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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Centralnic Group Plc | LSE:CNIC | London | Ordinary Share | GB00BCCW4X83 | ORD 0.1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 123.20 | 123.20 | 123.60 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMCNIC
RNS Number : 1351J
CentralNic Group PLC
07 September 2016
Press Release 7 September 2016
CentralNic Group plc
("CentralNic" or the "Company" or the "Group")
Half Year Results
for the six months ended 30 June 2016
CentralNic (AIM: CNIC), the internet platform business that derives revenue from the worldwide sales of internet domain names, today announces its half year results for the six months ended 30 June 2016.
Financial highlights
Hot Features
Premium
30 June 30 June Change Change
2016 2015
----------------------------- ----------- ----------- ----------- ----------
GBP'000 GBP'000 GBP'000 %
----------------------------- ----------- ----------- ----------- ----------
Billings(1) 45,080 7,932 37,148 + 468%
----------------------------- ----------- ----------- ----------- ----------
Revenue 8,931 4,445 4,486 + 101%
----------------------------- ----------- ----------- ----------- ----------
Gross profit(2) 2,281 1,918 363 +19%
----------------------------- ----------- ----------- ----------- ----------
Adjusted EBITDA(3) 1,309 1,011 298 +29%
----------------------------- ----------- ----------- ----------- ----------
Adjusted Profit before
tax(4) 948 845 103 +12%
----------------------------- ----------- ----------- ----------- ----------
(Loss) Profit after
tax (1,306) 287 (1,593)
----------------------------- ----------- ----------- ----------- ----------
Net cashflow from operating
activities 1,044 469 575
----------------------------- ----------- ----------- ----------- ----------
Basic EPS (pence) (1.37) 0.47 (1.84)
----------------------------- ----------- ----------- ----------- ----------
(1) Billings represents the value of products and/or services invoiced to customers stated prior to discounts or rebates and prior
to allocation of revenue share between registry operator and registry service provider. Billings do not equate to statutory revenue.
(2) 30 June 2015 restated for consistency of cost allocations
(3) Earnings before interest, tax, depreciation, amortisation, acquisition and non-recurring fees and non-cash charges
(4) Profit before tax adjusted for acquired amortisation charges, acquisition and non-recurring fees and non-cash charges
-- The financial results reflect a change in mix within the business when compared to the 1(st) half of 2015. The Retail division results were significantly enhanced by the acquisition of the Instra Group, while sales of premium domain names by the Enterprise division in the first half of 2015 did not recur in the first half of 2016. This change in mix diluted the gross margin to 26% (2015: 43%) while increasing the overall gross profit in the Group by GBP363,000
-- The Group improved its quality of earnings over the period, increasing recurring revenues by 130% to GBP5.33m (2015: GBP2.28m), representing 60% of reported revenue (2015: 51%). Increasing recurring revenues remains a focus for the Group going forward
-- The results for the Retail business included the performance of the Instra Group, which was acquired on 14 January 2016. This acquisition, combined with organic growth within the Internet BS business, delivered total Retail division revenue of GBP6.76m (2015: GBP1.79m) and Adjusted EBITDA contribution of GBP1.10m (2015: EBITDA loss of GBP0.01m). Instra Group contributed revenue of GBP4.88m and Adjusted EBITDA contribution of GBP0.95m for the period under CentralNic's ownership
-- The Enterprise division generated revenue of GBP0.54m (2015: GBP1.05m) and an Adjusted EBITDA loss of GBP0.05m (2015: EBITDA profit of GBP0.83m). There was a change of mix in the division, notably with minimal premium domain name sales when compared to the first half of the previous year (2015: GBP0.70m) and with the inclusion of the subsidiary dnsXperts UG, a strategic acquisition completed in July 2015. dnsXperts UG contributed revenue of GBP0.24m and an EBITDA loss of GBP0.09m during the 1(st) half of 2016
-- The Wholesale division generated revenue of GBP1.64m (2015: GBP1.61m) and an Adjusted EBITDA contribution of GBP0.71m (2015: GBP0.64m). This reflected a change in revenue mix, in line with management expectations, combined with favourable movements in foreign exchange rates
-- Central costs not allocated to the divisions were GBP0.46m (2015: GBP0.44m). Acquisition and non-recurring fees totalled GBP0.75m (2015: GBP0.14m) and included integration costs, acquisition fees, shut-down costs for the old Internet BS legal entity, a settlement agreement and related legal fees, and fees associated with treasury policy and compliance
-- Amortisation charges of GBP0.95m (2015: GBP0.29m) reflected the amortisation of intangible assets related to the acquisition of the Instra Group (GBP0.67m)
-- Cash and cash equivalents were GBP9.25m (2015: GBP4.44m) and net cash after borrowings were GBP6.04m (2015: GBP4.44m). Cash balances reflected a temporary increase in net working capital due to the timing of the June 2016 .xyz 2(nd) anniversary marketing campaign
Operational highlights
-- The successful acquisition and integration of Instra Group progressed in line with management expectations, which included the consolidation of retail operations and the customer support centre. A market entry and development roadmap has been defined for the enlarged retail business
-- Unprecedented growth saw the wholesale business increase from 20% to over 34% of global market share by volume, supporting 6 of the Top 25 new Top-Level Domains, including the leader, .xyz. New client wins as a registry service provider included .store, .fm, .am, and .art
-- In June 2016, the Company developed and implemented a gateway service to connect domains using competing wholesale platforms to CentralNic's network of retailers. The first Top-Level Domain, .cx, was implemented onto the gateway towards the end of June 2016
Post period end:
-- The 2(nd) anniversary marketing campaign in June 2016 resulted in the number of .xyz registrations increasing to around 6.5 million domain names. The volume of these domain names that are renewed will be established over the coming year
-- Discussions are progressing well with a leading software and managed service provider to enable the sale of domain names via its channel of telecommunications industry clients
-- The Company has advanced its plan to offer a brand monitoring service to corporate clients
Commenting on the results, Mike Turner, Chairman of CentralNic, said:
"During 2016 to date, CentralNic has advanced its growth strategy through the acquisition of the Instra Group. Together with Internet.BS, the Group is now able to address demand from a number of retail segments across geographic markets. This reflects our strategy to enhance the quality and visibility of the Group's earnings.
