CentralNic Group Plc (LON:CNIC), the global internet platform that derives revenue from the worldwide sales of internet domain names and related web services, has announced its unaudited preliminary accounts for the financial year ended 31 December 2020. The audited annual report and accounts for 2020 will be published towards the end of April 2021. Both revenue and Adjusted EBITDA have increased year-on-year, driven by a combination of acquisitions and underlying organic growth.
Financial Summary:
· Revenue increased by 121% to USD 241.2m (FY2019: USD 109.2m)
· Net revenue/Gross profit increased by 78% to USD 76.3m (FY2019: USD 42.8m)
· Adjusted EBITDA* increased by 71% to USD 30.6m (FY2019: USD 17.9m)
· Operating profit increased by USD 3.2m to USD 0.4m (FY2019: operating loss of USD (2.8m))
· Net debt** stood at USD 85.0m (gross interest bearing debt of USD 113.6m, cash of USD 28.7m) as compared to USD 75.0m in FY2019 (gross interest bearing debt of USD 101.2m, cash of USD 26.2m)
As CentralNic made one major acquisition in 2020 and four acquisitions in 2019, the Company also prepared a pro forma comparable financial summary including all businesses currently controlled by CentralNic (a definition of which is provided in a footnote on the page below), to effectively isolate organic growth.
Financial Organic Summary on a pro forma basis***:
· Revenue increased by 9% to USD 289.7m (pro forma FY2019: USD 265.9m)
· Gross profit increased by 8% to USD 96.6m (pro forma FY2019: USD 89.5m)
· Adjusted EBITDA* increased by 4% to USD 35.6m (pro forma FY2019: USD 34.1m)
Operational Highlights:
· Strong organic growth in the face of the COVID crisis
· All staff and systems remained fully operational with no interruption to the supply chains
· Completed an operational restructure which included investing significantly in new management personnel and systems to position the Group well for future growth
· Healthy demand for our two largest service lines, Wholesale domains and, most importantly, Monetisation – the latter also driven by the rollout of a patented SSL monetisation solution in late 2019
Financial Highlights:
· Payment of EUR 2.7m of earn-out for the Team Internet acquisition paid in June 2020 (EUR 0.9m of retention payment are still outstanding)
· EUR 1.3m of deferred consideration for SK-NIC was settled in July 2020; a maximum of EUR 1.7m is yet to be paid
· Conversion of the share premium account into a distributable reserve in August 2020
· The final deferred consideration payment of EUR 2.7m for Hexonet was settled in August 2020 by issuing 3.2m new shares
· The final deferred consideration payment of EUR 0.45m for GlobeHosting was paid in August 2020
· Payment of the 2019 KeyDrive earnout of USD 2.2m, paid 15% in cash and 85% by issuing 1.7m new shares; up to USD 1.4m of earnout may still be payable if certain conditions are met
· Successful placing of 40 million shares at a price of GBP 0.75 per share for total net proceeds of approximately USD 37.3m
· Acquisition of Codewise for USD 36.0m
· Profitable sale of a minority interest in Thomsen Trampedach for USD 1.8m
Post Year-End Highlights:
· Completion of acquisition of SafeBrands, a French Enterprise Domain Management and Online Brand Protection provider, strengthening our Enterprise division within the Direct Segment, for USD 3.7m plus a deferred consideration of USD 0.7m
· Successful, oversubscribed placement of EUR 15m (USD 18.2m approximately) of senior secured callable bonds at 104.5% of nominal value
· Completion of the acquisition of Wando Internet Solutions for USD 6.5m plus an additional earnout of up to USD 6.5m
Outlook:
· The strong organic growth in 2020 demonstrates the Company’s resilience despite the economic crisis, and ability to execute on its accelerated buy and build strategy
· New product launches and further integration activities will support revenue growth and margins
· The Company’s successful consolidation strategy continues, with opportunities being continually assessed in what is a large, globally fragmented and growing market
· Management is pleased that the full year results have been delivered in line with management expectations
Ben Crawford, CEO of CentralNic, commented: “In 2020, CentralNic generated as much revenue as in the five preceding years all added together. These outstanding results not only demonstrate that CentralNic can source and complete transformative acquisitions, but that it can also integrate them successfully while delivering record organic growth. Moreover, as we scale up rapidly, the underlying qualities of high recurring revenues with 99% of revenue derived from sales of recurring products and services and high cash conversion calculated at 106% on an adjusted basis become increasingly meaningful.
“Our pipeline of future deals remains strong, while our net debt level remains comfortable particularly given the profitability and healthy cash flow from the existing CentralNic Group and the expected contribution from recent acquisitions. We have also brought on new staff, including a number of new senior managers, and systems to drive our organic growth, and we are confident in continuing our trajectory towards joining the ranks of the global leaders in our industry.”
* Subsidiary and Associate Earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses
** Includes gross cash, debt and prepaid finance costs
*** Given that the Group has made a number of key strategic acquisitions in 2019 and 2020, we have estimated unaudited pro forma information to provide period-to-period comparison of performance. In doing so, we have made the following assumptions: (a) figures are provided for the entire comparative period, irrespective of when the acquisition by the Group arose; (b) adjustments have been made to the currency rates used for the comparative period to the most recent balance sheet date to harmonise the impact of currency fluctuations; (c) the impact of unwinding the deferred revenues relating to the period prior to 1 November 2018 arising from a change in the terms of conditions, as well as identified material non-cash or one-off revenues, have been excluded to ensure period to period comparability; and (d) adjustments have been made, as appropriate, to ensure GAAP comparability between periods. Differences to reported figures may result.
These unaudited preliminary accounts have been prepared for the purpose of fulfilling the information undertaking requirements included in the bond terms for the Senior Secured Callable Bond Issue.
