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Building a better
digital economy
CentralNic Group Plc | Annual report 2021
CentralNic
Group Plc
Annual report 2021
Purpose
To make the internet
everybody’s domain.
Vision
The extraordinary potential oftheinternet
available to all.
Mission
To provide tools to as many people as
possible to realise their aspirations online.
CentralNic Group Plc | Annual report 2021 01
Additional informationFinancial statementsGovernanceStrategic report
Contents
Strategic report
Our highlights 02
Journey so far 03
What we do 04
Chairman’s statement 06
Investment case 07
Chief Executive Officer’s report 08
Market opportunity 12
Our business model 13
Our strategy 16
Key performance indicators 18
Environmental, social and governance 20
Chief Financial Officer’s report 28
Risks 32
Governance
Board of Directors 36
Corporate governance 38
Audit Committee report 41
Remuneration report 42
Directors’ report 45
Financial statements
Independent auditor’s report 49
Consolidated statement of comprehensive income 54
Consolidated statement of financial position 55
Consolidated statement of changes in equity 56
Consolidated statement of cash flows 57
Notes to the consolidated financialstatements 58
Company statement of financial position 94
Company statement of changes in equity 95
Notes to the Company financial statements 96
Particulars of subsidiaries andassociates 102
Additional information
Shareholder information 105
Glossary 107
02 CentralNic Group Plc | Annual report 2021
Strategic report
Building leading marketplaces for
OnlinePresenceand Marketing.
Our highlights
2021 highlights
Very strong traction for the
Group’sprivacy‑safe online
marketingtechnologies in context
ofGDPR and the privacy‑conscious
policies of Big Tech.
New Data and AI group established
toimprove customer service, optimise
business operations anddecision
making, enhance marketing, reduce
customer churn, and automate
detection of non‑compliant
customeractivity.
New customer wins include JISC,
DotLondon and Yahoo!
Non‑recurring revenue products
contributed less than 1% of
totalrevenue.
Successful bond tap issue of
EUR15millionat 104.5% of
nominal value.
Experienced Non‑Executive Directors
added to the Board.
Post year end
highlights
The Financial Times listed CentralNic
among the top 250 fastest‑growing
companies and among the top 50
fastest‑growing technology
companies in Europe.
Acquisition of VGL Verlagsgesellschaft
mbH (VGL) in March 2022 for a total
consideration of EUR 67 million
(approx. USD 75 million) funded via
successful GBP 42 million equity and
EUR 21 million bond placing.
Acquisition of Fireball GmbH and the .
ruhr TLD in February 2022 for a total
ofc.USD 0.7 million.
Exceptionally strong start to 2022.
Financial highlights
Revenue growth
(USD m)
Net revenue/gross profit growth
(USDm)
Adjusted EBITDA growth
(USD m)
Operating profit growth
(USD m)
Organic revenue growth
(USD m)
Organic net revenue/
gross profit growth (USD m)
Organic adjusted EBITDA growth
(USD m)
Net debt deleverage
(USD m)
+71%
2020 2021
+58%
2020 2021
+57%
2020 2021
n.m.
2020 2021
+39%
2020 2021
+19%
2020 2021
25%
2020 2021
-11. 8%
2020 2021
240.0
410.5
75.1
118.5
29.4
46.3
(2 .1)
12.4
299.4
415.2
104.4
123.7
37.6
47.0 85.0
75.0
As CentralNic made four acquisitions in 2021 and one in 2020, the Company also prepared anon-GAAP pro
forma comparable financial summary including all businesses currently controlled by CentralNic (a definition
ofwhichis provided in note 3 to the consolidated financial statements), to effectively isolate organic growth.
Throughout this report, figures qualified by ‘organic’ refer to this pro forma financial summary.
CentralNic Group Plc | Annual report 2021 03
Additional informationFinancial statementsGovernanceStrategic report
CentralNic has achieved a Compound Annual
Growth Rate (CAGR) of 78% since its IPO in 2013,
throughacombination of organic growth
andhighlyaccretiveacquisitions.
Journey so far
CAGR: 78%
USD 4m
USD 8m
USD 14m
USD 29m
USD 32m
USD 56m
USD 109m
USD 411m
2013
2021
2014
2015
2016
2017
2018
2019
2020
Acquisition: DomiNIC
Acquisition: internet.bs
Acquisition: dnsXperts
Acquisition: Instra Group
Acquisition: SK-NIC
Acquisitions: KeyDrive, GlobeHosting
Acquisitions: TPP Wholesale, HEXONET, Ideegeo, Team Internet
Acquisition: Codewise
Acquisitions: SafeBrands, Wando, White & Case publishing network and NameAction
USD 240m
04 CentralNic Group Plc | Annual report 2021
Strategic report
CentralNic provides the tools for businesses to
succeed online via two marketplaces, Online
Presence and Online Marketing.
What we do
Online Presence Online Marketing
Business
Selling the basic tools for companies to get online
Products
Web addresses, websites, hosting, email, etc.
Recurring revenue model
Annual subscriptions
Business
Selling the tools for websites to acquire customers
and generaterevenues
Products
Tools for monetising web traffic and media buying
tools for acquiring customers
Recurring revenue model
Rolling open-ended revenue share contracts
CentralNic Group Plc | Annual report 2021 05
Additional informationFinancial statementsGovernanceStrategic report
Team Internet case study: Team Internet hasdelivered
continuous double-digit growth under CentralNic’sownership
Internal:
External:
= Revenue USDm
Apple’s iOS 14 enables
Tracking Prevention in all
browsers andapps
Apple’s iOS 15 includes
Mail Privacy Protection
Acquired by
CentralNic
Acquired December 2019
Annual revenue:
USD 75 million
(1)
Safari blocks
third-party cookies
by default
CentralNic invests in
staff and technology
development
Current revenue: Revenue
almost tripled to USD
205million
(2)
, a 65% CAGR
41.6
48.2
55.1
67.9
H2 2019 H1 2020 H2 2020 H1 2021
16% 14% 23%
137.2
H2 2021
102%
USD 149.3 million
2020: 127.9 million
Revenue
USD 53.3 million
2020: 45.1 million
Net revenue/gross
profit
USD 261.3 million
2020: 112.1 million
Revenue
USD 65.2 million
2020: 30.0 million
Net revenue/
gross profit
133%
Revenue growth
17%
Revenue growth
(1) Revenue for the full year ended 31 December 2019.
(2) Revenue for the full year ended 31 December 2021.
Online Presence Online Marketing
12.3 million
2020: 11.3 million
Processed domain
registration years
USD 9.24
2020: 9.02
Average revenue per
domain year
3.1 billion
2020: 2.1 billion
Visitor sessions
USD 64.92
2020: USD 47.90
Revenue per thousand
sessions (RPM)
06 CentralNic Group Plc | Annual report 2021
Strategic report
CentralNic’s results for 2021 demonstrate the potential of the
business to drive organic growth far ahead of standard market
metrics by investing in staff and systems and integrating
acquisitions into marketplaces where the value of the whole is
much greater than the sum of the acquired parts. It is particularly
pleasing to see that in only two years of participation in the online
marketing space, CentralNic is already outpacing most of its
competitors in its relentless path towards becoming a multi-billion
dollar online services company.
Notably, where the many changes in the legal, policy and technical
environment have impacted negatively on many tech companies
– from the end of COVID-19 restrictions to privacy measures
including the banning of third-party cookies – CentralNic has taken
these in its stride and indeed has benefited from the same market
conditions that have slowed many of its rivals.
While the mix of businesses evolved during this rapid growth,
margins remained resilient for each business line, and the
Company continued to generate high levels of operating cash flow,
continuously improving its net debt position.
We continue to see exciting M&A opportunities matching our
investment criteria. Indeed, the Group supplemented its organic
growth with four earnings-accretive acquisitions during the year
2021, and has started 2022 with an oversubscribed equity raise to
support its most exciting acquisition yet, the German product
comparison website group, VGL.
2022 has started off as the most volatile year in recent memory,
yetCentralNic has continued on its growth trajectory despite the
headwinds all businesses are currently experiencing. The Group’s
continued flourishing is the result of enormous hard work from our
executives, staff and Board, and I thank them on behalf of the
Shareholders for their efforts.
Iain McDonald
Chairman
4 April 2022
2022 has started off as the most volatile
year in recent memory, yet CentralNic has
continued on its growth trajectory despite
the headwinds all businesses are currently
experiencing.
Iain McDonald
Chairman
Chairman’s statement
CentralNic Group Plc | Annual report 2021 07
Additional informationFinancial statementsGovernanceStrategic report
A hugely resilient
recurring revenue business.
Investment case
Recurring revenues
Online Presence services sold
as annual subscriptions
Online Marketing services
billed continually on
utility-style rolling contracts
High customer stickiness
Only 3% of Online Presence
customers change supplier
each year
Average Online Marketing
customer has been using our
service for circa five years
Proven resilience
Continued growth in Online
Presence despite competition
from walled gardens
(Facebook, Amazon, Apps, etc.)
Online Marketing continues
tothrive in the face of ban on
third‑party cookies and
cross‑app tracking
Future proof
Marketplace model
focusesondiversification
ofsuppliers and customers
and capacity to rapidly switch
between them
No cookies used or private
user data collected as part of
the Online Marketing business
08 CentralNic Group Plc | Annual report 2021
Strategic report
Organic growth was up to 39%
fromatraditional base of 5-6%.
Ben Crawford
Chief Executive Officer
Chief Executive Officer’s report
CentralNic’s growth rate of 71% in 2021 is broadly in line with our
Compound Annual Growth Rate since we first listed in 2013;
however, for the first time in our Company’s history, half of that
growth was organic. Organic growth was up to 39% from a
traditional base of 5-6% – driven by our service diversification into
Online Marketing, our investment in people and systems, new
customer wins, increased spend from our customers, and
improvements to the competitiveness of our products.
Market and strategy
CentralNic is a global provider of increasing importance of the tools
to help businesses and other organisations to succeed online, by
applying a marketplace model to internet services. These services
are delivered through our two operating segments – Online
Presence and Online Marketing.
Online Presence
CentralNic’s Online Presence segment supplies a range of domain
names second to none, together with such value-added services
as email software, hosting, SSL Certificates, website builders and
online brand protection.
We are an omni-channel distributor of these services, supplying
allcustomer types via targeted brands and tailored offerings.
CentralNic supplies around 20,000 retailers (including many of
theworld’s best-known domain retailers) with virtually any domain
name in the world, through a single API, with a single invoice and
asingle customer service number to call. In addition to domain
names, the Group is starting to sell in-demand services such
asMicrosoft Office 365 and AWS hosting through this channel.
CentralNic’s Registry Services business is the world’s premier
distributor of new Top-Level Domains – it manages around the
same number of domains as all our competitors combined, as
wellas SK-NIC, operator of the official country code domain for
Slovakia, home to one of the fastest-growing economies in Europe.
CentralNic also supplies over 1,000 enterprise customers under
the brands BrandShelter and SafeBrands, with particularly strong
footprints in the French and German markets, as well as a
significant presence in the USA. These enterprise clients, including
a number of the Global 1,000 companies, view domain names as
intellectual property – like trade marks of the internet – and they
retain large portfolios of domain names to protect their brands
globally, as well as procuring CentralNic’s internet monitoring
andonline brand protection services to identify and stop
trademark abuse on theinternet. Our in-house retail brands
provide small-to-medium sized businesses in almost every country
in theworld with the tools to build their online presence. Lastly, our
Government channel supports the efforts of a dozen governments
to build their local digital economies.
The size of the domain name market is estimated at around
USD5billion with 3% growth, while the value-added services
related to and bundled with domains (website builders, website
hosting, email software, etc.) has estimated annual revenues of an
additional USD 25 billion. These services are sold on a subscription
basis – CentralNic provides access to continuous services,
inexchange for a stable and predictable recurring stream of
annualcustomer payments. The cash conversion from this revenue
stream is consistently over 100% as CentralNic does not offer
credit to most of its customers, who are therefore required to
pre-fund their accounts.
As the Online Presence market is extremely sticky, with only
2%ofcustomers switching providers each year, CentralNic’s
growth strategy in Online Presence been focused on acquisitions,
witheach acquisition adding new suppliers, distribution channels
and customers. This carefully curated group of businesses
acquired around the world has been operationally integrated into
amarketplace, allowing us to cross-sell suppliers from acquisition
X to customers from acquisition Y, creating a network effect, which
in 2021 has produced organic growth at 9% – double the rate of
previous years.
CentralNic Group Plc | Annual report 2021 09
Additional informationFinancial statementsGovernanceStrategic report
Online Marketing
CentralNic’s Online Marketing segment is for companies that
havetheir web presence in place and are seeking to acquire
newcustomers or monetise the traffic coming to their website.
Thetotal size of the online marketing market is estimated at
aroundUSD450 billion in 2021 with a growth rate of around 20%
per year–reflecting the fact that millions of companies now use
onlinemarketing to attract new customers – including of course
e-commerce companies, which in 2021 enjoyed over USD 4 trillion
inrevenues.
CentralNic’s range of online marketing solutions use proprietary
artificial intelligence and contextual data to optimise return on
advertising spend for advertisers and to maximise revenues for
websites with high quality traffic. The recurring revenue model
forOnline Marketing is utility-style, in that customers have rolling
contracts with CentralNic. CentralNic gets paid every time an end
user clicks on an ad – providing a reliable stream of new customers
to advertisers and revenues to publishers. Again, the cash
conversion from this revenue stream is consistently over
100%,ashere also CentralNic does not offer credit to most of its
customers, who are therefore required to pre-fund their accounts.
CentralNic’s anti-fraud and compliance software and teams are
industry leading, and they too benefit from AI applications for early
detection of any suspicious behaviour. All of CentralNic’s solutions
are privacy-safe and compliant with all data laws and recent
policies restricting third-party data handling and cookies. As well
as complying with the regulatory environment, CentralNic’s online
marketing solutions are aligned with public sentiment opposing the
collection and sale of private data. These qualities may have
contributed to the growth of CentralNic’s Online Marketing
segment in 2021, as advertisers were forced to abandon some
traditional ways of working.
CentralNic’s strategy in our Online Marketing segment follows
thesame approach as for Online Presence – except here, instead
of selling domain names and related services, we are selling
internet traffic – generating new customers for online merchants
and providing monetisation revenues to website publishers with
high quality traffic. As in our Online Presence business, we are
creating an operational marketplace from disparate acquisitions
– with each acquisition adding new traffic sources and revenue
partners to our marketplace. To date the results have been
extraordinary –by acquiring, investing in and combining three
companies, CentralNic has been able to increase their combined
growth organic rate from single digit to 65% in 2021.
Head office functions
The critical mass of CentralNic Group’s technical and operations
staff is concentrated in Germany and Poland, with regional staff in
Australasia and North and South America, and the corporate
headquarters located in the UK. From those centres, CentralNic
services customers in almost every country in the world.
Following initial investments in new staff and systems in 2020,
CentralNic continued its restructuring programme to build a robust
central hub of IT and corporate services designed to optimise
efficiency and transparency across the Group, freeing up staff in
individual businesses and channels to focus on customer-facing
activities. The Company made significant progress in rolling out
new Company-wide software tools including Salesforce,
Jira,Confluence, HiBob, Zendesk and Tableau during 2021.
Wesignificantly increased the size of our shared functions, building
out the teams working on products, finance, people, development,
integrations, and a single procurement function for domains and
other microservices, streamlining the internal supply chain.
TheData and Artificial Intelligence function was promoted from
theOnline Marketing segment to the head office, to assist all
business activities across the Group.
At the end of 2021 CentralNic appointed Carsten Sjoerup to the
new position of Chief Technology and Product Officer, responsible
inter alia for the technical integration of CentralNic’s acquired
businesses, and a consistent approach to platform and product
development across the Group.
Strategic priorities
Moving forward, CentralNic’s strategic priorities are as follows:
• organic growth in all its forms – winning new customers,
growing existing customer relationships, launching new
products, and contracting with new suppliers;
• achieving stronger operating leverage by scaling up our online
marketplaces, as these platform businesses can support higher
volumes of transactions with relatively fixed costs;
• continuing to manage our debt ratios – we ended the year at
our strongest position since 2019 with net debt/EBITDA at 1.6x
and interest coverage at 4.5x; and
• taking continued opportunity of our competitive advantages as
an acquirer, assembling a curated group of quality companies
meeting our criteria of recurring revenues, high cash conversion
and customer stickiness – and integrating them into robust
marketplaces with network effects driving growth.
10 CentralNic Group Plc | Annual report 2021
Strategic report
Chief Executive Officer’s report continued
Results and operational highlights
CentralNic’s 39% organic growth rate in 2021 is in itself ample
evidence that ours was not among the tech businesses ‘riding the
COVID-19 wave’. Our growth actually accelerated as the impact of
COVID-19 waned, reflecting a return on our acquisition strategy
and internal investment, and the long-term trend towards
privacy-safe online marketing.
Online Presence
Meaningful growth was achieved in the Online Presence segment
in 2021, with revenues increasing by USD 21.4 million for the year
– up17% from 127.9 million to 149.3 million. Organic growth of the
segment was 9% over the year, thanks largely to growth of
ourlargest existing customers. Customer wins during the period
notably included Ingram Micro and government contracts ranging
from Hillsborough County, Florida to Kingdom of Lesotho in
SouthernAfrica.
On 9 January 2021, CentralNic acquired SafeBrands,
aFrance-based award-winning innovator in enterprise
domainname and online marketing technologies, for a total
cashconsideration of up to EUR 3.6 million (USD 4.4 million),
representing 0.9x its FY2020 revenue. SafeBrands operated at
approximately breakeven in FY2019 and generated EBITDA of
EUR0.2 million (USD 0.2 million) in FY2020. Out of the total
consideration, EUR 2.5 million (USD 3.0 million) was paid upfront,
EUR 0.5 million (USD 0.6 million) was deferred for one year, and the
remaining EUR 0.6 million (USD 0.8 million) was paid subsequently,
as SafeBrands met agreed FY2020 financial objectives.
The Online Presence segment growth increased further with two
smaller acquisitions in Q4 2021 – NameAction, a leading reseller
ofdomain names in Latin America, which has now become
CentralNic’s Latin American sales hub across all our activities,
anda portfolio of websites acquired from White & Case Ltd.
Online Marketing
We entered this exciting high-growth market at the very end
of2019, and spent under USD 100 million in acquisition costs
tocreateabusiness that ended 2021 with USD 261.3 million in
revenues–reflecting an extraordinary organic growth rate of 65%.
Thethreeacquisitions were Team Internet, bought at the end of
2019, theZeroPark and Voluum businesses acquired from
Codewise in 2020, and finallyWando Internet Solutions, acquired
on 22 February 2021 for USD6.6 million plus an additional earnout
of up to USD6.6 million.
By combining the data, AI-based software, expertise and sources
of traffic of these three companies, we were able to supercharge
our growth with existing customers and attract new customers
– including those seeking out our privacy-safe solutions. Media
buyers used our platforms to place advertisements for many of
thebest-known internet native brands in America, and many
internet-savvy small businesses were able to obtain extraordinary
results from CentralNic’s solutions. We also contracted with new
partners including Yahoo! and Opera Mobile.
Head office
Other operational highlights that helped to drive our growth in
2021included adding two experienced Non-Executive Directors
tothe Board; a successful tap of our Norway-issued bond for
EUR15million at 104.5% of nominal value; and successfully
hedging our currency exposure on the bond at 3.3% below
thelevel at 31December2020.
Post year end and outlook
Current trading updates
The strong growth experienced during 2021 has continued into
2022, with the Company announcing on 14 February 2022 and
on28 February 2022 that its year-on-year revenue growth, largely
driven by the performance of the Online Marketing segment, was
materially ahead of the revenue growth rates implied by analyst
consensus expectations for the full year to 31 December 2022.
Given the early stage of the current financial year, the Directors
have yet to fully ascertain the expected impact on full-year
performance, but the outlook remains positive for the Company,
despite the impact of the war in Ukraine.
We note that CentralNic’s direct exposure to the Russian,
Belarusian and Ukrainian economies constitutes an immaterial
contribution to the business.
Strategic acquisitions
CentralNic has entered into agreements to acquire Fireball
SearchGmbH (‘Fireball’) as well as the .ruhr Top-Level
Domain(TLD) (‘.ruhr’) for a total aggregate consideration of
EUR0.6million (USD0.7 million) in cash. The acquisitions are
expected to complete immediately and on or around 31 May 2022
respectively and will be financed from available cash resources.
Combined historical revenue and EBITDA for both acquisitions
arec.EUR 0.2 million and c.EUR 0.1 million respectively.
Theacquisitions are expected to be immediately
earningsaccretive.
VGL acquisition and related equity and debt raises
CentralNic announced on 28 February 2022 the acquisition
ofVGLVerlagsgesellschaft mbH (VGL) for an enterprise value
ofEUR 60million, with initial consideration of EUR 67 million
(approx.USD 75 million), payable in cash on completion,
inclusiveofcustomary adjustments for cash and working capital.
The acquisition brings additional scale and capabilities to
CentralNic’s Online Marketing division, contributing traffic-generating
websites, content and media buying expertise and new partner
relationships to enhance CentralNic’s AI-drivenbusiness.
CentralNic Group Plc | Annual report 2021 11
Additional informationFinancial statementsGovernanceStrategic report
The acquisition is expected to be double-digit earnings enhancing
for the financial year ending 31 December 2022, prior to any
synergies being realised. VGL generated USD 55.3 million of
revenue (unaudited) and USD 10.9 million of Adjusted EBITDA
(unaudited) in the twelve months to 31 December 2021.
The acquisition was funded via an equity bookbuild that raised
gross proceeds of GBP 42 million (before expenses) through
thesuccessful placing of 35,000,000 Placing Shares at the Issue
Priceof 120 pence per New Ordinary Share. The Placing was
significantly oversubscribed. 2,500,000 additional shares were
placed via an Open Offer for existing Shareholders at the
sameprice per share as the Placing, raising gross proceeds
ofGBP3million, on the basis of 1 Open Offer Share for
every100.46403360 existing ordinary share. An additional
EUR21million was raised through a bond tap issue at
apremiumof 0.08% above the par value of the bond.
Conclusion
2021 was a year of extraordinary organic growth for CentralNic,
following successful business diversification into Online Marketing,
successful investment in staff and systems, and successfully
attaining network effects of integrating the acquired businesses
into online marketplaces.
I thank our people, our Directors, our customers and our suppliers
for their valuable contributions to our progress. As 2022 starts with
very promising impetus for CentralNic, this year has also been
marked by terrible conflict that affects us all. We expectCentralNic’s
progress to continue unabated, and we hope for a stable and
peaceful environment for ourselves and the global community.
Ben Crawford
Chief Executive Officer
4 April 2022
12 CentralNic Group Plc | Annual report 2021
Strategic report
CentralNic’s organic growth is driven by
theunderlying growth of the internet and
thee-commerce sector.
Market opportunity
USD 5bn market, growing at
around 3% per year on average
USD 25bn market,
growing at around
6%per year
USD 400bn
market, growth
22% peryear
Online
Presence
Online
Marketing
Web
addresses
Email, websites, etc.
Online customer acquisition
and website revenue generation
Selling the tools companies need to do business online:
CentralNic’s unique market position:
Online Presence Online Marketing
CentralNic has operationally integrated its acquisitions
into a marketplace selling almost all domain names and
other value added services to all customer types
through dedicated channels with direct accounts and
connections with almost all the worldwide suppliers of
country code and generic domain names
CentralNic is integrating its acquisitions into a
marketplace selling domain name traffic from almost
thefull range of sources to customers using a range of
leading demand side platforms
Leading domain market place connecting more than
1,500 domain name suppliers (TLDs) to more than
20,000resellers
Exclusive revenue generation right to 25 million websites
Trusted guardians of the domain portfolios of hundreds
of internationally recognised brands
4,500 online marketers/media buying platforms use
ourcustomer acquisition tools
c.250,000 direct SMB customers CentralNic’s privacy‑enabled marketing solution
resonates perfectly with market demand
CentralNic does business with most of the companies inits industry, providing a strong competitive advantage
forM&Adiscussions
CentralNic Group Plc | Annual report 2021 13
Additional informationFinancial statementsGovernanceStrategic report
Our business model
CentralNic’s strength and organic growth is built on a foundation
ofexcellent resources focussed on building value in a
sustainablemanner.
Inputs
Our people
CentralNic benefits from an
enormous depth of talent across
the business with considerable
and deep industry expertise.
Our technology
CentralNic is known for its
excellent technology solutions
supported by large in-house
product, engineering and
operations teams. Our pioneering
omni-channel platform provides
every type of customer with
world-class solutions.
Our operational
structure
CentralNic Group’s finance,
people, product, project
management, integrations,
technical and operations staff are
concentrated in Germany and
Poland, with regional staff in
Australasia, North and South
America, and corporate
headquarters in the UK. A truly
global operation, CentralNic
services customers in almost
every country in the world.
Our global
perspective
CentralNic’s globally diverse
acquisitions, people and
operations lend a unique
perspective to the Group.
Creating value for stakeholders
Customers
99%
Renewal by value
Colleagues
675
Expert employees
Investors
39%
Organic growth
Regulators and
governments
A number of CentralNic
entities are accredited by
ICANN and the Group
increasingly provides its
services to governments
around the world, helping
them to make progress on
their digital economy journey.
Partners
CentralNic values the
relationships it has
established with its
trustedpartners.
Communities
€600,000
Grants donated through the
SK-NIC Fund
Focused on sustainability
Environment
See more on our environmental
strategy and carbon neutrality
on pages 25 and 26.
Communities
See more on how we support
local communities on pages
24and 25.
Diversity
andinclusion
See more on our approach to
diversity and inclusion on pages
22 to 24.
Governance
See more on how we are
creating long‑term sustainable
success on pages 20 to 21.
14 CentralNic Group Plc | Annual report 2021
Strategic report
Our business model continued
CentralNic’s business characteristics:
Resilience –
Not one year of receding
revenues in more than
20years, not even during
the dotcom bubble burst,
the sub‑prime crisis, the
sovereign debt crisis,
orCOVID‑19
Automation –
CentralNic’s RRP proxy
was the first platform
allowing automated
registration of ccTLDs
through an API, and
CentralNic continues to
bea leader in automation
indomain names
Powerful partners –
CentralNic is the partner of
choice for the majority of the
world-leading hosting
companies to procure
domain names as the
foundation for their
customers’ online presences
Multi brand retail
business –
CentralNic operates
different brands that cater
to various customer
personas, from micro
businesses in emerging
countries to large North
American enterprises
Foundation
of the
internet
Domain names are the key
navigator for the internet and basis
for email, two key innovations of the
last few decades
More than 365 million domain
names are currently in existence
under more than 1,500 top level
domains (i.e., the rightmost part
ofa web address, such as ‘.com’)
Subscription
revenue
CentralNic connects more
c.250,000direct and four million
indirect customers with more than
1,000 domain name registries all
around the world
This network makes CentralNic
afavourite marketplace serving
alluser types ‑ SMBs, enterprise
customers, governments and
resellers ‑ who can obtain any
domain name their customer wants
through a single API and a single
invoice, with a single support
number to call
Basis for
value‑added
services
Additional services can be
bundled with domain names,
suchas SSL certificates or
hostingpackages
Domain parking services, as
offered by our Online Marketing
segment, allow owners to generate
recurring income from advertising
placed on their domain names
Also, domain names can be used
asa crypto currency wallet, and
inconjunction with blockchain
applications. CentralNic has
co‑developed and supported
blockchain applications for
domains over several years
How Online Presence services work:
CentralNic Group Plc | Annual report 2021 15
Additional informationFinancial statementsGovernanceStrategic report
Massive
underlying
growth
Over 4 billion people access
theinternet
320 million+ new users expected
in2022, annualised growth rate 7%
E‑commerce generated
USD4.3trillion in 2020,
growingat27%p.a.
Online
customer
acquisition
Over USD 400 billion was spent in
2020 (growing at 21%) on online
marketing, by e‑commerce
operators and others to acquire
customers
Online
revenue
generation
Websites with ‘traffic’
(peoplesurfing the internet)
areable to generate revenue
through placing advertisements
ontheirwebsites
How Online Marketing services work:
CentralNic’s business characteristics:
Future proof –
CentralNic’s Online
Marketing businesses
haveno exposure to:
• Cookies
• Private user data
Hence, we are at the
forefront of ESG‑friendly
online advertising
CentralNic accesses
tensof millions of websites
and domains with traffic
from more than 25 million
domains onan exclusive
basis
CentralNic uses
AIandenormous
processing power
toidentify potential
customers for its
clientsusing contextual
advertising (analysing
domain names and
websitecontent)
Recurring revenues–
Rolling contracts and
‘programmatic advertising’
tools for clients to
automate a continuous
stream of new customers
to their websites deliver
utility‑style predictable
revenues
16 CentralNic Group Plc | Annual report 2021
Strategic report
Our core growth strategy balances a focus on
organic growth with our leadership in consolidating
the global provision of our online services.
Our strategy
Strategic priorities: Description: Notes: 2021 achievements: Priorities for 2022: Link to KPIs:
Organic growth
New customer wins, supporting
existing customers, and
cross-sellingour services.
Launching new products
andcontracting with
newsuppliers.
As CentralNic has madea
number of major acquisitions in
recent years, the Company also
prepares proforma comparable
financial summaries including all
businesses currently controlled
by CentralNic toeffectively
isolate organicgrowth.
• Record organic revenue growth of 39% in2021
demonstrates the success of the Company’s
strategy of investing during the pandemic.
• The Financial Times listed CentralNic among the
top 250 fastest-growing companies and among
the top 50 fastest-growing Technology
companies in Europe; one criteria for inclusion is
that revenue growth must have been primarily
organic. Further, other companies included in the
ranking are significantly smaller than CentralNic,
which demonstrates growth at an unusual rate
for companies of our size.
• Dedicated business
development teams
established in late 2021
tocontinue to drive
incremental revenues.
• Organic growth to be driven
by cross-selling of services
throughcapitalising on
capabilities of newly acquired
entities.
1

2

3
4

5

7
9

10

11
12
 
Focused
M&A
Website and e-commerce
targets matching CentralNic’s
current recurring revenue, cash
generation profile.
Strong pipeline of attractively
priced deals.
CentralNic has cultivated
excellent capabilities in
sourcing,completing and
integrating transformative
acquisitions, integrating them
into marketplaces enjoying
network effects, and driving
organic growth.
• Acquisition of SafeBrands (Online
Presencesegment) in January 2021.
• Acquisition of Wando Internet Solutions
(Online Marketing segment) in February 2021.
• Acquisition of a publishing network of
revenue-generating websites from White & Case
Ltd in October 2021.
• Acquisition of NameAction (Online Presence
segment) in December 2021.
• Execute on strong pipelinefor
future acquisition targets to
ensure the business continues
its trajectory, scaling the ranks
of the global leaders in our
industry.
1

2

3
4

5

6
7

8

9
10

11

12
Operating
leverage
Achieve cost savings in future
periods by successfully
integrating acquired businesses.
Operational gearing is expected
to enhance margins as the
Group scales.
M&A activity targets specific
financial synergies to ensure that
the cost base continues to be
well controlled.
• Cost to net revenue ratio kept stable as
compared to FY20 despite notable upfront
investment in growth.
• Operational leverage already started materialising
in H2.
• The growth sparked by the
Company’s investment in
talent and systems is
expected to materially
continue whereas the growth
in operational expenditure
willbe underproportional
incomparison.
1

2

3
4

5

7
Sustainable
debt
Reduce interest rate on historic
debt (latest effective interest
rate<5%).
Retain net debt/EBITDA ratio
of<2.5x and interest coverage
of >4x.
Given the amortisation-free
nature of our Norwegian bond,
improving the interest cover
takes precedence.
• Oversubscribed bond tap issue at 104.5% of
nominal value provided a market test of yield
expectations for CentralNic’s much improved
credit profile.
• Interest cover, as measured by adjusted cash
flow divided by cash interest, improved from
3.7xin FY20 to 6.2x in FY21.
• The refinancing window
opening in July 2022 provides
a formidable opportunity to
manage towards the goal of
further notable improvements
of the interest cover.
3

6

8
CentralNic Group Plc | Annual report 2021 17
Additional informationFinancial statementsGovernanceStrategic report
Strategic priorities: Description: Notes: 2021 achievements: Priorities for 2022: Link to KPIs:
Organic growth
New customer wins, supporting
existing customers, and
cross-sellingour services.
Launching new products
andcontracting with
newsuppliers.
As CentralNic has madea
number of major acquisitions in
recent years, the Company also
prepares proforma comparable
financial summaries including all
businesses currently controlled
by CentralNic toeffectively
isolate organicgrowth.
• Record organic revenue growth of 39% in2021
demonstrates the success of the Company’s
strategy of investing during the pandemic.
• The Financial Times listed CentralNic among the
top 250 fastest-growing companies and among
the top 50 fastest-growing Technology
companies in Europe; one criteria for inclusion is
that revenue growth must have been primarily
organic. Further, other companies included in the
ranking are significantly smaller than CentralNic,
which demonstrates growth at an unusual rate
for companies of our size.
• Dedicated business
development teams
established in late 2021
tocontinue to drive
incremental revenues.
• Organic growth to be driven
by cross-selling of services
throughcapitalising on
capabilities of newly acquired
entities.
1

2

3
4

5

7
9

10

11
12
 
Focused
M&A
Website and e-commerce
targets matching CentralNic’s
current recurring revenue, cash
generation profile.
Strong pipeline of attractively
priced deals.
CentralNic has cultivated
excellent capabilities in
sourcing,completing and
integrating transformative
acquisitions, integrating them
into marketplaces enjoying
network effects, and driving
organic growth.
• Acquisition of SafeBrands (Online
Presencesegment) in January 2021.
• Acquisition of Wando Internet Solutions
(Online Marketing segment) in February 2021.
• Acquisition of a publishing network of
revenue-generating websites from White & Case
Ltd in October 2021.
• Acquisition of NameAction (Online Presence
segment) in December 2021.
• Execute on strong pipelinefor
future acquisition targets to
ensure the business continues
its trajectory, scaling the ranks
of the global leaders in our
industry.
1

2

3
4

5

6
7

8

9
10

11

12
Operating
leverage
Achieve cost savings in future
periods by successfully
integrating acquired businesses.
Operational gearing is expected
to enhance margins as the
Group scales.
M&A activity targets specific
financial synergies to ensure that
the cost base continues to be
well controlled.
• Cost to net revenue ratio kept stable as
compared to FY20 despite notable upfront
investment in growth.
• Operational leverage already started materialising
in H2.
• The growth sparked by the
Company’s investment in
talent and systems is
expected to materially
continue whereas the growth
in operational expenditure
willbe underproportional
incomparison.
1

2

3
4

5

7
Sustainable
debt
Reduce interest rate on historic
debt (latest effective interest
rate<5%).
Retain net debt/EBITDA ratio
of<2.5x and interest coverage
of >4x.
Given the amortisation-free
nature of our Norwegian bond,
improving the interest cover
takes precedence.
• Oversubscribed bond tap issue at 104.5% of
nominal value provided a market test of yield
expectations for CentralNic’s much improved
credit profile.
• Interest cover, as measured by adjusted cash
flow divided by cash interest, improved from
3.7xin FY20 to 6.2x in FY21.
• The refinancing window
opening in July 2022 provides
a formidable opportunity to
manage towards the goal of
further notable improvements
of the interest cover.
3

