Financial Results FY2016 Presentation 25 April 2017 http://mmx.co - - PowerPoint PPT Presentation

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Financial Results FY2016 Presentation 25 April 2017 http://mmx.co - - PowerPoint PPT Presentation

Minds + Machines Group Limited Financial Results FY2016 Presentation 25 April 2017 http://mmx.co Disclaimer The following is a presentation (the Presentation) relating to Minds + Machines Limited (MMX). The Presentation is being


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Minds + Machines Group Limited

Financial Results FY2016

Presentation – 25 April 2017

http://mmx.co

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Disclaimer

The following is a presentation (the “Presentation”) relating to Minds + Machines Limited (“MMX”). The Presentation is being communicated by MMX. It is confidential. Recipients may not provide, or otherwise make available, this Presentation to any person whatsoever and no part of it may be reproduced in any manner without the written permission of MMX. The information in the Presentation is subject to updating, revision and amendment. The Presentation does not constitute or form part of any offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any shares in MMX. No reliance may be placed for any purpose whatsoever on the information contained in the Presentation or any assumptions made as to its completeness. No representation or warranty expressed or implied is given by MMX or any of their officers, employees or agents as to the accuracy of the information or opinions contained in the Presentation and no liability is accepted for any such information or opinions (which should not be relied upon) or for any loss howsoever arising directly or indirectly from any use of the Presentation or its contents. The actual results, performance or achievements of MMX may be materially different from the future results, performance or achievements expressed or implied by any opinions, estimates and projections included in the Presentation. This Presentation is exempt from the general restriction on communications contained in section 21 of the Financial Services and Markets Act 2000 (“FSMA”) on the grounds that it is being provided

  • nly to persons of a kind described in Regulation 19 (being persons with professional experience in matters relating to investments), Regulation 48 (being a certified high

net worth individual), Regulation 49 (being high net worth companies, trustees of high net worth trusts or unincorporated associations), Regulation 50 (being a sophisticated investor) or Regulation 50A (being a self-certified sophisticated investor) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”) or to persons who are otherwise permitted by law to receive it. Any recipient of this Presentation who does not fall within Regulations 19, 48, 49, 50 or 50A of the Financial Promotion Order or as described above; or to whom distribution is otherwise not lawful may not rely on it, and should return the Presentation to MMX immediately. Neither any company nor any person involved in the preparation of the Presentation owes a duty of care to any person or any recipient. Each person or company must undertake such investigations as they see fit before entering into any contract of any kind. If you are in any doubt as to what action to take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorized under the FSMA immediately. Presentation to MMX immediately. Neither any company nor any person involved in the preparation of the Presentation owes a duty of care to any person or any recipient. Each person or company must undertake such investigations as they see fit before entering into any contract of any kind. If you are in any doubt as to what action to take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorized under the FSMA immediately.

Minds + Machines Group Limited | Financial Results FY2016

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To be a leading pure-play registry

  • f new generic top-level domains (“new gTLDs”)

delivering a predictable annuity revenue stream

  • f scale

Our Mission

.vip

.casa

.beer

.work

.yoga .fashion

.boston .cooking

.law

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At a glance

Minds + Machines Group Limited | Financial Results FY2016

Market Cap: GBP75.2m | Ticker Symbol: LSE: MMX

Domains under management

including committed orders, currently

c1.2 million

up from 821,000 as of 31.12.16 (31.12.15: 289,000)

FY 2016 gross billings

$15.8million – up

100%

(FY 2015: $7.9million)

FY 2016 billings operating EBITDA profit

before one-off restructuring costs,

$4.2 million

(FY 2015 billings EBITDA loss of $6.6million – excluding one-off private auction proceeds)

Intangible assets

$45.6million

(still based on book value)

