9 MONTHS ENDED 30 SEPTEMBER 2020 FINANCIAL RESULTS

CONSOLIDATED STATEMENT OF CASH FLOWS			Unaudited Nine months ended 30 Sep 2020		Unaudited Nine months ended 30 Sep 2019		Restated Audited Year ended 31 Dec 2019
			USD'000		USD'000		USD'000
Cash flow from operating activities
Loss before taxation			(9,067)		(4,905)		(5,789)
Adjustments for:
Depreciation of property, plant and equipment			1,494		911		1,306
Amortisation of intangible assets			8,777		5,599		8,299
Profit on investment in associate			-		-		(74)
Finance cost - net			10,949		5,004		3,869
Share based payments			3,902		2,000		2,878
Decrease/(increase) in trade and other receivables			819		(5,393)		(11,487)
(Decrease)/increase in trade and other payables			(3,367)		(3,537)		16,020
Decrease in inventories			39		47		3,603
Cash flow from operations			13,546		(274)		18,625
Income tax received/(paid)			52		(1,819)		(2,309)
Net cash flow generated from/(used in) operating activities			13,598		(2,093)		16,316
Cash flow used in investing activities
Purchase of property, plant and equipment			(609)		(566)		(755)
Purchase of intangible assets, net of cash acquired			(583)		(14,717)		(14,742)
Payment of deferred consideration			(5,130)		(2,940)		(2,940)
Acquisition of a subsidiary, net of cash acquired			(1,038)		(12,573)		(60,900)
Net cash flow used in investing activities			(7,360)		(30,796)		(79,337)
Cash flow used in financing activities
Proceeds/(Repayments) from borrowings (net)			2,377		57,437		103,424
Bond arrangement fees			(48)		(2,280)		(2,377)
Proceeds from issuance of ordinary shares (net)			37,302		43		2,133
Payment of debt like items			-		(27,839)		(27,839)
Lease rentals			(470)		(440)		(528)
Interest paid			(5,624)		(973)		(1,970)
Net cash flow (used in)/generated from financing activities			33,537		25,948		72,843
Net increase/(decrease) in cash and cash equivalents			39,775		(6,941)		9,822
Cash and cash equivalents at beginning of the period/year			26,182		23,090		23,090
Exchange differences on cash and cash equivalents			(2,295)		2,818		(6,730)
Cash and cash equivalents at end of the period/year			63,662		18,967		26,182

 

 

.

NOTES TO THE FINANCIAL INFORMATION

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, England, EC2V 6BR.  

The CentralNic Group provides subscription services on a global scale to domain names and associated digital subscription products through Indirect and Direct channels as well as Monetisation services.

 

2.   Basis of preparation

The condensed interim financial information for the nine month period ended 30 September 2020 is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2019 statutory accounts in accordance with the Group's bond terms and, for all periods presented, in line with the principal disclosure requirements of Accounting Standard IAS 34 Interim Financial Reporting.

The condensed interim consolidated financial statements 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. Those accounts, 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.

 

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the estimation of income tax, and the adoption of new and amended standards and accounting policies as set out below.

 

As a profitable provider of online subscription services with high cash conversion and solid organic growth, decentrally organised and catering to solid customers distributed over the entire globe, we do not expect CentralNic 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.   New and amended standards adopted by the Group

 

In the current reporting period, the Group has applied amendments to IFRS. These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements. The adoption of these has not had any material impact on the Group's financial statements and the accounting policies adopted by the Group in the interim report are consistent with the most recent Annual Report for the year ended 31 December 2019.

 

The International Accounting Standards Board published an amendment to IFRS 16 (''Covid-19 Related Rent Concessions''), in which they provide an accounting policy choice to the lessees to apply practical relief for rent concessions arising as a result of the COVID-19 pandemic. This amendment has not yet been endorsed by the European Union and did not impact the Interim Report September 2020.

 

4.   Critical accounting judgments and key sources of estimating uncertainty

 

In the application of the CentralNic Group's accounting policies, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not apparent from other sources. The estimates and assumptions are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

 

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date that have a significant risk of causing a significant adjustment to the carrying amounts of assets and liabilities in the financial statements:

 

Impairment Testing

 

The recoverable amounts of individual non-financial assets are determined based on the higher of the value-in-use calculations and the recoverable amount, or fair value less costs to sell. These calculations will require the use of estimates and assumptions. It is reasonably possible that assumptions may change, which may impact the Directors' estimates and may then require a material adjustment to the carrying value of tangible and intangible assets. 

