LONDON (Alliance News) – Software firm CentralNic Group PLC on 25th Aug 2017, Friday said it will buy SK-NIC AS, the manager of Slovakia’s top-level internet domain, .sk, for up to EUR26.1 million and added it expects to report a rise in revenue for the first half of the year.
The initial cash consideration for SK-NIC is EUR21.3 million with a deferred consideration of up to EUR4.9 million, depending on the acquisition achieving growth targets over the next three years.
The EUR21.3 million will be funded by existing cash reserves and a GBP18.0 million loan from Silicon Valley Bank, which also will provide a GBP3.0 million overdraft facility. CentralNic expects the deferred consideration will be paid from the profits of the enlarged group.
The acquisition, which is expected to complete in the beginning of September, is in line with CentralNic’s growth strategy.
London-listed CentralNic expects double-digit earnings entrancement in the first full-year of ownership from SK-NIC.
The company said SK-NIC will increase visibility and predictability of its revenue, with a larger proportion expected to be generated from recurring revenue streams, and it provides access to a new international market with the .sk domain.
SK-NIC has a domain name renewal rate of over 77% and has over 360,000 domains under management as well as over 2,100 active retailers in Slovakia.
CentralNic Chief Executive Ben Crawford said:
“SK-NIC is a major, earnings enhancing acquisition for group, which is wholly consistent with our growth strategy. The business will benefit significantly from CentralNic’s technology and expertise, to improve its security, resilience and growth, as well as bringing to the group strong recurring revenues. The .sk country code adds a substantial new product and SK-NIC’s network of over 2,100 local retailers extends our geographic footprint into an important new market with considerable growth potential.
“The acquisition of SK-NIC moves us another step forward in our strategy to increase substantially the proportion of group revenues generated from recurring revenue streams spread across diversified products, territories and customer types.”
In addition, CentralNic said it expects to report revenue for the six months ended June 30 of GBP10.6 million, which is 19% higher than last year’s GBP8.9 million.
Adjusted earnings before interest, tax, depreciation and amortisation, excluding foreign exchange gain and losses, is expected to rise to GBP1.4 million from GBP£908,000, while adjusted Ebitda including foreign exchange is estimated to fall to GBP1.1 million including an GBP312,000 foreign exchange loss, from GBP1.3 million that included a GBP401,000 foreign exchange gain.
CentralNic said that as results are historically weighted to the second half of the year, it is confident that the company is on track to meet market expectations for 2017.
CentralNic which is the back-end provider for many new gTLD extensions including .africa, applied for by DotConnectAfrica, .xyz which has the most registrations of all new gTLD’s, provides registrations on third level ccTLD’s domain names, owns the domain name registrars Internet BS and INSTRA and is a part owner of the .tickets new gTLD extension. The group’s leading position was further underlined last month, as it became the first new domain wholesaler to reach 4mln domain sales.