TIDMCNIC
RNS Number : 9457C
CentralNic Group PLC
28 February 2022
28 February 2022
CENTRALNIC GROUP PLC
("CentralNic" or "the Company" or "the Group")
UNAUDITED PRELIMINARY ACCOUNTS FOR THE YEARED 31 DECEMBER
2021
CentralNic Group Plc (AIM: CNIC), the global internet platform
that derives recurring revenue from operating a marketplace model
for online presence and online marketing services , announces its
unaudited preliminary accounts for the financial year ended 31
December 2021. The audited annual report and accounts for 2021 will
be published in early April 2022. Both revenue and Adjusted EBITDA
have increased year-on-year, driven by a combination of
acquisitions and underlying organic growth .
Financial summary:
-- Revenue increased by 71% to USD 410.5m (FY2020: USD 240.0m)
-- Organic revenue increased by 39% (FY2020: 9%)
-- Net revenue (gross profit) increased by 58% to USD 118.5m (FY2020: USD 75.1m)
-- Adjusted EBITDA* increased by 57% to USD 46.3m (FY2020: USD
29.4m) resulting in a margin of 11.3% on gross revenue and 39.0% on
net revenue, i.e. excluding passthrough expenses such as registry
fees and revenue shares
-- Operating profit of USD 12.4m (FY2020: operating loss of USD 2.1m)
-- Profit before tax of USD 1.6m (FY2020: loss before tax of USD 11.8m)
-- Net debt** down to USD 75.0m (gross interest bearing debt of
USD 131.1m, cash of USD 56.1m) as compared to USD 85.0m in FY2020 -
despite four acquisitions for a combined USD 18.3m in the year, and
the settlement of combined deferred consideration of USD 1.7m
-- Adjusted cash conversion ratio of 116% (FY2020: 120%)
-- Adjusted EPS for the year increased by 18% to USD 11.80 cents (FY2020: USD 9.96 cents)
Financial highlights:
-- Non-recurring revenue products contributed less than 1% of our total revenue
-- Successful bond tap issue of EUR 15m at 104.5% of nominal
value, implying a yield to maturity of sub 5%
-- Acquisition of SafeBrands (Online Presence segment) in
January 2021, Wando Internet Solutions (Online Marketing segment)
in February 2021, White & Case Ltd (Online Marketing segment)
in November 2021 and NameAction (Online Presence segment) in
December 2021
-- Final and interim deferred consideration payments made for
Team Internet (Online Marketing segment) and SafeBrands ( Online
Presence segment ) respectively
-- Currency exposure on the EUR 105m bond has been hedged at a
locked-in average EUR/USD rate of 1.1891, 3.3% below the prior year
balance sheet date
Operational highlights:
-- Very strong traction for the Group's privacy-safe online
marketing technologies in the 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 growth and
profitability, enhance 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 year-end highlights:
-- Exceptionally strong start into the year augurs well for financial year 2022
-- Acquisition of Fireball GmbH and the .ruhr TLD in February 2022 for a total of c.USD 0.7m
Outlook:
-- The record organic growth in 2021 as the world started to
come out of lockdown demonstrates the success of the Company's
strategy of investing during the pandemic
-- The Company's market consolidation strategy continues, with
acquisition opportunities being continually evaluated in a large,
global and fragmented market
-- The Group is consolidating the carefully curated assets into
its marketplace model for online presence and online marketing
services which facilitates to develop network effects among the
highly complementary businesses it has acquired
-- The Company is pleased to announce that the strong growth
experienced during 2021 has continued into 2022 to date
-- The year-on-year revenue growth experienced during Q1 to
date, which has been driven largely by the performance of the
Online Marketing segment, is materially ahead of the revenue growth
rates implied by analyst consensus expectations for the full year
to 31 December 2022
-- Given the early stage of the current financial year and given
the uncertainty implied by the geopolitical situation, the
Directors have yet to fully ascertain the expected impact on full
year performance; they however reconfirm their opinion that it
should be at least at or above the high end of the latest range of
analyst expectations ** *
Ben Crawford, CEO of CentralNic, commented: "CentralNic has
enjoyed a very strong 2021 across both our online presence
subscription products and our privacy-safe online marketing
solutions - achieving record organic growth of 39% for the year.
