TIDMCNIC
RNS Number : 6040Q
CentralNic Group PLC
01 March 2021
1 March 2021
CENTRALNIC GROUP PLC
("CentralNic" or "the Company" or "the Group")
UNAUDITED PRELIMINARY ACCOUNTS FOR THE PERIODED 31 DECEMBER
2020
CentralNic Group Plc (AIM: CNIC), the global internet platform
that derives revenue from the worldwide sales of internet domain
names and related web services, announces its unaudited preliminary
accounts for the financial year ended 31 December 2020. The audited
annual report and accounts for 2020 will be published towards the
end of April 2021. Both revenue and Adjusted EBITDA have increased
year-on-year, driven by a combination of acquisitions and
underlying organic growth .
Financial Summary:
-- Revenue increased by 121% to USD 241.2m (FY2019: USD 109.2m)
-- Net revenue/Gross profit increased by 78% to USD 76.3m (FY2019: USD 42.8m)
-- Adjusted EBITDA* increased by 71% to USD 30.6m (FY2019: USD 17.9m)
-- Operating profit increased by USD 3.2m to USD 0.4m (FY2019: operating loss of USD (2.8m))
-- Net debt** stood at USD 85.0m (gross interest bearing debt of
USD 113.6m, cash of USD 28.7m) as compared to USD 75.0m in FY2019
(gross interest bearing debt of USD 101.2m, cash of USD 26.2m)
As CentralNic made one major acquisition in 2020 and four
acquisitions in 2019, the Company also prepared a pro forma
comparable financial summary including all businesses currently
controlled by CentralNic (a definition of which is provided in a
footnote on the page below), to effectively isolate organic
growth.
Financial Organic Summary on a pro forma basis***:
-- Revenue increased by 9% to USD 289.7m (pro forma FY2019: USD 265.9m)
-- Gross profit increased by 8% to USD 96.6m (pro forma FY2019: USD 89.5m)
-- Adjusted EBITDA* increased by 4% to USD 35.6m (pro forma FY2019: USD 34.1m)
Operational Highlights:
-- Strong organic growth in the face of the COVID crisis
-- All staff and systems remained fully operational with no interruption to the supply chains
-- Completed an operational restructure which included investing
significantly in new management personnel and systems to position
the Group well for future growth
-- Healthy demand for our two largest service lines, Wholesale
domains and, most importantly, Monetisation - the latter also
driven by the rollout of a patented SSL monetisation solution in
late 2019
Financial Highlights:
-- Payment of EUR 2.7m of earn-out for the Team Internet
acquisition paid in June 2020 (EUR 0.9m of retention payment are
still outstanding)
-- EUR 1.3m of deferred consideration for SK-NIC was settled in
July 2020; a maximum of EUR 1.7m is yet to be paid
-- Conversion of the share premium account into a distributable reserve in August 2020
-- The final deferred consideration payment of EUR 2.7m for
Hexonet was settled in August 2020 by issuing 3.2m new shares
-- The final deferred consideration payment of EUR 0.45m for
GlobeHosting was paid in August 2020
-- Payment of the 2019 KeyDrive earnout of USD 2.2m, paid 15% in
cash and 85% by issuing 1.7m new shares; up to USD 1.4m of earnout
may still be payable if certain conditions are met
-- Successful placing of 40 million shares at a price of GBP
0.75 per share for total net proceeds of approximately USD
37.3m
-- Acquisition of Codewise for USD 36.0m
-- Profitable sale of a minority interest in Thomsen Trampedach for USD 1.8m
Post Year-End Highlights:
-- Completion of acquisition of SafeBrands, a French Enterprise
Domain Management and Online Brand Protection provider,
strengthening our Enterprise division within the Direct Segment,
for USD 3.7m plus a deferred consideration of USD 0.7m
-- Successful, oversubscribed placement of EUR 15m (USD 18.2m
approximately) of senior secured callable bonds at 104.5% of
nominal value
-- Completion of the acquisition of Wando Internet Solutions for
USD 6.5m plus an additional earnout of up to USD 6.5m
Outlook:
-- The strong organic growth in 2020 demonstrates the Company's
resilience despite the economic crisis, and ability to execute on
its accelerated buy and build strategy
-- New product launches and further integration activities will
support revenue growth and margins
-- The Company's successful consolidation strategy continues,
with opportunities being continually assessed in what is a large,
globally fragmented and growing market
-- Management is pleased that the full year results have been
delivered in line with management expectations
Ben Crawford, CEO of CentralNic, commented: " In 2020,
CentralNic generated as much revenue as in the five preceding years
all added together. These outstanding results not only demonstrate
that CentralNic can source and complete transformative
acquisitions, but that it can also integrate them successfully
while delivering record organic growth. Moreover, as we scale up
rapidly, the underlying qualities of high recurring revenues with
99% of revenue derived from sales of recurring products and
services and high cash conversion calculated at 106% on an adjusted
basis become increasingly meaningful.