In our wholesale business, where our strategy focusses on achieving scale through automation, our technical systems have been able to scale at an unprecedented pace to accommodate the additional volumes achieved by our clients as they gained market share. This presents an opportunity for future renewal revenues. It was also pleasing that the Group won additional wholesale clients during the period.
In our Enterprise business the Group made progress in discussions with channel partners to access corporate customers. Whilst the results in the first half were modest, the Group is excited about the future prospects for this division as we seek to deploy our technology platforms and service offerings.
Trading in our core businesses overall has remained in line with the Board's expectations since the half year. Our team is in discussions with trade buyers for premium domain name sales, and anticipating that these sales will proceed, the Board is confident of achieving the market expectations for the year."
-Ends-
For further information:
CentralNic Group plc
Ben Crawford (CEO) +44 (0) 203 388 0600
Zeus Capital - Nomad and
Joint Broker
Nick Cowles / Jamie Peel +44 (0) 161 831 1512
John Goold / Alex Davies +44 (0) 207 533 7716
Peel Hunt LLP - Joint Broker
Richard Kauffer / Euan Brown +44 (0) 207 418 8900
Alastair Rae
Abchurch Communications
Julian Bosdet / Tim Thompson
George Robinson / Nessyah
Hart +44 (0) 20 7398 7700
centralnic@abchurch-group.com www.abchurch-group.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 (LSE: CNIC) is a London-based AIM-listed company which earns revenues from the worldwide sales of internet domain names over its proprietary technology platform. These domain names are sold on an annual subscription basis and paid for by customers upfront, making CentralNic a cash-generative business with annuity revenue streams.
CentralNic comprises three business lines within the domain name industry. It operates a global wholesale network, supplying domain names to over 1,500 vendors in 77 countries. CentralNic has developed its wholesale and domain distribution capabilities through its new disruptive Registry Gateway Service, which enables hundreds of registrars to access new domain name extensions from multiple registries through one single Extensible Provisioning Protocol (EPP) connection. CentralNic is the exclusive wholesaler for 30 new Top-Level Domain extensions (the new alternatives to .com and .net), including .xyz, .site, .online, .website, .space, and .tech, which are ranked among the top twenty five most subscribed new Top-Level Domain extensions. One in three of all domains registered under new TLDs globally uses the CentralNic platform, ranking CentralNic as the leading global supplier with approximately eight million of these domains under management.
CentralNic is also a leading global domain name retailer, with retail websites including internetbs.net, buydomains.london and domain.luxury, as well as most recently instra.com and others following its acquisition of global domain name retailer Instra Group. Additionally, via its enterprise programme, CentralNic supplies domain names (including high-value premium domain names), software and services directly to large corporations and governments.
For more information please visit: www.centralnic.com
Chief Executive Officer's Statement
The domain name industry is undergoing a period of disruption and consolidation, with CentralNic an enabler of both. In our mission to improve both the quantity and the quality of our revenues, CentralNic has made a transformative acquisition in purchasing the Instra Group; it has supported a 2(nd) anniversary marketing campaign for the .xyz Top-Level domain with unprecedented success in building the domain inventory for renewal next year; and it has introduced a disruptive technology allowing CentralNic to distribute domain names that were previously contracted exclusively to our competitors.
Performance overview
In January 2016 CentralNic executed a transformational acquisition, adding the Instra Group into the Retail division. The Instra Group is a highly successful domain name retailer, selling domain names and related services to SMEs and medium sized enterprises via its six online brands and via resellers into markets across the world. Instra Group retails over 150 country code domain names and all open generic domain names, as well as operating a 24/7 call centre and bringing online marketing capabilities. In completing the acquisition, CentralNic has significantly expanded its Retail revenue and earnings, notably boosting the overall Group's recurring revenues to GBP5.33m in the first half of 2016 (2015: GBP2.28m).
