REG - Team Internet Group - Nine months unaudited results to 30 September 2024
11/11/2024 07:00
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RNS Number : 6451L Team Internet Group PLC 11 November 2024
11 November 2024
The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of the domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018 (as amended) ("UK MAR").
Upon the publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the public domain.
TEAM INTERNET GROUP PLC
("Team Internet" or the "Company" or the "Group")
UNAUDITED FINANCIAL RESULTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2024
Increasing gross margins and cost control provide the basis for sustaining
bottom-line profitability and increased adjusted EPS
Team Internet Group Plc (AIM: TIG, OTCQX: TIGXF), the global internet company
that generates recurring revenue from creating meaningful and successful
connections: businesses to domains, brands to consumers, publishers to
advertisers, announces its unaudited financial results for the nine months
ended 30 September 2024 ("September 2024 YTD").
Financial summary:
● Gross revenue increased by 1% to USD 615.1m (versus nine
months ended 30 September 2023 ("September 2023 YTD"): USD 611.7m)
● Net revenue (gross profit) increased by 4% to USD 143.6m
(September 2023 YTD: USD 138.5m), with gross margin increasing from 22.6% to
23.3%
● Adjusted EBITDA((i)) increased by 2% to USD 70.1m (September
2023 YTD: USD 68.8m), with adjusted EBITDA as a percentage of net revenue
stable at approximately 49%
● Operating profit decreased by less than 1% to USD 31.2m
(September 2023 YTD restated((ii)): USD 31.4m), following a USD 2.7m higher
amortisation charge, combined with a similar reduction in share-based payment
expenses year-on-year
● Profit before tax decreased by 9% to USD 18.3m (September 2023
YTD: USD 20.0m)
● Profit after tax decreased by 7% to USD 11.9m (September 2023
YTD: USD 12.8m)
● Adjusted EPS (diluted) increased by 7% to USD 16.83 cents
(September 2023 YTD restated((ii)): USD 15.68 cents)
● Net debt((iii)) of USD 99.7m (31 December 2023: USD 74.1m, 30
June 2024: USD 109.9m) and leverage((iv)) of 1.20x. The Group has continued to
be cash generative during Q3 2024, reducing net debt by USD 10.2m. As of
September 2024 YTD, the Group has incurred non-operating cash outflows,
including a cash outflow (net of acquired cash) of USD 31.8m for the
acquisition of Shinez, USD 13.8m for share repurchases, and a USD 6.4m
dividend payment
● Adjusted operating cash conversion of 91% (September 2023 YTD:
95%). We expect cash conversion to continue to normalise nearer to 100% over
the remainder of the year
Q3 highlights:
● In the Online Marketing segment, for the core products of TONIC
and ParkingCrew, the number of visitor sessions increased by 15% to 6.5
billion for TTM 2024 from 5.6 billion for the trailing twelve-month period
ended 30 September 2023 ("TTM 2023"). Revenue per thousand sessions ("RPM")
decreased by 18% from USD 97 to USD 79
● The Online Presence segment recorded organic revenue growth of
5% for TTM 2024
● Adjusted EBITDA as a percentage of net revenue reached 49% for
September 2024 YTD, a slight decrease from 50% in September 2023 YTD. However,
consistent quarter-on-quarter improvements have been observed throughout the
year, supported by improved operating leverage, delivering Q3 2024 adjusted
EBITDA of USD 23.5m (Q3 2023: USD 24.2m) with EBITDA conversion of 51% (Q3
2023: 51%)
Post period-end events:
● On 2 October 2024, a payment of USD 3.0m was made for the
acquisition of M.A Aporia, related to contingent consideration tied to the
ongoing employment of specific employees. We anticipate that this will be the
last material acquisition related contingent payment across the Group
● Interim dividend of 1.0 pence per ordinary share paid on 4
October 2024
Outlook:
The Directors are pleased to report that Team Internet Group's core businesses
remain strong and resilient. While our recent acquisition of Shinez has yet to
contribute to EBITDA, we are actively adjusting its operating model and cost
base to improve performance. The Group's established operations continue to
provide a solid foundation for growth and cash generation. The Group remains
on track to produce record profits in 2024 and 2025, albeit at more moderate
growth rates than originally anticipated. The Group now expects to deliver
approximately USD 97m adjusted EBITDA for 2024.
Looking ahead, the Directors are committed to maximising value across the
Group's asset base. We continue to enhance the revenue and profitability of
our Online Presence business, which now contributes a substantial share of our
overall profitability and operates under a subscription-based revenue model.
The Board will continue to assess group structure to maximise Shareholder
returns.
Our portfolio comprises a mix of market-leading assets in digital marketing
and domain management. While the Group's Online Marketing assets are more
transactional and operate in structural growth markets, the Online Presence
assets, though lower growth over an economic cycle, offer high predictability
and profitability. The Board believes the market does not fully recognise the
value of this diverse asset mix and is committed to providing greater
information by reporting on the profitability of each of these divisions in
the 2024 annual results, as well as separating out our Comparison business,
which has grown to the extent that it is expected to qualify as a separate
reporting segment. In addition, the Board intends to explore a range of
options to increase Shareholder value including balance sheet optimisation
through share buybacks and dividends, as well as a comprehensive review of
asset ownership. Additionally, the ongoing deployment of AI tools across all
business areas presents opportunities for automation and profitability
enhancement.
The Group's commitment to operational efficiency, paired with continuous
innovation, reinforces our confidence in delivering sustainable Shareholder
value and returns.
Michael Riedl, CEO of Team Internet, commented: "Team Internet has delivered a
resilient performance in our core businesses within a dynamic market
environment and the Group is poised to maintain record levels of
profitability. Although our recent acquisition has not yet contributed to
EBITDA, I am confident in its strategic value to our long-term objectives. In
contrast, our Comparison business, created from the acquisition of VGL
Publishing AG, has grown significantly, demonstrating the success of our
acquisition strategy. Our focus is now more than ever on realising synergies
through strategic integration, enhancing value across the sum of the parts of
our established assets and accelerating Shareholder returns. With our ongoing
commitment to innovation and operational excellence, we are well-positioned to
return to higher growth in profit and cash flow."
Results presentation:
There will be a webinar/conference call for equity analysts at 10am UK time
today. This event will be hosted by CEO Michael Riedl and CFO William Green.
Anybody wishing to register should contact teaminternet@secnewgate.co.uk
(mailto:teaminternet@secnewgate.co.uk) , where further details will be
provided.
Further, an Investor Meet Company session will be held at 12pm UK time today:
https://www.investormeetcompany.com/team-internet-group-plc/register-investor
(https://www.investormeetcompany.com/team-internet-group-plc/register-investor)
Investors who already follow Team Internet Group Plc on the Investor Meet
Company platform will automatically be invited. Questions can be submitted
pre-event via your Investor Meet Company dashboard up until 9am the day before
the meeting or at any time during the live presentation.
