TIDMCNIC
RNS Number : 0458T
CentralNic Group PLC
22 November 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU ) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
22 November 2021
CENTRALNIC GROUP PLC
("CentralNic" or "the Company" or "the Group")
UNAUDITED FINANCIAL RESULTS FOR THE NINE MONTHSED 30 SEPTEMBER
2021
CentralNic Group Plc (AIM: CNIC), the global internet technology
company that sells online presence and marketing services,
announces its unaudited financial results for the nine months ended
30 September 2021. Both revenue and adjusted EBITDA have
significantly increased year-on-year, driven by a combination of
underlying organic growth and acquisitions.
Financial summary:
-- Revenue increased by 67% to USD 282.0m (September 2020 YTD: USD 168.5m)
-- Organic revenue grew 29% between September 2020 YTD and September 2021 YTD
-- Net revenue (gross profit) increased by 60% to USD 85.5m (September 2020 YTD: USD 53.3m)
-- Adjusted EBITDA* increased by 46% to USD 32.3m (September 2020 YTD: USD 22.1m)
-- Operating profit of USD 8.9m (September 2020 YTD: USD 0.7m)
-- Adjusted operating cash conversion of 113% (September 2020 YTD: 93%)
-- Net debt** down to USD 78.6m (cash of USD 54.0m, gross
interest-bearing debt of USD 132.6m) as compared to USD 85.0m on 31
December 2020 - despite two acquisitions for a combined USD 11.1m
in the period, and the settlement of combined deferred
consideration of USD 1.7m
-- Adjusted EPS for the period increased by 5% to USD 7.73 cents
(September 2020 YTD: USD 7.33 cents)
Financial highlights:
-- Acceleration of organic growth from 9% in September 2020 YTD
to 29% overall for September 2021 YTD
-- Non-recurring revenue products contributed less than 1% of our total revenues
-- Successful bond tap issue of EUR 15m at 104.5% of nominal value
-- Acquisition of SafeBrands (Online Presence segment) in
January 2021 and Wando Internet Solutions (Online Marketing
segment) in February 2021
-- Final and interim deferred consideration payments made for
Team Internet (Online Marketing segment)
-- Currency exposure on the EUR 105m bond has been hedged at a
locked-in average EUR/USD rate of 1.1891
Operational highlights:
-- Very strong traction for the Group's privacy-safe online
marketing technologies in context of privacy-conscious policies of
Big Tech
-- Significant investment in new management, staff and systems
accelerated organic growth to record levels and positions the Group
well for continued growth
-- New Data and AI group established to improve customer
service, optimise business operations and decision making, enhance
marketing, reduce customer churn, and automate detection of
non-compliant customer activity
-- Appointment of Carsten Sjoerup in the new role of Chief
Technology & Product Officer to lead the integration of
technology and product teams across all brands, with a focus on
technical expertise and new product launches
-- Experienced non-executive directors added to the board
-- New customer wins for the Registry business include JISC and Dot London
Post period-end highlights:
-- Acquisition of publishing network of revenue generating
websites for a consideration of USD 6.5m in cash and assumed
working capital liabilities was completed on 15 November 2021 and
is expected to generate at least USD 2.0m in annualised revenue and
USD 1.5m in annualised EBITDA post-acquisition
Outlook:
-- The Company expects to trade comfortably at the upper end of
market expectations*** for the year for both revenue and adjusted
EBITDA
-- The accelerated organic growth seen during Q3 2021 YTD is
expected to be sustained for the full year following the investment
in new management, staff and systems
-- The Company's market consolidation strategy continues, with
opportunities being continually assessed in what is a large,
globally fragmented market
Ben Crawford, CEO of CentralNic, commented: "CentralNic has
enjoyed a very strong first nine months of 2021, across both our
online presence subscription products and our privacy enabled
online marketing technologies - achieving record organic growth of
29% for the year to date. By virtue of our significant investment
in human resources, restructuring and market-leading products and
promotions, we expect full year revenue and profits to be at least
at the upper end of market expectations.
A virtually pure play recurring revenue business with cash
conversion of over 100%, CentralNic continues to improve its cash
position, interest coverage and net debt to EBITDA ratio as it
grows. As our investment levels plateau moving forward, we expect
future periods to benefit from increasing operational leverage.
These robust results reflect CentralNic's continued success in
sourcing, completing and integrating transformative acquisitions
and driving the organic growth of our businesses. The pipeline of
future acquisition targets remains strong, and we are confident in
continuing our trajectory towards joining the ranks of the global
leaders in our industry."
* Subsidiary and associate earnings before interest, tax,
depreciation, amortisation, non-cash charges and non-core operating
expenses
** Includes gross cash, debt and prepaid finance costs
***) analyst expectations of revenue and adjusted EBITDA for the
financial year ending 31 Dec 2021 currently range from USD 349.0m
to USD 384.1m and USD 41.8m to USD 43.0m respectively.
