31 August 2021

CENTRALNIC GROUP PLC

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

UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

CentralNic Group Plc (AIM: CNIC), the global internet platform company that derives revenue from the sales of online presence and marketing services, announces its unaudited financial results for the six months ended 30 June 2021. Both revenue and adjusted EBITDA have significantly increased year-on-year, driven by a combination of underlying organic growth and acquisitions

Financial summary:

●       Revenue increased by 57% to USD 174.7m (H1 2020: USD 111.3m)

●       Organic revenue growth of 20% between H1 2020 and H1 2021, with standout performance from the Online Marketing segment which grew organically by 28%

●       Net revenue (gross profit) increased by 57% to USD 55.2m (H1 2020: USD 35.2m)

●       Adjusted EBITDA* increased by 36% to USD 20.5m (H1 2020: USD 15.1m)

●       Operating profit of USD 4.7m (H1 2020: USD 2.8m)

●       Adjusted operating cash conversion of 126% (H1 2020: 75%), driven by EBITDA generation and working capital optimisation

●       Net debt** down to USD 83.8m (gross interest-bearing debt of USD 123.3m, cash of USD 39.5m) as compared to USD 85.0m on 31 December 2020 (gross interest-bearing debt of USD 113.6m, cash of USD 28.6m) despite two acquisitions for a combined USD 11.1m in the period, and the settlement of combined deferred consideration of USD 1.7m

Financial highlights:

●      Acceleration of organic growth from 9% in 2020 to 16% in Q1 2021 to 25% in Q2 2021, resulting in 20% overall for H1 2021

●      Non-recurring revenue products contributed less than 1% of our total revenues

●      Successful bond tap issue of EUR 15m at 104.5% of nominal value

●      Acquisition of SafeBrands (Direct segment) in January 2021 and Wando Internet Solutions (Online Marketing segment) in February 2021

●      Final and interim deferred consideration payments made for Team Internet (Online Marketing segment) and SafeBrands (Direct segment) respectively

●      Currency exposure on EUR 80m of the total EUR 105m bond has been hedged, locking in a EUR/USD rate of 1.1930

Operational highlights:          

●      Very strong traction for the Group's privacy enabled online marketing technologies in view of a high cadence of privacy-conscious decisions of Big Tech

●      Significant investment in new management, staff and systems accelerated organic growth to record levels and positions the Group well for continued growth

●      New Data and AI group established in order to improve customer service, optimise business operations and decision making, enhance marketing, reduce customer churn and automate detection of non-compliant customer activity

●      Experienced non-executive directors added to the board

●      New customer wins for the Registry business include JISC and Dot London

Post period-end highlights:

●      The EUR 25m balance of the Group's EUR/USD exposure resulting from the EUR 105m bond has been hedged at a rate of 1.1765, taking the average rate on the total EUR 105m of currency exposure to 1.1891

Outlook:

●      Management expects full year revenues and profits to be at least at the upper end of market expectations

●      The accelerated organic growth seen during H1 2021 is expected to be sustained following 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

Ben Crawford, CEO of CentralNic, commented: "CentralNic has enjoyed a very strong first half across both our online presence subscriptions products and our privacy enabled online marketing technologies - achieving record organic growth of 25% in the second quarter, following 16% organic growth for the first quarter 2021 and 9% for the full year 2020. By virtue of our significant investment in resources, restructuring and market-leading products and promotions, we expect full year revenue and profits to be at least at the upper end of market expectations. As our investment levels plateau, we expect future periods to benefit from increasing operational leverage.

These robust results reflect CentralNic's continued success in sourcing, completing and integrating transformative acquisitions and driving the organic growth of all our businesses. Moreover, as the business scales rapidly, the underlying qualities of our recurring revenues and excellent cash generation become increasingly meaningful. The pipeline of future acquisition targets remains strong, while the net debt level remains comfortable and easily serviced given the profitability and cash generation of the existing CentralNic Group and the additional contribution from recent acquisitions. 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

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:

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 2021 results which show a transformational increase in revenue and adjusted EBITDA, both of which have grown by 57% and 36% respectively compared to H1 2020.

Performance Overview

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

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 businesses 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. The Company intends to combine the Direct and Indirect segment into a single Online Presence segment as of the next reporting date.

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 constant currency basis.

Indirect segment

Significant scale was achieved in the Indirect segment, with revenues increasing by USD 10.1m in the six months ended 30 June, or 25%, from USD 41.2m to USD 51.3m. The growth has been carried by the Group's key Wholesale brands and traction was particularly strong in the North American markets. Organic growth of the segment was 12% over the period.  

Direct segment

Revenue in the Direct segment increased by USD 5.4m, or 25%, from USD 21.6m to USD 27.0m. On an organic basis, revenue grew by 10%. Management is particularly pleased with this development as both the Retail business and the Enterprise business have continued their return to growth and successfully onboarded the SafeBrands acquisition.

Online Marketing segment

After the recent acquisitions of Zeropark, Voluum and Wando, which have substantially expanded the service offering beyond monetising traffic to a full suite of online customer acquisition 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 47.9m, or 99%, from USD 48.5m to USD 96.4m. Revenue continued to grow organically at a high rate of 28%, 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.

Ben Crawford

Chief Executive Officer

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.

●      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.

●      Share-based payments reserve represents the cumulative value of share-based payments recognised through equity.

●      Cash flow hedging reserve represents the effective portion of changes in the fair value of derivatives.

●      Foreign exchange translation reserve represents the cumulative exchange differences arising on Group consolidation.

●      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.

●      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.