Final Results and Q1 2020 Update

1. Segment analysis

2. Revenue

3. Profit before taxation

4. Non-core operating expenses

5. Finance income and costs

6. Income tax expense

7. Earnings per share

8. Property, plant and equipment

9. Intangible assets

10. Deferred receivables

11. Investments

12. Trade and other receivables

13. Cash and cash equivalents

14. Share capital

15. Non-current other payables

Deferred revenue represents amounts billed on account of revenues where performance obligations have not been met for recognition of revenue.

16. Trade and other payables and accruals

Deferred consideration is subject to actuarial and net present value discounts. The maximum amount of deferred consideration payable in cash or in shares is USD 15m, out of which USD 8.6m in cash and USD 6.4m in shares.

17. Borrowings

18. Business combinations

19. Related party disclosures

20. Financial Instruments

21. Post balance sheet events

(a) Ultimate controlling party

(b) Related party transactions

Current and non-current loans and borrowings are included within section (ii), credit risk below.

(a) Financial risk management framework

(b) Capital risk management

(i) Bond covenant

(c) Fair values of financial instruments

(d) Fair value hierarchy

Companies

Latest directors dealings

(i) Shareholders

(ii) Non-Executive Directors

(iii) Other Related Parties

(i) Foreign currency risk

(ii) Interest rate risk

(iii) Equity price risk

UK 100

RNS Number : 8842K

CentralNic Group PLC

27 April 2020

CentralNic Group plc

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

Final Results for the Year Ended 31 December 2019 and Q1 2020 Update

CentralNic Group PLC (AIM: CNIC), a global internet platform company that derives revenue from the subscription sales of internet domain names and internet services, announces its audited results for the year ended 31 December 2019.

Financial Highlights

Revenue up 95% to USD 109.2m (2018: USD 56.0m)

Recurring Revenues at 92% (2018: 90%)

Gross profit up 65% to USD 42.8m (2018: USD 25.9m)

Adjusted EBITDA* up 96% to USD 17.9m (2018: USD 9.1m)

Adjusted diluted EPS** up 43% to USD 6.81 cents (2018: USD 4.77 cents)

Cash balance at year end USD 26.2m (2018: USD 23.1m)

Net Debt at year end USD 75.0m*** (2018: USD 3.2m)

*Excludes impact of share-based payments expense, foreign exchange and non-core operating costs

** Adjusted for amortisation, share-based payments expense, foreign exchange and non-core operating costs

***Including prepaid finance costs

Operational Highlights

Significant client wins including .blog, the ccTLD .bh, MarkMonitor, ZDNS, and Automattic

Operational efficiencies and savings of c. USD 1m achieved through integration of earlier acquisitions.

Four further acquisitions strengthening our core offering, facilitating a strategic expansion into a new segment with the acquisition of Team Internet in December 2019

Augmented CentralNic's market strength, with 45% growth of customer base

Post year-end events
Trading proves to be resilient to the global impact of COVID-19
Team Internet integrating to plan with strong fundamentals for FY19 and pleasing contribution to the Group for Q1 2020
Management restructure with new hires:
• Chief People Officer, Tracey Hickling
• Head of Reseller segment, Robbie Birkner

Q1 Trading Update**

Revenue of USD 56m

Gross profit of USD 17.7m

Adjusted EBITDA*** of USD 8.1m

Net debt of USD 76.8m****

**This is CentralNic Group PLC's first Q1 trading update and consequently no prior year comparable is provided

*** See definition in Financial Highlights above

**** Including prepaid finance costs

Ben Crawford, CEO of CentralNic, commented: "I am delighted to report CentralNic Group enjoyed another record year in 2019, with 61% year-on-year growth of revenue, excluding the effect of acquisitions made during 2019. Including the four acquisitions made in the second half of 2019, revenues for the year were USD 109.2m, a 95% increase over 2018, taking the Group's Compound Annual Growth Rate (CAGR) since it listed in 2013 to 73%. Adjusted EBITDA for 2019 was USD 17.9m, a 96% improvement on 2018, with margins and cash generation maintained year-on-year.

The Group trading in Q1 2020 was in line with our expectations, despite the global business restrictions to slow the progress of COVID-19. As some of our companies are considered critical infrastructure, our Group has a long history of being focussed on business continuity, which prepared us well for switching our staff to working from home while providing undiminished service to our customers.

"As a profitable provider of online subscription services with high cash-conversion and solid organic growth, we do not expect CentralNic to be severely affected by COVID-19, but we will continuously review our acquisition and financing strategy to ensure that we maintain stability and optimise our business strategies in the new global climate."

For further information:

CentralNic Group Plc

Ben Crawford, Chief Executive Officer

Don Baladasan, Group Managing Director

Michael Riedl, Chief Financial Officer

+44 (0) 203 388 0600

Zeus Capital Limited (Nomad and Joint Broker)

Nick Cowles / Jamie Peel (Corporate Finance)

John Goold / Rupert Woolfenden

(Institutional Sales)

+44 (0) 161 831 1512

+44 (0) 203 829 5000

Stifel (Joint Broker)

Fred Walsh / Alex Price

+44 (0)20 7710 7600

Newgate Communications (for Media)

Bob Huxford

Robin Tozer

Tom Carnegie

+44 (0) 203 757 6880

centralnic@newgatecomms.com

About CentralNic Group plc

CentralNic (AIM: CNIC) is a London-based AIM-listed company which drives the growth of the global digital economy by developing and managing software platforms allowing businesses globally to buy subscriptions to domain names, used for their own websites and email, as well as for protecting their brands online. Its core growth strategy is identifying and acquiring cash-generative businesses in its industry with annuity revenue streams and exposure to growth markets and migrating them onto the CentralNic software and operating platforms.

CentralNic operates globally with customers in almost every country in the world. It earns recurring revenues from the worldwide sales of internet domain names and other services on an annual subscription basis.

For more information please visit: www.centralnicgroup.com

Chairman's statement

In this era of unprecedented interruption to business activities, I am pleased to report on another year of outstanding growth for CentralNic Group plc ('CentralNic Group' or 'the Group') in 2019, effectively doubling revenue and adjusted EBITDA while remaining a pure play recurring revenue business. The results for the first quarter of 2020 support the resilience of the Group's businesses, as it continues to take significant steps forward in its strategy to build a leading global domain name and web services provider.

All divisions continued to grow organically during 2019, through a combination of new client wins and increased business from existing customers, with continued healthy profit margins generating high levels of operating cash flow. The Group also made four earnings accretive acquisitions during the year, expanding its service offering and increasing scale. In addition, CentralNic Group widened its market offering at the end of 2019 by adding a new business model - Domain name monetisation - via the acquisition of Team Internet AG, which has already proved to be a highly earnings accretive addition to the Group.

The Group's continued transformation is the result of enormous hard work from our executives and staff, and I thank them on behalf of the Board and the shareholders for their efforts. We have worked hard to ensure that the businesses that we acquired have been integrated into our group structure to ensure consistent standards and efficient use of resources. I would also like to welcome the new staff and senior executives who joined the enlarged Group in 2019, as well as the new investors who joined the share register or who subscribed to CentralNic Group's maiden bond issue, listed on the Oslo exchange in October 2019. The new financial year has started with a number of new appointments to strengthen the Group's leadership, including Robbie Birkner, as Head of our Reseller segment and Tracey Hickling as the Group's Chief People Officer. These appointments are expected to enhance the Group's ability to drive rapid organic and M&A led growth.

Trading in Q1 2020, together with the Group's high percentage of recurring revenues, provide the Board with every confidence of meeting market expectations for 2020. The Group's long-standing proactive focus on ensuring business continuity for itself and its customers has prepared it well for the challenges presented by the novel COVID-19, including the movement of our global workforce to home working - completed before it was mandated by Government. We continue to monitor the situation and our Group's results closely.

We continue to see lots of interesting bolt-on M&A opportunities. We have chosen to defer the payment of our maiden dividend to preserve capital to make tactical acquisitions. In the current business environment, we believe that this will generate better returns for shareholders. The Directors will continue to monitor the potential payment of a dividend and will keep shareholders informed of any decision.

Iain McDonald, Chairman

Chief Executive Officer's Report

CentralNic Group enjoyed another record year in 2019, with 60.9% year-on-year growth excluding the effect of acquisitions made during 2019. Including the four acquisitions made in the second half of 2019, revenues for the year were USD 109.2m, a 95% increase over 2018, taking the Group's Compound Annual Growth Rate (CAGR) since it listed in 2013 to 73%. Adjusted EBITDA for 2019 was USD 17.9m, a 96% improvement on 2018, with margins and cash generation maintained year-on-year.

Market and Strategy

CentralNic Group is a leading global vendor of online subscriptions to domain names - a key infrastructure component of the internet used as the foundation for both email and websites. In 2019, over 90% of Group revenues came from domain names, with the remainder from recurring revenue domain-related services. CentralNic Group has a loyal and sticky customer base, with approximately 80% of CentralNic Group's revenues derived from recurring annual fees that were agreed in years prior to 2019. The balance of domain revenues is derived from first year domain registrations generated by our resellers or acquired directly by CentralNic Group.

The total addressable market (TAM) for CentralNic Group's services is estimated at USD 30 billion, with the majority of those markets currently served by smaller independent companies - providing significant opportunities for CentralNic Group to grow market share by winning new customers and through acquisitions.

A truly global company, CentralNic Group's staff are concentrated in its main hubs in Germany, Australasia and the UK, while it distributes domains from those centres to customers in almost every country in the world. In 2019, CentralNic Group supplied over 28 million domains to over 370,000 customers. Customer concentration was minimal with CentralNic Group's largest customer representing less than 10% of its revenues.

CentralNic Group is a leader among its peers as the first omni-platform provider. It developed an integrated stack of highly automated proprietary software platforms, customised top each customer type, which it now maintains, updates and operates.

Reseller segment

CentralNic Group is a world leader in its Reseller segment, which grew 122% in 2019. This segment operates platforms for resellers such as registrars, hosting companies and telcos. It operates under the brands Key-Systems, Hexonet, PartnerGate, TPP Wholesale and Toweb - and is ranked number two in the World by volume. In addition to domain names, the Group is starting to sell in-demand services such as Microsoft Office 365 and AWS hosting, which the Directors expect will provide a meaningful contribution to organic growth in the future.

The Reseller segment also includes Centralnic Group's Registry Solutions business, which operates a platform for registries of country-codes (ccTLDs) and new Top-Level Domains (nTLDs). With over 115 TLDs using its registry platform, CentralNic Group's Registry Solutions business is ranked in the top five globally and is the leading registry provider for new TLDs, finishing 2019 with over 40% market share of nTLDs by volume.

