TIDMCNIC

RNS Number : 5525X

CentralNic Group PLC

30 August 2022

30 August 2022

CENTRALNIC GROUP PLC

("CentralNic" or "the Company" or "the Group")

UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHSED 30 JUNE 2022

Transformational increase in Revenue and Adjusted EBITDA

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 financial results for the six months ended 30 June 2022. Record revenue and Adjusted EBITDA achieved, driven by continued organic growth, supplemented with acquisitions .

Financial summary H1 2022:

   --       Revenue increased by 93% to USD 334.6m (H1 2021: USD 173.8m) 
   --       Organic revenue growth* for the trailing twelve months ending 30 June 2022 of c.62% 
   --       Net revenue/gross profit increased by 51% to USD 82.1m (H1 2021: USD 54.3m) 
   --       Adjusted EBITDA** increased by 97% to USD 38.6m (H1 2021: USD 19.6m) 
   --       Operating profit of USD 21.7m (H1 2021: USD 3.1m) 
   --       Non-core operating expenses reduced by 51% to USD 2.5m (H1 2021: 5.1m) 
   --       Adjusted operating cash conversion of 110% (H1 2021: 132%) 
   --       Net debt*** down by 22% to USD 63.6m as compared to USD 81.4m on 31 December 2021 

Operational highlights:

-- The Company's organic growth further accelerated during the period, driven by the ongoing market share gains of its proprietary privacy-safe online marketing solutions facing a USD 100bn+ opportunity

-- EBITDA as a percentage of Net Revenue has increased from 36% in H1 2021 to 47% in H1 2022, demonstrating that CentralNic's growth translates into operating leverage

-- The Financial Times listed CentralNic among the top 250 fastest-growing companies and among the top 50 fastest-growing technology companies in Europe in its FT 1000 list

-- On 20 June 2022, the FTSE Russell included CentralNic in its AIM 100 and AIM UK 50 indices for the first time

Corporate highlights:

-- Leverage**** as defined under the Bond Terms reduced from 2.2x pro forma EBITDA as of 31 December 2021 to 1.3x due to improved profitability and continued deleverage

-- Acquisition of VGL , a leading product review website publisher, in March 2022 for an enterprise value of EUR 60 million (c. USD 65 million)

-- Oversubscribed GBP 42 million equity raise on 28 February 2022, EUR 21 million bond placing on 7 March 2022 and fully taken up Open Offer of GBP 3 million on 21 March 2022

-- Acquisition of Fireball GmbH and the .ruhr TLD in February 2022 for a total consideration of c USD 0.7 million

Outlook:

-- CentralNic's results for H1 2022 demonstrate the continued momentum within the business and significant potential of its strong marketplace model for Online Presence and Online Marketing services

-- The Directors are confident that the Company is comfortably trading towards the high end of the recently upgraded forecasts[1] The Company will issue its Q3 trading update on 17 October 2022

-- CentralNic is currently in advanced discussions with a number of banks to refinance its bonds maturing in July 2023, at favourable terms and expects to announce the outcome of the refinancing, before the date of the October trading update

Ben Crawford, CEO of CentralNic, commented: " CentralNic has enjoyed a strong first half of the year with year-on-year organic growth now reaching a record 62%, with our high cash conversion driving our net debt down to below our consensus EBITDA for 2022. CentralNic continues to deliver sustainable growth thanks to our hugely scalable and privacy safe proprietary solutions and the enormous size of the market opportunities we are addressing".

* Pro forma revenue, adjusted for acquired revenue, constant currency FX impact and non-recurring revenues is estimated at USD 608 million for the trailing 12 months ending 30 June 2022 and at USD 374 million for the trailing 12 months ending 30 June 2021

** Parent, subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses

*** Includes gross cash, bond and bank debt, prepaid finance costs and the Mark-To-Market (MTM) valuations for the bond hedges (gross interest-bearing debt of USD 142.2m, hedging liabilities of USD 16.6m, cash of USD 95.2m as of 30 June 2022 as compared to USD gross interest-bearing debt of USD 131.1m, hedging liabilities of USD 6.4m, cash of USD 56.1m as of 31 December 2021)

**** Includes Net Debt as defined under *** plus (i) lease liabilities, (ii) guarantee obligations, and (iii) the best estimate of any 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

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 2021 annual report.

