TIDMCNIC
RNS Number : 1456J
CentralNic Group PLC
14 August 2023
14 August 2023
CENTRALNIC GROUP PLC
("CentralNic" or the "Company" or the "Group")
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHSED 30 JUNE
2023
Continued delivery with a 18% increase in Revenue, 16% rise in
Adjusted EBITDA,
and a confident outlook for FY23
CentralNic Group Plc (AIM: CNIC), the global internet company
which helps online consumers make informed choices, is pleased to
announce its unaudited financial results for the six months ended
30 June 2023 ("H1 2023").
Financial summary:
-- Gross revenue increased by 18% to USD 396.4m (six months
ended June 2022 ("H1 2022"): USD 334.6m)
-- Organic revenue growth(*) for the trailing twelve months
ended 30 June 2023 ("TTM 2023") of approximately 31%
-- Net revenue/gross profit increased by 11% to USD 91.2m (H1 2022: USD 82.1m)
-- Adjusted EBITDA(**) increased by 16% to USD 44.6m (H1 2022:
USD 38.6m) and good progression from Q1 2023 to Q2 2023 reflecting
a quarter over quarter increase of USD 2.0m
-- Operating profit decreased by 19% to USD 17.5m (H1 2022: USD
21.7m), mainly due to an increase in non-cash charges such as
amortisation and foreign exchange
-- Adjusted EPS increased by 34% to USD 11.37 cents (H1 2022: USD 8.46 cents)
-- Inaugural final dividend of 1.0p per share paid on 16 June
2023 totalling USD 3.6m, reflecting a renewed capital allocation
policy geared towards greater returns to shareholders
-- Net debt(***) increased by USD 11.6m to USD 68.2m (31 December 2022: USD 56.6m), following non-operating cash outflows in respect of the Company acquiring its own shares (USD 13.9m), the Company's dividend (USD 3.6m), and USD 15.2m in respect of the non-recurring settlement of deferred contingent consideration
-- Leverage (****) increased to 1.0x from 0.9x pro forma EBITDA
as of 31 December 2022. The increase in the net leverage ratio is
entirely driven by the Company's choice in returning cash to
shareholders through its share buyback programme and dividend
-- Adjusted operating cash conversion of 94% (FY 2022: 110%) .
We expect this to normalise nearer to 100% over the remainder of
the year
H1 operational highlights:
-- The Group continued to trade at least in line with current
market expectations during the period, driven by ongoing market
share gains of its proprietary privacy-safe, AI based customer
journeys which address a multi-billion-dollar opportunity
-- The number of visitor sessions increased by 49% to 5.3
billion for TTM 2023 from 3.5 billion for the trailing twelve-month
period ended 30 June 2022 ("TTM 2022"), reflecting continual
integration with new networks combined with entering new verticals
and geographies. Revenue per thousand sessions ("RPM") remained
stable at USD 100, outperforming the market
-- Organic revenue growth for the Online Presence segment was
15% for TTM 2023 compared to 5% for TTM 2022 at H1 2022
-- Adjusted EBITDA as a percentage of Net Revenue has increased
to 49% in H1 2023 from 47% in H1 2022, demonstrating that
CentralNic's growth continues to translate into operating
leverage
-- Appointment of Marie Holive as independent Non-Executive
Director, Chair of the Audit & Risk Committee and a member of
the Remuneration & Nominations Committee. The scope of the
Audit Committee has been expanded to encompass Risk, resulting in
its new name as the "Audit & Risk Committee"
-- Partnership agreement with Microsoft Bing, deepening and
diversifying the demand pool in our important TONIC business
-- Awarded exclusive supplier status for the UK Crown Commercial
Service in the Online Presence registry division
-- First international expansion of our vergleich.org (VGL)
product review business with meilleurs.fr dedicated to France, the
second largest market for our key e-commerce partner Amazon within
the EU
-- On 8 May 2023, the first deferred consideration payment for
the acquisition of VGL was settled in cash for EUR 12.4m (USD
13.6m) as a result of the above expectation performance in 2022.