As well as increases in revenues and profit, the results for the half showed a shift towards higher quality earnings. The Group replaced the 1st half of 2015 earnings from non-recurring premium domain name sales with more predictable recurring earnings from the Retail division. As anticipated, this change in mix resulted in a lower gross margin in the business, at 26% (2015: 43%), with absolute gross profit increasing by GBP363,000. The recurring revenue base underpins the Group's financial stability and visibility of earnings and ensures that the Group is well placed to manage its business risks despite the current uncertain economic climate.
As the Group moves forward with its growth strategy, it expects to further enhance the recurring earnings across all three of its divisions, in turn reducing the proportion of non-recurring sources of revenues. The Board believes this approach is aligned with the long term interests of the Group's shareholders.
Retail
In the first half of 2016 it is pleasing to report that the Retail division generated revenue of GBP6.76m (2015: GBP1.79m) and an Adjusted EBITDA contribution of GBP1.10m (2015: loss GBP0.01m). This represents a significant increase in the scale of the division and the Group as a whole, with Retail becoming the most profitable division. This was achieved by a combination of the step-change from the acquisition of Instra Group with organic growth in the legacy retail business, which includes the Internet BS brand. The Group now has over 1.3 million domains under management in its retail business (1(st) half 2015: 0.6 million).
The Instra Group acquisition has been transformational for the Retail division, contributing revenue of GBP4.89m and Adjusted EBITDA of GBP0.95m. This was in line with management's expectations, with revenue and EBITDA contribution also in line with the investment case. It is particularly pleasing to report on the Instra recurring revenues, which at GBP2.95m represent some 60% of Instra's reported revenues for the 1(st) half.
The Group remains committed to developing the Instra service offerings to supply domain names and related services that benefit customers, while combining this with excellent, responsive customer service. The Group believes the combination of strong customer retention to support the renewals business combined with securing new registrations from growth markets will ably support future performance.
The remainder of CentralNic's retail business, including the Internet BS brand and the flagship stores, contributed GBP1.88m of revenue (2015: GBP1.79m) and GBP0.16m of Adjusted EBITDA contribution (2015: loss GBP0.02m). The underlying organic growth in revenue, measured on a consistent basis was 13%, mainly achieved through the Internet BS brand, which focusses on providing exceptional value and the most sophisticated domain portfolio management tools for domain name investors and website professionals.
Wholesale
CentralNic's Wholesale division generated revenue of GBP1.64m during the first half of the year (2015: 1.61m) and EBITDA contribution of GBP0.71m (2015: GBP0.64m).
The division continues to evolve, with a changing mix reflecting demand for heavily promoted and low-priced new Top-Level domains, the high volumes offsetting lower per domain revenues. The EBITDA contribution was also assisted by a GBP0.18m foreign exchange gain reflecting US$ denominated assets being re-valued post-Brexit.
The period saw accelerated scaling in the Wholesale division, which is unprecedented in the industry, closing out the half year at 7.8 million new gTLD domain names under management (2015: 1.2m). This included the .xyz domain, which had a very large scale 2-year anniversary marketing campaign in June 2016. The disruptive campaign stimulated significant interest in .xyz, resulting in over 1.9 million domain names registered within a single day and over 3.6 million new domain name registrations in June. While the impact on billings and working capital balances was significant, increasing the billings in the division to GBP37.83m in the first half of the year (2015: GBP4.92m), the first year revenue share for CentralNic was minimal although the potential for future renewals is enhanced.
As a result of the volume of domains achieved by its clients, CentralNic has improved its position as the world's leading Registry Service Provider in the new Top-Level Domains programme. On a volume basis, CentralNic's exclusive clients represent over 34% of new Top-Level Domains, with 6 of the top 25 domains (out of over 1,100 delegated) using the CentralNic backend platform. Additional domain extensions won in the period include the first dedicated e-commerce TLD .store (launched May 2016), .fm, .am (migrated in August 2016), and .art.
During the period the Group also developed a Registry Gateway offering, which was completed in June 2016. The gateway allows CentralNic to connect to other wholesalers as a retailer, then in turn offers the wholesaler's domain names to CentralNic's own network of retailers. The service was launched towards the end of June 2016 starting with the repurposed country code domain .cx (marketed as the domain for "Customer Xperience") and .la (for Los Angeles). As part of its focus on country code domains, CentralNic was also awarded the tender to draft the policy and regulations for a national country code administrator.
Enterprise
CentralNic's Enterprise division generated GBP0.54m of revenue in the first half of the year (2015: GBP1.05m) and an EBITDA loss of GBP0.05m (2015: EBITDA profit of GBP0.83m).
The results reflected a change in mix with revenue from non-recurring sources, notably the sale of premium domain names of GBP0.70m in the first half of 2015, which was not repeated in the first half of 2016. Premium domain name sales remain an important part of the Enterprise business, and discussions relating to significant sales of domains from CentralNic's portfolio have continued into the second half of the year. At this stage, it is management's expectation that these discussions will result in significant sale values at high margins in the second half, and these form an important part of the outlook for the remainder of the year.
The results for the first half of 2016 include revenue of GBP0.24m and EBITDA loss of (GBP0.09m) from dnsXperts UG, a strategic acquisition made by CentralNic in the second half of 2015. The dnsXperts team are instrumental in the Group's future plans for the development and client-facing implementation of the DomiNIC domain portfolio and DNS management software. This software has been deployed by corporates, including telcos, in the past to distribute domain names to their customers. This aligns with CentralNic's plans to address demand for domain names from telco clients.