Ben Crawford - CEO

Don Baladasan - Group Managing Director

Michael Riedl - CFO

For further information:

 
 
           CentralNic Group Plc 
           Ben Crawford, Chief Executive Officer 
            Don Baladasan, Group Managing Director 
            Michael Riedl, Chief Financial Officer                      +44 (0) 203 388 0600 
 
             Zeus (NOMAD and 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) 
            Mark Whitmore / Richard Andrews 
            / Alix Mecklenburg-Solodkoff 
 
            SEC Newgate (for Media)                                     +44 (0) 20 3207 7800 
           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 2021 and 2020 acquisitions, substantially increased the scale and capabilities of the Company. The effect of this is demonstrated in our unaudited H1 2022 results which show a transformational increase in revenue and adjusted EBITDA, which have grown by 93% and 97% respectively compared to H1 2021.

Performance Overview

The Company has performed strongly during the period with the key financial metrics listed below:

 
                              30 June   30 June 
 Six months to 30 June           2022      2021     Change 
                                USD m     USD m          % 
                             --------  --------  --------- 
 Revenue                        334.6     173.8        93% 
                             --------  --------  --------- 
 Net revenue/ gross profit       82.1      54.3        51% 
                             --------  --------  --------- 
 Adjusted EBITDA                 38.6      19.6        97% 
                             --------  --------  --------- 
 Operating profit                21.7       3.1       n.m. 
                             --------  --------  --------- 
 Adjusted operating cash 
  conversion (*****)             110%      132%       n.m. 
                             --------  --------  --------- 
 Profit / (loss) after tax        6.9     (3.1)       n.m. 
                             --------  --------  --------- 
 EPS - Basic (cents)             2.61    (1.41)       n.m. 
                             --------  --------  --------- 
 EPS - Adjusted earnings 
  - Basic (cents) (******)       8.46      5.33        59% 
                             --------  --------  --------- 
 

(*****) Please refer to note 8

(******) Please refer to note 7

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 proved entirely immune to any adverse signals from the market and further accelerated its growth with revenues increasing by USD 161.4 million, or 167%, from USD 96.4 million to USD 257.8 million. Organic revenue grew at a rate of 98%, predominantly driven by CentralNic's TONIC media buying business, was higher than for the group as a whole. Inorganic growth was obtained from the full semester impact of the Wando and White & Case acquisitions, as well as the impact of acquiring VGL and, to a lesser degree, Fireball.

The number of visitor sessions also increased by 82% from 1.1 billion in H1 2021 to 2.0 billion in H1 2022 and the revenue per thousand sessions ("RPM") increased by 87% from USD 56.8 to USD 106.0[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 continue to 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.

Online Presence segment

The Online Presence segment was impacted by exchange rates as foreign currency revenues translated into less USD in the period. As a result, revenue in the segment reduced by 1%, from USD 77.4 million in H1 2021 to USD 76.8 million. Nonetheless, organic growth for this segment was 5% for the trailing twelve months ended 30 June 2022.

In the Online Presence segment, the Company steered away from increasing sales through discounted bulk sales improving the quality of revenue. The average revenue per domain year increased by 8% from USD 8.90 to USD 9.60, while the number of processed domain registrations decreased from 6.5 million in H1 2021 to 6.0 million in H1 2022. The share of Value-Added Service revenue for the period ended 30 June 2022 remained stable at 7.9%[3].

Outlook

CentralNic enjoyed a very strong start to 2022, particularly in our Online Marketing segment. In H1 2022, we reported 62% organic revenue growth on a pro forma basis for the trailing twelve months ended 30 June 2022[4]

The Directors are pleased with this strong set of results delivered in H1 2022. Whilst the Directors remain cognisant of the current global macro-economic environment, they are confident that the Group will comfortably trade towards the high end of the recently upgraded market expectations for the year. Targeted investment in people and our market-leading products, in particular our suite of privacy-safe online marketing technologies, position us well to succeed even in a challenging global environment.

The pipeline of future acquisition targets also remains strong, while our net debt level has substantially reduced and is now only 1.3x trailing 12-month EBITDA[5]. CentralNic is therefore comfortably positioned, particularly given the Group's high cash generation and expected contribution from the recently completed acquisitions. We are confident in continuing our trajectory towards joining the ranks of the global leaders in our industry.

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 strong organic growth. Moreover, as the Company rapidly scales up, the underlying qualities of high recurring revenues and excellent cash conversion become increasingly meaningful, demonstrated by EBITDA as a percentage of Net Revenue increasing from 36% in H1 2021 to 47% in H1 2022.

As a virtually pure play recurring revenue business with high inherent cash conversion consistently above 100%, CentralNic continues to improve its key financial metrics as it grows, including its cash position, interest coverage and net debt to EBITDA ratio. As our investment levels plateau moving forward, we expect future periods to benefit from increasing operational leverage.