6

8
18 CentralNic Group Plc | Annual report 2021
Strategic report
A range of financial and non-financial keyperformance
indicators are usedto measure and monitor
performance acrossthe Group.
Key performance indicators
Financial:
1
Revenue growth
(USD m)
2
Net revenue/gross profit growth
(USD m)
3
Adjusted EBITDA growth
(USD m)
4
Organic revenue growth
(USD m)
5
Adjusted diluted EPS
(cents)
6
Cash balance
(USD m)
+71%
410.5
2021
240.0
2020
Why it’s important
Revenue increase is the key indicator
of growth of the Group
2021 performance
71% growth achieved organically and
through M&A activity
Outlook
Analyst expectations of 2022
revenue currently range from
USD499.9 million to USD
532.0million
+58%
118.5
2021
75.1
2020
+57%
46.3
2021
29.4
2020
+18%
11.80
20212020
+96%
56.1
2021
28.7
2020
9.96
+39%
415.2
20212020
299.4
Why it’s important
Principal indicator of core profitability
given ‘pass through’ nature of some
revenue streams
2021 performance
58% growth in 2021
Outlook
Analyst expectations of 2022
net revenue currently range from
USD 132.2 million to USD
145.6million
Why it’s important
Adjusted EBITDA is the key measure of
the Group’s operational excellence
2021 performance
57% growth due to strong revenue
growth and focus on cost control
Outlook
Analyst expectations currently range
from USD 56.4 million to USD
63.0million
Why it’s important
Given the highly acquisitive nature of
the Group, organic growth is a key
metric illustrating the underlying
revenue growth of the Group
2021 performance
Record organic growth of 39% in2021
Outlook
2021’s investments are expected
tocontinue to drive organic growth
into 2022
Why it’s important
Measure of the underlying growth
inearnings
2021 performance
18% growth is testament to organic
and M&A-led growth of the Group
Outlook
Growth expected from continuing
operational leverage benefits and
accretive acquisitions in FY22
Why it’s important
Cash balances are monitored weekly
for working capital and M&A funding
requirements
2021 performance
Cash reserves almost doubled to
USD 56.1 million at end of 2021
Outlook
Continued operational cash
conversion greater than 100%
expected in 2022
CentralNic Group Plc | Annual report 2021 19
Additional informationFinancial statementsGovernanceStrategic report
Financial: Non-Financial:
7
Operating profit growth
(USD m)
9
8
Net debt deleverage
(USD m)
n.m.
12.4
2021
(2.1)
2020
Why it’s important
Demonstrates that the Group’s
acquisition-led non-core and
amortisation charges are recovered
2021 performance
Operating profit increased to
12.4million
Outlook
Metric will benefit from operational
leverage but expected to be impacted
by 2021 and 2022 M&Aactivity
No. of domain registration years
(Online Presence) (#)
+9%
12.3m
2021
11.3m
2020
+13%
85.0
20212020
75.0
Why it’s important
Net debt deleverage expected over
time
2021 performance
Reduction despite significant
investing cash flows in 2021
Outlook
Deleverage (measured by net debt/
EBITDA) and further improvements
to interest cover will continue despite
debt raise for VGL acquisition
10
Ave. revenue per domain year
(Online Presence) (USD)
+2%
9.24
2021
9.02
2020
Why it’s important
Indicates whether CentralNic is
winning market share
2021 performance
Growth of 9% to 12.3 million
processed domain registration years
despite the stagnant market
Outlook
Further market share gain by
volume expected in 2022
Why it’s important
Indicative of the stability of our
conversion of underlying activity
2021 performance
Growth of 2% achieved in 2021
Outlook
Sustainable growth expected as
we continue to bring efficiencies to
the domain subscription process
11
No. of visitor sessions
(Online Marketing) (#)
+49%
3.1bn
2021
2.1bn
2020
12
Revenue Per Thousand
Impressions (Online Marketing)
(USD)
+36%
64.90
2021
47. 9 0
2020
Why it’s important
Indicative of the Group’s total
audience
2021 performance
Strong growth in particular from
social media, following the
audience to short form video
Outlook
Being platform agnostic, CentralNic
will nimbly follow the migration of
the mass audiences
Why it’s important
Indicative of how good CentralNic
is at monetising traffic, creating a
competitive advantage
2021 performance
Notable improvements made
through optimisation of algorithms
Outlook
Further improvement is to be
expected, in particular in the first
half of 2022
20 CentralNic Group Plc | Annual report 2021
Strategic report
Environmental, socialandgovernance (ESG)
The Board invests appropriately to address ESG
issues which affect the Group’s stakeholders.
Introduction
We believe that the best way to influence positive change
isby making a commitment to our key stakeholders –
whowill hold us accountable. With this in mind, we will
beadding a page dedicated to ESG to our website in
thecoming months.
The initiatives that we have undertaken and prioritised during
the year are summarised in the following pages.
Read more about:
• the Group’s goals, strategy and business model in the
strategic report on pages 02 to 19;
• how we manage risks on pages 32 to 35; and
• corporate governance on pages 38 to 40.
Adoption of the United
NationsSustainable
Development Goals
We adopted the United Nations Sustainable
Development Goals (UN SDGs) to help guide
oursustainability strategy
One CentralNic
In 2021 we launched our purpose and values – making
an impact, collaborating and taking ownership
Carbon intensity reduced
Group emissions per employee have reduced by
17.5% and emissions per turnover have reduced
by22.7% in 2021
Embracing future
reportingstandards
The Group is welcoming the upcoming Task Force
onClimate‑Related Disclosures (TCFD) requirements
and is actively preparing for them. In this endeavour,
we are exploring how to weave the industry‑specific
reporting metrics for Software & IT Services (TC‑SI)
provided by the Sustainability Accounting Standards
Board (SASB) into the TCFD framework and align
them with the Global Reporting Initiative (GRI)
standards
Our sustainability
strategy
The Group is committed to addressing today’s sustainability
challenges and opportunities, adjusting its business strategy
accordingly. Understanding the needs of key stakeholders
andtheexpectations they have is central to ensuring theGroup
prioritises the most critical issues and operates a responsible
andsustainable business.
The Group’s sustainability framework – aligning
with the UN Sustainable Development Goals
The 17 Sustainable Development Goals (SDGs) were launched in
2015 by the United Nations (UN), aiming to end poverty andcreate
a life of dignity and opportunity for all. TheSDGs define global
sustainable development priorities and aspirations for2030 and
seek to mobilise global efforts among governments, business
andcivil society around a common set oftargets.
Group activities align most closely with six UN SDGs covering
thethemes of resilient, inclusive, sustainable and innovative
industrialisation, together with good health and wellbeing,
genderequality, decent work and economic growth,
responsibleconsumption and production and climate action.
We have already made progress towards advancing these goals.
Theactions we have taken and our performance across these
topics are covered over the following pages. Aligning our
sustainability strategy with the UNSDGs will help guide
ourfutureactivity to ensure wecontinue to create
sustainable,sharedvalue for allstakeholders.
CentralNic Group Plc | Annual report 2021 21
Additional informationFinancial statementsGovernanceStrategic report
UN Goals How CentralNic Contributes
Good health
andwellbeing
Health and wellbeing are embedded in the CentralNic strategic
people priorities and contribute to its core sustainability mission
Gender
equality
CentralNic is committed to ensuring equal opportunities for all,
irrespective of gender, and to maintaining a culture of inclusion, in
which diversity is seen as a strength
Decent work
and economic
growth
CentralNic employs over 600 employees across the globe. Our
employees are crucial to delivering our sustainability goals and
mission
Sustainable
development
CentralNic is at the forefront of innovation within the domain and
online marketing industry. Our mission is to provide tools to as
manypeople to realise their aspirations online, demonstrating our
commitment to effective digital work and social practices,
suchasdata privacy
Responsible
consumption
andproduction
CentralNic makes sustainability a key factor when managing
suppliers
Climate action
CentralNic is taking action to reduce its GHG emissions whilst also
investing in green energy projects
22 CentralNic Group Plc | Annual report 2021
Strategic report
Uniting our people behind a common purpose, vision
and set of clear values is a powerful driver of our
culture and performance.
Environmental, socialandgovernance continued
Our people and culture
Coming together as One CentralNic
To bring us together as one aligned CentralNic, in 2021 we
launched our purpose and values – Impact, Collaboration
andOwnership – and are embedding these in everything we do.
TheExecutive Team is committed to building One CentralNic with
aculture, purpose and heartbeat that our people are motivated
byand feel proud to be a part of, and that delivers the value our
stakeholders deserve. Our people, financial and sustainability goals
will support our Company performance, ambition and purpose and
will be part of our 2022 corporate objectives and key results (OKRs)
on which we will bemeasured.
To drive this, we have recruited 17 Culture Ambassadors from
among our staff, who ensure our values are lived throughout the
business and provide avalues lens to all our new initiatives.
Uniting our people behind a common purpose, vision and set
ofclear values, rather than the many we have inherited via our
acquisitions, was animportant strategic step for CentralNic and will
be apowerful driver of our performance and culture both nowand
in the future.
Growing the team
It is CentralNic’s conviction that its assembled workforce is its key
asset. In line with this conviction, it is CentralNic’s strategy to retain
the talent that it acquires in its M&A growth strategy. CentralNic
invests into itself and its acquisitions and is proud to announce
that, adjusted for acquisitions, the Group had net employment
growth of 15% or 82 FTE, from 562 FTE on average in 2020 to
644FTE on average in 2021.
Attraction and engagement: Our evolving flexible
workingmodel
We are working tirelessly to create a culture and way of working
that is inclusive, where people feel they belong and are able to be
themselves, enabling them to thrive in our dynamic, fast-paced
environment.
Covid has presented us with challenges, and our people have risen
to meet them. We have taken the opportunity to think about the
ways of working best suited to underpin our day-to-day lives as we
emerge from the pandemic. We listened to our people who want
flexibility and we are evolving a dynamic team-driven working
model focused on output.
We recognise a hybrid working model is not easy, especially
asmany people have struggled to find the right rhythm between
workand personal life in a predominantly remote pandemic world.
Toaddress this, our manager training and facilitated sessions will
support teams as they determine their most effective hybrid
working models together with working practices and commitments
to their stakeholders and to each other. We believe supporting our
people to take ownership is critical, not just to maintaining a
sustainable way of working, but also in ensuring our people are
happy, engaged and motivated.
During 2022 we will be rethinking how we use our spaces for
whenwork is best done in-office and ensuring we harness thebest
technology solutions not just to ensure a great user experience,
but to cut travel time, costs and therefore our carbon footprint.
Weare now building harmonised processes across the Group to
support our new working model to ensure its ultimate success for
the benefit of our customers, our people and ourbusiness.
Group ethics
Company values, which incorporate the principles of corporate social responsibility and sustainability, guide the Group’s
relationships with its clients, people and the communities and environment in which the Group operates. The Group’s approach to
sustainability addresses both its environmental and social impacts, supporting the Group’s vision to remain an employer of choice,
while meeting client demands for socially responsible partners. The Group respects local laws and customs while supporting
international laws and regulations. These policies have been integral in the way Group companies have done business in the
pastand will continue to play a central role in influencing the Group’s practice in the future.
CentralNic Group Plc | Annual report 2021 23
Additional informationFinancial statementsGovernanceStrategic report
Inclusive at all times
Recruiting and retaining excellent staff is a key focus, and we
provide an environment and culture designed to enable our people
to feel supported and to do their best work. We continue to build
on the foundations in place, providing education and training for
allhiring managers to make sure we recruit at all times with an
inclusive mindset. Forfull transparency and equal opportunity,
weadvertise all roles internally and have a supportive process
toenable our people to apply for roles. Our 2022 manager
development programme includes unconscious bias training
through which managers earnthe right to hire.
Coming together as One CentralNic means we have a clearer view
on our overall inclusivity across the Group. Our inclusivity policy,
processes and training are designed to remove conditions that
place people at a disadvantage in respect of gender, race,
ethnicity, disability, age, sexual orientation, class, or faith.
Werecognise and encourage the valuable contribution that
peoplefrom all backgrounds and experience bring to our
company. Weare very proud to have over 40 nationalities across
our business, speaking more than 30 different languages. We look
forward to providing more insights in future reports around our
inclusive nature, working within the constraints imposed on
collecting personal data in many jurisdictions.
The gender balance at year end 2021 was 36% female and 61%
male
(1)
and whilst this is broadly reflective of our industry, it will be a
key focus for the Group as we move into 2022 and beyond.
We are pleased our gender balance within the senior leadership
team had increased to 28% of leadership being female by the end
of 2021. This remains below our expectations and through our new
career structure, manager training and talent programmes, we plan
to further address this during 2022. However an excellent example
of the promotion of leaders regardless of gender within the Group
is the appointment in January 2021 of Gaelle Lallement as CEO of
Team Internet, CentralNic’s largest subsidiary.
Wellbeing: Looking after ourselves andeachother
Our response has evolved from the urgent provision of home office
equipment in 2020, to a more holistic approach recognising that our
people’s wellbeing is a complex mix of social, physical and
psychological factors. In2021 all managers attended mental health
training, highlighting the need to prioritise their own wellbeing to
better support their team as well as how to recognise and help
people struggling.
During 2021 we listened to our people, carrying out
over35focusedinterviews and pulse surveys to check the
temperatureof the business. Given the pandemic and continued
remote working, encouragingly 91% of people said they continued
to be involved in impactful work, with 84% saying they still felt
connected to the business despite working remotely. 12% of our
people felt negatively impacted by working remotely but 71% of
those negatively impacted felt they were getting support from
thebusiness.
We continue to encourage proactive measures to support our
people, such as walking meetings, virtual meet-ups, gentle stretch
sessions, and a global step challenge. The last initiative not only
got people moving, it created a social, team-spirited opportunity
forpeople to team up with their colleagues across the globe and
helped create a more One CentralNic camaraderie. It will be
repeated in 2022 witheveryone using their CentralNic fitbit,
our2021 gift to launch our holistic approach to wellbeing in
2022,to capture their steps.
Recognising some people have struggled to switch off, we gave
the ‘gift of time’ over the 2021 holiday season with two additional
days off work for our people. We hope to extend this in 2022.
Our people also have access to Lifeworks, offering confidential
specialist support when needed and a vast library ofresources.
61% male
36% female
Group gender diversity
3% undisclosed
72% male
28% female
Senior leadership gender diversity
24 CentralNic Group Plc | Annual report 2021
Strategic report
Environmental, socialandgovernance continued
Coming together as One CentralNic continued
Learning and development: Growing together
As a fast-growing company, there are many opportunities for our
business and our people to grow together.
Responding to feedback in our 2021 engagement survey, we are
creating a clearer career framework underpinned by agile
performance across the Group. Everyone now has an annual
career and growth conversation with continuous coaching and
feedback throughout the year. People own their careers and we
have allocated a sizeable training budget to support identified
development needs.
2021 was our first year of having a company-wide training policy,
and over 1,111 online training hours were delivered, including
English language skills and key softer skills to enable ourpeople to
manage and work more effectively remotely. We also rolled out
LinkedIn learning to everyone, providing access to a wealth of
learning opportunities, together with tailored training modules truly
embracing e-learning opportunities globally.
We will continue to evolve this during 2022 to ensure we have the
right skills in the business to deliver our future aspirations and a rich
pool of talent ready to step up into new roles created by our growth.
Fair pay and living wage
We aim to ensure that everyone is not just paid a living wage
orabove, but also appropriately and fairly rewarded for their
contribution. To ensure this, we now have one aligned annual
salary review, and using the data gathered as part of getting to
know our talent bench, we are now able to more accurately
benchmark our people’s roles to the market. Basedonour review
of the 2021 salary review outcomes we know our people are paid a
local market salary and we are confident we reward people equally
forequal roles.
Engaging with our
communities
Internet accessibility
In line with the United Nations Broadband Commission’s objective of
providing affordable internet connection to the 50% of the world that
is still offline, CentralNic actively provides and expands its internet
services in virtually all developing countries around the world.
We believe that the internet is a pivotal instrument for improving
thehuman condition, and developing countries can benefit greatly
from broader access to information, business and trade
communications and effortless connectivity with people
aroundtheworld.
Global cybersecurity initiatives
CentralNic employs multiple anti-abuse and compliance
teamsaround the world to set policy, and monitor and enforce
compliance with our own policies and those of partners and
regulators, as well as applicable laws.
CentralNic has adopted extensive policies for protecting users
from digital fraud and other forms of cybercrime. The Company
actively co-operates with international organisations on protecting
users against cyber threats. For example, CentralNic Group has
partnered with the Global Cyber Alliance on the Domain Trust
initiative which provides registries and registrars with high-quality,
large-scale sets of data on suspected criminal and malicious
domains through which they can take further action, protecting
their users.
The Company has a strict policy of adhering to local laws and
regulations in every jurisdiction in which it operates, and
co-operates with national regulators and law enforcement.
CentralNic has partnered with leading cybersecurity vendors
andlaw enforcement organisations against global cybercrime.
TheCompany regularly participates in joint efforts for taking down
internet domains used by illegal actors and disabling (sinkholing)
botnets operated by cybercriminals.
To further help prevent online crime, CentralNic Group proactively
scans internet domains for signs of illegitimate activities and abuse.
In 2021, the Company performed over 70 million domain scans.
Data privacy
Data privacy is a fast evolving subject, with regulators and industry
leaders setting the pace, as demonstrated by Apple’s
implementation of IDFA or the Belgian DPA’s recent cookie ruling.
CentralNic stands behind the transition towards data privacy by
employing dedicated staff and retaining recognised advisors to
constantly stay ahead of the curve for its internal compliance.
CentalNic also provides modern Online Marketing tools that allow
advertisers to successfully promote their products and services
without a need to intrude into consumers privacy.
World Economic Forum
Since 2020, CentralNic has been an active member of the
WorldEconomic Forum (WEF), the world’s leading international
non-governmental organisation for public-private co-operation.
TheForum’s commitment to improving the state of the world
resonates deeply with CentralNic’s mission to help as many people
as possible realise their aspirations online.
(1) 3% undisclosed.
Values
Ownership
We always act for the good of our customers,
partners, people, company, and planet – for a
more inclusive, reliableand safe internet.
Impact
Driven by a passion for the immense potential of
the internet, we continuously seek to make a
bigger and more positiveimpact.
Collaboration
Relationships underpinned by common goals,
excellence and openness enable us to thrive in
and create a real contribution to the online
economy.
CentralNic Group Plc | Annual report 2021 25
Additional informationFinancial statementsGovernanceStrategic report
CentralNic’s CEO Ben Crawford and other Company executives
and experts work closely with the World Economic Forum’s team
and members, including the world’s 1,000 largest companies,
prominent policymakers, academics and other leaders of society
to shape global, regional and industry agendas.
Among such projects are the WEF’s Partnering Against Corruption
Initiative and the Global Future Council on Transparency and
Anti-corruption, bringing the world’s leading private-sector
organisations together with government officials and academia to
enact anti-corruption policy and recommendations, helping shape
the global anti-corruption agenda. CentralNic’s experts are actively
involved in these initiatives, contributing their expertise and
insights, and participating in working meetings and discussions.
ICANN
ICANN, or the Internet Corporation for Assigned Names
andNumbers, is a global multi-stakeholder organisation that
coordinates the Internet DNS and IP addresses devoted to the
security, stability and interoperability of the global internet for the
benefit of all, values that resonate perfectly with CentralNic’s beliefs.
CentralNic is therefore an active supporter of the ICANN multi-
stakeholder model of internet governance and has been actively
and constructively contributing as a sponsor of the ICANNmeetings
and as participant in multiple policy development working groups
on issues such as the development of a new domain name transfer
policy, the introduction of the new top level domains, or the
development of a standardised registration data request service.
International Telecommunication Union
CentralNic is a member of the International Telecommunication Union
(ITU) which is the United Nations’ specialised agency for information
and communication technologies. ITU is committed toconnecting all
the world’s people – wherever they live and whatever their means,
which strongly resonates with CentralNic’s mission to help create a
universally inclusive internet that improves global prosperity, equality
and sustainability. We are proud to be a part of ITU’s mission to
protect and support everyone’s right to communicate.
Alliance of Democracies
CentralNic is a member and active supporter of the Alliance of
Democracies, a non-profit organisation dedicated to the
advancement of democracy and free markets across the globe.
The Alliance aims to solidify at-risk democracies both through
international support and through locally driven economic growth.
The programme supports economic reforms and entrepreneurship
in emerging democracies and post-conflict areas. The initiative
includes the Democracy Tech Entrepreneur Fellowship that
seeksto make technology work for democracy.
Environmental
Energy consumption reduction
Streamlined Energy and Carbon Reporting (SECR)
Under the Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations 2018,
weare mandated to disclose our UK energy use and associated
greenhouse gas (GHG) emissions. Specifically, and as a minimum,
we are required to report those GHG emissions relating to natural
gas, electricity and transport fuel, as well as an intensity ratio,
under the SECR regulations.
Methodology
CentralNic Group Plc appointed Carbon Footprint Ltd, a leading
carbon and energy management company, to independently
assess its GHG emissions in accordance with the UK
Government’s ‘Environmental Reporting Guidelines: Including
Streamlined Energy and Carbon Reporting Guidance’.
The GHG emissions have been assessed following the ISO
14064-1:2018 standard and have used the 2020 emission
conversion factors published by the Department for Environment,
Food and Rural Affairs (Defra) and the Department for Business,
Energy & Industrial Strategy (BEIS). The assessment follows the
location-based approach for assessing Scope 2 emissions from
electricity usage. The financial control approach has been used.
Results
The table below summarises the GHG emissions for reporting
year1 January 2021 to 31 December 2021. This is the second year
CentralNic Group Plc has assessed its emissions. In 2021 the
majority of our employees continued to work from home and there
was less travel across the Group. Emissions reduced by 27% in
2021 to 42,719 kWh (2020: 58,579) kWh.
The table below shows only the SECR required elements for the
UK operations.
Element 2021 (tCO
2
e) 2020 (tCO
2
e)
Direct emissions (Scope 1) — —
Indirect emissions (Scope 2) –
Purchasedelectricity 8.60 13.66
Total tCO
2
e (Scope 1 and 2) 8.60 13.66
Other indirect emissions (Scope 3)
– Employee-owned car travel 0.54 —
Other indirect emissions (Scope 3)
– Transmissionand distribution
ofelectricity 0.76 1.17
Total tCO
2
e (Scope 3) 1.30 1.17
Gross total tonnes of CO
2
e 9.90 14.83
Tonnes of CO
2
e per UK employee 0.11 0.22
Tonnes of CO
2
e per UK turnover
(inUSD million) 1.45 3.80
Total energy consumption (kWh) 42,719 58,579
As Scope 3 emission reporting is an ever evolving space,
CentralNic is looking at the best way to collect this information
going forward. In the meantime, we continue to encourage all our
suppliers to reduce their carbon footprint and take sustainability
into consideration throughout the suppplier management process.
SK‑NIC fund
SK-NIC, part of the CentralNic Group and manager of the .sk
ccTLD, has made anofficial commitment to donate 5% of its
annual revenue to support the Slovakian digital economy and
internet community. Since 2017, CentralNic has donated
USD678,000 (USD 123,000 in 2021) to philanthropic
technology projects, such as accessibility software to enable
visually impaired people to use smartphones (Corvus), a
nationwide Slovakian online suicide prevention service (IPecko),
a dedicated programme launched to help girls prepare for a
career in the IT sector, and a specialised training programme for
school teachers, enabling them to use modern online tools and
technology for remote teaching during the COVID-19pandemic.
26 CentralNic Group Plc | Annual report 2021
Strategic report
Environmental, socialandgovernance continued
Energy efficiency
Some of our goals for 2022 to improve energy efficiency are:
• waste and recycling – reducing the waste generated by
CentralNic and diverting waste from landfill through recycling
and recovery; and
• electricity consumption – Although some of our sites already
operate on renewable energy, we aim to switch to renewable
energy sources across all premises where feasible.
• Group travel – updating the travel policy aiming to continue to
reduce our emissions and phasing out the use of hire car travel
and employee owned vehicle business mileage.
Carbon neutrality
Following the review conducted by Carbon Footprint Ltd on the
GHG emissions of the Group, CentralNic decided to offset these
emissions by investing in promoting improved cooking practices
in Nigeria. The project activity involves replacement of existing
inefficient cookstoves being used by majority of Nigerian
population with highly efficient cookstoves. CentralNic is
acertifiedCarbon Neutral Company.
Tree plantation programme
CentralNic continued tocontribute in 2021 to a global tree
plantation programme, whereover 15,000 trees were planted
through the help of Eden Reforestation Projects (EFP). In this effort
CentralNic helped EFP inits mission to plant trees around the
world in Ethiopia, Madagascar, Nepal, Haiti, Indonesia,
Mozambique, Kenya andCentral America.
Group GHG Emissions
We have also assessed the emissions of the Group as a whole
using the same methodology. The table below summarises the
GHG emissions of the Group.
Element 2021 (tCO
2
e) 2020 (tCO
2
e)
Gross total tonnes
ofCO
2
e 1,071.52 810.65 +32.2%
Tonnes of CO
2
e per
Groupemployee 1.65 2.00 -17.5%
Tonnes of CO
2
e per Group
turnover (in USD million) 2.61 3.38 -22.7%
Although there is an increase in total GHG emissions for the Group,
the emissions per employee have reduced by 17.5% and the
emissions per turnover have reduced by 22.7%. CentralNic has
also included emissions generated by employees working from
home in this year’s emissions in an effort to provide a clearer
picture of the Group’s total emissions.
Section 172(1) statement
The Board recognises its responsibility to take into consideration
the needs and concerns of all our stakeholders as part of our
discussion and decision-making processes, and in this regard,
wewelcome the fresh stance under section 172 of the UK
Companies Act 2006 (s.172) as part of the QCA Corporate
Governance Code.
The Directors have identified the Company’s key stakeholders as
its: Shareholders and investors, employees, customers, suppliers,
regulators and governmental bodies, the environment and the
wider community.
Building positive relations with these stakeholders, treating
themwell and with respect and managing our operations in
asustainable way, is essential to the success ofthe business.
The Board considers the interests of the Group’s employees
andother stakeholders, including the impact of its activities on
thecommunity, environment and the Group’s reputation, when
making all decisions. The Board, acting fairly between members,
andacting in good faith, considers what is most likely to promote
the success of the Group for its Shareholders in the long term.
The Group’s stakeholder engagement activities help to inform
theBoard’s decisions. By thoroughly understanding our key
stakeholder groups, we can factor their insights and concerns
intoboardroom discussions.
CentralNic Group Plc | Annual report 2021 27
Additional informationFinancial statementsGovernanceStrategic report
Suppliers
Regulators
andgovernments
Communities
Our suppliers are key to the
operational success of our company.
Our relationship with governments
and regulators is important to ensure
policies are developed in the interests
of our customers and the industry,
while also enabling them to better
understand the positive impact we
can have on the environment and
communities we operate in.
The Board is committed to
improvingsustainability and helping
communities thrive by positively
contributing both socially and
economically. Building and preserving
relationships with the communities we
serve is also core to our commercial
success and supports our purpose of
enabling our customers to realise their
aspirations online.
How we engage
• Supplier audits and assessments
How we engage
• Participation and attendance
atevents with government
andregulators
How we engage
• Through engagement with
charities and non-governmental
organisations
• Participation in key international
forums and working groups
Stakeholder engagement
Shareholders
andinvestors
Employees Customers
The Board regards effective
communication with Shareholders
as essential.
Relations with Shareholders are
managed principally by the Chief
Executive Officer, Chief Financial
Officer and the Chairman.
The Group recognises that high levels
of employee engagement lead to
lower levels of attrition, higher levels of
productivity and a more enjoyable
work environment, where people are
happier and are more likely to thrive.
The Group engages with customers
across the globe through its
dedicated customer support function.
Engaging with our customers and
understanding their needs is critical to
delivering on our strategy, ambition
and purpose.
How we engage
• Regular meetings with
institutionalinvestors and
analystsduring the year
• Individual or collective meetings
between major Shareholders and
the Board
• Annual General Meeting (AGM)
• Feedback from nominated
advisers and joint brokers
onShareholder opinions
• Group website
How we engage
• Regular town halls
• Ad hoc news, shoutouts and
kudos through our Human
Resources Information System
• Pulse and targeted surveys
• Group engagement surveys
• Internal newsletters
How we engage
• Customer support function
• Newsletters
• Customer satisfaction surveys
28 CentralNic Group Plc | Annual report 2021
Strategic report
CentralNic’s share price improved from
an84p average in 2020 to a 103p
average in 2021, a 23% increase.
Michael Riedl
Chief Financial Officer
Chief Financial Officer’s report
In the financial year 2021, the Group recorded overall year-on-year
growth in revenues of 71% from USD 240.0 million to USD 410.5
million. Organic growth was 39%. Net revenue increased by 58%
from USD 75.1 million to USD 118.5 million. Adjusted EBITDA
increased by 57% from USD 29.4 million to USD 46.3 million.
Thelower adjusted EBITDA margin of 11.3% compared with 12.2%
in the prior year is due to the different business mix post the 2019
and 2020 acquisitions, as the businesses constituting the Online
Marketing segment have a lower blended gross margin of 25%
than the businesses constituting the Online Presence segment
36%. Expressed as a percentage of net revenue or gross profit,
hence abstracting from pass-through costs such as revenue
shares and registry fees, the EBITDA margin stayed perfectly
constant at 39.1%. This margin, which the Directors consider a
more reliable metric of profitability and which forms the basis of
reporting for a notable number of CentralNic’s peers, together
withthe notable organic growth puts the Company comfortably
into the group of ‘Rule of 40’ companies.
This profile of notable growth and attractive margins is
complemented by a decent cash generative profile with net
operating cash flow before tax of USD 43.3 million in 2021 as
compared to 2020 (USD 22.7 million). Cash at the end of 2021
wasUSD 56.1 million (2020: USD 28.7 million).
In 2021, in view of the significance of the expansion into domain
name monetisation, the Company amended its segmental
reporting. As the acquisitions of Zeropark and Voluum in
November 2020 hadnotably broadened the scope of the former
‘Monetisation’ segment, it has now been rebranded as ‘Online
Marketing’. Itencompasses the tools that businesses need to win
customers and ultimately generate revenues. The former Indirect
and Direct segments have been merged into one segment called
‘Online Presence’, which provides the tools that businesses need
to go online, with the journey typically starting with registering a
domain name. For each segment, revenue and gross profit
contributions to the total operating expenditure to operate the
omni-platform shared services core are reported below, both on
areported basis aswellas on a pro forma basis.
Online Presence
The Online Presence segment now addresses c.274,000
activecustomers owning c.27 million domain names and yielded
revenue of USD 149.3 million, an increase of 16.7% over the
USD127.9million recorded in 2020. Gross profit in 2021 was
USD53.3 million, an increase of 18.1% over the 2020 figure of
USD45.1 million. On a pro forma basis, revenue grew by 9.2%
from USD 139.8 million in FY2020 to USD 152.7 million in FY2021.
Online Marketing
The fastest-growing segment of CentralNic’s business was
OnlineMarketing. Revenue in the Online Marketing segment was
USD 261.3 million with gross profit of USD 65.2 million and, on a
pro forma basis, revenue increased strongly by USD 102.9 million,
or65%, from USD 159.6 million to USD 262.5 million. It served
c.4,000 customers on the advertiser side, being those who want
traffic, and more than 6,000 customers on the publisher side,
being those who have traffic. The segment’s offering to the
advertisers comprises both demand-side platforms to acquire
traffic, but also subscriptions to analytics software to help
advertisers measuring their marketing effectiveness. On behalf
ofthe publishers, the segment managed c.26 million domain
names and other traffic sources.
The recent acquisition of VGL has further diversified our pool
ofmonetisation partners, including the leading names in
e-commerce, as well as publishing partners. It is expected to
positively impact our gross margin and EBITDA margin as well
asthe RPM KPI of the Online Marketing segment.
CentralNic Group Plc | Annual report 2021 29
Additional informationFinancial statementsGovernanceStrategic report
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 of the Group’s revenue comes from
recurring services, and around half of it is also subscription based.
Group overhead expenses excluding foreign exchange, depreciation,
amortisation, impairment and non-core operatingexpenses
increased 58% from USD 45.7million to USD72.2 million. Non-core
expenses of USD 8.7million included USD 3.1million acquisition
expenses, USD 3.9million integration expenses and USD 1.7million
other expenses. The latter primarily related to business reviews and
restructuring expenses. Othernon-cash expenses included the
acquired amortisation ofintangible assets of USD 18.3 million
(2020:USD 13.7 million). Theincrease reflects the full-year effect
ofscheduled amortisation for identified intangible assets arising
fromthe acquisition of the Zeropark andVoluum businesses from
Codewise, as well as amortisation also being included for the
majority of the year for theSafeBrands and Wando acquisitions.
Adjusted EBITDA of USD 46.3million (2020: 29.4million) hasbeen
derived from the operating profit of USD 12.4million (2020: loss of
USD 2.1million) after adjusting for the following items: a) depreciation
of USD 3.5million (2020: USD 2.1 million); b)amortisation of
intangible assets of USD 18.3million (2020: 13.7million) c) non-core
operating expenses of USD8.7million (2020: USD 8.2million);
d) foreign exchange profitsof USD 1.6million (2020: USD 2.1million
loss); and e) share-based payment expense of USD 5.0million
(2020: USD5.1million).
Adjusted diluted earnings per share were 11.46 cents
(2020:9.57cents) after consideration of non-recurring
acquisitioncosts and acquired amortisation charges.
Unadjusteddiluted earnings per share were (1.56) cents
(2020:(5.52) cents). Further details of the earnings per share
calculations are providedin note 12 to the financial statements.
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 43.3 million (2020: USD 22.7 million). When adjusted for
non-operating and one-off items, 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 acquisitions of
SafeBrands, Wando, White & Case and NameAction completed
during the financial year. The net cash inflow totalled USD30.2million
in 2021 as compared with USD 1.4 million in 2020. Other than
acquisitions, forwhich further details on the fairvalue are provided in
note 25 tothe financial statements, theGroup had relatively limited
capital expenditure. Excluding acquisitions, USD 4.8 million of
tangible and intangible assets have been added, representing just
over 1% of Grouprevenue. Further, USD 21.5 million of tangible and
intangible assets have been acquired.
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 as presented in notes 13
and 14 to the financial statements.
Investor relations
The Company continues to evolve its investor relations. In the
course of the year, record numbers of online investor conferences
have been attended and the cadence of virtual one-on-one
meetings remained high.
Further, CentralNic has engaged Edison to produce in-depth and
regular research on the Company which is available to everyone.
Itis hoped this research will raise the visibility of CentralNic and
enable investors of all classes, in any country, to develop an
improved understanding of the business. Edison’s research is read
on a free-to-access basis by individuals and institutions across the
globe. It has been accessed by more than 5,000 professional
investment institutions since MiFID II was introduced and many
other market participants including private investors, sell side,
advisers and press. Edison only produces research that falls
underthe minor non-monetary benefit definition in MiFID II.
Berenberg initiated coverage of CentralNic in mid-2021 and
Finncap followed suit in early 2022, being testament to the
increased interest of the capital markets in our story.
30 CentralNic Group Plc | Annual report 2021
Strategic report
Chief Financial Officer’s report continued
Augmented and accelerated financial reporting
Already in 2020, the Group augmented and accelerated its
financial reporting. In particular, the Group started to include
proforma figures in its interim report for the period ended
30June2020. These pro forma figures include all constituents
ofthe Group for the entire reporting and comparative periods,
regardless of the change of control date, and are also adjusted
toeliminate the impacts of non-recurring or non-cash revenues,
foreign exchange rate changes and changes to accounting
standards. This pro forma reporting has been provided in order to
allow the discerning reader to more accurately identify the impact
of the Group’s M&A activity. Further, the Group has undertaken to
release quarterly interim reports, effective with the interim report
for the period ended 30 September 2020. The Group is
continuously improving its processes to provide reliable trading
updates shortly after quarter end and to shorten the delivery time
of its quarterly and annual reports.
The Directors believe that a higher cadence of financial reporting
isreasonable given the Group’s fast-paced growth pattern. A Q1
trading update is scheduled for 25 April 2022 and the full Q1 2022
interim report is expected to be released on or around
23May2022.
Capital increase
On 1 June 2021, CentralNic issued and allotted 17,422,058
ordinary shares to RBC Cees Trustee Limited (RBC) the trustee of
the CentralNic Employee Benefit Trust (EBT) in order to satisfy the
potential future exercise of options held by employees of the
Company under its employee share schemes. As of that time, the
EBT held a number of shares equivalent to the number of options
granted to all employees and Directors of the CentralNic Group.
Alldividend and voting rights attaching to these ordinary shares
are waived whilst held by the EBT.
The Group had net assets of USD 114.0 million at
31December2021 (2020: USD 113.9 million).
Post the balance sheet date, on 28 February 2022, the Group
raised gross proceeds of GBP 42 million through the successful
private placing of 35,000,000 Placing Shares. The Placing Shares
