to receive further ordinary shares in the Company, paid up orcredited as fully paid and ranking pari passu with all other ordinary shares for the time being inissue of any dividend as may be determined by the Board.3.5 Return of CapitalIf the Company is wound up the liquidator may, with the sanction of a special resolution of theCompany and any other sanction required by law, divide among the members in specie the wholeor any part of the assets of the Company. The liquidator may, with like sanction, vest the wholeor any part of the assets in trustees on such trusts for the benefit of such members as theliquidator shall, with the like sanction, determine but so that no member shall be compelled toaccept any such assets on which there is a liability.3.6 Transfer of SharesCertificated shares may be transferred by means of an instrument of transfer in any usual formor any other form approved by the Board, which is executed by and on behalf of the transferorand (if any of the shares are partly paid) by and on behalf of the transferee. The transferorremains the holder of the certificated shares until the name of the transferee is entered in theregister of members in respect thereof. Shares which are held in uncertificated form may betransferred in accordance with the Uncertificated Securities Regulations but so that the Boardmay refuse to register such transfer in any circumstance permitted or required by theUncertificated Securities Regulations and the requirements of the computer based system andrelated procedures defined in the Uncertificated Securities Regulations.The Board may refuse to register the transfer of a certificated share if the share is not fully paid.The Board may also refuse to register the transfer of a certificated share if:(a) the transfer is not delivered to the registered office or to such other place as the Board hasappointed and is not accompanied by the certificate for the shares to which it relates or suchother evidence as the Board may reasonably require to show the transferor’s right to makethe transfer or evidence of someone other than the transferor to make the transfer on thetransferor’s behalf;(b) the transfer is not duly stamped or certified or adjudicated to be exempt from stamp duty;(c) the transfer is in respect of more than one class of share;14.1101

(d)(e)the transfer is in favour of more than four transferees; orin such exceptional circumstances as approved by the London Stock Exchange.There are no rights of pre-emption under the Articles in respect of transfer of issued ordinaryshares.3.7 Suspension of rightsWhere notice is served under section 793 of the Act (a section 793 notice) on a member or anotherperson appearing to be interested in shares held by that member and the member or other personhas failed in relation to any shares (“Default Shares”) to give the Company the informationrequired within the prescribed period from the date of the section 793 notice then the membershall not be entitled to vote in respect of the Default Shares or to be present or to vote (either inperson or by proxy) at a general meeting of the Company or at a separate meeting of the holdersof a class of shares on a poll.Where the Default Shares represent not less than 0.25 per cent. in nominal value of the issuedshares of their class, a dividend (or any part of dividend) or other amount payable in respect ofthe Default Shares shall be withheld by the Company which has no obligation to pay interest onit and no transfer of any of the Default Shares in a certificated form shall be registered unless thetransfer is an excepted transfer or the member is not himself in default in supplying theinformation required and the member proves to the satisfaction of the board that no person indefault in supplying the information required is interested in any of the shares the subject oftransfer. The prescribed period referred to above means 14 days.3.8 Purchase of own sharesThe Company may, subject to the provisions of the Act and to any rights for the time beingattached to any shares purchase any of its own shares of any class (including redeemable shares).3.9 Untraced shareholdersThe Company shall be entitled to sell any share of a member or any share to which a person isentitled by transmission if and provided that, during a period of 12 years, no cheque, order orwarrant in respect of such share sent by the Company through the post in a pre-paid envelopeaddressed to the member or to the person entitled by transmission to the share, at his address onthe register of members or other last known address given by the member or that person to whichcheques, orders or warrants in respect of such share are to be sent has been cashed and theCompany has received no communications in respect of such share from such member or person,provided that during such period of 12 years the Company has paid at least three dividends(whether interim or final) and no such dividend has been claimed by the person entitled to it.3.10 Borrowing powersSubject to the Articles, the Board may exercise all the powers of the Company to borrow moneyand to mortgage or charge the whole or any part of its undertaking, property and assets (presentand future) and uncalled capital (or any part thereof) and, subject to the provision of the Act, toissue debentures and other securities whether outright or as a security for any debt, liability orobligation of the Company or any third party.3.11 Delegation of power of the Board and committeesSubject to the Articles, the Board may delegate any of the powers which are conferred on themunder the Articles to such person, to a committee of such persons or any local or divisionalboards or agencies by such means (including by power of attorney), to such extent, in relation tosuch matters or territories and on such terms and conditions as they think fit. The Board mayrevoke any delegation in whole or part, or alter its terms and conditions. The Board may makerules of procedure for all or any committees, local or divisional boards or agencies which prevailover rules derived from Articles if they are not consistent with them.3.12 Change in ControlThere are no provisions in the Articles which would have an effect of delaying, deferring orpreventing a change in control of the Company.102