 

The Directors review and test the carrying value of tangible and intangible assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. For the purposes of performing impairment tests, assets are grouped at the lowest level for which identifiable cash flows are largely dependent on cash flows of other assets or liabilities. If there are indications that impairment may have occurred, estimates of expected future cashflows will be prepared for each group of assets. 

 

Expected future cash flows used to determine the value in use of tangible and intangible assets will be inherently uncertain and could materially change over time.

 

Estimation of useful life

 

The charge in respect of periodic amortisation and depreciation is derived after determining an estimate of an asset's expected useful life. The useful lives of the assets are determined by management at the time the asset is acquired and are reviewed continually for appropriateness.

 

Software development costs

 

The Group accounts for costs incurred to develop software for internal use as per IAS 38 and capitalises the costs incurred during the application development stage which include costs to design the software configuration and interfaces, coding, installation, and testing.  Costs incurred during the preliminary project stage along with post-implementation stages of internal use software are expensed as incurred. Capitalised development costs are amortised over their expected economic useful life. Costs incurred to maintain the existing software are expensed as incurred. The capitalisation and ongoing assessment of recoverability of development costs requires considerable judgement by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life.

 

Deferred Consideration

 

The fair value of the contingent deferred consideration arising on business combinations is a key area of accounting estimate. Judgement was exercised in determining the fair value of the deferred consideration in the KeyDrive acquisition, as described in note 15.

 

5.   Significant accounting policy

 

a)      Revenue recognition

 

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the course of ordinary activities, net of discounts and sales related taxes.

Revenue from the sale of services is recognised when the performance obligations are met under the customer contract In particular:

(i)            Indirect Sale of services for domain names to registrars (formerly reported as Reseller)

Indirect revenues are derived from their customer base, registrars, via the following three channels:

(a)   Reseller channel - Revenues are derived by facilitating the sale of domain names and associated digital subscription products to registrars by acting as a wholesale platform provider.

(b)   Registry Operator channel - CentralNic is an asset holder for Country Code TLD .SK, and therefore generates revenues through sale of domain names of .SK extension to registrars

(c)    Registry Service Provider channel - These revenues are generated from the provision of services through the registry service provider mechanism. CentralNic operates as a back-end service provider for third-party Top Level Domains on an exclusive basis, enabling the registrars to sell domain names to registrants.

In accordance with IFRS 15, each segment evaluates the representation of the underlying customer contracts with the registrars and identifies the performance obligation that is required to be met under the customer contract. Determining the transaction price and allocating the transaction price to the performance obligation is done is also considered, followed by the fulfilment of the performance obligation, therefore leading to the revenue recognition of the sale.

For the Reseller channel, upon evaluation of the customer contract, the registry channel has performance obligations that are met at point of sale of the domain name. An invoice under this division could cover the license to utilise the domain name for a fixed term period which could vary between one and ten years, however, all performance obligations are met at the point of sale, and therefore no revenue is deferred.

For the Registry operator revenues and Registry service channels, upon evaluation of the customer contract, the registry channel has several performance obligations that need to be met over the term of the domain name sale. An invoice under these divisions could cover the sale of a domain name for a fixed term period which could vary between one and ten years, and the performance obligations are expected to be fulfilled over the course of this term on a straight-line basis. Revenues that relate to the period in which the services are performed are recognised in the income statement of that period, with the amounts relating to future periods being deferred into ''deferred revenue''.

 

(ii)           Direct sale of services for domain names to domain registrants (formerly reported as Small business and Corporate Services)

For the Direct segment, upon evaluation of the customer contract, the registrar channel has performance obligations that are met at the point of sale of the domain name. An invoice under this segment could cover the license to utilise the domain name for a fixed term period which could vary between one and ten years, however, all performance obligations are met at the point of sale, and therefore no revenue is deferred.

Direct revenues are generated from the provision of retail and similar services to domain registrants. The sub revenue streams would be those of new registrations and renewals. Revenue originates when a transaction is generated on the service registry platform by the customer.

Revenue from the provision of computer software to a customer is recognised when the Group has delivered the related software and completed all of the adaptions required by the customer for either the whole contract or for a specific milestone deliverable within the contract. The revenue is recognised at the point of fulfilment of the performance obligation, in line with the customer contract.

Revenue from strategic consultancy and similar services is recognised in profit and loss in proportion to the stage of completion of the performance obligation at the reporting date. The stage of performance obligation fulfilment is determined based on completion of work performed to date as a percentage of total services to be performed.