Outlook
CentralNic's growth strategy is focussed on increasing the scale of its Retail and Wholesale divisions while also seeking a share of demand for domain names and related services from the larger Corporates. The Retail and Wholesale divisions are renewal-based businesses, and therefore are consistent with the Group's drive to achieve higher levels of predictable earnings and cashflow. The Enterprise division is also seeking to increase the recurring element of its revenues, through the introduction of new services in the areas of online security and protection. 2016 has seen significant development of exciting channel relationships, which are expected to create a step-change in the Enterprise division's performance.
Following the Instra acquisition, the Retail division now has exposure to the majority of the world's geographic markets as well as to a number of segments of demand for domain names. The Group intends to grow organically, in line with the historic trend, whilst also supplementing the growth with its online brands which present retail sites tailored to consumers in growth markets, such as those from emerging economies (where digital infrastructure investment is supporting the expansion of digital economies, in turn driving demand for an online presence amongst businesses and consumers). In parallel, the division is also focussing on deploying its white label domain registration platform with channel partners, which includes expanding its offerings to the corporate market to support online brand protection and domain name security.
The Wholesale division continues to see volume growth from the new Top-Level domains. To date, this growth has been achieved at low prices as registry operators have sought to acquire market share and establish their brands. Whilst this has not been significantly beneficial to CentralNic's earnings as yet, it does create a significant volume of domain names that will be due for renewal, with the majority due to either renew or be deleted in the coming year. Renewal rates and prices achieved will determine the quantum of the Group's share of those renewal revenues. In the meantime, CentralNic has further improved its position as the world's leading Registry Service Provider, with one in three new Top-Level domains now on the CentralNic platform.
CentralNic's Enterprise division presents significant opportunities for growth while enhancing the Group's profit margins, and these are reflected in the Group's future plans. These include corporates seeking to monetise their customer base, where domain names and related services can add additional breadth alongside the corporates' traditional services. The Group is excited to be in discussions with a channel partner with significant reach into a sector which it believes will be receptive to this offering, and looks forward to seeing how these discussions develop in the coming months. In parallel, the Group anticipates further significant premium domain name sales and registry software licence contracts to support the near-term earnings within the Enterprise division.
I would like to thank CentralNic's personnel for their professionalism and commitment to the ongoing growth and transformation of the business. It is thanks to them, to our clients and to our distribution channel partners, as well as our shareholders, that the Group continues to maintain and enhance its industry leading position.
Ben Crawford
Chief Executive
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015** 2015
Note GBP'000 GBP'000 GBP'000
----- ------------ ------------ --------
Revenue 5,6 8,931 4,445 10,393
Cost of sales (6,650) (2,527) (5,533)
Gross profit 2,281 1,918 4,860
Administrative expenses (2,724) (1,366) (3,085)
Share based payments expense (319) (135) (316)
Operating (loss) / profit (762) 417 1,459
Adjusted EBITDA* 1,309 1,011 3,254
Acquisition costs and non-recurring
fees (749) (140) (830)
Depreciation (57) (32) (71)
Amortisation of intangible
assets (946) (287) (578)
Share based payment expense (319) (135) (316)
------------ ------------ --------
Operating (loss) / profit (762) 417 1,459
-------------------------------------- ----- ------------ ------------ --------
Finance income 18 11 33
Finance costs (166) - (2)
Finance income - net (148) 11 31
Share of loss of investments
accounted for using the equity
method - (35) (36)
Profit / (Loss) before taxation (910) 393 1,454
Taxation 7 (396) (106) (548)
------------ ------------ --------
Profit / (Loss) after taxation
attributable to equity shareholders (1,306) 287 906
Items that may be reclassified
subsequently to profit and
loss
Exchange difference on translation
of foreign operation 2,040 - (1)
Cash flow hedges - effective
portion of changes in fair
value (245) - 245
Total comprehensive income
/ (loss) for the financial
year 489 287 1,150
Earnings per share
Basic, Pence 8 (1.37) 0.47 1.40
Diluted, Pence 8 (1.37) 0.42 1.36
All amounts relate to continuing activities.
*Earnings before interest, tax, depreciation and amortisation, acquisition costs and non-cash charges.
** Restatement of the six months ended Jun 2015 reflects reallocation of merchant fees and IT Costs from administrative expenses to cost of sales.