These unaudited financial results have been prepared for the
purpose of fulfilling the information undertaking requirements
included in the bond terms for the Senior Secured Callable Bond
Issue. To the best of our knowledge, these unaudited financial
results have been prepared in accordance with applicable accounting
standards and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Issuer and the Group
taken as a whole. In addition, to the best of our knowledge, these
unaudited financial results include a fair review of the
development and performance of the business and the position of the
Issuer and the Group taken as a whole. The principal risks and
uncertainties that the business faces remain materially consistent
with the risks and uncertainties described in the Risks section of
the Group's 2020 annual report.
Ben Crawford - CEO
Don Baladasan - Group Managing Director
Michael Riedl - CFO
For further information:
CentralNic Group Plc
Ben Crawford, Chief Executive Officer +44 (0) 203 388 0600
Don Baladasan, Group Managing Director
Michael Riedl, Chief Financial Officer
Zeus Capital Limited - NOMAD and
Joint Broker
Nick Cowles / Jamie Peel (Corporate
Finance) +44 (0) 161 831 1512
Rupert Woolfenden (Institutional
Sales) +44 (0) 203 829 5000
Stifel - Joint Broker
Fred Walsh / Alex Price / Richard
Short +44 (0) 20 7710 7600
SEC Newgate UK (for Media)
Bob Huxford / Tom Carnegie / Isabelle +44 (0) 203 757 6880
Smurfit centralnic@secnewgate.co.uk
Forward-Looking Statements
This document includes forward-looking statements. Whilst these
forward-looking statements are made in good faith, they are based
upon the information available to CentralNic at the date of this
document and upon current expectations, projections, market
conditions and assumptions about future events. These
forward-looking statements are subject to risks, uncertainties and
assumptions about the Group and should be treated with an
appropriate degree of caution.
About CentralNic Group Plc
CentralNic (AIM: CNIC) is a London-based AIM-listed company
which drives the growth of the global digital economy by developing
and managing software platforms allowing businesses globally to buy
subscriptions to domain names, websites, email, and brand
protection services - as well as tools for monetising online
traffic and acquiring customers online. The company's organic
growth combines selling recurring revenue services with new
customer wins, upselling and cross-selling of services, including a
pipeline of new products. The Company's inorganic growth strategy
is identifying and acquiring cash-generative businesses in its
industry with annuity revenue streams and exposure to growth
markets and migrating them onto the CentralNic software and
operating platforms. CentralNic operates globally with customers in
almost every country in the world. For more information please
visit: www.centralnicgroup.com
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
CentralNic's organic growth, combined with its 2021 and 2020
acquisitions, substantially increased the scale and capabilities of
the Company. The effect of this is demonstrated in our unaudited
September 2021 YTD results which show a transformational increase
in revenue and adjusted EBITDA, which have grown by 67% and 46%
respectively compared to September 2020 YTD.
Performance Overview
The Company has performed strongly during the quarter with the
key financial metrics listed below:
30 September 30 September
2021 2020 Change
USD m USD m %
------------- ------------- ---------
Revenue 282.0 168.5 67%
------------- ------------- ---------
Net revenue (gross profit) 85.5 53.3 60%
------------- ------------- ---------
Adjusted EBITDA 32.3 22.1 46%
------------- ------------- ---------
Operating profit 8.9 0.7 +8.2m
------------- ------------- ---------
Adjusted operating cash
conversion(1) 113% 93% +20%
------------- ------------- ---------
Loss after tax (2.9) (6.3) 54%
------------- ------------- ---------
EPS - Basic (cents) (1.26) (3.40) 63%
------------- ------------- ---------
EPS - Adjusted earnings
- Basic (cents)(2) 7.73 7.33 5%
------------- ------------- ---------
(1) Please refer to note 8
(2) Please refer to note 7
Segmental analysis
The Company has combined the previous Direct and Indirect
segments into a single Online Presence segment as of this reporting
date. In this segment, which provides the essential tools for
businesses to go online, growth in domain name sales has
accelerated notably. More importantly, our efforts to deliver
value-added services are paying off, with the growth in sales of
associated services outpacing growth in domain names sales. The
Online Marketing (formerly "Monetisation") segment, was renamed as
its service offering has been substantially expanded through the
acquisitions of Zeropark, Voluum and Wando, to a full suite of
online customer acquisition solutions, including data
analytics.
Organic growth rates quoted below are calculated on a pro forma
basis including all the Group's constituents as of the last balance
sheet dates and adjusted for non-recurring or non-cash revenues and
constant currency basis.