This was fully funded by the incremental operating cash flow
generated by VGL
Post period end highlights:
-- Zeropark, CentralNic's commerce media business, has announced
three strategic partnerships: First, becoming a Tier 1 Demand
Partner of Sovrn, a leading publisher technology platform. Second,
a significant deal with booking.com, the global online travel
agency. Third, Klarna, the Buy Now Pay Later platform has become a
direct publisher on the Zeropark network
-- Voluum, CentralNic's flagship ad tracker, has announced the
launch of a new integration with popular e-commerce platform
Shopify, allowing customers to directly feed conversion data from
their Shopify stores into Voluum, bolstering their ad, product, and
page performance
Outlook:
CentralNic delivered another strong performance during the H1
2023 period across both its Online Marketing and Online Presence
segments, gaining market share. For TTM 2023, organic revenue
growth was 31% on a pro forma basis. Moreover, as the Group rapidly
scales up, the underlying qualities of high recurring revenues and
excellent cash conversion become increasingly meaningful.
Furthermore, the Group has strong operating leverage, as
demonstrated by CentralNic's Adjusted EBITDA as a percentage of Net
Revenue being 49% for H1 2023 (47% H1 2022).
Whilst the Directors continue to monitor the global
macro-economic environment closely, they are confident in the
Group's targeted investment in product innovation, vertical
integration and international expansion. These strategic moves have
positioned the Group to succeed. Therefore, the Directors expect
that the Group will trade at least in line with current market
expectations for the full year.(*****)
The material expansion of the Company's second share buyback
programme announced on 3 July 2023, alongside the cash flow
waterfall model as described on page 14 in the 2022 Annual Report,
is being funded by continued strong operating cash generation. To
date, the Company has bought back 5.7m shares under that programme
at a cumulative cost of GBP 6.7m, in addition to purchases of
shares by the Company's Employee Benefit Trust. In excess of GBP
27m remains available for the remainder of the programme.
Results presentation:
There will be a webinar / conference call for equity analysts at
09.30am BST today, and for private client investment managers at
11am BST. Both events will be hosted by CEO Michael Riedl and CFO
William Green.
Anybody wishing to register should contact
centralnic@secnewgate.co.uk , where further details will be
provided.
Further, an Investor Meet Company session will be held at 1pm
BST today:
https://investormeetcompany.com/centralnic-group-plc/register-investor
Michael Riedl, CEO of CentralNic, commented: " CentralNic has
continued to deliver yet another strong quarterly performance,
enhancing our market share in each of the segments in which we
operate. Our sustained performance is a testament to our strong
ingrained culture of operational excellence, a factor that keeps us
at the fulcrum of the industry ecosystems.
Through our ongoing initiatives to boost operating leverage, we
are fortifying an already highly dependable and sustainable
business model. Our unrelenting commitment to these efforts
continues to build upon our prime objectives of creating a market
leader in its space and maximising shareholder value.
Our AI strategy goes beyond simple technological application;
it's about reshaping CentralNic into a dominant force in this
data-driven era. Our strategy is built on three pillars: (a)
enhancing AI capacity, (b) accelerating AI impact, and (c) scaling
our AI advantage. The Group has been at the forefront of the
industry in integrating AI into the heart of our operations and has
successfully pioneered and launched multiple AI projects."
