TIDMCNIC
RNS Number : 3099A
CentralNic Group PLC
01 June 2021
1 June 2021
CENTRALNIC GROUP PLC
("CentralNic" or "the Company" or "the Group")
UNAUDITED FINANCIAL RESULTS FOR THE THREE MONTHSED 31 MARCH
2021
CentralNic Group Plc (AIM: CNIC), the global internet platform
company that derives revenue from the worldwide sales of internet
domain names and related web services, announces its unaudited
financial results for the three months ended 31 March 2021. Both
revenue and adjusted EBITDA have increased quarter-on-quarter,
driven by a combination of acquisitions and underlying organic
growth.
Financial summary:
-- Revenue increased by 48% to USD 84.4m (Q1 2020: USD 56.9m)
-- Organic revenue growth Q1 2021 compared to Q1 2020 is 16%
-- Net revenue/ gross profit increased by 58% to USD 27.9m (Q1 2020: USD 17.7m)
-- Adjusted EBITDA* increased by 23% to USD 10.1m (Q1 2020: USD 8.2m)
-- Operating profit of USD 1.4m (Q1 2020: USD 2.9m)
-- Adjusted operating cash conversion of 163% (Q1 2020: 46%),
primarily due to optimisation of working capital
-- Net debt** down to USD 79.0m (gross interest-bearing debt of
USD 122.1m, cash of USD 43.1m) as compared to USD 85.0m on 31
December 2020 (gross interest-bearing debt of USD 113.6m, cash of
USD 28.6m)
Operational highlights:
-- Significant investment in new management, staff and systems
accelerated organic growth to record levels and positions the Group
well for continued growth
-- All segments have achieved organic growth compared to the prior year period
-- Investment in new products resulting in improved sales of
value-added services in Direct and Indirect segments
-- Financial and operational performance demonstrate the
resilience of all businesses in the face of potential business
interruption related to the COVID-19 pandemic
Financial highlights:
-- Completion of acquisition of SafeBrands, an 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
(approximately USD 18.2m) of senior secured callable bonds at
104.5% of par value, implying a yield to maturity of 5.0%
-- Completion of the acquisition of online marketing business
Wando Internet Solutions for USD 6.5m plus an additional
performance-based earnout of up to USD 6.5m
Post period-end highlights:
-- Final EUR 0.8m of deferred consideration for the Team
Internet acquisition settled in April 2021
-- EUR 0.6m of deferred contingent consideration for the
SafeBrands acquisition settled in May 2021
Outlook:
-- The accelerated organic growth is testament to the success of
the investment in new management, staff and systems
-- The Company's market consolidation strategy continues, with
opportunities being continually assessed in what is a large,
globally fragmented and growing market
-- Management expects the full year results to be in line with market expectations
Ben Crawford, CEO of CentralNic, commented: "In Q1 2021,
CentralNic generated more revenue and EBITDA than in the whole of
FY 2018. In our Direct and Indirect segments, which provide the
essential tools for business large and small to go online, growth
in domain name sales has notably accelerated. More importantly, our
efforts to deliver value-added services through our direct and
indirect channels are paying off, with the sales of associated
services outpacing domain names sales.
Subsequent to the recent acquisitions of Zeropark, Voluum and
Wando, which have substantially expanded the service offering past
monetising traffic on dormant domain names to a full suite of
online marketing and monetisation solutions, including data
analytics, management resolved to rename the segment more fittingly
as "Online Marketing". CentralNic is a leader in online privacy, as
none of our marketing platforms make use of third-party cookies or
collect personal data on our customers. We therefore expect that
restrictions placed on those practices , e.g. the ban of
third-party cookies in Google Chrome or App Tracking Transparency
in Apple's iOS 14.5, will benefit CentralNic, as we provide an
alternative to online marketers that is proven to be highly
effective whilst respecting the privacy of internet users, putting
us at the forefront of companies offering solutions for a more
privacy conscious world. "
* 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
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.
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
SEC Newgate UK (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 2021 and 2020
acquisitions, substantially increased the scale and capabilities of
the Company. The effect of this is demonstrated in our unaudited Q1
2021 results which show a transformational increase in revenue and
adjusted EBITDA, both of which have grown by 48% and 23%
respectively compared to Q1 2020.
