CentralNic, the internet platform business that derives revenue from the worldwide sales of internet domain names, reports adjusted pre-tax profits of £948,000 for the six months to the end of June - 12% up on last time. The group said the financial results reflect a change in mix within the business when compared to the first half of 2015. The Retail division results were significantly enhanced by the acquisition of the Instra Group, while sales of premium domain names by the Enterprise division in the first half of 2015 did not recur in the first half of 2016. This change in mix diluted the gross margin to 26% (2015: 43%) while increasing the overall gross profit in the Group by £363,000. The group said it improved its quality of earnings over the period, increasing recurring revenues by 130% to £5.33m (2015: £2.28m), representing 60% of reported revenue (2015: 51%). Increasing recurring revenues remains a focus for the Group going forward. The results for the Retail business included the performance of the Instra Group, which was acquired on 14 January 2016. This acquisition, combined with organic growth within the Internet BS business, delivered total Retail division revenue of £6.76m (2015: £1.79m) and Adjusted EBITDA contribution of £1.10m (2015: EBITDA loss of £0.01m). Instra Group contributed revenue of £4.88m and Adjusted EBITDA contribution of £0.95m for the period under CentralNic's ownership. The Enterprise division generated revenue of £0.54m (2015: £1.05m) and an Adjusted EBITDA loss of £0.05m (2015: EBITDA profit of £0.83m). There was a change of mix in the division, notably with minimal premium domain name sales when compared to the first half of the previous year (2015: £0.70m) and with the inclusion of the subsidiary dnsXperts UG, a strategic acquisition completed in July 2015. dnsXperts UG contributed revenue of £0.24m and an EBITDA loss of £0.09m during the 1st half of 2016. The Wholesale division generated revenue of £1.64m (2015: £1.61m) and an Adjusted EBITDA contribution of £0.71m (2015: £0.64m). This reflected a change in revenue mix, in line with management expectations, combined with favourable movements in foreign exchange rates. Central costs not allocated to the divisions were £0.46m (2015: £0.44m). Acquisition and non-recurring fees totalled £0.75m (2015: £0.14m) and included integration costs, acquisition fees, shut-down costs for the old Internet BS legal entity, a settlement agreement and related legal fees, and fees associated with treasury policy and compliance. Amortisation charges of £0.95m (2015: £0.29m) reflected the amortisation of intangible assets related to the acquisition of the Instra Group (£0.67m). Cash and cash equivalents were £9.25m (2015: £4.44m) and net cash after borrowings were £6.04m (2015: £4.44m). Cash balances reflected a temporary increase in net working capital due to the timing of the June 2016 .xyz 2nd anniversary marketing campaign. Chairman Mike Turner said: "During 2016 to date, CentralNic has advanced its growth strategy through the acquisition of the Instra Group. Together with Internet.BS, the Group is now able to address demand from a number of retail segments across geographic markets. This reflects our strategy to enhance the quality and visibility of the Group's earnings. "In our wholesale business, where our strategy focusses on achieving scale through automation, our technical systems have been able to scale at an unprecedented pace to accommodate the additional volumes achieved by our clients as they gained market share. This presents an opportunity for future renewal revenues. It was also pleasing that the Group won additional wholesale clients during the period. "In our Enterprise business the Group made progress in discussions with channel partners to access corporate customers. Whilst the results in the first half were modest, the Group is excited about the future prospects for this division as we seek to deploy our technology platforms and service offerings. "Trading in our core businesses overall has remained in line with the Board's expectations since the half year. Our team is in discussions with trade buyers for premium domain name sales, and anticipating that these sales will proceed, the Board is confident of achieving the market expectations for the year."
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