Significant investment in human resources, restructuring and
market-leading products has contributed to the Group having revised
its performance expectations for 2021 upwards repeatedly over the
course of the year.
"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,
integrating them into marketplaces enjoying network effects, and
driving organic growth. 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 2022 currently range from USD 420.2m
to USD 469.2m and USD 48.0m to USD 51.3m 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
Broker
Nick Cowles / Jamie Peel +44 (0) 161 831 1512
Dominic King / Rupert Woolfenden +44 (0) 203 829 5000
SEC Newgate (for Media)
Bob Huxford / Isabelle Smurfit / +44 (0) 203 757 6880
Max Richardson 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, used for their own websites and
email, as well as for protecting their brands online. These
platforms can also be used for distributing domain name related
software and services, an opportunity that contributes
significantly to CentralNic's organic growth. 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. It
earns recurring revenues from the worldwide sales of internet
domain names and other services on an annual subscription basis.
For more information please visit: www.centralnicgroup.com
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
CentralNic's organic growth, combined with its 2019, 2020 and
2021 acquisitions, substantially increased the scale and
capabilities of the Company. The effect of this is demonstrated in
our unaudited preliminary FY2021 results which show a
transformational increase in revenues and adjusted EBITDA, both of
which have grown by 71% and 57% respectively compared to
FY2020.
Performance overview
The Company has performed strongly during the year with the key
financial metrics listed below:
31 December Restated
2021 31 December Change(2)
2020
USD'000 USD'000 %
------------ ------------- ------------
Revenue 410,540 240,012 71%
------------ ------------- ------------
Gross profit 118,499 75,118 58%
------------ ------------- ------------
Adjusted EBITDA 46,251 29,394 57%
------------ ------------- ------------
Operating profit / (loss) 12,353 (2,079) n.m.
------------ ------------- ------------
Profit/(loss) before tax 1,555 (11,834) n.m.
------------ ------------- ------------
Loss after tax (3,542) (10,859) n.m.
------------ ------------- ------------
EPS - Basic (cents) (1.56) (5.52) n.m.
------------ ------------- ------------
EPS - Adjusted earnings
- Basic (cents) (1) 11.80 9.96 18%
------------ ------------- ------------
(1) Please refer to note 7
(2) n.m. - not meaningful
On a pro forma basis (as defined in the footnote on page 2), the
Company grew by 39% organically during FY2021.
Segmental analysis
The Company has combined the previous Direct and Indirect
segments into a single Online Presence segment for all reporting
periods ending 30 September 2021 and later. 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
on a constant currency basis.
Online Presence segment
Significant scale was achieved in the Online Presence segment,
with revenues increasing by USD 21.4m for the year ended 31
December 2021, or 17%, from USD 127.9m to USD 149.3m. Organic
growth for this segment was 9% over the year. 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.
The number of processed domain registration years increased by
9% from 11.3m in 2020 to 12.3m in 2021. At the same time, the
average revenue per domain year increased by 2% from USD 9.02 to
USD 9.24. The share of Value-Added Service revenue in 2021 was
8.3%[1].
Online Marketing segment
The Online Marketing segment grew more rapidly, with revenues
increasing by USD 149.2m, or 133%, from USD 112.1m to USD 261.3m.
Organic revenue grew at a rate of 65%, predominantly driven by
CentralNic's PubTONIC media buying business, with the inorganic
growth being contributed by the full year impact of the Zeropark
and Voluum acquisitions and this year's acquisitions of Wando and
the White & Case website portfolio.
The number of visitor sessions also increased by 49% from 2.1
billion in 2020 to 3.1 billion in 2021 and the revenue per thousand
sessions ("RPM") increase by 36% from USD 47.9 to USD 64.9[2].
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 for
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 2021, across both our
online presence subscription products and our privacy-safe online
marketing technologies - achieving record organic growth of 39% by
virtue of our significant investment in human resources,
restructuring and market-leading products. This contributed to the
Group revising its performance expectations for 2021 upwards
repeatedly over the course of the year.
These outstanding results demonstrate that CentralNic can source
and complete transformative acquisitions, but more importantly that
it can also integrate them successfully into marketplaces while
continuing to deliver organic growth. Moreover, as the company
rapidly scales up, the underlying qualities of high recurring
revenues and excellent cash conversion become increasingly
meaningful.