Ben Crawford

Chief Executive Officer

 
 CONSOLIDATED STATEMENT OF                                            Restated 
  COMPREHENSIVE INCOME                                           (a) Unaudited 
                                                 Unaudited          Six months          Audited 
                                                Six months            ended 30       Year ended 
                                                  ended 30                June      31 December 
                                                 June 2022                2021             2021 
                                       Note          USD m               USD m            USD m 
                                      -----  -------------  ------------------  --------------- 
 
 Revenue                                4            334.6               173.8          410.5 
 Cost of sales                                     (252.5)             (119.5)        (292.0) 
 
 Gross profit                                         82.1                54.3          118.5 
 
 Administrative expenses                            (57.7)              (49.5)        (101.1) 
 Share-based payments expense                        (2.7)               (1.7)          (5.0) 
 
 Operating profit                                     21.7                 3.1           12.4 
 
 Adjusted EBITDA (b)                                  38.6                19.6           46.3 
 Depreciation of property, plant 
  and equipment                                      (1.4)               (1.7)          (3.5) 
 Amortisation of intangible 
  assets                                            (14.0)               (9.0)         (18.3) 
 Non-core operating expenses(c)         5            (2.5)               (5.1)          (8.7) 
 Foreign exchange gain                                 3.7                 1.0            1.6 
 Share-based payment expenses                        (2.7)               (1.7)          (5.0) 
                                             -------------  ------------------  ------------- 
 Operating profit                                     21.7                 3.1           12.4 
------------------------------------  -----  -------------  ------------------  ------------- 
 
 Finance income                         6                -                   -            0.1 
 Finance costs                          6            (5.9)               (5.3)         (10.9) 
 
 Net finance costs                                   (5.9)               (5.3)         (10.8) 
 
 
 Profit / (loss) before taxation                      15.8               (2.2)            1.6 
 Income tax expense                                  (8.9)               (0.9)          (5.1) 
                                             -------------  ------------------  ------------- 
 Profit / (loss) after taxation                        6.9               (3.1)          (3.5) 
 
 Items that may be reclassified 
  subsequently to profit and 
  loss 
 Exchange difference on translation 
  of foreign operation                               (4.8)                 2.4            1.6 
 Loss arising on changes in 
  fair value of hedging instruments                 (10.2)               (0.8)          (6.4) 
                                             -------------  ------------------  ------------- 
 
 Total comprehensive income/(loss) 
  for the period                                     (8.1)               (1.5)          (8.3) 
 
 
 Profit / (loss) is attributable 
  to: 
  Owners of CentralNic Plc                             6.9               (3.1)          (3.5) 
                                             -------------  ------------------  ------------- 
 
 Total comprehensive income/(loss) 
  is attributable to: 
  Owners of CentralNic Plc                           (8.1)               (1.5)          (8.3) 
                                             -------------  ------------------  ------------- 
 
 Earnings per share: 
 Basic (cents)                                        2.61              (1.41)         (1.56) 
 Diluted (cents)                                      2.53              (1.41)         (1.56) 
 Adjusted earnings - Basic (cents)                    8.46                5.33          11.80 
 Adjusted earnings - Diluted 
  (cents)                                             8.21                5.11          11.46 
 

All amounts relate to continuing activities.

(a) The consolidated statement of comprehensive income for the six months ended 30 June 2021 has been restated as follows:

(i) Revenue has reduced by USD 0.9m due to the recognition of liabilities for prior period credit notes

(ii) Amortisation of intangible assets has increased by USD 0.7 million due to a restatement of intangible assets

(b) Parent, subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses.

(c) 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                             Restated* 
  FINANCIAL POSITION                     Unaudited     Unaudited 
                                        Six months    Six months        Audited 
                                             ended         ended     Year ended 
                                           30 June       30 June    31 December 
                                              2022          2021           2021 
                                             USD m         USD m          USD m 
                                      ------------  ------------  ------------- 
 ASSETS 
 
 NON-CURRENT ASSETS 
 Property, plant and equipment                 1.8           2.1            1.8 
 Right-of-use assets                           6.3           6.5            6.8 
 Intangible assets                           317.5         260.8          254.2 
 Deferred receivables                          0.4           0.5            0.4 
 Investments                                     -           0.1            0.1 
 Deferred tax assets                           8.2           5.7            8.6 
                                      ------------  ------------  ------------- 
 