Small Business segment

CentralNic Group's Small Business segment is a rapidly growing challenger, emerging from a field of hundreds of local competitors as a global player of increasing importance, growing 56% in 2019. Our online retailers target high-margin and high-growth niches globally, specialising in customers buying large quantities of domain names and country-code domains, and upselling other domain-related services to these customers.

Corporate segment

CentralNic Group's Corporate segment grew 140% in 2019. It services large corporations that view domain names as a form of intellectual property similar to trademarks, which must be secured and protected by brand owners. Over 1,000 corporate clients to date have entrusted their domain portfolio management to CentralNic Group, which includes Fortune 1000 companies and household brand names.

IT and Shared Services

Behind the scenes, CentralNic Group businesses are serviced by a central hub of IT and corporate services, including finance, HR, development, and a single procurement function for domains and other microservices, streamlining the internal supply chain. The Company also has a dedicated team that oversees the successful integration of each newly acquired business.

Operational Review

CentralNic Group experienced both acquisition-driven and organic growth in its Reseller, Small Business and Corporate segments in 2019. Given the difficulties of switching suppliers in the domain industry, customers tend to be very sticky, and client wins from other suppliers are relatively rare, which of course benefits the Group on the flipside. Nonetheless, CentralNic Group has continued to win more customers away from its competitors with its focus on expert service, close collaboration with clients, and feature rich, flexible and automated technology.

Significant customer wins in the Reseller segment include registry service contracts for the TLDs .Blog, .Gay, .Music, .Build, .Luxury, .Bond and .BH. CentralNic Registry Solutions ended 2019 with over 40% of the total nTLD market by volume, which is more than the next five competitors combined. Major resellers recruited in 2019 included Automattic, MarkMonitor, ZDNS and Telenor. These new client wins, together with growth of existing customers, resulted in the reseller businesses CentralNic Group owned for the full year 2019 increasing their domains under management from 13.5 million to 25.5 million during the year.

In the retail sector, the businesses CentralNic Group owned for the whole of 2019 enjoyed growth from 2.0 million to 2.3 million domains under management. In March 2019, CentralNic Group was selected by the internet regulator, ICANN (Internet Corporation for Assigned Names and Numbers) for the bulk transfer of 680,000 domain names from a former registrar that was no longer accredited.

Following a full competitive application process ICANN selected CentralNic Group to take over management of the domain names. Such a process is the official procedure when a former registrar loses accreditation in order to ensure the end customers enjoy continuity of service. A number of criteria were taken into account in selecting CentralNic Group as the successful candidate, including the Company's experience, history of compliance, stability, and overall reputation for professionalism. CentralNic Group completed the migrations in the space of two months.

In CentralNic Group's Corporate segment, domains under management increased from 137,000 to 154,000 in 2019, as a result of increased activity from existing clients as well as new client wins.

Integrations

Recurring net cost savings of approximately USD 1 million were realised in 2019, comprising the full year effect of cost savings made in 2018 plus successes in integrations in 2019. This included KeyDrive's KS Registry clients being migrated to the CentralNic Registry platform, while CentralNic Group's EPP Gateway clients were migrated to the KeyDrive reseller platform. Both the KS Registry and EPP Gateway platforms were retired. Additionally, our Instra retail business switched to the Central Domain Procurement platform for 400 Top-Level Domains, in some instances Instra's lower procurement costs were shared among Group companies.

CentralNic Group has a dedicated team of integration project managers who plan and track integrations according to a clearly defined blueprint. For each acquisition made, the integration plan following that blueprint includes ten work streams which list hundreds of tasks from immediate actions like changing signatories on bank accounts, through to long term projects such as the merging of software platforms. Key objectives for integration include obtaining visibility and control of costs and earnings, use of Group resources, cross-selling opportunities and cost reductions.

Acquisitions

Customers are very sticky in the domain business given the high levels of automation and high switching costs, with transfers between providers amounting to a small proportion of all transactions. This customer stickiness, combined with the high value and quality of earnings of existing customer books, makes the domain industry a very attractive and relatively low risk industry in which to acquire businesses.

In total, five successful acquisitions contributed to CentralNic Group's growth in 2019, with the acquisition of Team Internet AG being completed on 24 December 2019 and having its first material impact on 2020. CentralNic Group enjoyed the full year effect of its acquisitions of KeyDrive, completed on 2 August 2018, and Globehosting, completed the following month, making a significant contribution to the growth experienced in 2019. All acquisitions were of companies with a high level of recurring revenues, excellent customer retention and high levels of cash conversion.

On 1 August 2019 CentralNic Group acquired the Sydney-based business TPP Wholesale, the leading platform for resellers of domain names and hosting in Australasia - a carve out of certain trade and assets from ARQ Group Limited ("ARQ"), a company listed on the Australian Securities Exchange. TPP Wholesale serves around 14,000 reseller customers and has 840,000 domains under management, including 19% of all .com.au registrations. TPP Wholesale is an extension in Australia and New Zealand of CentralNic Group's largest business unit, which supplies domain names to resellers globally including most of the world's top ten domain name retailers by volume. CentralNic Group has provided TPP Wholesale customers with continuity of service, while it will also upgrade the service with new products. The TPP Wholesale acquisition also marked the first steps in CentralNic Group becoming a reseller of Amazon Web Services and Microsoft Office 365. The total consideration was AUD 24m including taxes, paid in cash and by assuming certain liabilities of c. AUD 1.6m (USD 1.1m) from ARQ at completion. CentralNic Group incurred a number of one-off integration costs of which AUD 0.7m arose in CentralNic Group's 2019 financial year.

On 7 August 2019 CentralNic Group acquired all of the shares in Hexonet, a leading international platform for resellers of domain names, with operations in Canada and Germany, in close proximity to CentralNic Group's main German operation. Hexonet sells domain name subscriptions directly and via more than a thousand resellers in over 110 countries, managing over 3.8 million domains on its proprietary software platforms. In 2018, Hexonet's revenues were c.EUR 16.5 million (c.USD 19.4m), representing a CAGR of 8% on a USD basis for the two preceding years, with an EBITDA of c.EUR 0.8m (c.USD 0.9m). CentralNic Group acquired all of the shares in Hexonet for up to EUR 10.0 million, subject to customary net cash and working capital adjustments, the payment being subject to Hexonet being delivered by the seller with over EUR 0.3m (c.USD 0.4m) of ongoing cost reductions compared to the 2018 cost base. Further, CentralNic Group filled staff vacancies budgeted at EUR 0.3m (c.USD 0.4m) with staff from Hexonet.

On 7 August 2019 CentralNic Group acquired the international domain name retailer Ideegeo Group Ltd ("Ideegeo"). The acquisition was both strategic and earnings accretive to CentralNic Group. Ideegeo is the operator of the retail website iwantmyname.com, a leading innovator in the application of User Centered Design to the retailing of domain names, with 180,000 domains under management. Since the acquisition CentralNic Group has started to deploy the design solutions developed by Ideegeo across its retail websites, noting that high usability is particularly ideal for customers in emerging economies, which is a key target market for CentralNic Group. The Company retained the staff of Ideegeo and appointed one of the founders as Customer Engagement Product Planner and Manager across its retail brands. For the financial year ended 31 March 2019, Ideegeo's revenues were c.NZD 6.2 million (c.USD 4.2m), with an EBITDA (adjusted for the costs of the shareholders leaving the business) of NZD 0.9m (c.USD 0.6m). The consideration represents a multiple of 5.8 times trailing adjusted EBITDA and was paid in cash.

To fund the above acquisitions and to refinance its bank debt, CentralNic Group successfully placed a debut EUR 50m senior secured bond issue on 24 June 2019, which was subsequently listed on the Oslo Stock Exchange and tapped for an additional EUR 40m for the Team Internet AG acquisition. The bond, which matures in July 2023, has a coupon of three-month EURIBOR (with a floor of zero per cent) plus 7% p.a. with quarterly interest payments. Pareto Securities acted as Sole Bookrunner for the bond issue. CentralNic Group was advised by Rothschild & Co in connection with the bond issue. The issue was oversubscribed and supported by a wide range of debt capital markets investors globally. This bond established CentralNic Group as an issuer and, in combination with our strong support among equity market investors, provides us with considerable financial flexibility, over the medium term, to pursue our strategic growth objectives.

On 24 December 2019, CentralNic Group acquired web services company Team Internet AG, a leading provider of monetisation services for domain investors. As reported by Matomy Media Group Ltd. as part of their audited annual report for FY2019, during the period from 1 January 2019 through 24 December 2019, the date of the sale of Team Internet AG to CentralNic Group, Team Internet recorded revenue of USD 74.0m and adjusted EBITDA of USD 12.3m. CentralNic Group acquired Team Internet AG for a total consideration of USD 48m cash, equivalent to 3.9 times Team Internet AG's EBITDA for the period 1 January 2019 to 24 December 2019. The acquisition is earnings enhancing and expected to be significantly accretive in the financial year ending 31 December 2020, before any synergies.

Through these acquisitions in combination with its organic growth, CentralNic Group doubled its revenue run-rate from the beginning of 2018 to the beginning of 2019. Recurring revenues from domain name subscription sales form the foundation of CentralNic Group's business and contributed the vast majority, an estimated 92%, of CentralNic Group's revenues in 2019. However, the highly attractive additional, domain-related software and services represent an earnings opportunity significantly greater than domain names, and CentralNic Group has been focused on rapidly gaining exposure to those services. In that respect, 2019 was a transformational year, in which the acquisitions made have the effect that our pro forma revenues from domain sales are now matched by the pro forma revenues from selling domain-related software and services.

In addition to the contribution these acquisitions have made to the continued growth of CentralNic Group, they also represent a practical demonstration of our team's ability to source and complete deals around the world and successfully integrate them. The Directors continue to build a pipeline of acquisition targets that fit the Group's criteria with a view to making further acquisitions in the coming years. As CentralNic Group's sector is proving resilient to business interruption, the Directors note the continued availability of attractive acquisition targets, which, coupled with the Group's proven ability to source, complete and integrate complex acquisitions around the world, provide an ongoing opportunity to build a sizeable global business to rival the largest industry players.

Post Year-end and Outlook

I am delighted to report that trading in Q1 2020 was in line with the Directors' expectations, despite the global business restrictions to slow the progress of COVID-19. As some of our group companies are considered critical infrastructure, our Group has a long history of being focussed on business continuity, which prepared us well for switching our staff to working from home while providing undiminished service to our customers.

As a provider of online subscription services with high cash-conversion and solid organic growth, we do not expect CentralNic Group to be severely affected by COVID-19, but we will take the necessary precautions to preserve our cash and review our acquisition pipeline and financing plans to ensure that we maintain stability and optimise our business strategies in the new global climate.