(*) Pro forma revenue, adjusted for; acquired revenue, constant
currency foreign exchange impact and non-recurring revenues is
estimated at USD 794m for TTM 2023 and at USD 606m for TTM 2022
(**) Parent and subsidiary earnings before interest, tax,
depreciation, amortisation, impairment, non-cash charges and
non-core operating expenses
(***) Includes gross cash, bank debt and prepaid finance costs
as of 30 June 2023 (cash of USD 82.6m and bank debt and prepaid
finance costs of USD 151.5m); includes gross cash, bank debt,
prepaid finance costs and hedging assets of USD 0.7m (31 December
2022 cash of 94.8m, bond debt, bank debt and prepaid finance costs
of USD 151.2m and hedging liabilities of USD 0.2m)
(****) Includes Net Debt as defined under (***) (i) excluding
prepaid finance costs, (ii) plus guarantee obligations, and (iii)
plus the best estimate of any crystallised deferred consideration
payable in cash, all divided by pro forma EBITDA, i.e. last twelve
months' EBITDA including acquired entities' EBITDA on a pro forma
basis, and adjusted for rental expense capitalized under IFRS 16
and non-core expenses
(*****) Latest analyst forecasts are within a range of USD 783m
and USD 834m for FY23 revenue and USD 91m and USD 98m for FY23
Adjusted EBITDA
For further information:
CentralNic Group Plc +44 (0) 203 388 0600
Michael Riedl, Chief Executive Officer
William Green, Chief Financial Officer
Zeus Capital Limited (NOMAD and Joint
Broker)
Nick Cowles / Jamie Peel / James Edis
(Investment Banking) +44 (0) 161 831 1512
Dominic King (Corporate Broking) +44 (0) 203 829 5000
Berenberg (Joint Broker) +44 (0) 203 207 7800
Mark Whitmore / Richard Andrews / Alix
Mecklenburg-Solodkoff
SEC Newgate (for Media) centralnic@secnewgate.co.uk
Bob Huxford / Alice Cho / Harry Handyside
/ Tom Carnegie +44 (0) 203 757 6880
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 leading global internet solutions
company that operates in two highly attractive markets: high-growth
digital advertising (Online Marketing segment) and domain name
management solutions (Online Presence segment). The company's
Online Marketing segment creates privacy-safe and AI-generated
online consumer journeys that convert general interest online media
users into confident high conviction consumers through advertorial
and review websites. The Online Presence segment is a critical
constituent of the global online presence and productivity tool
ecosystem, where CentralNic serves as the primary distribution
channel for a wide range of digital products. The company's
high-quality earnings come from subscription recurring revenues in
the Online Presence segment and revenue share on rolling
utility-style contracts in the Online Marketing segment.
For more information please visit: www.centralnicgroup.com
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
CentralNic's organic growth, combined with the acquisition
strategy pursued through the end of 2022, substantially increased
the scale and capabilities of the Group. The effect of this is
demonstrated in our unaudited June 2023 YTD results which show
increases in both Revenue and Adjusted EBITDA of 18% and 16%
respectively compared to H1 2022.
Performance Overview
The Group has performed strongly during the period with the key
financial metrics listed below:
Six months Six months
ended ended
30 June 30 June Change
2023 2022
USD m USD m %
----------- ----------- ---------
Revenue 396.4 334.6 18%
----------- ----------- ---------
Net revenue / gross profit 91.2 82.1 11%
----------- ----------- ---------
Adjusted EBITDA 44.6 38.6 16%
----------- ----------- ---------
Operating profit 17.5 21.7 (19%)
----------- ----------- ---------
Adjusted operating cash
conversion (note 8) 94% 110% (15%)
----------- ----------- ---------
Profit after tax 9.4 6.9 36%
----------- ----------- ---------
EPS - Basic (cents) 3.40 2.61 30%
----------- ----------- ---------
EPS - Adjusted earnings
- Basic (cents) (note 7) 11.37 8.46 34%
----------- ----------- ---------
Segmental analysis
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
on a constant currency basis.
Online Marketing segment
The Online Marketing segment continued its growth with revenues
increasing by USD 46.6m, or 18%, from USD 257.8m to USD 304.4m.
Organic revenue grew at a rate of 36% for LTM 2023, predominantly
driven by CentralNic's TONIC platform. Inorganic growth was a
result of the full period impact of the VGL acquisition, which was
acquired in March 2022
The number of visitor sessions increased by 49% from 3.5 billion
for TTM 2022 to 5.3 billion for TTM 2023 and the RPM remained
stable at USD 100(1) .
The Online Marketing segment creates privacy-safe and
AI-generated online consumer journeys that convert general interest
online media users into confident high conviction consumers through
advertorial and review websites, generating utility-style referral
and commission income through partnerships with Google, Amazon and
a multitude of other partners. The long-term vision is to combine
the Group's abilities to (a) convert social media and other low
intent traffic to qualify for search ad campaigns and (b) convert
search ad campaigns into ecommerce transactions, in a thriving
social commerce channel, a market that is estimated to be worth USD
80bn(2) by 2025 in the US.
Online Presence segment
Reported revenue in this segment increased by 20% from USD 76.8m
in June 2022 YTD to USD 92.0m in June 2023 YTD. Organic growth for
the Online Presence segment was 15% for TTM 2023, the highest
growth rate since the segment's establishment, driven by the
structural shift in demand towards Top Level Domains where
CentralNic has a competitive edge.