4. Directors’ Interests4.1 The interests of each of the Directors in the issued share capital of the Company as at the date ofthis document (being the last practicable date prior to its publication) or which are interests of aperson connected with a Director (within the meaning of section 252 of the Act) and the existenceof which is known or could, with reasonable diligence, be ascertained by a Director and as theyare expected to be immediately following Admission are as follows:PercentagePercentageof issuedNumber of of issued Number of ordinaryOrdinary Shares ordinary share Ordinary Shares share capitalas at the capital at the immediately immediatelydate of this date of this following followingDirector Document Document Admission AdmissionPanagiotis Dimitropoulos* 18,150,000 90.75% 18,150,000 70.63%Konstantinos Korletis 1,000,000 5% 1,000,000 3.89%* Panagiotis Dimitropoulos holds his interest in Ordinary Shares through Pitragon Investments Limited, a companyowned and controlled by him and it is the holder of 18,150,000 Ordinary Shares.The Non-Executive Directors each have rights to certain Ordinary Shares under the terms of theirletters of appointment. Details of those rights are set out in paragraph 10 of this Part IV.4.2 Save as disclosed in paragraph 4.1 and paragraph 10 below as at 3 December 2010 none of theDirectors nor any person connected with them had or will have any interest, beneficial orotherwise, in the share capital of the Company or any of its subsidiaries.4.3 There are no loans or guarantees provided by the Company for the benefit of any of the Directorsnor are there any loans or guarantees provided by any of the Directors for the benefit of theCompany.4.4 As at the date of this document, no Director holds options to subscribe for Ordinary Shares.4.5 Save as disclosed in this document, no Director has or has had any interest in any transactionwhich is or was unusual in its nature or conditions or significant to the business of the Companyand which was effected by the Company since its incorporation or which is or was unusual in itsnature or conditions or significant to the business of the Company.5. Directors’ service contracts, remuneration and benefits in kind5.1 Panagiotis Dimitropoulos, Konstantinos Korletis and Veronica Nocetti are executive Directors.The details of their respective service agreements with the Company or InternetQ Greece (in thecase of Konstantinos Korletis) are set out in paragraphs 12.11, 12.12 and 12.13 in this Part IV.Stuart Cruickshank, Iain Johnston and Michael Jolliffe are Non-Executive Directors. The detailsof their respective letters of appointment with the Company are set out in paragraphs 12.14, 12.15and 12.16 in this Part IV.5.2 The aggregate remuneration paid and benefits in kind granted to the Directors for the lastfinancial year amount to €340,430. The aggregate remuneration and benefits in kind granted tothe Directors in respect of the financial year ending 31 December 2010 under the arrangementsin force as at the date of this Document is expected to be approximately £419,000.14.214.216.116.2103

6. Additional information on the Directors6.1 In addition to their directorship of the Company, the Directors hold or have held the followingdirectorships or have been partners in the following partnerships within the five years prior to thedate of this Document:Name Present PastStuart Cruickshank Psion PLC Morse LimitedCambridge Building Society ASMMC LimitedHounslow Arts Trust Limited Delphis (Holdings) Limited(trading as Watermans) Delphis EBT 1999 LimitedDiagonal Consulting LimitedDiagonal LimitedDiagonal Quest LimitedDiagonal Solutions LimitedDiagonal Consulting ServicesLimitedDiagonal International LimitedDiagonal Security LimitedMFT Computer HoldingsMorse Group LimitedMorse Overseas Holdings LimitedMorse Service Holdings LimitedMorse Business ApplicationsLimitedMorse Business ConsultingLimitedMorse Computers LimitedMorse Data Systems LimitedWisdom Solutions LimitedMorse Management ConsultingLimitedAbsolute IT Recruitment LimitedCenturycom LimitedClaritas Information SecurityLimitedConos Resource LimitedEquity Solutions LimitedRantham Sutch AssociatesLimitedGSA Technical Services LimitedHughes Rae LimitedInterop Technologies LimitedObject 2 LimitedPartners For Change LimitedPortfolio Systems LimitedRed Creation LimitedIain Barrie Johnston Alterian Plc Loewy LimitedEvent Marketing Solutions Ltd Advent Publishing SystemsLoewy Group LimitedLimitedEpoch Design LimitedRainier LimitedPresident LimitedGB Information ManagementRadius London Limited LimitedRaymond Loewy International Core-Create LimitedLimitedGB Group plcRaymond Loewy Limited Brand Create LimitedSeymour-Powell Limited Core Create Group LimitedThe Team BrandCore Create Design LimitedCommunication Consultants Core Create Publishing LimitedLimitedBITE LimitedWilliams Murray Hamm Limited Logopress Limited104