Online Presence segment
Significant scale was achieved in the Online Presence segment,
with revenues increasing by USD 19.4m in the nine months ended 30
September 2021, or 20%, from USD 95.6m to USD 115.0m. Organic
growth of the segment was 9% over the period. The growth has been
predominantly carried by the Group's Wholesale and Enterprise
brands. Enterprise has seen growth further accelerated by the
successful SafeBrands acquisition.
Online Marketing segment
The Online Marketing segment grew more rapidly, with revenues
increasing by USD 94.1m, or 129%, from USD 72.9m to USD 167.0m.
Organic revenue grew at a high rate of 47%, foremost driven by
CentralNic's PubTONIC media buying business, with the additional
inorganic growth being contributed by the acquisitions of Zeropark,
Voluum and Wando.
CentralNic is a leader in online privacy, as none of our
marketing platforms make use of third-party cookies or collect
personal data on our customers. We therefore expect that
restrictions placed on those practices (e.g. the ban of third-party
cookies in Google Chrome or App Tracking Transparency in Apple's
iOS 14.5) will benefit CentralNic, as we provide an alternative to
online marketers that is proven to be highly effective whilst
respecting the privacy of internet users. This puts us at the
forefront of companies offering solutions for a more privacy
conscious world.
Outlook
CentralNic has enjoyed a very strong first nine months of 2021,
across both our online presence subscription products and our
privacy enabled online marketing technologies - achieving record
organic growth of 29% for the year to date. By virtue of our
significant investment in human resources, restructuring and
market-leading products and promotions, we expect full year revenue
and profits to be at least at the upper end of market
expectations.
A virtually pure play recurring revenue business with cash
conversion of over 100%, CentralNic continues to improve its cash
position, interest coverage and net debt to EBITDA ratio as it
grows. As our investment levels plateau moving forward, we expect
future periods to benefit from increasing operational leverage.
These robust results reflect CentralNic's continued success in
sourcing, completing and integrating transformative acquisitions
and driving the organic growth of our businesses. The pipeline of
future acquisition targets remains strong, and we are confident in
continuing our trajectory towards joining the ranks of the global
leaders in our industry.
Ben Crawford
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE Restated(c)
INCOME Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2021 2020 2020
Note USD m USD m USD m
----- --------------- -------------- ---------------
Revenue 4 282.0 168.5 241.2
Cost of sales (196.5) (115.2) (164.9)
Gross profit 85.5 53.3 76.3
Administrative expenses (73.3) (48.7) (70.8)
Share-based payment expenses (3.3) (3.9) (5.1)
Operating profit 8.9 0.7 0.4
Adjusted EBITDA (a) 32.3 22.1 30.6
Depreciation of property, plant
and equipment (2.7) (1.5) (2.1)
Amortisation of intangible
assets (12.5) (8.8) (12.5)
Non-core operating expenses(b) 5 (6.5) (6.0) (8.2)
Foreign exchange gain/(loss) 1.6 (1.2) (2.1)
Share of associate EBITDA - - (0.2)
Share-based payment expenses (3.3) (3.9) (5.1)
--------------- -------------- -------------
Operating profit 8.9 0.7 0.4
----------------------------------------- ----- --------------- -------------- -------------
Finance costs 6 (8.0) (6.5) (10.0)
Foreign exchange gain on borrowings 6 - - 0.1
Net finance costs (8.0) (6.5) (9.9)
Share of associate income - - 0.1
Profit/(loss) before taxation 0.9 (5.8) (9.4)
Income tax (expense)/income (3.8) (0.5) 1.0
--------------- -------------- -------------
Loss after taxation (2.9) (6.3) (8.4)
Items that may be reclassified
subsequently to profit and
loss
Exchange difference on translation
of foreign operation (0.6) 1.4 3.2
--------------- -------------- -------------
Total comprehensive income/(loss)
for the period (3.5) (4.9) (5.2)
Loss is attributable to:
Owners of CentralNic Plc (2.9) (6.3) (8.4)
--------------- -------------- -------------
Total comprehensive income/(loss)
is attributable to:
Owners of CentralNic Plc (3.5) (4.9) (5.2)
--------------- -------------- -------------
Earnings per share:
Basic (cents) (1.26) (3.40) (4.28)
Diluted (cents) (1.26) (3.40) (4.28)
Adjusted earnings - Basic (cents) 7.73 7.33 10.57
Adjusted earnings - Diluted
(cents) 7.52 7.03 10.16
All amounts relate to continuing activities.
(a) Subsidiary and associate earnings before interest, tax,
depreciation, amortisation, non-cash charges and non-core operating
expenses.
(b) Non-core operating expenses include items related primarily
to acquisition, integration and other related costs, which are not
incurred as part of the
underlying trading performance of the Group, and which are
therefore adjusted for, in line with Group policy.
(c) The comparative figures have been restated due to the
reclassification of foreign exchange differences and alignment of
tax estimates with the 2020 Annual report.