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
Note GBP'000 GBP'000 GBP'000
----- ------------- ------------- -------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 191 89 65
Intangible assets 9 26,385 5,874 5,390
Deferred receivables 10 1,292 981 295
Investments 997 1,010 997
Deferred tax assets 1,634 92 168
30,499 8,046 6,915
CURRENT ASSETS
Trade and other receivables 11 26,195 4,182 5,486
Derivative financial instruments - - 245
Cash and bank balances 9,253 4,440 19,060
35,448 8,622 24,791
TOTAL ASSETS 65,947 16,668 31,706
EQUITY AND LIABILITIES
EQUITY
Share capital 13 96 67 92
Share premium 17,983 7,127 16,522
Share based payments reserve 1,680 1,153 1,390
Foreign exchange translation reserve 2,040 1 -
Foreign currency hedging reserve - - 245
Retained earnings 496 1,178 1,797
TOTAL EQUITY 22,295 9,526 20,046
NON-CURRENT LIABILITIES
Other payables 3,568 785 845
Deferred tax liabilities 65 72 65
Borrowings 2,042 - -
5,675 857 910
------------- ------------- -------------
CURRENT LIABILITIES
Trade and other payables and accruals 12 36,285 5,990 10,349
Taxation payable 525 295 401
Borrowings 1,167 - -
37,977 6,285 10,750
TOTAL LIABILITIES 43,652 7,142 11,660
TOTAL EQUITY AND LIABILITIES 65,947 16,668 31,706
CENTRALNIC GROUP PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Share Foreign Foreign Total
capital premium based exchange currency Retained
payments translation hedging earnings
reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ------------- ---------- ----------- --------
Balance as at 1
January 2015 61 4,935 1,018 1 - 885 6,900
Profit/(loss) for
the period - - - - - 287 287
other comprehensive
income/(expense)
-
- translation of
foreign operation - - - - - - -
--------- --------- ---------- ------------- ---------- -----------
Total comprehensive
income for the period - - - - - 287 287
Transactions with
owners
Issue of new shares 6 2,302 - - - - 2,308
Share issue costs - (110) - - - - (110)
Share based payments - - 135 - - - 135
Share based payments
- deferred tax asset - - 6 - - - 6
Share based payments
- exercised and
lapsed - - (6) - - 6 -
Balance as at 30
June 2015 67 7,127 1,153 1 - 1,178 9,526
--------- --------- ---------- ------------- ---------- ----------- --------
Profit/(loss) for
the period - - - - - 619 619
other comprehensive
income/(expense)
- translation of
foreign operation - - - (1) - - (1)
- Cash flow hedge - - - - 245 - 245
--------- ---------- ------------- ---------- -----------
Total comprehensive
income for the period - - - (1) 245 619 863
Transactions with
owners
Issue of new shares 25 9,975 - - - - 10,000
Share issue costs - (580) - - - - (580)
Share based payments - - 181 - - - 181
Share based payments
- deferred tax asset - - 56 - - - 56
Balance as at 31
December 2015 92 16,522 1,390 - 245 1,797 20,046
--------- --------- ---------- ------------- ---------- ----------- --------
Profit/(loss) for
the period - - - - - (1,306) (1,306)
other comprehensive
income/(expense)
- translation of
foreign operation - - - 2,040 - - 2,040
- Cash flow hedge - - - - (245) - (245)
--------- --------- ---------- ------------- ---------- ----------- --------
Total comprehensive
income for the period - - - 2,040 (245) (1,306) 489
Transactions with
owners
Issue of new shares 4 1,461 - - - - 1,465
Share issue costs - - - - - - -
Share based payments - - 319 - - - 319
Share based payments
- deferred tax asset - - (24) - - - (24)
Share based payments
- exercised and
lapsed - - (5) - - 5 -
Balance as at 30
June 2016 96 17,983 1,680 2,040 - 496 22,295
--------- --------- ---------- ------------- ---------- ----------- --------
-- 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.
-- 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.
STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended 31
30 Jun 2016 30 Jun 2015 Dec 2015
GBP'000 GBP'000 GBP'000
------------- ------------- ----------
Cash flow from operating
activities
Profit / (loss) before
taxation (910) 393 1,454
Adjustments for:
Depreciation of property,
plant and equipment 57 32 71
Amortisation of intangible
assets 946 287 578
Reclassification of
intangible assets - - 448
Finance income/(cost)
- net 79 - (1)
Share based payments 319 135 316
Share of result of associate - 35 36
Operating cashflow before
working capital changes 491 882 2,902
Increase in trade and
other receivables (17,862) (1,914) (2,649)
Increase in trade and
other payables and accruals 19,074 1,538 5,839
Increase in inventories (262) - (1)
Cash flow from operations 1,441 506 6,091
Income tax paid (397) (37) (405)
Net cash flow from operating
activities 1,044 469 5,686
Cash flow used in investing
activities
Purchase of property,
plant and equipment (110) (32) (43)
Purchase of intangible
assets, net of cash
acquired (1,237) (43) (104)
Loan payments paid to/from
third parties - (36) -
Acquisition of a subsidiary,
net of cash acquired (12,881) - 12
Net cash flow used in
investing activities (14,228) (111) (135)
Cash flow used in financing
activities
Proceeds from borrowings
(net) 3,208 - -
Proceeds from issuance
of ordinary shares (net) 2 2,198 11,618
Reduction in deferred
consideration (36) (1,159) (1,159)
------------- ------------- ----------
Net cash flow generated
from / (used in) financing
activities 3,174 1,039 10,459
Net (decrease) / increase
in cash and cash equivalents (10,010) 1,397 16,010
Cash and cash equivalents
at beginning of the
period/year 19,060 3,056 3,056
Exchange differences
on cash and cash equivalents 203 (13) (6)
Cash and cash equivalents
at end of the period/year 9,253 4,440 19,060
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 35-39 Moorgate, London, EC2R 6AR.