                                             334.2         275.7          271.9 
 CURRENT ASSETS 
 Trade and other receivables                  93.1          68.0           71.4 
 Inventory                                     1.0           0.9            0.9 
 Cash and bank balances                       95.2          39.5           56.1 
                                      ------------  ------------  ------------- 
 
                                             189.3         108.4          128.4 
 
 
 TOTAL ASSETS                                523.5         384.1          400.3 
 
 
 EQUITY AND LIABILITIES 
 
 EQUITY 
 Share capital                                 0.3           0.3            0.3 
 Share premium                                98.3          39.8           39.8 
 Merger relief reserve                         5.3           5.3            5.3 
 Share-based payments reserve                 20.8          11.6           19.5 
 Cash flow hedging reserve                  (16.6)         (0.8)          (6.4) 
 Foreign exchange translation 
  reserve                                    (1.9)           3.8            2.9 
 Accumulated profits                          59.5          54.1           52.6 
                                      ------------  ------------  ------------- 
 
 TOTAL EQUITY                                165.7         114.1          114.0 
 
 
 NON-CURRENT LIABILITIES 
 Other payables                                7.4           3.5            4.4 
 Lease liabilities                             2.2           4.8            5.1 
 Deferred tax liabilities                     29.6          22.1           20.3 
 Borrowings                                  131.6         121.8          119.3 
                                      ------------  ------------  ------------- 
                                             170.8         152.2          149.1 
 CURRENT LIABILITIES 
 Trade and other payables and 
  accruals                                   155.4         113.7          117.1 
 Lease liabilities                             4.4           1.8            1.8 
 Borrowings                                   10.6           1.5           11.9 
 Derivative financial instruments             16.6           0.8            6.4 
                                      ------------  ------------  ------------- 
 
                                             187.0         117.8          137.2 
                                      ------------  ------------  ------------- 
 
 TOTAL LIABILITIES                           357.8         270.0          286.3 
 
 
 TOTAL EQUITY AND LIABILITIES                523.5         384.1          400.3 
                                      ------------  ------------  ------------- 
 

* The consolidated statement of financial position as at 30 June 2021 has been restated as follows (please refer to the Annual Report for the year ended 31 December 2021 for further disclosure): (i) Trade and other payables and accruals have increased by USD 2.9 million due to the recognition of liabilities for prior period credit notes. USD 0.9 million relates to the six month period ended 30 June 2021, USD 1.2 million relates to the year ended 31 December 2020, and USD 0.8 million relates to the year ended 31 December 2019; (ii) Intangible assets have decreased by USD 1.9 million due to increased amortisation charges. USD 1.2 million relates to the year ended 31 December 2020 and USD 0.7 million relates to the six month period ended 30 June 2021

 
 
 CENTRALNIC                                                                                                 Restated 
 GROUP PLC                                                                                                    Equity 
 CONSOLIDATED                                          Share-       Cash        Foreign     Restated*   attributable 
 STATEMENTS OF                             Merger       based       flow       exchange   Accumulated   to owners of 
 CHANGES IN           Share      Share     relief    payments    hedging    translation     profits /     the Parent 
 EQUITY             capital    premium    reserve     reserve    Reserve        reserve      (losses)        Company 
                      USD m      USD m      USD m       USD m      USD m          USD m         USD m          USD m 
 Balance as at 1 
  January 2021          0.3       39.8        5.3        11.0          -            1.4          56.1          113.9 
 Loss for the 
  period                  -          -          -           -          -              -         (3.1)          (3.1) 
 Translation of 
  foreign 
  operation               -          -          -           -          -            2.4             -            2.4 
 Total 
  comprehensive 
  income for the 
  period                  -          -          -           -          -            2.4         (3.1)          (0.7) 
 Loss arising on 
  fair value of 
  hedging 
  instruments             -          -          -           -      (0.8)              -             -          (0.8) 
 Share-based 
  payments                -          -          -         1.7          -              -             -            1.7 
 Share-based 
  payments - 
  exercised and 
  lapsed                  -          -          -       (1.1)          -              -           1.1              - 
 Balance as at 
  30 June 2021          0.3       39.8        5.3        11.6      (0.8)            3.8          54.1          114.1 
 Loss for the 
  period                  -          -          -           -          -              -         (0.4)          (0.4) 
 Translation of 
  foreign 
  operation               -          -          -           -          -          (0.9)             -          (0.9) 
 Total 
  comprehensive 
  income for the 
  period                  -          -          -           -          -          (0.9)         (0.4)          (1.3) 
 Loss arising on 
  fair value of 
  hedging 
  instruments             -          -          -           -      (5.6)              -             -          (5.6) 
 Share-based 
  payments                -          -          -         5.5          -              -             -            5.5 
 Share-based 
  payments - 
  deferred tax 
  asset                   -          -          -         2.2          -              -             -            2.2 
 Share-based 
  payments - 
  exercised and 
  lapsed                  -          -          -         0.2          -              -         (1.1)          (0.9) 
                  ---------  ---------  ---------  ----------  ---------  -------------  ------------  ------------- 
 Balance as at 
  31 December 
  2021                  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 
  operation               -          -          -           -          -          (4.8)             -          (4.8) 
 Total 
  comprehensive 
  income for the 
  period                  -          -          -           -          -          (4.8)           6.9            2.1 
 Issue of share 
  capital                 -       59.6          -           -          -              -             -           59.6 
 Share issue 
  costs                   -      (1.1)          -           -          -              -             -          (1.1) 
 Loss arising on 
  fair value of 
  hedging 
  instruments             -          -          -           -     (10.2)              -             -         (10.2) 
 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 
                  ---------  ---------  ---------  ----------  ---------  -------------  ------------  ------------- 
 