Name Present PastIain Barrie Johnston Branded Limited Manta Public Relations Limited(continued)PBW Group LimitedMichael Gordon Joliffe Hanjin Eurobulk Limited Lannet S.A.Tsakos Energy Navigation Limited Klonatex S.A.StealthGas Incorporated Global Ocean Carriers LimitedWigham-RichardsonRoyal Olympic Cruise LinesShipbrokers LimitedPanagiotis Dimitropoulos InternetQ GreeceInternetQ PolandMobile DialogueInternetQ SerbiaKonstantinos Korletis InternetQ Greece Liberis Media Group BulgariaInternetQ PolandADMobile DialogueLiberis Publications SADesmi Publications SALiberis Publications RomaniaNordic Light LimitedSRLTechnical Press ASMy NextCar Liberis PublicationsSARadio Station V FM 88.3 SATechniki Ekthesiaki SAThree Dee Radio Stations SAVeronica Julia Nocetti None NoneSave as set out above, the Directors hold or have held no other directorships or been partners inany partnership within the five years preceding the date of this document.6.2 Save as disclosed in paragraph 6.2(c) of this Part IV, none of the Directors has:(a) any unspent convictions in relation to indictable offences;(b) had any bankruptcy order made against him or entered into any voluntary arrangements;(c) other than Panagiotis Dimitropoulos who was a director of InternetQ Serbia, a formersubsidiary of InternetQ Greece, which was wound up by voluntary solvent liquidation, beena director of a company which has been placed in receivership, compulsory liquidation,administration, been subject to a voluntary arrangement or any composition or arrangementwith its creditors generally or any class of its creditors whilst he was a director of thatcompany or within the 12 months after he ceased to be a director of that company;(d) been a partner in any partnership which has been placed in compulsory liquidation,administration or been the subject of a partnership voluntary arrangement whilst he was apartner in that partnership or within the 12 months after he ceased to be a partner in thatpartnership;(e) been the owner of any assets of a partner in any partnership which has been placed inreceivership whilst he was a partner in that partnership or within the 12 months after heceased to be a partner in that partnership;(f) been publicly criticised by any statutory or regulatory authority (including recognisedprofessional bodies); or(g) been disqualified by a court from acting as a director of any company or from acting in themanagement or conduct of the affairs of a company.6.3 None of the Directors (nor any member of any of the Directors’ families) has a related financialproduct (as defined in the AIM Rules) referenced to the Ordinary Shares.105

7. Substantial Shareholdings7.1 As at 3 December 2010 (the latest practicable date prior to the publication of this document), theDirectors were aware that the following persons were interested, directly or indirectly, in 3 percent. or more of the issued share capital of the Company as at that date:PercentageNo of of issuedOrdinary ordinaryName Shares share capitalPanagiotis Dimitropoulos* 18,150,000 90.75%Konstantinos Korletis 1,000,000 5%* Panagiotis Dimitropoulos holds his interest through Pitragon Investments Limited, which is the registered holderof 18,150,000 Ordinary Shares.7.2 The Directors are aware that, as at 3 December 2010 (the latest practicable date prior to thepublication of this document), the following persons will be interested, directly or indirectly, in3 per cent. or more of the issued share capital of the Company immediately following the Placing:PercentageNo of of issuedOrdinary ordinaryShares share capitalimmediately immediatelyfollowing followingName Admission AdmissionBlackrock Investment Management UK Limited 1,250,000 4.9%Ivaldi LLP 1,083,333 4.2%Panagiotis Dimitropoulos* 18,150,000 70.6%Konstantinos Korletis 1,000,000 3.9%* Panagiotis Dimitropoulos holds his interest through Pitragon Investments Limited, which is the registered holderof 18,150,000 Ordinary Shares.7.3 Save as disclosed in paragraphs 7.1 and 7.2 of this Part IV, the Directors are not aware of anyperson who was at 3 December 2010 (the latest practicable date prior to the publication of thisdocument) interested, directly or indirectly, or who will, immediately following the Placing havean interest, directly or indirectly, in 3 per cent. or more of the issued share capital of the Company.7.4 None of these substantial Shareholders have voting rights different from any other Shareholders.7.5 Save as disclosed in paragraphs 7.1 and 7.2 of this Part IV, the Company is not aware of anyperson who exercises or could exercise, directly or indirectly, jointly or severally, control over theCompany.8. Related Party Transactions8.1 In 2006 InternetQ Greece granted a loan amounting to €250,000 to InternetQ Inc., a companywhich is under common control with the Group and which is in the process of a solvent voluntarywinding-up. The loan was intended to finance the short-term working capital needs of InternetQInc. and was fully repaid in 2009.8.2 In 2007 Escape granted a loan to InternetQ Inc. which bore interest of 1 per cent. above Euriborand was repayable upon first written demand of the lender to the borrower. It was intended tofinance the short-term working capital needs. The loan was fully repaid in 2009.8.3 On 1 August 2007 the Company granted a loan facility to Escape of up to €1,000,000 for itsworking capital requirements. The loan is repayable on demand together with all interest whichaccrues on the loan at the rate of 1 per cent. above Euribor.106