(iii)          Monetisation services

In the Monetisation segment, CentralNic places third party advertising ("Advertisers") on domain names held by third parties ("Publisher") not yet or not intended to be developed into website.  Revenues are recognized after a chargeable click on the Advertiser's advertisement placed on a Publisher's domain name or a chargeable redirect from a Publisher's domain name to an Advertiser's website are registered.

The acquisition of Team Internet AG and other transformative acquisitions during 2019 have altered the business mix of the Group which have resulted in the restatement and reclassification of the Group segmental reporting.  At 30 June 2020, certain restatement and reclassification have been made to the segmental reporting analysis of CentralNic Group for the period and financial year ended 30 June 2019 and 31 December 2019 respectively to enhance comparability with the current year's Interim Report ended 30 June 2020. These restatement and reclassification have had no impact on the Group reported Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position and Consolidated Statement of Cash Flow. As result, comparative figures in note 6 Segmental Analysis have been adjusted to conform to the Interim Report presentation and the formerly reported segments have been restated and reclassified as follows:

Segments reclassification

(a) Indirect, materially consistent with the former Reseller segment,

(b) Direct, combining the former Small Business and Corporate segment

(c) Monetisation, due to its materially enlarged weight warranted its own segment

 The segments restated were as follows:

As at 31 December 2019	Reseller USD'000	Small Business USD'000	Corporate USD'000	Total USD'000
Previously reported
Revenue	60,681	37,753	10,760	109,194
After reclassification	Indirect USD'000	Direct USD'000	Monetisation USD'000	Total USD'000
Revenue	60,681	46,638	1,875	109,194

b)   Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the CentralNic Group's entities are measured using the currency of the primary economic environment in which the entity operates. The Condensed Consolidated Financial Statements are presented in USD given that more than half of its trade is in US Dollar and the industry in which it operates is predominantly trading in US Dollars.

 

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as reserve for exchange rate adjustments.

In the Condensed Consolidated Statement of Comprehensive Income, the comparative figures for the period ended 30 June 2019 and financial year ended 31 December 2019 have been restated to reclassify the foreign exchange differences arising from foreign currency borrowings from administrative expenses to  finance costs and other comprehensive income respectively. The Directors believe that this change of presentation provides more reliable and relevant information to the users of the Interim Report about the effect of the transaction and the financial performance of the Group.  The change has had a material impact on the Group reported Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position and Consolidated Statement of Cash Flow for the period ended 30 September 2019 and financial year ended 31 December 2019, please refer to the footnote in the Condensed Consolidated Statement of Income for further details of the reclassification and presentation.  Following this change of accounting policy and in order to be in conformity with IAS 21.32, future foreign exchange differences arising on the translation of foreign currency borrowings will be recognised in other comprehensive income and accumulated in a separate reserve '' Foreign exchange translation reserve'' in equity.

Change of functional currency

On 1 January 2020, CentralNic Group PLC, the Parent Company changed its functional currency from GBP to EUR.  The change was made to reflect that EUR has become the predominant currency in the company, counting for a significant part of the company's foreign currency borrowings.  The change has been implemented with prospective effect and comparatives have not been restated. The change in functional currency will significantly reduce the volatility of the Parent Company's exposure to foreign currency exchange movement, in particular due to translation of foreign currency borrowings. 

The exchange rates used were as follows:

GBP/EUR exchange rate			1 January 2020	30 June 2020	30 September 2020
Spot rate			1.1755	-	-
Average rate			-	1.1126	1.0960
Closing rate			-	1.0960	1.0995

 

 

6.   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 Monetisation services to domain name owners. Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance.

 

The Directors do not rely on segmental cash flows or analysis of segment assets and liabilities arising from the operating, investing and financing activities for each reportable segment for their decision making and have therefore not included them. As described in note 5, there has been a restatement and reclassification of the Group's segmental reporting and therefore the comparatives have been updated. The segmental analysis is organised around the products and services of the business.

 

The Indirect segment is a global distributor of domain names and provides consultancy services to retailers. The Direct segment provides domain names, ancillary services to end users, monitoring services to protect brands online, technical and consultancy services to corporate clients, licencing of the Group's in house developed registry management platform, also on a global basis. The Monetisation segment provides advertising placement services, sale of domain name and data traffic management services on a global basis.