Cash and cash equivalents

$15.3million

as at 31.12.2016

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Key business highlights

  • Nascent, large and fast growing market
  • Diversified and differentiated world-class portfolio of top-level domain assets
  • Successfully transitioned into a low cost-base, pure-play portfolio registry
  • Strong global distribution partner network – Asia, Europe, US
  • Clear vision of underlying customer base, markets and appropriate revenue model
  • Experienced management team
  • Proven monetization strategy now delivering profitable growth

Minds + Machines Group Limited | Financial Results FY2016

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Global Registrants per Country

Fast grow ing market

Minds + Machines Group Limited | Financial Results FY2016

Net Registrations

Net Growth 31 December 2015 31 December 2016

Verisign (.com, .net) 139.8m 142.2m 2.4m Country codes 138.1m 142.7m 4.6m New gTLDs 11.2m 27.6m 16.4m

Source: Verisign

China | 48.2%

13,937,779 Domains

Whois Proxy (Unknown Registrant) | 22.2%

6,424,270 Domains

USA | 10.81%

3,124,445 Domains

Other | 9.5%

2,756,676 Domains

Germany 2.16% Russian Federation 1.78% United Kingdom 1.49% Japan 1.27% France 1.00% India 0.76% New Zealand 0.76%

Key drivers

Global growth of SME’s Digital entrepreneurs Domain investors

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Differentiated and diversified portfolio

Minds + Machines Group Limited | Financial Results FY2016

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Uncontested TLDs

In partnership On behalf of clients .abogado .bayern .beer .boston .budapest .casa .cooking .dds .fashion .fishing .fit .garden .horse .law .luxe .miami .nrw .rodeo .surf .vip .vodka .wedding .work .yoga .购物 .country .london .bradesco .gop

Contested TLDs

.cpa .gay .home .hotel .inc .llc In partnership .music

  • Owner/operator of leading China

facing new gTLD .vip

  • Upto 8 further TLDs going

through Chinese regulator, MIIT, approval process

  • Largest portfolio of geographic

gTLDs – 6 in Europe & US

  • Quality vertical interest &

generic TLDs

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MMX REGISTRY

REGISTRARS

Low cost-base portfolio registry operator

Minds + Machines Group Limited | Financial Results FY2016

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  • Business transformed into pure-play registry by new

management team during 2016

  • Now structured to operate across three key geographic

regions – US, Europe, Asia

  • OPEX capped at $6million (ie. goal: <33% of gross billings

in a stable state environment)

  • COGs capped at 20% of gross billings so as

to deliver targeted gross margin >80%

  • Global distribution partner

network established REGISTRY SERVICE PROVIDER

END USERS

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Strong global distribution partner network & office location

Minds + Machines Group Limited | Financial Results FY2016

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North America 34 South America 1 UK 14 China 50 Rest of the world 7 Continental Europe 37 Japan 3 India/South East Asia 5

Munich (Germany) 1 London (UK) 2 Dublin (Ireland) 3 Xiamen (China) 2 Remote 5 Seattle 7

Office Locations

Headcount (includes Exec team) 20 Registrar partners per region

Key

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Experienced management team

Minds + Machines Group Limited | Financial Results FY2016

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Executive Directors Non Executive Directors

Toby Hall

Chief Executive Officer

Michael Salazar

Chief Operating Officer & Chief Financial Officer

Guy Elliott

Non-Executive Chairman

Henry Turcan

Non-Executive Director

Senior managers

Deep Shah

Financial Controller

Solomon Amoako

VP, Channel Management

Yuling Huang

General Manager, China

Caspar von Veltheim

Director of European Operations + Sales

Victor H. Pitts

Director Premium Sales, Americas

Lou Andreozzi

CEO, Dot Law Inc.