CONSOLIDATED STATEMENT OF FINANCIAL Restated(a)
POSITION Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2021 2020 2020
USD m USD m USD m
--------------- -------------- -------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2.0 1.7 2.2
Right-of-use assets 6.4 4.1 6.5
Intangible assets 254.5 204.7 257.0
Deferred receivables 0.5 0.3 0.7
Investments 0.1 1.6 0.1
Deferred tax assets 6.6 3.3 5.3
--------------- -------------- -------------
270.1 215.7 271.8
--------------- -------------- -------------
CURRENT ASSETS
Trade and other receivables 62.0 37.8 47.9
Inventory 1.0 0.5 1.0
Cash and bank balances 54.0 63.7 28.7
--------------- -------------- -------------
117.0 102.0 77.6
TOTAL ASSETS 387.1 317.7 349.4
EQUITY AND LIABILITIES
EQUITY
Share capital 0.3 0.3 0.3
Share premium 39.8 40.6 39.8
Merger relief reserve 5.3 5.3 5.3
Share-based payments reserve 17.0 8.1 11.0
Cash flow hedging reserve (3.8) - -
Foreign exchange translation
reserve 2.0 (0.4) 1.4
Retained earnings 56.8 61.3 59.3
--------------- -------------- -------------
TOTAL EQUITY 117.4 115.2 117.1
--------------- -------------- -------------
NON-CURRENT LIABILITIES
Other payables 3.4 2.3 2.9
Lease liabilities 4.7 3.2 5.2
Deferred tax liabilities 21.5 21.7 22.0
Borrowings 121.3 103.5 107.8
--------------- -------------- -------------
150.9 130.7 137.9
--------------- -------------- -------------
CURRENT LIABILITIES
Trade and other payables and
accruals 101.8 65.7 87.3
Lease liabilities 1.9 1.0 1.3
Borrowings 11.3 5.1 5.8
Derivative financial instruments 3.8 - -
118.8 71.8 94.4
--------------- -------------- -------------
TOTAL LIABILITIES 269.7 202.5 232.3
TOTAL EQUITY AND LIABILITIES 387.1 317.7 349.4
--------------- -------------- -------------
(a) The comparative figures have been restated due to the
reclassification of foreign exchange differences and alignment of
tax estimates with the 2020 Annual report.
CENTRALNIC GROUP Equity
PLC attributable
CONSOLIDATED Share- Cash Foreign to owners
STATEMENTS OF Merger based flow exchange Retained of the
CHANGES IN Share Share relief payments hedging translation earnings/ Parent Non-Controlling
EQUITY Capital premium reserve reserve reserve reserve (losses) Company Interest Total
USD USD USD USD m USD USD m USD m USD m USD m USD
m m m m m
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Balance as at
1 January 2020 0.2 74.8 5.3 6.1 - (1.8) (7.5) 77.1 (0.1) 77.0
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Loss for the
period - - - - - - (6.3) (6.3) - (6.3)
Adjustment to
non-controlling
interest - - - - - - - - 0.1 0.1
Translation of
foreign
operation - - - - - 1.4 - 1.4 - 1.4
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Total
comprehensive
income for the
period - - - - - 1.4 (6.3) (4.9) 0.1 (4.8)
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Issue of new
shares 0.1 41.8 - - - - - 41.9 - 41.9
Share issuance
costs - (1.2) - - - - - (1.2) - (1.2)
Capital
reduction - (74.8) - - - - 74.8 - - -
Share-based
payments - - - 2.4 - - - 2.4 - 2.4
Share-based
payments
- deferred tax
asset - - - (0.1) - - - (0.1) - (0.1)
Share-based
payments
- exercised and
lapsed - - - (0.3) - - 0.3 - - -
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Balance as at
30 September
2020 0.3 40.6 5.3 8.1 - (0.4) 61.3 115.2 - 115.2
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Loss for the
period - - - - - - (2.0) (2.0) - (2.0)
Translation of
foreign
operation - - - - - 1.8 - 1.8 - 1.8
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Total
comprehensive
income for the
period - - - - - 1.8 (2.0) (0.2) - (0.2)
Issue of new
shares - 1.9 - - - - - 1.9 - 1.9
Share issue
costs - (2.7) - - - - - (2.7) - (2.7)
Share-based
payments - - - 2.8 - - - 2.8 - 2.8
Share-based
payments
- deferred tax
asset - - - 0.1 - - - 0.1 - 0.1
Share-based - - - - - - - - - -
payments
- exercised and
lapsed
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Balance as at
31 December
2020 0.3 39.8 5.3 11.0 - 1.4 59.3 117.1 - 117.1
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Loss for the
period - - - - - - (2.9) (2.9) - (2.9)
Translation of
foreign
operation - - - - - 0.6 - 0.6 - 0.6
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Total
comprehensive
income for the
period - - - - - 0.6 (2.9) (2.3) - (2.3)
Loss arising
on changes
in fair value
of hedging
instruments - - - - (3.8) - - (3.8) - (3.8)
Share-based
payments - - - 4.9 - - - 4.9 - 4.9
Share-based
payments
- deferred tax
asset - - - 1.5 - - - 1.5 - 1.5
Share-based
payments
- exercised and
lapsed - - - (0.4) - - 0.4 - - -
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
Balance as at
30 September
2021 0.3 39.8 5.3 17.0 (3.8) 2.0 56.8 117.4 - 117.4
--------- --------- --------- ---------- -------- ------------- ----------- ------------- ---------------- ------
-- Share capital represents the nominal value of the company's
cumulative issued share capital.