 

-- 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 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 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.

* Please refer to the consolidated statement of comprehensive income and the consolidated statement of financial position for details of the prior period restatements

 
 
 
 
                                                                 Restated* 
                                                 Unaudited       Unaudited        Audited 
                                                Six months      Six months     Year ended 
   CONSOLIDATED STATEMENT OF CASH                    ended           ended    31 December 
   FLOWS                                      30 June 2022    30 June 2021           2021 
                                                     USD m           USD m          USD m 
                                            --------------  --------------  ------------- 
 Cash flow from operating activities 
 
 Profit / (loss) before taxation                      15.8           (2.2)            1.6 
 
   Adjustments for: 
 
 Depreciation of property, plant 
  and equipment                                        1.4             1.7            3.5 
 Amortisation of intangible assets                    14.0             9.0           18.3 
 Finance cost (net)                                    5.9             5.3           10.8 
 Share-based payments                                  2.7             1.7            5.0 
 Decrease in trade and other 
  receivables                                       (10.9)          (19.2)         (20.8) 
 Increase in trade and other 
  payables                                             9.3            20.3           24.4 
 Decrease in inventories                                 -               -            0.3 
 Cash flow generated from operations                  38.2            16.6           43.1 
                                            --------------  --------------  ------------- 
 
 Income tax paid                                     (1.5)           (0.9)          (2.2) 
                                            --------------  --------------  ------------- 
 
 Net cash flow generated from 
  operating activities                                36.7            15.7           40.9 
 
 Cash flow used in investing 
  activities 
 Purchase of property, plant 
  and equipment                                      (0.4)           (0.4)          (0.7) 
 Purchase of intangible assets                       (1.9)           (1.1)          (4.1) 
 Payment of deferred consideration                   (1.4)           (1.7)          (1.7) 
 Proceeds from disposals of investments                0.1               -              - 
 Acquisition of subsidiaries                        (65.2)          (11.1)         (18.3) 
 
 Net cash flow used in investing 
  activities                                        (68.8)          (14.3)         (24.8) 
 
 Cash flow used in financing 
  activities 
 Proceeds from borrowings                             23.0            13.8           25.7 
 Accrued interest on bond tap                          0.4               -              - 
 Bond arrangement fees                               (0.5)           (0.4)          (1.0) 
 Proceeds from issuance of ordinary 
  shares (net)                                        58.5               -              - 
 Payment of lease liability                          (1.1)           (0.9)          (2.0) 
 Interest paid                                       (2.5)           (2.3)          (8.7) 
 Net cash flow generated/(used 
  in) from financing activities                       77.8            10.2           14.0 
                                            --------------  --------------  ------------- 
 
 Net increase in cash and cash 
  equivalents                                         45.7            11.6           30.1 
 Cash and cash equivalents at 
  beginning of the period/year                        56.1            28.7           28.7 
 Exchange losses on cash and 
  cash equivalents                                   (6.6)           (0.8)          (2.7) 
                                            --------------  --------------  ------------- 
 
 Cash and cash equivalents at 
  end of the period/year                              95.2            39.5           56.1 
 
 

* Please refer to the consolidated statement of comprehensive income and the consolidated statement of financial position for details of the prior period restatements

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 online presence and online marketing services. The Company is registered in England and Wales. Its registered office and principal place of business is 4(th) Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR.