Performance Overview
The Company has performed strongly during the quarter with the
key financial metrics listed below:
31 March 31 March
2021 2020 Change
USD m USD m %
--------- --------- ---------
Revenue 84.4 56.9 48%
--------- --------- ---------
Net revenue/ gross profit 27.9 17.7 58%
--------- --------- ---------
Adjusted EBITDA 10.1 8.2 23%
--------- --------- ---------
Operating profit 1.4 2.9 (52)%
--------- --------- ---------
Adjusted operating cash
conversion (1) 163% 46% 117%
--------- --------- ---------
Loss after tax (1.4) (1.3) (8)%
--------- --------- ---------
EPS - Basic (cents) (0.67) (0.73) 8%
--------- --------- ---------
EPS - Adjusted earnings
- Basic (cents) (2) 3.17 1.97 61%
--------- --------- ---------
(1) Please refer to note 8
(2) Please refer to note 7
Segmental analysis
In our Direct and Indirect segments, which provide the essential
tools for business large and small to go online, growth in domain
name sales has accelerated notably. More importantly, our efforts
to deliver value-added services through our direct and indirect
channels are paying off, with the sales of associated services
outpacing domain names sales. Organic growth rates quoted below are
calculated on a pro forma basis including all the Group's
constituents as of the last balance sheet excluding non-cash
revenues and on a constant currency basis (which may have a
significant impact given fluctuations in foreign exchange
rates).
Indirect segment
Significant scale was achieved in the Indirect segment, with
revenues increasing by USD 4.9m, or 24%, from USD 20.5m to USD
25.4m. The growth has been carried by the Group's key Wholesale
brands. Organic growth of the segment was 13%.
Direct segment
Revenue in the Direct segment increased by USD 3.1m, or 29%,
from USD 10.6m to USD 13.7m. On an organic basis, revenue grew by
13%. Management is particularly pleased with this development as
both the Retail business and the Corporate business have returned
to growth, also supported by new project work wins for major
Telcos. In particular the North American corporate domain business
performed very strongly.
Online Marketing segment
Subsequent to the recent acquisitions of Zeropark, Voluum and
Wando, which have substantially expanded the service offering
beyond monetising traffic on dormant domain names to a full suite
of demand side and supply side solutions, including data analytics,
management resolved to rename the segment more fittingly as "Online
Marketing". The Online Marketing segment was the fastest growing
one, with revenues increasing by USD 19.5m, or 76%, from USD 25.8m
to USD 45.3m. Revenue continued to grow organically at a high rate
of 19%, largely driven by Team Internet's PubTONIC, with the
remainder being contributed by the acquisitions of Zeropark, Voluum
and Wando.
CentralNic is a leader in online privacy, as none of our
marketing platforms make use of third-party cookies or collect
personal data on our customers. We therefore expect that
restrictions placed on those practices (e.g. the ban of third-party
cookies in Google Chrome or App Tracking Transparency in Apple's
iOS 14.5) will benefit CentralNic, as we provide an alternative to
online marketers that is proven to be highly effective whilst
respecting the privacy of internet users, putting us at the
forefront of companies offering solutions for a more privacy
conscious world.
Outlook
In Q1 2021 CentralNic reported 16% organic revenue growth on a
pro forma basis. Management is pleased with the achievement of
strong results in Q1 2021, in line with market expectations.
These robust results demonstrate that CentralNic can
continuously source and complete transformative acquisitions and
integrate them successfully while continuing to deliver organic
growth. Moreover, as the business scales rapidly, the underlying
qualities of high recurring revenues and excellent cash conversion
become increasingly meaningful.
The pipeline of future acquisition targets remains strong, while
the net debt level remains comfortable particularly given the
profitability of the existing CentralNic Group and the expected
contribution from recent acquisitions. We are confident in
continuing our trajectory towards joining the ranks of the global
leaders in our industry.