 

 

 

 

 

 

 

 

 

 

 

Management reviews the activities of the CentralNic Group in the segments disclosed below:

 

 

	Nine months ended 30 September 2020
	Indirect USD'000	Direct USD'000	Monetisation USD'000	Total USD'000
Revenue	63,478	32,102	72,894	168,474
Gross profit	19,198	14,888	19,165	53,251
Total administrative expenses Share based payments expense				(47,467)) (3,902)
Operating profit				1,882
Adjusted EBITDA Depreciation Amortisation of intangibles assets Non-core operating expenses Share based payment expense				22,075 (1,494) (8,777) (6,020) (3,902)
Operating profit				1,882
Finance cost (net)				(10,949)
Loss before taxation				(9,067)
Income tax expense				2,882
Loss after taxation				(6,185)

 

 

 

 

	Nine months ended 30 September 2019
	Indirect USD'000	Direct USD'000	Monetisation USD'000	Total USD'000
Revenue	41,978	35,146	-	77,124
Gross profit	13,245	17,343	-	30,588
Total administrative expenses Share based payments expense				(28,489) (28)
Operating profit				2,071
Adjusted EBITDA Depreciation Amortisation of intangibles assets Non-core operating expenses Share based payment expense				13,113 (911) (5,599) (4,504) (2,000)
Operating profit				99
Finance cost (net)				(5,004)
Loss before taxation				(4,905)
Income tax expense				(1,159)
Loss after taxation				(6,064)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	Year ended 31 December 2019
	Indirect USD'000	Direct USD'000	Monetisation USD'000	Total USD'000
Revenue	60,681	46,638	1,875	109,194
Gross profit	19,604	22,671	500	42,775
Total administrative expenses Share based payments expense				(41,891) (2,878)
Operating loss				(1,994)
Adjusted EBITDA Depreciation Amortisation of intangibles assets Non-core operating expenses Share of associate income Share based payment expense				17,920 (1,306) (8,299) (7,357) (74) (2,878)
Operating loss				(1,994)
Finance cost (net)				(3,869)
Share of associate income				74
Loss before taxation				(5,789)
Income tax expense				39
Loss after taxation				(5,750)

 

7.   Revenue

The Group's revenue is generated from the following geographical areas:

		Nine months ended				Financial year ended
		30 Sep 2020 (Unaudited)		30 Sep 2019 (Unaudited)		31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Indirect Services
UK			807		581		828
North America			16,916		9,824		13,509
Europe			32,558		25,487		34,972
ROW			13,197		6,086		11,372
			63,478		41,978		60,681
Direct Services
UK			1,848		2,230		2,792
North America			10,317		9,456		11,656
Europe			12,519		13,560		19,623
ROW			7,418		9,900		12,567
			32,102		35,146		46,638
Monetisation services
UK			256		-		8
North America			2,574		-		102
Europe			68,264		-		1,711
ROW			1,800		-		54
			-		618		4,523
			72,894		-		1,875
Total revenue			168,474		77,124		109,194

 

The Indirect segment has one customer that represents more than 10% of the segment's revenue during the period amounting to USD 7.5m.

The Direct segment has no customer that represents more than 10% of the segment's revenue during the period.

The Monetisation segment has one customer that represents more than 92% of the segment's revenue during the period amounting to USD 66.9m.

8.   Non-core operating expenses

 

				Nine months ended		Financial year ended
				30 Sep 2020 (Unaudited)	30 Sep 2019 (Unaudited)		31 Dec 2019 (Audited)
				USD'000	USD'000			USD'000
Acquisition related costs				686	1,652			3,466
Acquisition related bonuses				-	603			603
Integration and streamlining costs				3,010	2,249			3,288
Other costs(1)				2,324	-			-
				6,020	4,,504			7,357

 

⁽¹⁾  Other costs include items related primarily to business reviews and restructuring expenses.

9.   Finance costs

 

					Nine months ended		Financial year ended
								Restated(2)
					30 Sep 2020 (Unaudited)	30 Sep 2019 (Unaudited)		31 Dec 2019 (Audited)
				USD'000		USD'000			USD'000
Impact of unwinding of discount on Net Present Value of deferred consideration(1)				70		(299)			(3,398)
Reappraisal of deferred consideration				-		(3,173)			-
Foreign exchange loss on revolving credit facility revaluation				(196)		(363)			(214)
Foreign exchange (loss)/gain on bond revaluation				(4,270)		1,808			4,099
Arrangement fees on borrowings				(837)		(1,218)			(1,420)
Interest expense on short-term borrowings				(248)		(728)			(781)
Interest expense on long-term bank borrowings				(5,357)		(949)			(2,033)
Interest expense on leases				(119)		(87)			(127)
				(10,957)		(5,009)			(3,874)

⁽¹⁾  Details on the impact of deferred consideration on the Finance costs is discussed in detail in note 15.

⁽²⁾  The finance costs for the financial year ended 31 December 2019 have been restated to reclassify the foreign exchange loss on the revolving credit facility revaluation from administrative expenses to reflect the appropriate IFRS accounting treatment as per IAS 23.