9. EmployeesAs at the date of this document, the Group had 65 employees (of which 3 are employed by theCompany as well as by InternetQ Greece), 58 are employed by InternetQ Greece, 4 are employed byInternetQ Poland, 2 are employed by InternetQ Turkey and 1 is employed by InternetQ Ukraine.10. Incentive PlansShare Incentive PlanThe Company adopted the Share Incentive Plan on 6 December 2010 which will last for a period ofthree years. Share Incentive Plan is governed by the rules of that plan and administered by the Board.Any employee, consultant or director may be determined by the Board to be eligible to receiveOrdinary Shares in the capital of the Company under the Plan.Share Incentive Plan allows the eligible employee, consultant or director to acquire Ordinary Shares inthe capital of the Company at a nominal value subject to satisfaction of certain performanceconditions. Share Incentive Plan limits the number of shares that can be issued under it. The numberof Ordinary Shares which may be issued pursuant to the Share Incentive Plan over the period of threeyears may not exceed in aggregate 7 per cent. of the issued share capital of the Company on Admission,excluding the Placing Shares, divided into three years as follows: (i) up to 1.75 per cent. in relation tothe financial year ending on 31 December 2010; (ii) up to 2.5 per cent. in relation to the financial yearending on 31 December 2011; and (iii) up to 2.75 per cent. in relation to the financial year ending on31 December 2012.The performance conditions which must be satisfied before any Ordinary Shares are acquired under theShare Incentive Plan are based on earnings-based targets for the Group to be adopted by theRemuneration Committee and which will be designed to be stretching.Such performance conditions may be varied from time to time if the Board considers that they are nolonger a fair measure of the criteria to which they relate or are otherwise inappropriate. Any taxliability incurred in relation to Ordinary Shares, whether on grant, issue or otherwise shall be borne bythe relevant eligible employee, director or consultant.No Ordinary Shares shall be issued pursuant to Share Incentive Plan to an eligible employee, directoror consultant who has given or has received notice of termination of employment, service agreementor appointment on or before the date of the issue of Ordinary Shares.Non-Executive Directors Incentive Share PlanTerms of the Non-Executive Directors Incentive Share Plan will be determined by the RemunerationCommittee. Under the Non-Executive Directors Share Plan, the Board may discharge its obligationsto pay remuneration or any director’s fee to a Non-Executive Director of the Company by issuingOrdinary Shares in the capital of the Company to such Non-Executive Directors. All shares issuedpursuant to the Non-Executive Directors Incentive Share Plan shall, as to voting, dividend, transferand other rights, rank equally in all respects and as one class with the Ordinary Shares.The Board may from time to time make or amend any rules for the administration of the Non-Executive Directors Incentive Share Plan.11. Working CapitalThe Directors are of the opinion, having made due and careful enquiry, that, after taking account ofbank and other facilities available and the estimated net proceeds of the Placing, the Company willhave sufficient working capital for its present requirements, that is for at least 12 months fromAdmission.107

12. Material contractsThe following contracts (not being contracts entered into in the ordinary course of business) have beenentered into by the Company or any other member of the Group within two years immediatelypreceding the date of this document and are or may be material:Contracts relating to Admission12.1 On 26 August 2010 the Company entered into agreement with Grant Thornton UK LLP underwhich Grant Thornton UK LLP agreed to act as the Company’s Nominated Adviser in relationto the Admission. The agreement contains an indemnity from the Company in favour of GrantThornton UK LLP. Pursuant to this agreement the Company shall pay to Grant Thornton UKLLP a fee of £150,000.12.2 On 6 December 2010 the Company entered into agreement with Grant Thornton UK LLP underwhich Grant Thornton UK LLP agreed to act as the Company’s Nominated Adviser on an ongoingbasis. Pursuant to this agreement Grant Thornton UK LLP agreed to act as the nominatedadviser of the Company for an annual fee of £30,000 plus reasonable expenses. The agreement isfor a fixed-term of 24 months after which either party may terminate it on 30 days’ notice. Theagreement contains various undertakings from the Company and the Directors to comply with allapplicable regulation and an indemnity from the Company in favour of Grant Thornton UKLLP.12.3 On 26 July 2010 the Company entered into agreement with Jendens under which Jendens agreedto act as the Company’s broker and placing agent in respect of the Admission and the Placing andon an ongoing basis until completion of the fundraising or termination by either Jendens or theCompany giving one months’ written notice. In addition, in respect of its appointment as aplacing agent Jendens will receive commission equivalent to 4 per cent. of the aggregate value ofgross monies raised by Jendens during the Placing and a warrant to subscribe for shares describedin paragraph 12.8 of this Part IV. In respect of its appointment as the broker Jendens will receivean annual fee of £40,000.12.4 On 17 August 2010 the Company entered into an agreement with Ernst & Young Greece underwhich Ernst & Young Greece agreed to act as InternetQ Greece’s accountants in respect of theAdmission and on an ongoing basis until terminated with immediate effect by either party givinga written notice.12.5 On 18 October 2010 the Company entered into an agreement with Ernst & Young LLP under whichErnst & Young LLP agreed to act as the Company’s Reporting Accountants in respect of theAdmission and on an ongoing basis until terminated with immediate effect by either party giving awritten notice.12.6 On 2 August 2010 the Company