((i))Earnings before interest, tax, depreciation, amortisation, impairment,
non-core operating expenses, foreign exchange gains and losses, and
share-based payment expenses
((ii))Please see note 12 for further information on prior period restatements,
which are of the same nature as reported in the June 2024 unaudited interim
financial statements
((iii))Includes cash (USD 93.3m), bank debt and prepaid finance costs (USD
192.3m) and hedging liabilities (USD 0.7m) as of 30 September 2024 (31
December 2023 cash (USD 92.7m), bank debt and prepaid finance costs (USD
166.6m) and hedging liabilities (USD 0.2m))
((iv))Includes Net Debt as defined under((iii))(a) excluding prepaid finance
costs, (b) plus guarantee obligations, and (c) plus the best estimate of any
crystallised deferred consideration payable in cash, all divided by pro forma
EBITDA, i.e. last twelve months' EBITDA including acquired entities' EBITDA on
a pro forma basis, and adjusted for rental expenses capitalised under IFRS 16
and non-core expenses
For further information:
Team Internet Group Plc +44 (0) 203 388 0600
Michael Riedl, Chief Executive Officer
William Green, Chief Financial Officer
Zeus Capital Limited (NOMAD and Joint Broker)
Nick Cowles / James Edis (Investment Banking) +44 (0) 161 831 1512
Dominic King (Corporate Broking) +44 (0) 203 829 5000
Berenberg (Joint Broker) +44 (0) 203 207 7800
Mark Whitmore / Richard Andrews / Alix Mecklenburg-Solodkoff
SEC Newgate (for Media) teami (mailto:teaminternet@secnewgate.co.uk) nterne
(mailto:teaminternet@secnewgate.co.uk) t@secnewgate.co.uk
(mailto:teaminternet@secnewgate.co.uk)
Bob Huxford / Tom Carnegie / Harry Handyside +44 (0) 203 757 6880
Forward-looking statements
This document includes forward-looking statements. Whilst these
forward-looking statements are made in good faith, they are based upon the
information available to Team Internet at the date of this document and upon
current expectations, projections, market conditions and assumptions about
future events. These forward-looking statements are subject to risks,
uncertainties and assumptions about the Group and should be treated with an
appropriate degree of caution.
About Team Internet Group Plc
Team Internet (AIM: TIG, OTCQX: TIGXF) creates meaningful and successful
connections from businesses to domains, brands to consumers, publishers to
advertisers, enabling everyone to realise their digital ambitions. The Company
is a leading global internet solutions company that operates in two highly
attractive markets: high-growth digital advertising (Online Marketing segment)
and domain name management solutions (Online Presence segment). The Company's
Online Marketing segment creates privacy-safe and AI-generated online consumer
journeys that convert general interest online media users into confident high
conviction consumers through advertorial and review websites. The Online
Presence segment is a critical constituent of the global online presence and
productivity tool ecosystem, where Team Internet serves as the primary
distribution channel for a wide range of digital products. The Company's
high-quality earnings come from subscription recurring revenues in the Online
Presence segment and revenue share on rolling utility-style contracts in the
Online Marketing segment.
For more information please visit: www.teaminternet.com
(http://www.teaminternet.com) .
MANAGEMENT COMMENTARY ON PERFORMANCE
Introduction
Team Internet's core businesses continue to be robust and resilient, with the
Group's established operations serving as a solid base for future growth and
cash generation.
Performance overview
The Group's key financial metrics are listed
below:
Nine months
Nine months ended ended
30 September 30 September
2024 2023
Restated* Change
USD m USD m %
Revenue 615.1 611.7 1%
Net revenue/gross profit 143.6 138.5 4%
Adjusted EBITDA 70.1 68.8 2%
Operating profit 31.2 31.4 -
Adjusted operating cash conversion (note 9) 91% 95% (4%)
Profit after tax 11.9 12.8 (7%)
EPS - Basic (cents) 4.65 4.69 (1%)
EPS - Diluted (cents) 4.59 4.53 1%
EPS - Adjusted earnings - Basic (cents) (note 7) 17.06 16.25 5%
EPS - Adjusted earnings - Diluted (cents) (note 7) 16.83 15.68 7%
(*) Certain prior period figures are restated, please refer to note 12 for
further information.
Online Marketing segment
Net revenue increased by 1% from USD 94.3m to USD 95.4m. The segment saw 15%
growth in the number of consumer journeys, from 5.6 billion for TTM 2023 to
6.5 billion for TTM 2024. Click prices continue to be under pressure on both
the demand (revenue) and supply (cost of sales) side, with RPM((1)) decreasing
by 18% from USD 97 to USD 79. These metrics relate to the TONIC and
ParkingCrew platforms and do not cover the Group's product comparison
business, VGL, where RPM has increased 19% to USD 246, with visitor sessions
33% higher.
During the period, in line with market best practice, the Group pursued higher
traffic quality metrics and less reliance on short-form video. As a result,
whilst volume growth remained healthy, it did not fully compensate for lower
RPM. A key and significant investment in the last eighteen months is the
launch of the search on content business model, and this is expected to assist
the Group in improving both metrics over time.
Our Online Marketing segment aims to become the leading Digital Audience
Matching platform. We match audiences and advertisers between platforms that
are not innately integrated, such as linking social media users with search ad
campaigns on leading search engines, programmatic display, and video ad
inventory. We also connect users starting their product search on search
engines with leading e-commerce platforms and their marketplace partners. In
line with our OM(2) - omni-media, omni-monetisation - vision, we continually
expand our network of digital audiences and demand sources. By harnessing the
power of artificial intelligence, we enhance the relevance and value of our
first-party data as we expand our international footprint.
The Group aims to leverage the recently acquired Shinez platform to generate
revenue from previously unmonetised TONIC and VGL visitor sessions through
programmatic display and video advertising on a pay-per-view basis. In return,
the behavioural insights gathered from TONIC and VGL will enable Shinez to
more effectively connect advertisers with relevant audiences when viewing its
content. By doing so, we will drive future profitability through improved
targeting, increased RPM, and the accumulation of valuable first-party data.
In response to unanticipated changes in Shinez's specific target markets and
the resulting underperformance relative to expectations, the Group has swiftly
taken corrective actions, including integrating additional advertising
inventory, refining revenue optimisation strategies and a more general review
of its operating model. Please refer to note 10.a for more information.
Online Presence segment
Net revenue increased by 9% from USD 44.2m to USD 48.2m, with much improved
operating margins, continuing the year-on-year growth which the segment
demonstrated throughout 2023, driven by the structural shift in demand towards
Top Level Domains where Team Internet has a competitive edge. The number of
processed domain registration years decreased by 6% from 14.0m for TTM 2023 to
13.2m for TTM 2024, and the average revenue per domain year increased by 13%
from USD 10.8 to USD 12.2((2)).
The Online Presence segment empowers businesses and individuals worldwide to
create, maintain, and protect their digital identities, starting with a domain
name. This segment serves its global subscriber base through both direct and
indirect channels.
Michael Riedl
Chief Executive Officer
((1)) Based on analysis of c.78% of the Online Marketing segment which can be
adequately and reliably described by this KPI
((2)) Based on analysis of c.86% of the Online Presence segment which can be
adequately and reliably described by this KPI
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited
Unaudited Nine months Audited
Nine months ended Year ended
ended 30 September 31 December
30 September 2023 2023
2024 Restated* Restated*
Note USD m USD m USD m
Revenue 4 615.1 611.7 836.9
Cost of sales (471.5) (473.2) (645.8)
Net revenue/gross profit 143.6 138.5 191.1
Operating expenses (111.6) (103.6) (140.9)
Share-based payment expenses (0.8) (3.5) (4.5)
Operating profit 31.2 31.4 45.7
Adjusted EBITDA((a)) 70.1 68.8 96.4
Depreciation of property, plant and equipment (2.2) (2.3) (3.3)
Amortisation and impairment of intangible assets 8 (30.8) (28.1) (38.8)
Non-core operating expenses((b)) 5 (3.7) (3.4) (2.7)
Foreign exchange (1.4) (0.1) (1.4)
Share-based payment expenses (0.8) (3.5) (4.5)
Operating profit 31.2 31.4 45.7
Finance income 0.9 0.3 0.6
Finance costs (13.8) (11.7) (16.2)
Net finance costs 6 (12.9) (11.4) (15.6)
Profit before taxation 18.3 20.0 30.1
Income tax (6.4) (7.2) (5.0)
Profit after taxation 11.9 12.8 25.1
Exchange differences on translation of foreign operations 3.0 (4.2) 4.8
(Loss)/gain arising on changes in fair value of hedging instruments (0.5) 1.6 -
Total comprehensive profit for the period 14.4 10.2 29.9
Earnings per share:
Basic (cents) 7 4.65 4.69 9.20
Diluted (cents) 7 4.59 4.53 8.89
Adjusted earnings - Basic (cents) 7 17.06 16.25 23.27
Adjusted earnings - Diluted (cents) 7 16.83 15.68 22.46
All amounts relate to continuing activities
((a)) Earnings before interest, tax, depreciation, amortisation and
impairment, non-core operating expenses, foreign exchange gains and losses,
and share-based payment expenses.