were placed at a price of 120 pence per Placing Share,representing
a discount of c.10% to the last closing price and the placing was
significantly oversubscribed. The net proceeds have been used
tofund the consideration and fees in respect of the acquisition of
VGL Verlagsgesellschaft mbH and its subsidiaries. Zeus Capital
andBerenberg acted as joint bookrunners and joint brokers in
connection with the placing.
On 18 March 2022, 2,500,000 additional shares were placed via
an Open Offer for existing Shareholders at the same price per
share as the Placing Shares, i.e. 120 pence, raising gross
proceeds of GBP 3million.
This post-balance sheet equity raise was carried out via a
cashbox placing which was conducted in consultation with the
Company’s major Shareholders representing c.80% of the share
capital in issue. The cash box placing was warranted as the highly
accretive and strategic acquisition of VGL took place in a
competitive bidding process and the sellers would not grant a
window of exclusivity long enough to conduct a standard rights
issue or to convene a general meeting. Holder orders were fully
filled before allocating any shares to new Shareholders. An Open
Offer process has been put in place to allow retail Shareholders
toparticipate at the same terms and conditions as
institutionalinvestors.
Bond tap issue
A bondholder meeting held on 29 January 2021 approved the
amendment to the bond terms disclosed in our announcement
on15 January 2021. The Company successfully completed a
EUR15million tap issue under the Company’s existing senior
secured callable bonds listed on Oslo Børs. The tap issue
waspriced at 104.5% of par value. The transaction was
oversubscribed. The additional bonds have been issued under
thebond’s ordinary ISIN (NO0010856750) and listed on Oslo Børs
under the ordinary ticker code (CNIC01).
On 7 March 2022, a tranche of EUR 21.0 million (approximately
USD 23 million) was subscribed for under a commitment letter
issued by Macquarie Private Credit at a price of 100.8% of par
value. The total outstanding amount after the tap issue is
EUR126million.
CentralNic Group Plc | Annual report 2021 31
Additional informationFinancial statementsGovernanceStrategic report
The Directors believe that given the cash conversion and recurring
revenue nature of the business, the use of debt instruments in the
Group’s financing mix allows for lower cost of capital and improved
tax efficiency. The Group is comfortably below the leverage limits
of the bond terms and conditions, which currently allow to raise up
to3.5x net debt/EBITDA and to maintain a net debt/EBITDA ratio
lower than 6.0x. The Directors, however, give guidance that the
Company intends to maintain net debt/EBITDA below 2.5x and
interest cover above 4x.
The two recent tap issues imply a yield expectation of 5% or
below, giving the Directors confidence in the Company’s ability
torefinance at a lower coupon than what is currently in place.
TheDirectors will observe the market and deliberate on refinancing
options at the appropriate time. Refinancing at lower interest rates
holds notable potential for anenhancement of EPS and interest
cover and cash interest cover, which the Company considers the
most relevant debt metric. Cash interest cover, as defined as
adjusted cash flow over cash interest, improved from 3.7x in
FY20to 6.2x in FY21.
The Company has also been able to obtain a super senior
revolving credit facility (SSRCF) of EUR 13 million and a letter of
credit facility (LCF) of EUR 5.3 million with HSBC which substitutes
the former facilities provided by Silicon Valley Bank. After the
balance sheet date, in March 2022, the SSRCF was increased
toEUR 19 million.
Further detail is provided in notes 23 and 29 to the financial
statements.
Foreign exchange
Foreign exchange profits were USD 1.6 million, after USD2.1
million losses in 2020. EUR 105 million of the amount outstanding
under the bond have been hedged at a EUR/USD exchange
of1.1893.
Earnout and deferred consideration
In relation to Team Internet, the last payment of USD 1.0 million
was made in April 2021.
No deferred consideration was due for SK-NIC in 2021.
Furthertranches of USD0.7 million and USD 1.1 million will
become payable subject tothe achievement of performance
criteria in 2022 and 2024 respectively. For KeyDrive,
USD2.2million of earnout (USD0.3million in cash and
USD1.9million in shares) was paid on3 November 2020.
UptoUSD 1.4 million of earnout may still beearned.
In 2021, new deferred purchase price and earnout obligations were
entered into, namely USD 1.3 million and USD6.6million pertaining
to SafeBrands and Wando respectively. As SafeBrands met agreed
financial year 2020 objectives, deferred contingent consideration of
EUR 0.6 million was settled in May 2021.
Deferred consideration and earnout obligations are recorded on
the balance sheet at their net present value, which may be lower
than the maximum obligation, and are being trued up in line with
the best knowledge of the Directors at each balance sheet date.
As of the balance sheet date, a total of USD 5.2 million was
recorded under current and non-current liabilities.
Other post‑completion obligations
For the TPP Wholesale acquisition, a two-year migration
programme has been commissioned from the seller, who is a
public IT services business, to move the operations out of the
seller’s IT infrastructure into a cloud environment. The project cost
was estimated at USD 2 million and to be completed in Q3 2021.
Itis now expected that the project will complete in Q2 2022.
International tax compliance
The Group is undergoing an exercise to identify any potential tax
obligations in jurisdictions beyond those in which its subsidiaries
and itself are organised or operating from. This relates mostly to
indirect taxes, such as Value Added Tax or General Sales Tax.
TheDirectors believe that any such risk has been adequately
provided for.
Significant accounting policies and critical
accounting judgements
The summary of the Group’s significant accounting policies is set
out in note 3 and the Group’s critical accounting judgements are
set out in note 4 to the financial statements.
Michael Riedl
Chief Financial Officer
4 April 2022
32 CentralNic Group Plc | Annual report 2021
Strategic report
Effective risk mitigation is at the centre
oftheGroup’soperational strategy.
Risks
Group financial risk management
The Directors review all financial and other risks of the Group,
including deposit risk, credit risk, market risk, foreign currency risk
and financial instruments risks. Further details of the financial risk
management framework are provided in note 29 to the
financialstatements. The Group’s financial instruments comprise
cash and various items such as trade and deferred receivables.
Cash flow projections prepared by the finance function are
reviewed regularly by the Directors to ensure that there is adequate
liquidity to execute the Group’s strategy and to meet investment
and funding requirements.
Liquidity is primarily derived from cash generated from operations
and is supplemented, where necessary, through equity and debt
finance, especially in relation to acquisition activity.
Risks Mitigation Opportunities Change
COVID-19
risk
To date, CentralNic Group has not experienced interruptions
initsservices to customers or in its supply chain as a result of
the COVID-19 pandemic.
As providers of essential internet services, a number of
CentralNic Group companies were well prepared for the
current conditions, with business continuity plans already in
place precisely for situations where staff were unable to work
from the office. CentralNic Group continually assesses travel,
meetings and office working needs across its global locations
in advance of formal government directives. CentralNic Group
has run all services Group-wide without interruption and all
staff continue to work productively either remotely or in the
office where permissible.
CentralNic Group’s
business is expected
toremain resilient.
Itsservices are procured
and delivered over the
internet, and the majority
of CentralNic Group’s
revenues are payments
from existing subscribers
and customers on rolling
contracts. The Group’s
core product is the sale
of domain names, which
are core infrastructure
that enable the
functioning of email
andwebsites – the
mostimportant
communication tools
used between work
colleagues working
remotely and between
companies and their
customers.
Geopolitical
risk
The Group operates geographically distributed operations and
maintains global customer and supplier relationships. Crises in
individual countries have normally a limited impact on the
going concern.
Proven to be a resilient
supply chain partner,
CentralNic is well
positioned as a partner
of other international
businesses and
organisations.
Market risk
There is a risk that the market for domains for which the Group
provides registry and registrar services may not increase as
quickly as expected by the Directors. Also, the market for
monetisation of domain names may alter its pace of growth.
Ineither case, the Group’s revenues could reduce below
expectations with an impact on profitability. The risk is
mitigated to a degree by operating multiple lines of business,
themselves exposed to many vertical and geographical
markets and segments, which are only loosely correlated.
Future M&A activity
provides additional
opportunity for
diversification of
revenuestreams both
interms of activity type
and geography.
CentralNic Group Plc | Annual report 2021 33
Additional informationFinancial statementsGovernanceStrategic report
Risks Mitigation Opportunities Change
IT security
risk
If the Group does not prevent security breaches or becomes
susceptible to cyber-attacks, it may be exposed to lawsuits,
losecustomers, suffer harm to its reputation, and incur
additional costs. Unauthorised access, computer viruses,
accidents, employee error or malfeasance, intentional
misconduct by computer ‘hackers’ and other disruptions
canoccur that couldcompromise the security of the Group’s
infrastructure or confidential information. In order to mitigate
these risks, the Group has created a resilient network
infrastructure. Key platforms of theGroup have been certified
under ISO 27001/2013 for data security, ISO 27017 for cloud
security, ISO 27018 for cloud privacy, PCI DSS Level 1, and
SOC 1, SOC 2 and SOC 3, asthe case may be, thereby
mitigating risk by adherence tointernational best practice.
TheCompany conducts independent IT audits on new
acquisitions and from time totime on its existing businesses.
In 2021, a new Head
ofInformation Security
was hired from an
international technology
leader to further mitigate
the IT security risks
faced and to further
streamline and
consolidate security
policies across
theGroup.
Foreign
currency
risk
The Directors note that the Group predominantly trades in
USD,EUR, GBP and AUD, and considers the exposure to
foreign currency risk to be acceptable. The Group holds
reserves in each of these currencies to meet trading
obligations as required. Thecurrency risk is actively monitored
through a periodic review of inflows and outflows by currency,
including an assessment of the extent to which currencies are
naturally hedged across the Group’s business lines. Where this
is not the case, consideration is given to the use of hedging
instruments and, where available at reasonable terms and
conditions, the Group has entered into hedging agreements,
e.g. to cover the GBP overheads associated with its UK
headquarters. In 2021, currency exposure on the EUR
105million bond was hedged at a locked-in average EUR/USD
rate of 1.1891, 3.3% below the prior year balance sheet date.
The Group continues
todeploy increasingly
sophisticated tools for
monitoring cash
balances and to
carryout cash flow
forecasting. The full
implementation of
thesetools will allow for
increased analysis of the
Group’s foreign currency
reserves, thus further
enabling management
offoreign currency risk.
Salary
inflation risk
The Company leverages its presence in different countries
through various time zones to attract the right talent where it is
available at the right cost. Further, it is working on automation
of repetitive processes. A good example is Team Internet,
ahighly automated and machine learning based business
model that achieves c.USD 3.5 million annual revenue per
employee, putting it into the same league as major companies
such as Google, Facebook or Netflix on the efficiency scale.
Also, the 2020 acquisition of Zeropark and Voluum created
another geographic hub in Krakow, Poland, further diminishing
the dependency on specific labour markets.
The Group actively
engages with its
employees on reward
and recognition, thus
ensuring that salary is
only one component
ofan attractive
remuneration package.
Change in risk
Increase Decrease No change
34 CentralNic Group Plc | Annual report 2021
Strategic report
Risks continued
Group financial risk management continued
Risks Mitigation Opportunities Change
Global tax
compliance
risk
The OECD, policymakers, legislators and tax authorities
promote a global tax system that is more adequately designed
for a globally distributed and largely digitalised value chain.
While the search for a global system continues, individual
countries roll out new taxes, mostly indirect taxes, that also
apply to non-resident service providers, creating tax liabilities
not only in jurisdictions with strong nexus, such as a
permanent establishment, but also with weak nexus, such as
immaterial amounts of sales. The Group has implemented a
process in which tax compliance obligations outside the
country of residence are identified and addressed.
The central tax function
has oversight of the
global tax position of the
constituent legal entities
of the Group and works
with advisers to ensure
compliance with local
laws and regulations as
well as assessing
opportunities for tax
efficiencies and
streamlining of
operations.
Regulatory
risk
The Group monitors additional regulatory requirements
relevant to the domain industry made by national or
supranational lawmakers relevant to the markets in which
theGroup operates, as well as monitoring ongoing policy
developments by ICANN or the London Stock Exchange (LSE).
The Group also monitors pronouncements from sanctioning
bodies such as OFAC and national DPAs which may impact
onGDPR compliance.
The Group welcomes all
regulatory developments
as an opportunity to
enhance internal
processes and to ensure
best practices are in
place across all
businesses.
Credit risk
The Group’s exposure to credit risk from trade receivables is
relatively low, due to the fact that the business has traditionally
dealt with customers who often pay at the point of sale or in
advance. Where there are credit accounts, these are typically
with the largest and most reputable technology companies in
the world and receivables are controlled through credit limits
and regular monitoring.
Whilst minimal for the
Group as a whole, credit
risk experience informs
the Group’s operating
strategy in terms of
customer engagement
and credit terms.
Deposit risk
Deposit risk is mitigated by the Group’s policy of only
placingdeposits with banks and financial institutions
withhighcreditratings.
Group-wide cash
pooling is being
established in order
tomaximise returns
oncash deposits.
CentralNic Group Plc | Annual report 2021 35
Additional informationFinancial statementsGovernanceStrategic report
CentralNic specific risk mitigants
There are certain fact patterns which are commonly perceived as risks which the Directors believe do not constitute material risks to the
Company, as follows:
Risk Description
Channel
partners
The Group does not rely solely on its own outreach, reputation and distribution power, but also strategically
uses channel partners to promote its unique capabilities. Through its distribution partners, among them
some of the most prominent technology companies in the world, CentralNic reaches more than four million
domain registrants and more than four million advertisers for which it does not bear customer acquisition or
customer servicecost.
Intent/
contextual
marketing
Being a believer in privacy rights, all monetisation services of the Group have been systematically built
onintent or contextual marketing principles, not requiring the collection of personal data for retargeting
purposes. The Group is hence prepared for a future world without third-party cookies and cross-app
tracking. As a matter of fact, the growth of CentralNic’s Online Marketing business accelerated as these
legacy practices are gradually being banned. In particular, the increasing penetration of iOS versions
adopting IDFA fuels the migration to privacy-safe marketing solutions such as CentralNic’s.
Search
algorithms
Monetised domain names do not appear in the search indexes of major search engines. They source
theirtraffic from so-called direct navigation traffic, i.e. users entering the domain name or clicking on a link
tothat domain name. Changes of search algorithms have therefore no notable impact on the volume of
trafficreceived in the business models operated in the course of 2021.
Financing
cost
While the coupon on the Group’s bonds is fixed, the price at which the bonds are issued may vary. For the
latest tap issue, investors bid 100.8% of par value, which given the maturity, implies a yield to maturity and
hence financing cost to the Company of sub 5%. Through this mechanism, financing cost for new funds
floats with the credit risk of the Group, which has materially improved over 2019, 2020 and 2021 as
evidenced by the successful tap issue.
The Company’s strategic report is set out on pages 02 to 35 of the annual report.
The strategic report outlines our performance against our strategic objectives, performance and financial position, as well as our outlook
for the future.
Approved by the Board and signed on its behalf by:
Iain McDonald
Chairman
4 April 2022
Change in risk
Increase Decrease No change
36 CentralNic Group Plc | Annual report 2021
Governance
Board of Directors
Iain McDonald is a global expert in technology and e-commerce, having had a strong track
record in investing in early stage companies such as ASOS, The Hut Group, Eagle Eye Solutions,
Anatwine and Metapack. He is the founder of Belerion Capital, an investor and investment
adviser in technology and e-commerce companies. Iain is also a non-executive director of
various of his investee companies, as well as other technology companies such as The Hut
Group and Boohoo.com. Previously, Iain was a top-ranked retail and e-commerce analyst and
held positions in a number of UK investment banks. Iaingraduated from the London School of
Economics and Political Science (LSE), with a BSc in Economics & Economics History.
Ben Crawford has led CentralNic’s growth since 2009, taking the company from a small domain
name business turning over USD 3 million, to the current online service holding company with
USD 400 million in revenues and 39% organic growth - bringing to CentralNic both his expertise
in managing roll-up strategies and a long career in the global media and marketing industry.
His former positions included Founding President of Louise Blouin Media, integrating eleven
acquisitions in three countries and personally managed relationships with the ChineseGovernment;
Managing Director of SportBusiness Group; and Executive Producer of the official website of the
Sydney Olympic Games. Ben has an MBA from the Australian Graduate School of Management
and a First-Class Honours Degree from the University of Sydney.
Don Baladasan has several years of experience executing the strategic plans of high growth
companies. He has operated as COO and CFO for businesses that have undergone rapid
transformation. This includes raising capital, internationalisation, restructuring and developing
management teams. Don has integrated newly acquired brands, products and companies with
afocus on finance, governance and commercial synergies.
Don founded Mataxis, a consultancy that specialises in advising and partnering fast-growing
entities. Don initially studied Medicine at Guy’s Hospital before completing a BSc in Economics
at Bayes Business School. He trained as a chartered management accountant on the Financial
Times graduate scheme. He holds a PGDip in Artificial Intelligence for Business from the
University of Oxford. Don has held senior finance and operational roles in blue chip businesses
such as Pearson, WPP and BUPA. Don was CFO of CentralNic at the time of its IPO on AIM.
Michael Riedl was Executive Vice President and CFO of KeyDrive S.A. from August 2011,
overseeing the growth of the company over the next seven years. Prior to joining KeyDrive S.A.,
Michael held managing positions in the private equity and ICT industries. He started his career
withRoland Berger Strategy Consultants where he specialised in performance improvement
programmes. Michael was Chief Restructuring Officer at Group Saint-Paul in Luxembourg from
2004 to 2007 before joining DZ Equity Partners, the private equity firm, in Frankfurt in 2007.
In2008, Michael joined BIP Investment Partners where he worked on private equity opportunities
with a focus on buyouts until 2011. Michael holds a Bachelor’s degree in Computer Science from
James Madison University, USA, a Master of Science degree in Business Administration from
European Business School, Germany, and an LLM from Frankfurt School of Finance and
Management. Heisalso a Chartered Management Accountant.
Samuel Dayani is a partner at the Joseph Samuel Group, where he is responsible for
managingthe group’s investments and business development in the real estate, medtech,
energy & renewables, fashion and technology & telecoms sectors. Samuel was responsible for
purchasing CentralNic Group in 2003 and managing the restructuring of the business, building
the management team anddelivering an institutional grade business for its listing in 2013.
Previously, Samuel was the Chief Operating Officer and later Managing Director of ViaVision Ltd,
an interactive TV company on Sky, when it was sold to Yoomedia Plc in 2004.
Iain McDonald
Chairman (aged 51)
Donald Baladasan
Group Managing Director (aged 48)
Michael Riedl
Chief Financial Officer (aged 46)
Samuel Dayani
Non-Executive Director (aged 44)
Ben Crawford
Chief Executive Officer (aged 56)
CentralNic Group Plc | Annual report 2021 37
Additional informationFinancial statementsGovernanceStrategic report
Thomas Rickert
Non-Executive Director (aged 52)
Tom Pridmore
Non-Executive Director (aged 50)
Max Royde
Non-Executive Director (aged 50)
Horst Siffrin
Non-Executive Director (aged 74)
Tom Pridmore is a Group Director and co-founder of Civitas Investment Management, a leading
real estate social impact investor, and has been involved in investment management for over
20years, having originated, underwritten, financed and asset managed a wide range of property
investments both in the UK and abroad. Tom is also a director and co-founder of Beaufort
Capital Management, a UK debt investment manager, and was formerly a solicitor at Norton
Rose Fulbright, specialising in corporate finance and investment funds.
Thomas Rickert is an attorney-at-law in Germany. He is the owner of Rickert
Rechtsanwaltsgesellschaft mbH, a law firm based in Bonn, Germany. Thomas has extensive
experience in the domain industry, working on domain disputes as well as advising registrars,
registry service providers and registry operators both on contractual as well as policy matters.
Thomas is an expert speaker on domain-related subjects both at the national and international
level. Thomas served on the Council of the Generic Names Supporting Organisation (GNSO),
which is the body responsible for developing policy for generic domain names, for four years
(2011-2015), and was appointed to the GNSO Council for another term in October 2021.
Max Royde is currently managing partner at Kestrel Partners, an investment management
company specialising in business-critical software companies, which has a beneficial holding in
CentralNic of 56,583,670 shares, or 22.53%. Max co-founded Kestrel Partners in 2009 and is a
fund manager of Kestrel Opportunities. Prior to Kestrel, Max was a managing director of KBC
Peel Hunt, running its technology franchise. He has over 20 years’ experience focusing on the
technology sector.
Horst Siffrin started his career as a German diplomat serving in Germany, the UK, Ethiopia,
Nigeria, Bolivia, Poland and Spain. He is partner of inter.services holding/investments, which has
a beneficial holding in the Company of 37,085,870 shares, or 14.77%, and owner of H.O. Siffrin
Consulting based in Berlin. From August 2011 until the reverse takeover of CentralNic in August
2018 he was Chairman of the Supervisory Board of KeyDrive SA, Luxemburg and member of the
Advisory Board of the Key-Systems Group. In 2018 he co-founded AstraPharma.
38 CentralNic Group Plc | Annual report 2021
Governance
Corporate governance
Introduction
The Directors appreciate the value of good corporate governance
and have, with effect from September 2018, adopted the QCA
Corporate Governance Code (the ‘Code’). The Company takes
steps to ensure compliance by the Board and employees with the
terms of the Code.
The Board of CentralNic Group Plc places governance and
controls at the centre of its strategy. The Company has a dedicated
Compliance Committee which meets monthly. The remit of the
Compliance Committee is to ensure that all governance policies
are administered, reviewed and complied with across the Group.
Michael Riedl, the Chief Financial Officer of the Group, chairs this
Committee and provides a conduit between the Board and the
Committee. This ensures timely decisions and challenges are
communicated to the Board.
Board governance and policy
At year end, the Board comprised of a Non-Executive
Chairman,three Executive Directors and five Non-Executive
Directors. Theoffices of the Non-Executive Chairman and the
Chief Executive Officer are separated and never held by the
sameperson. TheBoard meets regularly to consider the business
strategy, performance and the framework of internal controls.
Toenable the Board to discharge its duties, all Directors receive
appropriate and timely information. Briefing papers are distributed
to all Directors in advance of Board meetings. All Directors have
access to the advice and services of the Company Secretary, who
is responsible for ensuring that the Board procedures are followed,
and that applicable rules and regulations are complied with.
In addition, procedures are in place to enable the Directors to
obtain independent professional advice in the furtherance of their
duties, if necessary, at the Company’s expense. In line with the
requirements of the Company’s Articles of Association, the Group
has voluntarily chosen that five Directors will retire at the Annual
General Meeting and, being eligible, will offer themselves for
re-election.
The majority of the Board is made up of independent
Non-Executive Directors. We judged the Chairman to be
independent at the time of his appointment. More information on
the Directors’ independence can be found on page 45 of the
Directors’ report.
Throughout their period in office the Directors are continually
updated on the Group’s business, the industry, corporate social
responsibility matters and other changes affecting the Group by
written briefings and meetings with Management. Theyarealso
updated on changes to the legal and governance requirements of
the Group, and upon themselves as Directors, onan ongoing and
timely basis.
Directors’ time commitment
The Company sets out the likely time commitment for each
Non-Executive Director in their appointment letter. This is of course
an estimate and may change depending on the demands of the
business. The Company expects Non-Executive Directors to
devote sufficient time to discharge their duties effectively and
attend all meetings of the Board.
The attendance of each Director at Board and Committee
meetings during the financial year ended 31 December 2021 is set
out in the table below.
The Board of CentralNic Group Plc places
governance and controls at the centre of its strategy.
Board
Audit
Committee
Remuneration
& Nominations
Committee
Iain McDonald 13/13 4/5 —
Ben Crawford 13/13 — —
Donald Baladasan 12/13 — —
Michael Riedl 13/13 — —
Samuel Dayani 12/13 — 2/2
Tom Pridmore 8/13 2/5 2/2
Thomas Rickert 13/13 5/5 2/2
Max Royde 8/8 — 1/1
Horst Siffrin 7/7 1/1 —
Attendance is expressed as the number of meetings attended/number eligible to attend. Directors’ attendance by invitation at
meetings of committees of which they are not a member is not reflected in the above table.
Attendance table
CentralNic Group Plc | Annual report 2021 39
Additional informationFinancial statementsGovernanceStrategic report
Board performance evaluation
There is no formal evaluation process; however, the Chairman is
responsible for Board performance and accordingly monitors the
performance of the Board, its committees and its individual
Directors and also actively encourages feedback on the content
and function of Board and committee meetings.
The Remuneration & Nominations Committee co-ordinates on
succession planning of the executive leadership team and makes
recommendations to the Board for the re-appointment of
Non-Executive Directors if and when necessary.
As the business has developed, the composition of the Board has
been under constant review to ensure that it remains appropriate
to the managerial requirements of the Group. In line with the
requirements of the Company’s Articles of Association, the Group
has voluntarily chosen that two Directors will retire at the Annual
General Meeting and, being eligible, will offer themselves for
re-election.
Board committees
The Company has established Audit, Remuneration and
Nominations Committees. During the year the Board decided to
merge the previously separate Remuneration and Nominations
Committees.
The terms of reference for the two committees were reviewed
during the year and are available for inspection on request from
theCompany Secretary.
Audit Committee
The Audit Committee has Thomas Rickert as its Chairman
andother members of the Committee include Iain McDonald,
TomPridmore and Horst Siffrin. The Chief Financial Officer is
invited to andregularly does attend the Committee meetings,
asdoes theChief Executive Officer.
The primary responsibilities of the Committee, having due regard
for the interests of Shareholders, include:
• monitoring the integrity of the quarterly, half-yearly and annual
financial statements and formal announcements regarding the
Group’s financial performance;
• reviewing significant accounting policies, areas of significant
estimates and judgements and disclosures in financial reports;
• monitoring the quality and effectiveness of internal control
procedures and risk management systems;
• considering the requirement for internal audit, taking into
account the size, distribution and nature of the Company
andthe Group and its operations;
• reviewing the external auditor reports relating to the
Company’saccounting and internal control procedures; and
• overseeing the Board’s relationship with the external
auditor,including their continued independence and
makingrecommendations to the Board on the selection
ofexternalauditors.
The Audit Committee is required to meet at least twice a year.
During the year the Committee met on five occasions.
The appointment of the independent external auditor is approved
by the Shareholders annually. The independent auditor’s audit of
the financial statements is conducted in accordance with
International Standards on Auditing (ISA (UK)) issued by the
Financial Reporting Council.
It is noted that the external auditor also operates procedures
designed to safeguard their objectivity and independence.
After taking into account the size, distribution, current robust
procedures and controls, together with the nature of the
Companyand the Group and its operations, the Audit Committee
has concluded that an internal audit function is not presently
required. The Audit Committee will re-evaluate this position on
aregular basis.
The Audit Committee reviews all fees related to non-audit work,
and the Committee reviews any material non-audit work prior to
commencement. Details of auditor fees can be found in note 7
tothe financial statements.
Remuneration & Nominations Committee
The Group’s Remuneration & Nominations Committee is
responsible, on behalf of the Board, for developing remuneration
policy and proposing new candidates to the board. Details of
objectives and policy are provided in the remuneration report
onpages 42 to 44.
The Remuneration & Nominations Committee has Tom Pridmore
as its Chairman and other members of the Committee include
Samuel Dayani, Thomas Rickert and Max Royde.
The primary responsibilities of the Committee, having due regard
for the interests of Shareholders, include:
• carrying out a selection process of candidates before
proposing new appointments to the Board, as needed;
• determining and agreeing with the Board the remuneration
policy for the Chairman of the Board, the Non-Executive
Directors and the Executive Directors and other
seniormanagers;
• reviewing the design of share incentive plans for approval by the
Board and determining the award policy to Executive Directors
and other key senior employees under existing plans;
• determining the remainder of the remuneration packages
(principally salaries, bonus and pension) for the Executive
Directors and other senior employees, including any
performance-related targets;
• reviewing and noting remuneration trends across the Group; and
• taking responsibility for the selection criteria and, if appropriate,
selecting, appointing and setting terms of reference for any
remuneration consultants engaged to advise the Committee.
The Remuneration & Nominations Committee was created in
January 2021 by merging the pre-existing Remuneration and
Nominations Committees originally created in September 2013
andis required to meet at least twice a year. During 2021 the
Committee met on two occasions. Previously the Remuneration
Committee was chaired by Tom Pridmore and the Nominations
Committee was chaired by Iain McDonald.
It is the Group’s policy that Executive Directors’ service contracts
contain at least a three-month notice period.
40 CentralNic Group Plc | Annual report 2021
Governance
Corporate governance continued
Risk management and internal controls
The Board has primary responsibility for establishing and
maintaining the Group’s financial and non-financial controls,
aswellas identifying the major risks facing the Group.
Internal control systems are designed to meet the particular needs
of the Group and the risks to which it is exposed. By their nature,
internal controls can provide reasonable but not absolute
assurance against material misstatement or loss.
The Executive Directors have specific responsibilities for aspects
ofthe Group’s affairs and have regular discussions to address
operational matters, as well as considering the skill sets required
intheir teams to maintain the internal controls required.
Accounting procedures
The financial processes and control systems are kept under regular
review by the Executives with oversight from the Board, with a view
to further evolution and improvement as the Group’s activities
expand. This includes the maintenance of and adherence to a
Financial Position and Prospects Procedures (FPPP) Memorandum
which is reviewed andupdated periodically.
Accounting procedures are managed on a day-to-day basis by
thefinance team. Responsibility levels are set and agreed with
theBoard, with authority delegated to appropriate responsible
managers as well as the Executive. Segregation of duties is
deployed to the degree this is practical and efficient, noting the
size and geographic distribution of the Group.
Monthly management accounts are reported to the Board, under
UK-adopted IFRS, with the content aligned to the Group’s
management information requirements. The Board reviews the
accounts in detail during each Board meeting and requests further
information as the need arises. Comparisons to approved budgets
and forecasts are prepared with associated commentary provided.
The Company prepares annual budgets which are reviewed by the
Board. The budgets are then updated during the year to provide
latest forecasts.
Capital expenditure is regulated by the budget process and is
keptunder regular review during the year. Investment appraisal
techniques, using discounted cash flow projections, are deployed
in relation to material investments and are reviewed by the Board
as part of good governance such that material transactions that
are significant in terms of their size or type are only undertaken
after Board review.
The Board acknowledges that there are processes in place for
identifying, evaluating and managing risks faced by the Group,
andplaces emphasis on continuous process improvement.
Corporate responsibility, the environment
andhealth and safety
The Group is committed to maintaining and promoting high
standards of business integrity. Company values, which
incorporate the principles of corporate social responsibility and
sustainability, guide the Group’s relationships with its stakeholders
including clients, employees and the communities and environment
in which the Group operates.
The Group’s approach to sustainability addresses both its
environmental and social impacts, supporting the Group’s vision
toremain an employer of choice, while meeting client demands for
socially responsible partners. More information on this is included
in the ESG section of this annual report.
The Group respects local laws and customs while supporting
international laws and regulations. These policies have been
integral in the way Group companies have done business in the
past and will continue to play a central role in influencing the
Group’s practice in the future.
Communications with Shareholders
The Board regards the importance of effective communication
withShareholders as essential. Relations with Shareholders are
managed principally by the Chief Executive Officer, Chief Financial
Officer and the Chairman, and meetings are regularly held with
institutional investors and analysts during the year.
The Chairman, Chief Executive Officer, Chief Financial Officer and,
if required, other Executive and Non-Executive Directors make
themselves available for meetings with major Shareholders either
individually or collectively. The Group’s Shareholders are invited
toattend the Annual General Meeting at which the majority of
Directors are present. The Group’s Nominated Advisers and Joint
Brokers also convey Shareholder opinions to the Chairman and
Chief Executive Officer, and these are discussed with the Board.
The Group’s website contains information on current business
activities, including the annual and interim results.
Annual General Meeting date
The Annual General Meeting will be convened in accordance with
the provisions of the Companies Act 2006. Although the date is
subject to change as the Directors reserve the right to resolve to
convene the AGM later depending on government guidance in
respect of COVID-19, the Annual General Meeting is due to take
place on Wednesday, 4 May 2022 at 10:00am.
The proposed resolutions, together with this annual report,
willbedistributed to Shareholders on or around Monday,
11April2022.
CentralNic Group Plc | Annual report 2021 41
Additional informationFinancial statementsGovernanceStrategic report
Attendance table
The role of the Audit Committee and its members are outlined on
page 39.
During the year the Audit Committee received and reviewed
reports from the Chief Financial Officer, other members of
management and the external auditor relating to the interim and
annual accounts and the accounting and internal control systems
in use throughout the Group.
The Chief Executive Officer and Chief Financial Officer are invited
to attend parts of meetings, with other senior financial managers
required to attend when necessary. The external auditor attended
meetings to discuss the planning and conclusions of their work
and meet with the members of the Committee. The Committee
was able to call for information from management and consults
with the external auditor directly as required.
The objectivity and independence of the external auditor
wassafeguarded by reviewing the auditor’s formal declarations,
monitoring relationships between key audit staff and the Company
and tracking the level of non-audit fees payable to the auditor.
As noted above, the Committee met five times during the
year.TheCommittee reviewed with the independent auditor
itsjudgements as to the acceptability of the Company’s
accountingprinciples.
Since the year end the Committee has met further with the
auditorto consider the 2021 financial statements and in particular
considered the significant audit risks. The Committee reviewed
and discussed the auditor’s comments on improvements which
could be made to the internal controls. In addition, the Committee
monitors the auditor firm’s independence from Company
management and the Company.
Thomas Rickert
Chair of the Audit Committee
Meetings
attended
Thomas Rickert
Iain McDonald
Tom Pridmore
Horst Siffrin
The objectivity and independence of
theexternal auditor was safeguarded by
reviewing the auditor’s formal declarations
and by monitoring relationships between
key audit staff and the Company.
Thomas Rickert
Chair of the Audit Committee
Audit Committee report
42 CentralNic Group Plc | Annual report 2021
Governance
Attendance table
The Company’s remuneration policy is
focused on being able to attract, retain
and incentivise management with the
appropriate skills and expertise.
Tom Pridmore
Chair of the Remuneration & Nominations Committee
Remuneration report
As the Company is an AIM listed company, it is not required to
present a Directors’ remuneration report. However, the Board has
chosen to do so in line with evolving best practice.
Remuneration & Nominations Committee
The membership of the Committee and the principal activities are
detailed in the corporate governance section of this annual report
on page 39.
Remuneration policy
The Company’s remuneration policy is focused on being able to
attract, retain and incentivise management with the appropriate
skills and expertise to realise the Group’s strategic objectives and
align management’s interests with those of Shareholders.
In particular, the Remuneration & Nominations Committee seeks to
link payment to performance and as a result create a performance
culture within the business.
As CentralNic is a very rapidly growing company, each year
provides the Directors with the challenge of managing revenues
and personnel roughly 80% greater than the year before. To ensure
remuneration is in line with the scale of the challenges faced and
performance delivered, the Remuneration & Nominations
Committee has over recent years engaged specialists at PWC
tobenchmark the salaries and bonuses of the Directors against
Directors at AIM companies managing businesses of
comparablesize.
Meetings
attended
Tom Pridmore
Samuel Dayani
Thomas Rickert
Max Royde
Pay rises and bonuses to the Directors have been granted based
on this advice.
Directors’ remuneration
The average number of staff employed by the Group is included in
note 8 to the financial statements.
Disclosure of the remuneration for key management personnel,
asrequired under IAS 24, is also detailed in note 8 to the
financialstatements.
In terms of the remuneration of the Company’s Directors, entries
toprofit and loss included in the statement of comprehensive
income include:
Salaries
and fees
USD’000
Bonus
USD’000
Employer
taxes
USD’000
Pension
USD’000
Share-based
payments
USD’000
2021
USD’000
2020
USD’000
Contractual
notice
periods
Non‑Executive Directors
Iain McDonald 138 — 16 7 171 332 361 3 months
Samuel Dayani 62 — — — — 62 58 —
Tom Pridmore 62 — 6 3 — 71 88 3 months
Thomas Rickert 62 — 8 — — 70 111 3 months
Max Royde 34 — — — — 34 — —
Horst Siffrin 34 — — — — 34 — —
Mike Turner — — — — — — 15 —
Executive Directors