-- Share premium represents the cumulative excess of the fair
value of consideration received for the issue of shares in excess
of their nominal value less attributable share issue costs and
other permitted reductions.
-- Merger relief reserve represents the cumulative excess of the
fair value of consideration received for the issue of shares in
excess of their nominal value less attributable shares issue costs
and other permitted reductions.
-- Share-based payments reserve represents the cumulative value
of share-based payments recognised through equity.
-- Cash flow hedging reserve represents the effective portion of
changes in the fair value of derivatives.
-- Foreign exchange translation reserve represents the
cumulative exchange differences arising on Group consolidation.
-- Retained earnings represent the cumulative value of the
profits not distributed to shareholders but retained to finance the
future capital requirements of the CentralNic Group.
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
CONSOLIDATED STATEMENT OF CASH 30 September 30 September 31 December
FLOWS 2021 2020 2020
USD m USD m USD m
--------------- ----------------- -------------
Cash flow from operating activities
Profit/(loss) before taxation 0.9 (5.8) (9.4)
Adjustments for:
Depreciation of property, plant
and equipment 2.7 1.5 2.1
Amortisation of intangible assets 12.5 8.8 12.5
Share of associate EBITDA - - (0.2)
Gain on sale of associate - - (0.3)
Finance cost (net) 8.0 6.5 9.9
Share-based payments 3.3 3.9 5.1
(Increase)/decrease in trade
and other receivables (14.1) 1.0 (9.3)
Increase/(decrease) in trade
and other payables 11.6 (2.4) 12.3
--------------- --------------------- -------------
Cash flow generated from operations 24.9 13.5 22.7
--------------- --------------------- -------------
Income tax (paid)/received (1.7) 0.1 (2.0)
--------------- --------------------- -------------
Net cash flow generated from
operating activities 23.2 13.6 20.7
Cash flow used in investing
activities
Purchase of property, plant
and equipment (0.6) (0.6) (1.2)
Purchase of intangible assets (1.6) (0.6) (3.0)
Payment of deferred consideration (1.7) (5.1) (5.5)
Proceeds from disposal of investment
in associate - - 1.8
Acquisition of subsidiaries (11.1) (1.0) (37.1)
--------------- --------------------- -------------
Net cash flow used in investing
activities (15.0) (7.3) (45.0)
Cash flow used in financing
activities
Proceeds from borrowings 25.5 2.4 2.2
Bond arrangement fees (0.6) (0.1) (0.6)
Proceeds from issuance of ordinary
shares (net) - 37.3 34.7
Payment of lease liability (1.4) (0.5) (1.1)
Interest paid (4.5) (5.6) (9.5)
--------------- --------------------- -------------
Net cash flow generated from
financing activities 19.0 33.5 25.7
--------------- --------------------- -------------
Net increase in cash and cash
equivalents 27.2 39.8 1.4
Cash and cash equivalents at
beginning of the period/year 28.7 26.2 26.2
Exchange (losses)/gains on cash
and cash equivalents (1.9) (2.3) 1.1
--------------- --------------------- -------------
Cash and cash equivalents at
end of the period/year 54.0 63.7 28.7
--------------- --------------------- -------------
NOTES TO THE UNAUDITED FINANCIAL RESULTS
1. General information
CentralNic Group Plc is the UK holding company of a group of
companies which are engaged in the provision of global domain name
services. The Company is registered in England and Wales. Its
registered office and principal place of business is 4th Floor,
Saddlers House, 44 Gutter Lane, London EC2V 6BR.
The CentralNic Group is a global internet platform that derives
revenue from the worldwide sales of internet domain names and
related web services.
2. Basis of preparation
The financial results for the nine months ended 30 September
2021 are unaudited and have been prepared on the basis of the
accounting policies set out in the Group's 2020 statutory accounts
for the purpose of fulfilling the information undertaking
requirements included in the bond terms for the Senior Secured
Callable Bond Issue and, for all periods presented, in line with
the principal disclosure requirements of IAS 34: Interim Financial
Reporting.