((b)) 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.
(*) Certain prior period figures are restated, please refer to note 12 for
further information.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Audited
Unaudited 30 September 31 December
30 September 2023 2023
2024 Restated(*) Restated(*)
Note USD m USD m USD m
ASSETS
Non-current assets
Property, plant and equipment 2.7 2.7 2.6
Right-of-use assets 4.4 4.7 4.6
Intangible assets 8 337.3 323.4 323.6
Other non-current assets 0.1 0.2 0.1
Deferred tax assets 13.4 9.7 12.8
Derivative financial instruments - 1.4 -
357.9 342.1 343.7
Current assets
Trade and other receivables 99.6 99.8 106.7
Inventory 0.3 0.5 0.2
Cash and bank balances 93.3 83.7 92.7
193.2 184.0 199.6
TOTAL ASSETS 551.1 526.1 543.3
EQUITY AND LIABILITIES
Equity
Share capital 0.3 0.3 0.3
Share premium - 98.3 -
Merger relief reserve 5.3 5.3 5.3
Share-based payment reserve 26.7 27.4 25.7
Cash flow hedging reserve (0.7) 1.4 (0.2)
Foreign exchange translation reserve (3.0) (15.0) (6.0)
Retained earnings 120.3 28.0 128.2
Total equity 148.9 145.7 153.3
Non-current liabilities
Other payables 6.1 5.8 4.5
Lease liabilities 3.2 3.1 3.2
Deferred tax liabilities 26.2 26.5 28.0
Borrowings 192.0 166.5 166.3
Derivative financial instruments 0.7 - 0.2
228.2 201.9 202.2
Current liabilities
Trade, other payables and accruals 172.2 176.5 185.9
Lease liabilities 1.5 1.7 1.6
Borrowings 0.3 0.3 0.3
174.0 178.5 187.8
TOTAL LIABILITIES 402.2 380.4 390.0
TOTAL EQUITY AND LIABILITIES 551.1 526.1 543.3
The financial statements on pages 1 to 21 were approved by the Board of
Directors and authorised for issue on 11 November 2024.
(*) Certain prior period figures are restated, please refer to note 12 for
further information.
Equity attributable to owners
of the Parent Company
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share- based payment reserve USD m Foreign exchange translation reserve USD m
Merger relief reserve Cash flow hedging USD m
Share capital Share premium USD m Reserve USD m Retained earnings
USD m USD m USD m
Balance as at 1 January 2023 0.3 98.3 5.3 24.1 (0.2) (10.8) 50.0 167.0
Prior year restatement (note 12) - - - - - - (1.0) (1.0)
Restated balance at 1 January 2023 0.3 98.3 5.3 24.1 (0.2) (10.8) 49.0 166.0
Profit for the period - - - - - - 12.8 12.8
Translation of foreign operations - - - - - (4.2) - (4.2)
Other comprehensive income - changes in fair value of hedging instruments - - - - 1.6 - - 1.6
Total comprehensive profit for the period - - - - 1.6 (4.2) 12.8 10.2
Dividends paid on equity shares - - - - - - (3.6) (3.6)
Repurchase of shares - - - - - - (30.2) (30.2)
Share-based payments - - - 2.1 - - - 2.1
Share-based payments - deferred tax - - - 1.2 - - - 1.2
Balance as at 30 September 2023 0.3 98.3 5.3 27.4 1.4 (15.0) 28.0 145.7
Profit for the period (restated, see note 12) - - - - - - 12.3 12.3
Translation of foreign operations (restated, see note 12) - - - - - 9.0 - 9.0
Other comprehensive income - changes in fair value of hedging instruments - - - - (1.6) - - (1.6)
Total comprehensive profit for the period - - - - (1.6) 9.0 12.3 19.7
Cancellation of shares - (98.3) - - - - 98.3 -
Repurchase of shares - - - - - - (10.4) (10.4)
Share-based payments - - - 1.1 - - - 1.1
Share-based payments - deferred tax - - - (2.8) - - - (2.8)
Balance as at 31 December 2023 0.3 - 5.3 25.7 (0.2) (6.0) 128.2 153.3
Profit for the period - - - - - - 11.9 11.9
Translation of foreign operations - - - - - 3.0 - 3.0
Other comprehensive income - changes in fair value of hedging instruments - - - - (0.5) - - (0.5)
Total comprehensive profit for the period - - - - (0.5) 3.0 11.9 14.4
Dividends paid on equity shares - - - - - - (6.4) (6.4)
Repurchase of shares - - - - - - (13.4) (13.4)
Share-based payments - - - 0.7 - - - 0.7
Share-based payments - deferred tax - - - 0.3 - - - 0.3
Balance as at 30 September 2024 0.3 - 5.3 26.7 (0.7) (3.0) 120.3 148.9
· 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 shares issue costs and other permitted
reductions.
· Share-based payment reserve represents the cumulative value of
share-based payments recognised through equity and deferred tax assets arising
thereon.
· Cash flow hedging reserve represents the effective portion of
changes in the fair value of derivatives.
· Foreign exchange translation reserve represents the cumulative
exchange differences arising on Group consolidation.
· Retained earnings represents the cumulative value of the profits
not distributed to Shareholders but retained to finance the future capital
requirements of the Group.
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
CONSOLIDATED STATEMENT OF CASH FLOWS 2024 2023 2023
Restated(*) Restated(*)
USD m USD m USD m
Cash flow from operating activities
Profit before taxation 18.3 20.0 30.1
Adjustments for:
Depreciation of property, plant and equipment 2.2 2.3 3.3
Amortisation and impairment of intangible assets 30.8 28.1 38.8
Finance costs (net) 12.9 11.4 15.6
Share-based payments 0.8 3.5 4.5
Increase in trade and other receivables (6.9) (1.1) (8.5)
Decrease in trade and other payables (1.5) (9.9) (6.0)
(Increase)/decrease in inventories (0.1) 0.2 0.4
Cash flow generated from operations 56.5 54.5 78.2
Income tax paid (6.6) (4.3) (5.6)
Net cash flow generated from operating activities 49.9 50.2 72.6
Cash flow used in investing activities
Purchase of property, plant and equipment (1.2) (1.7) (1.9)
Purchase of intangible assets (5.7) (6.7) (8.3)
Payment of deferred consideration (3.9) (17.9) (18.7)
Proceeds from disposal of subsidiary 0.2 - -
Acquisition of subsidiaries and related assets, net of cash acquired (32.2) (5.6) (5.6)
Net cash flow used in investing activities (42.8) (31.9) (34.5)
Cash flow generated from/(used in) financing activities
Drawdown of revolving credit facility 25.0 15.0 15.0
Bank finance arrangement fees (0.1) (0.2) (0.7)
Payment of dividend to ordinary Shareholders (6.4) (3.6) (3.6)
Repurchase of ordinary shares (13.8) (30.2) (39.7)
Lease principal repayments (1.5) (1.1) (2.3)
Bank loan capital repayments (0.2) (0.2) -
Interest paid (10.4) (9.0) (12.1)
Net cash flow used in financing activities (7.4) (29.3) (43.4)
Net decrease in cash and cash equivalents (0.3) (11.0) (5.3)
Cash and cash equivalents at beginning of the period 92.7 94.8 94.8
Exchange gains/(losses) on cash and cash equivalents 0.9 (0.1) 3.2
Cash and cash equivalents at end of the period 93.3 83.7 92.7
(*) Certain prior period figures are restated, please refer to note 12 for
further information.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. General information
Team Internet Group Plc is the UK holding company of a group of companies
whose principal activities create meaningful and successful connections from
businesses to domains, brands to consumers, publishers to advertisers,
enabling everyone to realise their digital ambitions. The Company is
registered in England and Wales (company number 08576358). Its registered
office and principal place of business is 4th Floor, Saddlers House, 44 Gutter
Lane, London EC2V 6BR.
