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CentralNic on course to become “major global player” after encouraging first half

“Our underlying first half results have been most encouraging as CentralNic continues to deliver organic growth alongside significant earnings enhancing acquisitions”
domain names
Insta Group, which CentralNic acquired last year, was the star performer

Centralnic Group PLC (LON:CNIC) has said it is on track to become a “major global player” in the internet domain names sector after enjoying a “most encouraging” first half.

The AIM-quoted group told investors it had enjoyed strong organic growth in the period, while its recent acquisitions also served as a boost to the top and bottom lines.

Insta Group puts in another good shift

In particular, CentralNic heaped praise on Insta Group – acquired at the beginning of last year – which now makes up the bulk of the retail division, the group’s largest and most lucrative arm.

During the six months ended 30 June, the retail business generated revenues of £7.97mln (H1 2016: £6.76mln) thanks to a full contribution from Insta this time around, which was responsible for around three-quarters of those sales.

WATCH: CentralNic eyeing up more acquisitions after strong first half

Total revenues across the business – which also includes the wholesale and enterprise divisions – jumped 19% to £10.6mln (H1 2016: £8.9mln).

A slight improvement in margins saw gross profit surge by almost a third to £3mln (H1 2016: £2.3mln) while adjusted underlying earnings rose by 50% to 1.4mln (H1 2016: £0.9mln).

Recurring revenues continue to rise

CentralNic has often repeated its desire to grow its recurring revenues and it said the percentage of these “high-quality” earnings during the first half.

Its recent acquisition of Slovakian counterpart SK-NIC was “another step forward” with this strategy given its potential to “increase substantially the proportion of group revenues generated from recurring revenue streams”.

On track to hit full-year expectations

“Our underlying first half results have been most encouraging as CentralNic continues to deliver organic growth alongside significant earnings enhancing acquisitions,” said chairman Mike Turner.

"In keeping with the consistently heavy second-half weighting of results in recent years, the board is confident that the Company is on track to meet market expectations for the full year to 31 December 2017.”

Renewal of .xyz contract

Alongside today’s interims, CentralNic confirmed it has renegotiated and renewed its exclusive wholesaler contract with XYZ.COM, which owns the .xyz top-level domain.

The company will receive a fixed fee based on the volume of .xyz registrations and subscriptions managed.

.xyz is one of the most popular domain names in the world, with several high-profile tech businesses and individuals such as Google and Mark Zuckerberg using it for their websites.

CentralNic added that the suffix has seen the most adoption from start-ups and entrepreneurs, as well as from business in emerging internet markets such as Indonesia and China.

Ben Crawford, chief executive of CentralNic, said:  "The long-standing excellent relationship between CentralNic and .xyz has been updated to normalise the company's revenues and profits going forward.”

Shares were down 0.5% to 67.7p shortly before market close.

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