10.   Income tax expense

		Nine months ended			Financial year ended
		30 Sep 2020 (Unaudited)		30 Sep 2019 (Unaudited)		31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Current tax on profits for the period- UK and foreign		1,295		(1,860)		(1,292)
Adjustments in respect of previous periods		57		38		48
Current income tax		1,352		(1,822)		(1,244)
Deferred income tax		1,530		663		1,283
		2,882		(1,159)		39

 

 

A reconciliation of the current income tax expense applicable to the profit before taxation at the statutory tax rate to the

current income tax expense at the effective tax rate of the CentralNic Group are as follows:

 

 

 

 

 

	Nine months ended			Financial year ended
	30 Sep 2020		30 Sep 2019		Restated 31 Dec 2019
	(Unaudited)		(Unaudited)		(Audited)
	USD'000		USD'000		USD'000
Loss before taxation	(9,067)		(4,905)		(5,789)
Tax calculated at domestic tax rates applicable to profits in the respective countries	(798)		(1,377)		(1,580)
Tax effects of:
Expenses not deductible for tax purposes	(1,001)		42		803
Adjustments in respect of previous periods	57		38		48
Tax loss movement	1,982		478		578
Deferred tax	1,530		663		1,283
Withholding tax	-		(7)		(168)
Other adjustments	1,112		(996)		(925)
Current tax (expense)/credit for the period/year	2,882		(1,159)		39

The Company estimates for income taxes in the condensed financial statements on the basis of its income for financial reporting purposes, adjusted for items that are not assessable or deductible for income tax purposes, in accordance with the regulations of domestic tax authorities.

The effective rate of tax for the nine months period was 32% (Nine months ended 2019: 24%), mainly driven by the different jurisdictions tax rate, local tax treatment of deferred consideration amounts, tax losses carried forward and the impact of SK-NIC's profits set off against amortisation of goodwill. As illustrated above the business incurs a high level of non-cash charges which are mainly not deductible for income taxes in the relevant jurisdictions and largely represent permanent differences between accounting and taxable profits. As a percentage of the adjusted EBITDA less non-core operating expenses, the tax charge was 18% for the nine months ended 30 Sep 2020 (Nine months ended 2019: 13.5%), which in the opinion of the Directors is a more appropriate measure of the tax cost to the business.

In the UK, the applicable statutory tax rate for 2020/21 is 19% (2019/20: 19%).

In the USA, federal taxes are due at 21% on taxable income. Under California tax legislation a statutory minimum of USD 800 of state tax is due.

In Germany, federal taxes are due at 15% on taxable income. With an additional 5.5% solidarity surcharge due on the income tax. A community business tax of 14%-c.17% is also levied with rates determined by the municipality taking the total effective tax charge to circa 30%-34%.

In Australia and New Zealand, income taxes are due at 30% and 28% respectively on taxable income.

In Slovakia, income tax is due at 21% of taxable income.

 

11.   Earnings per share

Earnings per share has been calculated by dividing the consolidated profit/(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.

 

		As at 30 Sep 2020 (Unaudited)		As at 30 Sep2019 (Unaudited)		As at 31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Loss) after tax attributable to owners		(6,185)		(6,012)		(5,686)
Operating profit /(loss)		1,882		99		(1,994)
Depreciation		1,494		911		1,306
Amortisation of intangible assets		8,777		5,599		8,299
Non-core operating expenses		6,020		4,504		7,357
Share of associate income		-		-		74
Share based payment expense		3,902		2,000		2,878
Adjusted EBITDA		22,075		13,113		17,920
Depreciation		(1,494)		(911)		(1,306)
Finance costs (excluding deferred consideration related amounts - note 8)		(11,027)		(1,537)		(476)
Finance income		8		5		5
Taxation		2,882		(1,159)		39
Adjusted Earnings		12,444		9,511		16,182
Weighted average number of shares:
Basic		185,521,432		173,793,044		175,083,962
Effect of dilutive potential ordinary shares		8,044,990		5,072,447		5,397,202
Diluted		193,566,422		178,865,491		180,481,164
Earnings per share:
Basic (cents)		(3.33)		(3.36)		(3.25)
Diluted (cents)		(3.33)		(3.36)		(3.25)
Adjusted earnings - Basic (cents)		6.71		5.47		9.24
Adjusted earnings - Diluted (cents)		6.43		5.32		8.97

Basic and diluted earnings per share has been impacted by non-recurring acquisition costs, amortisation changes and other significant operating costs.