"Our pipeline of future deals remains strong, while our net debt
level remains comfortable particularly given the profitability and
healthy cash flow from the existing CentralNic Group and the
expected contribution from recent acquisitions. We have also
brought on new staff, including a number of new senior managers,
and systems to drive our organic growth, and we are confident in
continuing our trajectory towards joining the ranks of the global
leaders in our industry."
* Subsidiary and Associate Earnings before interest, tax,
depreciation, amortisation, non-cash charges and non-core operating
expenses
** Includes gross cash, debt and prepaid finance costs
*** Given that the Group has made a number of key strategic
acquisitions in 2019 and 2020, we have estimated unaudited pro
forma information to provide period-to-period comparison of
performance. In doing so, we have made the following assumptions:
(a) figures are provided for the entire comparative period,
irrespective of when the acquisition by the Group arose; (b)
adjustments have been made to the currency rates used for the
comparative period to the most recent balance sheet date to
harmonise the impact of currency fluctuations; (c) the impact of
unwinding the deferred revenues relating to the period prior to 1
November 2018 arising from a change in the terms of conditions, as
well as identified material non-cash or one-off revenues, have been
excluded to ensure period to period comparability; and (d)
adjustments have been made, as appropriate, to ensure GAAP
comparability between periods. Differences to reported figures may
result.
These unaudited preliminary accounts have been prepared for the
purpose of fulfilling the information undertaking requirements
included in the bond terms for the Senior Secured Callable Bond
Issue.
For further information:
CentralNic Group Plc
Ben Crawford, Chief Executive Officer +44 (0) 203 388 0600
Don Baladasan, Group Managing Director
Michael Riedl, Chief Financial Officer
Zeus Capital Limited - NOMAD and
Joint Broker
Nick Cowles / Jamie Peel (Corporate
Finance) +44 (0) 161 831 1512
John Goold / Rupert Woolfenden (Institutional
Sales) +44 (0) 203 829 5000
Stifel - Joint Broker
Fred Walsh / Alex Price / Richard
Short +44 (0) 20 7710 7600
Newgate Communications (for Media)
Bob Huxford / Tom Carnegie / Isabelle +44 (0) 203 757 6880
Smurfit centralnic@newgatecomms.com
Forward-Looking Statements
This document includes forward-looking statements. Whilst these
forward-looking statements are made in good faith, they are based
upon the information available to CentralNic at the date of this
document and upon current expectations, projections, market
conditions and assumptions about future events. These
forward-looking statements are subject to risks, uncertainties and
assumptions about the Group and should be treated with an
appropriate degree of caution.
About CentralNic Group Plc
CentralNic (AIM: CNIC) is a London-based AIM-listed company
which drives the growth of the global digital economy by developing
and managing software platforms allowing businesses globally to buy
subscriptions to domain names, used for their own websites and
email, as well as for protecting their brands online. These
platforms can also be used for distributing domain name related
software and services, an opportunity that contributes
significantly to CentralNic's organic growth. The Company's
inorganic growth strategy is identifying and acquiring
cash-generative businesses in its industry with annuity revenue
streams and exposure to growth markets, and migrating them onto the
CentralNic software and operating platforms. CentralNic operates
globally with customers in almost every country in the world. It
earns recurring revenues from the worldwide sales of internet
domain names and other services on an annual subscription basis.
For more information please visit: www.centralnicgroup.com
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
CentralNic's organic growth, combined with its 2019 and 2020
acquisitions, substantially increased the scale and capabilities of
the Company. The effect of this is demonstrated in our unaudited
preliminary FY2020 results which show a transformational increase
in revenues and adjusted EBITDA, both of which have grown by 121%
and 71% respectively against FY2019. This is before the impact of
the acquisitions of SafeBrands and Wando Internet Solutions, which
completed after the balance sheet date of this report.
Performance Overview
The Company has performed strongly during the year with the key
financial metrics listed below:
31 December 31 December
2020 2019 Change
USD'000 USD'000 %
------------ ------------ ---------
Revenue 241,212 109,194 120.9%
------------ ------------ ---------
Gross profit 76,318 42,775 78.4%
------------ ------------ ---------
Adjusted EBITDA 30,594 17,921 70.7%
------------ ------------ ---------
Operating profit 360 (2,821) NM
------------ ------------ ---------
Profit/(loss) after tax (9,047) (6,577) (37.6)%
------------ ------------ ---------
EPS - Basic (cents) (4.60) (3.72) (23.7)%
------------ ------------ ---------
EPS - Adjusted earnings
- Basic (cents) (1) 10.25 9.24 10.9%
------------ ------------ ---------
(1) Please refer to note 7
On a pro forma basis (as defined in the footnote on page 2), the
Company grew by 9% organically during FY2020, as compared to
FY2019, from USD 265.9m to USD 289.7m.