Ben Crawford 658 570 191 — 1,075 2,494 2,686 12 months
Donald Baladasan 567 263 13 — 938 1,781 2,078 12 months
Michael Riedl 424 261 26 29 763 1,503 1,477 3 months
Alexander Siffrin — — — — — — 144 —
2,041 1,094 260 39 2,947 6,381 7,018 —
CentralNic Group Plc | Annual report 2021 43
Additional informationFinancial statementsGovernanceStrategic report
Share options
No new share options were issued to Directors in 2021.
Since prior to its IPO, CentralNic has consistently operated, with full disclosure to investors, option schemes where options vest in
threetranches over three years – which it judges to be more effective in ensuring continuous performance than schemes where vesting
isfocused at the end of the period. CentralNic has also issued options to non-shareholder Non-Executive Directors to attract the right
calibre of individual and to align their remuneration to shareholder interests, as is standard practice among the most successful
technology companies globally. The Board is of the view that equity-based compensation does not compromise the independence of
Non-Executive Directors.
Prior to admission to AIM, CentralNic Group established both an unapproved share option scheme (SOP) and an Enterprise Management
Incentive (EMI) option scheme under which certain key management personnel and other senior employees were invited to participate.
These options were rolled over into the Company during 2013. In August 2019, CentralNic also introduced the CentralNic Long Term
Incentive Plan (LTIP).
To reflect existing commitments, the options granted in June 2013 for the unapproved option scheme and the EMI scheme vested in
twelve equal instalments at three-month intervals following the admission. The unapproved options granted on 14 October 2013 vested
three years after the date of grant. The unapproved options granted under the LTIP on 2 August 2019 and 10 March 2020 and
1June2021 vest over a three-year period in equal instalments.
The Directors believe that it is important to properly motivate and reward key management personnel and other senior employees and
todo so in a manner that aligns their interests with the interests of the Shareholders. The Directors also recognise the importance of
ensuring that all employees are engaged, incentivised and identify closely with the profitability of the Company.
The table below shows the outstanding share options issued to Directors at 31 December 2021:
Number of options Exercise price Options granted
Outstanding at 31 December 2021
Ben Crawford 1,316,000 10p 1 June 2013
Ben Crawford 850,000 57p 1 September 2013
Ben Crawford 2,260,000 nil 2 August 2019
Ben Crawford 672,146 nil 10 March 2020
Ben Crawford 1,008,219 nil 10 March 2020
Ben Crawford 1,008,219 nil 10 March 2020
Donald Baladasan 586,301 nil 2 August 2019
Donald Baladasan 879,452 nil 10 March 2020
Donald Baladasan 879,452 nil 10 March 2020
Thomas Rickert 88,000 57p 1 September 2013
Thomas Rickert 350,000 40p 4 February 2016
Tom Pridmore 88,000 57p 1 September 2013
Tom Pridmore 350,000 40p 4 February 2016
Iain McDonald 350,000 40p 4 February 2016
Iain McDonald 500,000 nil 10 March 2021
Michael Riedl 48,611 nil 2 August 2019
Michael Riedl 106,499 nil 10 March 2020
Michael Riedl 462,10 0 nil 10 March 2020
Michael Riedl 693,150 nil 10 March 2020
Michael Riedl 693,150 nil 10 March 2020
Total 13,189,299
The non-performance related share options of Michael Riedl relate to a compensation scheme in place before his appointment as an
Executive Director.
44 CentralNic Group Plc | Annual report 2021
Governance
Share options continued
The following options were exercised during the year by Directors:
Number of ordinary shares
acquired on exercise of options Date of grant of option
Ben Crawford 336,073 10 March 2020
Donald Baladasan 293,151 10 March 2020
Donald Baladasan 1,808,000 10 March 2020
Michael Riedl 48,611 2 August 2019
Michael Riedl 53,249 10 March 2020
Michael Riedl 231,050 10 March 2020
No other Directors or former Directors have exercised any options and no options have expired. All options expire within ten years of
having vested.
Further details on share-based payment expenses are provided in note 28 to the financial statements.
In addition, a further 5,795,918 options over ordinary shares were in issue at 31 December 2021 (2020: 5,713,066), being held by the
Group’s employees.
The IFRS 2 charge in the year for all share option plans relating to the Directors was USD 2,947,000 (2020: USD 3,845,000).
On 31 December 2021, the closing market price of CentralNic Group Plc ordinary shares was 140 pence. The lowest and highest prices
ofthese shares in the year were 81 pence during March 2021 and 150 pence during November 2021 respectively. The average share
price for the year was 103 pence.
Directors’ interests
a) As at 31 December 2021, the interests of the Directors, including persons connected with the Directors within the meaning of section
252 of the Companies Act 2006, in the issued share capital of the Company are as follows:
Ordinary
shares Percentage
Kestrel Investment Partners
(1)
56,551,056 22.52%
inter.services GmbH
(2)
37,0 8 5, 870 14.77%
Erin Invest & Finance Ltd
(3)
15,790,279 6.29%
Clevebeam Limited
(4)
3,699,000 1.47%
Jabella Group Ltd
(4)
2,711,668 1.08%
Donald Baladasan 2,101,151 0.84%
Michael Riedl 1,474,178 0.59%
Ben Crawford 336,073 0.13%
Iain McDonald
(5)
11,500 0.00%
(1) Max Royde is currently a managing partner at Kestrel Investment Partners.
(2) The beneficial owners of inter.services GmbH are Horst Siffrin, a Director of the Company during the year, and his son.
(3) The beneficial holders of Erin Invest & Finance Limited are Samuel Dayani, a Director of the Company, and his father.
(4) Jabella Group Limited and Clevebeam Limited are companies owned, inter alia, by Erin Invest & Finance Limited.
(5) Iain McDonald has an interest, held through a contract for difference, in 11,500 ordinary shares in the Company.
b) Save as disclosed in this annual report, none of the Directors nor any members of their families, nor any person connected with them
within the meaning of section 252 of the Act, has any interest in the issued share capital of the Company or its subsidiaries.
c) Save as disclosed in this annual report, as at the date of this annual report, no Director has any option over any warrant to subscribe
for any shares in the Company.
d) None of the Directors nor any members of their families, nor any person connected with them within the meaning of section 252 of the
Act, has a related financial product (as defined in the AIM Rules) referenced to the ordinary shares.
e) None of the Directors is or has been interested in any transaction which is or was unusual in its nature or conditions or significant to
the business of the Company and which was effected by the Company and remains in any respect outstanding or unperformed.
f) There are no outstanding loans made or guarantees granted or provided by the Company to or for the benefit of any Director other
than disclosed in note 25 to the financial statements.
g) Save as disclosed in this annual report, there are no potential conflicts of interest between any duties to the Company of the Directors
and their private interests or their other duties.
Tom Pridmore
Chair of the Remuneration & Nominations Committee
Remuneration report continued
CentralNic Group Plc | Annual report 2021 45
Additional informationFinancial statementsGovernanceStrategic report
Directors’ report
Principal activities
CentralNic Group Plc is the ultimate holding company of a group
ofcompanies.
The principal activities of the Group are the provision of domain
name and web services (provided directly and indirectly), as well
asdomain name monetisation services. A more comprehensive
description of the Group’s activities, performance and likely
developments are provided in the Chairman’s statement, the
ChiefExecutive Officer’s report, the Chief Financial Officer’s report,
thecorporate governance report and the remuneration report,
which are incorporated by reference into this report.
A list of the subsidiary undertakings is disclosed in the particulars
of subsidiaries and associates on pages 102 to 104 of the
financialstatements.
Financial instruments
Details of the use of financial instruments and financial risk
management are included in note 29 to the financial statements.
Results and dividends
Information on the results is provided in the Chairman’s statement
and the Chief Financial Officer’s report.
The Directors do not propose a final dividend for 2021. The
Directors continuously observe the balance between the accretive
opportunities that the Company can pursue and the capacity to
return cash to Shareholders and will consider a maiden dividend
atthe appropriate time.
Post year end
Further details on post year-end events are disclosed in the Chief
Executive Officer’s report and in note 29.
Directors
The Company was incorporated on 19 June 2013, with a view
tobecoming the Parent Company of the Group after admission
toAIM. The admission was completed on 2 September 2013,
andatthis time the Board was expanded.
The Directors who served during the year were as follows:
Executive Directors
Ben Crawford (Chief Executive Officer)
Donald Baladasan (Group Managing Director)
Michael Riedl (Chief Financial Officer)
Non‑Executive Directors
Iain McDonald (Non-Executive Chairman)
Samuel Dayani
Tom Pridmore
Thomas Rickert
Max Royde (appointed 18 June 2021)
Horst Siffrin (appointed 18 June 2021)
The biographical details of the Directors are provided on pages
36 and 37 of this annual report.
Five Directors will retire at the Company’s Annual General Meeting
and, being eligible, will offer themselves for re-election.
The Directors and their interests
inthesharesofthe Group
The Directors of the Company, and their interests in the shares
andshare options of the Company, are shown in the remuneration
report on pages 42 to 44 of this annual report.
Transactions with any parties related to the Directors are disclosed
in note 26 to the financial statements.
Independence of Directors
Having independent Non-Executive Directors on the Board is a
coreelement of our governance philosophy, and our Chairman,
IainMcDonald, and the Directors Tom Pridmore (Chair of the
Remuneration & Nominations Committee) and Thomas Rickert
(Chair of the Audit Committee) meet the independence requirements
of the QCA which CentralNic has adopted in accordance with the
AIM market regulation. There are no business relationships between
Independent Directors and the Group, other than a law firm led by
Thomas Rickert providing specialist advice to the Group on data
privacy matters and a company associated with Horst Siffrin renting
office space to the Group, as disclosed in the related parties section
of this report. Inboth cases, the amounts payable fall below the de
minimis threshold considered to be material pursuant to AIM rule 13.
TheIndependent Directors have been issued share options in the
Company, and the Company maintains that this is in line with best
practice for technology companies and in no way prejudices
Director independence. ThreeNon-Executive Directors are
associated with major Shareholders in the Company.
Each year, or before a new Director is appointed, the Board must
affirmatively determine a Director has no relationship that would
interfere with the exercise of independent judgement in carrying
out his or her responsibilities as a Director. Annually, each Director
completes a detailed questionnaire that provides information about
relationships that might affect the determination of independence,
including a relationship with the Company, another Director, or as
apartner, shareholder, or officer of an organisation that has a
relationship with the Company.
Directors’ conflicts of interest
Each Director is required, in accordance with the provisions of the
Companies Act 2006, to declare any interests that may give rise to
a conflict of interest with the Company on appointment and
subsequently as they arise. Where such a conflict or potential
conflict arises, the Board is empowered under the Company’s
Articles of Association to consider and authorise such conflicts
asappropriate.
Articles of Association
The Company’s Articles of Association set out the Company’s
internal regulation and cover such matters as the rights of
Shareholders, the appointment and removal of Directors and
theconduct of Board and general meetings.
A copy of the Company’s Articles of Association is available on the
Group’s website.
Subject to the provisions of legislation, the Company’s Articles
ofAssociation and any directions given by resolutions of the
Shareholders, the Board may exercise all powers of the Company
and may delegate authorities to committees and management as it
sees fit. Details of the committees of the Board and their activities
are contained in the corporate governance report on pages 38 to
40 of this report.
The Directors are responsible for the maintenance and integrity
ofthe corporate and financial information included on the
Company’swebsite.
46 CentralNic Group Plc | Annual report 2021
Governance
Directors’ report continued
Principal risks and uncertainties
The Board’s assessment of the principal risks and uncertainties, together with the mitigating factors, are presented in the strategic report
on pages 32 to 35.
Substantial Shareholders
In addition to the Directors’ interests disclosed in the remuneration report, the Company has been notified that the following
Shareholders’ interests exceeded 3% of the Company’s ordinary share capital in issue at 28 February 2022:
Ordinary
shares Percentage
Kestrel Investment Partners 56,551,056 22.52%
inter.services GmbH 37,0 8 5, 870 14.77%
Erin Invest & Finance Limited 15,790,279 6.29%
JTC Employer Solutions Trustee 18,685,958 7.4 4%
Canaccord Genuity Wealth Management 16,975,803 6.76%
Chelverton Asset Management 15,000,000 5.97%
Schroder Investment Management 11,400,000 5.45%
Herald Investment Management 9,576,281 3.81%
Slater Investments 8,759,639 3.48%
No substantial Shareholders have different voting rights to other holders of the share capital of the Company.
Following the equity raise in March 2022, the above Shareholder interests changed and up-to-date information is available on the
Company’s website.
Corporate governance
The corporate governance report, on pages 38 to 40, is
incorporated into this annual report by reference and details how
the Board communicates with stakeholders.
Streamlined Energy and Carbon Reporting
The ESG report, on pages 20 to 27, is incorporated into this
Directors’ report by reference.
Corporate responsibility
The Board recognises its employment, environmental and health
and safety responsibilities, and devotes appropriate resources
towards monitoring and improving compliance with existing
standards. For more information, please refer to the ESG section
on pages 22 to 27.
Management and staff
CentralNic Group’s management team has been assembled to
ensure the Group has the number of people and range of skills
required to deliver the business strategy and to support the
expansion of the Group as it becomes an increasingly international
business. The team is diverse and brings functional expertise
across a number of disciplines including technical and operational
delivery, finance, people, law, marketing and sales.
While the business is managed under budgetary controls, the
Directors focus on ensuring there is succession planning in place
appropriate for a business of our size.
Our people represent a number of different nationalities, and we
are pleased by the gender diversity in our business.
The executive leaders within the business recognise the importance
of engaging with employees and do so informally on a day-to-day
basis. We often use a cascade approach to employee
communications, with the heads of departments disseminating
appropriate information to their teams, including those situated in
various locations around the world.
While we do not believe that human rights issues are a significant
risk to our business currently, we are conscious that as we expand
into new international markets issues of human rights may become
more significant. The Directors keep all aspects of business
development under review, and act with caution and integrity to
ensure all our activities, and specifically business development
activities, are respectful of human rights.
Communication with employees is primarily through formal and
informal meetings and through the use of the Group’s information
systems. This comprises regular communication of information
affecting our managers and their teams, to ensure all employees
are kept up to date with issues affecting them. In addition, in 2021
the Group implemented Culture Amp, a culture and engagement
survey platform, which provided everyone with the ability to
provide regular and open feedback to the management team as
well as facilitated two-way communication and increased
engagement with the business.
The Board recognises the importance of engaged employees
working within the Group and how they are vital to the future
success of thebusiness. However, given the size of the Group
andthe specialist nature of its technical operations, there is
dependency on a few key individuals, and this is discussed
furtherin the strategic report on pages 23 to 25.
The Group is committed to achieving equal opportunities and
tocomplying with anti-discrimination legislation. The Group is
committed tooffering employees and job applicants equal and
fairopportunity to benefit from employment without regard to
theirsex, sexual orientation, marital status, race, religion or belief,
age or disability.
The Company seeks to ensure that every employee without
exception is treated equally and fairly and that all employees are
aware of their responsibilities, and our procedures and policies are
designed (or are being designed) to fully support everyone. We are
responsive to the needs of our people and should an employee be
less able to work during their time with us, we will actively retrain
that employee and make reasonable adjustments to the working
environment where possible. Our Group procedures including
recruitment, training, career development and promotion are,
asfaras possible, the same for everyone.
CentralNic Group Plc | Annual report 2021 47
Additional informationFinancial statementsGovernanceStrategic report
The Board of Directors comprises nine members, all of whom are
male, and the overall number of employees at the year end is 675,
which contains 411 men, 242 women, two non-binary and 20
prefer not to disclose.
The Group has a policy of share participation for employees across
the Group at all levels.
Standards accreditations
The Registry channel of CentralNic Group’s Reseller segment is
certified against ISO 27001 (Information security management),
ISO 9001 (Quality management system) and ISO 22301 (Business
continuity management); Key-Systems GmbH has successfully
completed the Stage 2 audit for ISO 27001 Information Security
forits RRP Proxy and BrandShelter brands; and SK-NIC a.s. is
certified against ISO 27001 (Information security management).
These certifications are internationally recognised and provide
CentralNic Group’s stakeholders with additional levels of assurance
as to the technicalintegrity of the Group’s IT system.
Anti‑bribery and corruption, anti‑money
laundering and sanctions compliance
CentralNic Group conducts business ethically, maintains financial
integrity and strives to behave responsibly in its business dealings.
The Group’s Directors are committed to ensuring strict adherence
to its anti-bribery and corruption policy and compliance with
anti-bribery and corruption laws. TheGroup also maintains
andensures adherence to its policies inrelation to anti-money
laundering and trade sanctions and embargoes, again to comply
with relevant laws across the relevantjurisdictions.
All Directors, employees and consultants have received training in
maintaining the highest standards of professional conduct and are
aware of the need to carry out business fairly, honestly and openly.
Clear lines of communication and responsibility are in place to
report any incidences or suspected incidences of abuse to provide
an effective, trusted reporting mechanism.
Environment
The Group is committed to operating in an environmentally
responsible manner. The Directors consider environmental
impactswhen making decisions. Please refer to the ESG
sectionforfurtherdetails.
The community, charitable and political
donations
The Directors consider the impact on the community when making
decisions. During the year charitable donations totalling USD
140,000 were made (2020: USD 55,000).
The Group made no political donations during the year, either in
the UK or overseas.
Policy on the payment of creditors
The Group’s policy is to agree terms and conditions for its business
transactions with suppliers and to endeavour to abide by these
terms and conditions, subject to the suppliers meeting their
obligations.
No one supplier is considered to be essential to the business of
theGroup.
R&D activity
The Group undertakes research and development activities to
enhance its competitive position in its chosen markets, drawing on
skilled development resource from across the Group.
Health and safety
The Directors are committed to providing for the welfare,
healthand safety of the Group’s employees and have procedures
in place, including regular monitoring by third-party specialists,
toensure compliance with its legal and contractual obligations.
Formore information, please refer to the ESG section on pages
20to 27.
Business continuity
The Group has built a resilient technology infrastructure, designed
to provide data security and continuity of service. The Board
recognises the ongoing importance of resilience to cyber threats
and invests in primary and secondary data centres along with a
distributed domain name server constellation operated by the
Group and third-party providers. The Board keeps the
infrastructure requirements under review and adopts a continuous
improvement approach to further investment, within appropriate
parameters, as business activities expand. The technical provision,
alongside customer support, is considered one of the most
significant aspects of business continuity. This strategy has proven
effective in the events around COVID-19 where the Company was
able to switch to home office operations virtually seamlessly for
materially all global staff. The proper functioning of the operations
is followed up by the Company’s Business Continuity Committee.
Going concern
The Directors have procedures in place to review the forecasts
andbudgets for the going concern review period, which have
beendrawn up with appropriate regard for the macroeconomic
environment in which the Group operates, particular circumstances
influencing the domain name and online advertising industry and
the Group itself. These were prepared with reference to historical
and current industry knowledge, as well as contractual trading
activities and prospects that relate to the future strategy of the
Group. As a result, at the time of approving the financial statements,
the Directors consider that the Company and the Group have
sufficient resources to continue in operational existence for the
foreseeable future, and that it is therefore appropriate to adopt the
going concern basis in the preparation of the financial statements.
The COVID-19 pandemic, and the Group’s ability to adapt to it,
havebeen duly considered in making the judgement on the going
concern assumption.
As with all forecasts, the Directors cannot guarantee that the
goingconcern basis will remain appropriate given the inherent
uncertainty relating to future events. Principal areas of uncertainty
and risks are highlighted on pages 32 to 35.
Auditor
The Company’s independent external auditor, Crowe U.K. LLP,
was initially appointed on 17 July 2013 and was most recently
re-appointed at the Company’s Annual General Meeting of
3June2021. The most recent rotation of audit partner was
effective from the 2020 Annual Report. It is proposed by the
Boardthat they be put forward for re-appointment as auditor
andaresolution concerning their re-appointment will be
proposedat the forthcoming Annual General Meeting.
48 CentralNic Group Plc | Annual report 2021
Governance
Registered office
4th Floor, Saddlers House, 44 Gutter Lane, London, England,
EC2V 6BR. Registered number: 08576358
Statement of Directors’ responsibilities in
respect of the annual report and the financial
statements
The Directors are responsible for preparing the strategic report, the
Directors’ report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group financial statements in
accordance with International Financial Reporting Standards
(IFRS)as adopted by the UK and applicable law and the Company
financial statements in accordance with Financial Reporting
Standard 101.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and the Group and of
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
They are further responsible for ensuring that the strategic report
and the Directors’ report and other information included in the
annual report and financial statements is prepared in accordance
with applicable law in the United Kingdom.
The maintenance and integrity of the CentralNic Group website
isthe responsibility of the Directors; the work carried out by the
auditor does not involve the consideration of these matters and,
accordingly, the auditor accepts no responsibility for any changes
that may have occurred in the accounts since they were initially
presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of the accounts and the other information included
in annual reports may differ from legislation in other jurisdictions.
Disclosure of audit information
The Directors confirm that, as at the date of approval of this annual
report, so far as each Director is aware there is no relevant audit
information of which the Company’s auditor is unaware and that he
or she has taken all the steps that he or she ought to have taken as
a Director in order to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditor is
aware of that information.
Approved by the Board and signed on its behalf by:
Iain McDonald
Chairman
4 April 2022
Directors’ report continued
CentralNic Group Plc | Annual report 2021 49
Additional informationFinancial statementsGovernanceStrategic report
Opinion
We have audited the financial statements of CentralNic Group
Plcand its subsidiaries (the Group) and CentralNic Group Plc
(theParent Company) for the year ended 31 December 2021,
which comprise:
• the Group consolidated statement of comprehensive income
for the year ended 31 December 2021;
• the Group consolidated and Parent Company statements
offinancial position as at 31 December 2021;
• the Group consolidated and Parent Company statements
ofchanges in equity for the year then ended;
• the Group consolidated statement of cash flows for the year
then ended;and
• the notes to the financial statements, including a summary
ofsignificant accounting policies.
The financial reporting framework that has been applied in
thepreparation of the financial statements is applicable law
andUK-adopted International Accounting Standards (IFRSs).
Thefinancial reporting framework that has been applied in the
preparation of the Parent Company financial statements is
applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 Reduced Disclosure
Framework the Financial Reporting Standard applicable in the UK
(United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state
ofthe Group’s and of the Parent Company’s affairs as at
31December 2021 and of the Group’s loss for the year then
ended;
• the Group financial statements have been properly prepared
inaccordance with UK-adopted International Accounting
Standards;
• the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described
inthe Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s
Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficientand appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and
Company’s ability to continue to adopt the going concern basis
ofaccounting included obtaining and reviewing management’s
assessment of going concern. This involved gaining an
understanding of management’s basis for the identification of
events or conditions that may cast a significant doubt on the ability
of the Group and the Company to continue as a going concern,
and whether a material uncertainty related to going concern exists.
Furthermore, we performed specific audit procedures around
going concern, whereby we obtained and reviewed actual financial
results against budgeted results, assessed the reasonableness of
budgets and forecasts for successive financial years, evaluated the
feasibility of management’s plans in respect of going concern as
well as considered whether new facts or information have become
available since management made their assessment. We also
considered explicitly whether there was any evidence of
management bias in the preparation of the going concern
assessment. Based on the work we have performed, we have not
identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the
Group’s or Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
beexpected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group and Company financial statements as
awhole to be USD 1,000,000 (2020: USD 750,000) and
USD200,000 (2020: USD 210,000) respectively. In determining
this, we considered a range of benchmarks with specific focus
onapproximately 2-3% of adjusted EBITDA (a key performance
measure used by the Group), and 5% of the Group’s loss before
tax for the financial year.
We use a different level of materiality (‘performance materiality’)
to determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit
materiality as adjusted for the judgements made as to the entity
risk and our evaluation of the specific risk of each audit area having
regard to the internal control environment. The performance
materiality that was set was USD 700,000.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and Directors’ remuneration.
We agreed with the Audit Committee to report to it all identified
errors in excess of USD 33,000 (2020: USD 25,000). Errors below
that threshold would also be reported to it if, in our opinion as
auditor, disclosure was required on qualitative grounds.
Independent auditor’s report
to the Members of CentralNic Group Plc
50 CentralNic Group Plc | Annual report 2021
Financial statements
Independent auditor’s report continued
to the Members of CentralNic Group Plc
Overview of our audit approach continued
Overview of the scope of our audit
In establishing our overall approach to the Group audit, we
determined the type of work that needed to be undertaken at each
of the components by us, as the primary audit engagement team.
For the full scope components in Germany, Australia, Slovakia and
Poland, where the work was performed by component auditors,
we determined the appropriate level of involvement to enable us
todetermine that sufficient audit evidence had been obtained as
abasis for our opinion on the Group as a whole.
The primary team led by the Senior Statutory Auditor was
ultimately responsible for the scope and direction of the audit
process. The primary team interacted regularly with the
component teams where appropriate during various stages of
theaudit, reviewed working papers and were responsible for the
scope and direction of the audit process. This, together with
theadditional procedures performed at Group level, gave us
appropriate evidence for our opinion on the Group
financialstatements.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
thesematters.
This is not a complete list of all risks identified by our audit.
Key audit matter How the scope of our audit addressed the key audit matter
Revenue recognition
The Group’s operating revenue which comprises registry, retail,
corporate and monetisation revenues amounted to USD 411
million for the year ended 31 December 2021.
The key revenue recognition risks are in respect of the following:
• Appropriate recognition of revenue in accordance with the
stated policies ensuring satisfaction of the respective
performance obligations of each revenue stream,
appropriate cut-off is applied for the recognition in the
correct period and of accrued and deferred revenue;
• Completeness of revenue; and
• Segmental recognition and classification of revenue.
We obtained an understanding of the revenue agreements
andevaluated the Group’s processes and controls in place
tocalculate the amount and timing of subscription and activity
based revenue transactions.
We performed the following audit procedures on a sample
basis, for both existing and new contracts, having regard to
satisfaction of performance obligations, to assess the
appropriateness of revenue recognition for individual
transactions:
• Assessed the appropriateness of the allocation of various
revenue elements with reference to the terms of the
contract;
• Ensured revenue recognised from subscription fees was
supported by signed contracts;
• Assessed the existence of debtors through testing to
contracts, cash received where applicable and a review
ofcredit notes issued after year-end;
• Assessed that revenue was recognised in the correct
period, agreeing back to supporting documentation the
contract price and the period in which the services were
delivered including the assessment of contractual liabilities;
• Performed analytical procedures and assessed revenue
recognition policies for consistency and compliance with
IFRS 15: Revenue from contracts with customers;
• Performed substantive procedures designed to test the
accuracy and completeness of revenue recorded in the
year;and
• Reviewed revenue segmental classifications to ensure
compliance with revenue recognition policies.
In our instructions to component auditors, our discussions
withthem, our review of their files and our assessment of their
reporting, we examined and evaluated the work undertaken
and their conclusions in respect of revenue recognition.
CentralNic Group Plc | Annual report 2021 51
Additional informationFinancial statementsGovernanceStrategic report
Key audit matter How the scope of our audit addressed the key audit matter
Business combinations and acquisition accounting (including the carrying value of goodwill
andseparatelyidentifiableintangible assets)
During the year, the Group completed acquisitions of
SafeBrands, Wando Internet Solutions, websites from White
&Case and NameAction, disclosed in note 25.
The Group has determined these acquisitions to be business
combinations, the accounting for which can be complex.
Forthe acquisitions, the Group determined the amounts to be
recognised for the fair value of both the consideration paid and
the acquired assets and liabilities. This can involve significant
estimates and judgements including, at the acquisition date,
determining how the purchase price is to be allocated between
acquired assets and liabilities and identified intangible assets,
and leading to the resultant recognition of goodwill at their
respective fair values.
There is a risk that inappropriate assumptions could result in
material errors in the acquisition accounting.
The Group used projected financial information in the purchase
price allocation (PPA) exercise. Management use their best
knowledge to make estimates when utilising the Group’s
valuation methodologies. In order to determine the fair value
ofthe separately identifiable intangible assets on a business
combination, the valuation methodologies require input based
on assumptions about the future and use discounted cash
flows and cash flow forecasts.
Due to the Group’s estimation process in the PPA exercise and
the work effort from the audit team, business combinations is
considered a key audit matter.
Our procedures included the following:
• Assessing the competence and independence of third party
engaged in undertaking the PPA valuation for Management;
• Reviewing the asset purchase agreement in respect of the
business combination to understand the nature and terms
ofthe transaction and to agree the consideration paid;
• Assessing whether the acquisition during the year met the
criteria of a business combination in accordance with
IFRS3: Business Combinations;
• Validating whether the date of acquisition was correctly
determined by scrutinising the key transaction documents
tounderstand key terms and conditions;
• Assessing the fair value of assets and liabilities recorded
inthe purchase price allocation, by performing procedures
including considering the completeness of assets and
liabilities identified and the reasonableness of any underlying
assumptions in their respective valuations and this would
also include assessment on the reasonableness of the
useful lives of the intangible assets and the
considerationgiven;
• Assessing and challenging the valuation techniques,
assumptions (including those relating to growth rates and
discount rates), models and calculations used to determine
the fair value of the separately identifiable intangible assets
recognised on date of acquisition;
• Assessing the amount of goodwill recognised on acquisition;
and
• Assessing the disclosures in respect of the business
combination.
Carrying value of goodwill, investments and intangible assets
When assessing the carrying value of goodwill, investments
(including fair value) and intangible assets, management make
judgements regarding the appropriate cash generating unit,
strategy, future trading and profitability and the assumptions
underlying these. We considered the risk that goodwill,
investments and/or intangible assets were impaired.
We evaluated, in comparison to the requirements set out in
IAS36: Impairment of Assets, management’s assessment
(using discounted cash flow models) as to whether goodwill,
investments and/or intangible assets were impaired.
We performed sensitivity analysis on the key assumptions
inrelation to growth rates and discount rates utilised within
managements impairment assessment.
We performed stress testing where we examined the change in
goodwill value should the growth rate fall or if the discount rate
were to increase.
We examined management’s evaluation of the fair value
ofinvestments.
We challenged, reviewed and considered by reference to
external evidence, management’s impairment and fair value
models as appropriate and their key estimates, including the
discount rate. We reviewed the appropriateness and
consistency of the process for making such estimates.
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They were not designed to
enable us to express an opinion on these matters individually and we express no such opinion.
52 CentralNic Group Plc | Annual report 2021
Financial statements
Independent auditor’s report continued
to the Members of CentralNic Group Plc
Other information
The Directors are responsible for the other information contained
within the annual report. The other information comprises the
information included in the annual report, other than the financial
statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion based on the work undertaken in the course of
ouraudit
• the information given in the strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by
exception
In light of the knowledge and understanding of the Group and the
Parent Company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the Directors’ report.
We have nothing to report in respect of the following matters
wherethe Companies Act 2006 requires us to report to you if,
inour opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the Parent Company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of the Directors
As explained more fully in the Directors’ responsibilities statement
set out on page 48, the Directors are responsible for the
preparation of the financial statements and for being satisfied that
they give a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Group’s and Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group
or the Parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whetherthe financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
isa high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken
onthe basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance
withlaws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
inrespect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud
is detailed below:
We obtained an understanding of the legal and regulatory
frameworks within which the Group and Parent Company
operates. We obtained specialist advice for non-U.K. jurisdictions
that have a direct effect on the determination of material amounts
and disclosures in the financial statements via the use of
component auditors. We also considered and obtained an
understanding of the U.K. legal and regulatory framework which
we considered in this context were the Companies Act 2006 and
U.K. taxation legislation.
We identified the greatest risk of material impact on the financial
statements from irregularities, including fraud, to be the override
ofcontrols by management. Our audit procedures to respond to
these risks included enquiries of management about their own
identification and assessment of the risks of irregularities, sample
testing on the posting of journals and reviewing accounting
estimates for biases.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. We are not responsible for preventing
non-compliance and cannot be expected to detect
non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of
misstatement resulting from fraud as this may involve sophisticated
schemes designed to avoid detection, including deliberate failure
to record transactions, collusion or the provision of intentional
misrepresentations.
A further description of our responsibilities for the audit of
thefinancial statements is located on the Financial Reporting
Council’swebsite at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
CentralNic Group Plc | Annual report 2021 53
Additional informationFinancial statementsGovernanceStrategic report
Report on other legal and regulatory
requirements
European Single Electronic Format
We have examined the digital files of the European Single
Electronic Format (ESEF) of the consolidated financial statements
of CentralNic Group Plc for the year ended 31 December 2021 that
comprise an XHTML file which includes the consolidated annual
accounts for the financial year and XBRL files with tagging
performed by the entity, which will form part of the annual financial
report.
The Directors of CentralNic Group Plc are responsible for
presenting the annual financial report for the 2021 financial year in
accordance with the formatting and markup requirements
established in the Delegated Regulation (EU) 2019/815 of 17
December 2018 of the European Commission (hereinafter the
ESEF Regulation).
Our responsibility is to examine the digital files prepared by Parent
Company’s Directors, in accordance with EU legislation. This
legislation requires that we plan and execute our audit procedures
in order to verify whether the content of the consolidated annual
accounts included in the aforementioned digital files completely
agrees with that of the consolidated annual accounts that we have
audited, and whether the format and markup of these accounts
and of the aforementioned files has been affected, in all material
respects, in accordance with the requirements established in the
ESEF Regulation.
In our opinion, the digital files examined completely agree with the
audited consolidated annual accounts, and these are presented
and have been marked up, in all material respects, in accordance
with the requirements established in the ESEF Regulation.
Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state
to the Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
Leo Malkin
(Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
4 April 2022
54 CentralNic Group Plc | Annual report 2021
Financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2021
Note
2021
USD’000
Restated
2020