The CentralNic Group provides wholesale ("registry"), retail ("registrar") and enterprise services and strategic consultancy for new Top Level Domains ("TLDs"), Country Code TLD's ("ccTLDs") and Second-Level Domains ("SLDs") and it is the owner and registrant for a portfolio of domain names, which it uses as SLD domain extensions and for resale on the domain aftermarket.
2. Basis of preparation
Items included in the financial statements of each of the group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The consolidated interim financial information is presented in pounds sterling (GBP) the group's presentational currency.
The interim financial information has been prepared under the historical cost convention, except for financial instruments that have been measured at fair value through profit and loss and the cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.
The interim financial information has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The interim financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") issued by the International Accounting Standards Board ("IASB"), including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").
The accounting policies and methods of computation used in the interim financial information is consistent with those used in the group's Annual Report for 2015 and are expected to be applied for the year ended 31 December 2016.
3. Consolidation
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. Acquisition-related costs are expensed as incurred.
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 on-going 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 will be prepared of expected future cash flows 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.
Share based payments
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the statement of comprehensive income on a straight line basis over the vesting period, taking account of the estimated number of shares that will vest. The fair value is determined by use of the Black Scholes model method.
5. Segment analysis
CentralNic is an independent global domain name service provider. It provides wholesale, retail and enterprise services and it is the owner and registrant of a portfolio of domain names, which it uses as SLD domain extensions. Management reviews the activities of the CentralNic Group in the segments disclosed below.
Period ended 30 June 2016
-------------------------------------------------------------------------
Revenue Adjusted Non-current Current Non-current Current
EBITDA assets assets liabilities liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- ------------ -------- ------------- -------------
Wholesale domain
sales 1,638 712 3,651 26,293 2,544 29,764
Retail domain
sales 6,755 1,103 26,731 8,929 3,131 8,118
Enterprise including
premium domain
name sales 538 (50) 117 226 - 95
Group overheads - (456) - - - -
including costs
associate with
public company
status
8,931 1,309 30,499 35,448 5,675 37,977
-------- --------- ------------ -------- ------------- -------------
Period ended 30 June 2015
-------------------------------------------------------------------------
Revenue Adjusted Non-current Current Non-current Current
EBITDA assets assets liabilities liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- ------------ -------- ------------- -------------
Wholesale domain
sales 1,606 638 3,705 5,236 563 4,466
Retail domain
sales 1,785 (15) 4,341 2,525 294 1,819
Enterprise including
premium domain
name sales 1,054 825 - 861 - -
Group overheads - (437) - - - -
including costs
associate with
public company
status
4,445 1,011 8,046 8,622 857 6,285
-------- --------- ------------ -------- ------------- -------------
Year ended 31 December 2015
-------------------------------------------------------------------------
Revenue Adjusted Non-current Current Non-current Current
EBITDA assets assets liabilities liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- ------------ -------- ------------- -------------
Wholesale domain
sales 3,129 1,403 2,711 20,544 585 8,522
Retail domain
sales 3,405 174 4,198 4,116 325 2,154
Enterprise including
premium domain
name sales 3,859 2,608 6 131 - 74
Group overheads - (931) - - - -
including costs
associate with
public company
status
10,393 3,254 6,915 24,791 910 10,750
-------- --------- ------------ -------- ------------- -------------
6. Revenue
The CentralNic Group's revenue is generated from the following geographical areas:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Wholesale Domain Sales
UK 463 475 902
North America 443 606 997
Europe 234 220 458
ROW 498 305 772
---------- ---------- --------
1,638 1,606 3,129
---------- ---------- --------
Retail Domain Sales
UK 493 113 214
North America 1,419 405 744
Europe 1,874 625 1,149
ROW 2,860 511 1,051
Other Revenues 109 131 247
---------- ---------- --------
6,755 1,785 3,405
---------- ---------- --------
Enterprise including
Premium Domain Name
Sales
UK - - -
North America 31 737 3,286
Europe 254 19 246
ROW 253 298 327
538 1,054 3,859
The following table shows customers that represented 10% or more of the wholesale domain sales:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Customer A 177 209 393
Customer B 96 264 333
Other customers 1,365 1,133 2,403
1,638 1,606 3,129
No single customer contributes greater than 10% or more of the retail domain sales.
No single customer contributes greater than 10% or more of the Enterprise including premium domain name sales which by their nature are subject to annual variation depending on customer demand. In prior periods the enterprise including premium domain name sales were principally driven by premium domain name sales of GBP3,221,000 for the year ended 31 Dec 2015 (6 months ended 30 Jun 2015: GBP697,000) of which GBP3,079,000 was made to one customer (6 months ended 30 Jun 2015: GBP636,000 to one customer)
7. Income tax expense
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 Dec
30 Jun 30 Jun 2015
2016 2015
GBP'000 GBP'000 GBP'000
---------- ---------- ------------
Current tax on (loss)/profits
for the period 443 116 593
Adjustments in respect - - -
of previous periods
---------- ---------- ------------
Current income tax 443 116 593
Deferred income tax (47) (10) (45)
396 106 548
A reconciliation of the current tax expense applicable to the (loss)/profit before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the CentralNic Group are as follows:
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 Dec
30 Jun 30 Jun 2015
2016 2015
GBP'000 GBP'000 GBP'000
---------- ---------- ------------
(Loss)/profit before taxation (910) 393 1,454
Tax calculated at domestic
tax rates applicable to profits
in the respective countries (110) 81 404
Tax effects of:-
Expenses not deductible for
tax purposes 528 34 168
Capital allowances in excess
of depreciation (8) 1 21
Losses not utilised / other 33 - -
differences
Current tax expense for the
period/year 443 116 593
The Company provides for income taxes 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 current tax expense for the period reflects significant non-deductible items principally amortisation of intangible assets acquired, acquisition costs and the effect of foreign exchange gains on loans subject to tax at the individual entity level (eliminated on consolidation). Adjusting for these items, the underlying effective rate of tax for the period was 24.7%.