2. Basis of preparation
The financial results for the nine months ended 30 September 2024 have been
prepared in accordance with the accounting policies outlined in the Group's
2023 statutory financial statements, except for the changes to IAS 1:
Presentation of Financial Statements effective 1 January 2024 and the
classification of the reassessment of contingent consideration in the income
statement, and comply with the disclosure requirements of IAS 34: Interim
Financial Reporting. The financial statements have been restated for the
changes in accounting policies and errors in respect of contingent
consideration, please refer to note 12 for further information.
The Group adopted the following new pronouncements during the period to 30
September 2024, which did not have a material impact on the Group's interim
financial statements:
• Amendment to IFRS 16 - Leases on sale and leaseback; and
• Amendment to IAS 7 and IFRS 7 - Supplier finance.
The unaudited financial results are condensed and do not comprise statutory
accounts within the meaning of section 434 of the Companies Act 2006. The
financial statements for the year ended 31 December 2023, upon which the
auditors issued an unqualified opinion, are available on the Group's website
and did not contain statements under section 498(2) or (3) of the Companies
Act 2006.
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 Group has 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.
As at 30 September 2024, the Group had access to over USD 148.3m of liquidity,
comprising cash and cash equivalents of USD 93.3m and access to an undrawn
Revolving Credit Facility (RCF) of USD 55.0m. In considering whether the
Group's financial statements can be prepared on a going concern basis, the
Directors have reviewed the Group's business activities together with factors
likely to affect its performance, financial position and access to liquidity
(including consideration of financial covenants).
The Group has net current assets of USD 19.2m at 30 September 2024. Current
liabilities include USD 22.5m of liabilities not expected to result in a cash
outflow in the foreseeable future, comprising deferred revenue of USD 8.1m and
payments received on account from customers of USD 14.4m. Excluding these
liabilities, the Group has net current assets of USD 41.7m.
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.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
3. Segment analysis
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.
The Group has two reporting segments, Online Marketing and Online Presence.
Online Marketing is comprised of three operating segments which meet the
qualitative and quantitative thresholds for aggregation as one reporting
segment. Online Presence is comprised of one operating segment.
Our Online Marketing segment aims to become the leading Digital Audience
Matching platform, matching audiences and advertisers between platforms that
are not innately integrated. Our Online Presence segment enables business and
individuals globally to create, maintain and protect their digital identity
online, commencing the journey with a domain name. The Online Presence segment
is serving its global subscriber base through direct and indirect channels.
The Group's reporting segments performed as follows during the period:
Unaudited Unaudited
Nine months ended Nine months ended Audited
30 September 30 September Year ended
2024 2023 31 December
USD m USD m 2023
USD m
Online Marketing
Revenue 471.0 474.7 657.1
Cost of sales (375.6) (380.4) (525.4)
Net revenue/gross profit 95.4 94.3 131.7
Online Presence
Revenue 144.1 137.0 179.8
Cost of sales (95.9) (92.8) (120.4)
Net revenue/gross profit 48.2 44.2 59.4
Total revenue 615.1 611.7 836.9
Total cost of sales (471.5) (473.2) (645.8)
Total net revenue/gross profit 143.6 138.5 191.1
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
4. Revenue
The Group's revenue is generated indirectly from consumers located in the
following geographical areas:
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December 2023
2024 2023 USD m
USD m % USD m % %
Americas 270.5 44% 314.6 52% 444.5 53%
EMEA 303.8 49% 246.5 40% 326.2 39%
APAC 40.8 7% 50.6 8% 66.2 8%
615.1 100% 611.7 100% 836.9 100%
The Group's revenue is invoiced directly to the following geographical areas:
Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December 2023
2024 2023 USD m
USD m % USD m % %
Americas 86.4 14% 65.8 11% 90.7 11%
EMEA 506.8 82% 520.6 85% 714.1 85%
APAC 21.9 4% 25.3 4% 32.1 4%
615.1 100% 611.7 100% 836.9 100%
On a reporting segment basis, the Group's revenue is invoiced directly to the
following geographical areas:
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December 2023
2024 2023 USD m
USD m % USD m % %
Online Marketing
Americas 28.0 5% 14.5 3% 20.5 3%
EMEA 437.0 71% 452.3 74% 626.5 75%
APAC 6.0 1% 7.9 1% 10.1 1%
471.0 77% 474.7 78% 657.1 79%
Online Presence
Americas 58.4 9% 51.3 8% 70.2 8%
EMEA 69.8 11% 68.3 11% 87.6 10%
APAC 15.9 3% 17.4 3% 22.0 3%
144.1 23% 137.0 22% 179.8 21%
Total revenue 615.1 100% 611.7 100% 836.9 100%
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
5. Non-core operating expenses
Unaudited Audited
Unaudited Nine months Year ended
Nine months ended 31 December
ended 30 September 2023
30 September 2023 Restated(*)
2024 Restated(*) USD m
USD m USD m
Acquisition costs 4.5 4.0 4.7
Reassessment of contingent consideration (2.4) (4.9) (7.0)
Total acquisition related costs/(income) 2.1 (0.9) (2.3)
Integration and streamlining costs 0.9 2.6 3.3
Other costs 0.7 1.7 1.7
Non-core operating expenses 3.7 3.4 2.7
* Certain prior period figures are restated, please refer to note 12 for
further information.
6. Net finance costs
Unaudited Unaudited Audited
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2023
2024 2023 Restated(*)
USD m Restated(*) USD m
USD m
Finance income (0.9) (0.3) (0.6)
Impact of unwinding of discount on net present value of deferred consideration 0.4 1.0 1.2
Amortisation of arrangement fees on borrowings 1.0 1.0 1.4
Interest on bank borrowings 11.7 9.8 13.5
Other interest 0.5 - -
Interest expense on leases 0.2 0.1 0.2
Gain arising on derivatives classified as fair value hedges - (0.2) (0.1)
Net finance costs 12.9 11.4 15.6
* Certain period figures are restated, please refer to note 12 for further
information.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
7. 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, plus vested options, as
these options have little or no exercise price, less shares held in treasury
and by the Group's Employee Benefit Trust.
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 unvested dilutive potential ordinary shares as
calculated using the treasury stock method (arising from the Group's share
option scheme) into ordinary shares has been added to the denominator. Exact
numbers have been used in the calculation of earnings per share, rather than
the rounded numbers used in the financial statements.