   2.   Basis of preparation 

The financial results for the six months ended 30 June 2022 are unaudited and have been prepared on the basis of the accounting policies set out in the Group's 2021 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 2021, 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 recurring revenue 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 recessionary external factors. 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 building and managing platforms that sell Online Presence and 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 uses privacy-safe AI based data analytics and automation tools to provide advertising placement services to match websites that have traffic with online marketers who want qualified traffic that translates into new customers.

Management reviews the activities of the CentralNic Group in the segments disclosed below up to a gross profit level only:

 
                              Unaudited      Restated           Audited 
                             Six months     Unaudited        Year ended 
                                  ended    Six months       31 December 
                                30 June         ended              2021 
                                   2022       30 June             USD m 
                                  USD m          2021 
                                                USD m 
                           ------------                ---------------- 
    Online Presence 
    Revenue                        76.8          77.4             149.3 
    Cost of sales                (50.1)        (49.2)            (96.0) 
                           ------------  ------------  ---------------- 
    Gross profit                   26.7          28.2              53.3 
                           ------------  ------------  ---------------- 
 
    Online Marketing 
    Revenue                       257.8          96.4             261.2 
    Cost of sales               (202.4)        (70.3)           (196.0) 
                           ------------  ------------  ---------------- 
    Gross profit                   55.4          26.1              65.2 
                                         ------------  ---------------- 
 
    Total revenue                 334.6         173.8             410.5 
    Total cost of sales         (252.5)       (119.5)           (292.0) 
                           ------------  ------------  ---------------- 
    Gross profit                   82.1          54.3             118.5 
                           ------------  ------------  ---------------- 
 
 
 
   4.   Revenue 

The Group's revenue is generated from the following geographical areas:

 
                           Unaudited        Restated         Audited 
                          Six months       Unaudited      Year ended 
                               ended      Six months     31 December 
                             30 June           ended            2021 
                                2022         30 June           USD m 
                               USD m            2021 
                                               USD m 
                        ------------                  -------------- 
    Online Presence 
    UK                           2.0             1.7             3.6 
    North America               22.8            22.7            43.3 
    Europe                      37.8            36.9            70.5 
       ROW                      14.2            16.1            31.9 
                        ------------                  -------------- 
                                76.8            77.4           149.3 
                        ------------  --------------  -------------- 
    Online Marketing 
    UK                           1.2             1.5             3.2 
    North America                9.6             9.6            19.0 
    Europe                     238.9            74.2           217.2 
    ROW                          8.1            11.1            21.8 
                               257.8            96.4           261.2 
                        ------------  --------------  -------------- 
 
    Total revenue              334.6           173.8           410.5 
                        ------------  --------------  -------------- 
 
 
 
 
 
   5.   Non-core operating expenses 
 
                                                Unaudited     Unaudited 
                                               Six months    Six months        Audited 
                                                    ended         ended     Year ended 
                                                  30 June       30 June    31 December 
                                                     2022          2021           2021 
                                                    USD m         USD m          USD m 
 
 Acquisition related costs                            1.0           1.8            3.1 
 Integration and streamlining costs                   1.4           2.1            3.9 
 Other costs (1)                                      0.1           1.2            1.7 
                                                      2.5           5.1            8.7 
                                             ------------  ------------  ------------- 
 

(1) Other costs include items related primarily to business reviews and restructuring expenses.

   6.   Finance income and costs 
 
                                                Unaudited     Unaudited 
                                               Six months    Six months        Audited 
                                                    ended         ended     Year ended 
                                                  30 June       30 June    31 December 
                                                     2022          2021           2021 
                                                    USD m         USD m          USD m 
 
 Finance income                                         -             -          (0.1) 
 Impact of unwinding of discount 
  on net present value of deferred 
  consideration                                         -           0.1            0.2 
 Reappraisal of deferred consideration                  -         (0.1)          (0.1) 
 Arrangement fees on borrowings                       0.9           0.7            1.6 
 Interest expense on current borrowings               0.3           0.2            0.3 
 Interest expense on non-current 
  borrowings                                          4.6           4.3            8.7 
 Interest expense on leases                           0.1           0.1            0.2 
 Net finance 
 costs                                                5.9           5.3           10.8 
                                             ------------  ------------  ------------- 
 
   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 has 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 as calculated using the treasury stock method (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) as a result of the dilutive calculation. Due to the loss made in the year ended 31 December 2021, 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 
                                               Six months     Unaudited 
                                                    ended    Six months        Audited 
                                                  30 June         ended     Year ended 
                                                     2022       30 June    31 December 
                                                    USD m          2021           2021 
                                                                  USD m          USD m 
 