Ben Crawford
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE Unaudited Unaudited
INCOME Three months Three months Audited
ended 31 ended 31 Year ended
Mar 2021 Mar 2020 31 Dec 2020
Note USD m USD m USD m
----- --------------- ----------------- ---------------
Revenue 4 84.4 56.9 241.2
Cost of sales (56.5) (39.2) (164.9)
Gross profit 27.9 17.7 76.3
Administrative expenses (25.0) (13.4) (70.8)
Share-based payments expense (1.5) (1.4) (5.1)
Operating profit 1.4 2.9 0.4
Adjusted EBITDA (a) 10.1 8.2 30.6
Depreciation of property, plant
and equipment (0.7) (0.5) (2.1)
Amortisation of intangible
assets (4.0) (2.9) (12.5)
Non-core operating expenses(b) 5 (2.9) (1.1) (8.2)
Foreign exchange gain/(loss) 0.4 0.6 (2.1)
Share of associate EBITDA - - (0.2)
Share-based payment expenses (1.5) (1.4) (5.1)
--------------- ----------------- -------------
Operating profit 1.4 2.9 0.4
----------------------------------------- ----- --------------- ----------------- -------------
Finance costs 6 (2.5) (2.2) (10.0)
Foreign exchange gain on borrowings 6 - - 0.1
Net finance costs (2.5) (2.2) (9.9)
Share of associate income - - 0.1
(Loss)/profit before taxation (1.1) 0.7 (9.4)
Income tax (expense)/income (0.3) (2.0) 1.0
--------------- ----------------- -------------
Loss after taxation (1.4) (1.3) (8.4)
Items that may be reclassified
subsequently to profit and
loss
Exchange difference on translation
of foreign operation 3.7 (3.7) 3.2
--------------- ----------------- -------------
Total comprehensive income/(loss)
for the period 2.3 (5.0) (5.2)
Loss is attributable to:
Owners of CentralNic Plc (1.4) (1.3) (8.4)
--------------- ----------------- -------------
Total comprehensive income/(loss)
is attributable to:
Owners of CentralNic Plc 2.3 (5.0) (5.2)
--------------- ----------------- -------------
Earnings per share:
Basic (cents) (0.67) (0.73) (4.28)
Diluted (cents) (0.67) (0.73) (4.28)
Adjusted earnings - Basic (cents) 3.17 1.97 10.57
Adjusted earnings - Diluted
(cents) 3.04 1.90 10.16
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.
CONSOLIDATED STATEMENT OF FINANCIAL Unaudited Unaudited
POSITION Three months Three months Audited
ended ended Year ended
31 Mar 2021 31 Mar 2020 31 Dec 2020
USD m USD m USD m
-------------- -------------- -------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2.2 1.7 2.2
Right-of-use assets 6.0 4.3 6.5
Intangible assets 262.9 196.6 257.0
Deferred receivables 0.6 0.1 0.7
Investments 0.1 1.4 0.1
Deferred tax assets 5.4 2.3 5.3
-------------- -------------- -------------
277.2 206.4 271.8
CURRENT ASSETS
Trade and other receivables 58.1 46.4 47.9
Inventory 1.9 0.5 1.0
Cash and bank balances 43.1 24.1 28.7
-------------- -------------- -------------
103.1 71.0 77.6
TOTAL ASSETS 380.3 277.4 349.4
EQUITY AND LIABILITIES
EQUITY
Share capital 0.3 0.2 0.3
Share premium 39.8 74.8 39.8
Merger relief reserve 5.3 5.3 5.3
Share-based payments reserve 11.7 7.5 11.0
Foreign exchange translation
reserve 5.1 (5.5) 1.4
Accumulated profits/(losses) 57.9 (8.8) 59.3
-------------- -------------- -------------