Unaudited Unaudited
Nine months Nine months Audited
ended ended Year ended
30 September 30 September 31 December
2024 2023 2023 Restated*
USD m Restated* USD m
USD m
Profit after tax attributable to owners 11.9 12.8 25.1
Operating profit 31.2 31.4 45.7
Depreciation of property, plant and equipment 2.2 2.3 3.3
Amortisation and impairment of intangible assets 30.8 28.1 38.8
Non-core operating expenses 3.7 3.4 2.7
Foreign exchange 1.4 0.1 1.4
Share-based payment expenses 0.8 3.5 4.5
Adjusted EBITDA 70.1 68.8 96.4
Depreciation (2.2) (2.3) (3.3)
Net finance costs (excluding gains arising on derivatives classified as fair (12.9) (11.5) (15.7)
value hedges) - note 6
Current income tax (11.5) (10.6) (14.0)
Adjusted earnings 43.5 44.4 63.4
Weighted average number of shares:
Basic 255,107,731 272,757,583 272,131,265
Effect of dilutive potential ordinary shares 3,382,130 9,878,548 9,869,695
Diluted average number of shares 258,489,861 282,636,131 282,000,960
Earnings per share:
Basic (cents) 4.65 4.69 9.20
Diluted (cents) 4.59 4.53 8.89
Adjusted earnings - Basic (cents) 17.06 16.25 23.27
Adjusted earnings - Diluted (cents) 16.83 15.68 22.46
* Certain prior period figures are restated, please refer to note 12 for
further information.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
8. Intangible assets
Domain names Customer list Patents and trademarks Intellectual property
USD m Software USD m USD m Goodwill USD m Total
USD m USD m USD m
Cost or deemed cost
At 1 January 2023 43.3 58.9 101.1 10.2 217.4 4.5 435.4
Restatement (note 12) - - - - (5.6) - (5.6)
At 1 January 2023 (restated) 43.3 58.9 101.1 10.2 211.8 4.5 429.8
Additions 3.1 4.2 0.2 - - 2.4 9.9
Acquisition of subsidiary - 0.5 0.6 - 1.3 - 2.4
Exchange differences - (0.2) (0.8) (0.1) (2.1) (0.1) (3.3)
At 30 September 2023 46.4 63.4 101.1 10.1 211.1 6.8 438.9
Amortisation and impairment
At 1 January 2023 11.7 25.3 42.7 2.3 3.6 1.9 87.5
Charge for the period 5.7 9.6 10.8 0.7 - 1.4 28.2
Exchange differences 0.2 - (0.4) - - - (0.2)
At 30 September 2023 17.5 34.9 53.1 3.0 3.6 3.3 115.5
Net book value
At 1 January 2023 (restated) 31.6 33.6 58.4 7.9 208.2 2.6 342.3
At 30 September 2023 28.9 28.5 48.0 7.1 207.4 3.5 323.4
Cost or deemed cost
At 1 October 2023 46.4 63.4 101.1 10.1 211.1 6.8 438.9
Additions 0.2 1.2 (0.2) - - 0.6 1.8
Acquisition of subsidiary - - - - - - -
Exchange differences 0.8 0.8 2.7 0.1 5.5 0.4 10.3
At 31 December 2023 47.4 65.4 103.6 10.2 216.6 7.8 451.0
Amortisation and impairment
At 1 October 2023 17.5 34.9 53.1 3.0 3.6 3.3 115.5
Charge for the period 2.0 3.3 3.8 0.2 - 0.6 9.9
Impairment - - - - - 0.7 0.7
Exchange differences 0.1 0.3 0.9 - - 0.1 1.4
At 31 December 2023 19.6 38.5 57.8 3.2 3.6 4.7 127.4
Net book value
At 1 October 2023 (restated) 28.9 28.5 48.0 7.1 207.4 3.5 323.4
At 31 December 2023 27.8 26.9 45.8 7.0 213.0 3.1 323.6
Cost or deemed cost
At 1 January 2024 47.4 65.4 103.6 10.2 220.0 7.8 454.4
Restatement (note 12) - - - - (3.4) - (3.4)
At 1 January 2024 (restated) 47.4 65.4 103.6 10.2 216.6 7.8 451.0
Additions 0.4 4.7 - - - 1.0 6.1
Acquisition of subsidiary - 7.0 15.3 - 9.3 4.3 35.9
Disposal of subsidiary - (0.2) - - - - (0.2)
Exchange differences 0.3 0.5 1.0 - 2.3 0.2 4.3
At 30 September 2024 48.1 77.4 119.9 10.2 228.2 13.3 497.1
Amortisation and impairment
At 1 January 2024 19.6 38.5 57.8 3.2 3.6 4.7 127.4
Charge for the period 5.9 11.6 11.0 0.6 - 1.7 30.8
Disposal of subsidiary - (0.1) - - - - (0.1)
Exchange differences 0.2 0.4 0.7 - 0.3 0.1 1.7
At 30 September 2024 25.7 50.4 69.5 3.8 3.9 6.5 159.8
Net book value
At 1 January 2024 (restated) 27.8 26.9 45.8 7.0 213.0 3.1 323.6
At 30 September 2024 22.4 27.0 50.4 6.4 224.3 6.8 337.3
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
9. Financial instruments
The Group is exposed to market risk, credit risk and liquidity risk arising
from financial instruments. The Group's overall financial risk management
policy focusses 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.
Cash conversion was as follows:
Unaudited Unaudited Audited
Nine months Nine months ended Year ended
ended 30 September 31 December
30 September 2023 2023
2024 USD m Restated(*)
USD m USD m
Cash conversion
Cash flow from operations 56.5 54.5 78.2
Non-core costs incurred and paid during the period 5.4 5.1 6.1
Change in working capital due to non-recurring working capital items 2.2 6.0 8.3
Adjusted cash flow from operations 64.1 65.6 92.6
Adjusted EBITDA 70.1 68.8 96.4
Adjusted operating cash conversion % 91% 95% 96%
* Certain prior period figures are restated, please refer to note 12 for
further information.
Net debt is shown in the table below:
Debt related financial
instruments
Bank debt Cash Net debt
USD m USD m USD m USD m
At 1 January 2023 (151.2) 94.8 (0.2) (56.6)
Drawdown of revolving credit facility (15.0) 15.0 - -
Capital repayments 0.2 (0.2) - -
Prepaid finance cost additions 0.2 (0.2) - -
Amortisation of prepaid finance costs (1.0) - - (1.0)
Mark-to-market revaluation - - 1.6 1.6
Other cash movements - (25.6) - (25.6)
Foreign exchange differences - (0.1) - (0.1)
At 30 September 2023 (166.8) 83.7 1.4 (81.7)
Capital repayments 0.1 (0.1) - -
Prepaid finance cost additions 0.5 (0.5) - -
Amortisation of prepaid finance costs (0.4) - - (0.4)
Mark-to-market revaluation - - (1.6) (1.6)
Other cash movements - 6.3 - 6.3
Foreign exchange differences - 3.3 - 3.3
At 31 December 2023 (166.6) 92.7 (0.2) (74.1)
Drawdown of revolving credit facility (25.0) 25.0 - -
Capital repayments 0.2 (0.2) - -
Prepaid finance costs additions 0.1 (0.1) - -
Amortisation of prepaid finance costs (1.0) - - (1.0)
Mark-to-market revaluation - - (0.5) (0.5)
Acquisition of Shinez (initial cash consideration, net of cash acquired) - (31.8) - (31.8)
Other cash movements - 6.8 - 6.8
Foreign exchange differences - 0.9 - 0.9
At 30 September 2024 (192.3) 93.3 (0.7) (99.7)
The Group's drawn-down RCF of USD 45.0m (31 December 2023: USD 20.0m, 30
September 2023: USD 20.0m) is classified as a non-current liability following
the IAS 1 amendment effective 1 January 2024 (see note 12 for further
information). The RCF would become repayable if the Group breaches a quarterly
covenant, which are leverage and interest cover covenants. There is no
indication that the Group will breach these covenants.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
10. Business combinations
a. Update on the Acquisition of Shinez I.O. Ltd
On 26 April 2024, Team Internet Group Plc acquired the entire issued share
capital of a leading Israel-based online marketing business, Shinez I.O. Ltd.