USD’000
Revenue 5,6 410 , 5 4 0 240,01 2
Cost of sales (2 9 2 , 0 41) (16 4 , 8 9 4)
Gross profit 11 8 , 4 9 9 7 5 ,11 8
Administration expenses (1 0 1 ,14 0) (72,0 8 4)
Share-based payment expenses (5,0 06) (5 ,11 3)
Operating profit/(loss) 1 2,353 (2,079)
Adjusted EBITDA
(1)
4 6 , 2 51 29,394
Depreciation of property, plant and equipment 13 (3 , 514) (2,0 8 4)
Amortisation of intangible assets 14 (18 , 2 9 1) (1 3 , 74 7)
Non-core operating expenses
(2)
9 (8 ,70 2) (8 ,2 37)
Foreign exchange 1, 615 (2 ,1 3 7)
Share of associate EBITDA — (15 5)
Share-based payment expenses (5,0 06) (5 ,11 3)
Operating profit/(loss) 7 1 2,353 (2, 079)
Finance income 10 59 5
Finance costs 10 (10, 8 5 7) (9, 976)
Foreign exchange gain on borrowings 10 — 13 7
Net finance costs (10,7 9 8) (9,834)
Share of associate income — 79
Profit/(loss) before tax 11 1 ,555 (11 , 8 3 4)
Income tax (5,0 97) 975
Loss after tax (3 ,542) (10, 8 5 9)
Exchange differences included in other comprehensive income 1, 5 73 3 , 24 3
Loss arising on changes in fair value of hedging instruments (6 , 41 9) —
Total comprehensive loss for the period (8,38 8) (7, 6 1 6)
Note
2021
Cents
2020
cents
Earnings per share
Basic (cents) 12 (1. 5 6) (5.52)
Diluted (cents) 12 (1. 5 6) (5.52)
(1) Parent, subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses.
(2) Non-core operating expenses include items related primarily to acquisition, integration and other related costs, which are not incurred as part of the
underlying trading performance of the Group, and which are therefore adjusted for, in line with Group policy.
All amounts relate to continuing activities.
The notes on pages 58 to 93 form an integral part of these financial statements.
The prior year figures have been restated due to the recognition of liabilities for prior period credit notes and due to the restatement of
intangible asset amortisation; please refer to note 31 for further details.
CentralNic Group Plc | Annual report 2021 55
Additional informationFinancial statementsGovernanceStrategic report
Consolidated statement of financial position
as at 31 December 2021
Note
2021
USD’000
Restated
2020
USD’000
ASSETS
Non-current assets
Property, plant and equipment 13 1, 8 2 0 2,222
Right-of-use assets 13,27 6,7 81 6,4 55
Intangible assets 14 2 5 4 ,1 6 9 25 5 ,716
Other non-current assets 15 4 39 6 61
Investments 16 58 11 4
Deferred tax assets 21 8, 5 6 3 5 , 41 0
2 71, 8 3 0 270,578
Current assets
Trade and other receivables 17 71, 3 6 3 4 7, 9 4 1
Inventory 8 95 1, 0 11
Cash and bank balances 18 5 6 ,1 3 3 28,6 5 4
12 8 , 3 9 1 7 7, 6 0 6
Total assets 400,22 1 3 4 8 ,18 4
EQUITY AND LIABILITIES
Equity
Share capital 19 2 90 29 0
Share premium 19 3 9,8 4 5 39,845
Merger relief reserve 19 5, 2 97 5, 297
Share-based payment reserve 19, 5 0 6 11 , 0 3 2
Cash flow hedging reserve (6 , 41 9) —
Foreign exchange translation reserve 2 ,9 3 3 1, 3 6 0
Accumulated profits/(losses) 52 , 5 3 0 5 6,072
Total equity 11 3 , 9 8 2 113 , 8 9 6
Non-current liabilities
Other payables 20 4, 42 0 2,878
Lease liabilities 27 5 ,1 0 5 5, 204
Deferred tax liabilities 21 2 0, 3 3 4 2 1, 9 6 5
Borrowings 23 11 9 , 2 5 1 1 0 7, 8 2 0
14 9 ,11 0 13 7, 8 6 7
Current liabilities
Trade, other payables and accruals 22 1 17, 0 1 6 8 9, 256
Lease liabilities 27 1, 8 3 7 1, 3 4 6
Borrowings 23 11 , 8 5 7 5 , 8 19
Derivative financial instruments 24 6 , 419 —
1 3 7,1 2 9 9 6 ,421
Total liabilities 2 86 , 2 39 23 4,28 8
Total equity and liabilities 400 ,22 1 3 4 8 ,1 8 4
These financial statements were approved and authorised for issue by the Board of Directors on 4 April 2022 and were signed on its
behalf by:
Iain McDonald
Chairman
Company Number: 08576358
The notes on pages 58 to 93 form an integral part of these financial statements.
The prior year figures have been restated due to the recognition of liabilities for prior period credit notes and due to the restatement of
intangible asset amortisation; please refer to note 31 for further details.
56 CentralNic Group Plc | Annual report 2021
Financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share
capital
USD’000
Share
premium
USD’000
Merger
relief
reserve
USD’000
Share-
based
payment
reserve
USD’000
Cash flow
hedging
reserve
USD’000
Restated
foreign
exchange
translation
reserve
USD’000
Restated
accumulated
(losses)/
retained
earnings
USD’000
Restated
equity
attributable
to owners
the Parent
Company
USD’000
Non-
controlling
interests
USD’000
Restated
total
equity
USD’000
Balance as at
31 December 2019 232 74 , 8 4 0 5, 2 97 6 ,09 5 — (1 ,883) (8,308) 76, 2 73 (6 9) 76, 2 0 4
Loss for the year — — — — — — (10 , 8 5 9) (10 , 8 5 9) — (10 , 8 5 9)
Adjustment to
non-controlling interest — — — — — — — — 69 69
Other comprehensive income
Translation of foreign
operation — — — — — 3 , 24 3 — 3, 24 3 — 3 , 24 3
Total comprehensive loss
forthe year — — — — — 3, 24 3 (10 , 8 5 9) ( 7, 6 1 6) 69 (7 ,54 7)
Transactions with owners
Issue of share capital 58 4 3 , 6 74 — — — — — 4 3 ,73 2 — 4 3 ,73 2
Share issue costs — (3,829) — — — — — (3,829) — (3,829)
Capital reduction — (74 , 8 4 0) — — — — 74 , 8 4 0 — — —
Share-based payments — — — 5 ,1 7 9 — — 5 ,17 9 — 5 ,17 9
Share-based payments
– deferred tax assets — — — 15 7 — — — 157 — 15 7
Share-based payments
– exercised and lapsed — — — (3 99) — — 399 — — —
Balance as at
31 December 2020 290 39 ,845 5,2 97 11 , 0 3 2 1, 3 6 0 56 ,072 113 , 8 9 6 —
113,896
Loss for the year — — — — — — (3,5 42) (3,5 42) — (3, 542)
Other comprehensive income
Translation of foreign
operation — — — — — 1, 5 7 3 — 1, 5 7 3 — 1, 5 7 3
Loss arising on changes in fair value
of hedginginstruments — — — — (6 , 41 9) — — (6 , 41 9) — (6 , 41 9)
Total comprehensive loss
for the year — — — — (6 , 41 9) 1, 5 7 3 (3,5 42) (8,388) — (8,388)
Transactions with owners
Share-based payments — — — 7,110 — — — 7,11 0 — 7,110
Share-based payments
– deferred tax assets — — — 2, 2 27 — — — 2, 22 7 — 2, 2 27
Share-based payments
– exercised and lapsed — — — (863) — — — (863) — (863)
Balance as at
31 December 2021 290 39,8 4 5 5, 297 19, 5 0 6 (6 , 419) 2 ,933 52,5 30 11 3 , 9 8 2 — 11 3 , 9 8 2
• Share capital represents the nominal value of the Company’s cumulative issued share capital.
• Share premium represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of their
nominal value less attributable share issue costs and other permitted reductions.
• Merger relief reserve represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of
their nominal value, less attributable share issue costs and other permitted reductions, where the consideration for shares in another
company includes issued shares, and 90% of the equity is held in the other company.
• Retained earnings represent the cumulative value of the profits not distributed to Shareholders but retained to finance the future
capital requirements of the Group.
• Share-based payments reserve represents the cumulative value of share-based payments recognised through equity and deferred tax
assets arising thereon, net of exercised and lapsed options.
• Cash flow hedging reserve represents the effective portion of changes in the fair value of derivatives.
• Foreign exchange translation reserve represents cumulative exchange differences arising on Group consolidation.
• The non-controlling interests comprise the portion of equity of subsidiaries that are not owned, directly or indirectly, by the Group.
These non-controlling interests are individually not material for the Group.
• The prior year figures have been restated due to the recognition of liabilities for prior period credit notes and due to the restatement of
intangible asset amortisation; please refer to note 31 for further details.
The notes on pages 58 to 93 form an integral part of these financial statements.
CentralNic Group Plc | Annual report 2021 57
Additional informationFinancial statementsGovernanceStrategic report
Consolidated statement of cash flows
for the year ended 31 December 2021
2021
USD’000
Restated
2020
USD’000
Cash flow from operating activities
Profit/(loss) before taxation 1 ,555 (11 , 8 3 4)
Adjustments for:
Depreciation of property, plant and equipment 3 , 514 2, 0 8 4
Amortisation of intangible assets 18, 2 91 1 3 , 74 7
Share of associate EBITDA — (15 5)
Gain on sale of associate — (266)
Finance costs (net) 10,7 9 8 9, 83 4
Share-based payments 5, 0 0 6 5 ,11 3
Increase in trade and other receivables (2 0, 8 16) (9,26 6)
Increase in trade and other payables and accruals 24 ,6 0 5 13 , 3 9 5
Decrease in inventories 3 02 —
Cash flow from operations 4 3, 2 5 5 22,6 5 2
Income tax paid (2 ,2 30) (1, 9 5 7)
Net cash flow generated from operating activities 41, 0 2 5 20,6 95
Cash flow used in investing activities
Purchase of property, plant and equipment (72 2) (1,296)
Purchase of intangible assets (4, 088) (2,9 6 3)
Payment of deferred consideration (1,7 19) (5,467)
Proceeds from disposal of investment in associate — 1, 8 14
Acquisition of subsidiaries, net of cash acquired (18 , 3 4 4) (3 7, 0 6 5 )
Net cash flow used in investing activities (24 ,873) (4 4,97 7)
Cash flow generated from/(used in) financing activities
Proceeds from borrowings 2 5 ,70 0 2, 2 0 8
Arrangement fees (979) (6 45)
Proceeds from issuance of ordinary shares (net) — 3 4,6 67
Payment of lease liability (1, 9 81) (1, 0 8 1)
Interest paid (8,6 95) (9 , 512)
Net cash flow generated from financing activities 14 , 0 4 5 25,6 37
Net increase in cash and cash equivalents 3 0 ,1 9 7 1, 3 5 5
Cash and cash equivalents at beginning of the year 28,654 2 6 ,1 8 2
Exchange (losses)/gains on cash and cash equivalents (2 ,718) 1 ,117
Cash and cash equivalents at end of the year 5 6 ,1 3 3 28,65 4
The notes on pages 58 to 93 form an integral part of these financial statements.
The prior year figures have been restated due to the recognition of liabilities for prior period credit notes and due to the
restatement of intangible asset amortisation; please refer to note 31 for further details.
58 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2021
1. General information
(a) Nature of operations
CentralNic Group Plc is the UK holding company of a group of companies which operate a global internet platform that derives recurring
revenue from operating a marketplace model for online presence and online marketing services. The Company is registered in England
and Wales. Its registered office and principal place of business is 4th Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR.
(b) Component undertakings
The principal activities of the subsidiaries and other entities included in the financial statements are presented within the particulars of
subsidiaries and associates on pages 58 to 93 of these financial statements.
2. Application of IFRS
(a) Basis of preparation
The financial statements are measured and presented in USD rounded to the nearest thousand, unless otherwise stated, which is the
currency of the primary economic environment in which many of the entities operate. They have been prepared in accordance with UK
adopted International Accounting Standards under the historical cost convention, except for those financial instruments which have been
measured at fair value through profit and loss.
The financial statements have been prepared on the going concern basis, which assumes that the Group will continue to be able to meet
its liabilities as they fall due for the foreseeable future. The financial statements have been prepared in accordance with International
Accounting Standards (IFRS).
In assessing the Group’s going concern position as at 31 December 2021, the Directors have considered a number of factors, including
the current statement of financial position, the principal and emerging risks which could impact the performance of the Group and the
Group’s strategic and financial plan. The assessment concluded that, for the foreseeable future, the Group has sufficient capital to
support its operations, has a funding and liquidity base which is strong, robust, diversified and well managed with future capacity,
andhas expectations that performance will continue to improve as the Group’s strategy is executed.
As a result of their assessment, the Directors have a reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future and therefore believe that the Group is well placed to manage its risks
successfully in line with its business model and strategic aims. Accordingly, they continue to adopt the going concern basis in
preparingthe consolidated financial statements.
(b) Standards adopted in the year
There have been no standards adopted that have had a material impact on the financial statements and no standards adopted in
advance of their implementation date.
(c) Standards, amendments and interpretations to published standards not yet effective
The Directors have considered those standards and interpretations, which have not been applied in the financial statements but are
relevant to the Group’s operations, that are in issue but not yet effective and do not consider that they will have a material impact on the
future results of the Group.
CentralNic Group Plc | Annual report 2021 59
Additional informationFinancial statementsGovernanceStrategic report
3. Summary of significant accounting policies
The financial statements have been prepared on the historical cost basis except for certain financial instruments at fair value, as explained
in the accounting policies set out below, whichhas been prepared in accordance with IFRS. The principal accounting policies are set out
below:
(a) Basis of consolidation
The consolidated financial statements include the financial statements of all subsidiaries. The financial year ends of all entities in the
Group are coterminous.
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control over the
operating and financial decisions is obtained, and cease to be consolidated from the date on which control is transferred out of the
Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and
hasthe ability to affect those returns through its power over the investee.
All intercompany balances and transactions, including recognised gains arising from inter-group transactions, have been eliminated in full.
Unrealised losses are eliminated in the same manner as recognised gains except to the extent that they provide evidence of impairment.
Non-controlling interest in the result and equity of subsidiaries are shown separately in the consolidated statement of profit or loss,
statement of comprehensive income, statement of changes in equity and statement of financial position respectively.
(b) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each
business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in
administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
Thisincludes the separation of embedded derivatives in host contracts by the acquiree.
Where not all of the equity of a subsidiary is acquired, the non-controlling interests are recognised at the non-controlling interest’s share
of the acquiree’s net identifiable assets. Upon obtaining control in a business combination achieved in stages, the Group remeasures its
previously held equity interest at fair value and recognises a gain or a loss to the income statement.
Contingent consideration is included in the cost at its acquisition date fair value and, in the case of contingent consideration classified
asa financial liability, remeasured subsequently through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for
non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value
of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly
identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be
recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the
aggregateconsideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that
areexpected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal.
Goodwill disposed of in these circumstances is measured based on the relative values of the disposed operation and the portion of the
cash-generating unit retained.
60 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
3. Summary of significant accounting policies continued
(c) Functional and foreign currencies
(i) Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates. The consolidated financial statements are presented in USD given that more than half of the
Group’s trade is in USD and the industry in which the Group operates predominantly trades in USD.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency at the exchange rates prevailing at the dates of the transactions
or valuation where items are remeasured. Foreign currency gains and losses resulting from the settlement of such transactions, and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the
income statement, except where deferred in other comprehensive income as qualifying cash flow hedges and qualifying net-investment
hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income
statement within finance income or finance costs. All other foreign exchange gains and losses are recognised in profit and loss within
administrative expenses.
(iii) Group companies
The results and financial position of all of the Group entities (none of which has the currency of a hyper-inflationary economy) that have
afunctional currency different from the presentation currency of the Group are translated into the presentation currency as follows:
a) assets and liabilities for each statement of financial position are translated at the closing rate at the date of that statement of financial
position;
b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing at the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
c) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, the exchange differences arising from the translation of any investment in foreign entities, and of borrowings and
otherfinancial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign
operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified
toprofit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
CentralNic Group Plc | Annual report 2021 61
Additional informationFinancial statementsGovernanceStrategic report
(d) Financial instruments
Financial assets and liabilities are recognised in the statements of financial position when any entity within the Group becomes a party
tothe contractual provisions of the instruments.
The Group’s financial assets and liabilities are initially measured at fair value plus any directly attributable transaction costs.
The carrying value of the Group’s financial assets (primarily cash and bank balances) and liabilities (primarily trade payables and other
accrued expenses) approximate their fair values.
Financial instruments are offset when the CentralNic Group has a legally enforceable right to offset and intends to settle either on a net
basis or to realise the asset and settle the liability simultaneously.
The Group classifies its financial assets into one of the categories discussed below. The Group’s accounting policy for each category is
as follows:
(i) Amortised cost
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other
types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash
flows are solely payments of principal and interest. They are initially recognised at fair value plus those transaction costs that are directly
attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using
a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the
lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a
separate provision account with the loss being shown as an impairment charge in the consolidated statement of comprehensive income.
On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated
provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking
expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of the financial asset. For those financial assets where the credit risk has not
increased significantly since initial recognition, twelve months of expected credit losses along with gross interest income are recognised.
For those financial assets for which credit risk has increased significantly since initial recognition, lifetime expected credit losses along
with the gross interest income are recognised. For those financial assets that are determined to be credit impaired, lifetime expected
credit losses along with interest income on a net basis are recognised.
From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a
good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and,
inconsequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the
carrying value is recognised in the consolidated statement of comprehensive income.
The Group’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position.
(ii) Fair value through other comprehensive income
The Group has an equity interest in a number of investments in unlisted entities which are not accounted for as subsidiaries, associates
orjointly controlled entities. For those investments, the Group has made an irrevocable election to classify the investments at fair value
through other comprehensive income rather than through profit or loss, as the Group considers this measurement to be the most
representative of the business model for these assets. They are carried at fair value with changes in fair value recognised in other
comprehensive income and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any balance
within fair value through other comprehensive income reserve is reclassified directly to retained earnings and is not reclassified to profit
orloss.
Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment, in which
case the full or partial amount of the dividend is recorded against the associated investment’s carrying amount.
Purchases and sales of financial assets measured at fair value through other comprehensive income are recognised on settlement date
with any change in fair value between trade date and settlement date being recognised in the fair value through other comprehensive
income reserve.
(iii) Financial liabilities and equity instruments
Financial liabilities are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest,
dividends, gains and losses relating to financial liabilities are reported in profit or loss. Distributions to holders of financial liabilities
areclassified as equity and charged directly to equity.
62 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
3. Summary of significant accounting policies continued
(d) Financial instruments continued
(iii) Financial liabilities and equity instruments continued
Financial liabilities
Financial liabilities comprise long-term borrowings, short-term borrowings, trade and other payables and accruals, measured at
amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the
expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Bond issue costs are initially recorded as a deduction from the bond liability on the statement of financial position, and subsequently
expensed to the consolidated statement of profit and loss over the life of the bond using the straight-line method.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities.
Equityinstruments issued by the CentralNic Group are recognised at the proceeds received, net of direct issue costs.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are
showninequity as a deduction, net of tax, from proceeds.
Dividends on ordinary shares are recognised as liabilities when approved for appropriation.
Dividends proposed or declared after the reporting date but before the financial statements have been authorised for issue are not
recognised as a liability at the reporting date. However, the details of these dividends are disclosed in the notes in accordance with IAS 1.
(iv) Derivative financial instruments and cash flow hedges
The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. Derivatives are
recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each
reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention to
offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
twelve months and it is not due to be realised or settled within twelve months.
Hedge accounting
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk as cash flow hedges. At the
inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along
with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the
hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values or
cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge
effectiveness requirements:
• there is an economic relationship between the hedged item and the hedging instrument;
• the effect of credit risk does not dominate the value changes that result from that economic relationship; and
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship
(i.e. rebalances the hedge) so that it meets the qualifying criteria again. The Group designates the full change in the fair value of a forward
contract (i.e. including the forward elements) as the hedging instrument for all of its hedging relationships involving forward contracts.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as
cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve,
limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in
equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised
hedged item. Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to profit or loss. The Group discontinues hedge accounting only when the
hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances
when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or
loss recognised in other comprehensive income and accumulated in the cash flow hedging reserve at that time remains in equity and is
reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or
loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss.
CentralNic Group Plc | Annual report 2021 63
Additional informationFinancial statementsGovernanceStrategic report
(e) Property, plant and equipment
Property, plant and equipment, including leasehold improvements and office furniture and equipment, are stated at cost less
accumulated depreciation and impairment losses, if any.
Depreciation is calculated using the methods below to write off the depreciable amount of the assets over their estimated useful lives.
Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.
The principal annual rates used for this purpose are:
Australia France Germany Luxembourg New Zealand Poland Slovakia UK
Depreciation method Reducing
balance
Reducing
balance
Straight
line
Straight
line
Reducing
balance
Straight
line
Straight
line
Reducing
balance
Computer equipment 10-66.67% 33% 33% 20-25% 20-50% 30% 25% 60-65%
Furniture and fittings 15-40% 33% 9-10% — 12-50% 20% 16.67% 15-20%
The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period
toensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of
consumption of the future economic benefits embodied in the asset.
Subsequent component replacement costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the
CentralNic Group and the cost of the asset can be measured reliably. The carrying amount of parts that are replaced is derecognised.
The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises
the initial estimate of costs for dismantling and removing the asset, and restoring the site on which it is located, which the CentralNic
Group is obliged to incur when the asset is acquired, if applicable.
An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use.
Anygain or loss arising from derecognition of the asset is recognised in profit or loss.
(f) Intangible assets
Domain name intangible assets represent amounts paid to acquire the rights to own and act as registrant for a portfolio of domain
names. Capitalised domain names have a finite useful life and are measured at cost less accumulated amortisation and impairment
losses, if any. Domain names are amortised on an annual basis at the rate of 20% straight line. Domain names not held for resale are
included in the balance sheet at amortised cost and classified as ‘domain names’ and amortised over their useful lives. Domain names
held for resale are included in the balance sheet at the lower of cost and net realisable value and classified as inventory held for sale with
no amortisation charged. If a decision is taken to sell a domain name previously included in intangible assets it is reclassified asinventory
at net book value prior to sale.
The useful economic life for the software acquired as part of the Internet.BS, Instra and SK-NIC acquisitions is five years and the acquired
customer lists are amortised over ten years. The useful economic lives for the software acquired as part of the KeyDrive and Team
Internet acquisitions are three to nine years and the acquired customer lists are amortised over seven to ten years. The useful economic
lives for all of the intangible assets acquired as part of the Codewise acquisition are five years. The useful economic lives for the intangible
assets acquired as part of the SafeBrands acquisition are six years for customer lists and brand name, and four years for technology.
The useful economic lives for the intangible assets acquired as part of the Wando acquisition are a blended c.four years for technology.
The useful economic lives for the websites acquired from White & Case and in the NameAction acquisition are five years.
Patents and trademarks acquired as part of the acquisitions of KeyDrive and GlobeHosting are amortised over the shorter of their useful
life and/or their contractual life (or length of legal right to assets). If the contractual or legal rights are renewed, the useful life will include
the renewal period. Patents and trademarks are amortised over five to 15 years.
Development costs that the CentralNic Group incurs on the development of identifiable and unique software will be capitalised where the
following criteria are met:
• it is technically feasible to complete the software so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated that the asset will probably generate future economic benefits;
• the expenditure attributable to the software product during its development can be reliably measured; and
• that there are adequate technical and finance resources available to complete the development.
Costs capitalised in relation to computer software development may relate to either:
• completely separable software; or
• enhancements of existing software which are clearly identifiable as new modules within the system or new features which enable the
asset to generate additional future economic benefit. For the avoidance of doubt, this excludes any ongoing maintenance to the
existing software.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the assets are ready for use.
Research and development expenditure that does not meet the criteria above is recognised as an expense as incurred.
Development costs previously recognised as an expense cannot be recognised as an asset in a subsequent period.
64 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
3. Summary of significant accounting policies continued
(f) Intangible assets continued
Development costs acquired as part of the acquisition of Team Internet are amortised over three to five years.
Directly attributable costs that are capitalised as part of software include employee costs and an appropriate portion of relevant
overheads. Computer software development costs recognised as assets are amortised over their estimated useful lives as determined
bythe Directors.
Costs for development initiatives that the CentralNic Group undertakes that are not otherwise allocable to specific domain names or
projects are expensed through the consolidated statement of comprehensive income as incurred.
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development
costs, are not capitalised and the related expenditure is reflected in the consolidated statement of comprehensive income in the period
inwhich the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets are tested for impairment annually if facts and circumstances indicate that impairment may exist. In the event that the
expected future economic benefits of the intangible assets are no longer probable or expected to be recovered, the capitalised amounts
are written down to their recoverable amount through the consolidated statement of comprehensive income.
(g) Impairment of non-financial assets
The carrying values of non-financial assets, other than deferred tax assets, are reviewed at the end of each reporting period to determine
whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of the asset is the higher of the asset’s fair value less costs to sell and their value-in-use, which is measured by
reference to discounted future cash flows.
An impairment loss is recognised if the carrying value of the asset exceeds its recoverable amount and is recognised immediately in the
consolidated statement of comprehensive income.
In respect of assets other than goodwill, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the
previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of
amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised immediately in the consolidated
statement of comprehensive income.
(h) Cash and cash equivalents
Cash and bank balances comprise of cash in hand, bank balances, deposits with financial institutions and short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(i) Employee benefits
Short-term employee benefits, including wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are
accrued in the period in which the associated services are rendered by employees of the Group.
(j) Leases
Under IFRS 16, the Group recognises right-of-use assets and corresponding lease liabilities for most leases by recording them on the
balance sheet.
The Group does not recognise the right-of-use assets and lease liabilities for short-term leases that have a term of three months or less or
leases that are of low value (less than USD 5,000). Lease payments associated with these leases are expensed on a straight-line basis
over the lease term.
At inception, or on assessment of a contract that contains a lease component, the Group allocates the consideration in the contract to
each lease and non-lease component based on their relative stand-alone prices. However, for leases of properties, the Group does not
separate non-lease components and instead accounts for the lease and non-lease components as one single lease component.
The Group’s leases primarily relate to properties and motor vehicles. Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. Property leases will often include extension and termination options, open market rent
reviews, and uplifts.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using the individual lessee company’s incremental borrowing rate taking into account the duration of the lease.
The lease liability is subsequently measured at amortised cost using the effective interest method, with the finance cost charged to the
consolidated statement of comprehensive income over the lease period to produce a constant periodic rate of interest on the remaining
balance of the liability. It is remeasured when there is a change in future lease payments arising from a change in index or rate, or if the
Group changes its assessment of whether it will exercise an extension or termination option. The lease liability is recalculated using a
revised discount rate if the lease term changes as a result of a modification or re-assessment of an extension or termination option.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received. The right-of-use
asset is typically depreciated on a straight-line basis over the lease terms. In addition, the right-of-use asset may be adjusted for certain
remeasurements of the lease liability, such as indexation and market rent review uplifts. Please refer to note 27 for further details.
CentralNic Group Plc | Annual report 2021 65
Additional informationFinancial statementsGovernanceStrategic report
(k) Taxation
Taxation for the year comprises current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax
rates that have been enacted or substantively enacted at the end of the reporting period.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of
theacquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business
combination costs, or from the initial recognition of an asset or liability in a transaction which is not a business combination and,
atthetime of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is
probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax
credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the
liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when the deferred income taxes relate to the same taxation authority.
Deferred tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transactions either in other
comprehensive income or directly in equity, and deferred tax arising from a business combination is included in the resulting goodwill
orexcess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the
business combination costs.
(l) Share-based payments
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions, whereby these
individuals render services as consideration for equity instruments (equity-settled transactions). These individuals are granted share
option rights approved by the Board which can only be settled in shares of the respective companies that award the equity-settled
transactions. Share option rights are also granted to these individuals by majority Shareholders over their shares held. No cash-settled
awards have been made or are planned.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled to the award
(vesting point). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments and value that will
ultimately vest. The statement of comprehensive income charge for the year represents the movement in the cumulative expense
recognised as at the beginning and end of that period.
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the statement of
comprehensive income on a straight-line (graded vesting) basis over the vesting period, taking account of the estimated number of shares
that will vest. The fair value is determined by use of the Black-Scholes model method.
(m) Provisions, contingent liabilities and contingent assets
Provisions are recognised when, as a result of a past event, the CentralNic Group has a present legal or constructive obligation, when it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate
of the amount can be made. Provisions are reviewed at the end of each financial reporting period and adjusted to reflect the current best
estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required
to settle the obligation.
A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of
one or more uncertain future events not wholly within the control of the CentralNic Group. It can also be a present obligation arising from
past events that is not recognised because it is not probable that outflow of economic resources will be required, or the amount of
obligation cannot be measured reliably. A contingent liability is not recognised in the financial statements but is disclosed in the notes to
the financial statements. When a change in the probability of a contingent outflow occurs so that the outflow is probable, a liability will be
recognised as a provision.
A contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain events not wholly within the control of the CentralNic Group. The CentralNic Group does not
recognise contingent assets but discloses their existence where inflows of economic benefits are probable, but not virtually certain.
66 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
3. Summary of significant accounting policies continued
(n) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services
provided in the course of ordinary activities, net of discounts and sales-related taxes.
The Company has combined the previous Direct and Indirect segments into a single Online Presence segment. This segment provides
the essential tools for businesses to go online. The Online Marketing (formerly ‘Monetisation’) segment, was renamed as its service
offering has been substantially expanded through the acquisitions of Zeropark, Voluum and Wando, to a full suite of online customer
acquisition solutions, including data analytics. The prior year figures in note 5 Segment analysis have been adjusted to conform to the
current year presentation. These segmental adjustments have had no impact on the Group’s reported consolidated statement of
comprehensive income, consolidated statement of financial position and consolidated statement of cash flows.
Please refer to note 5 for further details.
Revenue from the sale of services is recognised when the performance obligations are met under the customer contract. In particular:
(i) Indirect sales of services for domain names to registrars (Online Presence segment)
Indirect revenues are derived from their customer base, registrars, via the following three channels:
a) Reseller channel – revenues are derived by facilitating the sale of domain names and associated digital subscription products to
registrars by acting as a wholesale platform provider;
b) Registry operator channel – CentralNic is an asset holder for Country Code TLD ‘.SK’, and therefore generates revenues through sales
of domain names with the ‘.SK’ extension to registrars; and
c) Registry service provider channel – these revenues are generated from the provision of services through the registry service provider
mechanism. CentralNic operates as a back-end service provider for third-party TLDs on an exclusive basis, enabling the registrars to
sell domain names to registrants.
In accordance with IFRS 15, the underlying customer contract with the registrar is evaluated and the performance obligation that is
required to be met under that customer contract is identified. The transaction price is also determined and allocated to the performance
obligation. Revenue is recognised on fulfilment of the performance obligation. A liability is also recognised for amounts due back to the
customers based on their contractual terms.
For a) reseller channel, evaluation of the customer contract has determined that the performance obligations are met at the point of sale
of the domain name. An invoice under this channel could cover the licence to utilise the domain name for a fixed term period which could
vary between one and ten years; however, all performance obligations are met at the point of sale, and therefore no revenue is deferred.
For b) registry operator and c) registry service provider channels, evaluation of the customer contract has determined that there are
several performance obligations that need to be met over the term specified in the contract governing the sale of the domain name.
Aninvoice under these channels could cover the sale of a domain name for a fixed term, which could vary between one and ten years,
with the performance obligations expected to be fulfilled over the course of this term on a straight-line basis. Revenues that relate to the
period in which the services are performed are recognised in the consolidated statement of comprehensive income of that period, with
amounts relating to future periods being deferred into deferred revenue.
(ii) Direct sale of services for domain names to domain registrants (Online Presence segment)
Direct revenues are derived from their customer base via the following three channels:
a) Retail channel – revenues arise from the provision of retail and similar services to domain registrants, with sub-revenue streams being
those of new registrations and renewals. Revenues originate when a transaction is generated on the service registry platform by the
customer;
b) Computer software channel – revenues arise from the provision of computer software; and
c) Strategic consultancy and similar services – revenues arise from the provision of corporate strategic consulting services.
For a) retail channel, evaluation of the customer contract has determined that the performance obligations are met at the point of sale
ofthe domain name. An invoice under this segment could cover the licence to utilise the domain name for a fixed term which could vary