entered into agreement with First Athens Corporate Financeunder which First Athens Corporate Finance agreed to act as the Company’s financial adviser inconnection with the Admission and Placing. The engagement of First Athens Corporate Financeshall continue until completion of Placing or until terminated by either party. The fees that theCompany shall pay to First Athens Corporate Finance is an engagement fee of EUR 4,500, amonthly retainer fee of EUR 1,500 and a success fee which depends on the funds raised inPlacing. Fifty per cent. of such success fee may be satisfied both in cash and shares (valued at thePlacing Price) at the Company’s discretion.12.7 On 6 December 2010 the Company, the Directors and the Non-Executive Directors entered intoa Placing Agreement with Grant Thornton UK LLP and Jendens whereby Grant Thornton UKLLP has agreed to act as the nominated adviser and Jendens has agreed to use its reasonableendeavours (as an agent of the Company) to procure placees for the Placing Shares. Theagreement is conditional, inter alia, upon Admission. The Company has given certain warrantiesand indemnities as to the accuracy of the information contained in this document and othermatters in relation to the Company and its business. Under the agreement, the Company will payto Grant Thornton UK LLP a corporate finance fee of £150,000 payable on Admission. TheCompany will also pay to Jendens an incentive fee to be satisfied by issue of warrants to subscribefor such number of Ordinary Shares at the Placing Price as is equal to 3 per cent. of the number108

of Placing Shares (effected through the Warrant Agreement) and a broking commission in theamount equal to 4 per cent. of the monies raised by Jendens pursuant to Placing. The paymentsby the Company to Grant Thornton UK LLP and Jendens pursuant to the Placing Agreementare in substitution of the payments agreed under their respective engagement letters referred to inparagraphs 12.1 and 12.3 respectively. The Company will reimburse Grant Thornton UK LLPand Jendens their reasonable expenses incurred in relation to the execution of their obligationsunder the Placing Agreement.12.8 On 6 December 2010 the Company entered into a Warrant Agreement with Jendens pursuant towhich the Company, for consideration of £1 and conditional upon Admission, grants to Jendensthe right to subscribe for such number of Ordinary Shares as would be equal to 3 per cent. of thenumber of Placing Shares at the Placing Price, as adjusted from time to time. The warrants areexercisable during the period starting on Admission and ending on the date falling 30 monthsafter the Admission.12.9 Orderly Market AgreementOn 6 December 2010, Pitragon Investments Limited and Konstantinos Korletis entered into anorderly market agreement with the Company, Grant Thornton UK LLP and Jendens wherebythey agreed, subject to certain exceptions, not to dispose of any of their shareholdings in theCompany which they hold as of the date of the Admission: (i) at any time prior to the firstanniversary of the date of the Admission; (ii) at any time during the period starting on the firstanniversary of the date of the Admission and ending on the second anniversary of the date of theAdmission without effecting such disposal through Jendens.12.10 Relationship DeedThe Company has entered in to a relationship agreement dated 6 December 2010 with PitragonInvestments Limited, as the Company’s majority shareholder and Panagiotis Dimitropoulos, asthe ultimate beneficial owner and controller of Pitragon Investments Limited (togetherthe “Controlling Shareholders”) for the purposes of regulating the relations between the Companyand the Controlling Shareholders. Accordingly, the Pitragon Investments Limited undertakes(and Panagiotis Dimitropoulos undertakes to procure that Pitragon Investments Limited willcomply with its obligations) that it shall exercise it voting rights in such way as to ensure that theCompany is capable of carrying on its business independently of it, will act in good faith and willnot abuse its power over the Company or the Group. The agreement also contains undertakingfrom the Controlling Shareholders in relation to related party transactions and exercise of votingrights so as to preserve the Company’s independence.Service Agreements and Letters of Appointment12.11 Panagiotis Dimitropoulos entered into a service agreement with the Company on 5 August 2005.Pursuant to this agreement his employment as a director of the Company may be terminated byeither party giving 12 months’ notice to the other party or in the case of the Company withimmediate effect for cause. The agreement contains customary provisions in relation to duties ofconfidentiality and post-termination restrictive covenants. The agreement also has provisions toprotect the Company’s (and any Group Company’s) intellectual property rights. His annual salaryfrom the Group is an aggregate amount of €182,000. The termination of his appointment doesnot give rise to any right of compensation.12.12 Konstantinos Korletis entered into an employment agreement with InternetQ Greece whichagreement became effective on 12 April 2010. Pursuant to this agreement his employment isindefinite and may be terminated with or without notice according to the relevant provisions ofGreek employment legislation from time to time. In addition, the agreement may be terminatedby the mutual agreement of the parties or in case of breach of any material terms of theagreement by either party. His salary pursuant to this agreement is €154,000 per annum plus€11,000 bonus payment and a minimum amount of €20,400 car allowance per year. Hisremuneration is subject to annual review by the board of InternetQ Greece based on performancecriteria but will automatically be raised by at least the general price index increase publishedannually by the Greek Government. The agreement states that Mr. Korletis shall be appointed asa director, acting as chief executive officer, of the Company by virtue of his employment as adirector of InternetQ Greece. The agreement does not contain any post-termination restrictive109