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.
The pipeline of future deals remains strong, while the net debt
level remains comfortable particularly given the profitability of
the existing CentralNic Group and the expected contribution from
recent acquisitions. 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 INCOME Restated (c)Year ended31 December 2020
Unaudited
Year ended
31 December 2021
Note USD'000 USD'000
------------- --------------------- --------------------------
Revenue 4 410,540 240,012
Cost of sales (292,041) (164,894)
Gross profit 118,499 75,118
Administrative expenses (101,140) (72,084)
Share-based payment
expenses (5,006) (5,113)
Operating profit/(loss) 12,353 (2,079)
Adjusted EBITDA (a) 46,251 29,394
Depreciation of property,
plant and equipment (3,514) (2,084)
Amortisation of
intangible assets (18,291) (13,747)
Non-core operating
expenses (b) 5 (8,702) (8,237)
Foreign exchange
gain/(loss) 1,615 (2,137)
Share of associate EBITDA - (155)
Share-based payment
expenses (5,006) (5,113)
--------------------- --------------------------
Operating profit/(loss) 12,353 (2,079)
-------------------------- ------------- --------------------- -------- --------------------------
Finance income 59 5
Finance costs 6 (10,857) (9,976)
Foreign exchange gain on
borrowings 6 - 137
Net finance costs (10,798) (9,834)
Share of associate income - 79
Profit/(loss) before
taxation 1,555 (11,834)
Taxation (charge)/credit (5,097) 975
--------------------- --------------------------
Loss after taxation (3,542) (10,859)
Items that may be
reclassified subsequently
to profit and loss
Exchange difference on
translation of foreign
operation 1,573 3,243
Total comprehensive loss
for the financial year (1,969) (7,616)
Loss after tax is
attributable to:
Owners of CentralNic
Group Plc (3,542) (10,859)
--------------------- --------------------------
(3,542) (10,859)
Total comprehensive
profit/(loss) is
attributable to:
Owners of CentralNic
Group Plc (1,969) (7,616)
--------------------- --------------------------
(1,969) (7,616)
--------------------- --------------------------
Earnings per share
Basic (cents) (1.56) (5.52)
Diluted (cents) (1.56) (5.52)
Adjusted earnings - Basic
(cents) 11.80 9.96
Adjusted earnings -
Diluted (cents) 11.46 9.57
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) N on-core operating expenses include items related to 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 prior year figures have been restated as follows:
* Revenue has reduced by USD 1,200,000 due to the
recognition of a credit note provision
* Amortisation charges have increased by USD 1,239,000
due to the restatement of intangible asset
amortisation
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Restated (a)
Year ended Year ended
31 December 2021 31 December 2020
USD'000 USD'000
------------------- -------------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 1,820 2,222
Right-of-use assets 6,781 6,455
Intangible assets 254,169 255,716
Other non-current assets 439 661
Investments 58 114
Deferred tax assets 8,563 5,410
271,830 270,578
------------------- -------------------
CURRENT ASSETS
Trade and other receivables 71,363 47,941
Inventory 895 1,011
Cash and bank balances 56,133 28,654
128,391 77,606
TOTAL ASSETS 400,221 348,184
EQUITY AND LIABILITIES
EQUITY
Share capital 290 290
Share premium 39,845 39,845
Merger relief reserve 5,297 5,297
Share-based payments reserve 19,506 11,032
Cash flow hedging reserve (6,419) -
Foreign exchange translation reserve 2,933 1,360
Accumulated profits 52,530 56,072
TOTAL EQUITY 113,982 113,896
NON-CURRENT LIABILITIES
Other payables 4,420 2,878
Lease liabilities 5,105 5,204
Deferred tax liabilities 20,334 21,965
Borrowings 119,251 107,820
149,110 137,867
------------------- -------------------
CURRENT LIABILITIES
Trade and other payables and accruals 117,016 89,256
Lease liabilities 1,837 1,346
Borrowings 11,857 5,819
Derivative financial liabilities 6,419 -
137,129 96,421
------------------- -------------------
TOTAL LIABILITIES 286,239 234,288
TOTAL EQUITY AND LIABILITIES 400,221 348,184
------------------- -------------------
(a) The prior year figures have been restated as follows:
-- Closing accumulated profits as at 31 December 2020 have
reduced by USD 2,000,000 due to the recognition of a credit note
provision of USD 1,200,000 in 2020 and of USD 800,000 in 2019
-- Trade and other payables and accruals have increased by USD
2,000,000 due to the recognition of the above credit note
provisions
-- Closing intangible assets have reduced by USD 1,239,000 due
to the restatement of intangible asset amortisation
CENTRALNIC Equity
GROUP PLC attributable
CONSOLIDATED Cash Foreign to owners
STATEMENTS Merger Share-based flow exchange Accumulated of the