Team Internet represented a significant proportion of the strong
performance in the period. The acquired businesses have similar
patterns of recurring revenue and cash conversion as CentralNic's
prior business, and hence recurring revenue and cash conversion are
expected to remain in line with the long-term trend. This underpins
the Company's financial stability and visibility of earnings. The
decrease in average gross margin from 39.2% to 31.6% reflects the
change in the business blend as a result of the 2019 and 2020
acquisitions. The marginal drop of gross margin on a proforma basis
from 33.7% to 33.4% is testament to this fact.
Segmental Analysis
Indirect segment
Significant scale was achieved in the Indirect segment, with
revenues increasing by USD 25.1m or 41%, from USD 60.7m to USD
85.8m, chiefly driven by the full year effect of the acquisitions
of TPP Wholesale in July 2019 and Hexonet Group in August 2019. On
a pro forma basis, revenue increased by USD 5.7m or 7% from USD
83.3m to USD 89.1m.
During the period, the Company successfully completed a number
of key integration tasks within its Indirect segment, most notably
the migration of all .au domain names from the Webcentral (formerly
Arq Group) platform to CentralNic's central domain procurement
engine, leading to estimated future annualised savings of USD
350,000 on cost of sales.
At the same time, CentralNic continued to develop its reseller
key accounts with seven out of the top ten customer accounts having
increased their spend compared to 2019 by up to 63%.
Direct segment
Revenue in the Direct segment decreased by USD 3.2m or 7%, from
USD 46.6m to USD 43.4m. The decrease was largely due to the
diminishing impact of the November 2018 change in terms and
conditions, the reallocation of the data center business to the
Indirect business and the reallocation of the monetisation
activities to the Monetisation segment. The acquisition of Ideegeo
contributed favourably to growth. On a pro forma basis, revenue was
stable with USD 44.3m in FY2019 and USD 44.4m in FY2020.
Management is positive that the segment will return to growth
with further client wins, and a healthy pipeline of prospective
clients.
Monetisation
The fastest growing segment of CentralNic's business was
Monetisation, which is for the first time presented as a separate
segment. On a pro forma basis, revenue increased strongly by USD
17.9m or 13% from USD 138.3m to USD 156.2m. Excluding the
acquisition of Codewise, revenue would have increased by USD 26.9m
or 35% from USD 76.5m to USD 103.4m. The contraction of Codewise
revenue was due to optimisation for gross profit and was known at
the time of acquisition. Going forward, Management expects both
businesses to contribute to growth.
Revenue growth has been driven mostly by an increase in the
average yield ("RPM") of 36%. This is a result of both superior
traffic quality subsequent to pruning the publisher base, as well
as the rollout of Team Internet's patented SSL monetisation
technology. At the same time, the number of page visits increased
by 1%.
Outlook
In 2020 CentralNic delivered higher revenue than for the whole
of the last five years combined and reported 9% revenue growth on a
pro forma basis. Management is pleased with the achievement of
strong results in 2020, in line with management expectations.
These outstanding results demonstrate that CentralNic can source
and complete transformative acquisitions, but more importantly that
it can also integrate them successfully while continuing to deliver
organic growth. Moreover, as the business rapidly scales up, the
underlying qualities of high recurring revenues and excellent cash
conversion become increasingly meaningful.
The pipeline of future deals remains strong, while the net debt
level remains comfortable particularly given the profitability of
the existing CentralNic Group and the expected contribution from
recent acquisitions. We are confident in continuing our trajectory
towards joining the ranks of the global leaders in our
industry.
Year-to-date, the Company has been trading in line with
management's expectations.