The number of processed domain registration years increased by
7% from 12.0m for TTM 2022 to 12.9m for TTM 2023 and the average
revenue per domain year increased by 6% from USD 9.83 to USD 10.46.
The share of Value-Added Service revenue TTM 2023 was 7%(3) .
The Online Presence segment is a critical constituent of the
global online presence and productivity tool ecosystem, where
CentralNic serves as the primary distribution channel for a wide
range of digital products.
Reporting cycle
The Group today also announces it is streamlining its reporting
cycle. CentralNic has historically provided nine updates to the
market in the course of the year. This will be reduced to seven,
where trading updates for Q1 and Q3 will be incorporated into those
interim reports, which are to be published within forty-five days
of the end of the period. The Board believes this reporting cycle
continues to support active investor engagement throughout the
calendar year.
Michael Riedl
Chief Executive Officer
(1) Based on analysis of c.85% of the search segment which can
be adequately and reliably described by this KPI
(2) Source: "Social commerce: The future of how customers
interact with brands", McKinsey & Company, October 19, 2022
(3) Based on analysis of c.80% of this segment which can be
adequately and reliably described by this KPI
CONSOLIDATED STATEMENT OF Unaudited Unaudited Audited
COMPREHENSIVE INCOME Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022
2022
Note USD m USD m USD m
-------------- ------------ -------------
Revenue 4 396.4 334.6 728.2
Cost of sales (305.2) (252.5) (550.5)
Net revenue / gross profit 91.2 82.1 177.7
Operating expenses (71.4) (57.7) (138.4)
Share-based payments expense (2.3) (2.7) (5.7)
Operating profit 17.5 21.7 33.6
Adjusted EBITDA (a) 44.6 38.6 86.0
Depreciation of property,
plant and equipment (1.5) (1.4) (3.0)
Amortisation and impairment
of intangible assets (18.5) (14.0) (36.4)
Non-core operating expenses(b) 5 (3.2) (2.5) (8.1)
Foreign exchange (loss) /
gain (1.6) 3.7 0.8
Share-based payment expenses (2.3) (2.7) (5.7)
-------------- ------------ -------------
Operating profit 17.5 21.7 33.6
------------------------------------ ----- -------------- ------------ -------------
Finance income less finance
costs 6 (4.2) (5.9) (13.2)
Foreign exchange loss on
borrowings - - (5.6)
Net finance costs (4.2) (5.9) (18.8)
Profit before taxation 13.3 15.8 14.8
Income tax expense (3.9) (8.9) (16.9)
-------------- ------------ -------------
Profit/(loss) after taxation 9.4 6.9 (2.1)
Items that may be reclassified
subsequently to profit and
loss
Exchange difference on translation
of foreign operations 0.9 (4.80) (13.7)
Movement arising on changes
in fair value of hedging
instruments 0.9 (10.2) 6.2
-------------- ------------ -------------
Total comprehensive income/(loss)
for the period / year 11.2 (8.1) (9.6)
Profit/(loss) is attributable
to:
Owners of CentralNic Group
Plc 9.4 6.9 (2.1)
-------------- ------------ -------------
Total comprehensive income/(loss)
is attributable to:
Owners of CentralNic Group
Plc 11.2 (8.1) (9.6)
-------------- ------------ -------------
Earnings per share:
Basic (cents) 3.40 2.61 (0.78)
Diluted (cents) 3.37 2.53 (0.78)
Adjusted earnings - Basic
(cents) 11.37 8.46 20.01
Adjusted earnings - Diluted
(cents) 11.26 8.21 19.81
All amounts relate to continuing activities
(a) Parent and subsidiary earnings before interest, tax, depreciation,
amortisation and impairment , 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.