covenants. Termination of his appointment does not give rise to any contractual right ofcompensation other than in accordance with applicable Greek employment law pro rata to hisyears of service.12.13 Veronica Nocetti entered into a service agreement with the Company on 6 December 2010.Pursuant to this agreement the term of her employment is indefinite and may be terminated byeither party giving 6 months’ notice to the other. She receives a salary of €5,600 per annum inaddition to which she receives an amount of €42,000 per annum as salary from InternetQ Greece.Termination of the appointment does not give rise to any right of compensation.12.14 A Letter of Appointment dated 6 December 2010 and subject to Admission pursuant to the termsof which Stuart Cruickshank was appointed as a Director for an annual fee of £50,000. £37,500of the fee is payable in arrears by equal monthly instalments and the remaining £12,500 shall besatisfied by the issue of Ordinary Shares pursuant to the Non-Executive Directors Incentive SharePlan. The appointment is for an initial term of three years to be reviewed annually and terminableon three months’ notice by the Director and six months’ notice by the Company. Termination ofthe appointment does not give rise to any right of compensation.12.15 A Letter of Appointment dated 6 December 2010 and subject to Admission pursuant to the termsof which Iain Johnston was appointed as a Director for an annual fee of £37,500. £25,000 of thefee is payable in arrears by equal monthly instalments and the remaining £12,500 shall be satisfiedby the issue of Ordinary Shares pursuant to the Non-Executive Directors Incentive Share Plan.The appointment is for an initial term of three years to be reviewed annually and terminable onthree months’ notice by the Director and six months’ notice by the Company. Termination of theappointment does not give rise to any right of compensation.12.16 A Letter of Appointment dated 6 December 2010 and subject to Admission pursuant to the termsof which Michael Joliffe was appointed as a Director for an annual fee of £37,500. £18,750 of thefee is payable in arrears by equal monthly instalments and the remaining £18,750 shall be satisfiedby the issue of Ordinary Shares pursuant to the Non-Executive Directors Incentive Share Plan.The appointment is for an initial term of two years to be reviewed annually and terminable onthree months’ notice by the Director and six months’ notice by the Company. Termination of theappointment does not give rise to any right of compensation.Other contracts12.17On 31 January 2010 InternetQ Greece entered into a share sale and purchase agreement withCynoptics Limited pursuant to which InternetQ Greece sold the entire issued share capital ofInternetQ Kazakhstan for the purchase price of €1,000.13. Litigation13.1 InternetQ Greece filed a claim against OTE S.A. at the first instance court of Athens for theamount of €106,007.93. The hearing took place on 11 November 2009. The court decision ispending.13.2 InternetQ Greece brought a claim against Veroia Radiao TV S.A. in 2008 for the non-payment ofa contractual debt in the sum of €215,257.72. The first instance court of Athens postponed thehearing until 26 May 2011.13.3 InternetQ Greece filed a claim against SAT BOX Communications S.A. at the first instance courtin Athens for the amount of EUR 240,699.70. The court hearing is scheduled to take place inDecember 2011.13.4 In January 2010 InternetQ Poland filed a claim against EL2 Sp.z.o.o for breach of contract andrequested a payment of debt in the amount of PLN 8,728,101.05 pursuant to a cooperationagreement between InternetQ Poland and EL2 Sp.z.o.o dated 5 May 2009.Save as disclosed in this document no legal or arbitration proceedings are active, pending or threatenedagainst or being brought by the Group which are having or may have a significant effect on the110

financial position of the Company and, so far as the Directors are aware, there are no such proceedingspending or threatened by or against the Group.14. Significant ChangeSave as disclosed in this document there has been no significant change in the financial or tradingposition of the Group since 30 June 2010.15. Intellectual PropertyThe Group has the following registered trade marks:InternetQ Greece:● “akazoo FUN & MUSIC”● “Internetq”InternetQ Turkey:● “Ianscept”● “akazoo” (in application)InternetQ Ukraine:● “100 cars for 100 days” (in application)In addition, the group has a total of 95 domain names and owns the intellectual property rights (or islicensee of the same) in relation to all software employed for the “Akazoo-IQ Platform” and the“Mobile Promotions Suite Platform”.Finally, Escape is the owner of non-registered intellectual property rights pertaining to thepromotional game which it developed itself.16. UK TaxationThis section provides a general guide to the UK taxation treatment for certain categories ofshareholder under current UK legislation and what is understood to be HM Revenue & Customspractice as at the date of this document. It relates to certain limited aspects of the UK taxation positionof shareholders who are the absolute beneficial owners of their shares, who are resident or ordinarilyresident in the UK for taxation purposes and who hold