Ben Crawford, CEO

Chief Financial Officer's Report

2019 was yet another transformational year for CentralNic Group, not only by the number and volume of acquisitions completed, but also in the way that the Group structured and financed them. Most importantly, the acquisitions were immediately accretive as demonstrated by CentralNic Group's 2019 financial performance.

In the financial year 2019, the Group recorded overall year-on-year growth in revenues of 95% from USD 56.0m to USD 109.2m. The growth in the revenue line flowed proportionally down to Adjusted EBITDA*, which increased by 96% to USD 17.9m (2019: USD 9.1m). The Adjusted EBITDA Margin increased from 16.3% to 16.5%. Foreign exchange gains were USD 1.4m, after USD 0.8m in 2018.

The attractive cash generative profile of the Group continued in 2019 with net operating cash flow before tax and non-core expenses being USD 18.6m (2018: USD 11.8m). Cash at the end of 2019 was USD 26.2m (2018: USD 23.1m).

Key Performance Indicators 2019:

• Revenue: USD 109.2m (2018: USD 56.0m)

• Adjusted EBITDA*: USD 17.9m (2018: USD 9.1m)

• Operating loss: USD 0.5m (2018: USD 3.6m)

• Adjusted diluted EPS** up 43% to USD 6.81 cents (2018: USD 4.77 cents)

• Cash Balance 31 Dec 2019: USD 26.2m (2018: USD 23.1m)

• Net Debt 31 Dec 2019: USD 75.0m*** (2018: USD 3.2m)

* Earnings before interest, tax, depreciation and amortisation, foreign exchange, and non-core operating costs and revenues (acquisition costs, integration costs, share option expense and settlement items)

**Adjusted for amortisation, share-based payments expense, foreign exchange and non-core operating costs

*** Including prepaid finance costs

In 2018 the Company adopted segments related to customer types, namely Resellers, Small Businesses and Corporates, with each having distinct needs that are served by CentralNic Group's proprietary SaaS platform. For each segment, revenue and gross profit contributions to the total operating expenditure to operate the omni-platform shared services core are reported below.

Reseller segment

Two Reseller portals, namely Hexonet and TPP Wholesale, have been added through the acquisitions in the year. The Reseller segment now addresses c.29,000 customers with c.25.6m domain names under management. This has contributed to revenue in the Reseller segment increasing by 122% from USD 27.3m to USD 60.7m. Gross profit for the segment increased by 53% from USD 12.9m to USD 19.6m. The decrease in the gross margin from 47% to 32% is driven by the higher blended share of registrar business coming from the acquisitions as opposed to the near 100% gross margin registry business of the legacy CentralNic Group business - and is not indicative of declining prices.

Small Business segment

The portfolio of Small Business portals was extended by the acquisition of the IWantMyName.com portal. In total, the Small Business segment now addresses c.340,000 customers owning c.2.2m domain names and yielded revenue of USD 37.8m, an increase of 56% over the USD 24.2m recorded in 2018. Gross profit in 2019 was USD 16.1m, an increase of 64% over the 2018 figure of USD 9.9m.

Corporate segment

Revenue in the Corporate segment was USD 10.8m, an increase of 140% from the USD 4.5m reported in 2018, and Gross Profit increased by 120% to USD 7.0m from USD 3.2m in 2018. It served c.1,000 customers and managed c.154,000 domains on their behalf. For 2019, the one week of trading of Team Internet AG under CentralNic ownership has been included in the Corporate segment.

Overhead Expenses

Group overhead expenses excluding foreign exchange, depreciation, amortisation, impairment and non-core operating expenses increased 48% from USD 16.8m to USD 24.9m.

Going forward, the Company plans to amend its segmental reporting to reflect the new reality subsequent to the 2019 acquisitions and the accompanying review of the management structure.

Earnings Profile

The quality of the Group's earnings remains an important strategic priority for CentralNic Group and its investors, as the Group increases the proportion of revenues derived from predictable sources. Today, virtually all the Group's revenue is from recurring, and in most cases, subscription-based services.

Adjusted EBITDA of USD 17.9m (2018: USD 9.1m) has been derived from the operating loss of USD 0.5m (2018: USD 3.6m) after adjusting for the following items: a) depreciation of USD 1.3 m (2018: USD 0.3m); b) amortisation of intangible assets of USD 8.3 m (2018: USD 5.6m); c) fair value movement of investment of USD 0.0m (2018: USD 1.3m); d) noncore operating expenses of USD 7.3m (2018: USD 5.8m); e) foreign exchange gains of USD 1.5m (2018: USD 0.8m); f) immaterial amounts of associate income; and g) share based payment expense of USD 2.9m (2018: USD 0.5m).

Non-core expenses of USD 7.3m included USD 3.4m acquisition expenses, USD 3.3m integration expenses and USD 0.6m other expenses.

Other non-cash expenses included the acquired amortisation of intangible assets of USD 8.3m (2018: USD 5.6m). This reﬂects the full year effect of the scheduled amortisation for identified intangible assets of KeyDrive, as well as the 5 months post-acquisition of TPP, Hexonet, Ideegeo and for a marginal part Team Internet AG.

Basic earnings per share of -4.67 cents (2018: -5.04 cents) has been impacted by non-recurring acquisition costs, amortisation charges, and other significant non-core operating costs. Diluted earnings per share, at -4.67 cents (2018: -5.04 cents) reﬂected the dilutive effect of the share options "in the money" at the average share price for the year.

Group statement of financial position

The Group had net assets of USD 77.4m at 31 December 2019 (2018: USD 78.1m).

Capital expenditure and investing activities

Other than acquisitions, the Group had relatively limited capital expenditure. Excluding acquisitions, USD 4.5m of property, plant, and equipment have been added. Out of these, USD 3.6m related to recognising so called Right of Use Assets under IFRS 16. Further, USD 0.2m of intangible assets have been acquired. Excluding acquisitions and IFRS 16, USD 1.1m of tangible and intangible assets have been added, representing c.1% of group revenue.

In line with the appropriate treatment for translation of a foreign operation into the Group's presentational currency, both the tangible and intangible assets are translated at the closing rate, generating foreign exchange diﬀerences.

Except for goodwill, intangible assets are amortised in line with the Group's accounting policy. The carrying value of goodwill is tested annually for impairment, while the Directors also consider other intangible assets and investments for indications of impairment.

Cash flow and net cash

The cash ﬂow statement for the Group includes two major themes: the entries related to the ﬁnancing and completion of acquisitions and the results of the ongoing operations of the business, considering ﬂuctuations in working capital.

Net cash ﬂow from operating activities after tax was higher than the previous year at USD 16.3m (2018: USD 8.8m). In both years, the net cash ﬂow from operating activities was in line with expectations relative to Adjusted EBITDA.

Investing activities were mainly related to the four acquisitions completed during the financial year. The net cash outflow totalled USD 79.4m in 2019 as compared with USD 17.6m in 2018 where the KeyDrive acquisition was largely financed through an issue of equity.

Bond issue and loan refinancing

On 3 July 2019, the Company successfully issued EUR 50m of bonds in private placement to 40 institutional investors. The bond carries a coupon of 7% above 3-month EURIBOR, with a floor at 0%. It matures on 3 July 2023 and the Company is able to call the bond without indemnification anytime in the 12 months preceding the maturity. In case of a change of control, the Company may call the bond at 105% and the bondholders may put the bond at 101% of nominal value. The collateral is similar to the collateral formerly provided to Silicon Valley Bank (SVB), whose loan has been fully repaid from the bond proceeds. A major difference is that the collateral may be flexibly shared with other finance providers, either in the form of pari passu loans or bond issues, revolving credit facilities (RCF) or letter of credit facilities (LCF). The Company has issued additional bonds for EUR 40m on 23 December 2019 to Macquarie Principal Finance.

The bond was listed on the Oslo Stock Exchange on 30 September 2019 and is the first security of the Company being listed on a Regulated Market in the meaning of the EU's Financial Services Action Plan. The Company has adopted a policy of quarterly trading updates.

The relationship with SVB has been maintained. The Company currently has a super senior revolving credit facility (RCF) and letter of credit facility for a combined total amount of EUR 7.5m. On the balance sheet date, the RCF has been utilised for an equivalent of USD 2.2m and the LCF has been utilised for an equivalent of USD 1.75m.

The Group is in compliance with the maintenance covenant ratios and its payment obligations under the bond and facilities agreement.

Consideration shares

Under the earnout agreed for the acquisition of KeyDrive SA in 2018, during the 2019 financial year, USD 6,834,000 Additional Consideration attributable to the FY2018 objectives became payable to Inter.Services. 15%, equalling USD 1,025,100 has been settled in cash. The remainder of the Additional Consideration attributable to FY2018 objectives was settled by issuing 7,384,978 Additional Consideration Shares, at 59.3p per share. Inter.Services holding increased from c.16.4% to c.19.1% of the issued share capital of the Company.

Out of the total consideration of USD 48m for the acquisition of Team Internet AG, USD 45m is cash-settled and USD 3m has been settled in CentralNic Group Plc shares on completion. CentralNic Group Plc shares have been valued at 59p, resulting in 3,911,650 shares having been issued to the sellers, subject to a 12 months restriction on sales and a 6 months orderly market condition.

Earnout and Deferred Consideration

SK-Nic met its performance target and therefore USD 1.8m was paid to the vendors during 2019. Further tranches of USD 1.7m, USD 0.7m and USD 1.1m will become payable subject to the achievement of performance criteria in each of 2020, 2022, and 2024.

For KeyDrive, out of the USD 6.8m having become due under the earnout USD 1.0m has been settled in cash. The remaining earnout amount due is expected to be determined and settled in June 2020.

In relation to GlobeHosting, USD 0.7m became payable in September 2019 and another USD 0.5m is anticipated to become payable in September 2020.

For Team Internet AG, USD 3.0m have been deferred until June 2020 and USD 1.0m will be withheld until March 2021 to cover eventual warranty breaches.

CentralNic is an independent global domain name service provider. It provides Reseller, Small business and Corporate services and is the owner and registrant of a portfolio of domain names. 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 arising from the operating, investing and financing activities for each reportable segment for their decision making and have therefore not included them. There was a change in the composition in the segmental analysis and the comparatives have been updated. The segmental analysis is organised around the products and services of the business.

The Reseller segment is a global distributor of domain names and provides consultancy services to retailers. The Small Business segment provides domain names and ancillary services to end users, also on a global basis. The Corporate segment represents revenue generated by providing domain names and monitoring services to protect brands online,technical and consultancy services to corporate clients, licencing of the Group's in house developed registry management platform.