Ben Crawford
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME Unaudited Restated (c)
Year ended Year ended
31 December 2020 31 December 2019
Note USD'000 USD'000
----- ------------ ----------------------------
Revenue 4 241,212 109,194
Cost of sales (164,894) (66,419)
Gross profit 76,318 42,775
Administrative expenses (70,845) (42,718)
Share-based payment expenses (5,113) (2,878)
Operating profit/(loss) 360 (2,821)
Adjusted EBITDA (a) 30,594 17,921
Depreciation of property, plant and equipment (2,084) (1,306)
Amortisation of intangible assets (12,508) (8,299)
Non-core operating expenses (b) 5 (8,237) (7,357)
Foreign exchange loss (2,137) (828)
Share of associate EBITDA (155) (74)
Share-based payment expenses (5,113) (2,878)
------------ ----------------------------
Operating profit/(loss) 360 (2,821)
---------------------------------------------- ----- --- ----- ------------ --- ----------------------------
Finance income 5 5
Finance costs 6 (9,976) (7,759)
Foreign exchange gain on borrowings 6 137 3,885
Net finance costs (9,834) (3,869)
Share of associate income 79 74
Loss before taxation (9, 395 ) (6,616)
Taxation 348 39
------------ ----------------------------
Loss after taxation (9,047) (6,577)
Items that may be reclassified subsequently
to profit and loss
Exchange difference on translation of foreign
operation 3,243 (6,034)
Total comprehensive loss for the financial
year (5,804) (12,611)
Loss after tax is attributable to:
Owners of CentralNic Plc (9,047) (6,513)
Non-controlling interest - (64)
------------ ----------------------------
(9,047) (6,577)
Total comprehensive loss is attributable to:
Owners of CentralNic Plc (5,804) (12,547)
Non-controlling interest - (64)
------------ ----------------------------
(5,804) (12,611)
------------ ----------------------------
Earnings per share (note 7):
Basic (cents) (4.60) (3.72)
Diluted (cents) (4.60) (3.72)
Adjusted earnings - Basic (cents) 10.25 9.24
Adjusted earnings - Diluted (cents) 9.85 8.97
All amounts relate to continuing activities.
(a) Subsidiary and Associate Earnings before interest, tax,
depreciation, amortisation, non-cash charges and non-core operating
expenses.
(b) Non-core operating expenses include items related primarily
to acquisition, integration and other related costs, which are not
incurred as part of the underlying trading performance of the
Group, and which are therefore adjusted for, in line with Group
policy.
(c) The prior year figures have been restated for the
reclassification of foreign exchange differences arising from
foreign currency borrowings as follows:
-- a foreign exchange gain of USD 3,885,000 has been
reclassified from administrative expenses to finance costs
-- a foreign exchange loss of USD 1,583,000 has been
reclassified from administrative expenses to other comprehensive
income
-- this results in a net increase in administrative expenses of USD 2,302,000
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Restated
Year ended Year ended
31 December 2020 31 December 2019
USD'000 USD'000
------------------- -------------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,222 1,695
Right-of-use assets 6,455 4,732
Intangible assets 260,569 206,055
Other non-current assets 661 739
Investments 114 1,778
Deferred tax assets 5,410 2,545
275,431 217,544
CURRENT ASSETS
Trade and other receivables 47,239 40,760
Inventory 1,011 491
Cash and bank balances 28,654 26,182
76,904 67,433
TOTAL ASSETS 352,335 284,977
EQUITY AND LIABILITIES
EQUITY
Share capital 294 232
Share premium 39,845 74,840
Merger relief reserve 5,297 5,297
Share-based payments reserve 11,032 6,095
Foreign exchange translation reserve 1,360 (1,883)
Accumulated losses 58,684 (7,508)
CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE GROUP 116,512 77,073
Non-controlling interests - (69)
TOTAL EQUITY 116,512 77,004
NON-CURRENT LIABILITIES
Other payables 2,878 3,798
Lease liabilities 5,204 3,832
Deferred tax liabilities 21,965 22,609
Borrowings 107,820 98,967
137,867 129,206
------------------- -------------------
CURRENT LIABILITIES
Trade and other payables and accruals 90,791 75,683
Lease liabilities 1,346 871
Borrowings 5,819 2,213
97,956 78,767
TOTAL LIABILITIES 235,823 207,973
TOTAL EQUITY AND LIABILITIES 352,335 284,977
------------------- -------------------
CENTRALNIC Equity
GROUP PLC attributable
CONSOLIDATED Share- Foreign to owners
STATEMENTS Merger based exchange of the
OF CHANGES Share Share relief payments translation Accumulated Parent Non-controlling Total
IN EQUITY capital premium reserve reserve reserve losses Company interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Balance as at
1 January 2019 216 69,238 2,314 3,330 4,151 (1,186) 78,063 5 78,068
Loss for the
year - - - - - (6,513) (6,513) (64) (6,577)
Adjustment to
non-controlling
interests - - - - - 11 11 (11) -
Other
comprehensive
income -
translation
of foreign
operation - (1) - - (6,034) - (6,035) 1 (6,034)
Total
comprehensive
loss for the
year - (1) - - (6,034) (6,502) (12,537) (74) (12,611)
Transactions
with owners
Issue of share
capital 16 5,603 2,983 - - - 8,602 - 8,602
Share-based
payments - - - 2,336 - - 2,336 - 2,336