between one and ten years; however, all performance obligations are met at the point of sale, and therefore no revenue is deferred.
For b) computer software channel, customer contracts typically require the delivery of software including all adaptations required by
thecustomer; this can either be specified as one performance obligation within the whole contract, or split into separate and specific
milestone deliverables, i.e. separate performance obligations, within the contract. Revenue is recognised at the point of fulfilment of the
relevant performance obligation in line with the customer contract.
For c) strategic consultancy and similar services, the customer contract typically covers a broad range of consultancy services to be
delivered over varying lengths of time. Performance obligations are fulfilled as work is completed, and revenue is therefore recognised
based on completion of work performed to date as a percentage of total services to be performed.
(iii) Monetisation services (Online Marketing segment)
The Online Marketing segment provides advertising placement services to match those who have traffic, e.g. domain name owners and
content website operators, with those who want traffic, e.g. e-commerce website operators and affiliates on a global basis, including
AI-based data analytics and automation tools. Revenues are recognised after either of the following is registered: (i) a chargeable click on
the advertiser’s advertisement placed on the publisher’s domain name; or (ii) a chargeable re-direct from a publisher’s domain name to an
advertiser’s website.
CentralNic Group Plc | Annual report 2021 67
Additional informationFinancial statementsGovernanceStrategic report
(o) Inventories
Inventories consists of domain names which are initially recognised at cost and subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location
and condition. Weighted average cost is used to determine the cost of ordinarily interchangeable items.
(p) Associates
Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is
classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. Subsequently,
associates are accounted for using the equity method, where the Group’s share of post-acquisition profits and losses and other
comprehensive income is recognised in the consolidated statement of comprehensive income (except for losses in excess of the
Group’sinvestment in the associate unless there is an obligation to make good those losses).
(q) Non-core operating expenses
Non-core operating expenses are disclosed and described separately in the consolidated financial statements where it is necessary to
doso to provide further understanding of the financial performance of the Group. They are material items of expense relating to projects
that have been shown separately due to the significance of their nature or amount, which are generally outside the ordinary scope of
business, are discretionary and non-recurring, and convey a future benefit. Acquisition and integration expenses are the most relevant
items falling into this taxonomy.
(r) Definition of organic growth
Given that the Group has made a number of key strategic acquisitions in 2020 and 2021, unaudited, non-GAAP pro forma information
has been estimated to provide period-to-period comparison of performance. In doing so, the following assumptions have been made:
a) figures are provided for the entire comparative period, irrespective of when the acquisition by the Group arose;
b) adjustments have been made to the currency rates used for the comparative period to the most recent balance sheet date to
harmonise the impact of currency fluctuations;
c) the impact of unwinding the deferred revenues relating to the period prior to 1 November 2018 arising from a change in the terms of
conditions, as well as identified material non-cash or one-off revenues, have been excluded to ensure period-to-period comparability; and
d) adjustments have been made, as appropriate, to ensure GAAP comparability between periods. Differences to reported figures may result.
4. Critical accounting judgements and key sources of estimating uncertainty
When applying the Group’s accounting policies, described in note 3, the Directors are required to make judgements, estimates
andassumptions about the carrying amounts of assets and liabilities that are not apparent from other sources. The estimates and
assumptions are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
theperiod in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial
position date that have a significant risk of causing a significant adjustment to the carrying amounts of assets and liabilities in the financial
statements:
Impairment testing and fair value assessment
The recoverable amounts of individual non-financial assets are determined based on the higher of the value-in-use and the fair value
lesscosts to sell. These calculations will require the use of estimates and assumptions. It is reasonably possible that assumptions may
change, which may impact the Directors’ estimates and may then require a material adjustment to the carrying value of investments,
tangible and intangible assets.
The Directors review and test the carrying value of investments, tangible and intangible assets when events or changes in circumstances
suggest that the carrying amount may not be recoverable. For the purposes of performing impairment tests, assets are grouped at the
lowest level for which identifiable cash flows are largely independent of cash flows of other assets or liabilities. If there are indications that
impairment may have occurred, estimates will be prepared of expected future cash flows for each group of assets.
For financial assets classified as ‘fair value through other comprehensive income’, the Directors review the appropriateness and
reasonableness of the valuation technique(s) used to determine the fair value and ensure that corroborative support is obtained for (i) the
assumptions used in preparing such valuations and the evaluation of the sensitivity in such assumptions, (ii) the evidence of indicators of
a change in fair value, and (iii) the adjustments required if there are indications that a change in fair value has arisen.
Expected future cash flows used to determine the value-in-use of tangible and intangible assets will be inherently uncertain and could
materially change over time. The discount rate used in the impairment testing for CGUs was 11.0%, using the Capital Asset Pricing
Method (CAPM), with a long-term growth rate of 2.0%. The carrying value of the Group’s tangible, intangible and investment assets
aredisclosed in notes 13, 14 and 16, respectively.
68 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
4. Critical accounting judgements and key sources of estimating uncertainty continued
Acquisition accounting and goodwill
Where the Group undertakes business combinations, the cost of acquisition is allocated to identifiable net assets and contingent
liabilitiesacquired and assumed by reference to their estimated fair values at the time of acquisition. The remaining amount is recorded as
goodwill. The valuation of identifiable net assets involves an element of judgement related to projected results. Fair values that are stated
as provisional are not finalised at the reporting date and final fair values may be determined that are materially different from the
provisional values stated.
In addition, the fair value of the deferred consideration arising on the business combination/acquisition is a key area of accounting estimate.
Judgement was exercised in determining the fair value of the assets and liabilities and the deferred consideration in recent acquisitions.
Further details are set out in note 25.
Taxes
The Group has operations or sales in around 40 countries that are subject to direct and indirect taxes. The tax position is often not
agreed with tax authorities until sometime after the relevant period end and, if subject to a tax audit, may be open for an extended period.
In these circumstances, the recognition of tax liabilities and assets requires management estimation to reflect a variety of factors; these
include the status of any ongoing tax audits, historical experience, interpretations of tax law and the likelihood of settlement.
The changing regulatory environment affecting all multinational corporations increases the estimation uncertainty associated with
calculating the Group’s tax position. This is as a result of amendments to tax law at the national level, increased co-operation between
tax authorities and greater cross-border transparency.
The Group estimates and recognises additional tax liabilities as appropriate based on management’s interpretation of country-specific tax
law, external advice and the likelihood of settlement. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the results in the year in which such determination is made. Further details of this are
provided in note 21.
In addition, calculation and recognition of temporary differences giving rise to deferred tax assets requires estimates and judgements
tobe made on the extent to which future taxable profits are available against which these temporary differences can be utilised.
5. Segment analysis
CentralNic is an independent global service provider distributing domain names and associated digital subscription products through its
Online Presence segment, as well as providing Online Marketing services. Operating segments are organised around the products and
services of the business and are prepared in a manner consistent with the internal reporting used by the chief operating decision maker
to determine allocation of resources to segments and to assess segmental performance. The Directors do not rely on analyses of
segment assets and liabilities, nor on segmental cash flows arising from the operating, investing and financing activities for each
reportable segment, for their decision making and therefore have not included them.
As described in note 3, there has been a reclassification of the Group’s segmental reporting and therefore the comparatives have been
updated.
The Company has combined the previous Direct and Indirect segments into a single Online Presence segment. This segment provides
the essential tools for businesses to go online. The Online Marketing (formerly ‘Monetisation’) segment, was renamed as its service
offering has been substantially expanded through the acquisitions of Zeropark, Voluum and Wando, to a full suite of online customer
acquisition solutions, including data analytics
CentralNic Group Plc | Annual report 2021 69
Additional informationFinancial statementsGovernanceStrategic report
Management reviews the activities of the CentralNic Group in the segments disclosed below:
2021
Online
Presence
USD’000
Online
Marketing
USD’000
Total
USD’000
Revenue 149,274 261,266 410,540
Gross profit 53,250 65,249 118,49 9
Total administrative expenses (101,140)
Share-based payment expenses (5,006)
Operating profit 12,353
Adjusted EBITDA 46,251
Depreciation of property, plant and equipment (3,514)
Amortisation of intangible assets (18,291)
Non-core operating expenses (8,702)
Foreign exchange gain 1,615
Share-based payment expenses (5,006)
Operating profit 12,353
Finance cost (net) (10,798)
Profit before taxation 1,555
Income tax charge (5,097)
Loss after taxation (3,542)
Restated 2020
Online
Presence
USD’000
Online
Marketing
USD’000
Total
USD’000
Revenue 127,9 39 112,073 240,012
Gross profit 45,091 30,027 75,118
Total administrative expenses (72,084)
Share-based payment expenses (5,113)
Operating loss (2,079)
Adjusted EBITDA 29,394
Depreciation of property, plant and equipment (2,084)
Amortisation of intangible assets (13,747)
Non-core operating expenses (8,237)
Foreign exchange loss (2,137)
Share of associate EBITDA (155)
Share-based payment expenses (5,113)
Operating loss (2,079)
Finance cost (net) (9,834)
Share of associate income 79
Loss before taxation (11,8 3 4)
Income tax expense 975
Loss after taxation (10,859)
70 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
5. Segment analysis continued
The geographical locations of the non-current and current assets and non-current and current liabilities are as follows:
2021
Non-current
assets
USD’000
Current
assets
USD’000
Non-current
liabilities
USD’000
Current
liabilities
USD’000
UK 68,762 21,307 (136,971) (51,383)
North America 7,2 05 4,508 — (3,507)
Europe 158,429 96,858 (11,505) (77,641)
Australasia 34,375 4,162 (257) (3,729)
ROW 3,059 1,556 (377) (869)
271,830 128,391 (149,110) (137,129)
Restated 2020
Non-current
assets
USD’000
Current
assets
USD’000
Non-current
liabilities
USD’000
Current
liabilities
USD’000
UK 26,809 17,811 (110,119) 37,157
North America 8,149 3,143 (191) (3,334)
Europe 200,217 49,504 (24,746) (124,084)
Australasia 32,304 5,795 (2,811) (4,595)
ROW 3,099 1,353 — (1,565)
270,578 77,6 0 6 (137,8 67 ) (96,421)
6. Revenue
The Online Presence segment, which provides the essential tools for businesses to go online, has generated revenue totalling
USD 149,274,000 (2020: USD 127,939,000). The Online Marketing segment’s service comprises a full suite of online customer acquisition
solutions, including data analytics, and has generated revenue totalling USD 261,266,000 (2020: USD 112,073,000).
CentralNic Group’s revenue is generated from the following geographical areas:
2021
USD’000
Restated
2020
USD’000
Online Presence
UK 3,648 3,365
North America 43,279 34,766
Europe 70,462 64,087
ROW 31,885 25,721
149,274 127,9 3 9
Online Marketing
UK 3,239 575
North America 19,045 6,197
Europe 217,211 10 0,129
ROW 21,771 5,172
261,266 112,073
Total revenue 410,540 240,012
CentralNic Group Plc | Annual report 2021 71
Additional informationFinancial statementsGovernanceStrategic report
CentralNic Group’s revenue is generated from the following countries:
2021
USD’000
Restated
2020
USD’000
Revenue by customer location
(1)
Ireland 200,964 95,829
United States of America 55,756 37,609
Germany 26,816 25,074
UK 6,887 3,940
Australia 12,712 11,693
Netherlands 8,098 7,9 3 3
Switzerland 7,272 6,561
Canada 6,568 3,353
China 4,362 3,013
Slovakia 3,764 3,510
Other 77,341 41,497
410,540 240,012
(1) Largely aggregator revenues, not representative of the actual location of consumption of services.
For the year ended 31 December 2021, there was one customer that represented more than 10% of the Group’s revenue, amounting to
USD 208,863,000 (2020: 100,129,000) across two segments (Online Presence USD 9,869,000 (2020: 4,378,000) and Online Marketing
USD 198,994,000 (2020: 95,751,000). The customer is an aggregator who does not procure the services for its own use but provides
access to an estimated three to four million end customers who order and consume the services.
7. Profit/(loss) before taxation
The profit / (loss) before taxation is stated after charging the following amounts:
2021
USD’000
Restated
2020
USD’000
Employee benefit expense – wages and salaries 38,510 25,455
Employee benefit expense – social security 6,720 3,683
Employee benefit expense – pension 476 577
Employee benefit expense – share-based payments 2,059 1,268
Staff consultancy fees 4,614 3,357
Directors’ remuneration – fees and salaries 3,434 3,173
Directors’ remuneration – share-based payments 2,947 3,845
Fees payable to the Company’s auditor for the audit of Parent Company and
consolidatedfinancialstatements – UK auditor office 330 282
Fees payable to the Company’s auditor for the audit of subsidiary companies
–overseasauditorassociates — 3
Fees payable to the Company’s auditor for:
– Assurance-related services 91 64
– Due diligence and other acquisition costs 41 126
Depreciation and amortisation expense 21,805 15,831
8. Employee information
The average number of persons employed by the Group (excluding Directors) during the year was 644 (2020: 405), analysed by category
as follows:
2021
Number
2020
Number
Management and finance 108 62
Technical 217 140
Sales and marketing 158 84
Administrative 34 26
Operations 127 93
72 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
8. Employee information continued
Key management personnel
The total remuneration of the Directors, who are considered to be the key management personnel of the Group, is USD 6,381,000
(2020:USD7,018,000) and is set out below in aggregate for each of the categories specified in IAS 24: Related Party Disclosures.
Compensation has been disclosed in this note, while further information can be found in the remuneration report on page 42.
2021
Directors
USD’000
2020
Directors
USD’000
Wages and salaries 1,862 2,431
Social security 260 160
Pension 39 29
Share-based payment expenses 2,947 3,845
Directors’ consultancy fees 1,273 553
6,381 7,018
The Group made contributions to defined contribution personal pension schemes for three Directors in the period (2020: six). Included in
the above tables, the highest paid Director had wages and salaries, including employer’s taxes, of USD 849,000 (2020: USD 587,000), a
bonus of USD 570,000 (2020: USD 531,000), and share-based payment expenses of USD 1,075,000 (2020: 1,568,000) totalling
USD2,494,000 (2020: USD 2,686,000).
The Group operates payrolls in several foreign subsidiaries and complies with local jurisdiction obligations. Directors are compensated
through the payroll of the country in which those individuals fulfil their duties.
9. Non-core operating expenses
2021
USD’000
2020
USD’000
Acquisition-related costs 3,081 1,386
Integration and streamlining 3,915 3,613
Other costs
(1)
1,706 3,238
8,702 8,237
(1) Other costs include items related primarily to business reviews and restructuring expenses.
10. Finance income and costs
2021
USD’000
2020
USD’000
Finance income (59) (5)
Impact of unwinding of discount on net present value of deferred consideration
(1)
246 221
Reappraisal of deferred consideration (71) 921
Foreign exchange loss on revaluation of revolving credit facility — (137)
Arrangement fees on borrowings 1,553 1,115
Interest expense on current borrowings 269 235
Interest expense on non-current borrowings 8,664 7,324
Interest expense on leases 196 160
Finance costs 10,857 9,839
Net finance costs 10,798 9,834
(1) The impact of deferred consideration on finance costs is discussed in detail in notes 22 and 29.
CentralNic Group Plc | Annual report 2021 73
Additional informationFinancial statementsGovernanceStrategic report
11. Income tax expense
2021
USD’000
2020
USD’000
UK corporation tax
Current tax on profits for the year 8,970 2,840
Adjustments in respect of prior years (376) (344)
Current income tax 8,594 2,496
Deferred income tax (note 21) (3,497) (3,471)
Income tax expense 5,097 (975)
A reconciliation of the current income tax expense applicable to the profit before taxation at the statutory tax rate to the current income
tax expense at the effective tax rate of the CentralNic Group is as follows:
2021
USD’000
2020
USD’000
Profit / (loss) before taxation 1,555 (11,8 34)
Tax calculated at domestic tax rates applicable to profits in the respective countries 449 (2,485)
Tax effects of:
– Expenses not deductible for tax purposes 93 674
– Tax losses not utilised 9,606 5,358
– Tax losses movement (2,210) ( 7, 0 6 8)
– Share-based payment expenses 729 959
– Deferred tax (3,497) (3,471)
– Withholding tax 539 274
– Other adjustments (236) 5,128
– Adjustments in respect of prior years (376) (344)
Income tax expense 5,097 (975)
The Group 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 Group is not meaningful as it is significantly affected by the following items:
• the various tax rates and tax regimes applicable in all of the different jurisdictions in which the businesses of CentralNic operate;
• the diverse tax treatments of deferred consideration amounts applied in each jurisdiction;
• the tax loss carry forward regulations in different jurisdictions;
• the impact of some entities’ profits being set off against goodwill amortisation in certain jurisdictions; and
• the high level of non-cash charges which are mainly not deductible for income taxes in the certain jurisdictions, and largely represent
permanent differences between accounting and taxable profits.
As the tax loss carry forward position varies in each jurisdiction, this has resulted in the Group paying income tax totalling USD2,230,000
for the year ended 31 December 2021 (year ended 31 December 2020: USD 1,957,000).
The tax rates applicable in various jurisdictions (listed alphabetically) are:
• Australia: Standard corporate income tax rate is 30%. A 26% tax rate applies to base rate entities defined as being corporate tax
entities with no more than 80% of their assessable income being passive income and with an aggregate turnover of lessthan AUD 50
million;
• Brazil: Corporate income tax is assessed at the fixed rate of 15% on annual taxable income. Corporate taxpayers are also subject to a
surcharge of 10% on the annual taxable income in excess of 240,000 Brazilian ReaIs. All legal entities are generally also subject to a
social contribution on net income at the rate of 9%;
• Canada: Federal income tax is due at 15%. Companies are also subject to provincial/territorial income tax, which is levied with rates
determined by the province and vary from 8% to 16%;
• Chile: The basic tax on income of a legal entity domiciled or resident in Chile and engaged in commerce, mining, fishing or industrial
activities is the first category tax, which is assessed at a 25% rate for SMEs and 27% rate for entities subject to the partially integrated
system on the entity’s worldwide income;
• France: As a general rule, the standard corporate tax rate is 26.5% (27.5% for companies with a turnover of EUR 250 million or more);
• Germany: Federal taxes are due at 15% of taxable income, with an additional 5.5% solidarity surcharge due on the income tax; acommunity
business tax is also levied with rates determined by the municipality, taking the total effective tax charge toc.30%-35%;
• New Zealand: Income taxes are due at 28% of taxable income;
• Poland: Income tax is due at 19% (standard corporate tax rate) of taxable income;
• Slovakia: Income tax is due at 21% (standard corporate tax rate) of taxable income;
• UK: The applicable statutory tax rate is 19%; and
• USA: Federal taxes are due at 21% of taxable income. Companies are also subject to a state tax that varies from state to state and
generally ranges from 1% to 12%. Under California tax legislation, a statutory minimum of USD 800 of state tax is due.
74 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
12. Earnings per share
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 each year, 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.
2021
USD’000
2020
USD’000
Loss after tax attributable to owners (3,542) (10,859)
Operating profit/(loss) 12,353 (2,079)
Depreciation of property, plant and equipment 3,514 2,084
Amortisation of intangible assets 18,291 13,747
Non-core operating expenses 8,702 8,237
Foreign exchange gains/(losses) (1,615) 2,137
Share of associate income — 155
Share-based payment expenses 5,006 5,113
Adjusted EBITDA 46,251 29,394
Depreciation (3,514) (2,084)
Finance costs (10,857) (8,698)
Finance income 59 5
Taxation (5,097) 975
Adjusted earnings 26,842 19,592
Weighted average number of shares:
Basic 227,380,670 196,680,310
Effect of dilutive potential ordinary shares 6,856,289 8,019,971
Diluted average number of shares 234,236,959 204,700,281
Earnings per share:
Basic (cents) (1.56) (5.52)
Diluted (cents) (1.56) (5.52)
Adjusted earnings – Basic (cents) 11.80 9.96
Adjusted earnings – Diluted (cents) 11.46 9.57
Basic and diluted earnings per share of (1.56) cents (2020: (5.52) cents) have been impacted by amortisation charges, non-core operating
expenses, foreign exchange gains and losses, share of associate income and share-based payment expenses. Tax on adjusted earnings
is the same figure as that shown in the consolidated statement of comprehensive income given that the majority of the adjusting items in
the earnings per share calculation above are also adjusted for when calculating the Group’s tax expense.
The weighted average number of shares for the Company is disclosed above. The issued share capital of the Company at
31December2021 was 251,160,084 and the total number of shares that were vested but not exercised were 10,614,252. Exercises of
options will largely be covered by the shares held by the Group’s Employee Benefit Trust.
CentralNic Group Plc | Annual report 2021 75
Additional informationFinancial statementsGovernanceStrategic report
13. Property, plant and equipment
Right-of-use
assets
USD’000
Motor
vehicles
USD’000
Computer
equipment
USD’000
Furniture
and fittings
USD’000
Total
USD’000
Cost
At 1 January 2020 5,401 12 2,646 580 8,639
Additions 186 — 1,205 24 1,415
Acquisition of subsidiary 2,422 — 17 87 2,526
Exchange differences 365 — 215 26 606
At 31 December 2020 8,374 12 4,083 717 13,186
Additions 2,317 — 669 53 3,039
Acquisition of subsidiary 107 — 83 16 206
Disposal — (2) (1,050) (110) (1,163)
Exchange differences (313) (3) (322) 19 (618)
At 31 December 2021 10,485 7 3,463 695 14,650
Accumulated depreciation
At 1 January 2020 669 12 1,323 208 2,212
Charge for the year 1,124 — 854 106 2,084
Exchange differences 126 — 77 10 213
At 31 December 2020 1,919 12 2,254 324 4,509
Charge for the year 1,967 — 1,272 275 3,514
Disposals — (2) (1,007) (92) (1,101)
Exchange differences (182) (3) (471) (217) (873)
At 31 December 2021 3,704 7 2,048 290 6,049
Net book value at 31 December 2021 6,781 — 1,415 405 8,601
At 31 December 2020 6,455 — 1,829 393 8,677
Depreciation of property, plant and equipment is included in administrative expenses in the consolidated statement of comprehensiveincome.
14. Intangible assets
Domain names
USD’000
Software
USD’000
Customer list
USD’000
Patents and
trademarks
USD’000
Goodwill
USD’000
Intellectual
property
USD’000
Total
USD’000
Cost or deemed cost
At 1 January 2020 11,838 18,317 79,182 5,174 110,237 1,640 226,388
Additions 29 3,069 7 2 4,757 8 7,872
Acquisition of subsidiary — 8,001 1,400 5,111 26,206 — 40,718
Reclassification from
inventory (7) — — — — — (7)
Exchange differences 543 510 5,173 170 8,456 159 15,011
At31December2020 12,403 29,897 85,762 10,457 149,656 1,807 289,982
Additions 421 3,666 — 1 — — 4,088
Acquisition of subsidiary 6,492 5,501 1,733 364 7,159 — 21,249
Disposals — (27) — — — — (27)
Reclassification to inventory — — — — (841) — (841)
Exchange differences 3 784 (2,435) 1,183 (9,507) 274 (9,698)
At 31 December 2021 19,319 39,821 85,060 12,005 146,467 2,081 304,753
Amortisation
At 1 January 2020 1,076 5,953 12,848 378 — 78 20,333
Charge for the year 1,425 3,056 8,586 518 — 162 13,747
Exchange differences 78 155 — (69) — 22 186
At 31 December 2020 2,579 9,164 21,434 827 — 262 34,266
Charge for the year 2,479 6,067 8,847 788 — 110 18,291
Disposals — (27) — — — — (27)
Exchange differences (22) 30 (1,489) (193) — (272) (1,946)
At 31 December 2021 5,036 15,234 28,792 1,422 — 100 50,584
Net book value at
31 December 2021 14,283 24,587 56,268 10,583 146,467 1,981 254,169
At 31 December 2020 9,824 20,733 64,328 9,630 149,656 1,545 255,716
76 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
14. Intangible assets continued
The average remaining amortisation period of intangible assets is five years.
When testing for impairment, intangible assets are evaluated according to the cash-generating units (CGUs) to which they belong, which
are specifically the typically identifiable entities in each acquisition.
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 are translated at closing foreign exchange rates.
Amortisation of intangible assets is included in administrative expenses in the consolidated statement of comprehensive income.
Certain domain names were initially classified as goodwill arising on a business acquisition based on the initial accounting; subsequently
this goodwill amount was reclassified to inventory.
Goodwill and customer lists
The Group tests goodwill recognised through business combinations annually for impairment. Additions to goodwill arose through the
business combinations outlined in note 25. The carrying value of goodwill and the customer list is allocated to the respective segments
within the CGUs as follows:
Customer list Goodwill
2021
USD’000
2020
USD’000
2021
USD’000
2020
USD’000
Online Presence 32,642 34,644 91,089 102,762
Online Marketing 23,626 29,684 55,378 46,894
Total carrying value 56,268 64,328 146,467 149,656
The recoverable amount of goodwill at 31 December 2021 of USD 146,467,000 (2020: USD 149,656,000) is determined based on a
value-in-use calculation using cash flow projections from financial budgets approved by key management personnel covering a one-year
period. Cashflow projections beyond the one-year time frame are extrapolated by applying a flat growth rate into perpetuity as set out in
the tablebelow. These long-term growth rates are based on historical trends, expected return on investments, and management’s
judgement, experience and discretion. The pre-tax discount rate applied to the cash flow projections is 11.0% depending on the segment
within each CGU. Based on the value-in-use calculation, goodwill does not need to be impaired in any of the CGUs.
Growth rates
Online Presence segment 2%
Online Marketing segment 2%
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 weighted average cost
of capital (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.
The Directors consider that no reasonable change in these key assumptions would cause the carrying amount of this asset to exceed its
value-in-use.
15. Other non-current assets
2021
USD’000
2020
USD’000
Deferred costs 439 600
Amounts due from related parties — 61
439 661
In June 2017 the Company loaned Accent Media Ltd USD 100,000. During 2020, USD 40,000 was repaid. The balance outstanding at
31December 2020 was USD 60,000, which was fully repaid on 20 April 2021. The loan incurred interest at 5% until the loan was repaid in
full. Please refer to note 26 for further details.
Deferred costs are invoices relating to domain name purchases from wholesalers which are prepaid for periods over twelve months.
CentralNic Group Plc | Annual report 2021 77
Additional informationFinancial statementsGovernanceStrategic report
16. Investments
Fair value through other comprehensive income
The Company owns less than 20% of the following undertakings which are measured at fair value through other comprehensive income.
The values of these investments at 31 December 2021 are USD 58,000 (2020: USD 114,000):
Name
Place of
incorporation/
establishment
Principal
activities
Issued and
paid-up/
registered
capital
Effective
interest
Net assets
of 100% of
investment
(1)
USD’000
2021
Value
USD’000
2020
Value
USD’000
Accent Media Ltd UK Domain registry
operator
Ordinary shares 10.40% 2,818 — —
Verve Capital Partners AG Switzerland Investment fund Ordinary shares 2.00% 280 — 55
Matomy Media Group Ltd Israel Dormant
company
Ordinary shares 1.23% 4,391 58 59
58 114
(1) As per the most recently available financial information.
These investments are categorised in the fair value hierarchy under level 3 as no observable market data is available.
A full impairment of USD 997,000 was applied to the investment in Accent Media Ltd in 2018. Accent Media is currently in liquidation
andCentralNic will recognise the proceeds upon confirmation by the liquidator.
17. Trade and other receivables
2021
USD’000
2020
USD’000
Trade receivables 48,661 27, 241
Accrued revenue 6,491 6,725
Deferred costs 1,770 1,395
Supplier payments on account 3,260 3,478
Prepayments and other receivables 11,181 9,102
71,363 47,9 41
As of 31 December 2021, trade receivables of USD 4,801,000 (2020: USD 4,112,000) 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 1,890,000 (2020: USD 2,506,000),
30-60days USD908,000 (2020: USD 359,000), 60-90 days USD 815,000 (2020: USD 298,000), and over 90 days USD 1,188,000
(2020:USD949,000).
Deferred costs are invoices relating to domain name purchases from wholesalers which are prepaid for periods within twelve months.
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.
Within trade and other receivables, accrued revenue of USD 6,491,000 (2020: 6,725,000) is classified as a contract asset.
78 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
18. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
Amounts held on deposit
2021
USD’000
2020
USD’000
GBP 2,064 1,176
USD 37,162 15,830
EUR 13,732 9,588
AUD 1,440 473
NZD — 926
CAD 123 178
PLN 395 300
Other 1,217 183
56,133 28,654
19. Share capital
The Company’s issued and fully paid share capital is as follows:
Ordinary shares of 0.1 pence each Number
Share
capital
USD’000
Share
premium
USD’000
Merger relief
reserve
USD’000
At 31 December 2019 182,486,128 232 74,840 5,297
Capital reduction — — (74,840) —
Shares issued to settle deferred consideration
in respect of Hexonet acquisition 3,208,819 4 3,324 —
Shares issued to fund Codewise acquisition 40,000,000 52 38,444 —
Shares issued to settle deferred consideration
in respect of KeyDrive acquisition 1,685,723 2 1,906 —
Share issue costs — — (3,829) —
At 31 December 2020 and 31 December 2021 227,380,670 290 39,845 5,297
The actual number of ordinary shares in issue is 251,160,084, however 23,779,414 ordinary shares are held by the CentralNic Employee
Benefit Trust (the‘Trust’) which is consolidated into these financial statements as it is considered that CentralNic Group Plc controls the
Trust (inlinewith the IFRS 10: Consolidated Financial Statements definition of ‘control’). Therefore, these 23,779,414 ordinary shares are
eliminated onconsolidation. In addition to the issued share capital of 251,160,084 noted above, the total number of shares that were
vested but not exercisedas at 31 December 2021 was 10,614,252.
The Company has authority to allot shares up to an aggregate nominal value equal to GBP 77,133, thereof GBP 23,373 with suspended
pre-emptive rights. This authority expires at the earlier of the AGM held in 2022 and 3 September 2022.
20. Non-current other payables
2021
USD’000
2020
USD’000
Deferred revenue 3,459 1,208
Deferred consideration 961 1,670
4,420 2,878
Deferred revenue represents amounts billed in advance of the performance obligation being satisfied.
CentralNic Group Plc | Annual report 2021 79
Additional informationFinancial statementsGovernanceStrategic report
21. Deferred tax
Deferred tax assets
Share-based
payments
USD’000
Losses
USD’000
Other
temporary
differences
USD’000
Total
USD’000
At 1 January 2020 1,681 355 509 2,545
Acquisition of subsidiary — — 1,017 1,017
Credit to profit and loss 877 — 432 1,309
Credit to equity 157 — — 157
Exchange differences 442 — (60) 382
At 31 December 2020 3,157 355 1,898 5,410
Credit to profit and loss 450 359 161 970
Credit to equity 2,227 — — 2,227
Exchange differences (361) (355) 672 (44)
At 31 December 2021 5,473 359 2,731 8,563
Deferred tax liabilities
Hexonet
intangible
assets
USD’000
Ideegeo
intangible
assets
USD’000
Instra
intangible
assets
USD’000
KeyDrive
intangible
assets
USD’000
SK-NIC
intangible
assets
USD’000
SafeBrands
USD’000
Team
Internet
intangible
assets
USD’000
Wando
USD’000
Others
USD’000
Total
USD’000
At 1 January 2020 633 194 2,303 4,783 2,413 — 10,245 — 2,038 22,609
(Credit)/charge to profit
and loss (111) (33) (511) (642) (319) — (728) — 182 (2,162)
Exchange differences 50 10 170 — 199 — 891 — 198 1,518
At 31 December 2020 572 171 1,962 4,141 2,293 — 10,408 — 2,418 21,965
Acquisition ofsubsidiary — — — — — 386 — 1,513 — 1,899
(Credit)/charge to profit
and loss (17) (36) (347) (642) (259) (72) (1,536) (312) 694 (2,527)
Exchange differences (472) (8) (97) — (161) (26) (770) (39) 570 (1,003)
At 31 December 2021 83 127 1,518 3,499 1,873 288 8,102 1,162 3,682 20,334
The total credit to the profit and loss account is USD 3,497,000 (2020: USD 3,471,000) and the total credit to equity is USD 2,227,000
(2020: USD 157,000). The deferred tax assets of USD 8,563,000 include an amount of USD 359,000 in carried forward tax losses which
relates to the Group’s entities located in Australia. The losses relate to one-off costs of integrating acquired operations and are not
expected to recur in the future. The Group has concluded that the deferred tax assets will be recoverable based on the estimated future
taxable income inthe management-approved business plans and budgets. The Group is expected to generate taxable income from 2022
onwards. Thelosses can be carried forward indefinitely and have no expiry date. Management does not expect the prior period loss to
adversely impact future deferred tax asset recovery to a significant extent. Elsewhere in the Group, based on latest filed tax returns, the
amount of unused tax losses available for carry forward for which no deferred tax asset has been recognised is USD 37,718,000.
22. Trade and other payables and accruals
2021
USD’000
Restated
2020
USD’000
Trade payables 42,108 23,869
Accrued expenses 39,688 31,875
Other taxes and social security 4,615 546
Deferred consideration 4,243 1,931
Deferred revenue 2,752 7,72 9
Customer payments on account 15,323 20,631
Accrued interest — 32
Other liabilities 2,618 2,643
Corporation tax 5,669 —
117,016 89,256
Deferred consideration is subject to actuarial and net present value discounts. The maximum amount of deferred consideration payable is
USD 5,400,000 (2020: 3,996,000), a part of which may be settled in shares, the remainder in cash.
Deferred revenue represents amounts billed in advance of the performance obligation being satisfied.
80 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
23. Borrowings
2021
USD’000
2020
USD’000
Non-current
Bank borrowings 119,884 110,447
Prepaid finance costs (633) (2,627)
119, 251 107, 8 20
Current
Bank borrowings 13,451 6,327
Prepaid finance costs (1,594) (508)
11,857 5,819
Total borrowings 131,108 113,6 39
Bank
borrowings
USD’000
Prepaid
finance costs
USD’000
Total
USD’000
Bank borrowings 1 January 2020 104,710 (3,530) 101,180
New financing RCF 3,026 125 3,151
New financing bond — 1,046 1,046
Repayment of financing (812) — (812)
Exchange differences 9,851 (777) 9,074
Total borrowing as at 31 December 2020 116,775 (3,136) 113,639
New financing RCF 15,189 (608) 15,189
New financing bond 18,162 (371) 18,162
Repayment/amortisation (7,6 51) 1,811 (6,130)
Exchange differences (9,140) 77 (9,752)
Total borrowing as at 31 December 2021 133,335 (2,227) 131,108
The borrowings amounting to USD 118,923,000 (EUR 105,000,000) relate to three successful placements of senior secured
non-convertible bond issues in the amount of EUR 50,000,000 completed on 24 June 2019, EUR 40,000,000 completed on
20December 2019, and EUR 15,000,000 completed on 12 February 2021, respectively. The bond matures in July 2023 and has a
coupon of three-month EURIBOR plus 7% per annum with interest payable quarterly. The EUR 105,000,000 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 have been
used to fund the acquisitions which occurred during the financial years ended 31 December 2019 and 31 December 2021, and also to
repay existing interest-bearing liabilities.
Bank borrowings amounting to USD 13,025,000 (EUR 11,500,000) relate to the EUR 13,000,000 senior secured revolving credit facility
(RCF) entered into with HSBC UK Bank Plc on 7 May 2021. The RCF drawdown was used to fund the working capital requirement of the
Parent Company, which has no income other than dividend income, interest income and intercompany recharge income from
subsidiaries, which may or may not coincide with the payment obligations of the Parent Company. A previous secured debt facility of EUR
7,500,000 entered into with Silicon Valley Bank (SVB) on 11 September 2019 was repaid and terminated on 11 March 2021.
24. Derivative financial instruments
2021
USD’000
2020
USD’000
Forward foreign exchange contracts – cash flow hedges 6,419 —
On 24 June 2021, the Company entered into a forward foreign exchange contract with HSBC Bank Plc (HSBC) and, on 20 July 2021, the
Company entered into a further forward foreign exchange contract with Global Reach Partners Ltd (Global Reach). This results in a
notional EUR 105,000,000 of the amount outstanding under the bond being hedged at a weighted average EUR/USD exchange rate of
1.1893 and at a 1:1 hedge ratio. The forward contract with HSBC expires on 13 July 2022 and has an early exercise right from
4July2022. The forward contract with Global Reach matures on 15 July 2022 with an early exercise right from 8 July 2022. TheCompany
has prepared hedging documentation which demonstrates that the hedging instrument and the hedged item offset each other in currency
terms and in amounts, meaning there is a clear economic relationship between the hedging instrument and hedged item as required under
international accounting standards. At the balance sheet date, the forward foreign exchange contracts have been measured based on the
mark-to-market valuation reports provided by each of HSBC and Global Reach, with no ineffectiveness recognised. The change in the fair
value of the derivative financial instrument in 2021 is USD 6,419,000 (2020: USD nil) and the balance in the cash flow hedging reserve at the
year end is USD 6,419,000 (2020: USD nil).
CentralNic Group Plc | Annual report 2021 81
Additional informationFinancial statementsGovernanceStrategic report
25. Business combinations
SafeBrands
On 9 January 2021, CentralNic acquired SafeBrands, a France-based corporate domain management and brand protection company,
fora purchase price of up to EUR 3.0 million (approximately USD 3.6 million). Additional consideration of EUR 0.6 million (USD 0.8 million)
was paid as SafeBrands met agreed FY2020 financial objectives. SafeBrands offers registration management for all Top-Level Domains
and a wide range of value-added services for domain management and brand protection, including secure hosting, DNS optimisation
and SSLmanagement. SafeBrands’ online brand protection products and expertise have, to date, been available to companies based in
French-speaking markets. CentralNic plans to offer these services, which help businesses protect their revenue streams in digital
channels, through its global brand services offering, which currently serves clients worldwide through teams based in the US, the UK,
Canada, Australia, Germany, New Zealand, and other countries. SafeBrands’ strong presence in France, one of the largest internet
services markets globally, complements CentralNic’s brand services business, which includes a leading corporate registrar in Germany.
This positions CentralNic as the European champion for corporate domain portfolio management and online brand protection, as well
asone of the top three global leaders available to serve customers in any country.
The following table summarises the consideration paid for SafeBrands and the fair values of the assets and liabilities at the acquisition
date, in line with Group policies.
Consideration USD’000
Initial cash consideration 3,136
Deferred consideration 551
Deferred contingent consideration 735
Total consideration 4,422
Fair value recognised on acquisition USD’000
Assets
Technology 458
Customer relationships 666
Brand name 364
Property, plant and equipment 89
Inventories 157
Trade receivables 1,573
Other assets 186
3,493
Liabilities
Trade payables (135)
Other provisions (117)
Other liabilities (732)
Deferred tax (386)
(1,370)
Total identifiable estimated net assets at fair value 2,123
Goodwill arising on acquisition 2,299
Purchase consideration 4,422
For the post-completion period to 31 December 2021 revenues of USD 5,318,000, adjusted EBITDA of USD 524,000 and a post-tax loss
of USD 582,000 have been generated by SafeBrands.
Goodwill arising on acquisition primarily relates to the specific synergistic benefits able to be realised through SafeBrands being a part
ofthe larger CentralNic Group, as well as goodwill in relation to employees.
Wando Internet Solutions
On 22 February 2021, CentralNic acquired Wando Internet Solutions, a Berlin-based technology company specialising in social
marketing, search engine marketing (SEM) advertising and display advertising that enables augmentation of the quality and volume of