The unaudited financial results are condensed and do not
represent statutory accounts within the meaning of section 435 of
the Companies Act 2016. The statutory accounts for the year ended
31 December 2020, upon which the auditors issued an unqualified
opinion, are available on the Group's website and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
As a profitable provider of online subscription services with
high cash conversion and solid organic growth, de-centrally
organised and catering to solid customers distributed over the
entire globe, CentralNic has not been, and is not expected to be,
severely affected by COVID-19. The Directors have taken the
necessary precautions to preserve the Group's cash and review the
acquisition pipeline and financing plans to ensure stability and
optimisation of the business strategies in the current global
climate.
3. Segment analysis
CentralNic is an independent global service provider
distributing domain names and associated digital subscription
products through its Online Presence segment, as well as providing
Online Marketing services. Operating segments are organised around
the products and services of the business and are prepared in a
manner consistent with the internal reporting used by the chief
operating decision maker to determine allocation of resources to
segments and to assess segmental performance. The Directors do not
rely on analyses of segment assets and liabilities, nor on
segmental cash flows arising from the operating, investing and
financing activities for each reportable segment, for their
decision making and therefore have not included them.
The Online Presence segment conducts business as a global
distributor of domain names through a network of channel partners
as well as selling domain names and ancillary services to end
users, monitoring services to protect brands online, technical and
consultancy services to corporate clients, and licensing the
Group's in-house developed registry management platform on a global
basis. The Online Marketing segment provides advertising placement
services to match those who have traffic, e.g. domain name owners
and content website operators, with those who want traffic, e.g.
ecommerce website operators and affiliates on a global basis,
including AI based data analytics and automation tools.
Management reviews the activities of the CentralNic Group in the
segments disclosed below:
Nine months ended 30 September 2021
----------------------------------------
Online Online Marketing Total
Presence USD m USD m
USD m
------------------------------------------------ ----------- ----------------- --------
Revenue 115.0 167.0 282.0
------------------------------------------------ ----------- ----------------- --------
Gross profit 42.4 43.1 85.5
------------------------------------------------ ----------- ----------------- --------
Total administrative expenses (73.3)
Share-based payment expenses (3.3)
------------------------------------------------ ----------- ----------------- --------
Operating profit 8.9
------------------------------------------------ ----------- ----------------- --------
Adjusted EBITDA 32.3
Depreciation of property, plant and equipment (2.7)
Amortisation of intangibles assets (12.5)
Non-core operating expenses (6.5)
Foreign exchange gain 1.6
Share-based payment expenses (3.3)
------------------------------------------------ ----------- ----------------- --------
Operating profit 8.9
------------------------------------------------ ----------- ----------------- --------
Net finance cost (8.0)
Profit before taxation 0.9
------------------------------------------------ ----------- ----------------- --------
Income tax expense (3.8)
------------------------------------------------ ----------- ----------------- --------
Loss after taxation (2.9)
------------------------------------------------ ----------- ----------------- --------
3. Segment analysis (continued)
Nine months ended 30 September 2020
----------------------------------------
Online Online Marketing Total
Presence USD m USD m
USD m
------------------------------------------------ ----------- ----------------- --------
Revenue 95.6 72.9 168.5
------------------------------------------------ ----------- ----------------- --------
Gross profit 34.1 19.2 53.3
------------------------------------------------ ----------- ----------------- --------
Total administrative expenses (48.7)
Share-based payment expenses (3.9)
------------------------------------------------ ----------- ----------------- --------
Operating profit 0.7
------------------------------------------------ ----------- ----------------- --------
Adjusted EBITDA 22.1
Depreciation of property, plant and equipment (1.5)
Amortisation of intangibles assets (8.8)
Non-core operating expenses (6.0)
Foreign exchange loss (1.2)
Share-based payment expenses (3.9)
------------------------------------------------ ----------- ----------------- --------
Operating profit 0.7
------------------------------------------------ ----------- ----------------- --------
Net finance cost (6.5)
Loss before taxation (5.8)
------------------------------------------------ ----------- ----------------- --------
Income tax expense (0.5)
------------------------------------------------ ----------- ----------------- --------
Loss after taxation (6.3)
------------------------------------------------ ----------- ----------------- --------
Year ended 31 December 2020
----------------------------------------
Online Online Marketing Total
Presence USD m USD m
USD m
------------------------------------------------ ----------- ----------------- --------
Revenue 129.1 112.1 241.2
------------------------------------------------ ----------- ----------------- --------
Gross profit 46.3 30.0 76.3
------------------------------------------------ ----------- ----------------- --------