12. Property, plant and equipment

	Right of use assets	Motor vehicles	Computer equipment	Furniture and fittings	Total
	USD'000	USD'000	USD'000	USD'000	USD'000
Cost
At 1 January 2019	-	30	1,722	257	2,009
IFRS 16 adjustment on 1 January 2019	779	-	-	-	779
Additions	3,598	-	440	188	4,226
Acquisition of subsidiary	-	-	28	45	73
Exchange differences	(138)	(19)	(209)	(27)	(393)
At 30 September 2019	4,239	11	1,981	463	6,694
Additions	-	-	240	25	265
Acquisition of subsidiary	911	-	348	82	1,341
Exchange differences	251	1	77	10	339
At 31 December 2019	5,401	12	2,646	580	8,639
Additions	160	-	717	37	914
Exchange differences	(18)	-	5	14	1
At 30 September 2020	5,543	12	3,368	631	9,554
Accumulated depreciation
At 1 January 2019	-	11	958	109	1,078
Charge for the period	462	5	369	75	911
Exchange differences	(12)	(5)	(222)	(23)	(262)
At 30 September 2019	450	11	1,105	161	1,727
Charge for the period	196	-	158	41	395
Exchange differences	23	1	60	6	90
At 31 December 2020	669	12	1,323	208	2,212
Charge for the period	769	-	577	148	1,494
Exchange differences	(23)	-	(2)	29	4
At 30 September 2020	1,415	12	1,898	385	3,710
Property, plant and equipment- carrying value
At 30 Sep 2019	3,789	-	876	302	4,967
At 31 Dec 2019	4,732	-	1,323	372	6,427
At 30 Sep 2020	4,128	-	1,470	246	5,844

The carrying value of property, plant and equipment excluding right of use assets recognised under IFRS 16 at 30 September 2020 was USD 1.7m (30 September 2019: USD 1.2m)

 

13. Intangible assets

	Domain Names	Patents & Trademarks	Software	Customer List	Goodwill	Intellectual Property	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Cost or deemed cost
At 1 January 2019	1,472	3,210	14,639	41,946	77,600	-	138,867
Additions	-	-	142	-	-	-	142
Acquisition of subsidiary	-	1,038	-	13,632	15,421	1,464	31,555
Exchange Differences	(60)	(54)	(276)	(1,616)	(2,105)	113	(3,998)
At 30 September 2019	1,412	4,194	14,505	53,962	90,916	1,577	166,566
Additions	-	-	21	-	-	-	21
Acquisition of subsidiary	6,761	836	3,232	20,934	16,354	-	48,117
Reclassification from Inventory	3,467	-	-	-	-	-	3,467
Exchange Differences	199	144	559	4,286	2,967	62	8,217
At 31 December 2019	11,839	5,174	18,317	79,182	110,237	1,639	226,388
Additions	85	2	1,381	192	655	-	2,315
Acquisition of Subsidiary	-	-	-	-	(93)	-	(93)
Exchange Differences	370	33	(19)	1,563	3,176	21	5,144
At 30 September 2020	12,294	5,209	19,679	80,937	113,975	1,660	233,754
Amortisation
At 1 January 2019	399	88	3,718	7,395	-	-	11,600
Charge for the period	79	184	1,638	3,522	149	27	5,599
Exchange differences	(18)	(3)	(198)	(273)	(144)	10	(626)
At 30 September 2019	460	269	5,158	10,644	5	37	16,573
Charge for the period	564	114	522	1,614	(145)	31	2,700
Exchange Differences	52	(5)	273	590	140	10	1,060
At 31 December 2019	1,076	378	5,953	12,848	-	78	20,333
Charge for the period	886	320	1,806	5,647	-	118	8,777
Exchange Differences	(30)	(53)	(81)	(85)	165	(2)	(86)
At 30 September 2020	1,932	645	7,678	18,410	165	194	29,024
Carrying value
At 30 September 2019	952	3,925	9,347	43,318	90,911	1,540	149,993
At 31 December 2019	10,763	4,796	12,364	66,334	110,237	1,561	206,055
At 30 September 2020	10,362	4,564	12,001	62,527	113,810	1,466	204,730

 

Amortisation of intangible assets is included in administrative expenses in the combined and consolidated statement of comprehensive income.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14. Deferred receivables

		As at 30 Sep 2020 (Unaudited)		As at 30 Sep2019 (Unaudited)		As at 31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Deferred costs		190		384		639
Loans to related parties		100		100		100
		290		484		739

 

 

 