internet traffic on domain names and websites in order to generate superior returns. The acquisition is a vertical integration and more than
half ofWando’s historical revenue generation has come from CentralNic; it has been integrated into CentralNic’s Online Marketing
segment. Theinitial consideration for the acquisition is EUR 5.4 million (c.USD 6.6 million) and the sellers of Wando may earn up to
another EUR 5.4 million (c.USD 6.6 million) payable in Q3 2022 subject to stretched performance targets being met.
The following table summarises the consideration paid for Wando Internet Solutions and the fair values of the assets and liabilities at the
acquisition date, in line with Group policies.
82 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
25. Business combinations continued
Wando Internet Solutions continued
Consideration USD’000
Initial cash consideration 6,557
Purchase price adjustment 1,427
Deferred contingent consideration 1,960
Total consideration 9,944
Fair value recognised on acquisition USD’000
Assets
Technology 5,043
Trade receivables 508
Other assets 2,284
7,835
Liabilities
Other provisions (472)
Other liabilities (734)
Deferred tax (1,513)
(2,719)
Total identifiable estimated net assets at fair value 5,116
Goodwill arising on acquisition 4,828
Purchase consideration 9,944
For the post-completion period to 31 December 2021 revenues of USD 5,992,000, adjusted EBITDA of USD 1,167,000 and a post-tax loss
of USD 134,000 have been generated by Wando Internet Solutions. Goodwill arising on acquisition primarily relates to the specific synergistic
benefits able to be realised through Wando being a part of the larger CentralNic Group, as well as goodwill in relation to employees.
White & Case Ltd
On 1 October 2021, the Company announced that it had entered into an agreement to acquire a publishing network of revenue-generating
websites for a consideration of USD 6.5 million in cash, including assumed working capital liabilities, from White& Case Ltd.
The acquisition completed on 15November 2021 and has been financed from available liquidity. CentralNic is already monetising roughly
half of the websites’ traffic and the acquisition is part of a larger vertical integration strategy, providing the Group’s Online Marketing
segment with more proprietary and exclusive traffic to monetise.
The following table summarises the consideration paid to White & Case Ltd and the fair values of the assets and liabilities at the
acquisition date, in line with Group policies.
Consideration USD’000
Initial cash consideration 5,317
Working capital adjustment 591
Deferred contingent consideration 584
Total consideration 6,492
Fair value recognised on acquisition USD’000
Assets
Domain name assets 6,492
Total identifiable estimated net assets at fair value 6,492
Purchase consideration 6,492
For the post-completion period to 31 December 2021 revenues of USD 608,000, adjusted EBITDA of USD 608,000 and a post-tax profit
of USD 298,000 have been generated by White & Case.
NameAction
On 6 December 2021, CentralNic acquired the domain name and brand protection business trading as NameAction, in a share and asset
deal for a total consideration of USD 1.0 million in cash from NameAction Inc.
The acquisition comprised an asset purchase of domain names and assumed working capital liabilities for an initial consideration of
USD0.7 million in cash, and a share purchase of two Chilean entities and one Brazil-based entity for an initial consideration of USD
0.1million in cash. In addition, there are two deferred consideration payments of USD 0.1 million each due on 6 December 2022 and
6December 2023. The acquisition was financed from available liquidity. This acquisition provides CentralNic with a greater presence in
the South American market.
The following table summarises the consideration paid for NameAction and the fair values of the assets and liabilities at the acquisition
date, in line with Group policies.
CentralNic Group Plc | Annual report 2021 83
Additional informationFinancial statementsGovernanceStrategic report
Consideration USD’000
Initial cash consideration 750
Deferred consideration 250
Total consideration 1,000
Fair value recognised on acquisition USD’000
Assets
Customer relationships 1,067
Property, plant and equipment 10
Trade receivables 38
Other receivables 17
Cash and cash equivalents 94
1,226
Liabilities
Trade payables (218)
Other liabilities (39)
(257)
Total identifiable estimated net assets at fair value 969
Goodwill arising on acquisition 32
Purchase consideration 1,000
For the post-completion period to 31 December 2021 revenues of USD 169,000, adjusted EBITDA of USD 169,000 and a post-tax loss of
USD 18,000 have been generated by NameAction.
Goodwill arising on acquisition primarily relates to the specific synergistic benefits able to be realised through NameAction being a part of
the larger CentralNic Group, as well as goodwill in relation to employees.
Acquisitions of business after the end of the reporting period
After the end of the reporting period, the Group acquired VGL Verlagsgesellschaft mbH, Fireball Search Gmbh and the .ruhr TLD. Further
details of these acquisitions are included in note 30.
Full disclosure of the fair values of assets acquired and liabilities assumed for these acquisitions is not possible as the initial accounting is
incomplete at the date of issue of these financial statements.
26. Related party disclosures
(a) Ultimate controlling party
The Company is not controlled by any one party.
(b) Related party transactions
Key management personnel are considered to be the Directors. Compensation has been disclosed in note 8, while further information
can be found in the remuneration report on page 42. The Directors have assured themselves that all related party transactions are at
normal market conditions and in the best interest of the Group.
(i) Directors
The Group provided registry services amounting to USD 263,000 (2020: USD 285,000) to Shortdot S.A., a company of which Michael
Riedl is a Director. The amount outstanding at the year end amounted to USD 82,000 (2020: USD 71,000).
Neozoon Sàrl, a company of which Michael Riedl is a Director and shareholder, provided domain registration and monetisation services
to the Group for a net amount of USD 15,000 (2020: the Group provided domain registration and monetisation services to Neozoon Sàrl
for a net amount of USD 4,000). The net amount owed to Neozoon Sàrl at the year end amounted to USD 44,000 (2020: USD 24,000).
Am Bongert Business Advisory SARL, a company of which Michael Riedl is a Director, provided services amounting to USD 446,000
(2020: USD 228,000) to the Group; these services form part of the compensation package of Michael Riedl and are disclosed as part
ofhis remuneration in the remuneration report. The amount outstanding at the year end amounted to USD 246,000 (2020: USD 57,000).
Mataxis Ltd, a company of which Donald Baladasan is a Director, provided services amounting to USD 532,000 (2020: USD 490,000)
tothe Group; these services form part of the compensation package of Donald Baladasan and are disclosed as part of his remuneration
in the remuneration report. The amount outstanding at the year end amounted to USD 35,000 (2020: USD 258,000).
At 31 December 2021, USD 300,000 was owed to the Group by Donald Baladasan for payroll tax on exercise of share options;
arrangements have been made to set off the amount with future compensation.
84 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
26. Related party disclosures continued
(b) Related party transactions continued
(ii) Non-Executive Directors
Rental income payable to inter.services GmbH, a company of which Horst Siffrin is a shareholder, under the lease of a property based in
Sankt Ingbert, Germany (see note 27), amounted to USD 522,000 (2020: USD 511,000). USD nil (2020: USD nil) was outstanding at the
year end. The Group recognises a right-of-use asset of USD 605,000 and a lease liability of USD 632,000 in respect of this lease.
During the year the Group incurred rental costs of USD 9,000 (2020: USD 7,000) from Horst Siffrin.
During the year, CentralNic engaged with Rickert Rechtsanwaltsgesellschaft mbH, of which Thomas Rickert has a controlling interest,
toprovide advice and compliance services around data protection. Thefees were USD 167,000 (2020: USD 164,000) and USD 5,000
was outstanding at 31 December 2021 (2020: USD 97,000). The Company intends to in-source these services in 2022.
On 28 February 2022, Kestrel Partners LLP, a substantial shareholder in the Company, of which Max Royde is an LLP Designated
Member, conditionally subscribed for 6,500,000 Placing Shares in CentralNic Group at a purchase price of 120 pence, totalling
GBP 7,800,000.
H.O. Siffrin Consulting and inter.services GmbH, companies of which Horst Siffrin is a Director, provided Non-Executive Director and
other consultancy services amounting to USD 64,000 (2020: USD nil) to the Group; Horst Siffrin’s total remuneration is further disclosed
in the remuneration report. The amount outstanding at the year end amounted to USD nil (2020: USD nil).
Kestrel Investment Partners, a partnership of which Max Royde is an LLP Designated Member, provided Non-Executive Director services
amounting to USD 34,000 (2020: USD nil) to the Group; Max Royde’s total remuneration is further disclosed in the remuneration report.
The amount outstanding at the year end amounted to USD 12,000 (2020: USD nil).
Clevebeam Limited and Laura Trading Limited, companies of which Samuel Dayani is a Director, provided Non-Executive Director
services amounting to USD 62,000 (2020: USD 58,000) to the Group; Samuel Dayani’s total remuneration is further disclosed in the
remuneration report. The amount outstanding at the year end amounted to USD nil (2020: USD nil).
(iii) Other related parties
Balances outstanding with other related parties:
2021
USD’000
2020
USD’000
Accent Media Ltd — 60
In June 2017 the Company loaned Accent Media Ltd USD 100,000. At 31 December 2020, USD 60,000 was outstanding. This balance
accrued interest at 5% which was payable quarterly in arrears. Interest receivable in the year amounted to USD 1,000 (2020: USD 4,000).
On 20April 2021, the loan was fully repaid and the balance owing at 31 December 2021 is nil.
Accent Media is currently in liquidation and CentralNic will recognise the proceeds upon confirmation of the amounts receivable from
theliquidator.
27. Leases
The Group leases various offices and vehicles under non-cancellable leases expiring within three months to eight years. The leases have
varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.
Lease liabilities
31 December
2021
USD’000
31 December
2020
USD’000
Current lease liabilities 1,837 1,346
Non-current lease liabilities 5,105 5,204
Total lease liabilities 6,942 6,550
Right-of-use assets
31 December
2021
USD’000
31 December
2020
USD’000
Properties 6,722 6,378
Motor vehicles 55 72
Equipment 4 5
Total right-of-use assets 6,781 6,455
Interest expense related to the lease liabilities and depreciation related to the right-of-use assets recognised in the consolidated
statement of comprehensive income at 31 December 2021 are shown below:
31 December
2021
USD’000
31 December
2020
USD’000
Depreciation for right-of-use assets 1,967 1,124
Interest expense on lease liabilities 196 160
CentralNic Group Plc | Annual report 2021 85
Additional informationFinancial statementsGovernanceStrategic report
Properties
The Group leases office space at the following locations:
Melbourne, Australia. The lease agreement was renewed on 18 June 2021 with an expiry date of 17 June 2023.
Richmond (BC), Canada. The Group acquired leases on the acquisition of the Hexonet Group for a period of twelve months. The leases
can be renewed for an additional period of five years upon expiration with the same term.
Marseilles, France. The Group acquired an office lease on the acquisition of SafeBrands which expires in May 2023.
Berlin, Germany. The Group acquired an office sublease on the acquisition of Wando Internet Solutions which expires in March 2023
and can be terminated by Wando with two months’ notice.
Bonn, Germany. The lease agreement was entered into on 1 January 2015 for an initial term of three years. The lease will renew each
year for a further year unless either party terminates with six months’ notice.
Friedrichsthal, Germany. The lease agreement was originally entered into on 2 July 2012, is now renewed tacitly, and can be
terminated by either party with six months’ notice.
Görlitz, Germany. The Group acquired an office lease on the acquisition of Internexum which is renewed tacitly and is subject to six
months’ notice by either party.
Homburg, Germany. The Group acquired office leases on the acquisition of the Hexonet Group which expired in March 2022 and the
premises have now been vacated.
Munich, Germany. The Group acquired several leases on its acquisition of KeyDrive Group for a period of 36 months from August2012.
The leases are renewed tacitly, and termination is subject to a month’s notice by either party.
Munich, Germany. The Group acquired several leases on its acquisition of Team Internet. The leases have been renewed and now
expire in July 2025.
Sankt Ingbert, Germany. The lease agreement was entered into on 1 July 2018 for an initial term until 31 December 2023. The lease
will then be renewed for two years after the lease date unless a year’s notice is provided.
Luxembourg, Luxembourg. The lease agreement was acquired on acquisition of the KeyDrive Group. The contracts are renewed by
tacit agreement for a period of twelve months subject to a notice period either side of three months.
Napier, New Zealand. The lease agreement was entered into on 16 April 2019 for an initial term of three years with the right to renew
every three years. The final expiry date is 31 July 2027.
Krakow, Poland. The Group acquired an office lease on the acquisition of Codewise which expires on 31 July 2026.
Bratislava, Slovakia. The lease agreement was acquired on acquisition and can be terminated at any point in time with immediate
effect, i.e. there exists no minimum commitment period.
Edinburgh, UK. The lease agreement was entered into on 8 April 2021 with an expiry date of 23 April 2023.
London, UK. The lease agreement was entered into on 7 March 2019 with a break clause on 6 March 2024 and an expiry date of
6March 2029.
Leesburg (VA), USA. The lease agreement was entered into on 1 October 2013 for an initial term of three years. The lease will renew
each year for a further year unless either party terminates with six months’ notice.
Motor vehicles
The Group also acquired several motor vehicle leases on the acquisition of KeyDrive Group in 2018 and Hexonet Group and Team
Internet in 2019. These leases run for a period of 36 months.
Equipment
The Group leases equipment under various short-term or low-value leases, the majority of which can be terminated immediately, and
equate to immaterial sums.
28. Share options and warrants
Share options
The share option scheme, adopted by CentralNic during 2013, was established to reward and incentivise the executive management
team and staff for delivering share price growth. The option schemes are all equity settled.
The share option scheme is administered by the Remuneration & Nominations Committee.
3,694,797 options were granted during 2021 (2020: 9,101,271) with a weighted average fair value of 81 pence (2020: 54 pence). As the
exercise price for these options is nil, an option pricing model was not used and the fair values were based on the Company’s share price at
the dates of grant. Out of the outstanding options of 19,185,251 (2020: 21,390,916), 10,614,252 options (2020: 8,347,828) were exercisable.
4,528,612 share options were exercised in 2021 (2020: 568,128), with 1,371,850 options lapsing during the year (2020: 251,901).
A charge of USD 5,006,000 (2020: USD 5,113,000) has been recognised in the consolidated statement of comprehensive income for the
year relating to these options.
Options are exercisable in accordance with the contracted vesting schedules; if the employee leaves the employment of the Group prior
to the options vesting, then the share options previously granted will lapse.
86 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
28. Share options and warrants continued
Share options continued
Details of the share options outstanding at the year end are as follows:
Number
2021
WAEP
(1)
2021
Number
2020
WAEP
(1)
2020
Outstanding at 1 January 21,390,916 23p 13,109,674 28p
Granted during year 3,694,797 0p 9,101,271 0p
Exercised during year (4,528,612) 8p (568,128) 22p
Lapsed during year (1,371,850) 0p (251,901) 4p
Outstanding at 31 December 19,185, 251 7p 21,390,916 9p
Thereof exercisable at 31 December 10,614,252 12p 8,347,828 23p
(1) Weighted average exercise price.
The weighted average remaining contractual life of the options outstanding at the statement of financial position date is 7.2 years.
Exercises of options will largely be covered by the shares held by the Group’s Employee Benefit Trust.
29. Financial instruments
The CentralNic Group is exposed to market risk, credit risk and liquidity risk arising from financial instruments. The Group’s overall
financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects
onthe Group’s financial performance. The Group does not trade in financial instruments.
The principal financial instruments used by the CentralNic Group, from which financial instrument risk arises, are as follows:
2021
USD’000
2020
USD’000
Financial assets measured at amortised cost
Trade and other receivables 69,616 43,047
Cash and cash equivalents 56,133 28,654
125,749 71,701
Financial liabilities measured at amortised cost
Trade and other payables and accruals 94,698 55,879
Lease liabilities (note 27) 6,942 6,550
Borrowings (current liabilities) 11,857 5,819
113,497 68,248
Financial liabilities measured at fair value
Derivative financial liabilities 6,419 —
6,419 —
Financial liabilities 119,916 68,248
Non-current borrowings are included within section (ii), credit risk, below.
(a) Financial risk management framework
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
Foreign currency risk
The CentralNic Group is exposed to foreign currency risk on transactions and balances that are denominated in currencies other than
itsprincipal functional currencies, primarily USD and EUR. Foreign currency risk is monitored on an ongoing 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 holding of 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.
Forexample, the Group has entered into USD/PLN forward agreements in relation to the acquisition of Codewise. In addition, GBP/USD
forward agreements, first entered into in March 2020, continue to be renewed on a monthly basis.
CentralNic Group Plc | Annual report 2021 87
Additional informationFinancial statementsGovernanceStrategic report
The carrying amounts of the Group’s financial instruments are denominated in the following currencies as at 31 December 2021:
GBP
USD’000
USD
USD’000
EUR
USD’000
AUD
USD’000
Other
currencies
USD’000
Total
USD’000
Current financial assets
Loans and receivables
Trade and other receivables 15,293 1,030 50,741 1,466 1,086 69,616
Cash and cash equivalents 2,064 37,162 13,732 1,440 1,735 56,133
17,357 38,192 64,473 2,906 2,821 125,749
Current financial liabilities
measuredat amortised cost
Trade and other payables 22,152 1,266 67, 815 1,052 2,413 94,698
Lease liabilities 1,690 13 4,956 22 261 6,942
Loans and borrowings — — 11,857 — — 11,8 57
23,842 1,279 84,628 1,074 2,674 113,497
Current financial liabilities measured at fair value
Derivative financial liabilities — — 6,419 — — 6,419
— — 6,419 — — 6,419
Current financial liabilities 23,842 1,279 91,047 1,074 2,674 119,916
The currency derivative financial liability is measured at fair value using Level 2 valuation inputs.
The sensitivity analyses in the table below detail the impact of changes in foreign exchange rates on the Group’s post-tax profit or loss for
the year ended 31 December 2021.
If the US Dollar strengthened or weakened by 10% against the other currencies specified in the table below, with all other variables in
each case remaining constant, then the impact on the Group’s post-tax profit or loss would be gains or losses as follows:
2021
Strengthen/
weaken
USD’000
2020
Strengthen/
weaken
USD’000
GBP +/- 1,246 +/- 771
EUR +/- 1,099 +/- 393
Interest rate risk
Interest rate risk is the risk that the fair value of, 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 2020 and 2021, the Group’s debt facilities bear interest at EURIBOR plus a margin.
2021
USD’000
2020
USD’000
Cash and bank balances 56,133 28,654
Effect of interest rate change of 100 basis points on cash and bank balances +/- 561 +/- 287
Bank facilities 14,412 6,305
Effect of interest rate change of 100 basis points on cash and bank balances +/- 144 +/- 63
Bond 116,695 107, 33 4
Effect of interest rate change of 100 basis points on cash and bank balances +/- 1,167 +/- 1,073
Equity price risk
The CentralNic Group does not have any quoted investments as at each of 31 December 2020 and 2021 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 a counterparty’s failure to meet its obligation to settle a financial asset.
The Directors consider the Group’s exposure to credit risk arising from trade receivables to be minimal as the Group is often paid at the
outset or in advance of a transaction. 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 trade receivables. Any receivables which have significant pastdue
balances or are aged for more than 90 days which are deemed to have a higher credit risk are monitored individually. Analysisoftrade
receivables past due is disclosed in note 17, 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.
88 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
29. Financial instruments continued
(a) Financial risk management framework continued
(ii) Credit risk continued
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. As at the reporting
date, there has been no significant increase of credit risk since initial recognition.
For cash and bank balances, the Directors minimise the 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.
2021
USD’000
2020
USD’000
Trade and other receivables 69,616 43,047
Deferred receivables — 61
Cash and bank balances 56,133 28,654
125,749 71,762
(iii) Liquidity risk
Liquidity risk is the risk that the CentralNic Group will encounter difficulty in settling those financial obligations that are settled with cash or
with another financial asset. The Directors’ objective is to maintain, as much as possible, a level of cash and bank balances adequate to
ensure that there will be sufficient liquidity to meet its liabilities when they fall due.
The following sets forth the remaining contractual maturities of financial liabilities as at:
Carrying
amount
USD’000
Total
USD’000
Within 1 year
USD’000
1-5 years
USD’000
31 December 2021
Trade and other payables and accruals 94,698 94,698 94,698 —
Lease liabilities 6,942 6,942 1,837 5,105
Borrowings 131,108 131,10 8 11,857 119,251
Derivative financial liabilities 6,419 6,419 6,419 —
239,167 239,167 114,811 124,356
Carrying
amount
USD’000
Total
USD’000
Within 1 year
USD’000
1-5 years
USD’000
31 December 2020
Trade and other payables and accruals 55,879 55,879 55,879 —
Lease liabilities 6,550 6,550 1,346 5,204
Borrowings 113,639 113,639 5,819 107,82 0
176,068 176,068 63,044 113,024
(b) Capital risk management
The Directors define capital as the total equity of the CentralNic Group. 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 the Group’s capital based on a ratio which calculates total liabilities less cash and bank balances divided by total
equity, as shown below:
2021
USD’000
2020
USD’000
Total liabilities 239,167 176,068
Less: cash and bank balances (56,133) (28,654)
Total liabilities less cash and bank balances 183,034 147,414
Total equity 113,982 117,135
Total liabilities less cash and bank balances-to-equity ratio 1.61 1.26
The increase in the ratio is driven by the higher levels of trade payables and accrued expenses at the year end given the notably higher
level of revenue during 2021.
CentralNic Group Plc | Annual report 2021 89
Additional informationFinancial statementsGovernanceStrategic report
The net debt of the CentralNic Group as at the end of each reporting period, excluding prepaid finance costs, was as follows:
2021
USD’000
2020
USD’000
Cash and bank balances 56,133 28,654
Less: borrowings (excluding prepaid finance costs) (133,335) (116,774)
Net debt (77,202) (88,120)
The net debt of the CentralNic Group as at the end of each reporting period, including prepaid finance costs, was as follows:
2021
USD’000
2020
USD’000
Cash and bank balances 56,133 28,654
Less: borrowings (including prepaid finance costs) (131,108) (113,639)
Net debt (74,975) (84,985)
(i) Bond and RCF covenant
Under the terms of the major borrowing facilities, the Group is required to comply with a financial covenant that the leverage ratio must be
not more than 6.0x.
The Group has complied with this covenant throughout the reporting period.
(ii) Net debt reconciliation
Cash/bank
overdraft
USD’000
Borrowings,
due within
1 year
USD’000
Borrowings,
due after
1 year
USD’000
Total
USD’000
Net debt as at 1 January 2020 26,182 (3,307) (101,402) (78,527)
Cash flows 1,355 (3,020) (9,045) (10,710)
Foreign exchange adjustments 1,117 — — 1,117
Net debt as at 31 December 2020 28,654 (6,327) (110,4 47) (88,120)
Cash flows 30,197 ( 7,124) (9,437) 13,636
Foreign exchange adjustments (2,718) — — (2,718)
56,133 (13,451) (119,884) (77, 202)
(c) Fair values of financial instruments
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:
2021 2020
Carrying
amount
USD’000
Fair value
USD’000
Carrying
amount
USD’000
Fair value
USD’000
Trade and other receivables 69,616 69,616 43,047 43,047
Deferred receivables — — 61 61
Cash and bank balances 56,133 5 6,133 28,654 28,654
125,749 125,749 71,762 71,762
Trade and other payables and accruals (94,698) (94,698) (55,879) (55,879)
Lease liabilities (6,942) (6,942) (6,550) (6,550)
24,109 24,109 9,333 9,333
The SK-NIC acquisition on 5 December 2017 had an element of deferred and contingent cash consideration of EUR 5,850,000 that,
subject to any claims, will be released to the vendor in tranches until 2024 dependent on SK-NIC attaining defined growth targets from
2018 to 2021. As at 31 December 2021, 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 amounted to USD 1,695,000 (2020: USD 1,592,000) (including FX
impacts). The growth rates in relation to the contingent consideration are calculated based on the number of registered domains at the
end of each financial year over the three years post-acquisition, with the payment profile 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.
90 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
29. Financial instruments continued
(c) Fair values of financial instruments continued
The KeyDrive Group acquisition on 2 August 2018 included earnout commitments whereby, if certain financial performance tests are met,
CentralNic will pay inter.services GmbH a performance-based earnout 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 earnout
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 earnout, but only to the extent that such tax losses are used by the enlarged Group and provided
that the aggregate consideration for the earnout and the tax losses does not exceed USD 6,500,000. As at 31 December 2021, the
earnout element has been accounted for in the consolidated statement of financial position at fair value, using a discount factor of c.9%,
which amounted to USD 921,000 (2020: USD 921,000).
(d) Fair value hierarchy
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).
30. Post balance sheet events
Acquisition of TLD .ruhr
On 28January 2022, CentralNic acquired domain assets of the .ruhr TLD for a purchase price of EUR 150,000. Additional consideration
ofEUR 150,000 is payable in May 2022. .ruhr is the domain address for the urban agglomeration centred around the river Ruhr in
Germany, consisting of c.50 cities, including Dortmund and Essen, with roughly 5 million inhabitants. There are currently c.10,000 domain
names registered using the .ruhr Top-Level Domain. .ruhr will be migrated from its existing service providers and will be fully managed by
CentralNic’s internal resources, joining another German regional TLD, .saarland.
Acquisition of Fireball Search GmbH
On 2February 2022, CentralNic acquired Fireball Search GmbH for a purchase price of EUR 315,000. Founded in 1996, Fireball was
once the leading search engine in Germany, and the name retains high consumer awareness, despite being acquired by and merged into
Lycos Europe in the early 2000s. In 2016, Fireball was re-established as an independent company, with a completely overhauled version
of the service, including a strong focus on privacy, a core value of CentralNic. Search results are powered by Bing. Fireball opens up new
traffic sources for CentralNic to monetise through its proprietary online marketing tools, and it adds alternative monetisation channels for
CentralNic to generate revenues from internet traffic.
Placing and launch of Open Offer to existing Shareholders
On 28 February 2022, the Group raised gross proceeds of GBP 42 million (before expenses) through the successful placing of
35,000,000 Placing Shares at the Issue Price of 120 pence per New Ordinary Share. The Placing was significantly oversubscribed.
Conditional on admission of the Placing Shares to trading on AIM becoming effective, the Board also announced the launch of an Open
Offer for existing Shareholders at the same price per share as the Placing. In aggregate, up to 2,500,000 Open Offer Shares are to be
issued pursuant to the Open Offer, at the Issue Price, raising gross proceeds of up to GBP 3 million, on the basis of one Open Offer
Share for every 100.46403360 existing ordinary share. The Placing isnot conditional on the Open Offer proceeding or on any minimum
take-up under the Open Offer. Assuming full subscription of the 2,500,000 Open Offer Shares to be offered pursuant to the Open Offer,
combined with the 35,000,000 Placing Shares, will result in the issued share capital of the Company increasing to 288,660,084 ordinary
shares. TheNew Ordinary Shares will represent approximately 13.0%. of the enlarged share capital of the Company.
Bond tap
On 7 March 2022, the Company successfully issued additional senior secured callable bonds for a nominal value of EUR 21 million under
its existing senior secured bond, listed on Oslo Børs, at a price of 100.8% of par value. The maturity and call conditions areidentical to
the prior tranches of senior secured callable bonds.
Acquisition of VGL Verlagsgesellschaft mbH
On 8 March 2022, CentralNic acquired VGL Verlagsgesellschaft mbH (VGL), a German-based digital publishing and online marketing
company headquartered in Berlin. Since its founding in 2014, VGL has grown into the leading German product comparison platform
withmore than 270 million visits a year to its high-quality content websites, notably the market leader Vergleich.org. VGL’s organic traffic
issupplemented by a large-scale media buying operation, and it is an important customer acquisition source for Amazon and other
leadinge-commerce companies in Germany. VGL is being acquired for an enterprise value of EUR 60 million, with initial consideration of
EUR67million (approx. USD 75 million), payable in cash on completion, inclusive of customary adjustments for cash and workingcapital.
In FY2020, VGL generated unaudited revenue of EUR 46.7 million (c.USD 55.3 million) and unaudited EBITDA of EUR 9.3 million
(c.USD10.9 million).
CentralNic Group Plc | Annual report 2021 91
Additional informationFinancial statementsGovernanceStrategic report
31. Prior year restatement
The comparative figures for the year ended 31 December 2020 have been restated as follows:
• revenue has reduced by USD 1,200,000 due to the recognition liabilities for prior period credit notes; and
• amortisation charges have increased by USD 1,239,000 due to the restatement of intangible amortisation.
This results in a net decrease in net profit before tax for the year ended 31 December 2020 of USD 2,439,000.
The restatement has had a material impact on the Group’s reported consolidated statement of comprehensive income, consolidated
statement of financial position and consolidated statement of cash flows for the financial year ended 31December 2020. The impact on
the financial statements for the year ended 31 December 2019 was USD 800,000 and opening reserves at 1January 2020 have been
restated. Given the limited impact of the restatement on the balance sheet as at 31 December 2019, no consolidated statement of
financial position as at that date has been presented in these financial statements.
The following tables show the financial impact of the restatements by comparing the previously stated and the now restated
primarystatements.
Consolidated statement of comprehensive income
Note
As reported
2020
USD’000
Restatements
2020
USD’000
As restated
2020
USD’000
Revenue 5,6 241,212 (1,200) 240,012
Cost of sales (164,894) — (164,894)
Gross profit 76,318 (1,200) 75,118
Administrative expenses (70,845) (1,239) (72,084)
Share-based payment expenses (5,113) — (5,113)
Operating profit/loss 360 (2,439) (2,079)
Adjusted EBITDA
(1)
30,594 (1,200) 29,394
Depreciation of property, plant and equipment 13 (2,084) (2,084)
Amortisation of intangible assets 14 (12,508) (1,239) (13,747)
Non-core operating expenses
(2)
9 (8,237) — (8,237)
Foreign exchange (2,137) — (2 ,137)
Share of associate EBITDA (155) — (155)
Share-based payment expenses 28 (5,113) — (5,113)
Operating profit/loss 360 (2,439) (2,079)
Finance income 10 5 — 5
Finance costs 10 (9,976) — (9,976)
Foreign exchange gain on borrowings 10 137 — 137
Net finance costs 10 (9,834) — (9,834)
Share of associate income 79 — 79
Loss before taxation 7 (9,395) (2,439) (11,834)
Income tax expense 11 975 — 975
Loss after taxation (8,420) (2,439) (10,859)
Items that may be reclassified subsequently to profit and loss
Exchange differences included in other comprehensive income 3,243 — 3,243
Total comprehensive loss for the period (5,177) (2,439) (7,616)
Loss is attributable to:
Owners of CentralNic Plc (8,420) (2,439) (10,859)
(8,420) (2,439) (10,859)
Total comprehensive loss is attributable to:
Owners of CentralNic Plc (5,177) (2,439) (7,616)
(5,177) (2,439) (7,616)
(1) Parent, subsidiary and associate earnings before interest, tax, depreciation, amortisation, non-cash charges and non-core operating expenses.
(2) Non-core operating expenses include items related primarily to acquisition, integration and other related costs, which are not incurred as part of the
underlying trading performance of the Group, and which are therefore adjusted for, in line with Group policy. All amounts relate to continuing activities.
92 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
31. Prior year restatement continued
Consolidated statement of financial position
Note
As reported
2020
USD’000
Restatements
2020
USD’000
As restated
2020
USD’000
ASSETS
Non-current assets
Property, plant and equipment 13 2,222 — 2,222
Right-of-use assets 13,26 6,455 — 6,455
Intangible assets 14 256,955 (1,239) 255,716
Other non-current assets 15 661 — 661
Investments 16 114 — 114
Deferred tax assets 21 5,410 — 5,410
271,817 (1,239) 270,578
Current assets
Trade and other receivables 17 47,9 41 — 47,9 41
Inventory 1,011 — 1,011
Cash and bank balances 18 28,654 — 28,654
77,6 0 6 — 77,606
Total assets 349,423 (1,239) 348,184
EQUITY AND LIABILITIES
Equity
Share capital 19 290 — 290
Share premium 19 39,845 — 39,845
Merger relief reserve 19 5,297 — 5,297
Share-based payment reserve 11,0 32 — 11,032
Foreign exchange translation reserve 1,360 — 1,360
Accumulated losses 59,311 (3,239) 56,072
Total equity 117,135 (3,239) 113,896
Non-current liabilities
Other payables 20 2,878 — 2,878
Lease liabilities 27 5,204 — 5,204
Deferred tax liabilities 21 21,965 — 21,965
Borrowings 23 107, 820 — 107, 820
137,8 67 — 137,867
Current liabilities
Trade and other payables and accruals 22 87,25 6 2,000 89,256
Lease liabilities 27 1,346 — 1,346
Borrowings 23 5,819 — 5,819
94,421 2,000 96,421
Total liabilities 232,288 2,000 234,288
Total equity and liabilities 349,423 (1,239) 348,184
CentralNic Group Plc | Annual report 2021 93
Additional informationFinancial statementsGovernanceStrategic report
Consolidated statement of cash flows
As reported
2020
USD’000
Restatements
2020
USD’000
As restated
2020
USD’000
Cash flow from operating activities
Loss before taxation (9,395) (2,439) (11,834)
Adjustments for:
Depreciation of property, plant and equipment 2,084 — 2,084
Amortisation of intangible assets 12,508 1,239 13,747
Share of associate EBITDA (155) — (155)
Gain on sale of associate (266) — (266)
Finance cost – net 9,834 — 9,834
Share-based payment expenses 5,113 — 5,113
Increase in trade and other receivables (9,266) — (9,266)
Increase in trade and other payables and accruals 12,195 1,200 13,395
Cash flow from operations 22,652 — 22,652
Income tax paid (1,957) — (1,957)
Net cash flow generated from operating activities 20,695 — 20,695
Cash flow used in investing activities
Purchase of property, plant and equipment (1,296) — (1,296)
Purchase of intangible assets (2,963) — (2,963)
Payment of deferred consideration (5,467) — (5,467)
Proceeds from disposal of investment in associate 1,814 — 1,814
Acquisition of subsidiaries, net of cash acquired (37, 0 6 5) — (37,0 65)
Net cash flow used in investing activities (44,977) — (44,977)
Cash flow used in financing activities
Proceeds from borrowings 2,208 — 2,208
Arrangement fees (645) — (645)
Proceeds from issuance of ordinary shares (net) 34,667 — 34,667
Payment of finance leases (1,081) — (1,081)
Interest paid (9,512) — (9,512)
Net cash flow generated from financing activities 25,637 — 25,637
Net increase in cash and cash equivalents 1,355 — 1,355
Cash and cash equivalents at beginning of the year 26,182 — 26182
Exchange losses on cash and cash equivalents 1,117 — 1,117
Cash and cash equivalents at end of the year 28,654 — 28,654
94 CentralNic Group Plc | Annual report 2021
Financial statements
Company statement of financial position
as at 31 December 2021
Note
2021
USD’000
2020
USD’000
ASSETS
Fixed assets
Property, plant and equipment 74 97
Right-of-use assets 1,674 1,956
Intangible assets 324 387
Investments 7 81,929 58,752
Deferred tax asset 8 3,907 2,330
87,908 63,522
Current assets
Other debtors, deposits and prepayments 9 207,406 200,577
Cash and bank balances 2,326 2,013
209,732 202,590
Total assets 297,640 266,112
LIABILITIES
Current liabilities
Creditors – amounts falling due within one year
Trade and other payables and accruals 11 28,819 11,125
Lease liabilities 198 205
Borrowings 11,932 5,493
Derivative financial liabilities 6,419 —
47,3 68 16,823
Non-current liabilities
Creditors – amounts falling due after one year
Lease liabilities 1,469 1,812
Borrowings 117,788 107, 820
119, 257 109,632
Total liabilities 166,625 126,455
Net assets 131,015 139,657
CAPITAL AND RESERVES
Share capital 10 323 298
Share premium 10 39,845 39,845
Merger relief reserve 10 5,297 5,297
Share-based payment reserve 18,629 10,329
Cash flow hedging reserve (6,419) —
Foreign exchange translation reserve (1,538) 3,523
Retained earnings 74,878 80,365
Shareholders’ funds 131,015 139,657
The loss for the year, including other comprehensive income, was USD 6,845,000 (December 2020: loss of USD 1,000). The loss for the
year, excluding other comprehensive income, was USD 5,487,000 (December 2020: loss of USD 285,000).
These financial statements were approved and authorised for issue by the Board of Directors on 4 April 2022 and were signed on its
behalf by:
Iain McDonald
Chairman
Company Number: 08576358
The notes on pages 96 to 101 form an integral part of these financial statements.
CentralNic Group Plc | Annual report 2021 95
Additional informationFinancial statementsGovernanceStrategic report
Company statement of changes in equity
for the year ended 31 December 2021
Share
capital
USD’000
Share
premium
USD’000
Merger relief
reserve
USD’000
Share-based
payment
reserve
USD’000
Cash flow
hedging
reserve
USD’000
Foreign
exchange
translation
reserve
USD’000
Retained
earnings/
(accumulated
losses)
USD’000
Total
USD’000
Balance at
1 January 2020
236 74,840 5,297 6,020 — 3,087 5,777 95,257
Loss for the year — — — — — — (285) (285)
Other comprehensive
income
Translation of foreign
operation — — — (152) — 436 — 284
Transactions
with owners
Capital reduction — (74,8 40) — — — — 74,840 —
Issue of share capital 62 43,674 — — — — — 43,736
Share issue costs — (3,829) — — — — — (3,829)
Share-based payments — — — 4,451 — — — 4,451
Share-based payments
–exercisedand lapsed — — — (33) — — 33 —
Share-based payments
–deferred tax assets — — — 43 — — — 43
Balance at
31 December 2020
298 39,845 5,297 10,329 — 3,523 80,365 139,657
Loss for the year — — — — — — (5,487) (5,487)
Other comprehensive
income
Translation of
foreign operation — — — — — (5,061) — (5,061)
Loss arising on changes
in fair value of hedging
instruments — — — — (6,419) — — (6,419)
Transactions
with owners
Issue of share capital 25 — — — — — — 25
Share-based payments — — — 6,539 — — — 6,539
Share-based payments
– deferred tax assets — — — 1,761 — — — 1,761
Balance at
31 December 2021 323 39,845 5,297 18,629 (6,419) (1,538) 74,878 131,015
• Share capital represents the nominal value of the Company’s cumulative issued share capital.
• Share premium represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of their
nominal value less attributable share issue costs and other permitted reductions.
• Merger relief reserve represents the cumulative excess of the fair value of consideration received for the issue of shares in excess of
their nominal value, less attributable share issue costs and other permitted reductions, where the consideration for shares in another
company includes issued shares, and 90% of the equity is held in the other company.
• Cash flow hedging reserve represents the effective portion of changes in the fair value of derivatives.
• Retained earnings represent the cumulative value of the profits not distributed to Shareholders but retained to finance the future
capital requirements of the Company.
• Share-based payment reserve represents the cumulative value of share-based payments recognised through equity and deferred tax
assets arising thereon, net of exercised and lapsed options.
• Foreign exchange translation reserve represents cumulative exchange differences arising on translation of foreign operations.
The notes on pages 96 to 101 form an integral part of these financial statements.
96 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the Company financial statements
for the year ended 31 December 2021
1. General information
Nature of operations
CentralNic Group Plc (the ‘Company’) is the UK holding company of a group of companies which are engaged in the provision of global
domain name services. The Company is registered in England and Wales. Its registered office and principal place of business is 4th Floor,
Saddlers House, 44 Gutter Lane, London EC2V 6BR.
2. Basis of preparation
For the financial year ended 31 December 2021, the Company elected to prepare the financial statements in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework. The purpose of this was to more closely align the Company’s accounting
policies with the Group’s policies. This transition is not considered to have had a material effect on the financial statements.
The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and
the Companies Act 2006.
The preparation of financial statements in compliance with Financial Reporting Standard 101 Reduced Disclosure Framework requires
theuse of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company’s
accounting policies (see note 3 in the Group financial statements).
All accounting policies that are not unique to the Company are listed on pages 58 to 68. All additional accounting policies have been