Total administrative expenses (70.8)
Share-based payment expenses (5.1)
------------------------------------------------ ----------- ----------------- --------
Operating profit 0.4
------------------------------------------------ ----------- ----------------- --------
Adjusted EBITDA 30.6
Depreciation of property, plant and equipment (2.1)
Amortisation of intangibles assets (12.5)
Non-core operating expenses (8.2)
Foreign exchange loss (2.1)
Share of associate income (0.2)
Share-based payment expenses (5.1)
------------------------------------------------ ----------- ----------------- --------
Operating profit 0.4
------------------------------------------------ ----------- ----------------- --------
Net finance cost (9.9)
Share of associate income 0.1
------------------------------------------------ ----------- ----------------- --------
Loss before taxation (9.4)
------------------------------------------------ ----------- ----------------- --------
Income tax expense 1.0
------------------------------------------------ ----------- ----------------- --------
Loss after taxation (8.4)
------------------------------------------------ ----------- ----------------- --------
4. Revenue
The Group's revenue is generated from the following geographical
areas:
Unaudited Unaudited Audited
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2020
2021 2020 USD m
USD m USD m
--------------- ---------------
Online Presence
UK 2.8 2.7 3.4
North America 33.2 27.2 35.9
Europe 55.5 45.1 64.1
Countries not included
above 23.5 20.6 25.7
--------------- ---------------
115.0 95.6 129.1
--------------- --------------- ---------------
Online Marketing
UK 2.3 0.3 0.6
North America 13.5 2.6 6.2
Europe 134.7 68.3 100.1
Countries not included
above 16.5 1.8 5.2
--------------- --------------- ---------------
167.0 72.9 112.1
--------------- --------------- ---------------
Total revenue 282.0 168.5 241.2
--------------- --------------- ---------------
5. Non-core operating expenses
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2021 2020 2020
USD m USD m USD m
-------------- -------------- --------------------------
Acquisition related costs 1.8 0.7 1.4
Integration and streamlining costs 3.4 3.0 3.6
Other costs(1) 1.3 2.3 3.2
6.5 6.0 8.2
-------------- -------------- ----------------------
(1) Other costs include items related primarily to business
reviews and restructuring expenses.
6. Finance costs
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2021 2020 2020
USD m USD m USD m
-------------- -------------- -------------
Impact of unwinding of discount
on net present value of deferred
consideration (0.1) - (0.2)
Reappraisal of deferred consideration 0.1 - (0.9)
Foreign exchange (gain)/loss on
revaluation of revolving credit
facility - - 0.1
Arrangement fees on borrowings (1.1) (0.8) (1.1)
Interest expense on current borrowings (0.3) (0.2) (0.3)
Interest expense on non-current
borrowings (6.5) (5.4) (7.3)
Interest expense on leases (0.1) (0.1) (0.2)
Net finance
costs (8.0) (6.5) (9.9)
-------------- -------------- -------------
7. Earnings per share
Earnings per share has been calculated by dividing the
consolidated loss after taxation attributable to ordinary
shareholders by the weighted average number of ordinary shares in
issue during the period.
Diluted earnings per share have been calculated on the same
basis as above, except that the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive
potential ordinary shares (arising from the Group's share option
scheme and warrants) into ordinary shares has been added to the
denominator. There are no changes to the profit (numerator) because
of the dilutive calculation. Due to the loss made in the year ended
31 December 2020, the impact of the potential shares to be issued
on exercise of share options and warrants would be anti-dilutive
and therefore diluted earnings per share is reported on the same
basis on earnings per share.
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2021 2020 2020
USD m USD m USD m
-------------- -------------- --------------------------
Loss after tax attributable to
owners (2.9) (6.3) (8.4)
-------------- -------------- ----------------------
Operating profit 8.9 0.7 0.4
Depreciation of property, plant
and equipment 2.7 1.5 2.1
Amortisation of intangible assets 12.5 8.8 12.5
Non-core operating expenses 6.5 6.0 8.2
Foreign exchange (gain)/loss (1.6) 1.2 2.1
Share of associate income - - 0.2
Share-based payment expenses 3.3 3.9 5.1
-------------- -------------- ----------------------
Adjusted EBITDA 32.3 22.1 30.6
Depreciation (2.7) (1.5) (2.1)
Finance costs (excluding deferred
consideration related amounts -
note 6) (8.0) (6.5) (8.7)
Taxation (3.8) (0.5) 1.0
-------------- -------------- ----------------------
Adjusted earnings 17.8 13.6 20.8
Weighted average number
of shares:
Basic 230,362,429 185,521,432 196,680,310
Effect of dilutive potential
ordinary shares 6,326,392 8,044,990 8,019,971
-------------- -------------- ----------------------
Diluted average number
of shares 236,688,821 193,566,422 204,700,281
-------------- -------------- ----------------------
Earnings per share:
Basic (cents) (1.26) (3.40) (4.28)
Diluted (cents) (1.26) (3.40) (4.28)
-------------- -------------- ----------------------
Adjusted earnings - Basic
(cents) 7.73 7.33 10.57
Adjusted earnings - Diluted
(cents) 7.52 7.03 10.16
-------------- -------------- ----------------------
Basic and diluted earnings per share of (1.26) cents (September
2020 YTD: (3.40) cents) has been impacted by interest, tax,
depreciation, amortisation, non-cash charges and non-core operating
expenses. Tax on adjusted earnings is the same figure as that shown
in the consolidated statement of comprehensive income given that
most of the adjusting items in the earnings per share calculation
above are also adjusted for when calculating the Group's tax
expense.