During 2019 management reviewed the activities of the CentralNic Group in the segments disclosed below:

	2019
	Reseller	Small business	Corporate	Total
	USD'000	USD'000	USD'000	USD'000

Revenue	60,681	37,753	10,760	109,194

Gross profit	19,604	16,135	7,036	42,775

Total administrative expenses				(40,416)
Share based payments expense				(2,878)
Operating loss				(519)

Adjusted EBITDA				17,921
Depreciation				(1,306)
Amortisation of intangibles assets				(8,299)
Fair value movement of investment				-
Non-core operating expenses				(7,357)
Foreign exchange				1,474
Share of associate income				(74)
Share based payment expense				(2,878)
Operating Loss				(519)

Finance cost (net)		(7,754)

Share of associate income				74

Loss before taxation				(8,199)

Income tax expense				39

Loss after taxation				(8,160)

	2018
	Reseller	Small business	Corporate	Total
	USD'000	USD'000	USD'000	USD'000

Revenue	27,288	24,223	4,480	55,991

Gross profit	12,853	9,858	3,200	25,911

Total administrative expenses				(29,053)
Share based payments expense				(469)
Operating loss				(3,611)

Adjusted EBITDA				9,146
Depreciation				(326)
Amortisation of intangibles assets Fair value movement of investment				(5,600) (1,265)
Non-core operating expenses				(5,840)
Foreign exchange				788
Share of associate income				(45)
Share based payment expense				(469)
Operating loss				(3,611)

Finance cost (net) Share of associate income		(1,430) 45

Loss before taxation				(4,996)

Income tax expense				(1,428)

Loss after taxation				(6,424)

The geographical locations of the non-current and current assets and non-current and current liabilities are as follows.

	2019
	Non-current assets	Current assets	Non-current liabilities	Current liabilities
	USD'000	USD'000	USD'000	USD'000
UK	24,170	16,716	101,263	31,147
North America	6,050	3,952	42	4,584
Europe	154,136	36,755	24,514	33,332
Australasia	30,257	4,976	3,387	4,314
ROW	3,335	1,722	-	2,080
	217,948	64,121	129,206	75,457

	2018
	Non-current assets	Current assets	Non-current liabilities	Current liabilities
	USD'000	USD'000	USD'000	USD'000
UK	6,395	16,161	36,509	25,482
North America	1,103	4,310	-	1,569
Europe	94,366	17,770	6,679	24,493
Australasia	26,897	9,115	-	7,706
ROW	3,560	4,022	-	3,194
	132,321	51,378	43,188	62,444

The Reseller segment generated its revenue from reselling domain names totalling USD 60,681,000 (2018: USD 25,256,000), USDnil (2018: USD1,810,000) from consultancy and USD nil (2018: USD 222,000) from DotBrand revenues. The Small Business segment wholly represents revenue from provision of domain names sales totalling USD 37,753,000 (2018: USD 24,223,000). The Corporate segment generated its revenue from corporate revenues of USD 10,760,000 (2018: USD 4,050,000), and software licensing revenues of USD nil (2018: USD 430,000). As part of the streamlining of the segmental analysis in 2018, DotBrand revenues are now included in the Reseller segment from the Corporate segment and Team Internet revenues are included in the corporate segment as managements believe the monetisation revenue stream is best represented through the corporate segment.

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

	2019	2018
	USD'000	USD'000
Reseller Domain Sales
UK	828	660
North America	13,509	5,297
Europe	34,972	17,689
ROW	11,372	3,642


	60,681	27,288


Small Business Domain Sales
UK	2,428	1,919
North America	8,907	6,045
Europe	15,213	5,805
ROW	11,205	10,454


	37,753	24,223

Corporate Sales
UK	372	680
North America	2,851	1,431
Europe	6,121	2,265
ROW	1,416	104


	10,760	4,480

The Reseller segment had no one customer that represents more than 10% of the segment's revenue. No single customer contributes greater than 10% or more of the Small Business sales.

The Corporate segment has two customers that represented more than 10% of the segment's revenue in the year of USD 3,320,000 (2018: USD 605,000).

The CentralNic Group's revenue is generated from the following countries:

	2019	2018
	USD'000	USD'000
Revenue by Customer Location

United States of America	24,364	11,921

Germany	19,999	9,525
Australia	6,645	2,113
Switzerland	5,549	2,324
United Kingdom	3,628	2,460
China	2,858	1,397
France	2,637	1,264
United Arab Emirates	1,166	995
Italy	1,751	1,051
Russian Federation	1,254	739
Singapore	1,059	861
Canada	756	736
Hong Kong	728	625
New Zealand	654	535
India	530	382
Chile	94	118
Other	35,522	18,947

	109,194	55,991

The profit before taxation is stated after charging the following amounts.

	2019	2018
	USD'000	USD'000

Employee benefit expense - wages and salaries	14,659	8,265
Employee benefit expense - social security	2,093	1,201
Employee benefit expense - pension	353	224
Employee benefit expense - share based payments	1,258	142
Staff consultancy fees	1,689	917
Directors' remuneration - fees and salaries	2,105	1,446
Directors' remuneration - share based payments	1,620	294
Operating Leases - land & buildings	-	399
Operating Leases - equipment	-	625
Fees payable to the Company's auditor for the audit of Parent
Company and consolidated financial statements - UK auditor office	270	179
Fees payable to the Company's auditor for the audit of
subsidiary companies - Overseas auditor associates	3	63
Fees payable to Company's auditors for:
- Assurance related services	73	36
- Due diligence and other acquisition costs	238	467
Net gain on foreign currency translation	(1,474)	(800)
Depreciation and amortisation expenseI	9,605	5,681

	2019	2018
	USD'000	USD'000

Acquisition related costs	34,66	4,785
Acquisition related bonuses	603	-
Integration and streamlining	3,288	1,055
	7,357	5,840

	2019	2018
	USD'000	£'000

Interest income on loans to Accent Media Ltd (related party)	5	3

Finance income	5	3

Unwinding of deferred consideration	(3,398)	(117)
Arrangement fees on borrowings	(1,420)	(185)
Interest expense on loans to Shareholders	-	(6)
Interest expense on short-term borrowings	(781)	(84)
Interest expense on long-term bank borrowings	(2,033)	(1,041)
Interest expenses on leases	(127)	-

Finance costs	(7,759)	(1,433)

Net finance costs	(7,754)	(1,430)

	2019	2018
	USD'000	USD'000
UK corporation tax
Current tax on profits for the year	(1,123)	(1,441)
Adjustments in respect of prior years	47	(325)
Current Income Tax	(1,076)	(1,766)

Foreign tax
Current tax on profits for the year	(168)	(190)
Adjustments in respect of prior years	-	(166)
	(168)	(356)

Total current tax	(1,244)	(2,141)

Deferred Income Tax	1,283	713

Income tax expense	39	(1,428)

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 CentralNic is as follows:

	2019	2018
	USD'000	USD'000

Loss before taxation	(9,839)	(4,996)

Tax calculated at domestic tax rates applicable to profits in the respective countries	(3,596)	830

Tax effects of;
- Expenses not deductible for tax purposes	402	(1,721)
- Tax losses movement	578	(518)
- Share based payment	403	-
- Deferred tax	1,283	713
- Withholding tax	(168)	(356)
- Other adjustments	1,091	(51)
- Adjustment in respect of prior years	48	(325)

Current income tax	39	(1,428)

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 effective rate of tax for the year is 0.40% (2018: 27.9%).

In the UK, the applicable statutory tax rate for 2019 is 19% (2018: 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. Further, a community business tax of c.14%-17% is also levied with rates determined by the municipality. An additional 5.5% solidarity surcharge is due on the federal and municipal tax, taking the total effective tax charge to c.30%-34%.

In addition, for the current year, included within the domestic tax rates applicable to profits are Australia where income tax is due at 30% of taxable income and New Zealand, where income tax is due at 28% on taxable income.

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

Earnings per share has been calculated by dividing the consolidated profit 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 the dilutive potential ordinary shares as calculated using the treasury stock method (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. Due to the loss made in the year ended 31 December 2019, the impact of the potential shares to be issued on exercise of share options and warrants would be anti-dilutive and therefore diluted earnings per share is reported on the same basis on earnings per share.

	2019	2018
	USD	USD
Loss after tax attributable to owners (USD'000)	(8,160)	(6,424)

Operating loss	(519)	(3,611)
Depreciation	1,306	326
Amortisation of intangible assets	8,299	5,600
Fair value movement of investment	-	1,265
Non-core operating expenses	7,357	5,840
Foreign exchange	(1,474)	(788)
Share of associate income	74	45
Share based payments expense	2,878	469
Adjusted EBITDA	17,921	9,146
Depreciation	(1,306)	(326)
Finance costs (excluding deferred consideration related amounts)	(4,361)	(1,316)
Finance income	5	3
Taxation	39	(1,428)
Adjusted Earnings	12,298	6,079

Weighted average number of shares:
Basic	175,083,962	127,515,308
Effect of dilutive potential ordinary shares	5,397,202	-
Diluted	180,481,164	127,515,308
Earnings per share:
Basic (cents)	(4.67)	(5.04)
Diluted (cents)	(4.67)	(5.04)
Adjusted earnings - Basic (cents)	7.02	4.77

Adjusted earnings - Diluted (cents)	6.81	4.77

	Right of use assets	Motor vehicles	Computer equipment	Furniture and fittings	Total
	USD000	USD'000	USD'000	USD'000	USD'000
Cost
At 1 January 2018	-	-	961	130	1,091
Additions	-	-	377	8	385
Acquisition of Subsidiary	-	29	468	140	637
Exchange differences	-	1	(84)	(21)	(104)
Disposals	-	-	-	-	-
At 31 December 2018	-	30	1,722	257	2,009
IFRS 16 adjustment 1 January	779	-	-	-	779
Additions	3,598	-	680	213	4,491
Acquisition of Subsidiary	911	-	376	127	1,413
Exchange differences	113	(18)	(132)	(17)	(54)
At 31 December 2019	5,401	12	2,645	580	8,638

Accumulated depreciation
At 1 January 2018	-	-	720	88	808
Charge for the year	-	10	288	28	326
Exchange differences	-	1	(50)	(7)	(56)
Disposals	-	-	-	-	-
At 31 December 2018	-	11	958	109	1,708
Charge for the year	658	5	527	116	1,306
Exchange differences	11	(4)	(164)	(18)	(174)
At 31 December 2019	669	12	1,321	208	2,210

Property, plant and equipment, net
At 31 December 2019	4,732	-	1,324	372	6,428
At 31 December 2018	-	19	764	148	931

Depreciation of property, plant and equipment is included in administrative expenses in the consolidated statement of comprehensive income.