TOTAL EQUITY 120.1 73.5 117.1
NON-CURRENT LIABILITIES
Other payables 5.3 5.2 2.9
Lease liabilities 4.7 3.6 5.2
Deferred tax liabilities 20.6 21.5 22.0
Borrowings 120.3 96.4 107.8
-------------- -------------- -------------
150.9 126.7 137.9
CURRENT LIABILITIES
Trade and other payables and
accruals 106.1 72.0 87.3
Lease liabilities 1.4 0.7 1.3
Borrowings 1.8 4.5 5.8
-------------- -------------- -------------
109.3 77.2 94.4
-------------- -------------- -------------
TOTAL LIABILITIES 260.2 203.9 232.3
TOTAL EQUITY AND LIABILITIES 380.3 277.4 349.4
-------------- -------------- -------------
CENTRALNIC GROUP
PLC Equity
CONSOLIDATED Share- Foreign attributa-ble
STATEMENTS OF Merger based exchange Accumulated to owners of
CHANGES IN Share Share relief payments translation profits/ the Parent Non-Controlling
EQUITY capital premium reserve reserve reserve (losses) Company Interest Total
USD m USD m USD m USD m USD m USD m USD m USD m USD m
---------- --------- --------- ---------- ------------- ------------- -------------- ---------------- ------
Balance as at 1
January 2020 0.2 74.8 5.3 6.1 (1.8) (7.5) 77.1 (0.1) 77.0
Loss for the
period - - - - - (1.3) (1.3) - (1.3)
Adjustment to
non-controlling
interest - - - - - - - 0.1 0.1
Translation of
foreign
operation - - - - (3.7) - (3.7) - (3.7)
Total
comprehensive
income for the
period - - - - (3.7) (1.3) (5.0) 0.1 (4.9)
Share-based
payments - - - 1.4 - - 1.4 - 1.4
Balance as at 31
March 2020 0.2 74.8 5.3 7.5 (5.5) (8.8) 73.5 - 73.5
--------- --------- --------- ---------- ------------- ------------- -------------- ---------------- ------
Loss for the
period - - - - - (7.2) (7.2) - (7.2)
Translation of
foreign
operation - - - - 6.9 - 6.9 - 6.9
Total
comprehensive
income for the
period - - - - 6.9 (7.2) (0.3) - (0.3)
Issue of new
shares 0.1 43.7 - - - - 43.8 - 43.8
Share issue costs - (3.9) - - - - (3.9) - (3.9)
Capital reduction - (74.8) - - - 74.8 - - -
Share-based
payments - - - 3.8 - - 3.8 - 3.8
Share-based
payments -
deferred tax
asset - - - 0.2 - - 0.2 - 0.2
Share-based
payments -
exercised and
lapsed - - - (0.5) - 0.5 - - -
Balance as at 31
December 2020 0.3 39.8 5.3 11.0 1.4 59.3 117.1 - 117.1
--------- --------- --------- ---------- ------------- ------------- -------------- ---------------- ------
Loss for the
period - - - - - (1.4) (1.4) - (1.4)
Translation of
foreign
operation - - - - 3.7 - 3.7 - 3.7
Total
comprehensive
income for the
period - - - - 3.7 (1.4) 2.3 - 2.3
Share-based
payments - - - 1.5 - - 1.5 - 1.5
Share-based
payments -
exercised and
lapsed - - - (0.8) - - (0.8) - (0.8)
Balance as at 31
March 2021 0.3 39.8 5.3 11.7 5.1 57.9 120.1 - 120.1
--------- --------- --------- ---------- ------------- ------------- -------------- ---------------- ------
-- 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.
-- Foreign exchange translation reserve represents the
cumulative exchange differences arising on Group consolidation.
-- Foreign currency hedging reserve represents the effective
portion of changes in the fair value of derivatives.