8. Financial instruments
The CentralNic Group is exposed to market risk, credit risk and
liquidity risk arising from financial instruments. The Group's
overall financial risk management policy focusses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance. The
Group does not trade in financial instruments.
Cash conversion for the six-month period ended 30 September 2021
was as follows:
Unaudited Unaudited Unaudited
Nine months Nine months Year ended
ended 30 ended 30 31 December
September September 2020
2021 2020 USD m
USD m USD m
------------- ------------- ------------------
Cash conversion
Cash flow from operations 24.9 13.5 22.7
Exceptional costs incurred and paid
during the year 9.1 6.0 7.5
Settlement of one-off working capital
items from the prior year 2.5 1.0 5.1
Adjusted cash flow from operations 36.5 20.6 35.3
------------- ------------- ------------------
Adjusted EBITDA 32.3 22.1 30.6
Conversion % 113% 93% 115%
Nine monthly cash conversion may diverge notably from the
long-term trend and should be expected to converge towards
annual averages as demonstrated historically.
Net debt as at 30 September 2021, 30 September 2020 and
31 December 2020 is shown in the table below.
Bond Bank debt Cash Net debt
USD m USD m USD m USD m
------------- ------------- ------- ---------
At 1 January 2020 (97.7) (3.5) 26.2 (75.0)
(Drawdown)/ repayment - (2.4) 2.4 -
Amortisation of costs (1.2) (0.2) - (1.4)
Placing proceeds (net of costs) - - 37.3 37.3
Other cash movements - - 0.1 0.1
------------- ------------- ------- ---------
Net cash flows before foreign
exchange (1.2) (2.6) 39.8 36.0
Foreign exchange differences (3.5) (0.1) (2.3) (5.9)
At 30 September 2020 (102.4) (6.2) 63.7 (44.9)
------------- ------------- ------- ---------
(Drawdown)/ repayment - 0.2 (0.2) -
Amortisation of costs 2.2 0.1 - 2.3
Other cash movements - - (38.2) (38.2)
------------- ------------- ------- ---------
Net cash flows before foreign
exchange 2.2 0.3 (38.4) (35.9)
Foreign exchange differences (7.1) (0.5) 3.4 (4.2)
At 31 December 2020 (107.3) (6.4) 28.7 (85.0)
------------- ------------- ------- ---------
(Drawdown)/ repayment - (7.3) 12.2 4.9
Amortisation of costs (0.5) - - (0.5)
Placing proceeds (net of costs) (18.2) - 18.2 -
Other cash movements - - (3.2) (3.2)
------------- ------------- ------- ---------
Net cash flows before foreign
exchange (18.7) (7.3) 27.2 1.2
Foreign exchange differences 6.7 0.4 (1.9) 5.2
At 30 September 2021 (119.3) (13.3) 54.0 (78.6)
------------- ------------- ------- ---------
9. Business combinations
Acquisitions of SafeBrands and Wando Internet Solutions
For further details regarding the acquisition of SafeBrands on 9
January 2021, please refer to note 9 of the unaudited financial
results for the three months ended 31 March 2021 as published and
released on 1 June 2021.
For further details regarding the acquisition of Wando Internet
Solutions on 22 February 2021, please refer to note 9 of the
unaudited financial results for the six months ended 30 June 2021
as published and released on 31 August 2021.
10. Events occurring after the quarter end
Detailed below are the significant events that happened after
the Group's quarter end date of 30 September 2021 and before the
signing of these Unaudited Financial Results on 22 November
2021.
-- On 29 October, the Company announced that it entered into an
agreement to acquire a publishing network of revenue generating
websites ("Publishing Network") for a consideration of USD 6.5m in
cash and assumed working capital liabilities ("Acquisition") from
White & Case Ltd. The Acquisition completed on 15 November 2021
and has been financed from available liquidity. The acquisition
will be immediately earnings accretive. On a standalone basis, the
websites are expected to generate at least USD 2.0m in annualised
revenue and USD 1.5m in annualised EBITDA post-acquisition. As
CentralNic is already today monetising roughly half of the
websites' traffic, this is expected to translate into c.USD 1.0m of
additional revenue, c.USD 0.5m of reduced COGS and c.USD 1.5m of
EBITDA in the 2022 financial year. The Acquisition is part of a
larger vertical integration strategy, providing the Group's Online
Marketing segment with more proprietary and exclusive traffic to
monetise.
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END
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