CONSOLIDATED STATEMENT OF Unaudited
FINANCIAL POSITION Six months Unaudited Audited
ended Six months Year ended
30 June ended 31 December
2023 30 June 2022 2022
USD m USD m USD m
------------ -------------- -------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2.2 1.8 1.8
Right-of-use assets 4.7 6.3 5.5
Intangible assets 335.2 317.5 347.9
Deferred receivables 0.2 0.4 0.3
Deferred tax assets 10.2 8.2 9.5
Derivative financial instruments 0.7 - -
------------ -------------- -------------
353.2 334.2 365.0
CURRENT ASSETS
Inventory 0.5 1.0 0.6
Trade and other receivables 94.2 93.1 98.2
Derivative financial instruments 0.7 - -
Cash and bank balances 82.6 95.2 94.8
178.0 189.3 193.6
TOTAL ASSETS 531.2 523.5 558.6
EQUITY AND LIABILITIES
EQUITY
Share capital 0.3 0.3 0.3
Share premium 98.3 98.3 98.3
Merger relief reserve 5.3 5.3 5.3
Share-based payments reserve 26.4 20.8 24.1
Cash flow hedging reserve 0.7 (16.6) (0.2)
Foreign exchange translation
reserve (9.9) (1.9) (10.8)
Retained earnings 41.4 59.5 50.0
------------ -------------- -------------
TOTAL EQUITY 162.5 165.7 167.0
NON-CURRENT LIABILITIES
Other payables 8.4 7.4 13.9
Lease liabilities 3.2 2.2 3.8
Deferred tax liabilities 26.6 29.6 30.2
Borrowings 147.6 131.6 145.9
Derivative financial instruments - - 0.2
------------ -------------- -------------
185.8 170.8 194.0
CURRENT LIABILITIES
Trade and other payables and
accruals 177.3 155.4 190.3
Lease liabilities 1.7 4.4 1.9
Borrowings 3.9 10.6 5.3
Derivative financial instruments - 16.6 0.1
------------ -------------- -------------
182.9 187.0 197.6
------------ -------------- -------------
TOTAL LIABILITIES 368.7 357.8 391.6
TOTAL EQUITY AND LIABILITIES 531.2 523.5 558.6
------------ -------------- -------------
Equity
CONSOLIDATED Share- Foreign attributable
STATEMENT OF Merger based Cash exchange to owners
CHANGES IN Share Share relief payments flow translation Retained of the
EQUITY capital premium reserve reserve hedging reserve earnings Parent
USD m USD m USD m USD m Reserve USD m USD m Company
USD m USD m
Balance as at
1 January
2022 0.3 39.8 5.3 19.5 (6.4) 2.9 52.6 114.0
Profit for the
period - - - - - - 6.9 6.9
Translation of
foreign
operations - - - - - (4.8) - (4.8)
Other
comprehensive
income -
changes in
fair value of
hedging
instruments - - - - (10.2) - - (10.2)
Total
comprehensive
income for
the period - - - - (10.2) (4.8) 6.9 (8.1)
Issue of share
capital - 59.6 - - - - - 59.6
Share issue
costs - (1.1) - - - - - (1.1)
Share-based
payments - - - 2.7 - - - 2.7
Share-based
payments -
deferred tax
asset - - - 0.4 - - - 0.4
Share-based
payments -
exercised and
lapsed - - - (1.8) - - - (1.8)
Balance as at
30 June 2022 0.3 98.3 5.3 20.8 (16.6) (1.9) 59.5 165.7
Loss for the
period - - - - - - (9.0) (9.0)
Translation of
foreign
operations - - - - - (8.9) - (8.9)
Other
comprehensive
income -
changes in
fair value of
hedging
instruments - - - - 16.4 - - 16.4
Total
comprehensive
income for
the period - - - - 16.4 (8.9) (9.0) (1.5)
Repurchase of
shares - - - - - - (0.5) (0.5)
Share-based
payments - - - 5.4 - - - 5.4
Share-based
payments -
deferred tax
asset - - - (0.3) - - - (0.3)
Share-based
payments -
exercised and
lapsed - - - (1.8) - - - (1.8)
---------- ----------- ---------- ---------- ---------- ------------- ---------- -------------
Balance as at
31 December
2022 0.3 98.3 5.3 24.1 (0.2) (10.8) 50.0 167.0
---------- ----------- ---------- ---------- ---------- ------------- ---------- -------------
Profit for the
period - - - - - - 9.4 9.4
Translation of
foreign
operations - - - - - 0.9 - 0.9
Other
comprehensive
income -
changes in
fair value of
hedging
instruments - - - - 0.9 - - 0.9
Total
comprehensive
income for
the period - - - - 0.9 0.9 9.4 11.2
Dividends paid
on equity
shares - - - - - - (3.6) (3.6)
Repurchase of
shares - - - - - - (14.4) (14.4)
Share-based
payments - - - 5.9 - - - 5.9
Share-based
payments -
deferred tax
asset - - - 0.9 - - - 0.9
Share-based
payments -
exercised and
lapsed - - - (4.5) - - - (4.5)
Balance as at
30 June 2023 0.3 98.3 5.3 26.4 0.7 (9.9) 41.4 162.5
-- 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.
