Commenting on the results, Mike Turner, Chairman of CentralNic, said: “I am pleased to report on a strong year of growth for CentralNic. The Group continued its strategy to build a diversified internet services business of size and scale through an acquisitive roll-up programme which delivers high-levels of recurring revenues, quality of earnings and strong cash generation.
SK-NIC, the manager of the exclusive country code top-level domain for Slovakia, was acquired in mid-December 2017 for a maximum cash consideration of €25.7 million (£22.6 million). The Board anticipates SK-NIC to be earnings enhancing in line with expectations at the time of the acquisition, as well as providing access to a new international market with sustainable growth characteristics, a high renewal rate of over 86%, and the opportunity to leverage CentralNic’s existing expertise and bespoke technical platforms in the domain management business. Significant growth was delivered in the Wholesale and Retail divisions, which contributed to an increase in recurring revenues and an improvement in the quality of the Group’s earnings. Whilst the Enterprise Division made a significant contribution to the Group’s profits in the year under review, its contribution through one-off domain name sales reduced when compared to the prior year.The Directors are confident that the Group will continue to deliver on its strategic goals in 2018, to deliver growth both organically and by expansion of the business, and further improve the percentage of recurring revenues and the Group’s quality of earnings.”
CentralNic (AIM: CNIC), the internet platform that derives revenue from the worldwide sales of internet domain names, today announced its audited results for the year ended 31 December 2017.
The Company’s full Annual Report is also being published and sent to shareholders by 1 June 2018 if not before and the Company’s Annual General Meeting will be held 25 June 2018 at the offices of Taylor Wessing LLP, 5 New Street Square, London, EC4A 3TW at 10.00am.
Financial summary
|
|
31 Dec 2017 |
31 Dec 2016 |
Change |
Change |
|
|
£’000 |
£’000 |
£’000 |
% |
|
Revenue |
24,348 |
22,129 |
2,219 |
+10% |
|
Gross profit |
9,794 |
7,667 |
2,127 |
+28% |
|
Adjusted EBITDA* |
6,607 |
5,483 |
1,124 |
+20% |
|
Adjusted Profit before taxation** |
5,581 |
4,724 |
857 |
+18% |
|
Profit before taxation |
1,371 |
1,157 |
214 |
+19% |
|
Net cashflow from operating activities |
3,700 |
3,318 |
382 |
+12% |
* Excludes share based payments expense of £453,000 (2016: £621,000) and acquisition costs and exceptional items of £1,982,000 (2016: £1,262,000).
**Excludes share based payments expense of £453,000 (2016: £621,000), acquisition costs and exceptional items of £1,982,000 (2016: £1,262,000) and acquired amortisation charges, in relation to the intangible assets of Internet.BS, the Instra Group and SK-NIC of £1,775,000 (2016: £1,684,000).
Financial Highlights
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· |
Revenues grew by 10% to £24.35m (2016: £22.13m) and Adjusted EBITDA grew 20% to £6.61m (2016: £5.48m). EBITDA margin increased by 10% to 27% (2016: 25%). |
|
· |
Operating profit grew by 34% to £1.89m (2016: £1.41m) after depreciation, amortisation, share based payment expense and acquisition costs and exceptional items. |
|
· |
Acquisition of SK-NIC, the manager of the exclusive country code top-level domain for Slovakia, .sk, completed in December 2017 for a total cash consideration of €25.70m. |
|
· |
Significant growth in the Wholesale and Retail Divisions, up by 48% and 9% respectively on the previous year contributing to an improvement in the quality of the Group’s earnings. |
|
· |
Sale of a number of premium domain names for consideration of £3.0 million (2016: £3.7m). |
|
· |
Cash at bank was £10.9m (2016: £9.9m), an increase of 10%. Net Debt (excluding prepaid finance fees) was £7.22m at the year-end (2016: Net Cash £7.28m) as a result of the Company paying £20.27m cash, in December 2017 and financed in part by borrowings, as initial consideration for the purchase of SK-NIC. |
|
· |
Recurring & subscription revenues increased to 84% of overall revenues (2016: 81%) providing quality of earnings and strong cash generation. |
Operational Highlights
|
· |
The Group’s financial performance continues to advance in line with its increasing standing within the industry. CentralNic is now ranked fifth among the world’s Registry providers, with 104 exclusive Registry contracts. |
|
· |
Acquisition of SK-NIC, the manager of the exclusive country code top-level domain for Slovakia, for a maximum consideration of €28.1m (£24.7m). Funded by the Company’s own cash reserves, a term loan of £12m and revolving credit facility of £6m, both provided by Silicon Valley Bank, which also provides a £3m overdraft facility (unutilised). |
|
· |
Exclusive wholesaler contract with XYZ.com, owner of the .xyz Top-Level Domain (“TLD”), renegotiated for a term running until May 2032. CentralNic receives a fixed minimum fee which may increase based on the volume of .xyz domains managed. |
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· |
Don Baladasan joined the Board on 24 July 2017 as Chief Financial Officer, bringing significant M&A and integration experience. |