OF CHANGES Share Share relief payments hedging translation profits/ Parent Non-Controlling Total
IN EQUITY capital premium reserve reserve reserve reserve (losses) Company Interest equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance as
at 1 January
2020 (restated) 232 74,840 5,297 6,095 - (1,883) (8,308) 76,273 (69) 76,204
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Loss for
the year - - - - - - (10,859) (10,859) - (10,859)
Adjustment
to
non-controlling
interest - - - - - - - - 69 69
Other
comprehensive
income -
translation
of foreign
operation - - - - - 3,243 - 3,243 - 3,243
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Total
comprehensive
loss for
the year - - - - - 3,243 (10,859) (7,616) 69 (7,547)
Transactions
with owners
Issue of
share capital 58 43,674 - - - - - 43,732 - 43,732
Share issue
costs - (3,829) - - - - - (3,829) - (3,829)
Elimination
of share
premium - (74,840) - - - - 74,840 - - -
Share-based
payments - - - 5,179 - - - 5,179 - 5,179
Share-based
payments
- deferred
tax assets - - - 157 - - - 157 - 157
Share-based
payments
- exercised
and lapsed - - - (399) - - 399 - - -
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Balance as
at 31 December
2020 (restated) 290 39,845 5,297 11,032 - 1,360 56,072 113,896 - 113,896
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Loss for
the year - - - - - - (3,542) (3,542) - (3,542)
Other
comprehensive
income -
translation
of foreign
operation - - - - - 1,573 - 1,573 - 1,573
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Total
comprehensive
loss for
the year - - - - - 1,573 (3,542) (1,969) - (1,969)
Transactions
with owners
Loss arising
on changes
in fair value
of hedging
instruments - - - - (6,419) - - (6,419) - (6,419)
Share-based
payments - - - 6,633 - - - 6,633 - 6,633
Share-based
payments
- deferred
tax assets - - - 2,704 - - - 2,704 - 2,704
Share-based
payments
- exercised
and lapsed - - - (863) - - - (863) - (863)
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
Balance as
at 31 December
2021 290 39,845 5,297 19,506 (6,419) 2,933 52,530 113,982 - 113,982
-------- --------- -------- ------------ -------- ------------ ------------ ------------- ---------------- ---------
-- 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 share issue costs
and other permitted reductions. Where the consideration for shares
in another company includes issued shares, and 90% of the equity is
held in the other company.
-- 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.
-- 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.
Restated
Unaudited Audited
Year ended Year ended
31 December 2021 31 December 2020
CONSOLIDATED STATEMENT OF CASH FLOWS USD'000 USD'000
------------------- ------------------
Cash flow from operating activities
Profit / (loss) before taxation 1,555 (11,834)
Adjustments for:
Depreciation of property, plant and equipment 3,514 2,084
Amortisation of intangible assets 18,291 13,747
Share of associate income - (155)
Gain on sale of associate - (266)
Finance cost (net) 10,798 9,834
Share-based payments 5,006 5,113
Increase in trade and other receivables (18,816) (8,066)
Increase in trade and other payables and accruals 20,017 12,195
Decrease in inventories 302 -
------------------- ------------------
Cash flow from operations 40,667 22,652
------------------- ------------------
Income tax paid (2,230) (1,957)
------------------- ------------------
Net cash flow generated from operating activities 38,437 20,695
Cash flow used in investing activities
Purchase of property, plant and equipment (722) (1,296)
Purchase of intangible assets (2,833) (2,963)
Payment of deferred consideration (1,719) (5,467)
Proceeds from disposals of investment in associate - 1,814
Acquisition of subsidiaries, net of cash acquired (18,344) (37,065)
------------------- ------------------
Net cash flow used in investing activities (23,618) (44,977)
Cash flow used in financing activities
Proceeds from borrowings 26,631 2,208
Bond arrangement fees (625) (645)
Proceeds from issuance of ordinary shares (net) - 34,667
Payment of finance leases (1,981) (1,081)
Interest paid (8,647) (9,512)
Net cash flow generated from financing activities 15,378 25,637
------------------- ------------------
Net increase in cash and cash equivalents 30,197 1,355
Cash and cash equivalents at beginning of the year 28,654 26,182
Exchange differences on cash and cash equivalents (2,718) 1,117
------------------- ------------------
Cash and cash equivalents at end of the year 56,133 28,654
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS
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 preliminary accounts for the year ended 31 December 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 years presented, in line with the principal
disclosure requirements of IAS 34: Interim Financial Reporting.