	Domain Names	Software	Customer List	Patents & Trademarks	Goodwill	Intellectual Property	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD000	USD'000
Cost or deemed cost
At 1 January 2018	1,550	5,170	33,069	-	39,413	-	79,202
Additions	-	483	1,472	319	2,065	-	4,339
Acquisition of Subsidiary	12	8,982	8,978	2,794	37,192	-	57,958
Reclassification	-	-	-	-	-	-	-
Exchange Differences	(90)	4	(1,573)	97	(1,070)	-	(2,632)
At 31 December 2018	1,472	14,639	41,946	3,210	77,600	-	138,867
Additions	-	163	-	-	-	-	163
Acquisition of Subsidiary	6,761	3,232	34,566	1,874	31,775	1,464	79,673
Reclassification from Inventory	3,467	-	-	-	-	-	3,467
Exchange Differences	138	283	2,670	90	492	175	3,847
At 31 December 2019	11,839	18,318	79,182	5,174	109,867	1,639	226,017
Amortisation
At 1 January 2018	299	2,284	3,982	-	-	-	6,565
Charge for the year	122	1,616	3,773	89	-	-	5,600
Exchange differences	(22)	(182)	(360)	(1)	-	-	(565)
At 31 December 2018	399	3,718	7,395	88	-	-	11,600
Charge for the year	643	2,160	5,136	298	4	58	8,299
Exchange differences	34	76	317	(8)	(370)	20	68
At 31 December 2019	1,076	5,954	12,848	378	(367)	78	19,967
Intangible assets, net
At 31 December 2019	10,763	12,364	66,334	4,795	110,233	1,561	206,050
At 31 December 2018	1,073	10,921	34,551	3,122	77,600	-	127,267

For the purposes of the impairment evaluation, the intangible assets are evaluated according to their cash generating units (CGUs) which are the separate identifiable entities acquired in each of the Internet.bs, Instra, SK Nic, and KeyDrive and GlobeHosting acquisitions. Acquisitions completed in the current financial year will be tested for impairment in subsequent financial years.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

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

Certain domain names previously held as inventory held for resale were reclassified to intangible assets in 2019.

TPP Wholesale

The purchase of TPP Wholesale, an asset acquisition is included in the additions line of the note above. On 1 August 2019, the Group completed the acquisition of TPP Wholesale, a carve out of certain trade and assets from ARQ Group Limited (ASX: ARQ) (''ARQ''), a company listed on the Australian Securities Exchange. TPP Wholesale is Australasia's leading domain name and hosting reseller platform business with around 14,000 reseller customers and 840,000 domains under management, including 19% of all.com.au registrations. The total cash consideration for the acquisition comprises an initial purchase price of USD 14.7m less the Purchase Price Adjustment of USD 0.5m which is an estimated Working Capital Adjustment restated at the completion date representing a total gross consideration/headline consideration of USD 16.6m including taxes. The initial purchase price of TPP Wholesale amounting to USD14.7m represent 4.5 x EBITDA, less USD 0.5m of adjustment. Given the nature of the acquisition, the transition period is expected to stipulate a 2 years transition in order to migrate the customer base giving rise to a number of one-off costs of approximately USD 1.24m , of which USD 0.5m AUD has already been incurred in CentralNic's financial year ended 31 December 2019.

Goodwill and Customer List

The Group tests goodwill recognised through business combinations annually for impairment. Additions to goodwill arose through business combinations outlined in note 19. The carrying value of goodwill and the customer list is allocated to the respective segments within the CGUs as follows:

	Customer List		Goodwill
	2019	2018	2019	2018
	USD,000	USD,000	USD'000	USD'000
Reseller segment	24,676	21,065	55,203	46,449
Small Business segment	11,331	12,047	29,638	25,344
Corporate segment	30,327	1,439	23,041	5,807
Total carrying value	66,334	34,551	107,882	77,600

The recoverable amount of goodwill of USD 107,882,000 (2018: USD 77,600,000) at 31 December 2019 is determined based on a value in use using cash flow projections from financial budgets approved by senior management covering a one to three years period. Cash flow projections beyond the one to three year time frame are extrapolated by applying a flat growth rate in perpetuity per the table below which is based on management judgement, historical trends, expected return on investment, experience and discretion. The pre-tax discount rate applied to the cash flow projections is 8.5%-10.3% depending on the segment within each CGU. As a result of the analysis, management did not identify any impairment of goodwill.

The assumptions used in the cash flow projections were as follows;

	Growth Rates

Reseller segment		1-5%
Small Business segment		1%
Corporate segment		-%

Discount rates:

Discount rates represent the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and is derived from its WACC, with appropriate adjustments made to reflect the risks specific to the CGU and to determine the pre-tax rate. The cost of equity is derived from the expected return on investment by the Group's investors.

Management considers that no reasonable change in these key assumptions would cause the carrying amount of this asset to exceed its value in use.

	2019	2018
	USD'000	USD'000

Deferred costs	1,414	1,006
Amounts due from related parties	100	100

	1
	1,514	1,106

In June 2017 the Company loaned Accent Media Ltd USD 100,000 (2018: USD 100,000). The loan is due for repayment in three years and accrues interest at 5% which is payable quarterly in arrears.

The deferred costs are prepaid invoices for a period over 12 months relating to domain name purchases from wholesalers.

a) Fair value through other comprehensive income	USD'000
At 31 December 2018	-
Fair value movement	-
At 31 December 2019	-
.0

The Company owns less than 20% of the following undertakings which are incorporated in the United Kingdom (UK):

Name	Place of incorporation/ establishment	Principal activities	Issued and paid-up/ registered capital	Effective interests

Accent Media Ltd	UK	Domain registry operator	Ordinary shares	10.4%

This investment is categorised in the fair value hierarchy under Level 3 as no observable market data was available.

The fair value of the investment at 31 December 2018 continues to be assessed using a price of recent investment valuation technique, supported by a DCF valuation technique to corroborate the measure of fair value of the investment. The valuation method applied to this investment is considered the most appropriate with regard to the stage of the development of the business and the IPEVCV guidelines. In applying the price of recent investment valuation methodology, the basis used is the initial cost of the investment.

In deriving the price of recent investment the Directors have given consideration to the cost of investment arising from transactions involving both the Company and (subsequently) third parties. In determining the continued use of the price of recent investment valuation the directors have considered the continued validity of this method by reference to the timing of the most recent transactions, the existence of indicators of change in fair value and the appropriateness of alternative valuation techniques. Whilst the directors accept that Accent Media continues to be at an early stage, and envisage its profitability to improve, due to the business's current profitability, a prudent approach of applying a full impairment in 2018 has been adopted of USD 997,000.

There has been no movement on the investment of Accent Media Ltd's investment during the financial year ended 31 December 2019.

The net assets of Accent Media Limited (in which the Group has 10.4% shareholding) in the most recently publicly available unaudited financial statements for the year ended 31 March 2019 were USD 3,071,963.

b) Investments in associates

At 31 December 2018	1,390
Additions	92
Share of associate income	75
Foreign exchange movement	221
At 31 December 2019	1,778

The Company owns the following investment in associates:

Name	Place of incorporation/ establishment	Principal activities	Issued and paid-up/ registered capital	Effective interests

Thomsen Trampedach GmbH	Germany	Online Brand Protection	Ordinary shares	26.5%

% of ownership interests/voting rights held by the Group	2019 USD'000	2018 USD'000
At 31 December:
Non-current assets	477	283
Current assets	1,295	1,472
Current liabilities	(694)	(940)
Net assets	1,078	815
Group's share of net assets	286	216
Others	792	599

Year ended 31 December 2019:
Revenue	3,089	3,295
Profit from continuing operations	283	412
Post-tax profit or loss from continuing operations	241	349
Total comprehensive income	241	349

	2019	2018
	USD'000	USD'000

Trade receivables	21,121	12,393
Accrued revenue	6,251	5,141
Deferred costs	1,723	3,556
Supplier payments on account	4,387	1,550
Prepayments and other receivables	7,278	1,742


	40,760	24,382

As of 31 December 2019, trade receivables of USD 5,194,000 (2018: USD 643,000) were past due but not impaired. These primarily relate to several customers for whom there is considered a low risk of default.

The ageing of the trade receivables past due but not impaired is as follows; 0-30 days USD 2,920,000 (2018: USD 159,000), 30-60 days USD 888,000 (2018: USD 117,000), 60-90 days USD 388,000 (2018: USD 87,000), and over 90 days USD 998,000 (2018: USD 342,000).

The deferred costs are prepaid invoices for a period within 12 months relating to domain name purchases from wholesalers. Supplier payments on account reflect payments to domain name registries for use against future wholesale domain purchases within the Internet.BS and Instra retail businesses. Other receivables primarily relate to rebates due from registries in the KeyDrive and UK businesses.

These are no contract assets within trade and other receivables.

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

	2019	2018
Amounts held on deposit	USD'000	USD'000

GBP	591	1,262
USD	12,784	12,389
EUR	10,990	8,583
AUD	127	196
NZD	962	239
CAD	62	54
Other	666	367
	26,182	23,090

	1118

The Company's issued and fully paid share capital is as follows:

		Share Capital		Share Premium	Merger relief Reserve
	Number		USD'000	USD'000	USD'000
Ordinary shares of 0.1 pence each
At 31 December 2017	95,894,348		119	20,369	2,314
Options exercised on 1 February 2018	598,000		1	255	-
Shares issued in respect of KeyDrive acquisition	74,160,454		96	49,971	-
Transaction costs	-		-	(1,357)	-
At 31 December 2018	170,652,802		216	69,238	2,314
Proceeds from shares issued in connection with the employee share option schemes	100,000		-	44	-
Shares issued to settle the deferred consideration in respect of KeyDrive acquisition	7,384,978		10	5,553	-
Options exercised in August 2019	436,698		1	5
Shares issued in respect of Team Internet acquisition	3,911,650		5		2,983

	182,486,128		232	74,840	5,297

On 14 June 2019 7,384,978 Ordinary shares were issued for USD 5,563,000 in relation to the KeyDrive acquisition to settle the deferred consideration and on 24 December 2019 3,911,650 Ordinary shares for USD 2,988,000, net of share issue costs in relation to the acquisition of Team Internet.