15. Trade and other receivables

		As at 30 Sep 2020 (Unaudited)		As at 30 Sep 2019 (Unaudited)		As at 31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Trade receivables		20,790		11,911		21,121
Accrued revenue		6,676		8,746		6,251
Deferred costs		1,335		874		1,723
Prepayments and other receivables		9,335		3,903		7,278
Supplier payments on account		3,091		4,619		4,387
		41,227		30,053		40,760

 

 

 

 

 

 

 

16. Trade and other payables and accruals

 

		As at 30 Sep 2020 (Unaudited)		As at 30 Sep 2019 (Unaudited)		As at 31 Dec 2019 (Audited)
		USD'000		USD'000		USD'000
Accounts payable		19,448		6,307		15,645
Accrued expenses		18,214		16,402		23,252
Other taxes and social security		146		157		-
Deferred consideration		3,072		8,242		10,881
Deferred revenue		6,431		6,919		6,331
Customer payments on account		15,359		18,173		16,724
Accrued interest		1,877		938		1,850
Other liabilities		1,536		1,068		1,000
		66,083		58,206		75,683

 

 

 

 

 

 

 

 

 

 

 

 

On 23 June 2020, CentralNic Group has settled EUR 2,700,000 deferred consideration payable to the sellers of Team Internet AG in cash. On 15 July 2020, CentralNic Group settled EUR 1,324,492 deferred consideration to the seller of SK-NIC. On 6 August 2020, the Company settled EUR 2,971,000 deferred consideration to the sellers of Hexonet Group by issuing 3,208,819 consideration shares and on 31 August 2020, settled an amount of EUR 450,000 as deferred considered to the seller of GlobeHosting in cash.  The deferred consideration and the finance costs also reflected the unwinding of the discount factor resulting from the passage of time.

Deferred consideration is subject to actuarial and net present value discounts and the resulting income or expense are recorded in the finance cost in the Consolidated Statement of Comprehensive Income as described in note 9. The maximum amount of deferred consideration payable in cash or in shares is USD 9.9m, out of which USD 3.5m is in cash and USD 6.4m in shares. Please refer to note 19 for further details of deferred consideration liabilities settled after the balance sheet date.

17. 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:

		As at 30 Sep 2020 (Unaudited)			As at 30 Sep 2019 (Unaudited)		As at 31 Dec 2019 (Audited)
		USD'000			USD'000		USD'000
Financial assets
Loan and receivables
Trade and other receivables		34,178			25,817		33,701
Cash and cash equivalents		63,662			18,967		26,182
		97,840			44,784		59,883
Financial liabilities measure at amortised costs
Trade and other payables		45,303			28,511		46,555
Loan and borrowings (short and long term)		108,600			54,884		101,180
		153,903			83,395		147,735

 

 

 

 

 

 

 

 

 

 

 

Cash and Net Debts movement in the 9 months period to 30 September 20 were as follows:

				As at 30 Sep 2020 (Unaudited)
Cash conversion				USD'000
Cash flow from operations				13,546
Exceptional costs incurred and paid during the period				6,020
Settlement of one-off working capital items from prior period				1,029
Adjusted cash flow from operations				20,595
Adjusted EBIDTA				22,075
Conversion %				93.3%
			Bond		Bank debt							Cash					Net debt
			USD'000		USD'000							USD'000					USD'000
At 31 Dec 19			(97,724)		(3,456)							26,182					(74,998)
Draw down			-		(2,377)							2,377					-
Amortisation of costs			(1,223)		(199)							-					(1,422)
Placing proceeds (net of costs)			-		-							37,298					37,298
Other cash movements			-		-							100					100
Net cash flows before foreign exchange			(1,223)		(2,576)							39,775					35,976
Foreign exchange differences			(3,461)		(161)							(2,295)					(5,917)
At 30 Sep 20			(102,408)		(6,193)							63,662					(44,939)

 

18. Share capital

		Number		Share Capital		Share Premium		Merger Relief
				USD'000		USD'000		USD'000
At 1 January 2019		170,652,802		216		69,238		2,314
Proceeds from shares issued in connection with the employee share option schemes		100,000		1		44		-
Shares issued to settle the deferred consideration in respect of KeyDrive acquisition		7,384,978		10		5,553		-
Option exercised in August 2019		436,698		-		5		-
At 30 September 2019		178,574,478		227		74,840		2,314
Shares issued in respect of Team Internet acquisition		3,911,650		5		-		2,983
At 31 December 2019		182,486,128		232		74,840		5,297
New shares issued		3,138,356		4		-		-
Elimination of share premium to create distributable reserve		-		-		(74,840)		-
Shares issued to settle deferred consideration of Hexonet Group		3,208,819		4		3,324		-
Shares issued in relation to the acquisition of Codewise		40,000,000		52		38,444		-
Shares issuance costs		-		-		(1,198)		-
At 30 September 2020		228,833,303		292		40,570		5,297