The unaudited preliminary accounts 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.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
3. Segment analysis (continued)
Management reviews the activities of the CentralNic Group in the
segments disclosed below:
Year ended 31 December 2021
-----------------------------------------------------
Online Presence Online Marketing Total
USD'000 USD'000 USD'000
------------------------------------------------ ---- ---------------- ----------------- ----------
Revenue 149,274 261,266 410,540
------------------------------------------------------ ---------------- ----------------- ----------
Gross profit 53,250 65,249 118,499
------------------------------------------------------ ---------------- ----------------- ----------
Total administrative expenses (101,140)
Share-based payments expenses (5,006)
------------------------------------------------------ ---------------- ----------------- ----------
Operating profit 12,353
------------------------------------------------------ ---------------- ----------------- ----------
Adjusted EBITDA 46,251
Depreciation of property, plant and equipment (3,514)
Amortisation of intangibles assets (18,291)
Non-core operating expenses (8,702)
Foreign exchange gain 1,615
Share-based payment expenses (5,006)
------------------------------------------------------ ---------------- ----------------- ----------
Operating profit 12,353
------------------------------------------------------ ---------------- ----------------- ----------
Finance cost (net) (10,798)
Profit before taxation 1,555
------------------------------------------------------ ---------------- ----------------- ----------
Income tax expense (5,097)
------------------------------------------------------ ---------------- ----------------- ----------
Loss after taxation (3,542)
------------------------------------------------------ ---------------- ----------------- ----------
Restated
Year ended 31 December 2020
-----------------------------------------------------
Online Presence Online Marketing Total
USD'000 USD'000 USD'000
------------------------------------------------ ---- ---------------- ----------------- ----------
Revenue 127,939 112,073 240,012
------------------------------------------------------ ---------------- ----------------- ----------
Gross profit 45,091 30,027 75,118
------------------------------------------------------ ---------------- ----------------- ----------
Total administrative expenses (72,084)
Share-based payments expenses (5,113)
------------------------------------------------------ ---------------- ----------------- ----------
Operating loss (2,079)
------------------------------------------------------ ---------------- ----------------- ----------
Adjusted EBITDA 29,394
Depreciation of property, plant and equipment (2,084)
Amortisation of intangibles assets (13,747)
Non-core operating expenses (8,237)
Foreign exchange loss (2,137)
Share of associate income (155)
Share-based payment expenses (5,113)
------------------------------------------------------ ---------------- ----------------- ----------
Operating loss (2,079)
------------------------------------------------------ ---------------- ----------------- ----------
Finance cost (net) (9,834)
Share of associate income 79
------------------------------------------------------ ---------------- ----------------- ----------
Loss before taxation (11,834)
------------------------------------------------------ ---------------- ----------------- ----------
Income tax expense 975
------------------------------------------------------ ---------------- ----------------- ----------
Loss after taxation (10,859)
------------------------------------------------------ ---------------- ----------------- ----------
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
4. Revenue
The Group's revenue is generated from the following geographical
areas:
Unaudited Restated
Year ended Year ended
31 December 31 December
2021 2020
USD'000 USD'000
------------- --------------
Online Presence
UK 3,648 3,365
North America 41,279 35,966
Europe 72,462 62,887
ROW 31,885 25,721
149,274 127,939
------------- --------------
Online Marketing
UK 3,239 575
North America 19,045 6,197
Europe 217,211 100,129
ROW 21,771 5,172
261,266 112,073