Shinez specialises in the production and promotion of highly engaging content
across diverse channels such as social media, search engines, and native
networks. Its current 40 popular portals include luxandlush.com,
cooking4all.com and theprimarymarket.com. Leveraging this expertise, Shinez
monetises real-time visits through an expansive network of advertising
exchanges, utilising cutting-edge technology and strategies. This approach
maximises the revenue potential of each piece of content, and positions Shinez
at the forefront of digital marketing innovation.
Team Internet acquired Shinez for an enterprise value of USD 41.8m, on a net
debt-free basis and subject to customary adjustments for net working capital,
payable in cash. The initial consideration represents a multiple of 4.0x
Shinez's FY23 Adjusted EBITDA. Additional contingent consideration of up to
USD 12.3m may become due subject to Shinez achieving ambitious financial
targets over the next two years, payable in cash. As the USD 12.3m of
contingent payments is also contingent on continued employment of specific
employees, the fair value of this consideration will be charged to the income
statement within non-core expenses as remuneration and is therefore not
included within consideration in the table below. In view of the
post-acquisition performance, the probability of any additional contingent
consideration becoming due is negligible.
Total consideration payable in the table below of USD 42.5m comprises the
enterprise value of USD 41.8m, less discounting of deferred consideration of
USD 0.7m, plus working capital adjustments totalling USD 1.4m. Initial cash
consideration, net of cash acquired, is USD 31.8m (USD 37.6m of initial cash
consideration, less cash acquired of USD 5.8m).
The following table summarises the consideration paid for Shinez I.O. Ltd and
the fair values of the assets and liabilities at the acquisition date, in line
with Group policies. The fair values of the acquired assets and liabilities
are provisional pending completion of the purchase price allocation as
required under IFRS 3: Business combinations ("IFRS 3").
USD m
Initial cash consideration (adjusted for cash and working capital) 37.6
Consideration contingent on completion of operational milestones 1.3
Deferred consideration (USD 4.3m discounted to present value) 3.6
Total consideration 42.5
Fair values recognised on acquisition
Assets
Customer list 15.3
Software 7.0
Intellectual property 4.3
Trade and other receivables 14.0
Deferred tax asset 0.3
Corporation tax receivable 0.3
Cash and cash equivalents 5.8
47.0
Liabilities
Trade payables 8.2
Other current liabilities 2.4
Deferred tax liability 3.2
13.8
Total identifiable estimated net assets at fair value 33.2
Goodwill arising on acquisition 9.3
Purchase consideration 42.5
For the period post-acquisition to 30 September 2024, revenues of USD 21.7m,
an adjusted EBITDA loss of USD 0.5m and a post-tax loss of USD 2.0m, including
amortisation of acquired intangibles, have been generated by Shinez. If the
acquisition had been made on 1 January 2024 the contribution to the Group's
results, for the nine months ended 30 Sept 2024, would have been revenues of
USD 50.3m, adjusted EBITDA of USD 0.7m and a loss after tax of USD 1.3m,
including amortisation of acquired intangibles.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
10. Business combinations (continued)
Goodwill arising on the acquisition primarily relates to the specific
synergistic benefits able to be realised through Shinez being part of the
larger Team Internet Group, as well as goodwill in relation to employees.
Since the acquisition of Shinez in April 2024, the asset has underperformed
relative to expectations, primarily due to unanticipated changes in its
specific target markets. In response, the Group has swiftly taken corrective
actions, integrating additional advertising inventory and refining revenue
optimisation strategies to enhance Shinez's performance.
While these measures aim to support Shinez's return to profitability, we
currently expect limited EBITDA contribution in the near term. However, the
technology, content library, social media reach, behavioural data, and skilled
workforce assembled within Shinez represent a valuable asset base. We believe
these elements will strengthen our competitive advantage as we advance our
core Online Marketing services. The Shinez assets themselves will be
redeveloped with a view to using primarily organic traffic, more short-form
video content and higher intent advertising.
b. Deferred consideration payments
During the nine-month period ended 30 September 2024 the following deferred
consideration payments were made:
· The final deferred cash consideration payment of USD 0.1m was
made for the acquisition of NameAction in January 2024
· The final deferred cash consideration payment of EUR 1.0m (USD
1.1m) for the acquisition of SK-NIC was made in two instalments: EUR 0.4m (USD
0.4m) in March 2024 and EUR 0.6m (USD 0.7m) in May 2024
· A deferred cash consideration payment of USD 0.4m for the
acquisition of Shinez I.O. Ltd was made in June 2024 in respect of operational
milestones achieved
· In July 2024, a deferred consideration payment for the
acquisition of M.A Aporia was settled in cash for USD 2.3m
11. Share buyback programme and Employee Benefit Trust
During the period, the Company repurchased 7,913,694 shares under its share
buyback programme at an average price of GBP 1.33 (USD 1.68), compared to
22,136,411 shares purchased in the year ended 31 December 2023 at GBP 1.27
(USD 1.59). These repurchased shares are held in treasury. The total value of
share repurchases for the nine-month period ended 30 September 2024, including
commission on shares purchased, amounted to GBP 10.6m (USD 13.4m).
At 30 September 2024 the Employee Benefit Trust ("EBT") held 5,926,601 shares
(31 December 2023: 9,104,431 shares, 30 September 2023: 9,199,521 shares). In
September 2024 YTD, the number of shares held in the EBT reduced due to
satisfying the exercise of share options by employees of the Group. During
2024, 612,371 share options were granted, 3,165,730 share options were
exercised and 885,278 share options were forfeited.
During the period 15,160,084 ordinary shares held in treasury were cancelled.
Following the cancellation, the issued share capital of the Company is
273,500,000.
The number of shares held, and outstanding share options is as follows:
Unaudited Unaudited Audited
30 September 30 September 31 December
2024 2023 2023
Number Number Number
Issued share capital 273,500,000 288,660,084 288,660,084
Shares held by the Employee Benefit Trust (5,926,601) (9,199,521) (9,104,431)
Shares held in treasury (15,110,021) (16,098,125) (22,356,411)
Share capital 252,463,378 263,362,438 257,199,242
Outstanding share options 7,918,563 11,525,831 11,357,200
Share capital plus outstanding share options 260,381,941 274,888,269 268,556,442
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
12. Changes in accounting policies and correction of errors
Restatements have been made to the financial statements for the periods ended
31 December 2023 and 30 September 2023 as described below. There are no
changes to taxation in respect of the restatements. Please note that these
restatements are of the same nature as reported in the June 2024 unaudited
interim financial statements.
Classification of borrowings and reassessment of contingent consideration -
change in accounting policies
The consolidated statements of financial position at 31 December 2023 and at
30 September 2023 have been restated in line with the amendments to
International Financial Statement IAS 1: Presentation of Financial Statements
("IAS 1"), effective 1 January 2024.
Following the changes to IAS 1, amounts drawn from the Group's RCF, and all
prepaid finance costs, are classified as non-current liabilities in the
financial statements. This is based on the Group's ability to defer payments
for at least twelve months from the date of the financial statements as long
as the Group is still in compliance with its banking covenants. This change in
accounting policy has been applied retrospectively, with comparative figures
for 31 December 2023 and 30 September 2023 restated, i.e. borrowings of USD
18.6m at 31 December 2023 and of USD 18.8m at 30 September 2023 have been
reclassified from current to non-current borrowings.
