30 August 2022

 

CENTRALNIC GROUP PLC

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

 

UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022

 

Transformational increase in Revenue and Adjusted EBITDA

CentralNic Group Plc (AIM: CNIC), the global internet platform that derives recurring revenue from operating a marketplace model for online presence and online marketing services, announces its unaudited financial results for the six months ended 30 June 2022. Record revenue and Adjusted EBITDA achieved, driven by continued organic growth, supplemented with acquisitions.

Financial summary H1 2022:

●       Revenue increased by 93% to USD 334.6m (H1 2021: USD 173.8m)

●       Organic revenue growth* for the trailing twelve months ending 30 June 2022 of c.62%

●       Net revenue/gross profit increased by 51% to USD 82.1m (H1 2021: USD 54.3m)

●       Adjusted EBITDA** increased by 97% to USD 38.6m (H1 2021: USD 19.6m)

●       Operating profit of USD 21.7m (H1 2021: USD 3.1m)

●       Non-core operating expenses reduced by 51% to USD 2.5m (H1 2021: 5.1m)

●       Adjusted operating cash conversion of 110% (H1 2021: 132%)

●       Net debt*** down by 22% to USD 63.6m as compared to USD 81.4m on 31 December 2021

 

Operational highlights:          

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

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

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

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

 

Corporate highlights:

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

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

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

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

 

Outlook:

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

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

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

 

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

 

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

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

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

**** Includes Net Debt as defined under *** plus (i) lease liabilities, (ii) guarantee obligations, and (iii) the best estimate of any Deferred Consideration payable in cash, all divided by pro forma EBITDA, i.e. last twelve months' EBITDA including acquired entities' EBITDA on a pro forma basis

 

These unaudited financial results have been prepared for the purpose of fulfilling the information undertaking requirements included in the bond terms for the Senior Secured Callable Bond Issue. To the best of our knowledge, these unaudited financial results have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Issuer and the Group taken as a whole. In addition, to the best of our knowledge, these unaudited financial results include a fair review of the development and performance of the business and the position of the Issuer and the Group taken as a whole. The principal risks and uncertainties that the business faces remain materially consistent with the risks and uncertainties described in the Risks section of the Group's 2021 annual report.

 

 

Ben Crawford - CEO

Don Baladasan - Group Managing Director

Michael Riedl - CFO

 

 

For further information:

CentralNic Group Plc
Ben Crawford, Chief Executive Officer Don Baladasan, Group Managing Director Michael Riedl, Chief Financial Officer			+44 (0) 203 388 0600
Zeus (NOMAD and Broker)
Nick Cowles / Jamie Peel / James Edis (Investment Banking)		+44 (0) 161 831 1512
Dominic King (Corporate Broking)		+44 (0) 203 829 5000
Berenberg (Joint Broker) Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff       SEC Newgate (for Media)	+44 (0) 20 3207 7800
Bob Huxford / Isabelle Smurfit / Max Richardson	+44 (0) 203 757 6880 centralnic@secnewgate.co.uk

Forward-Looking Statements

This document includes forward-looking statements. Whilst these forward-looking statements are made in good faith, they are based upon the information available to CentralNic at the date of this document and upon current expectations, projections, market conditions and assumptions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Group and should be treated with an appropriate degree of caution. 

About CentralNic Group Plc

CentralNic (AIM: CNIC) is a London-based AIM-listed company which drives the growth of the global digital economy by developing and managing software platforms allowing businesses globally to buy subscriptions to domain names, used for their own websites and email, as well as for protecting their brands online. These platforms can also be used for distributing domain name related software and services, an opportunity that contributes significantly to CentralNic's organic growth. The Company's inorganic growth strategy is identifying and acquiring cash-generative businesses in its industry with annuity revenue streams and exposure to growth markets and migrating them onto the CentralNic software and operating platforms. CentralNic operates globally with customers in almost every country in the world. It earns recurring revenues from the worldwide sales of internet domain names and other services on an annual subscription basis. For more information please visit: www.centralnicgroup.com

 

MANAGEMENT COMMENTARY ON PERFORMANCE

 

Introduction

CentralNic's organic growth, combined with its 2021 and 2020 acquisitions, substantially increased the scale and capabilities of the Company. The effect of this is demonstrated in our unaudited H1 2022 results which show a transformational increase in revenue and adjusted EBITDA, which have grown by 93% and 97% respectively compared to H1 2021.

 

Performance Overview

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

 

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

 

^***** Please refer to note 8

^****** Please refer to note 7

 

Segmental analysis

Organic growth rates quoted below are calculated on a pro forma basis including all the Group's constituents as of the last balance sheet dates and adjusted for non-recurring or non-cash revenues and on a constant currency basis.