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Clear vision of underlying customer base, markets and revenue model

  • Supporting registrars to target SME’s and

vertical sectors

  • Supporting registrars to target digital

entrepreneurs

  • Supporting registrars to target domain

investors

Minds + Machines Group Limited | Financial Results FY2016

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Key end-markets Supportive revenue model

First year premium name billings Standard name sales and ongoing renewals

1st Year 2nd Year 3rd Year 5th Year 4th Year

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289,000 821,000 1,200,000

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

2015 2016 2017 - to date

Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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KPIs Domains under management

DUMs

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7,922 15,800

2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

2015 2016

Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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Annual gross billings $’000

Annual gross billings $

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Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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Fixed OPEX

$’000

11,745 7,182 6,000

2,000 4,000 6,000 8,000 10,000 12,000 14,000

2015 2016 2017 - expected

148% 45%

0% 20% 40% 60% 80% 100% 120% 140% 160%

2015 2016 OPEX as a % of gross billings

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84.04% 83.92%

80.00% 81.00% 82.00% 83.00% 84.00% 85.00% 86.00%

2015 2016

Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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Gross margin (on gross billings)

Gross Margin %

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  • 6,574

4,209

  • 8,000
  • 6,000
  • 4,000
  • 2,000

2,000 4,000 6,000

2015 2016

Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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Billings operating EBITDA before restructuring costs

$’000

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1.8m 3.8m

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1,000 2,000 3,000 4,000 5,000 6,000

2015 2016 2017 - trend

Renewals - $ Annual renewals as a % of OPEX

Proven monetization strategy now delivering profitable grow th

Minds + Machines Group Limited | Financial Results FY2016

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Annual renewals - $ amount & % of OPEX

$’000 % of OPEX

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Financial highlights

Minds + Machines Group Limited | Financial Results FY2016

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Billing operating EBITDA

FY 2016 $000’s FY 2015 $’000’s % Change Billings(1) 15,800 7,922 100% Partner payments (1,868) (1,487) 26% Revenue less partner payments 13,932 6,435 117% Cost of sales (2,541) (1,264) 101% Gross margin 11,391 5,171 120% Gross margin % 82% 80% Cash expenditure Operating expenses – ongoing (6,536) (11,745) (44%) Operating expenses – forfeited (646)

  • Billing Operating EBITDA (before restructuring costs) (2)

4,209 (6,574) (164%)

(1) Billings refer to total sales generated during the year (not deferred for accounting purposes) (2) Operating earnings before interest, tax, depreciation & amortization and other non-cash charges where earnings are calculated on the basis of billings as opposed to accounting revenue. It should be noted that for accounting purposes Operating EBITDA before restructuring was $3.6 million as highlighted in the Group’s 2016 Income Statement.

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Summary income statement

Minds + Machines Group Limited | Financial Results FY2016

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2016 2015

Revenue 15.00 6.32 Less: Partner payments (1.52) (0.84) Revenue Less Partner Payments 13.48 5.48 Cost of Sales (2.54) (1.26) Gross Profit 10.94 4.22 gTLD applications (0.15) 7.79 OPEX: Ongoing (6.53) (11.74) Forfeited (0.65)

  • Operating EBITDA before Restructuring

3.61 0.27

Other (F/X, etc) (0.53) (4.64) Restructuring - Operating (1.17)

  • Restructuring - Contracts

(3.75)

  • EBITDA

(1.84) (4.37)

Other (Deprec, etc) (0.33) (0.30) Discontinued Ops (2.33) (4.68)

Net Profit / (Loss) for the year (4.50) (9.35)

Group Statement of Comprehensive Income

Accounting revenue more than doubled Gross margin exceeds 81% Net of one-time gTLD private auction revenue, 2015 had an Operating EBITDA loss of $7.67million

  • n like for like basis

Reflects restructuring of challenging contract signed by previous management into structure that can now potentially deliver future economic interest Without these costs, 2016 would have delivered a net profit of $3.4 million – they will not occur in 2017

COMMENTS

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Summary balance sheet

Minds + Machines Group Limited | Financial Results FY2016

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Group Statement of Financial Position COMMENTS