-- 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 Unaudited
Three months Three months Audited
CONSOLIDATED STATEMENT OF CASH ended ended Year ended
FLOWS 31 Mar 2021 31 Mar 2020 31 Dec 2020
USD m USD m USD m
-------------- -------------- -------------
Cash flow from operating activities
(Loss)/profit before taxation (1.1) 0.7 (9.4)
Adjustments for:
Depreciation of property, plant
and equipment 0.7 0.5 2.1
Amortisation of intangible assets 4.0 2.9 12.5
Share of associate EBITDA - - (0.2)
Gain on sale of associate - - (0.3)
Finance cost (net) 2.5 2.2 9.9
Share-based payments 1.5 1.4 5.1
Increase in trade and other
receivables (10.2) (5.6) (9.3)
Increase/(decrease) in trade
and other payables 15.1 (0.9) 12.3
Cash flow generated from operations 12.5 1.2 22.7
-------------- -------------- -------------
Income tax paid - (0.7) (2.0)
-------------- -------------- -------------
Net cash flow generated from
operating activities 12.5 0.5 20.7
Cash flow used in investing
activities
Purchase of property, plant
and equipment (0.2) (0.1) (1.2)
Purchase of intangible assets (0.6) (0.3) (3.0)
Payment of deferred consideration - - (5.5)
Proceeds from disposal of investment
in associate - - 1.8
Acquisition of subsidiaries (11.1) (1.1) (37.1)
-------------- -------------- -------------
Net cash flow used in investing
activities (11.9) (1.5) (45.0)
Cash flow used in financing
activities
Proceeds from borrowings 18.2 2.0 2.2
Bond arrangement fees (0.4) - (0.6)
Proceeds from issuance of ordinary
shares (net) - - 34.7
Payment of lease liability (0.4) (0.4) (1.1)
Interest paid (2.3) (1.8) (9.5)
Net cash flow generated/(used
in) from financing activities 15.1 (0.2) 25.7
-------------- -------------- -------------
Net increase/(decrease) in cash
and cash equivalents 15.7 (1.2) 1.4
Cash and cash equivalents at
beginning of the period/year 28.7 26.2 26.2
Exchange (losses)/gains on cash
and cash equivalents (1.3) (0.9) 1.1
-------------- -------------- -------------
Cash and cash equivalents at
end of the period/year 43.1 24.1 28.7
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 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 financial results for the three months ended 31 March 2021
are unaudited and have been prepared on the basis of the accounting
policies set out in the Group's 2020 statutory accounts for the
purpose of fulfilling the information undertaking requirements
included in the bond terms for the Senior Secured Callable Bond
Issue and, for all 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 2020, upon which the auditors issued an unqualified
opinion, are available on the Group's website and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
As a profitable provider of online subscription services with
high cash conversion and solid organic growth, de-centrally
organised and catering to solid customers distributed over the
entire globe, CentralNic has not been, and is not expected to be,
severely affected by COVID-19. The Directors have taken the
necessary precautions to preserve the Group's cash and review the
acquisition pipeline and financing plans to ensure stability and
optimisation of the business strategies in the current global
climate.
3. Segment analysis
CentralNic is an independent global service provider
distributing domain names and associated digital subscription
products through Indirect and Direct channels, as well as providing
Online Marketing services. Operating segments are organised around
the products and services of the business and are prepared in a
manner consistent with the internal reporting used by the chief
operating decision maker to determine allocation of resources to
segments and to assess segmental performance. The Directors do not
rely on analyses of segment assets and liabilities, nor on
segmental cash flows arising from the operating, investing and
financing activities for each reportable segment, for their
decision making and therefore have not included them.
The 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
Online Marketing segment provides advertising placement services to
match those who have traffic, e.g. domain name owners and content
website operators, with those who want traffic, e.g. ecommerce
website operators and affiliates on a global basis, including AI
based data analytics and automation tools.