The Company has an authorised share capital of £56,900, thereof £17,075 with suspended pre-emptive right. The authorised capital expires at the earlier of the AGM held in 2020 and 20 September 2020

	2019	2018
	USD'000	USD'000

Deferred revenue	1,604	3,144
Deferred consideration	2,194	4,516


	3,798	7,660

	2019	2018
	USD'000	USD'000

Trade payables	15,645	9,248
Accrued expenses	23,252	12,144
Other taxes and social security	-	327
Deferred consideration	10,881	7,581
Deferred revenue	6,331	9,992
Customer payments on account	16,724	19,693
Accrued interest	1,850	230
Other liabilities	4,311	504
	78,994	59,719

		2019		2018
		USD'000		USD'000
Non-current
Bank borrowings		101,402		23,702
Prepaid finance costs		(2,435)		(769)
		98,967		22,933

Current
Bank borrowings		3,307		2,560
Prepaid finance costs		(1,094)		(288)
		2,213		2,272


Total Borrowings		101,180		25,205
	Bank borrowings		Prepaid finance Costs		Total
	USD'000		USD'000		USD'000

Bank borrowings 1 January 2018	23,090		(872)		22,218
Repayment of initial loan	-		-		-
New financing drawdown (August 2017)	5,583		(399)		5,184
New financing drawdown (November 2017)
Repayment of new financing	(2,560)		215		(2,345)
Exchange differences	149		-		149
Total borrowing as at 31 December 2018	26,262		(1,056)		25,206
New financing drawdown	3,536		(150)		3,386
New financing bond	96,707		(3,379)		93,328
Repayment of new financing	(26,041)		1,046		(24,995)
Exchange differences	4,246		9		4,255
Total borrowing as at 31 December 2019	104,710		(3,530)		101,180

The borrowings amounting to USD 96,700,000 (€90,000,000) relate to two successful placements of senior secured non-convertible bond issues in the amount of €50,000,00 completed on 24 June 2019 and €40,000,000 completed on 20 December 2019 respectively. The bond matures in July 2023 and has a coupon of three-month EURIBOR plus 7% per annum with quarterly interest payment. The €90m bond is currently listed on the Oslo Stock Exchange and can also be traded on the Open Market of the Frankfurt Stock Exchange. The bond proceeds received has been used to fund the acquisition occurred during the financial year ended 31 December 2019 and to repay the existing interest-bearing liabilities.

Bank borrowings relate to the €7,500,000 secured debt facility (RCF) entered into with Silicon Valley Bank (SVB) on 11 September 2019. The debt facility was used to fund the working capital requirement of the parent company, which has no income other than dividends interest and intercompany recharges from subsidiaries which may or may not coincide with the payment obligations of the parent company. As of the balance sheet date a total amount of USD 2,500,000 has been drawn down from the SVB RCF facility.

Hexonet Group

On 7 August 2019, CentralNic Group completed the acquisition of the entire issued share capital of Mediasiren Advertising Inc. and Hexonet GmbH for €5.0m and €5.9m respectively, a privately-owned Group of companies with operations in Canada and Germany. The companies sell domain name subscriptions directly and via more than a thousand resellers in over 110 countries, managing over 3.8 million domains on its proprietary software platforms. The acquisition increases the number of domains under management on CentralNic's reseller platforms by c.28%. The total consideration comprises a USD 7.8m (€7m) cash payment plus a purchase price adjustment of USD 0.9m at the completion date and a deferred consideration payment €3.0m on the first anniversary of the completion, either payable in cash or CentralNic shares at prevailing market price, at the Company's discretion.

The primary reason for the business combination was to acquire the high-level recurring revenue and excellent customer retention of Hexonet Group providing access to a new international market with sustainable growth characteristics in line with the Group strategy.

The following table summarises the consideration paid for the share capital of Mediasiren Advertising Inc. and Hexonet GmbH and the fair value of the assets and liabilities at the acquisition date on a combined basis:

Consideration	USD'000	€'000
Initial Cash consideration	7,834	7,029
Purchase price adjustment	1,245	1,117
Deferred consideration (in cash or shares)	3,310	2,970
Total consideration	12,390	11,116

Fair value recognised on acquisition	USD'000	€'000
Assets
Platform technology	446	400
Trademarks	669	600
Customer relationships	1,115	1,000
Other intangible assets	39	35
Property, plant & equipment	67	60
Other investments	2	2
Trade receivables	1,402	1,258
Other receivables	654	587
Cash	537	482
	4,931	4,423
Liabilities
Trade payables	495	444
Other payables and accruals	2,065	1,853
Deferred tax	673	604
Corporationtax	(14)	(13)
	3,219	2,888

Total identifiable estimated net assets at fair value	1,712	1,535

Goodwill arising on acquisition⁺	10,678	9,581

Purchase consideration	12,390	11,116

Management have evaluated the value of the acquired customer list in relation to the domains under management at the time of acquisition and the expected discounted future cash flow that is expected to derive from the existing customer base, with the residual intangible classed as goodwill. Goodwill arising on acquisition primarily relates to the inherent value of the acquired Hexonet gTLD and goodwill in relation to employees.

Acquisition related costs of USD 0.3m have been recognised in the income statement.

For the post-completion period to 31st December 2019 revenues of USD 8.2m and Adjusted EBITDA of USD 0.7m have been generated by Hexonet Group.

Ideegeo

On 7 August 2019, the Company completed the acquisition of Ideegeo Group Limited, a privately-owned domain name retailer serving an international customer base from New Zealand for a total consideration of $5.2m NZD (c.USD 3.4m), of which $0.5m NZD (c.USD 0.3m) constitutes a deferred payment which will be held in an escrow account until May 2021. The total consideration represents a multiple of 5.8 times trailing adjusted EBITDA. Ideegeo Group Limited, sells domain name subscriptions directly to small business customers, with a high level of recurring revenues and excellent customer retention.

CentraNic's management strongly believes that there would be cross selling opportunities by providing Ideegeo's existing 80,000 customers with CentralNic's extended product offering such as hosting, SSL certificates and other additional subscription products and services. The acquisition is both strategic and earnings accretive to CentralNic. Ideegeo is also the operator of the retail website iwantmyname.com, a leading innovator in the application if User Centered Design to the retailing of domain names with 180,000 domains under management.

The following table summarises the consideration paid for the share capital of Ideegeo and the fair value of the assets and liabilities at the acquisition date in line with Group accounting policies.

Consideration	USD'000	NZD$'000
Initial Cash consideration	3,011	4,680
Purchase price adjustment	111	173
Deferred consideration (in cash)	334	520
Total consideration	3,457	5,373

Fair value recognised on acquisition	USD'000	NZD$'000
Assets
Trademarks	193	300
Customer relationships	515	800
Property, plant & equipment	7	11
Other investments	32	50
Trade receivables	1	2
Other receivables	65	102
Cash	127	197
	940	1,462
Liabilities
Trade payables	-	-
Other payables and accruals	491	764
Deferred revenue	-	-
Deferred tax	198	308
Corporation tax	4	6
	693	1,078

Total identifiable estimated net assets at fair value	(247)	(384)

Goodwill arising on acquisition	3,210	4,989

Purchase consideration	3,457	5,373

Management have evaluated the value of the acquired customer list in relation to the domains under management at the time of acquisition and the expected discounted future cash flow that is expected to derive from the existing customer base, with the residual intangible classed as goodwill. Goodwill arising on acquisition primarily relates to the inherent value of the acquired Ideegeo gTLD and goodwill in relation to employees.

Acquisition related costs of USD 0.2m have been recognised in the income statement.

For the post-completion period to 31st December 2019 revenues of USD 1.6m and Adjusted EBITDA of USD 0.2m have been generated by Ideegeo.

The acquisition of TPP Wholesale, Hexonet Group and Ideegeo were funded by a senior secured bond of €50m which was admitted to trading on the Oslo Stock Exchange on the 27 September 2019. The senior secured bond has a maturity of 4 years, ending on 3 July 2023 and a coupon of three-month EURIBOR plus 7% p.a.

Team Internet

On 23 December 2019, CentralNic Group PLC completed the acquisition of the entire share capital of web services provider, Team Internet for a total consideration of USD 48m. The total consideration of USD 48m comprises a cash consideration of USD 45m, of which USD 3m is deferred, and a share consideration of USD 3m payable in Group shares which are subject to a lock-in period of 12 months, during which the vendors of Team Internet are unable to dispose of their Consideration Shares, followed by a period of 6 months during which they may only do so with the Company's consent. The consideration paid represents a multiple of 4.5 times Team Internet's EBITDA on a continuing basis for the trailing 12 months to 30 June 2019 of USD 10.6m. The acquisition is expected to be immediately earnings enhancing and significantly accretive in the financial year ending 31 December 2020 on a standalone basis before any integration or revenue synergies.

The primary reason for the business combination is to become one of the world's leading providers of domain name monetisation services with a proprietary platform that enables domain name investors to generate recurring advertising income from their assets. The acquisition is expected to be immediately earnings enhancing and significantly accretive before any synergies and management believes Team Internet is a strong fit for CentralNic stated strategy to derive recurring revenue from domain related technologies.

The following table summarises the consideration paid for the share capital of Team Internet and the fair value of the assets and liabilities at the acquisition date in line with Group policies.

Consideration	USD'000	€'000
Initial Cash consideration	40,885	39,900
Locked box interest	846	764
Share consideration	2,992	2,700
Purchase price allocation	2,941	2,654
Deferred cash consideration	2,992	2,700
Deferred consideration (in cash or shares)	997	900
Total consideration	51,653	46,619

Fair value recognised on acquisition	USD'000	€'000
Assets
Domain names	6,872	6,206
Research and development	646	583
Technology	2,210	1,996
Customer relationships	28,571	25,800
Other intangibles assets	102	93
Property, plant & equipment	427	386
Other investments	300	271
Trade receivables	11,406	10,294
Other receivables	3,243	2,927
Cash	2,153	1,943
Deferred charges	468	422
	55,930	50,921
Liabilities
Trade payables	4,832	4,361
Loan facilities	1,080	975
Other payables and accruals	1,972	1,779
Advance receipts	741	669
Corporation and deferred tax liabilities	73	66
Deferred tax	10,157	9,172
Other provisions	2,704	2,441
	21,560	19,463

Total identifiable estimated net assets at fair value	34,370	31,458

Goodwill arising on acquisition	17,283	15,161

Purchase consideration	51,653	46,619

For the post-completion period to 31st December 2019 revenues of USD 1.9m and Adjusted EBITDA of USD 0.4m have been generated by Team Internet.

The acquisition of Team Internet was funded via a €40m further bond issue of its existing senior secured bond (the ''Tap Issue'') subscribed by Macquarie Principal Finance and admitted to the Oslo Stock Exchange. The bond has a maturity of 4 years, ending on 3 July 2023 and a coupon of three-month EURIBOR plus 7% p.a.

Management has evaluated the value of the acquired customer list in relation to the domains under management at the time of acquisition and the expected discounted future cash flow that is expected to derive from the existing customer base, with the residual intangible classed as goodwill. Goodwill arising on acquisition primarily relates to the inherent value of the acquired Team Internet gTLD and goodwill in relation to employees.

The Company is not controlled by any one party.

