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