Management reviews the activities of the CentralNic Group in the
segments disclosed below:
Three months ended 31 March 2021
----------------------------------------------
Indirect Direct Online Marketing Total
USD m USD m USD m USD m
------------------------------------- --------- ------- ----------------- -------
Revenue 25.4 13.7 45.3 84.4
------------------------------------- --------- ------- ----------------- -------
Gross profit 8.6 6.9 12.4 27.9
------------------------------------- --------- ------- ----------------- -------
Total administrative expenses (25.0)
Share-based payments expenses (1.5)
------------------------------------- --------- ------- ----------------- -------
Operating profit 1.4
------------------------------------- --------- ------- ----------------- -------
Adjusted EBITDA 10.1
Depreciation of property, plant (0.7)
and equipment
Amortisation of intangibles assets (4.0)
Non-core operating expenses (2.9)
Foreign exchange gain 0.4
Share-based payment expenses (1.5)
------------------------------------- --------- ------- ----------------- -------
Operating profit 1.4
------------------------------------- --------- ------- ----------------- -------
Net finance cost (2.5)
Loss before taxation (1.1)
------------------------------------- --------- ------- ----------------- -------
Income tax expense (0.3)
------------------------------------- --------- ------- ----------------- -------
Loss after taxation (1.4)
------------------------------------- --------- ------- ----------------- -------
3. Segment analysis (continued)
Three months ended 31 March 2020
----------------------------------------------
Indirect Direct Online Marketing Total
USD m USD m USD m USD m
------------------------------------- --------- ------- ----------------- -------
Revenue 20.5 10.6 25.8 56.9
------------------------------------- --------- ------- ----------------- -------
Gross profit 5.6 5.2 6.9 17.7
------------------------------------- --------- ------- ----------------- -------
Total administrative expenses (13.4)
Share-based payments expenses (1.4)
------------------------------------- --------- ------- ----------------- -------
Operating profit 2.9
------------------------------------- --------- ------- ----------------- -------
Adjusted EBITDA 8.2
Depreciation of property, plant (0.5)
and equipment
Amortisation of intangibles assets (2.9)
Non-core operating expenses (1.1)
Foreign exchange gain 0.6
Share-based payment expenses (1.4)
------------------------------------- --------- ------- ----------------- -------
Operating profit 2.9
------------------------------------- --------- ------- ----------------- -------
Net Finance cost (2.2)
Profit before taxation 0.7
------------------------------------- --------- ------- ----------------- -------
Income tax expense (2.0)
------------------------------------- --------- ------- ----------------- -------
Loss after taxation (1.3)
------------------------------------- --------- ------- ----------------- -------
Year ended 31 December 2020
-----------------------------------------------
Indirect Direct Online Marketing Total
USD m USD m USD m USD m
------------------------------------- --------- ------- ----------------- --------
Revenue 85.8 43.3 112.1 241.2
------------------------------------- --------- ------- ----------------- --------
Gross profit 25.8 20.5 30.0 76.3
------------------------------------- --------- ------- ----------------- --------
Total administrative expenses (70.8)
Share-based payments expenses (5.1)
------------------------------------- --------- ------- ----------------- --------
Operating profit 0.4
------------------------------------- --------- ------- ----------------- --------
Adjusted EBITDA 30.6
Depreciation of property, plant (2.1)
and equipment
Amortisation of intangibles assets (12.5)
Non-core operating expenses (8.2)
Foreign exchange loss (2.1)
Share of associate income (0.2)
Share-based payment expenses (5.1)
------------------------------------- --------- ------- ----------------- --------
Operating profit 0.4
------------------------------------- --------- ------- ----------------- --------
Net finance cost (9.9)
Share of associate income 0.1
------------------------------------- --------- ------- ----------------- --------
Loss before taxation (9.4)
------------------------------------- --------- ------- ----------------- --------
Income tax expense 1.0
------------------------------------- --------- ------- ----------------- --------
Loss after taxation (8.4)
------------------------------------- --------- ------- ----------------- --------
4. Revenue
The Group's revenue is generated from the following geographical
areas:
Unaudited Unaudited Audited
Three months Three months Year ended
ended ended 31 December
31 March 31 March 2020
2021 2020 USD m
USD m USD m
-------------- ---------------
Indirect services
UK 0.3 0.3 1.0
North America 7.4 5.4 22.5
Europe 13.1 10.6 45.8
ROW 4.6 4.2 16.5
-------------- ---------------
25.4 20.5 85.8
-------------- -------------- ---------------
Direct services
UK 0.7 0.6 2.4
North America 3.6 3.3 13.4
Europe 6.7 4.3 18.3
ROW 2.7 2.4 9.2
13.7 10.6 43.3
-------------- -------------- ---------------
Online Marketing
UK 0.8 0.1 0.6
North America 5.1 1.0 6.2
Europe 34.4 24.0 100.1
ROW 5.0 0.7 5.2
-------------- -------------- ---------------
45.3 25.8 112.1
-------------- -------------- ---------------
Total revenue 84.4 56.9 241.2
-------------- -------------- ---------------
5. Non-core operating expenses
Unaudited Unaudited
Three months Three months Audited
ended ended Year ended
31 March 31 March 31 December
2021 2020 2020
USD m USD m USD m
Acquisition related costs 0.8 0.2 1.4
Integration and streamlining costs 1.2 0.9 3.6
Other costs (1) 0.9 - 3.2
2.9 1.1 8.2
-------------- -------------- -------------
(1) Other costs include items related primarily to business
reviews and restructuring expenses.