Share-based
payments
- deferred tax
assets - - - 609 - - 609 - 609
Share-based
payments
- exercised and
lapsed - - - (180) - 180 - - -
Balance as at
31 December 2019
(restated) 232 74,840 5,297 6,095 (1,883) (7,508) 77,073 (69) 77,004
--------- --------- --------- ---------- ------------- ------------- ------------- ---------------- ---------
Loss for the
year - - - - - (9,047) (9,047) - (9,047)
Other
comprehensive
income -
translation
of foreign
operation - - - - 3,243 - 3,243 - 3,243
--------- --------- --------- ---------- ------------- ------------- ------------- ---------------- ---------
Total
comprehensive
loss for the
year - - - - 3,243 (9,047) (5,804) - (5,804)
Transactions - -
with owners
Issue of share
capital 62 43,674 - - - 43,736 - 43,736
Share issue costs - (3,829) - - - (3,829) - (3,829)
Elimination of
share premium - (74,840) - - - 74,840 - - -
Adjustment to
non-controlling
interest - - - - - - - 69 69
Share-based
payments - - - 5,179 - 5,179 - 5,179
Share-based
payments
- deferred tax
assets - - - 157 - 157 - 157
Share-based
payments
- exercised and
lapsed - - - (399) - 399 - - -
Balance as at
31 December 2020 294 39,845 5,297 11,032 1,360 58,684 116,512 - 116,512
--------- --------- --------- ---------- ------------- ------------- ------------- ---------------- ---------
-- Share capital represents the nominal value of the Company's
cumulative issued share capital.
-- Share premium represents the cumulative excess of the fair
value of consideration received for the issue of shares in excess
of their nominal value less attributable share issue costs and
other permitted reductions.
-- Merger relief reserve represents the cumulative excess of the
fair value of consideration received for the issue of shares in
excess of their nominal value less attributable share issue costs
and other permitted reductions. Where the consideration for shares
in another company includes issued shares, and 90% of the equity is
held in the other company.
-- Retained earnings represent the cumulative value of the
profits not distributed to Shareholders but retained to finance the
future capital requirements of the CentralNic Group.
-- Share-based payments reserve represents the cumulative value
of share-based payments recognised through equity.
-- Foreign exchange translation reserve represents the
cumulative exchange differences arising on Group consolidation.
-- The non-controlling interests comprise the portion of equity
of subsidiaries that are not owned, directly or indirectly, by the
Group. These non-controlling interests are individually not
material for the Group .
Unaudited Restated
Year ended Year ended
31 December 2020 31 December 2019
CONSOLIDATED STATEMENT OF CASH FLOWS USD'000 USD'000
------------------- ------------------
Cash flow from operating activities
Loss before taxation (9,395) (6,616)
Adjustments for:
Depreciation of property, plant and equipment 2,084 1,306
Amortisation of intangible assets 12,508 8,299
Share of associate income (155) (74)
Gain on sale of associate (266) -
Finance cost (net) 9,834 3,869
Share-based payments 5,113 2,878
Decrease in trade and other receivables (9,266) (11,487)
Increase in trade and other payables and accruals 9,575 16,847
Decrease in inventories - 3,603
------------------- ------------------
Cash flow from operations 20,032 18,625
------------------- ------------------
Income tax paid (1,957) (2,309)
------------------- ------------------
Net cash flow generated from operating activities 18,075 16,316
Cash flow used in investing activities
Purchase of property, plant and equipment (1,296) (755)
Purchase of intangible assets, net of cash acquired (2,963) (14,742)
Payment of deferred consideration (5,467) (2,940)
Acquisition of subsidiaries, net of cash acquired (37,065) (60,900)
------------------- ------------------
Net cash flow used in investing activities (46,791) (79,337)
Cash flow used in financing activities
Proceeds from borrowings 2,208 103,424
Bond arrangement fees (645) (2,377)
Proceeds from issuance of ordinary shares (net) 37,287 2,133
Proceeds from disposal of investment in associate 1,814 -
Payment of debt like items - (27,839)
Payment of finance leases (1,081) (528)
Interest paid (9,512) (1,970)
Net cash flow generated from financing activities 30,071 72,843
------------------- ------------------
Net increase in cash and cash equivalents 1,355 9,822
Cash and cash equivalents at beginning of the year 26,182 23,090
Exchange differences on cash and cash equivalents 1,117 (6,730)
------------------- ------------------
Cash and cash equivalents at end of the year 28,654 26,182
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS
1. General information
CentralNic Group Plc is the UK holding company of a group of
companies which are engaged in the provision of global domain name
services. The Company is registered in England and Wales. Its
registered office and principal place of business is 4th Floor,
Saddlers House, 44 Gutter Lane, London EC2V 6BR.
The CentralNic Group is a global internet platform that derives
revenue from the worldwide sales of internet domain names and
related web services.