------------- --------------
Total revenue 410,540 240,012
5. Non-core operating expenses
Unaudited Restated
Year ended Year ended
31 December 2021 31 December 2020
USD'000 USD'000
Acquisition related costs 3,081 1,386
Integration and streamlining costs 3,915 3,613
Other costs (1) 1,706 3,238
8,702 8,237
------------------ -------------------
(1) Other costs include items related primarily to business
reviews and restructuring expenses.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
6. Finance costs
Unaudited Restated
Year ended Year ended
31 December 2021 31 December 2020
USD'000 USD'000
Finance income (59) (5)
Impact of unwinding of discount on net present value of deferred
consideration 246 221
Reappraisal of deferred consideration (71) 921
Foreign exchange (gain)/loss on revolving credit facility revaluation - (137)
Arrangement fees on borrowings 1,553 1,115
Interest expense on short-term borrowings 269 235
Interest expense on long-term borrowings 8,664 7,324
Interest expense on leases 196 160
Net finance costs 10,798 9,834
------------------ ------------------
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 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. There are no changes to
the profit (numerator) because of the dilutive calculation. Due to
the loss made in each 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 Restated
Year ended Year ended
31 December 2021 31 December 2020
USD'000 USD'000
Loss after tax attributable to owners (3,542) (10,859)
Operating profit/(loss) 12,353 (2,079)
Depreciation of property, plant and equipment 3,514 2,084
Amortisation of intangible assets 18,291 13,747
Non-core operating expenses 8,702 8,237
Foreign exchange (gain)/loss (1,615) 2,137
Share of associate income - 155
Share-based payment expenses 5,006 5,113
------------------ ------------------
Adjusted EBITDA 46,251 29,394
Depreciation (3,514) (2,084)
Finance costs (excluding deferred consideration related amounts - note
6) (10,857) (8,698)
Finance income 59 5
Taxation (5,097) 975
------------------ ------------------
Adjusted earnings 26,842 19,592
------------------ ------------------
Weighted average number of shares:
Basic 227,380,670 196,680,310
Effect of dilutive potential ordinary shares 6,856,289 8,019,971
------------------ ------------------
Diluted 234,236,959 204,700,281
Earnings per share:
Basic (cents) (1.56) (5.52)
Diluted (cents) (1.56) (5.52)
Adjusted earnings - Basic (cents) 11.80 9.96
Adjusted earnings - Diluted (cents) 11.46 9.57
Basic and diluted earnings per share of (1.56) cents (2020:
(5.52) cents) have been impacted by amortisation charges, non-core
operating expenses, foreign exchange gains and losses, share of
associate income and share-based payment expenses.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
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 year ended 31 December 2021 was as
follows:
Unaudited Restated
Year ended Year ended
31 December 31 December
2021 2020
USD'000 USD'000
Cash conversion
Cash flow from operations 40,667 22,652
Exceptional costs incurred and paid during
the year 11,025 7,466
Settlement of one-off working capital items
from the prior year 1,975 5,075
------------- -------------
Adjusted cash flow from operations 53,667 35,193
------------- -------------
Adjusted EBITDA 46,251 29,394
Conversion % 116% 120%
Net debt as at 31 December 2021 and 2020 is shown in the table below.
Bond Bank debt Cash Net debt
USD'000 USD'000 USD'000 USD'000
-------------- ---------- -------- ---------
At 31 December 2020 (107,334) (6,305) 28,654 (84,985)
Drawdown - (8,488) 8,488 -
Amortisation of costs (500) - - (500)
Placing proceeds (net of costs) (17,966) - 17,966 -
Other cash movements - - 3,743 3,743
-------------- ---------- -------- ---------
Net cash flows before foreign exchange (125,800) (14,793) 58,851 (81,742)
Foreign exchange differences 9,104 381 (2,718) 6,767
At 31 December 2021 (116,696) (14,412) 56,133 (74,975)
-------------- ---------- -------- ---------
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
9. Business combinations
Acquisition of Safebrands
For further details regarding acquisition of Safebrands on 09
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
Acquisition of Wando Internet Solutions
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.