 Profit / (loss) after tax attributable 
  to owners                                           6.9         (3.1)          (3.5) 
                                             ------------  ------------  ------------- 
 Operating profit                                    21.7           3.1           12.4 
 Depreciation of property, plant 
  and equipment                                       1.4           1.7            3.5 
 Amortisation of intangible assets                   14.0           9.0           18.3 
 Non-core operating expenses                          2.5           5.1            8.7 
 Foreign exchange gain                              (3.7)         (1.0)          (1.6) 
 Share-based payment expenses                         2.7           1.7            5.0 
                                             ------------  ------------  ------------- 
 Adjusted EBITDA                                     38.6          19.6           46.3 
 Depreciation                                       (1.4)         (1.7)          (3.5) 
 Finance income                                         -             -            0.1 
 Finance costs                                      (5.9)         (5.3)         (10.9) 
 Taxation                                           (8.9)         (0.9)          (5.1) 
                                             ------------  ------------  ------------- 
 Adjusted earnings                                   22.4          11.7           26.8 
 Weighted average number 
  of shares: 
 Basic                                        264,765,349   219,559,661    227,380,670 
 Effect of dilutive potential 
  ordinary shares                               7,955,487     9,536,719      6,856,289 
                                             ------------  ------------  ------------- 
 Diluted average number 
  of shares                                   272,720,836   229,096,380    234,236,959 
                                             ------------  ------------  ------------- 
 Earnings per share: 
 Basic (cents)                                       2.61        (1.41)         (1.56) 
 Diluted (cents)                                     2.53        (1.41)         (1.56) 
                                             ------------  ------------  ------------- 
 Adjusted earnings - Basic 
  (cents)                                            8.46          5.33          11.80 
 Adjusted earnings - Diluted 
  (cents)                                            8.21          5.11          11.46 
                                             ------------  ------------  ------------- 
 

Basic and diluted earnings per share of 2.61 and 2.53 cents (H1 2021: (1.41) cents) has been impacted by amortisation charges, non-core expenses, foreign exchange gains and losses and share-based payment expenses. 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 the majority of the adjusting items in the earnings per share calculation above are also adjusted for when calculating the Group's tax expense.

The weighted average number of shares for the Company is disclosed above. The issued share capital of the Company at 30 June 2022 was 288,660,084 and the total number of shares that were vested but not exercised were 8,877,594. Exercises of options will largely be covered by the shares held by the Group's Employee Benefit Trust.

   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 2022 and 30 June 2021, and for the year ended 31 December 2021 was as follows:

 
                                                        Unaudited      Restated                Audited 
                                                       Six months     Unaudited             Year ended 
                                                       to 30 June    Six months            31 December 
                                                             2022    to 30 June                   2021 
                                                            USD m          2021                  USD m 
                                                                          USD m 
                                                     ------------  ------------  --------------------- 
 Cash conversion 
 Cash flow from operations                                   38.2          16.6                   43.1 
 Exceptional costs incurred and paid 
  during the year                                             3.1           7.1                   11.0 
 Settlement of one-off working capital 
  items from the prior year                                   1.1           2.1                    2.0 
 
 Adjusted cash flow from operations                          42.4          25.8                   56.1 
                                                     ------------  ------------  --------------------- 
 Adjusted EBITDA                                             38.6          19.6                   46.3 
 Conversion %                                                110%          132%                   121% 
                                 Single quarter 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 June 2022, 30 June 2021 and 31 December 2021 is 
                                                                             shown in the table below. 
                                                             Bond     Bank debt    Cash       Net debt 
                                                            USD m         USD m   USD m          USD m 
                                                     ------------  ------------  ------  ------------- 
 
 At 1 January 2021                                        (107.3)         (6.4)    28.7         (85.0) 
 Placing proceeds (net of costs)                           (18.2)             -    18.2              - 
 Amortisation of costs                                        0.4             -       -            0.4 
 Drawdown                                                       -           4.4   (4.4)              - 
 Other cash movements                                           -             -   (2.2)          (2.2) 
                                                     ------------  ------------  ------  ------------- 
 Net cash flows before foreign 
  exchange                                                 (17.8)           4.4    11.6          (1.8) 
 Foreign exchange differences                                 2.9           0.9   (0.8)            3.0 
 
 
 At 30 June 2021                                          (122.2)         (1.1)    39.5         (83.8) 
                                                     ------------  ------------  ------  ------------- 
 