Key management are considered to be the Directors and key management personnel.

Balances outstanding with shareholders:

Amounts due from Jabella Group Limited were interest free until 31 August 2013, from which time the balance accrued interest at 2% above LIBOR. Following the loan repayment in 2018, there was no interest received in the year.

During the year Inter.Services GmbH, a company of which Alexander Siffrin is a shareholder provided services totalling USD 478,000 (2018: USD 227,000) to the Group. USD nil (2018: USD 15,000) was outstanding at the year-end.

During the year the Group incurred rental costs of USD 6,000 (2018: USD 3,000 from Horst Siffrin, a close relative of Alexander Siffrin.

The group provided services amounting to USD 198,000 (2018: USD 15,000) to Shortdot S.A., a company of which Michael Riedl is a Director and Shareholder. The amount outstanding at the year-end amounted to USD 132,000 (2018: USD 6,000).

The group provided services amounting to USD 31,957 (2018: USD 7,686) to Neozoon Sàrl a company of which Michael Riedl is a Director and Shareholder and procured services from Neozoon Sàrl amounting to USD 2,813 (2018: USD 1,515). The amount outstanding at the year-end amounted to USD 2,154 (2018: USD nil).

Rental income payable to Erin Investments & Finance Limited of which Samuel Dayani is a member, amounted to USD 39,000 (2018: USD 85,000) for the year. The Company was not recharged for the service charges. USD nil (2018: USD 36,000) was payable at the year-end and the Company has vacated the premises.

During the year, CentralNic engaged with Rickert Rechtsanwaltsgesellschaft GmbH, of which Thomas Rickert has a controlling interest, to provide legal services in relation to the purchase of intangible assets and advise on potential acquisitions and other legal works. The fees were USD 10,000 (2018: USD 7,000) and no amounts were outstanding as at 2019 and 2018 year-ends.

Balances outstanding with other related parties:

	2019	2018
	USD'000	USD'000
Accent Media Ltd	100	100

In June 2017 the Company loaned Accent Media Ltd USD 100,000 (2018: USD 100,000 and 2017: USD 100,000). The loan is due for repayment in three years from the date of advance and accrues interest at 5% which is payable quarterly in arrears. Interest receivable in the year amounted to USD 5,000 (2018: USD 3,000).

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 focuses 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:

	2019	2018
	USD'000	USD'000
Financial assetsmeasured at amortised cost

Trade and other receivables	33,701	18,954
Cash and cash equivalents	26,182	23,090


	59,883	42,044

Financial liabilities measured at amortised cost
Trade and other payables and accruals	46,555	22,378
Loan and borrowing (current liabilities)	2,213	2,272


	48,768	24,650

The Directors' risk management policies are established to identify and analyse the risks faced by the CentralNic Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.

(i) Market risk

The CentralNic Group is exposed to foreign currency risk on transactions and balances that are denominated in a currency other than its functional currency, primarily USD and EUR. Foreign currency risk is monitored on an on-going basis to ensure that the net exposure is at an acceptable level.

The CentralNic Group's exposure to foreign currency risk is minimal as it trades predominantly in USD, EUR, GBP and AUD. Exposure to currency risk is negated by the CentralNic Group holding adequate reserves in these four currencies to meet trading and provisioned obligations as the need arises.

As the Group evolves, foreign currency risk will be monitored more closely given exposure to additional markets and currencies. The Group has entered into a GBP/EUR forward agreement in November 2019, and into a GBP/USD forward agreement in March 2020

The carrying amounts of the CentralNic Group's financial instruments are denominated in the following currencies at 31 December 2019:

	GBP	USD	EUR	AUD	other currencies	Total
	USD'000s	$'000s	USD'000s	USD'000s	USD'000s	USD'000s
Current Financial assets
Loan and receivables
Trade and other receivables	13,373	1,539	15,370	2,015	1,403	33,701
Cash and cash equivalents	591	12,784	10,990	127	1,690	26,182


	13,964	14,323	26,360	2,142	3,093	59,883

Current Financial liabilities measured at amortised costs
Trade and other payables	21,243	3,386	19,061	1,451	1,414	46,555
Loan and borrowing	(268)	1,470	1,174	(6)	(157)	2,213


	20,975	4,856	20,235	1,445	1,257	48,768

The sensitivity analyses in the table below details the impact of changes in foreign exchange rates on the CentralNic Group's post-tax profit or loss for the year ended 31 December 2019.

It is assumed that the named currency is strengthening or weakening against all other currencies, while all the other currencies remain constant.

If the USD strengthened or weakened by 10% against the other currencies, with all other variables in each case remaining constant, then the impact on the CentralNic Group's post-tax profit or loss would be gains or losses as follows:

	Strengthen/Weaken 2019	Strengthen/Weaken 2018
	USD'000	USD'000


GBP	+/-947	+/-943
EUR	+/-613	+/-665
AUD	+/-70	+/-25

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The CentralNic Group's exposure to interest rate risk arises mainly from interest-bearing financial assets and liabilities. The Directors' policy is to obtain the most favourable interest rates available.

As at each of 31 December 2018 and 2019, CentralNic Group's long-term debt facility entered into with SVB bears interest at a margin plus LIBOR.

2019

2018

USD'000

Cash and bank balances

26,182

23,090

Effect of interest rate change of 100 basis points on cash and bank balances

+/- 262

+/- 231

SVB Bank Facilities

3,455

25,205

Effect of interest rate change of 100 basis points on cash and bank balance

+/- 35

+/- 252

Bond

97,724

Effect of interest rate change of 100 basis

points on cash and bank balance

+/- 977

The CentralNic Group does not have any quoted investments as at each of 31 December 2018 and 2019 and as such does not have significant exposure to equity price risk.

(ii) Credit risk

The CentralNic Group's exposure to credit risk arises mainly from counterparty's failure to meet its obligation to settle a financial asset. The Directors consider the CentralNic Group's exposure to credit risk arising from trade receivables to be minimal as the CentralNic Group is often paid at the outset or in advance. Credit risk arising from other receivables is controlled through monitoring procedures, including credit approvals and credit limits, with the balance largely offset by separate liabilities held on the balance sheet relating to the same party.

The CentralNic Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 90 days, which are deemed to have higher credit risk, are monitored individually. Analysis of the trade receivables past due is disclosed in note 12 and analysis of trade and other receivables by foreign currency exposure is noted above. There have been no material changes in the credit risk profile of the Group during the year.

Management considers these exposures to have low credit risk since based on limited historical credit losses, these financial assets have low risk of default and have a strong capacity to meet their contractual cash flow obligations in the near term. At reporting date, there is no significant increase of credit risk since initial recognition.

For cash and bank balances, the Directors minimise the CentralNic Group's credit risk by dealing exclusively with banks and financial institution counterparties with high credit ratings.

The carrying amounts of financial assets at the end of the reporting periods represent the maximum credit exposure.


	2019	2018
	USD'000	USD'000

Deferred receivables	100	100
Trade and other receivables	33,701	18,954
Investments	-	-
Cash and bank balances	26,182	23,090


	59,983	42,144

(iii) Liquidity risk

Liquidity risk is the risk that the CentralNic Group will encounter difficulty in settling its financial obligations that are settled with cash or another financial asset. The Directors' objective is to maintain, as much as possible, a level of its cash and bank balances adequate to ensure that there will be sufficient liquidity to meet its liabilities when they fall due.

The following set forth the remaining contractual maturities of financial liabilities as at:

USD'000	Carrying amount	Total	Within 1 year	1 - 5 years

31 December 2019
Trade and other payables and accruals	46,555	46,555	46,555	-
Borrowings	101,180	101,180	2,213	98,967


	147,735	147,735	48,768	98,967

USD'000	Carrying amount	Total	Within 1 year	1 - 5 years

31 December 2018
Trade and other payables and accruals	22,378	22,378	22,378	-
Borrowings	25,205	25,205	2,274	22,931


	47,583	47,583	24,652	22,931

The Directors define capital as the total equity of CentralNic. The Directors' objectives when managing capital are to safeguard the CentralNic Group's ability to continue as a going concern in order to provide returns for Shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Directors may adjust the amounts of dividends paid to Shareholders, return capital to Shareholders, issue new shares or sell assets to reduce debt.

The Directors manage CentralNic's capital based on debt-to-equity ratio. The debt-to-equity ratio is calculated as net debt divided by total equity. Net debt is calculated as total liabilities less cash and cash equivalents.

The debt-to-equity ratio of the CentralNic Group as at the end of each of the reporting periods was as follows:

	2019	2018
	USD'000	USD'000

Total liabilities	147,735	47,583
Less: cash and bank balances	(26,182)	(23,090)


Financial Instruments - net debt/(cash)	121,553	24,493


Total equity	77,004	78,068


Debt-to-equity ratio	1.60	0.31

The net cash of the CentralNic Group as at the end of each of the reporting periods excluding prepaid finance costs was as follows:

	2019	2018
	USD'000	USD'000

Cash and bank balances	26,182	23,090
Less: Borrowings (excluding prepaid finance costs)	(104,710)	(25,205)


Net (debt) / cash	(78,528)	(2,115)

The net cash of the CentralNic Group as at the end of each of the reporting periods including prepaid finance costs was as follows:

	2019	2018
	USD'000	USD'000

Cash and bank balances	26,182	23,090
Less: Borrowings prepaid finance costs)	(101,180)	(25,205)


Net (debt) / cash	(74,997)	(2,115)

Under the terms of the major borrowing facilities, the Group is required to comply with the following financial covenant:

· the leverage ratio must be not more than 6 x

The Group has complied with these covenants throughout the reporting period.

(ii) Net debt reconciliation

	Cash/bank overdraft	Borrow, due within 1 year	Borrow, due after 1 year	Total
	USD'000s	USD'000s	USD'000s	USD'000s
Net debts as at 1 January 2018	14,675	(2,703)	(21,733)	(9,761)
Cash flows	9,639	143	(1,969)	7,813
Acquisitions - finance leases and lease incentives	-	-	-	-
Foreign exchange adjustments	(1,224)	-	-	(1,224)
Other non-cash movements	-	-	-	-


Net debts as at 31 December 2018	23,090	(2,560)	(23,702)	(3,172)

Cash flows	9,822	(747)	(77,700)	(68,625)
Acquisitions - finance leases and lease incentives	-	-	-	-
Foreign exchange adjustments	(6,730)	-	-	(6,730)
Other non-cash movements	-	-	-	-


	26,182	(3,307)	(101,402)	(78,527)

In addition to the fair value of financial instruments disclosed elsewhere in the financial statements, the following carrying amounts of the financial assets and liabilities reported in the consolidated financial statements approximate their fair values:

	2019		2018
USD'000	Carrying amount	Fair value	Carrying amount	Fair value

Trade and other receivables	33,701	33,701	18,954	18,954
Deferred receivables	100	100	100	100
Investments	-	-	-	-
Cash and bank balances	26,182	26,182	23,090	23,090


	59,983	59,983	42,144	42,144


Trade and other payables and accruals	46,555	46,555	22,378	22,378


	13,428	13,428	19,766	19,766

The SK-NIC acquisition on 5 December 2017 had an element of deferred and contingent consideration of €5.85m that subject to any claims will be released to the vendor in tranches until 2024. Deferred cash consideration of €5.85m is dependent on SK-NIC attaining defined growth targets from 2018 to 2020. At 2019 year-end, the deferred cash consideration has been accounted for in the consolidated statement of financial position at fair value, using a discount factor of 10%, which has amounted to €552,000 (2018: €918,000). This will unwind as the payment stages become due through the consolidated statement of comprehensive income. The maximum amount not settled as of the balance sheet date is EUR 3.2 million.