applied as detailed in note 3 below.
3. Significant accounting policies
(a) Going concern
As at 31 December 2021, the Company had net current assets of USD 162,364,000 (2020: USD 185,767,000) with the main current asset
being amounts owed from its subsidiaries amounting to USD 206,346,000 (2020: USD 199,733,000). The Company has assessed its
ongoing costs with cash generated by its subsidiaries to ensure that it can continue to settle its debts as they fall due.
In addition, the COVID-19 pandemic has been duly considered by the Directors in making their judgement on the going concern
assumption. As the Parent Company of a group that is a provider of online subscription services with high cash conversion and solid
organic growth, CentralNic has not been, and is not expected to be, severely affected by COVID-19, but the Directors will take the
necessary precautions to preserve the Company’s cash and review the acquisition pipeline and financing plans to ensure that stability
ismaintained and that business strategies are optimised in the new global climate.
The Directors have, after careful consideration of the factors set out above, concluded that it is appropriate to adopt the going concern
basis for the preparation of the financial statements, and the financial statements do not include any adjustments that would result if the
going concern basis was not appropriate.
(b) Investments
Investments held as fixed assets are stated at cost less provision for impairment.
(c) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates
and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the
balance sheet date. Timing differences are differences between the Company’s taxable profits and its results as stated in the financial
statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are
recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be
regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is not recognised when fixed assets are sold and it is more likely than not that the taxable gain will be rolled over, being
charged to tax only if and when the replacement assets are sold.
Taxation arising on disposal of a revalued asset is split between the profit and loss account and the statement of changes in equity on
thebasis of the tax attributable to the gain or loss recognised in each statement.
CentralNic Group Plc | Annual report 2021 97
Additional informationFinancial statementsGovernanceStrategic report
(d) Financial instruments
Financial assets and liabilities are recognised in the statements of financial position when the Company becomes a party to the
contractual provisions of the instruments.
The Company’s financial assets and liabilities are initially measured at fair value plus any directly attributable transaction costs.
The carrying value of the Company’s financial assets (primarily cash and bank balances) and liabilities (primarily trade payables and other
accrued expenses approximate their fair values.
Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle either on a net basis or to
realise the asset and settle the liability simultaneously.
The Company classifies its financial assets into one of the categories discussed below. The Company’s accounting policy for each
category is as follows:
(i) Amortised cost
These assets arise principally from the provision of goods and services to Group entities, but also incorporate other types of financial
assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair value plus those transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Impairment provisions for current and non current trade receivables are recognised based on the simplified approach within
IFRS9using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the
non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the loss being shown as an impairment charge in the consolidated
statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of
theasset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking
expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of the financial asset. For those financial assets where the credit risk has not
increased significantly since initial recognition, twelve months of expected credit losses along with gross interest income are recognised.
For those financial assets for which credit risk has increased significantly since initial recognition, lifetime expected credit losses along
with the gross interest income are recognised. For those financial assets that are determined to be credit impaired, lifetime expected
credit losses along with interest income on a net basis are recognised.
The Company’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position.
(ii) Fair value through other comprehensive income
Where the Company has an equity interest in a number of investments in unlisted entities which are not accounted for as subsidiaries,
associates or jointly controlled entities. For those investments, the Company has made an irrevocable election to classify the investments
at fair value through other comprehensive income rather than through profit or loss, as the Company considers this measurement to be
the most representative of the business model for these assets. They are carried at fair value with changes in fair value recognised in
other comprehensive income and accumulated in the fair value through other comprehensive income reserve. Upon disposal, any
balance within fair value through other comprehensive income reserve is reclassified directly to retained earnings and is not reclassified
toprofit or loss. Dividends are recognised in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the
investment, in which case the full or partial amount of the dividend is recorded against the associated investment’s carrying amount.
Purchases and sales of financial assets measured at fair value through other comprehensive income are recognised on settlement date
with any change in fair value between trade date and settlement date being recognised in the fair value through other comprehensive
income reserve.
(iii) Financial liabilities and equity instruments
Financial liabilities are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest,
dividends, gains and losses relating to financial liabilities are reported in profit or loss. Distributions to holders of financial liabilities
areclassified as equity and charged directly to equity.
Financial liabilities
Financial liabilities comprise long-term borrowings, short-term borrowings, trade and other payables and accruals, measured at
amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a
financial liability and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter
period to the net carrying amount on initial recognition. Bond issue costs are initially recorded as a deduction from the bond liability on
the statement of financial position, and subsequently expensed to the consolidated statement of profit and loss over the life of the bond
using the straight-line method.
98 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the Company financial statements continued
for the year ended 31 December 2021
(d) Financial instruments continued
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Equity
instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Ordinary shares are classified as
equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of
tax, from proceeds. Dividends on ordinary shares are recognised as liabilities when approved for appropriation. Dividends proposed or
declared after the reporting date but before the financial statements have been authorised for issue are not recognised as a liability at the
reporting date. However, the details of these dividends are disclosed in the notes in accordance with IAS 1.
(iv) Derivative financial instruments and cash flow hedges
The Company enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risks. Derivatives are
recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each
reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention
tooffset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
twelve months and it is not due to be realised or settled within twelve months.
Hedge accounting
The Company designates certain derivatives as hedging instruments in respect of foreign currency risk as cash flow hedges. At the
inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Company documents whether the hedging instrument is effective in offsetting changes in fair
values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following
hedge effectiveness requirements:
• there is an economic relationship between the hedged item and the hedging instrument;
• the effect of credit risk does not dominate the value changes that result from that economic relationship; and
• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Company
actuallyhedges and the quantity of the hedging instrument that the Company actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same, the Company adjusts the hedge ratio of the hedging relationship
(i.e. rebalances the hedge) so that it meets the qualifying criteria again. The Company designates the full change in the fair value of a
forward contract (i.e. including the forward elements) as the hedging instrument for all of its hedging relationships involving forward
contracts.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify
ascash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve,
limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in
equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised
hedged item. Furthermore, if the Company expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to profit or loss. The Company discontinues hedge accounting only when
the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances
when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or
loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is
reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain
orloss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss.
(e) Parent Company disclosure exemptions
In preparing the separate financial statements of the Parent Company, advantage has been taken of the following disclosure exemptions
available in FRS 101:
• disclosures in respect of the Parent Company’s financial instruments and share-based payment arrangements have not been
presented as equivalent disclosures have been provided for the Group as a whole;
• no disclosure has been given for the aggregate remuneration of the key management personnel of the Parent Company as their
remuneration is included in the totals for the Group as a whole;
• no cash flow statement has been presented for the Parent Company;
• related party transactions with wholly owned fellow Group companies have not been disclosed; and
• the effect of future accounting standards not yet adopted has not been disclosed.
CentralNic Group Plc | Annual report 2021 99
Additional informationFinancial statementsGovernanceStrategic report
(f) Share-based payments
Employees (including Directors) receive remuneration in the form of share-based payment transactions, whereby these individuals render
services as consideration for equity instruments (equity-settled transactions). These individuals are granted share option rights approved
by the Board which can only be settled in shares of the respective companies that award the equity-settled transactions. Share option
rights are also granted to these individuals by majority Shareholders over their shares held. No cash-settled awards have been made or
are planned.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance and/or service conditions are fulfilled, ending on the date on which the relevant individuals become fully entitled to the award
(vesting point). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the best estimate of the number of equity instruments and value that will ultimately
vest. The statement of comprehensive income charge for the year represents the movement in the cumulative expense recognised as at
the beginning and end of that period.
The fair value of share-based remuneration is determined at the date of grant and recognised as an expense in the statement of
comprehensive income on a straight-line (graded vesting) basis over the vesting period, taking account of the estimated number of shares
that will vest. The fair value is determined by use of the Black-Scholes model method.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not apparent from other sources. The estimates
and assumptions are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
theperiod in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if
therevision affects both current and future periods.
The following are areas where key assumptions concerning the future, and other key sources of estimation uncertainty as at the
statement of financial position date, have a significant risk of causing a significant adjustment to the carrying amounts of assets
andliabilities in the financial statements:
Recognition of deferred tax assets
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will
beavailable in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits,
reference is made to the latest available profit forecasts. Where the temporary differences are related to losses, relevant tax law is
considered to determine the availability of the losses to offset against the future taxable profits.
5. Profit for the financial period
The Company has taken advantage of section 408 of the Companies Act 2006 and, consequently, a profit and loss account for
theCompany alone has not been presented. The Company’s loss for the financial period was USD 5,487,000 (2020: loss USD 1,000)
which excluded a net gain on foreign currency translation of USD 5,061,000 (2020: gain of USD 284,000) and a loss arising on changes in
fair value of hedging instruments of USD 6,419,000 (2020: nil). The Company’s loss for the financial year hasbeen arrived at after charging
auditor’s remuneration payable to Crowe U.K. LLP for audit services to the Company of USD 330,000 (2020:USD260,000).
100 CentralNic Group Plc | Annual report 2021
Financial statements
Notes to the Company financial statements continued
for the year ended 31 December 2021
6. Employees and Directors’ remuneration
Staff costs during the period incurred by the Company were as follows:
2021
USD’000
2020
USD’000
Wages and salaries 3,638 1,867
Social security 212 157
Pension 27 26
Share-based payment expenses 3,389 3,845
Directors’ consultancy fees 827 325
8,093 6,220
The average number of employees of the Company, including Directors, performing under a service contract during the period was:
2021
Number
2020
Number
Directors under employment contracts only 4 4
Directors under service contracts only 3 2
Directors under a combination of employment and service contracts 2 2
9 8
The Group made contributions to defined contribution personal pension schemes for three Directors in the period (2020: three). Included
in the above tables, the highest paid Director had wages and salaries, including employer’s taxes, of USD 849,000 (2020: USD 587,000),
a bonus of USD 570,000 (2020: USD 531,000), and share-based payment expenses of USD 1,075,000 (2020: 1,568,000) totalling
USD2,494,000 (2020: USD 2,686,000).
7. Investments
USD’000
At 1 January 2020 79,538
Novation agreement with CentralNic EU SE (share premium reimbursement) (19,800)
Share options issued to subsidiary employees issued on behalf of subsidiaries 530
Exchange differences (1,516)
At 31 December 2020 58,752
Conversion of subsidiary loans into investments 21,289
Share options issued to subsidiary employees on behalf of subsidiaries 2,633
Novation agreement with CentralNic EU SE (share premium reimbursement) (745)
At 31 December 2021 81,929
8. Deferred tax
Deferred tax assets
Share-based
payments
USD’000
At 1 January 2020 1,260
Credit to income 1,070
At 31 December 2020 2,330
Credit to income 62
Credit to equity 1,761
Exchange differences (246)
At 31 December 2021 3,907
CentralNic Group Plc | Annual report 2021 101
Additional informationFinancial statementsGovernanceStrategic report
9. Debtors
2021
USD’000
2020
USD’000
Amounts owed by Group undertakings 206,346 199,733
Other debtors 1,060 844
207,4 0 6 200,577
10. Share capital and share premium
The Company’s issued and fully paid share capital is as follows:
Number
Share capital
USD’000
Share premium
USD’000
Merger relief
reserve
USD’000
Ordinary shares of 0.1 pence each
At 31 December 2019 185,705,128 236 74,8 40 5,297
New shares issued 3,138,356 4 — —
Capital reduction — — (74,840) —
Shares issued to settle deferred consideration in respect
of Hexonet acquisition 3,208,819 4 3,324 —
Shares issued in respect of Codewise acquisition 40,000,000 52 38,444 —
Shares issued to settle deferred consideration in respect
of KeyDrive acquisition 1,685,723 2 1,906 —
Share issue costs — — (3,829) —
At 31 December 2020 233,738,026 298 39,845 5,297
Shares issued to Employee Benefit Trust 17,422,05 8 25 — —
At 31 December 2021 251,160,084 323 39,845 5,297
On 1 June 2021, 17,422,058 ordinary shares were issued and allocated in connection with the Employee Benefit Trust.
11. Creditors: amounts falling due within one year
2021
USD’000
2020
USD’000
Trade creditors 745 2,442
Amounts owed to Group undertakings 24,033 6,055
Accruals and deferred income 3,938 2,514
Accrued interest — 32
Other liabilities 103 82
28,819 11,125
102 CentralNic Group Plc | Annual report 2021
Financial statements
Particulars of subsidiaries and associates
The companies listed below are 100% subsidiaries of Group companies and only have ordinary share capital unless otherwise stated.
Parent Company Subsidiary
Country of
incorporation and
principal operations Principal activity Registered office
Instra Holdings
(Aus)Pty Ltd
Domain Directors
PtyLtd(100 504 596)
Australia Domain registrar
servicesprovider
Level 2, 222 Beach Road,
Mordialloc, VIC 3195, Australia
Instra Holdings
(Aus)Pty Ltd
Instra Corporation Pty
Limited (110 054 610)
Australia Domain registrar
services provider
Level 2, 222 Beach Road,
Mordialloc, VIC 3195, Australia
Instra Holdings
(Aus)Pty Ltd
Ozenum Pty Limited
(111198246)
Australia Dormant Level 2, 222 Beach Road,
Mordialloc, VIC 3195, Australia
TLD Registrar
Solutions Limited
Internet Domain Service
BS Corp (171543B)
Commonwealth
ofThe Bahamas
Domain registrar
services provider
PO Box SS-19084, Ocean Centre,
Montagu Foreshore, East Bay
Street, Nassau, New Providence,
The Bahamas
TLD Registrar
Solutions Limited
Whois Privacy Corp
(171546B)
Commonwealth
ofThe Bahamas
Domain registrar
services provider
PO Box SS-19084, Ocean Centre,
Montagu Foreshore, East Bay
Street, Nassau, New Providence,
The Bahamas
Asesorias En Dominios
Latinoamerica SpA
Domain Under Protection
Ltda (05.678.324/
00001-05)
Brazil Local presence domain
registrar
Rua Vergueiro 00875 CONJ 44,
Bairro Libertade, CEP: 01504-00,
Sao Paulo, Brasil
Key-Systems GmbH Toweb Brazil LTDA Brazil Domain registrar services
provider
Av. Afonso Pena 423, Praia da
Costa, Vilha Velha, Brasil
Safebrands SAS 9269-4785 Quebec Inc.
(1168 5610 83)
Canada Domain registrar 300-575 Rue Saint-Joseph E
Quebec, Quebec G1K3B7, Canada
CentralNic Chile SpA Asesorias En Dominios
Latinoamerica SpA
(76.757.590-4)
Chile Domain registrar services
provider
Avenida Providencia número 201,
oficina 22, comuna de Providencia,
Región Metropolitana, Chile
CentralNic Chile SpA Servicios y Asesorias
Computacionales Offpaper
SpA (76.346.410-5)
Chile Domain registrar services
provider
Avenida Providencia número 201,
oficina 22, comuna de Providencia,
Región Metropolitana, Chile
CentralNic Limited Domain Escrow Services
Ltd (06737803)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Limited GB.com Limited
(03797075)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Limited Helium TLDs Limited*
(1135479 9)
England and Wales Operator of
generic TLDs
4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Limited PremiumSale.com Limited
(07560824)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Limited Whois Privacy Limited
(07881505)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Limited Whoistrustee.com Limited
(09729254)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Helium TLDs Limited dotBroker Registry
Limited (09237714)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Helium TLDs Limited DotCFD Registry Limited
(09237733)
England and Wales Dormant 4th Floor, Saddlers House, 44
Gutter Lane, London EC2V 6BR
Helium TLDs Limited DotForex Registry Limited
(09237740)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Helium TLDs Limited dotMarkets Registry
Limited (09237699)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Helium TLDs Limited DotSpreadbetting
Limited (09237702)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Helium TLDs Limited DotTrading Registry
Limited (09237708)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Instra Holdings
(UK)Limited
Domain Directors
(Europe)Limited
(5300465)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
Instra Holdings
(UK)Limited
Europe Registry
Limited(5524089)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic Group Plc | Annual report 2021 103
Additional informationFinancial statementsGovernanceStrategic report
Parent Company Subsidiary
Country of
incorporation and
principal operations Principal activity Registered office
Instra Holdings
(UK)Limited
Instra Corporation
(Europe)Limited (5700131)
England and Wales Dormant 4th Floor, Saddlers House,
44 Gutter Lane, London EC2V 6BR
CentralNic EU SE Sublime Technology
(France) Sarl (531906790)
France Domain registrar services
provider for .FR
2, Rue Robert Geffré Bat
n°11-17000 La Rochelle – France
Sublime Technology
(France) Sarl
Safebrands S.A.S.(FR)
412721524
France Domain registrar
services provider
37, rue Guibal, 13003
Marseille(France)
CentralNic EU SE CentralNic Germany
GmbH (HRB 23747)
Germany Holding company Im Oberen Werk 1, 66386 St.
Ingbert
CentralNic EU SE CentralNic Holding
GmbH (HRB 24754)
Germany Holding company Im Oberen Werk 1, 66386 St.
Ingbert
CentralNic
Germany GmbH
Key-Systems GmbH
(818835)
Germany Domain registrar
services provider
Im Oberen Werk 1, 66386 St.
Ingbert, Germany
CentralNic
Holding GmbH
Team Internet AG
(HRB 200081)
Germany Monetisation of
internet traffic
Liebherrstr. 22, 80538
München,Germany
CentralNic
Holding GmbH
Traffic.club IT GmbH
(HRB 19295)
Germany Domain registrar
services provider
Im Oberen Werk 1, 66386 St.
Ingbert Germany
CentralNic
Holding GmbH
Wando Internet Solutions
GmbH (135243)
Germany Monetisation of internet
traffic
Uhlandstraße 171/172,
10719 Berlin
Key-Systems GmbH 1API GmbH (HRB 15683) Germany Domain registrar
services provider
Im Oberen Werk 1, 66386 St.
Ingbert, Germany
Key-Systems GmbH Dot Saarland GmbH
(B19630)
Germany Registry operator
for Saarland
Im Oberen Werk 1, 66386 St.
Ingbert Germany
Key-Systems GmbH InterNexum GmbH
(HRB35328)
Germany Domain registrar
servicesprovider
Blumenstraße 54, 02826
Görlitz,Germany
Key-Systems GmbH PTS GmbH (B100445) Germany Domain registrar
services provider
Neunkircher Straße 43, 66299
Friedrichsthal
Key-Systems GmbH RegistryGate GmbH
(B181621)
Germany Domain registrar
services provider
Wilhelm-Wagenfeld-Str. 16,
80807Munich
Wando Internet
Solutions GmbH
Pink Dodo Marketing
Agentur UG (HRB 166015)
Germany Monetisation of internet
traffic
Uhlandstraße 171/172, 10719 Berlin
Wando Internet
Solutions GmbH
QEONIX DIGITAL MEDIA
AGENCY UG (166351)
Germany Monetisation of internet
traffic
Uhlandstraße 171/172, 10719 Berlin
Instra Corporation
Pty Limited
Instra-Internet Services
One-Person LLC
(997994885)
Greece Domain registrar
services provider for .GR
1 Dimokraatias Square,
Thessaloniki, 54629, Greece
Instra Holdings
(UK)Limited
Sublime Technology
Limited (1064594)
Hong Kong Domain registrar services
provider for .HK
2003, 20/F Towers China Hong
Kong City, Tsim Sha Tsui, Kowloon,
Hong Kong
Instra Holdings
(UK)Limited
Tunglim International
PtyLimited (1593163)
Hong Kong Domain registrar services
provider for .CN
2003, 20/F Towers China Hong
Kong City, Tsim Sha Tsui, Kowloon,
Hong Kong
Safebrands SAS Mailclub Asia Registrar
Services Limited 1171994
Hong Kong Dormant Flat/RM World Trust Tower, 50
Stanley StreetCentral, Hong-Kong
City, China
CentralNic Limited CNIC Services Private
Limited (U74999DL2018
FTC337075)
India Dormant 818, Indraprakash Building 21,
Barakhamba Road New Delhi New
Delhi Dl 110001
CentralNic EU SE CentralNic Finance & IP
Sarl (B157525)
Luxembourg Domain registrar
services provider
1-3, Boulevard de la Foire, L-1528
Luxembourg
Instra Holdings
(UK)Limited
White Label Domains
SDNBHD B12 (844839V)
Malaysia Domain registrar services
provider for .MY
No/ 36B, 2nd Floor, Jalan Tun Mohd
Fuad 2. Taman Tun Dr Ismail, Kuala
Lumpur, 60000, Malaysia
Key-Systems GmbH/
Brandshelter Inc (50%
split in ownership)
KS Internet Solutions DE
RL DE CV (KISO910211TA)
Mexico Domain registrar
services provider
San Pedro Garza García,
N.L.,Mexico
Instra Corporation
PtyLimited
Instra Domain Directors
B.V. (24436342)
The Netherlands Domain registrar
services provider for .NL
Beechavenue 54-62, 1119PW,
Schiphol-Rijk, The Netherlands
104 CentralNic Group Plc | Annual report 2021
Financial statements
Particulars of subsidiaries and associates continued
Parent Company Subsidiary
Country of
incorporation and
principal operations Principal activity Registered office
CentralNic NZ Limited Ideegeo Group Ltd
(2131522)
New Zealand Domain registrar
services provider
c/o Grant Thornton New Zealand,
LR, 152, Fanshawe Street,
Auckland, 1010, New Zealand
CentralNic EU SE CentralNic Poland Sp.
z.o.o.(0000830352)
Poland Monetisation of
internet traffic
ul. Lubicz 17 G31-503 Kraków,
Poland
Instra Corporation
PtyLimited
Instra Corporation PTE
Limited (200711838Z)
Singapore Domain registrar
services provider for .SG
c/o Asiabiz Services PTE Ltd,
30Cecil Street, #19-08,
PrudentialTower, Singapore 049712
CentralNic EU SE SK-Nic A.S. (35 698 446) The Slovak Republic Registry operator
for.SK
Námestie SNP 14 Bratislava –
mestská cˇ ast’ Staré Mesto 811 06
CentralNic USA Ltd Brandshelter Inc
(4680526)
USA, Virginia Domain registrar
services provider
885 Harrison St. SE, Leesburg,
VA20175
Brandshelter Inc Key-Systems LLC
(34181990)
USA, Virginia Domain registrar
services provider
885 Harrison St. SE, Leesburg,
VA20175
CentralNic USA Ltd Moniker.com Inc
(P00000072934)
USA, Florida Domain registrar
services provider
6301 NW 5th Way, Suite 4500,
FtLauderdale, FL 33309. Mailing
address: 13727 SW 152nd Street
#513, Miami, FL 33177
Moniker.com Inc Moniker Online Services
LLC (L020000016399)
USA, Florida Domain registrar
services provider
6301 NW 5th Way, Suite 4500,
FtLauderdale, FL 33309. Mailing
address: 13727 SW 152nd Street
#513, Miami, FL 33177
Moniker.com Inc Moniker Privacy Services
LLC (M10000001115)
USA, Florida Domain registrar
services provider
6301 NW 5th Way, Suite 4500,
FtLauderdale, FL 33309. Mailing
address: 13727 SW 152nd Street
#513, Miami, FL 33177
Subsidiary
Country of incorporation
and principal operations Principal activity Registered office
Instra Holdings (Aus) Pty Limited
(609 143 599)
Australia Holding company Level 2, 222-225 Beach Road, Mordialloc,
Victoria, VIC3195
CentralNic Canada Inc.
(BC1056960)
Canada, British
Columbia
Holding company Suite 2300, Bentall 5, 550 Burrard Street,
Vancouver, BC V6C 2B5
CentralNic Chile SpA (14524) Chile Holding company Premio Nobel 1762, Ñuñoa, Región
Metropolitana, 7800179, Chile
CentralNic Limited*
(04985780)
England and Wales Domain registry services provider 4th Floor, Saddlers House, 44 Gutter Lane,
London EC2V 6BR
Hoxton Domains Limited*
(09332447)
England and Wales Aftermarket domain services 4th Floor, Saddlers House,44 Gutter Lane,
London EC2V 6BR
Instra Holdings (UK) Limited*
(09877716)
England and Wales Holding company 4th Floor, Saddlers House, 44 Gutter Lane,
London EC2V 6BR
TLD Registrar Solutions Limited*
(07629187)
England and Wales Domain registrar services provider 4th Floor, Saddlers House,44 Gutter Lane,
London EC2V 6BR
CentralNic EU SE
(B224488)
Luxembourg Holding company 1-3, Boulevard de la Foire, L-1528
Luxembourg
CentralNic NZ Limited
(5846027)
New Zealand Holding company C/o Grant Thornton New Zealand, LR, 152,
Fanshawe Street, Auckland, 1010, New
Zealand
CentralNic Services DWC
– LLC 10217
UAE Holding company Business Center Logistics City, Dubai
Aviation City, P.O.Box: 390667, Dubai, U.A.E.
CentralNic USA Limited
(C3183691)
USA, California Holding company 4th Floor, Saddlers House, 44 Gutter Lane,
London EC2V 6BR
S479A Exemption from audit of subsidiary companies
Certain UK companies have elected to make use of the audit exemption, for non-dormant subsidiaries, under section 479A of the
Companies Act 2006. In order to fulfil the conditions, set out in the regulations, the Company has given a statutory guarantee of all
outstanding liabilities to which the subsidiaries are subject at the end of the financial year to 31 December 2021. The UK companies
which have made use of the audit exemption are marked with an asterisk (*) in the tables above.
CentralNic Group Plc | Annual report 2021 105
Additional informationFinancial statementsGovernanceStrategic report
Shareholder information
CentralNic Group Plc’s interest is 100% in the issued ordinary
share capital of these undertakings included in the consolidated
accounts:
Financial calendar
Annual General Meeting
Although the date is subject to change as the Directors reserve the
right to resolve to convene the AGM later depending on government
guidance in respect of COVID-19, the Annual General Meeting is
due to take place on Wednesday, 4 May 2022 at 10:00am.
Announcements
• Full-year audited results for the twelve-month period
ended31December 2021 are expected in April 2022.
• Interim unaudited results for the three-month period
ended31March 2022 are expected in May 2022.
• Interim unaudited results for the six-month period
ended30June 2022 are expected in August 2022.
• Interim unaudited results for the nine-month period ended
30September 2022 are expected in November 2022.
• Full-year unaudited results for the twelve-month period
ended31 December 2022 are expected in February 2023.
• Full-year audited results for the twelve-month period ended
31December 2022 are expected in April 2023.
Dates are correct at the time of printing, but are subject to change.
Directors
Iain McDonald (Chairman)
Ben Crawford (Chief Executive Officer)
Donald Baladasan (Group Managing Director)
Michael Riedl (Chief Financial Officer)
Samuel Dayani (Non-Executive Director)
Tom Pridmore (Non-Executive Director)
Thomas Rickert (Non-Executive Director)
Max Royde (Non-Executive Director)
Horst Siffrin (Non-Executive Director)
Registered office
4th Floor, Saddlers House, 44 Gutter Lane, London EC2V 6BR
Company Secretary
Michael Riedl (Chief Financial Officer)
Company website
www.centralnicgroup.com
Nominated Adviser and Joint Broker
Zeus Capital Limited
82 King Street
Manchester M2 4WQ
41 Conduit Street
London W1S 2YQ
3 Brindleyplace
Birmingham B1 2JB
Joint Broker
Joh. Berenberg, Gossler & Co. KG
60 Threadneedle St
London EC2R 8HP
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London EC4M 7JW
Solicitors to the Company
DWF LLP
20 Fenchurch Street
London EC3M 3AG
Solicitors to the Nominated Adviser
and Broker
DAC Beachcroft LLP
100 Fetter Lane
London EC4A 1BN
Financial PR
Newgate Communications
Sky Light City Tower
50 Basinghall Street
London EC2V 5DE
Bankers
HSBC UK Bank plc
89 Buckingham Palace Road
London SW1W 0QL
Company registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Link Asset Services is our registrar and they offer many services
tomake managing your shareholding easier and more efficient.
106 CentralNic Group Plc | Annual report 2021
Additional information
Shareholder information continued
Share portal
The share portal is a secure online site where you can manage
your shareholding quickly and easily. You can:
• view your holding and get an indicative valuation;
• change your address;
• arrange to have dividends paid into your bank account;
• request to receive Shareholder communications by email rather
than post;
• view your dividend payment history;
• make dividend payment choices;
• buy and sell shares and access a wealth of stock market news
and information;
• register your proxy voting instruction; and
• download a stock transfer form.
To register for the share portal just visit www.signalshares.com.
Allyou need is your investor code, which can be found on your
share certificate or your dividend tax voucher.
Customer support centre
Alternatively, you can contact Link’s Customer Support Centre
which is available to answer any queries you have in relation to
your shareholding:
By phone – UK: 0871 664 0300 (UK calls cost 12p per minute plus
network extras). From overseas: +44 371 664 0300.
Lines are open 9.00am to 5.30pm, Monday to Friday, excluding
public holidays.
By email – shareholderenquiries@linkgroup.co.uk
By post – Link Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU.
Sign up to electronic communications
Help us to save paper and get your Shareholder information
quickly and securely by signing up to receive your Shareholder
communications by email.
Registering for electronic communications is very straightforward.
Just visit www.signalshares.com. All you need is your investor
code, which can be found on your share certificate or your
dividend tax voucher.
Donate your shares to charity
If you have only a small number of shares which are uneconomical
to sell you may wish to donate them to charity free of charge
through ShareGift (Registered Charity 10528686). Find out more
atwww.sharegift.org.uk or by telephoning 020 7930 3737.
Share fraud warning
Share fraud includes scams where investors are called out of
theblue and offered shares that often turn out to be worthless or
non-existent, or an inflated price for shares they own. These calls
come from fraudsters operating in ‘boiler rooms’ that are mostly
based abroad.
While high profits are promised, those who buy or sell shares in
this way usually lose their money.
The Financial Conduct Authority (FCA) has found most share fraud
victims are experienced investors who lose an average of GBP
20,000, with around GBP 200 million lost in the UK each year.
PROTECT YOURSELF
If you are offered unsolicited investment advice, discounted shares,
a premium price for shares you own, or free company or research
reports, you should take these steps before handing over
anymoney:
• get the name of the person and organisation contacting you;
• check the Financial Services Register at http://www.fca.org.uk/
to ensure they are authorised;
• use the details on the FCA Register to contact the firm;
• call the FCA Consumer Helpline on 0800 111 6768 if there are
no contact details on the Register or you are told they are out
ofdate; and
• search our list of unauthorised firms and individuals to avoid
doing business with.
REMEMBER: if it sounds too good to be true, it probably is!
If you use an unauthorised firm to buy or sell shares or other
investments, you will not have access to the Financial Ombudsman
Service or Financial Services Compensation Scheme (FSCS) if
things go wrong.
REPORT A SCAM
If you are approached about a share scam you should tell the FCA
using the share fraud reporting form at http://www.fca.org.uk/
scams, where you can find out about the latest investment scams.
You can also call the Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should
contact Action Fraud on 0300 123 2040.
Identity theft
Tips for protecting your shares in the Company:
• ensure all your certificates are kept in a safe place or hold
yourshares electronically in CREST via a nominee;
• keep correspondence from us and Link in a safe place and
destroy any unwanted correspondence by shredding;
• if you change address, inform Link in writing or update your
address online via the share portal. If you receive a letter from
Link regarding a change of address but have not moved,
pleasecontact them immediately;
• consider having your dividend paid directly into your bank.
Thiswill reduce the risk of the cheque being intercepted or lost
in the post. If you change your bank account, inform Link of the
details of your new account. You can do this by post or online
via the share portal;
• if you are buying or selling shares, only deal with brokers
registered and authorised to carry out that type of business;
and
• be wary of phone calls or emails purporting to come from us
orLink asking you to confirm personal details or details of your
investment in our shares. Neither we nor Link will ever ask you
to provide information in this way.
CentralNic Group Plc | Annual report 2021 107
Additional informationFinancial statementsGovernanceStrategic report
Glossary
Adtech
An umbrella term for advertising technology
Application Programming Interface or ‘API’
A software intermediary that allows two applications to talk to
each other
Artificial Intelligence or ‘AI’
The theory and development of computer systems able to perform
tasks normally requiring human intelligence, such as visual
perception, speech recognition, decision-making, and translation
between languages.
Cost Per Click or ‘CPC’
The price paid for each click in pay-per-click (PPC) marketing
campaigns
Cost Per Thousand or ‘CPM’
A marketing term that refers to the cost that an advertiser pays
perone thousand advertisement impressions on a web page
Country Code Top-Level Domain or ‘ccTLD’
An internet Top-Level Domain generally used or reserved for a
country, a sovereign state, or a dependent territory e.g. .uk, .jp
Demand-Side Platform or ‘DSP’
A system that allows buyers of digital advertising inventory to
manage multiple ad exchange and data exchange accounts
through one interface
Domain Name Registrar
An organisation or commercial entity that manages the reservation
of internet domain names
Domain Name System or ‘DNS’
A hierarchical distributed naming system for computers, services,
or any resource connected to the internet or a private network
Enterprise Management Incentive or ‘EMI’
A tax-advantaged share option scheme designed to retain
employees (Note: CentralNic no longer qualifies to issue new
EMIsand only historic issues have been noted in this report)
Environmental, Social and Governance or ‘ESG’
ESG criteria are a set of standards for a company’s operations.
Environmental criteria consider how a company performs as a
steward of nature. Social criteria examine how it manages
relationships with employees, suppliers, customers, and the
communities where it operates. Governance deals with a
company’s leadership, executive pay, audits, internal controls,
and shareholder rights
The General Data Protection Regulation or
‘GDPR’
The General Data Protection Regulation (GDPR) is a legal framework
that sets guidelines for the collection and processing of personal
information from individuals who live in the European Union (EU)
Global Reporting Initiative or ‘GRI’
Global Reporting Initiative (known as GRI) is an international
independent standards organization that helps businesses,
governments and other organizations understand and
communicatetheir impacts on issues such as climate
change,human rights and corruption
Identifier for Advertisers or ‘IDFA’
IDFA is a random device identifier assigned by Apple to a user’s
device. Advertisers use this to track data so they can deliver
customized advertising. The IDFA is used for tracking and
identifying a user without revealing personal information
Internet Corporation for Assigned Names
andNumbers or ‘ICANN’
A non-profit private organisation that was created to oversee a
number of internet-related tasks previously performed directly
onbehalf of the US Government
International Telecommunication Union or ‘ITU’
The International Telecommunication Union is the United Nations
specialized agency for information and communication
technologies (ICTs)
Long Term Incentive Plan or ‘LTIP’
Executive share option plans that reward executives for reaching
specific goals that lead to increased shareholder value
The Office of Foreign Assets Control or ‘OFAC’
The Office of Foreign Assets Control (OFAC) is a department of the
U.S. Treasury that is charged with enforcing economic and trade
sanctions imposed by the U.S. against countries and groups of
individuals
Quoted Companies Alliance or ‘QCA’
The QCA publishes the ‘QCA Code’ which is an approach to
corporate governance that is tailored for small and mid-size quoted
companies in the UK
Registry Operator
An entity that maintains the database of domain names for
agivenTop-Level Domain and generates the zone files which
convert domain names to IP addresses. It is responsible for
domain name allocation and technically operates its Top-Level
Domain, sometimes by engaging a Registry Service Provider
Registry Service Provider
A company that performs the technical functions of a TLD on
behalf of the TLD owner or licensee. The registry service provider
keeps the master database and operates DNS servers to allow
computers to route internet traffic using the DNS
Revenue Per Thousand or ‘RPM’
A marketing term that refers to the revenue generated per one
thousand advertisement impressions on a web page
108 CentralNic Group Plc | Annual report 2021
Additional information
Glossary continued
Search Engine Marketing or ‘SEM’
A digital marketing strategy that involves the promotion of websites
by increasing their visibility in search engine results pages primarily
through paid advertising
Second-Level Domain or ‘SLD’
A domain that is directly below a Top-Level Domain e.g. uk.com
Secure Sockets Layer or ‘SSL’
SSL is a secure protocol developed for sending information
securely over the internet
Share Option Plan or ‘SOP’
An unapproved share option plan under which employees are
given options to acquire shares at a future date at a price specified
by the Company
Small Business or ‘SMB’
An internal term used to describe small business customers
Streamlined Energy and Carbon Reporting or
‘SECR’
Streamlined Energy and Carbon Reporting (SECR) was introduced
in 2019, as legislation to replace the Carbon Reduction
Commitment (CRC) Scheme. SECR requires obligated companies
to report on their energy consumption and associated greenhouse
gas emissions within their financial reporting for Companies House
Sustainability Accounting Standards Board
or‘SASB’
SASB standards guide the disclosure of financially material
sustainability information by companies to their investors. Available
for 77 industries, the standards identify the subset of ESG issues
most relevant to financial performance in each industry. The
‘TC-SI’ standards are those applicable to the Software & IT
services industry
Sustainable Development Goals or ‘SDGs’
SDGs, also known as the Global Goals, were adopted by the
United Nations in 2015 as a universal call to action to end poverty,
protect the planet, and ensure that by 2030 all people enjoy peace
and prosperity
Task Force on Climate-related Financial
Disclosures or ‘TCFD’
The Task Force on Climate-related Financial Disclosures was
created by the Financial Stability Board to improve and increase
reporting of climate-related financial information
Top-Level Domain or ‘TLD’
The suffix attached to internet domain names e.g. .com, .net
United Nations or ‘UN’
The United Nations, commonly referred to as the UN, is an
international nonprofit organisation formed in 1945 to increase
political and economic cooperation among its member countries
Verified Carbon Standard or ‘VCS’
A standard for certifying carbon emissions reductions,
VCSisadministered by Verra, a not-for-profit organisation.
TheVCS Programme is the world’s leading voluntary programme
for the certification of GHG emission reduction projects
World Economic Forum or ‘WEF’
The World Economic Forum is an independent international
organization committed to improving the state of the world by
engaging business, political, academic, and other leaders of
society to shape global, regional, and industry agendas
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CentralNic Group Plc | Annual report 2021
Registered office:
4th Floor
Saddlers House
44 Gutter Lane
London EC2V 6BR