Financial Results FY2018 Presentation 3 April 2019 http://mmx.co - - PowerPoint PPT Presentation

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Financial Results FY2018 Presentation 3 April 2019 http://mmx.co - - PowerPoint PPT Presentation

Mi Minds nds + Ma Machi chine nes Group up Limited Financial Results FY2018 Presentation 3 April 2019 http://mmx.co Disclaimer The following is a presentation (the Presentation) relating to Minds + Machines Limited (MMX).


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Mi Minds nds + Ma Machi chine nes Group up Limited

Financial Results FY2018

Presentation – 3 April 2019

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 FY2018

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A leading pure-play registry

  • f new generic Top-Level Domains (“new gTLDs”)

delivering a predictable annuity revenue stream of scale

Achieving our goal

.vip

.casa

.beer

.work

.yoga .fashion

.fit

.cooking .law

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At a glance

Minds + Machines Group Limited | Financial Results FY2018

Market Cap: GBP53.6m/USD69.7m | Ticker Symbol: LSE: MMX

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  • Adj. operating EBITDA**

12.5%

$3.6million

(FY17: $3.2m**)

FY18 renewal revenue

97%

$9.4million

(FY17: $4.8m)

Registrations

37%

1.81million

(31.12.17: 1.32m)

FY18 revenue

5%

$15.1million

(FY 17: $14.3million)

Intangible assets

$81.5m

based on book value (FY 17: $46.2m)

Cash collections

30%

$16.1million

(FY17: $12.3m)

*

**

FY18 is net of $586k of revenue reversed from a prior period; net of reversal, revenue increased by 10% and adj. operating EBITDA by 31% Net of one-off revenue from resolution of contested new gTLD applications and contract restructuring

* *

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Diversified portfolio of names to right of the dot

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Owned

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

In negotiation

.music .hotel

  • Generic and vertical

interests

  • Geographic
  • Largest portfolio
  • 6 in Europe & US

icm icm icm icm .fashion .fit .yoga

  • China licensed

Typical Usage

  • Email
  • Websites
  • Marketing
  • Investment

.

Revenue Model Annual reoccurring fee

Minds + Machines Group Limited | Financial Results FY2018

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MMX: a pure-play registry

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END USERS

MMX

EXTERNAL SALES CHANNEL (registrars) TECHNICAL BACK-END OUTSOURCED

  • 32 TLDs owned/managed by MMX as the registry
  • Technical infrastructure outsourced
  • External global sales channel (registrars)
  • Low-cost, scalable model

Minds + Machines Group Limited | Financial Results FY2018

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SLIDE 7

External global sales channel

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North America 58 South America 1 UK 10 China 59 Rest of the world 7 Continental Europe 57 Japan 6 India/South East Asia 12 Internal headcount (Excluding Board) 20 Registrar partners per region

Key

Minds + Machines Group Limited | Financial Results FY2018

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Global new gTLD Registrants per Country

Market dynamics

Minds + Machines Group Limited | Financial Results FY2018

China | 35.8%

9,507,250 Domains

Whois Proxy | 11.8%

(Unknown Registrant) 3,128,773 Domains

USA | 13.8%

3,677,550 Domains

Other | 16.3%

4,266,472 Domains Germany 2.21% France 1.89% U.K. 1.68% Canada 1.56% India 1.47% Singapore 1.36% Russia 1.18%

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Key drivers

Global growth of SME’s Digital entrepreneurs Domain investors

Panama | 6.3%

1,662,837 Domains

Japan | 5.4%

1,442,077 Domains 31-Dec-15 31-Dec-18

Verisign (.com, .net) 139.8m 153.0m 13.2m 3.1% Country codes 138.4m 154.3m 15.9m 3.8% New gTLDs 11.3m 26.5m 15.2m 44.8% MMX 289k 1.81m 1.5m 175.4%

Yearly Average Growth Net 3 year Growth

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MMX: registration & revenue growth

Minds + Machines Group Limited | Financial Results FY2018

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cdd Revenue Registrations

2018 based on gross revenue net of 2016 adjustment

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MMX: OPEX & Cost of Sales management

Minds + Machines Group Limited | Financial Results FY2018

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In 2016, management set as its target OPEX to be 33%

  • f revenue in stable state (gross billings)

In 2016, management set as its target Cost of Sales to be 20% of revenue in stable state (gross billings)

MMX OPEX MMX Cost of Sales

2015 2016 2017 2018 20% 17% 24% 23% 0% 5% 10% 15% 20% 25% 30%

1,000 1,500 2,000 2,500 3,000 3,500

Cost fo Sales as a % of Gross Revenue in 000's

Cost of Sales Cost of Sales as a % of Gross Revenue

2018 gross revenue net of 2016 adjustment 2018 gross revenue net of 2016 adjustment

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MMX: adjusted Operating EBITDA growth

  • All years reflect ongoing operations
  • nly.
  • All years exclude one-off contested

application revenues and contract restructuring costs but include

  • perational restructuring costs
  • 2018 net of $586k 2016 revenue

reversal

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Operating EBITDA adjustments