2. Basis of preparation
The preliminary accounts for the year ended 31 December 2020 are
unaudited and have been prepared on the basis of the accounting
policies set out in the Group's 2019 statutory accounts for the
purpose of fulfilling the information undertaking requirements
included in the bond terms for the Senior Secured Callable Bond
Issue.
The unaudited preliminary accounts are condensed and do not
represent statutory accounts within the meaning of section 435 of
the Companies Act 2016. The financial information for the year
ended 31 December 2019 is based on the statutory accounts for the
year ended 31 December 2019, as adjusted for the reclassification
of foreign exchange differences arising from foreign currency
borrowings as follows:
-- a foreign exchange gain of USD 3,885,000 has been
reclassified from administrative expenses to finance costs;
-- a foreign exchange loss of USD 1,583,000 has been
reclassified from administrative expenses to other comprehensive
income;
-- this results in a net increase in administrative expenses of USD 2,302,000.
The statutory accounts for the year ended 31 December 2019, upon
which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
As a profitable provider of online subscription services with
high cash conversion and solid organic growth, de-centrally
organised and catering to solid customers distributed over the
entire globe, CentralNic has not been, and is not expected to be,
severely affected by COVID-19. The Directors have taken the
necessary precautions to preserve the Group's cash and review the
acquisition pipeline and financing plans to ensure stability and
optimisation of the business strategies in the current global
climate.
3. Segment analysis
CentralNic is an independent global service provider
distributing domain names and associated digital subscription
products through Indirect and Direct channels, as well as providing
Monetisation services to domain name owners. 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 acquisition of Team Internet AG and other transformative
acquisitions during 2019 altered the business mix of the Group and
resulted in a reassessment of the Group's segmental reporting.
Therefore, certain restatements and reclassifications have been
made to the segmental reporting analysis of the CentralNic Group
for the financial year ended December 2019 to enhance comparability
with the current year. These restatements and reclassifications
have had no impact on the Group reported Consolidated Statement of
Comprehensive Income, Consolidated Statement of Financial Position
and Consolidated Statement of Cash Flow. The formerly reported
segments have been restated and reclassified as follows:
(i) Indirect, materially consistent with the former Reseller
segment
(ii) Direct, combining the former Small Business and Corporate
segments
(iii) Monetisation, which, due to its materially enlarged
weight, warrants its own segment.
The Indirect segment is a global distributor of domain names
through a network of channel partners. The Direct segment sells
domain names and ancillary services to end users, monitoring
services to protect brands online, technical and consultancy
services to corporate clients, and licenses the Group's in-house
developed registry management platform, also on a global basis. The
Monetisation segment provides advertising placement services, and
sells domain name and data traffic management services on a global
basis.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
3. Segment analysis (continued)
Management reviews the activities of the CentralNic Group in the
segments disclosed below:
Year ended 31 December 2020
-----------------------------------------------
Indirect Direct Monetisation Total
USD'000 USD'000 USD'000 USD'000
------------------------------------------------ --------- --------- ------------- ----------
Revenue 85,765 43,374 112,073 241,212
------------------------------------------------ --------- --------- ------------- ----------
Gross profit 25,833 20,458 30,027 76,318
------------------------------------------------ --------- --------- ------------- ----------
Total administrative expenses (70,845)
Share-based payments expenses (5,113)
------------------------------------------------ --------- --------- ------------- ----------
Operating profit 360
------------------------------------------------ --------- --------- ------------- ----------
Adjusted EBITDA 30,594
Depreciation of property, plant and equipment (2,084)
Amortisation of intangibles assets (12,508)
Non-core operating expenses (8,237)
Foreign exchange loss (2,137)
Share of associate income (155)
Share-based payment expenses (5,113)
------------------------------------------------ --------- --------- ------------- ----------
Operating profit/(loss) 360
------------------------------------------------ --------- --------- ------------- ----------
Finance cost (net) (9,834)
Share of associate income 79
------------------------------------------------ --------- --------- ------------- ----------
Profit/(loss) before taxation (9,395)
------------------------------------------------ --------- --------- ------------- ----------
Income tax expense 348
------------------------------------------------ --------- --------- ------------- ----------
Profit/(loss) after taxation (9,047)
------------------------------------------------ --------- --------- ------------- ----------
Year ended 31 December 2019
----------------------------------------------
Indirect Direct Monetisation Total
USD'000 USD'000 USD'000 USD'000
------------------------------------------------ --------- --------- ------------- ---------