Non-current Assets 2016 2015

  • Intangible

45.60 41.29

  • FFE

0.09 0.19

  • Goodwill

2.83 2.83

  • JVs

0.39 0.83

  • Other LT Assets

3.32 3.45 Total Non-current Assets 52.23 48.59 Current Assets

  • Cash

15.28 34.65

  • Receivables

7.95 5.61 Total Current Assets 23.23 40.26 Total Assets 75.46 88.85 Liabilities

  • Trade Payables & Other

(14.98) (8.97)

  • Lease obligations
  • Total Current Liabilities

(14.98) (8.97) NET ASSETS 60.48 79.88 Equity

  • Share Capital

60.06 73.82

  • FX

0.74 1.40

  • RE

0.01 4.99

  • Non-controlling Interests

(0.33) (0.33) TOTAL EQUITY 60.48 79.88

Assets in at book value. Change relates to .boston acquisition and value of restructured contract Company maintains a strong cash position even after net $13.5 million share buyback, acquisition of .boston and restructuring Primarily related to deferred revenue & accruals plus obligations from restructured contract Share capital reduced 8% to 699,857,562 (31.12.16), Warrants, options, and RSU’s reduced 41% to 42,809,590 (31.12.16).

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Summary cashflow

Minds + Machines Group Limited | Financial Results FY2016

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Group Cash Flow Statement COMMENTS

Includes Restructuring and Discontinued Operational costs of $2.5million Reflects net share buyback

2016 2015 Cash from Operating EBITDA 3.61 0.27 One-off Discontinued Ops

  • 1.31
  • 3.88

One-off Restructuring

  • 1.17
  • Change in AR/AP/Other
  • 1.76

0.82 Private auctions

  • 7.94

Cash from Operating Activities

  • 0.63
  • 10.75

Cash from Investing Activities

  • 3.76

8.7 Cash from Financing Activities

  • 14.97
  • 9.98
  • Net (decrease)/increase in cash
  • 19.36
  • 12.03
  • Cash at beginning of year

34.65 45.8

  • FX
  • 0.01

0.88 Cash at end of year 15.28 34.65

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Summary

  • Young business experiencing significant growth in a rapidly expanding, but still nascent, industry

that has the potential to match .com/.net or the country codes within a 5-10 year time-frame

  • Low operating cost pure-play registry with world class portfolio
  • Registrations up over 40% year-to-date, following a near three-fold increase of registrations in

2016

  • A loss making business transformed into one with ongoing profits by new management team
  • Expanding global foot-print and distribution partner network established; and
  • Significant scope for further billings and revenue improvement from premium and standard

name inventory as Company looks to transition into a highly predictable annuity based business

  • f scale

Minds + Machines Group Limited | Financial Results FY2016

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Appendix 1

Minds + Machines Group Limited | Financial Results FY2016

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Holder Amount Percent

Lombard Odier Asset Management 140,344,766 20.05% London and Capital Asset Management Ltd 105,781,945 15.11% Hargreave Hale Limited 64,014,389 9.16% Oryx International Growth Fund Limited 52,550,000 6.94% Hony Capital 50,107,692 7.17% Guy Elliott * † 20,250,000 2.89% Michael Salazar * 1,975,050 0.28% Caspar von Veltheim ‡ 916,613 0.13% Toby Hall * 500,000 0.07%

Major Shareholders

The Company’s issued share capital consists of 699,857,562 Ordinary Shares of no par value. No Ordinary Shares are held in treasury. The total number of voting rights in the Company is 699,857,562. The percentage of Ordinary Shares not in public hands is 37.05% per cent. The Company has been notified, in accordance with the Disclosure and Transparency Rules, of the following directors’ holdings and shareholdings amounting to 3% or more of the issued capital with voting rights:

* Director † Includes the interest of the Elliott Family Irrevocable Trust ‡ Director of a subsidiary

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Thank you

http://mmx.co