The Group has also changed its policy in respect of the classification of
changes in fair value of contingent consideration in respect of business
combinations. Previously changes in the fair value of contingent consideration
were recognised within finance costs. The Group has changed its policy to
recognise such items within operating profit in instances where the fair value
is reassessed as a result of over or underperformance by the acquired entity
resulting in more, or less, consideration payable in relation to an earn-out.
This change in accounting policy provides reliable and more relevant
information on the nature of these transactions. Consequently, a credit of USD
2.8m in the nine-month period ended 30 September 2023, and in the year ended
31 December 2023, has been reclassified from finance costs to operating
expenses (non-core expenses).
Contingent consideration - correction of errors
Fair value reassessments of contingent consideration after the finalisation of
their fair value, but within twelve months of the date of acquisition, were
previously accounted for as adjustments to goodwill. Under IFRS 3, such
changes should be accounted for within the income statement. To correct this,
USD 2.8m has been credited to operating costs (non-core expenses) within the
income statement in the nine-month period ended 30 September 2023, and in the
year ended 31 December 2023. Goodwill has increased by USD 2.1m at 31 December
2023 and 30 September 2023. There has also been an increase of USD 0.1m to
goodwill in respect of foreign exchange differences which impacted the year
ended 31 December 2023 related to these adjustments, nine-month period ended
30 September 2023 USD nil.
Contingent consideration should be reassessed at the end of each reporting
period. Management did not fully reassess the contingent consideration at
December 2023. Having now done so, based on the information available as at 31
December 2023, a further USD 2.1m has been credited to operating costs
(non-core expenses) in the income statement for the year ended 31 December
2023 to correct this error and reduce the contingent consideration.
In line with IFRS 3, contingent consideration linked to the continued
employment of owners of acquired entities should be treated as remuneration,
charged to the income statement over the contingent period. Previously the
Group treated these payments as part of the acquisition consideration for an
acquired entity and included these amounts within goodwill. Consequently, in
respect of one business combination, goodwill has been reduced by USD 5.6m at
31 December 2023 and 30 September 2023, and operating costs (non-core
expenses) have increased by USD 3.6m in the year ended 31 December 2023 (of
which USD 3.3m relates to nine-month period ended 30 September 2023). The
impact on finance costs for the unwinding of the discount of deferred
consideration is a reduction in finance costs of USD 0.2m for the year ended
31 December 2023 (of which USD 0.2m relates to the nine-month period ended 30
September 2023). Deferred consideration decreased by USD 5.1m at 31 December
2023 and USD 5.8m at 30 September 2023. Accruals in respect of contingent
consideration treated as remuneration of USD 1.9m have been recognised at 31
December 2023 (30 September 2023: USD 4.4m). The impact on retained earnings
at 1 January 2023 is USD 1.1m comprising contingent consideration treated as
remuneration.
Impact on earnings per share
Earnings per share for the nine-month period ended 30 September 2023 and the
year ended 31 December 2023 have been restated for the correction of errors
shown in the table below.
In addition, in line with the change in policy within the audited 31 December
2023 financial statements, adjusted earnings per share for 30 September 2023
has been restated to exclude deferred tax, which mainly relates to items
adjusted for within amortisation, and the treatment of vested and unvested
options within the number of basic and diluted shares.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
12. Changes in accounting policies and correction of errors (continued)
The consolidated statement of comprehensive income, consolidated statement of
financial position and consolidated statement of cash flows have been restated
as follows:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited
Nine months Nine months
ended ended Audited
30 September 30 September Audited Year ended
2023 Accounting policy changes 2023 Year ended Accounting policy changes 31 December
Correction of errors Restated 31 December Correction of errors 2023
2023 Restated
USD m USD m USD m USD m USD m USD m USD m USD m
Revenue 611.7 - - 611.7 836.9 - - 836.9
Cost of sales (473.2) - - (473.2) (645.8) - - (645.8)
Net revenue/gross profit 138.5 - - 138.5 191.1 - - 191.1
Operating expenses (105.2) 2.8 (1.2) (103.6) (144.3) 2.8 0.6 (140.9)
Share-based payment expenses (3.5) - - (3.5) (4.5) - - (4.5)
Operating profit 29.8 2.8 (1.2) 31.4 42.3 2.8 0.6 45.7
Adjusted EBITDA 68.8 - - 68.8 96.4 - - 96.4
Depreciation of property, plant and equipment (2.3) - - (2.3) (3.3) - - (3.3)
Amortisation and impairment of intangible assets (28.1) - - (28.1) (38.8) - - (38.8)
Non-core operating expenses (5.0) 2.8 (1.2) (3.4) (6.1) 2.8 0.6 (2.7)
Foreign exchange loss (0.1) - - (0.1) (1.4) - - (1.4)
Share-based payment expenses (3.5) - - (3.5) (4.5) - - (4.5)
Operating profit 29.8 2.8 (1.2) 31.4 42.3 2.8 0.6 45.7
Finance income 0.3 - - 0.3 0.6 - - 0.6
Finance costs (9.1) (2.8) 0.2 (11.7) (13.6) (2.8) 0.2 (16.2)
Net finance costs (8.8) (2.8) 0.2 (11.4) (13.0) (2.8) 0.2 (15.6)
Profit before tax 21.0 - (1.0) 20.0 29.3 - 0.8 30.1
Income tax (7.2) - - (7.2) (5.0) - - (5.0)
Profit after tax 13.8 - (1.0) 12.8 24.3 - 0.8 25.1
Exchange differences on translation of foreign operations (4.2) - - (4.2) 4.7 - 0.1 4.8
Gain arising on changes in fair value of hedging instruments 1.6 - - 1.6 - - - -
Total comprehensive profit for the period 11.2 - (1.0) 10.2 29.0 - 0.9 29.9
Earnings per share:
Basic (cents) 5.10 (0.04) (0.37) 4.69 8.94 - 0.26 9.20
Diluted (cents) 5.07 (0.16) (0.38) 4.53 8.63 - 0.26 8.89
Adjusted earnings - Basic (cents) 17.56 (1.42) 0.11 16.25 23.22 - 0.05 23.27
Adjusted earnings - Diluted (cents) 17.45 (1.88) 0.11 15.68 22.41 - 0.05 22.46
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
12. Changes in accounting policies and correction of errors (continued)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Accounting policy changes Correction of errors Unaudited Accounting policy changes Correction of errors Audited
Unaudited 30 September Audited 31 December
30 September 2023 31 December 2023
2023 Restated 2023 Restated
USD m USD m USD m USD m USD m USD m USD m USD m
ASSETS
Non-current assets
Property, plant and equipment 2.7 - - 2.7 2.6 - - 2.6
Right-of-use assets 4.7 - - 4.7 4.6 - - 4.6
Intangible assets 327.0 - (3.6) 323.4 327.0 - (3.4) 323.6
Deferred receivables 0.2 - - 0.2 0.1 - - 0.1
Deferred tax assets 9.7 - - 9.7 12.8 - - 12.8
Derivative financial instruments 1.4 - - 1.4 - - - -
345.7 - (3.6) 342.1 347.1 - (3.4) 343.7
Current assets
Trade and other receivables 99.8 - - 99.8 106.7 - - 106.7
Inventory 0.5 - - 0.5 0.2 - - 0.2
Cash and bank balances 83.7 - - 83.7 92.7 - - 92.7
184.0 - - 184.0 199.6 - - 199.6
Total assets 529.7 - (3.6) 526.1 546.7 - (3.4) 543.3