-- Retained earnings represents the cumulative value of the
profits not distributed to Shareholders but retained to finance the
future capital requirements of the Group.
-- Share-based payments reserve represents the cumulative value
of share-based payments recognised through equity and deferred tax
assets arising thereon, net of exercised and lapsed options.
-- 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.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
CONSOLIDATED STATEMENT OF CASH 31 June 30 June 31 December
FLOWS 2023 2022 2022
USD m USD m USD m
------------ ------------ -------------
Cash flow from operating activities
Profit before taxation 13.3 15.8 14.8
Adjustments for:
Depreciation of property, plant
and equipment 1.5 1.4 3.0
Amortisation and impairment
of intangible assets 18.5 14.0 36.4
Finance cost (net) 4.2 5.9 18.8
Share-based payments 2.3 2.7 5.7
Decrease / (increase) in trade
and other receivables 4.0 (10.9) (9.8)
Increase / (decrease) in trade
and other payables (8.6) 9.3 16.9
Decrease in inventories 0.1 - 0.2
Cash flow generated from operations 35.3 38.2 86.0
------------ ------------ -------------
Income tax paid (2.4) (1.5) (8.4)
------------ ------------ -------------
Net cash flow generated from
operating activities 32.9 36.7 77.6
Cash flow used in investing
activities
Purchase of property, plant
and equipment (0.8) (0.4) (1.3)
Purchase of intangible assets (3.8) (1.9) (5.2)
Payment of deferred consideration (15.2) (1.4) (2.7)
Proceeds from disposals of investments - 0.1 0.1
Acquisition of subsidiaries,
net of cash acquired (2.1) (65.2) (81.5)
Net cash flow used in investing
activities (21.9) (68.8) (90.6)
Cash flow used in financing
activities
Proceeds from borrowings - 23.0 185.5
Settlement of forward foreign
exchange contracts - - (25.5)
Repayment of bond financing - - (128.6)
Repayment of revolving credit
facility - - (18.8)
Bank finance arrangement fees (0.2) - (3.4)
Accrued interest on bond tap - 0.4 0.4
Bond arrangement fees - (0.5) (0.8)
Proceeds from issuance of ordinary
shares (net) - 58.5 58.6
Repurchase of ordinary shares (13.9) - (0.4)
Dividends paid on equity shares (3.6) - -
Payment of lease liability (1.1) (1.1) (2.2)
Bank loan capital repayments (0.1) - -
Interest paid (6.0) (2.5) (7.8)
Net cash flow generated/(used
in) from financing activities (24.9) 77.8 57.0
------------ ------------ -------------
Net increase in cash and cash
equivalents (13.9) 45.7 44.0
Cash and cash equivalents at
beginning of the period/year 94.8 56.1 56.1
Exchange gains/(losses) on cash
and cash equivalents 1.7 (6.6) (5.3)
------------ ------------ -------------
Cash and cash equivalents at
end of the period/year 82.6 95.2 94.8
NOTES TO THE UNAUDITED FINANCIAL RESULTS
1. General information
CentralNic Group Plc is the UK holding company of a group of
companies which operate a global internet platform that derives
recurring revenue from Online Marketing and Online Presence
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.
2. Basis of preparation
The financial results for the six months ended 30 June 2023 are
unaudited and have been prepared on the basis of the accounting
policies set out in the Group's 2022 statutory accounts 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 2022, 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.
3. Segment analysis
CentralNic is an independent global service provider building
and managing platforms that sell Online Marketing and Online
Presence 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 Marketing segment creates privacy-safe, AI-based
customer journeys that help online consumers make informed choices.
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.