their shares as an investment (otherwise thanunder an individual savings account or a personal equity plan). This section does not deal with theposition of certain classes of shareholder, including personal representatives, trustees, insurancecompanies, collective investment schemes, dealers in securities and persons connected with depositoryarrangements or clearance services. Any shareholder who is in any doubt as to his own taxationposition or who is subject to tax in any jurisdiction other than the UK should consult an appropriateprofessional adviser.16.1 Taxation of the CompanyAs a UK tax resident company, the Company will be liable to UK corporation tax on itsworldwide income and gains (including any capital gains) at a tax rate between 21 and 28 per cent.depending upon the level of the Company’s profits for each accounting period.It was announced in the Budget of 22 June 2010 that the mainstream rate of corporation taxwould be reduced from 28 per cent. by one per cent. per annum, eventually reaching 24 per cent.with effect from 1 April 2014. However, at present only a reduction in the mainstream rate to 27per cent. with effect from 1 April 2011 has been legislated.16.2 Taxation of dividendsUnder current UK taxation legislation, there is no withholding tax on dividends paid by a UK taxresident company.111

(a)Individual shareholdersAny UK tax resident individual shareholder who receives a dividend paid by the Companywill be liable to UK income tax on the gross amount of any such dividend, either at theordinary rate of 10 per cent., or the dividend upper rate of 32.5 per cent., or at the dividendadditional rate of 42.5 per cent. Dividend income from the Company will be treated asforming the highest part of an individual shareholder’s income.A tax credit should be available to UK tax resident individuals. This will have the effect ofeliminating the income tax liability on such dividend income for shareholders who are liableto tax only at the basic rate of income tax, reducing the effective rate payable by individualsliable to higher rate income tax to 25 per cent., and reducing the effective rate payable byindividuals liable to tax at the additional rate to approximately 36.1 per cent.(b)Corporate shareholdersAll dividends received by UK resident corporate shareholders are generally exempt from UKcorporation tax unless they fall within certain anti-avoidance rules.UK resident corporate shareholders will not be entitled to claim a refund of any part of thetax credit related to a dividend paid by the Company.(c)Non-resident shareholdersCertain non-UK tax resident individuals may be entitled to a tax credit in respect of adividend paid by a UK tax resident company. Such individuals include residents of theEuropean Economic Area, the Channel Islands, the Isle of Man and those entitled to thebenefit of certain double tax treaties, and the right to claim any part of the tax credit isdependent on being permitted to do so by an applicable double tax treaty.Shareholders who are not tax resident in the UK should consult their own taxation adviseron the application of such provisions and the procedure for claiming relief.16.3 UK Taxation on Chargeable Gains for Shareholders(a) Individual shareholdersA UK tax resident individual shareholder who disposes of, or who is deemed to dispose of,their shares in the Company may be liable to capital gains tax in relation thereto at a flat rateof 28 per cent. of any chargeable gain thereby realised (or at a flat rate of 18 per cent. forbasic rate tax payers). Individuals may, depending on their circumstances, benefit fromcertain reliefs and allowances (including a personal allowance which presently exempts fromtax the first £10,100 of gains and, subject to certain conditions, entrepreneurs’ relief). Incomputing the chargeable gain, the shareholder should be entitled to deduct from thedisposal proceeds the purchase cost to him of the shares (together with incidental costs ofacquisition and disposal).Shareholders who are not resident or ordinarily resident in the UK should consult their owntax adviser.(b)Corporate shareholdersA UK tax resident corporate shareholder disposing of its shares in the Company may beliable to corporation tax on chargeable gains in relation thereto at the usual rates ofcorporation tax applicable to it (currently between 21 and 28 per cent. depending upon thelevel of the corporate shareholder’s taxable profits for the accounting period in question). Itwas announced in the Budget of 22 June 2010 that the mainstream rate of corporation taxwould be reduced by one per cent. per annum, eventually reaching 24 per cent. with effectfrom 1 April 2014. However, at present only a reduction in the mainstream rate to 27 percent. with effect from 1 April 2011 has been legislated. In computing the chargeable gain, theshareholder should be entitled to deduct from the disposal proceeds the purchase cost to himof the shares (together with incidental costs of acquisition and disposal, and indexationallowance).112