Revenue 60,681 46,638 1,875 109,194
------------------------------------------------ --------- --------- ------------- ---------
Gross profit 19,604 22,671 500 42,775
------------------------------------------------ --------- --------- ------------- ---------
Total administrative expenses (42,718)
Share-based payments expenses (2,878)
------------------------------------------------ --------- --------- ------------- ---------
Operating loss (2,821)
------------------------------------------------ --------- --------- ------------- ---------
Adjusted EBITDA 17,921
Depreciation of property, plant and equipment (1,306)
Amortisation of intangibles assets (8,299)
Non-core operating expenses (7,357)
Foreign exchange loss (828)
Share of associate income (74)
Share-based payment expenses (2,878)
------------------------------------------------ --------- --------- ------------- ---------
Operating loss (2,821)
------------------------------------------------ --------- --------- ------------- ---------
Finance cost (net) (3,869)
Share of associate income 74
------------------------------------------------ --------- --------- ------------- ---------
Loss before taxation (6,616)
------------------------------------------------ --------- --------- ------------- ---------
Income tax expense 39
------------------------------------------------ --------- --------- ------------- ---------
Loss after taxation (6,577)
------------------------------------------------ --------- --------- ------------- ---------
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
4. Revenue
The Group's revenue is generated from the following geographical
areas:
Unaudited Audited
Year ended Year ended
31 December 31 December
2020 2019
USD'000 USD'000
------------- --------------
Indirect Services
UK 964 828
North America 22,527 13,509
Europe 45,766 34,972
ROW 16,508 11,372
------------- --------------
85,765 60,681
------------- --------------
Direct Services
UK 2,401 2,792
North America 13,439 11,656
Europe 18,321 19,623
ROW 9,213 12,567
43,374 46,638
------------- --------------
Monetisation services
UK 575 8
North America 6,197 102
Europe 100,129 1,711
ROW 5,172 54
112,073 1,875
------------- --------------
Total revenue 241,212 109,194
For the year ended 31 December 2020, there was one customer that
represented more than 10% of the Group's revenue, amounting to USD
101,329,000 across all three segments.
5. Non-core operating expenses
Unaudited Audited
Year ended Year ended
31 December 2020 31 December 2019
USD'000 USD'000
Acquisition related costs 1,386 4,069
Integration and streamlining costs 3,613 3,288
Other costs (1) 3,238 -
8,237 7,357
------------------ -------------------
(1) Other costs include items related primarily to business
reviews and restructuring expenses.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
6. Finance costs
Unaudited Restated
Year ended Audited
31 December 2020 Year ended
USD'000 31 December 2019
USD'000
Impact of unwinding of discount on net present value of deferred
consideration 221 3,398
Reappraisal of deferred consideration 921 -
Foreign exchange (gain)/loss on revolving credit facility revaluation(1) (137) 214
Foreign exchange gain on bond revaluation - (4,099)
Arrangement fees on borrowings 1,115 1,420
Interest expense on short-term borrowings 235 781
Interest expense on long-term borrowings 7,324 2,033
Interest expense on leases 160 127
9,839 3,874
------------------ ------------------
(1) The finance costs for the financial year ended 31 December
2019 have been restated to reclassify the foreign exchange loss on
the revaluation of the revolving facility of USD 3,885,000 from
administrative expenses to finance costs to reflect the appropriate
IFRS accounting treatment as per IAS 23.
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 (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.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
7. Earnings per share (continued)
Unaudited Audited
Year ended Year ended
31 December 2020 31 December 2019
USD'000 USD'000
Loss after tax attributable to owners (9,047) (6,513)
------------------ ------------------
Operating profit/(loss) 360 (2,821)
Depreciation of property, plant and equipment 2,084 1,306
Amortisation of intangible assets 12,508 8,299
Non-core operating expenses 8,237 7,357
Foreign exchange loss 2,137 828
Share of associate income 155 74
Share-based payment expenses 5,113 2,878
------------------ ------------------
Adjusted EBITDA 30,594 17,921
Depreciation (2,084) (1,306)
Finance costs (excluding deferred consideration related amounts - note
6) (8,698) (476)
Finance income 5 5
Taxation 348 39
------------------ ------------------
Adjusted earnings 20,165 16,183
------------------ ------------------
Weighted average number of shares:
Basic 196,680,310 175,083,962
Effect of dilutive potential ordinary shares 8,019,971 5,397,202
------------------ ------------------
Diluted 204,700,281 180,481,164
Earnings per share:
Basic (cents) (4.60) (3.72)
Diluted (cents) (4.60) (3.72)
Adjusted earnings - Basic (cents) 10.25 9.24
Adjusted earnings - Diluted (cents) 9.85 8.97
Basic and diluted earnings per share has been impacted by
non-recurring acquisition costs, amortisation changes and other
significant operating costs.
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
8. Financial instruments
The CentralNic Group is exposed to market risk, credit risk and
liquidity risk arising from financial instruments. The Group's
overall financial risk management policy focusses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance. The
Group does not trade in financial instruments.