EQUITY AND LIABILITIES
Equity
Share capital 0.3 - - 0.3 0.3 - - 0.3
Share premium 98.3 - - 98.3 - - - -
Merger relief reserve 5.3 - - 5.3 5.3 - - 5.3
Share-based payment reserve 27.4 - - 27.4 25.7 - - 25.7
Cash flow hedging reserve 1.4 - - 1.4 (0.2) - - (0.2)
Foreign exchange translation reserve (15.0) - - (15.0) (6.1) - 0.1 (6.0)
Retained earnings 30.0 - (2.0) 28.0 128.5 - (0.3) 128.2
Total equity 147.7 - (2.0) 145.7 153.5 - (0.2) 153.3
Non-current liabilities
Other payables 5.7 - 0.1 5.8 5.8 - (1.3) 4.5
Lease liabilities 3.1 - - 3.1 3.2 - - 3.2
Deferred tax liabilities 26.5 - - 26.5 28.0 - - 28.0
Borrowings 147.7 18.8 - 166.5 147.7 18.6 - 166.3
Derivative financial instruments - - - - 0.2 - - 0.2
183.0 18.8 0.1 201.9 184.9 18.6 (1.3) 202.2
Current liabilities
Trade and other payables and accruals 178.2 - (1.7) 176.5 187.8 - (1.9) 185.9
Lease liabilities 1.7 - - 1.7 1.6 - - 1.6
Borrowings 19.1 (18.8) - 0.3 18.9 (18.6) - 0.3
199.0 (18.8) (1.7) 178.5 208.3 (18.6) (1.9) 187.8
Total liabilities 382.0 - (1.6) 380.4 393.2 - (3.2) 390.0
Total equity and liabilities 529.7 - (3.6) 526.1 546.7 - (3.4) 543.3
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (continued)
12. Changes in accounting policies and correction of errors (continued)
Unaudited Accounting policy changes Correction of errors Unaudited Audited Accounting policy changes Correction of errors Audited
Nine months Nine months Year ended Year ended
ended ended 31 December 31 December
CONSOLIDATED STATEMENT OF CASH FLOWS 30 September 30 September 2023 2023
2023 2023 Restated
Restated
USD m USD m USD m USD m USD m USD m USD m USD m
Cash flow from operating activities
Profit before taxation 21.0 - (1.0) 20.0 29.3 - 0.8 30.1
Adjustments for:
Depreciation of property, plant and equipment 2.3 - - 2.3 3.3 - - 3.3
Amortisation and impairment of intangible assets 28.1 - - 28.1 38.8 - - 38.8
Finance costs (net) 8.8 2.8 (0.2) 11.4 13.0 2.8 (0.2) 15.6
Share-based payments 3.5 - - 3.5 4.5 - - 4.5
Increase in trade and other receivables (1.1) - - (1.1) (8.5) - - (8.5)
(Decrease)/increase in trade and other payables (8.3) (2.8) 1.2 (9.9) 0.2 (2.8) (3.4) (6.0)
Decrease in inventories 0.2 - - 0.2 0.4 - - 0.4
Cash flow generated from operations 54.5 - - 54.5 81.0 - (2.8) 78.2
Income tax paid (4.3) - - (4.3) (5.6) - - (5.6)
Net cash flow generated from operating activities 50.2 - - 50.2 75.4 - (2.8) 72.6
Cash flow used in investing activities
Purchase of property, plant and equipment (1.7) - - (1.7) (1.9) - - (1.9)
Purchase of intangible assets (6.7) - - (6.7) (8.3) - - (8.3)
Payment of deferred consideration (17.9) - - (17.9) (21.5) - 2.8 (18.7)
Acquisition of subsidiaries and related assets, net of cash acquired (5.6) - - (5.6) (5.6) - - (5.6)
Net cash flow used in investing activities (31.9) - - (31.9) (37.3) - 2.8 (34.5)
Cash flow used in financing activities
Drawdown of revolving credit facility 15.0 - - 15.0 15.0 - - 15.0
Bank finance arrangement fees (0.2) - - (0.2) (0.7) - - (0.7)
Payment of dividend to ordinary Shareholders (3.6) - - (3.6) (3.6) - - (3.6)
Repurchase of ordinary shares (30.2) - - (30.2) (39.7) - - (39.7)
Lease principal repayments (1.1) - - (1.1) (2.3) - - (2.3)
Bank loan capital repayments (0.2) - - (0.2) - - - -
Interest paid (9.0) - - (9.0) (12.1) - - (12.1)
Net cash flow used in financing activities (29.3) - - (29.3) (43.4) - - (43.4)
Net decrease in cash and cash equivalents (11.0) - - (11.0) (5.3) - - (5.3)
Cash and cash equivalents at beginning of the period 94.8 - - 94.8 94.8 - - 94.8
Exchange gains on cash and cash equivalents (0.1) - - (0.1) 3.2 - - 3.2
Cash and cash equivalents at end of the period 83.7 - - 83.7 92.7 - - 92.7
13. Subsequent events
The following significant events occurred after the Group's period end date of
30 September 2024 and before the signing of these unaudited financial results
on 11 November 2024:
· On 2 October 2024, a payment of USD 3.0m was made for the
acquisition of M.A Aporia, related to contingent consideration tied to the
ongoing employment of specific employees. We anticipate that this will be the
last material acquisition related contingent payment across the Group
· Interim dividend of 1.0 pence per ordinary share paid on 4
October 2024
GLOSSARY
The Group discloses and describes a number of alternative performance measures
and terms used in these financial statements. These are listed below:
Adjusted earnings per share
Adjusted earnings per share ('Adjusted EPS') is stated before amortisation and
impairment, non-core operating expenses foreign exchange gains and losses,
share-based payment expenses and deferred tax to provide a widely used metric
that provides a more appropriate measure of the ongoing and underlying
earnings per share. Deferred tax mainly relates to items adjusted for within
amortisation.
Adjusted EBITDA
The Group reports adjusted earnings before interest, tax, depreciation,
amortisation and impairment, non-core operating expenses, foreign exchange
gains and losses, and share-based payment expenses ('Adjusted EBITDA'). This
metric is widely used by internal and external stakeholders to assess the
underlying profitability of a company.
Adjusted EBITDA is considered to be tax jurisdiction, capital structure,
property plant and equipment asset and intangible asset agnostic, as well as
providing a more appropriate measure of ongoing and underlying profitability.
Adjusted operating cash conversion
Adjusted cash conversion refers to the percentage of Adjusted EBITDA that
converted into operating cash in the period. Operating cash flows are adjusted
for non-recurring working capital items, such as the settlement of acquisition
costs included within the balance sheet of acquired entities.
Net debt
The Group defines net debt as: gross cash, less bank debt and prepaid finance
costs, and adding/subtracting bank debt-related hedging assets/liabilities as
at the balance sheet date. The Group considers net debt an appropriate measure
to determine its overall financial position and is a widely used metric by
internal and external stakeholders to assess the solvency or liquidity of the
Group.
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
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.
Organic revenue growth
Non-GAAP information has been provided for period-to-period comparison of
revenue performance. Revenue for the entire comparative period is used,
irrespective of when the acquisition by the Group arose.
Revenue by geographical location of indirect consumer
There is a material difference between the geographical location of the
indirect consumer and the invoiced customer. The Group therefore discloses the
geographical location of both the indirect (end) consumer and the (direct)
invoiced party.
Revenue per domain year
Revenue generated from the sale of an internet domain divided by the licence
period (in years) of the internet domain sold.
Revenue per thousand sessions ("RPM")
Revenue generated for every thousand sessions or visits to a website.
Revenue per visitor session
Revenue generated from each visitor session to a website.
Top-Level Domain or 'TLD'
A top-level domain is one of the domains at the highest level in the Domain
Name System of the Internet. For example, in the domain name
'www.teaminternet.com', the top-level domain is .com
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