 

 

 

 

 

 

 

 

 

 

 

 

19. Borrowings

      At 30 September 2020, the contractual maturities of the Group's non-derivative financial liabilities were as follows:

		Less than 6 months	Less than 6-12 months		Between 1 and 2 years		Between 2 and 5 years		Over 5 years		Total contractual cash flows	Carrying amount (assets)/liabilities
		USD' 000	USD'000		USD'000		USD'000		USD'000		USD'000	USD'000
Trade and other payables and accruals		45,303	-		-		-		-		45,303	45,303
Borrowings (include prepaid costs)		6,036	156		-		102,408		-		108,600	108,600
Lease liabilities		500	508		954		1,316		955		4,233	4,233
Total non-derivatives		51,839	664		954		103,724		955		158,136	158,136
At 30 September 2020, the SVB Revolving facility is reflected in short term borrowings as its repayment is due within six months from the date of this report.   At 31 December 2019, the contractual maturities of the Group's non-derivative financial liabilities were as follows:
		Less than 6 months	Less than 6-12 months		Between 1 and 2 years		Between 2 and 5 years		Over 5 years		Total contractual cash flows	Carrying amount (assets)/liabilities
		USD'000	USD'000		USD'000		USD'000		USD'000		USD'000	USD'000
Trade and other payables and accruals		46,555	-		-		-		-		46,555	46,555
Borrowings (include prepaid costs)		2,809	348		299		97,724				101,180	101,180
Lease liabilities		403	468		935		1,717		1,180		4,703	4,703
Total non-derivatives		49,767	816		1,234		99,441		1,180		152,438	152,438

 

As at 31 December 2019, a second tranche of bonds for a nominal amount of EUR 40,000,000 had been issued from the existing senior secured bond.  

At 30 September 2019, the contractual maturities of the Group's non-derivative financial liabilities were as follows:

		Less than 6 months	Less than 6-12 months		Between 1 and 2 years		Between 2 and 5 years		Over 5 years	Total contractual cash flows	Carrying amount (assets)/liabilities
		USD'000	USD'000		USD'000		USD'000		USD'000	USD'000	USD'000
Trade and other payables and accruals		28,511	-		-		-		-	28,511	28,511
Borrowings (include prepaid costs)		2,398	-		-		52,486		-	54,884	54,884
Lease liabilities		206	243		568		1,531		1,161	3,709	3,709
Total non-derivatives		31,115	243		568		54,017		1,161	87,104	87,104

In July 2019, the EUR 50,000,000 bond proceeds replaced the SVB term loan and was reflected in long term borrowings.

20. Events occurring after the reporting period

Detailed below are the significant events that happened after the Group's period end date of 30 September 2020 and before the signing of this Interim Report and Accounts on 30 November 2020.

Acquisition of Zeropark and Voluum

On 31 October 2020, CentralNic Group PLC completed the acquisition of Zeropark and Voluum businesses including all material trade and assets pertaining thereto (together, being "Codewise").  Codewise is a Monetisation and Marketing technology business offering digital solutions, including Zeropark (an Ad Exchange platform connecting domain investors and other traffic providers with online marketers) and Voluum (SaaS analytics, measurement, optimisation and media buying tools). In addition to the underlying Zeropark and Voluum platforms, CentralNic took on all Codewise staff and management, including the development team developing the platforms to serve an increasing number of monetisation and marketing customers.  Zeropark operates a revenue model based on cost per 1k impressions ("CPM") and cost per click ("CPC") together with a commission-based model on sales in marketplace whereas Voluum operates a revenue model based on a recurring yearly tiered  subscription pricing for its Tracker product, together with a commission-based model on demand side platforms ("DSPs").

KeyDrive deferred consideration

The acquisition of KeyDrive SA on 2 August 2018, has performed well against its highly ambitious targets set for FY2019. As a result of this performance, USD 2,245,000 Additional Consideration attributable to the FY2019 objectives is payable to Inter.Services GmbH ("Inter.Services").  On 3 November 2020, 15% of the total consideration amounting to USD 336,750 has been settled in cash. The remainder of the Additional Consideration attributable to the FY2019 objectives will be settled by issuing 1,685,723 Additional Consideration Shares. Inter.Services may still earn up to a maximum of USD 1,423,000 of Additional Consideration in the future under the terms of the SPA, which the Company considers a contingent liability.