In some circumstances, a UK tax resident corporate shareholder may be exempt fromcorporation tax in relation to its disposal of shares under the substantial shareholdingexemption, or be able to reduce the quantum of the gain by capital and/or income lossesarising to it.16.4 Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)No liability to UK stamp duty or SDRT should arise on the allotment of ordinary shares by theCompany under the Placing.Any future dealings with shares will be subject to stamp duty and SDRT in the normal way. Inparticular, SDRT will be chargeable (at a rate of 0.5 per cent. of the consideration) on anagreement to transfer Shares within CREST.16.5 Inheritance Tax and Business Property ReliefThe shares in the Company are assets situated in the UK for purposes of UK inheritance tax. Agift or inheritance of such assets taken from an individual shareholder may (subject to certainexemptions and reliefs) give rise to a liability to UK inheritance tax. For inheritance tax purposes,a transfer of assets at less than full market value may be treated as a gift and particular rules applyto gifts where the donor reserves or retains some benefit.Shares listed on AIM are generally treated as “unquoted” for the purposes of UK inheritance tax,and as such individuals subject to inheritance tax may be entitled to business property relief of upto 100 per cent. after a holding period of two years, provided that all the relevant conditions forthe relief are satisfied at the appropriate time.The information in this paragraph 16 above is a general guide to the taxation treatment forshareholders in the Company and should not be construed as constituting advice. Potential investorsshould obtain advice from their own investment or taxation adviser.17. Persons Responsible for this DocumentThe Directors, whose names and addresses appear on page 7 of this document, accept responsibilityfor the information contained in this document. Ernst & Young LLP accepts responsibility for theirreport contained in Section A of Part III of this document.18. General18.1 The gross proceeds of the Placing are expected to be approximately £6.8 million. The total costsand expenses relating to Admission and the Placing are payable by the Company and areestimated to amount to approximately £1.1 million (including Value Added Tax).18.2 Ernst & Young LLP has given and has not withdrawn its written consent to the inclusion of itsreport on the Company in the form set out in Part III – “Financial Information” of this documentand to the references to its name in the form and context in which they appear in this document.18.3 Grant Thornton Corporate Finance has given and has not withdrawn its written consent to theissue of this document with the inclusion of its name in the form and context in which it appears.18.4 Jendens has given and has not withdrawn its written consent to the issue of this document withthe inclusion of its name in the form and context in which it appears.18.5 Other than the current application for Admission, the Ordinary Shares have not been admitted todealings on any recognised investment exchange nor has any application for such admission beenmade nor are there intended to be any other arrangements for dealings in the Ordinary Shares.18.6 The minimum amount of £6.8 million must, in the opinion of the Directors, be raised under thePlacing in order to provide the sums required in respect of each of the following:113

(a)(b)any preliminary expenses payable by the Company and any commission so payable to anyperson in consideration of his/her agreement to subscribe for or of his/her procurement oragreement to procure subscription for, any shares in the Company: £1.1 million; andworking and investment capital: £5.7 million.18.7 The accounting reference date of the Company is 31 December in each year.18.8 The Placing Price represents a premium of 119.75 pence over the nominal value of 0.25 pence for anOrdinary Share.18.9 Other than the Warrants, the Company has no convertible securities in issue.18.10 Save for professional advisers disclosed in this document, in the last twelve months no person hasreceived or is contractually entitled to receive, directly or indirectly, from the Company on or afterAdmission any payment or benefit from the Company to the value of £10,000 or more orsecurities in the Company to such value (calculated by reference to the expected opening price) orentered into any contractual arrangements to receive the same from the Company at the date ofAdmission.18.11 The financial information relating to the Company contained in this document does notconstitute statutory accounts within the meaning of section 434 of the Act.18.12 Monies received from Placees in respect of the Placing Shares will be held in accordance with theterms of the placing letters issued by Jendens or the Company to such Placees until such time asthe Placing Agreement becomes unconditional in all respects. If the Placing Agreement does notbecome unconditional in all respects by 8.00 a.m. on 31 December 2010, monies received fromPlacees will be returned to Placees at the relevant Placees’ sole risk without interest.18.13 Following Admission, share certificates representing the Ordinary Shares to be issued pursuant tothe Placing are expected to be despatched by post to Placees who do not wish to receive shares inuncertificated form, at the relevant Placee’s sole risk. It is expected that certificates in respect ofthe Placing Shares will be despatched by 21 December 2010. No temporary documents of title willbe issued in connection with the Placing. Pending the despatch of definitive share certificates,instruments of transfer will be certified against the register of members of the Company.18.14 The CREST accounts of Placees who have duly elected to receive their Ordinary Shares inuncertificated form are expected to be credited to the designated CREST account on 10 December2010.19. Availability of Admission DocumentCopies of this Document are available during normal business hours on any weekday (Saturdays, Sundaysand public holidays are excepted) free of charge from the Company’s registered office and at the offices ofGrant Thornton for the period from the date of this document until one month after Admission.Dated: 6 December 2010114

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