Management reviews the activities of the CentralNic Group in the
segments disclosed below up to a net revenue / gross profit level
only:
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022 USD m
USD m USD m
------------- ------------- ----------------
Online Marketing
Revenue 304.4 257.8 574.7
Cost of sales (242.6) (202.4) (449.6)
------------- ----------------
Net revenue / gross
profit 61.8 55.4 125.1
------------- ----------------
Online Presence
Revenue 92.0 76.8 153.5
Cost of sales (62.6) (50.1) (100.9)
------------- ------------- ----------------
Net revenue / gross
profit 29.4 26.7 52.6
----------------
Total revenue 396.4 334.6 728.2
Total cost of sales (305.2) (252.5) (550.5)
------------- ----------------
Net revenue / gross
profit 91.2 82.1 177.7
------------- ------------- ----------------
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
4. Revenue
The Group's revenue is generated from the following geographical
areas:
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022 USD m
USD m USD m
------------- ------------- --------------
Online Marketing
UK 2.0 1.2 2.9
North America 8.5 9.6 18.5
Europe 283.0 238.9 536.1
ROW 10.9 8.1 17.2
------------- ------------- --------------
304.4 257.8 574.7
------------- ------------- --------------
Online Presence
UK 2.2 2.0 4.1
North America 34.1 22.8 47.3
Europe 41.1 37.8 72.1
ROW 14.6 14.2 30.0
-------------
92.0 76.8 153.5
------------- ------------- --------------
Total revenue 396.4 334.6 728.2
------------- ------------- --------------
* End customers may be located in different territories as
notable parts of the business are conducted through channel
partners. Looking through the channel partners, North America
represents c.48% of group revenue (H1 2022: 52%)
5. Non-core operating expenses
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
USD m USD m USD m
-------------- -------------- -------------
Acquisition related costs 0.4 1.0 3.5
Integration and streamlining
costs 1.6 1.4 3.9
Other costs (1) 1.2 0.1 0.7
3.2 2.5 8.1
-------------- -------------- -------------
(1) Other costs include items related primarily to business
reviews and restructuring expenses.
6. Net finance costs
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 December
30 June 2023 30 June 2022 2022
USD m USD m USD m
-------------- -------------- -------------
Impact of unwinding of discount
on net present value of deferred
consideration 0.9 - 1.0
Reappraisal of deferred consideration (2.8) - (1.3)
Arrangement fees on borrowings 0.7 0.9 3.0
Interest on bank borrowings
and bond interest 6.1 4.8 10.2
Interest expense on leases 0.1 0.1 0.2
(Gain) / loss arising on derivatives
classified
as fair value hedges (0.8) - 0.1
Foreign exchange loss on borrowings - - 5.6
Net finance costs 4.2 5.9 18.8
-------------- -------------- -------------
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
7. Earnings per share
Earnings per share has been calculated by dividing the
consolidated profit / (loss) after taxation attributable to
ordinary shareholders by the weighted average number of ordinary
shares in issue during the year. 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. In 2022, there
is no change to the loss numerator of the dilutive calculation. Due
to the loss made in the year, 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
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
USD m USD m USD m
------------ ------------ -------------
Profit/(loss) after tax attributable
to owners 9.4 6.9 (2.1)
------------ ------------ -------------
Operating profit 17.5 21.7 33.6
Depreciation of property, plant
and equipment 1.5 1.4 3.0
Amortisation and impairment of
intangible assets 18.5 14.0 36.4
Non-core operating expenses 3.2 2.5 8.1
Foreign exchange loss / (gain) 1.6 (3.7) (0.8)
Share-based payment expenses 2.3 2.7 5.7
------------ ------------ -------------
Adjusted EBITDA 44.6 38.6 86.0
Depreciation (1.5) (1.4) (3.0)
Net finance costs (excluding deferred
consideration amounts, foreign
exchange loss on borrowings and
write off of arrangement fees on
borrowing - note 7) (7.8) (5.9) (13.1)
Taxation (3.9) (8.9) (16.9)
------------ ------------ -------------
Adjusted earnings 31.4 22.4 53.0
Weighted average number
of shares:
Basic 276,168,951 264,765,349 265,623,278
Effect of dilutive potential
ordinary shares 2,584,870 7,955,487 2,584,385
------------ ------------ -------------
Diluted average number
of shares 278,753,821 272,720,836 268,207,663
------------ ------------ -------------
Earnings per share:
Basic (cents) 3.40 2.61 (0.78)
Diluted (cents) 3.37 2.53 (0.78)
------------ ------------ -------------
Adjusted earnings - Basic
(cents) 11.37 8.46 20.01
Adjusted earnings - Diluted
(cents) 11.26 8.21 19.81
------------ ------------ -------------
Basic and diluted earnings per share of 3.40 and 3.37 cents
(2022: 2.61 and 2.53 cents) have been impacted by depreciation,
amortisation, impairment, non-core operating expenses, foreign
exchange gains and losses and share-based payment expenses.