The growth rates in relation to the contingent consideration are calculated on the number of registered domains at the end of each financial year over the next three years (post completion) with the payment profile being spread over eight years. The last payment on the profile is not subject to the defined growth rates. The Directors have considered the range of outcomes on the target growth rate which would trigger the unwinding of the deferred consideration and on the basis that there exists sufficient headroom against management sensitivity to attain these domain name growth rates, they have concluded that the deferred consideration will be payable in full over the agreed period.

The KeyDrive Group acquisition on 2 August 2018 included earn-out commitments, if certain financial performance tests are met, CentralNic will pay Inter.Services a performance-based earn-out of up to USD 6,500,000, a minimum of 15% of which shall be settled in cash and up to 85% of which may be settled by the issue of additional consideration shares. If the performance-based earn-out pays out less than USD 6,500,000 in total, CentralNic will pay for certain tax losses within the KeyDrive Group on the same basis as the payment of the performance-based earn-out but only to the extent that such tax losses are used by the enlarged Group and provided that the aggregate consideration for the earn-out and the tax losses does not exceed USD 6,500,000. At 2019 year-end, the earn-out element has been accounted for in the consolidated statement of financial position at fair value, using a discount factor of 8.46 - 8.55%, which has amounted to USD 87,471 (2018: USD 587,881).

The Ideegeo acquisition on 6 August 2019 had an element of deferred consideration of NZD 300,000 that has been placed into an escrow account and subject to any claims will be released to the vendor in 2021. At 2019 year-end, the deferred cash consideration has been accounted for in the consolidated statement of financial position at book value due to the immaterial nature of the transaction.

The Hexonet Group acquisition on 6 August 2019 is subject to an element of deferred consideration of EUR 3,000,000 on the first anniversary of completion, payable in cash or CentralNic shares at the prevailing market price, at the Company's discretion. At 2019 year-end, the deferred cash consideration has been accounted for in the consolidated statement of financial position at book value and not being discounted as the deferred consideration will be released on the first anniversary.

The Team Internet acquisition includes USD 3,000,000 deferred consideration in cash, and equity consideration of USD 3,000,000 payable in Group shares which are subject to a lock-in period of twelve months, during which the vendors of Team Internet are unable to dispose of their Consideration Shares, followed by a period of six months during which they may only do so with the Company's consent. The deferred consideration has not been discounted to its present value due to the nature of the transaction as it will be payable fully over the agreed period of twelve months. And additional USD 1,000,000 have been withheld from the purchase price and will be released to the sellers subject to any warranty claims on 23 March 2021.

The different levels are defined as follows:

Level 1: Fair value measurements are derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Fair value measurements are derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3: Fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

On 9 January 2020, Fans TLD Limited, a subsidiary, acquired the entire share capital of six UK TLD companies for a total amount of £600,000 from Financial Domain Registry Holdings Limited.

On 27 January 2020, Team Internet AG completed the share purchase of 49.97% of InterNexum GmbH, now a wholly owned subsidiary of Team Internet which was agreed at the time of Team Internet's acquisition. The acquisition cost was EUR 226,593. The purchase price will be grossed up to the underlying part of 4x EBIT for the financial year 2022 with a cap of EUR 900,000 which is payable in cash.

In December 2019, a novel strain of coronavirus ("COVID-19") surfaced in Wuhan, China, and has spread around the world, with resulting business and social disruption around the world. COVID-19 was declared a Public Health Emergency of International Concern by the World Health Organization on January 30, 2020. Despite this, trading for the Group in Q1 2020 was in line with expectations, despite the global business restrictions to slow the progress of COVID-19. As some of our companies are considered critical infrastructure, the Group has a long history of being focussed on business continuity, which prepared them well switching our staff to working from home while providing undiminished service to their customers. As a profitable provider of online subscription services with high cash conversion and solid organic growth, we do not expect CentralNic to be severely affected by COVID-19, but we will take the necessary precautions to preserve our cash and review our acquisition pipeline and financing plans to ensure that we maintain stability and optimise our business strategies in the new global climate.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR KKABPKBKBPQB

Team Internet Group plc (TiG)

Friday, 24th January 2025

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Jabella Group Limited

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All directors dealings today

	Share capital	Share premium	Merger relief reserve	Share- based payments reserve	Foreign exchange translation reserve	Accumulated (losses)/ Retained earnings	Equity attributable to owners of the parent company	Non-Controlling interests	Total equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000

Balance as at 31 December 2017	119	20,369	2,314	3,133	4,799	5,026	35,760	-	35,760

Loss for the year	-	-	-	-	-	(6,424)	(6,424)	5	(6,419)
Other comprehensive income
Translation of foreign operation	-	-	-	-	(648)	-	(648)	-	(648)
Total comprehensive income for the year	-	-	-	-	(648)	(6,424)	(7,072)	5	(7,067)

Transactions with owners
Issue of new shares Share issue costs	97 -	50,226 (1,357)	- -	- -	- -	- -	50,323 (1,357)	- -	50,323 (1,357)
Share based payments	-	-	-	469	-	-	469	-	469
Share based payments - reclassify lapsed options	-	-	-	(212)	-	212	-	-	-
Share based payments - deferred tax asset	-	-	-	(60)	-	-	(60)	-	(60)
Balance as at 31 December 2018	216	69,238	2,314	3,330	4,151	(1,186)	78,063	5	78,068

(Loss)/profit for the year	-	-	-	-	-	(8,160)	(8,160)	-	(8,160)
Impact of non-controlling interest	-	-	-	-	-	64	64	(64)	-
Reclass on non-controlling interest	-	-	-	-	-	11	11	(11)	-
Other comprehensive income
Translation of foreign operation	-	(1)	-	-	(4,451)	-	(4,452)	-	(4,452)
Total comprehensive income for the year	-	(1)	-	-	(4,451)	(8,085)	(12,537)	(75)	(12,612)

Transactions with owners
Share issued	16	5,603	2,983	-	-	-	8,602	-	8,602
Share issue costs	-	-	-	-	-	-	-	-	-
Share based payments	-	-	-	2,336	-	-	2,336	-	2,336
Share based payments - deferred tax assets	-	-	-	609	-	-	609	-	609
Share based payments - reclassify lapsed options	-	-	-	(180)	-	180	-	-	-
Balance as at 31 December 2019	232	74,840	5,297	6,095	(300)	(9,091)	77,073	(70)	77,004

		2019	2018
	Note	$'000	$'000

Cash flow from operating activities

Loss before taxation		(8,199)	(4,996)

Adjustments for:
Depreciation of property, plant and equipment		1,306	326
Amortisation of intangible assets		8,299	5,600
Fair value movement of investment		-	1,265
Profit on investment in associate		(74)	(45)
Finance cost - net		7,754	1,430
Share based payments		2,878	469
(Increase)/decrease in trade and other receivables		(11,487)	2,524
Increase in trade and other payables and accruals		14,545	8,894
Decrease/(increase) in inventories		3,603	(3,635)


Cash flow from operations		18,625	11,832

Income tax paid		(2,309)	(3,015)


Net cash flow generated from operating activities		16,315	8,817

Cash flow used in investing activities
Purchase of property, plant and equipment		(755)	(399)
Purchase of intangible assets		(14,740)	(4,521)
Payment of deferred consideration		(2,940)	(680)
Acquisition of subsidiaries, net of cash acquired	19	(60,900)	(11,965)


Net cash flow used in investing activities		(79,335)	(17,565)

Cash flow used in financing activities
Proceeds from borrowings		103,424	3,124
Bond arrangement fees		(2,377)	-
Proceeds from issuance of ordinary shares		2,133	32,263
Costs from share issue		-	(1,394)
Payment of debt like items		(27,839)	(14,923)
Payment of finance leases		(528)	-
Interest paid		(1,970)	(682)

Net cash flow generated from financing activities		72,842	18,388


Net increase in cash and cash equivalents		9,822	9,640
Cash and cash equivalents at beginning of the year		23,090	14,675
Exchange losses on cash and cash equivalents		(6,730)	(1,225)


Cash and cash equivalents at end of the year		26,182	23,090

	Note	2019 $'000	2018 $'000

Revenue	1,2	109,194	55,991
Cost of sales		(66,419)	(30,080)


Gross profit		42,775	25,911
Administrative expenses		(40,416)	(29,053)
Share based payments expense		(2,878)	(469)

Operating loss		(519)	(3,611 )

Adjusted EBITDA*		17,921	9,146
Depreciation	8	(1,306)	(326)
Amortisation of intangible assets	9	(8,299)	(5,600)
Fair value movement of investment	11	-	(1,265)
Non core operating expenses	4	(7,357)	(5,840)
Foreign exchange		1,474	788
Share of associate income		(74)	(45)
Share based payments expense	20	(2,878)	(469)
Operating loss		(519)	(3,611)

Finance income	5	5	3
Finance costs	5	(7,759)	(1,433)
Net finance costs	5	(7,754)	(1,430)
Share of associate income		74	45

Loss before taxation	3	(8,199)	(4,996)
Income tax expense	6	39	(1,428)

Loss after taxation		(8,160)	(6,424)

Items that may be reclassified subsequently to profit and loss
Exchange difference on translation of foreign operation		(4,049)	(648)


Total comprehensive loss for the period		(12,209)	(7,072)



Loss is attributable to:
Owners of CentralNic Plc		(8,160)	(6,424)
Non-controlling interest		64	5
		(8,096)	(6,419)
Total comprehensive loss is attributable to:
Owners of CentralNic Plc		(12,209)	(7,072)
Non-controlling interest		64	5
		(12,145)	(7,067)

	Note	2019 cents	2018 cents
Earnings per share
Basic (cents)	7	(4.67)	(5.04)
Diluted (cents)	7	(4.67)	(5.04)