6. Finance costs
Unaudited Unaudited
Three months Three months Audited
ended ended Year ended
31 March 31 March 31 December
2021 2020 2020
USD m USD m USD m
Impact of unwinding of discount
on net present value of deferred
consideration - - (0.2)
Reappraisal of deferred consideration - - (0.9)
Foreign exchange (gain)/loss on
revaluation of revolving credit
facility - - 0.1
Arrangement fees on borrowings (0.3) (0.2) (1.1)
Interest expense on current borrowings (0.1) (0.3) (0.3)
Interest expense on non-current
borrowings (2.1) (1.7) (7.3)
Interest expense on leases - - (0.2)
Net finance
costs (2.5) (2.2) (9.9)
-------------- -------------- -------------
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. Due to the loss made in the
year ended 31 December 2020, the impact of the potential shares to
be issued on exercise of share options and warrants would be
anti-dilutive and therefore diluted earnings per share is reported
on the same basis on earnings per share.
Unaudited Unaudited
Three months Three months Audited
ended ended Year ended
31 March 31 March 31 December
2021 2020 2020
USD m USD m USD m
Loss after tax attributable to
owners (1.4) (1.3) (8.4)
-------------- -------------- -------------
Operating profit 1.4 2.9 0.4
Depreciation of property, plant
and equipment 0.7 0.5 2.1
Amortisation of intangible assets 4.0 2.9 12.5
Non-core operating expenses 2.9 1.1 8.2
Foreign exchange (gain)/loss (0.4) (0.6) 2.1
Share of associate income - - 0.2
Share-based payment expenses 1.5 1.4 5.1
-------------- -------------- -------------
Adjusted EBITDA 10.1 8.2 30.6
Depreciation (0.7) (0.5) (2.1)
Finance costs (excluding deferred
consideration related amounts -
note 6) (2.5) (2.2) (8.7)
Taxation (0.3) (2.0) 1.0
-------------- -------------- -------------
Adjusted earnings 6.6 3.5 20.8
Weighted average number
of shares:
Basic 208,520,020 178,096,349 196,680,310
Effect of dilutive potential
ordinary shares 8,725,291 6,440,183 8,019,971
-------------- -------------- -------------
Diluted average number
of shares 217,245,311 184,536,532 204,700,281
-------------- -------------- -------------
Earnings per share:
Basic (cents) (0.67) (0.73) (4.28)
Diluted (cents) (0.67) (0.73) (4.28)
-------------- -------------- -------------
Adjusted earnings - Basic
(cents) 3.17 1.97 10.57
Adjusted earnings - Diluted
(cents) 3.04 1.90 10.16
-------------- -------------- -------------
Basic and diluted earnings per share of (0.67) cents (Q1 2020:
(0.73) cents) has been impacted by 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.
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 three-month period ended 31 March 2021
was as follows:
Unaudited Unaudited Unaudited
Three months Three months Year ended
to 31 March to 31 March 31 December
2021 2020 2020
USD m USD m USD m
-------------- -------------- ------------------------
Cash conversion
Cash flow from operations 12.5 1.2 22.7
Exceptional costs incurred and
paid
during the year 3.7 1.1 7.5
Settlement of one-off working
capital
items from the prior year 0.3 1.5 5.1
Adjusted cash flow from
operations 16.5 3.8 35.3
-------------- -------------- ------------------------
Adjusted EBITDA 10.1 8.2 30.6
Conversion % 163% 46% 115%
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 31 March 2021, 31 March 2020 and 31 December
2020 is shown in the table below.