The principal financial instruments used by the CentralNic
Group, from which financial instrument risk arises, are as
follows:
Unaudited Audited
Year ended Year ended
31 December 2020 31 December 2019
USD'000 USD'000
Financial assets
Loan and receivables
Trade and other receivables 42,345 33,701
Cash and cash equivalents 28,654 26,182
70,999 59,883
Financial liabilities measured at amortised cost
Trade and other payables 67,168 46,555
Loan and borrowings (short and long term) 113,639 101,180
180,807 147,735
------------------- -------------------
Cash conversion for the year ended 31 December 2020 was as
follows:
Unaudited
Year ended
31 December 2020
USD'000
------------------
Cash conversion
Cash flow from operations 20,032
Exceptional costs incurred and
paid during the year 7,466
Settlement of one-off working
capital items from the prior
year 5,075
Adjusted cash flow from
operations 32,573
------------------
Adjusted EBITDA 30,594
Conversion % 106.5%
Net debt as at 31 December 2020 and 2019 is shown in the table
below.
Bond Bank debt Cash Net debt
USD'000 USD'000 USD'000 USD'000
------------------ ---------- ------------ ---------
At 31 December 2019 (97,724) (3,456) 26,182 (74,998)
Drawdown - (2,213) 2,213 -
Amortisation of costs (1,046) (125) - (1,171)
Placing proceeds (net of costs) - - - -
Other cash movements - - (858) (858)
------------------ ---------- ------------ ---------
Net cash flows before foreign
exchange (98,770) (5,794) 27,537 (77,027)
Foreign exchange differences (8,564) (511) 1,117 (7,958)
At 31 December 2020 (107,334) (6,305) 28,654 (84,985)
------------------ ---------- ------------ ---------
NOTES TO THE UNAUDITED PRELIMINARY ACCOUNTS (continued)
9. Events occurring after the year end
Detailed below are the significant events that happened after
the Group's year end date of 31 December 2020 and before the
signing of these Unaudited Preliminary Accounts on 1 March
2021.
Acquisition of SafeBrands
On 9 January 2021, CentralNic acquired SafeBrands, a
France-based corporate domain management and brand protection
company for a purchase price of up to EUR 3,000,000 (approximately
USD 3,600,000). Additional consideration of EUR 600,000 (USD
700,000) may be payable subject to SafeBrands having met agreed
FY20 financial objectives. It offers registration management for
all Top-Level Domains and a wide range of value added services for
domain management and brand protection, including secure hosting,
DNS optimisation and SSL management. SafeBrands' online brand
protection products and expertise have, to date, been available to
companies based in French-speaking markets. CentralNic plans to
offer these services, which help businesses protect their revenue
streams in digital channels, through its global brand services
offering, which currently serves clients worldwide through teams
based in the US, the UK, Canada, Australia, Germany, New Zealand,
and other countries. SafeBrands' strong presence in France, one of
the largest internet services markets globally, complements
CentralNic's brand services business, which includes a leading
corporate registrar in Germany. This positions CentralNic as the
European champion for corporate domain portfolio management and
online brand protection, as well as one of the top three global
leaders available to serve customers in any country.
Bond Tap Issue
On 12 February 2021, the Company successfully completed a EUR
15,000,000 (approximately USD 18,000,000) tap issue under the
existing senior secured callable bonds. The tap issue was
oversubscribed and priced at 104.5% of par value. The maturity and
call conditions are identical to the prior tranches of senior
secured callable bonds.
Acquisition of Wando Internet Solutions
On 19 February 2021, CentralNic acquired Wando Internet
Solutions, a Berlin-based technology company specialised in social
marketing, SEM (Search Engine Marketing) advertising and display
advertising that enables augmentation of the quality and volume of
internet traffic on domain names and websites in order to generate
superior returns. In FY2020, Wando generated unaudited revenue of
EUR 4,900,000 (c. USD 5,600,000) and unaudited EBITDA of EUR
1,200,000 (c. USD 1,400,000). The acquisition is a vertical
integration and more than half of Wando's historical revenue
generation has come from CentralNic. The initial consideration for
the acquisition is EUR 5,400,000 (c. USD 6,500,000) and the sellers
of Wando may earn up to another EUR 5,400,000 (c. USD 6,500,000)
payable in Q3 2022 subject to stretched performance targets being
met.
Including the deferred consideration amounts described above for
Wando and SafeBrands, the maximum amount of deferred consideration
payable (before NPV adjustments) is USD 10,801,000, a part of which
may be settled in shares, the remainder in cash.
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END
FR FLFFAFTITFIL
(END) Dow Jones Newswires
March 01, 2021 02:00 ET (07:00 GMT)
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