In the UK, the applicable statutory tax rate for 2015/16 is 20% (2014/15: 20%).
In the USA, federal taxes are due at 34% on taxable income. Under California tax legislation an additional 8.84% of state tax is due on taxable income.
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 c.17% is also levied with rates determined by the municipality.
In the Australia and New Zealand, income taxes are due at 30% and 28% respectively on taxable income.
8. Earnings per share
Earnings per share has been calculated by dividing the consolidated (loss)/profit after taxation attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period.
The calculation of earnings per share is based on the earnings and number of shares set out below.
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.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
------------- ----------- -----------
(Loss) / profit after
tax attributable to
owners (1,306) 287 906
Weighted average number
of shares:
Basic 95,417,444 61,580,878 64,537,714
Effect of dilutive potential
ordinary shares - 6,380,226 1,953,680
Diluted 95,417,444 67,961,104 66,491,394
Earnings per share:
(1.37 0.47 1.40
Basic pence) pence pence
(1.37 0.42 1.36
Diluted pence) pence pence
At 30 June 2016, the contingently issuable potential ordinary shares included within the share options are anti-dilutive and are not included in the calculation.
9. Intangible assets
Domain Patents Software Customer Goodwill Total
Names & Trademarks List
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost or deemed
cost
At 1 January
2015 3,164 - 960 2,548 1,379 8,051
Additions - - 43 - - 43
Exchange Differences (3) - - - - (3)
At 30 June
2015 3,161 - 1,003 2,548 1,379 8,091
--------- --------------- ----------- ----------- ----------- --------
Additions - - 61 - - 61
Acquisition
of subsidiary - - - - 194 194
Reclassification (835) - - - - (835)
Exchange Differences 14 - - - - 14
--------- --------------- ----------- ----------- ----------- --------
At 31 December
2015 2,340 - 1,064 2,548 1,573 7,525
--------- --------------- ----------- ----------- ----------- --------
Additions 1,121 - 116 - - 1,237
Acquisition
of subsidiary - 11 1,637 8,738 7,927 18,313
Exchange Differences 25 2 217 1,147 1,064 2,455
--------- --------------- ----------- ----------- ----------- --------
At 30 June
2016 3,486 13 3,034 12,433 10,564 29,530
Amortisation
At 1 January
2015 1,707 - 99 127 - 1,933
Charge for
the period 73 - 87 127 - 287
Exchange differences (3) - - - - (3)
--------- --------------- ----------- ----------- ----------- --------
At 30 June
2015 1,777 - 186 254 - 2,217
--------- --------------- ----------- ----------- ----------- --------
Charge for
the period 69 - 94 128 - 291
Reclassification (387) - - - - (387)
Exchange Differences 14 - - - - 14
--------- --------------- ----------- ----------- ----------- --------
At 31 December
2015 1,473 - 280 382 - 2,135
--------- --------------- ----------- ----------- ----------- --------
Charge for
the period 95 - 274 577 - 946
Acquisition
of subsidiary - 11 23 - - 34
Exchange Differences 25 2 3 - - 30
--------- --------------- ----------- ----------- ----------- --------
At 30 June
2016 1,593 13 580 959 3,145
Carrying value
At 30 June
2015 1,384 - 817 2,294 1,379 5,874
========= =============== =========== =========== =========== ========
At 31 December
2015 867 - 784 2,166 1,573 5,390
========= =============== =========== =========== =========== ========
At 30 June
2016 1,893 - 2,454 11,474 10,564 26,385
========= =============== =========== =========== =========== ========
Amortisation of intangible assets is included in administrative expenses in the combined and consolidated statement of comprehensive income.
Certain domain names previously held as intangibles were reclassified to stock held for resale in the period to 31 December 2015.