Acquisition of White and Case Ltd
On 1 October 2021, CentralNic Group Plc acquired White and Case
Ltd, a publishing network of revenue generating websites for a
consideration of USD 6.5m in cash and assumed working capital
liabilities from White & Case Ltd. The acquisition was 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.
The following table summarises the consideration paid for White
and Case Ltd and the fair values of the assets and liabilities at
the acquisition date, in line with Group policies.
USD'000
--------
Initial cash consideration 5,317
Working capital adjustment 591
Deferred consideration 584
--------
Total consideration 6,492
--------
Fair values recognised on acquisition
Assets
Domain name assets 6,492
--------
Total assets 6,492
Total identifiable estimated net assets at fair value 6,492
--------
Purchase consideration 6,492
--------
The deferred consideration of USD 584k was settled on 15
November 2021.
Acquisition of NameAction
On 06 December 2021, CentralNic acquired the domain name and
brand protection business trading as NameAction, in a share and
asset deal for a total consideration of USD 1.0m in cash from
NameAction Inc. The NameAction business is expected to contribute
at least USD 2.0m and USD 0.2m in adjusted EBITDA to the Online
Presence segment in 2022.
The acquisition comprised an asset purchase of domain names and
assumed working capital liabilities for a initial consideration of
USD 675k in cash, and a share purchase of two Chilean entities and
one Brazil based entity for an initial consideration of USD 75k in
cash. In addition, there are two deferred consideration payments of
USD 125k each due on 6 December 2022 and 6 December 2023
respectively. The acquisition was financed from available
liquidity. This acquisition provides CentralNic with a greater
presence in the South American market
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
9. Business combinations (continued)
Acquisition of NameAction (continued)
The following table summarises the consideration paid for
NameAction and the fair values of the assets and liabilities at the
acquisition date, in line with Group policies.
USD'000
--------
Initial cash consideration 750
Deferred consideration 250
--------
Total consideration 1,000
--------
Fair values recognised on acquisition
Assets
Domain name assets 1,067
Property, plant and equipment 10
Trade receivables 38
Other receivables 17
Cash and other equivalents 94
--------
Total assets 1,226
Liabilities
Trade payables 218
Other liabilities 40
--------
Total liabilities 258
--------
Total identifiable estimated net assets at fair value 968
Goodwill arising on acquisition 32
--------
Purchase consideration 1,000
--------
10. Events occurring after the year end
Detailed below are the significant events that happened after
the Group's year end date of 31 December 2021 and before the
signing of these Unaudited Preliminary Accounts on 28 February
2022.
-- On 28 January 2022, CentralNic acquired domain assets of the
TLD .ruhr for a purchase price of EUR 150k. Additional
consideration of EUR 150k is payable in May 2022. .ruhr is the
domain address for the urban agglomeration centred around the river
Ruhr in Germany, consisting of c.50 cities, including Dortmund and
Essen, with roughly 5m inhabitants. There are currently c.10k
domain names registered using the .ruhr Top-Level Domain. .ruhr
will be migrated from its existing service providers and will be
fully managed by CentralNic's internal resources, joining another
German regional TLD, .saarland.
(--) On 2 February 2022, CentralNic acquired Fireball Search
GmbH for a purchase price of EUR 315k. Founded in 1996, Fireball
was once the leading search engine in Germany, and the name retains
high consumer awareness, despite being acquired by and merged into
Lycos Europe in the early 2000s. In 2016, Fireball was
re-established as an independent company, with a completely
overhauled version of the service, including a strong focus on
privacy, a core value of CentralNic. Search results are powered by
Bing. Fireball opens up new traffic sources for CentralNic to
monetise through its proprietary Online Marketing tools, and it
adds alternative monetisation channels for CentralNic to generate
revenues from internet traffic.
[1] Based on analysis of c.77% of the segment which can be
adequately and reliably be described by these KPI
[2] Based on analysis of parts of the business that were
continuously owned and operational for all of 2020 and 2021,
covering c.77% of the segment's revenue in 2021
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END
FR FFFVFFVIDFIF
(END) Dow Jones Newswires
February 28, 2022 02:00 ET (07:00 GMT)
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