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 periods ended 30 June 2023, 30
June 2022 and for the year ended 31 December 2022 was as
follows:
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
USD m USD m USD m
------------ ------------ -------------
Cash conversion
Cash flow from operations 35.3 38.2 86.0
Exceptional costs incurred and
paid during the year 3.2 3.1 7.8
Settlement of one-off working capital
items from the prior year 3.4 1.1 1.2
------------ ------------ -------------
Adjusted cash flow from operations 41.9 42.4 95.0
Adjusted EBITDA 44.6 38.6 86.0
Conversion % 94% 110% 110%
--------------------------------------- ------------ ------------ -------------
NOTES TO THE UNAUDITED FINANCIAL RESULTS (continued)
8. Financial instruments (continued)
Net debt as at 30 June 2023 and 31 December 2022 is shown in the
table below.
Bank debt Cash Financial Net debt
instruments
USD m USD m USD m USD m
----------- ------- ------------- ----------
At 31 December 2022 (151.2) 94.8 (0.2) (56.6)
Capital repayments 0.1 (0.1) - -
Prepaid finance costs 0.2 (0.2) - -
Amortisation of prepaid finance
costs (0.6) - - (0.6)
Mark-to-market revaluation - - 0.9 0.9
Other cash movements - (13.6) - (13.6)
Foreign exchange differences - 1.7 - 1.7
----------- ------- ------------- ----------
At 30 June 2023 (151.5) 82.6 0.7 (68.2)
----------- ------- ------------- ----------
Financial instruments included in net debt represent the
mark-to-market valuation of interest rate swaps, which fix the
variable interest component of USD 75.0m of the bank debt.
9. Business combinations
Deferred consideration payments
During the six month period ended 30 June 2023 deferred
contingent consideration payments for the acquisition of VGL
Publishing AG was settled in cash for EUR 13.7m (USD 14.9m), which
includes EUR 12.4m (USD 13.6m) in respect of performance in
2022.
10. Share buyback programme and Employee Benefit Trust
During the period the Company repurchased 5,678,850 shares under
its share buyback programme at an average share price of GBP1.31
(FY2022: 220,000 shares at a share price of GBP1.54). These shares
are held in treasury by the Company. The number of treasury shares
held by the Company at 30 June 2023 is 5,898,850 (31 December 2022:
220,000, 30 June 2022: nil).
During the period the Group's Employee Benefit Trust purchased
3,648,587 shares at an average share price of GBP1.16. At 30 June
2023 the Employee Benefit Trust held 10,115,916 shares (31 December
2022: 11,232,599 shares, 30 June 2022: 17,188,427 shares).
The number of shares in issue at 30 June 2023 is 288,660,084,
including the shares noted above (31 December 2022 and 30 June
2022: 288,660,084).
The total share repurchase in the period is USD 14.4m of which
USD 13.9m was settled in cash in the period, with USD 0.5m settled
in cash after the period end.
11. Events occurring after the period end
Detailed below are the significant events that happened after
the Group's period end date of 30 June 2023 and before the signing
of these Unaudited Financial Results on 14 August 2023.
-- The first deferred consideration payment for the acquisition
of M.A Aporia has been agreed at USD 2.3m and will be cash settled
in Q3 2023. USD 0.8m was paid on 13 July 2023.
-- On 27 July 2023 , the final deferred consideration payment
for the acquisition of InterNexum GmbH was settled in cash for EUR
0.6m (USD 0.6m)
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END
IR DZGMRLFMGFZM
(END) Dow Jones Newswires
August 14, 2023 02:00 ET (06:00 GMT)
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