 Drawdown                                                       -         (8.5)     8.5              - 
 Amortisation of costs                                      (0.7)             -   (0.2)          (0.9) 
 Other cash movements                                           -         (4.4)    10.3            5.9 
                                                     ------------  ------------  ------  ------------- 
 Net cash flows before foreign 
  exchange                                                  (0.7)        (12.9)    18.6            5.0 
 Foreign exchange differences                                 6.2         (0.4)   (2.0)            3.8 
 
 
 At 31 December 2021                                      (116.7)        (14.4)    56.1         (75.0) 
                                                     ------------  ------------  ------  ------------- 
 Drawdown                                                  (23.2)             -    23.2              - 
 Amortisation of costs                                        0.3             -       -            0.3 
 Other cash movements                                       (1.3)           0.5    22.5           21.7 
                                                     ------------  ------------  ------  ------------- 
 Net cash flows before foreign 
  exchange                                                 (24.2)           0.5    45.7           22.0 
 Foreign exchange differences                                11.4           1.2   (6.6)            6.0 
 
 
 At 30 June 2022                                          (129.5)        (12.7)    95.2         (47.0) 
 
 
 

Derivative financial instruments

In 2021, the Company entered into forward foreign exchange contracts with HSBC Bank Plc (HSBC) and Global Reach Partners Ltd (Global Reach) which resulted in a notional EUR 105 million of the amount outstanding under the bond being hedged at a weighted average EUR/USD exchange rate of 1.1893 and at a 1:1 hedge ratio. The forward contract with HSBC expired on 13 July 2022 and the forward contract with Global Reach expired on 15 July 2022; please refer to note 10 for further details of the post-balance sheet date settlement of these hedges. The Company has prepared hedging documentation which demonstrates that the hedging instrument and the hedged item offset each other in currency terms and in amounts, meaning there is a clear economic relationship between the hedging instrument and hedged item as required under international accounting standards. At the balance sheet date, the forward foreign exchange contracts have been measured based on the mark-to-market valuation reports provided by each of HSBC and Global Reach, with no ineffectiveness recognised. The change in the fair value of the derivative financial instrument for the six months ended 30 June 2022 is USD 10.2 million (H1 2021: USD 0.8 million; FY2021 USD 6.4 million) and the balance in the cash flow hedging reserve at 30 June 2022 is USD 16.6 million (H1 2021: USD 0.8 million; FY2021 USD 6.4 million).

   9.     Business combinations 

For further details regarding the acquisitions of VGL Verlagsgesellschaft mbH (VGL) on 7 March 2022, of the .ruhr TLD on 28 January 2022, and of Fireball Search GmbH on 2 February 2022, please refer to note 9 of the unaudited financial results for the three months ended 31 March 2022 as published and released on 23 May 2022.

Deferred consideration of EUR 0.1 million (USD 0.1 million) in respect of the .ruhr TLD acquisition was paid on 30 May 2022.

   10.   Events occurring after the quarter end 

Detailed below are the significant events that happened after the Group's quarter end date of 30 June 2022 and before the signing of these Unaudited Financial Results on 30 August 2022.

-- The forward contract with HSBC expired on 13 July 2022 and the forward contract with Global Reach expired on 15 July 2022. The Company settled the forward contracts at the prevailing mark-to-market valuations on those dates, which resulted in a EUR 20.9 million (USD 21.0 million) cash outflow. The event is neutral to the Company's Net Debt as the hedging liabilities mirror the gains from devaluation of the EUR

-- On 18 July 2022, the final additional consideration payment for the acquisition of KeyDrive SA was determined to be USD 1,138,400 and was settled in cash on 22 July 2022.

[1] Analysts forecasts have recently been upgraded with FY22 revenue now projected to be between USD c.574 million and USD c.642 million, and FY22 EBITDA between USD c.66 million and USD c.74 million

([2]) Based on analysis of c.84% of the segment which can be adequately and reliably be described by these KPI

([3]) Based on analysis of c.75% of the segment which can be adequately and reliably be described by these KPI

[4] Pro forma revenue, adjusted for acquired revenue, constant currency FX impact and non-recurring revenues is estimated at USD 608 million for the trailing 12 months ending 30 June 2022 and at USD 374 million for the trailing 12 months ending 30 June 2021

[5] Pursuant to the bond terms, i ncluding deferred consideration and lease liabilities

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END

IR FZGFRKGNGZZG

(END) Dow Jones Newswires

August 30, 2022 02:02 ET (06:02 GMT)

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