 

Online Marketing segment

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

 

The number of visitor sessions also increased by 82% from 1.1 billion in H1 2021 to 2.0 billion in H1 2022 and the revenue per thousand sessions ("RPM") increased by 87% from USD 56.8 to USD 106.0[2]. 

 

CentralNic is a leader in online privacy, as none of our marketing platforms make use of third-party cookies or collect personal data on our customers. We therefore expect that restrictions placed on those practices (e.g. the ban of third-party cookies in Google Chrome or App Tracking Transparency in Apple's iOS 14.5) will continue to benefit CentralNic, as we provide an alternative for online marketers that is proven to be highly effective, whilst respecting the privacy of internet users. This puts us at the forefront of companies offering solutions for a more privacy conscious world.

 

Online Presence segment

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

 

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

 

 

Outlook

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

 

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

 

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

 

These outstanding results demonstrate that CentralNic can source and complete transformative acquisitions, but more importantly, that it can also integrate them successfully into marketplaces while continuing to deliver strong organic growth. Moreover, as the Company rapidly scales up, the underlying qualities of high recurring revenues and excellent cash conversion become increasingly meaningful, demonstrated by EBITDA as a percentage of Net Revenue increasing from 36% in H1 2021 to 47% in H1 2022.

 

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

 

 

Ben Crawford

Chief Executive Officer

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

 

All amounts relate to continuing activities.

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

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

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

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

^(c)  Non-core operating expenses include items related primarily to acquisition, integration and other related costs, which are not incurred as part of the underlying trading performance of the Group, and which are therefore adjusted for, in line with Group policy 

 

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

 

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

CENTRALNIC GROUP PLC CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	Share capital		Share premium			Merger relief reserve	Share- based payments reserve			Cash flow hedging Reserve	Foreign exchange translation reserve		Restated* Accumulated profits / (losses)	Restated Equity attributable to owners of the Parent Company
	USD m		USD m			USD m	USD m			USD m	USD m		USD m	USD m
Balance as at 1 January 2021		0.3		39.8	5.3			11.0	-			1.4	56.1	113.9
Loss for the period		-		-	-			-	-			-	(3.1)	(3.1)
Translation of foreign operation		-		-	-			-	-			2.4	-	2.4
Total comprehensive income for the period		-		-	-			-	-			2.4	(3.1)	(0.7)
Loss arising on fair value of hedging instruments		-		-	-			-	(0.8)			-	-	(0.8)
Share-based payments		-		-	-			1.7	-			-	-	1.7
Share-based payments - exercised and lapsed		-		-	-			(1.1)	-			-	1.1	-
Balance as at 30 June 2021		0.3		39.8	5.3			11.6	(0.8)			3.8	54.1	114.1
Loss for the period		-		-	-			-	-			-	(0.4)	(0.4)
Translation of foreign operation		-		-	-			-	-			(0.9)	-	(0.9)
Total comprehensive income for the period		-		-	-			-	-			(0.9)	(0.4)	(1.3)
Loss arising on fair value of hedging instruments		-		-	-			-	(5.6)			-	-	(5.6)
Share-based payments		-		-	-			5.5	-			-	-	5.5
Share-based payments - deferred tax asset		-		-	-			2.2	-			-	-	2.2
Share-based payments - exercised and lapsed		-		-	-			0.2	-			-	(1.1)	(0.9)
Balance as at 31 December 2021		0.3		39.8	5.3			19.5	(6.4)			2.9	52.6	114.0
Profit for the period		-		-	-			-	-			-	6.9	6.9
Translation of foreign operation		-		-	-			-	-			(4.8)	-	(4.8)
Total comprehensive income for the period		-		-	-			-	-			(4.8)	6.9	2.1
Issue of share capital		-		59.6	-			-	-			-	-	59.6
Share issue costs		-		(1.1)	-			-	-			-	-	(1.1)
Loss arising on fair value of hedging instruments		-		-	-			-	(10.2)			-	-	(10.2)
Share-based payments		-		-	-			2.7	-			-	-	2.7
Share-based payments - deferred tax asset		-		-	-			0.4	-			-	-	0.4
Share based payments - exercised and lapsed		-		-	-			(1.8)	-			-	-	(1.8)
Balance as at 30 June 2022		0.3		98.3	5.3			20.8	(16.6)			(1.9)	59.5	165.7

 

●      Share capital represents the nominal value of the company's cumulative issued share capital.

●     Share premium represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of their nominal value less attributable share issue costs and other permitted reductions.

●     Merger relief reserve represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of their nominal value less attributable shares issue costs and other permitted reductions.

●   Retained earnings represent the cumulative value of the profits not distributed to shareholders but retained to finance the future capital requirements of the CentralNic Group.

●      Share-based payments reserve represents the cumulative value of share-based payments recognised through equity and deferred tax assets arising thereon, net of exercised and lapsed options. 

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

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

 

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