Bond Bank debt Cash Net debt
USD m USD m USD m USD m
-------------- -------------- ------------- ---------
At 1 January 2020 (97.7) (3.5) 26.2 (75.0)
Drawdown - (2.2) 2.2 -
Amortisation of costs (0.2) - - (0.2)
Other cash movements - - (3.4) (3.4)
-------------- -------------- ------------- ---------
Net cash flows before foreign
exchange (0.2) (2.2) (1.2) (3.6)
Foreign exchange differences 2.3 0.3 (0.9) 1.7
At 31 March 2020 (95.6) (5.4) 24.1 (76.9)
-------------- -------------- ------------- ---------
Drawdown - (0.8) 0.8 -
Amortisation of costs (0.8) - - (0.8)
Other cash movements - - 1.8 1.8
-------------- -------------- ------------- ---------
Net cash flows before foreign
exchange (0.8) (0.8) 2.6 1.0
Foreign exchange differences (10.9) (0.1) 1.9 (9.1)
At 31 December 2020 (107.3) (6.3) 28.6 (85.0)
-------------- -------------- ------------- ---------
Amortisation of costs 0.4 - - 0.4
Placing proceeds (net of costs) (18.2) - 18.2 -
Other cash movements - 4.4 (2.4) 2.0
-------------- -------------- ------------- ---------
Net cash flows before foreign
exchange (17.8) 4.4 15.8 2.4
Foreign exchange differences 4.8 0.1 (1.3) 3.6
At 31 March 2021 (120.3) (1.8) 43.1 (79.0)
-------------- -------------- ------------- ---------
9. Business combinations
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 3.0m (approximately USD
3.6m). Additional consideration of EUR 0.6m (USD 0.7m) is now
payable as SafeBrands has met agreed FY2020 financial objectives.
SafeBrands 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.
The following table summarises the consideration paid for
SafeBrands and the fair values of the assets and liabilities at the
acquisition date, in line with Group policies.
USD m
-------
Total consideration 4.4
Fair values recognised on acquisition
Assets
Customer relationships 0.7
Developed technologies 0.4
Brand name 0.4
Property, plant and equipment 0.1
Inventories 0.2
Trade receivables 1.6
Other assets 0.1
-------
Total assets
Liabilities 3.5
Deferred tax (0.4)
Trade payables (0.1)
Other provisions (0.1)
Other liabilities (0.8)
-------
Total liabilities (1.4)
-------
Total identifiable estimated net assets at fair value 2.1
-------
Goodwill arising on acquisition 2.3
-------
Purchase consideration 4.4
-------
Acquisition of Wando Internet Solutions
On 19 February 2021, CentralNic acquired Wando Internet
Solutions, a Berlin-based technology company specialising in social
marketing, search engine marketing (SEM) 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 4.9m (c. USD 5.6m) and unaudited EBITDA of EUR 1.2m (c. USD
1.4m). 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 5.4m (c. USD
6.5m) and the sellers of Wando may earn up to another EUR 5.4m (c.
USD 6.5m) payable in Q3 2022 subject to stretched performance
targets being met.
The purchase price allocation exercise for the acquisition of
Wando Internet Solutions has not been completed as at the date of
signing this report, and it is therefore not possible to provide
further details of the fair value estimates of the assets and
liabilities at the acquisition date.
10. Events occurring after the quarter end
Detailed below are the significant events that happened after
the Group's quarter end date of 30 March 2021 and before the
signing of these Unaudited Financial Results on 1 June 2021.
-- CentralNic settled the final EUR 0.8m of deferred
consideration withheld from the consideration for Team Internet in
April 2020
-- As SafeBrands met agreed FY2020 financial objectives,
deferred contingent consideration of EUR 0.6m was settled in May
2021
-- HSBC has granted a EUR 13.0m Revolving Credit Facility (RCF)
and a EUR 5.3m Letter of Credit Facility (LCF) which substitute the
former EUR 5.0m RCF and EUR 2.5m LCF provided by Silicon Valley
Bank (SVB); the enlargement of the RCF and LCF facilitate the
continued growth of the company and allow for better working
capital management
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END
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