10. Deferred receivables
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Amounts due from shareholders - 720 -
Deferred costs 1,292 261 295
1,292 981 295
11. Trade and other receivables
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Trade receivables 3,599 1,582 1,855
Accrued revenue 16,256 734 225
Stock held for resale 376 60 61
Deferred costs 2,972 1,233 1,486
Prepayments 164 134 110
Prepaid finance costs 334 - 350
Supplier payments on
account 377 212 333
Loan to third party - 93 -
Amounts due from shareholders 738 - 729
Other taxes and social 37 - -
security
Other receivables 1,342 134 337
26,195 4,182 5,486
---------- ---------- --------
12. Trade and other payables and accruals
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- ---------- --------
Accounts payable 10,740 285 2,425
Accrued expenses 14,589 930 1,859
Other taxes and social
security 97 60 81
Deferred consideration 829 - 36
Deferred revenue 7,488 2,852 3,126
Customer payments on
account 2,503 1,863 2,779
Accrued interest 29 - 3
Other liabilities 10 - 40
36,285 5,990 10,349
---------- ---------- --------
13. Share capital
Number Share Share Premium
Capital
GBP'000 GBP'000
----------- -------- -------------
At 1 January 2015 61,181,647 61 4,935
Proceeds from shares issued in connection with the employee share option
schemes 75,834 - 7
Issued in connection with a placing on 19(th) June 2015 5,750,000 6 2,185
At 30 June 2015 67,007,481 67 7,127
Issued in connection with a placing on 29(th) December 2015 25,000,000 25 9,395
At 31 December 2015 92,007,481 92 16,522
Issued in connection with the acquisition of the Instra Group 3,656,450 4 1,459
Proceeds from shares issued in connection with the employee share option
schemes 20,417 - 2
At 30 June 2016 95,684,348 96 17,983
On 19 May 2015, the company issued 75,834 new ordinary shares due to employees exercising GBP0.10 share options in accordance with share option agreements.
On 17 June 2015 the company raised GBP2,300,000 (gross of fees) via a placing of 5,750,000 new ordinary shares of 0.1 pence each at 40 pence per share. A share premium was created on the issue of these shares totalling GBP2,294,250.
On 29 December 2015 the company raised GBP10,000,000 (gross of fees) via a placing of 25,000,000 new ordinary shares of 0.1 pence each in connection with the acquisition of the Instra Group at 40 pence per share. A share premium was created on the issue of these shares totalling GBP9,975,000.
On 14 January 2016 the company issued 3,656,450 new ordinary shares to Antonio Frank Lentino of 0.1 pence each at 40 pence per share. A share premium was created on the issue of these shares totalling GBP1,458,924.
The company has no authorised share capital.
14. Business Combinations
On 14 January 2016 CentralNic completed the acquisition of the entire issued share capital of the companies forming the Instra Group for a total consideration of AU$33 million, consisting of AU$30 million in cash and AU$3 million in shares in CentralNic Group plc, plus an adjustment for working capital at completion.
The following table summarises the consideration to acquire the share capital of the Instra Group and the provisional fair value of the assets and liabilities at the acquisition date in line with group accounting policies.
Consideration AUD$'000 GBP'000
--------- --------
Cash 30,000 14,560
Equity Instruments (3,656,450
ordinary shares) 3,000 1,463
Adjustment for working
capital 4,174 2,152
Total consideration 37,174 18,175
--------- --------
Fair value recognised AUD$'000 GBP'000
on acquisition
--------- --------
Assets
Intangible assets - customer
list 18,005 8,738
Intangible assets - software 3,275 1,589
Intangible assets - domain
names 2,310 1,121
Other intangible assets 52 25
Property, plant & equipment 129 63
Trade receivables 815 395
Other receivables 8,199 3,979
Deferred income tax asset 2,597 1,260
Cash 1,150 558
--------- --------
36,532 17,728
--------- --------
Liabilities
Trade payables 391 190
Other payables and accruals 1,835 891
Deferred revenue 13,513 6,558
Current income tax liabilities (127) (62)
---------
15,612 7,577
--------- --------
Total identifiable net
assets at fair value 20,920 10,151
--------- --------
Goodwill arising on acquisition 16,254 8,024
Purchase consideration 37,174 18,175
--------- --------
The fair value of the 3,656,450 ordinary shares issued as part of the consideration paid was based on the 40 pence per share achieved in the placing on 29 December 2015. The mid-market foreign exchange rate used was as at 12 noon on 13 January 2016 being the business day pre-completion. AUD$5m of the cash consideration has been placed in to an escrow account and will be released to the vendor over 5 years in equal instalments on the anniversary of the completion date.
The cash consideration was funded by the equity placing on 29 December 2015, together with a new secured debt facility comprising a GBP3.5m term loan with the remainder from existing cash balances held by the group.
15. Financial instruments
The CentralNic group is exposed to market risk, credit risk and liquidity risk arising from financial instruments. The CentralNic group's overall financial risk management policy focusses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the CentralNic group's financial performance. The group does not trade in financial instruments.
The principal financial instruments used by the CentralNic group, from which financial instrument risk arises, are as follows:
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------- -------------- --------
Financial assets
Loan and receivables
Trade and other receivables 26,195 4,182 5,486
Cash and cash equivalents 9,253 4,440 19,060
35,448 8,622 24,546
Financial liabilities
measured at amortised
cost
Trade and other payables 36,285 5,990 10,349
Loan and borrowings 3,209 - -
39,494 5,990 10,349
16. Seasonal or cyclical factors
There are no seasonal factors that materially affect the operations of any company in the group.
17. Nature of financial information
The financial information presented above does not constitute statutory financial information for either the company or the CentralNic group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGGLRVKGVZM
(END) Dow Jones Newswires
September 07, 2016 02:00 ET (06:00 GMT)
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