Minds + Machines Group Limited | Financial Results FY2018

2015 2016 2017 2018

$(7,700) $2,400 $3,200 $3,600

Accounting Operating EBITDA Adjusted for one-off Items in 000's

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MMX: renewal revenue growth

  • Near 100% growth YoY for last two

years

  • 19% underlying growth from MMX

portfolio in 2018 – H2 boost from maiden ICM contribution

  • Key milestone achieved in 2017 of

renewal revenue surpassing OPEX

  • Key milestone achieved in 2018 of

renewal revenue surpassing OPEX & COGs ahead of schedule

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Renewal revenue

Minds + Machines Group Limited | Financial Results FY2018 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000

2015 2016 2017 2018 Gross Accounting Renewals vs COGs and OPEX (in $'000's)

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MMX: monetisation model of names

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2016 Guidance 2019 Update

First year premium name billings Standard names and renewals

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

C]

Minds + Machines Group Limited | Financial Results FY2018

f

2016 2017 2018 Today

Premium Channel

2021

Renewals

62% 16% 34% 37% 11% 10%

Premium Brokered Standards

23% 38% 13% 17% 24% 15%

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Stated growth strategy

Minds + Machines Group Limited | Financial Results FY2018

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ORGANIC CORE MMX PORTFOLIO SELECTIVE ACQUISITION ICM INNOVATION RATIONALE

ü 23% registration growth ü 19% renewal revenue growth ü 5% growth on cash collected ü Accretive ü > 75% renewal revenue ü Accelerates renewal base growth/reduces exposure to one-off income ü Balance geographic revenues: 55% now in the US, 32% China (2017: 32% US, 53% China) ü R&D to better monetise portfolio by developing relevant, next generation products through DNS based innovation ü First project: .luxe, launched Nov 2018, creates standard naming method between WWW and blockchains

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.luxe at launch: one name - two protocols domain.luxe

First, dedicated TLD to serve as a digital identifier on two different platforms

Minds + Machines Group Limited | Financial Results FY2018

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.luxe momentum: one name, multiple protocols

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myname.luxe

Blockchain A Blockchain B Blockchain C Blockchain D My Website Ethereum (live) Bitcoin (in development) EOS (in development) Private Blockchain

Minds + Machines Group Limited | Financial Results FY2018

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Summary income statement

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2018 $’m 2017 $’m

Revenue 15.09 14.32 Less: Partner payments (2.52) (2.36) Cost of Sales (3.48) (3.44) Gross Profit 9.09 8.51 gTLD applications 0.48 2.11 OPEX (5.53) (5.29)

Operating EBITDA 4.05 5.33

Strategic, Acquisition and Restructuring costs (1.45) (0.3) Bad debt provisions (2.11)

  • Impairment loss on intangibles

(4.15)

  • Onerous contract provision

(7.15)

  • Other (FX, etc.)

(1.50)

(1.05)

EBITDA (12.32) 3.99

Other (Depreciation, etc.)

(0.38)

(0.16) Income tax

0.05

(0.02)

Net Profit / (Loss) for the year (12.64) 3.81

Group Statement of Comprehensive Income

Revenue masks underlying growth - cash collections up 30% to $16.1m Renewal revenue now accounts for 62% of total revenue Reflects new IFRS 9 standard – historically, no bad debt Includes $0.7m legacy contract restructuring payment and overhang from 2017 strategic review resulting in acquisition of ICM

COMMENTS

Modest increase in OPEX reflecting efficient integration of ICM COGS flat in spite of portfolio expansion and 2 TLD launches 2017 inflated by one-off revenue of $2.1m of one-off contested gTLD application revenue Provision made based on future min. rev. guarantees above revenue for 2018 - 2021 Consequence of onerous contract provision

Minds + Machines Group Limited | Financial Results FY2018

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Summary balance sheet

Minds + Machines Group Limited | Financial Results FY2018

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Group Statement of Financial Position COMMENTS

Non-current Assets 2018 $’m 2017 $’m

  • Intangible Assets

81.46 46.18

  • Goodwill

2.83 2.83

  • FFE

0.06 0.08

  • Investments

0.06 0.50

  • JVs

0.43 0.43

  • Other LT Assets

0.44 2.96 Total Non-current Assets 85.27 52.98 Current Assets

  • Cash

10.37 15.87

  • Receivables

9.13 9.42 Total Current Assets 19.50 25.29 Total Assets 104.77 78.26 Liabilities

  • Trade Payables & Other

(24.39) (12.71)

  • Provisions

(5.77)

  • Total Current Liabilities

(30.16) (12.71) NET ASSETS 74.60 65.55 Equity

  • Share Capital

80.66 60.06

  • FX and other

1.14 1.20

  • RE

(6.87) 4.37

  • Non-controlling Interests

(0.33) (0.07) TOTAL EQUITY 74.60 65.55 $35.3m increase reflects ICM acquisition ($39.6m) and impairment of intangible asset ($4.2m) Includes $0.6m collected in January + $0.5m of long-term receivables collected in March Impact of ICM acquisition $11.7m increase reflects deferred revenue of $9.1m from ICM and drawdown of $3m W.C. facility (fully paid back in March) Remaining onerous contract provision Reflects full ICM acquisition of 225m MMX shares @6.9p - final 128m tranche issued January 2019

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Summary cashflow

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Group Cash Flow Statement COMMENTS

2018 2017 Operating EBITDA 4.05 5.33

  • One-off (restructuring / strategic review)

(0.85) (0.30)

  • Cash in AR / AP / Other

(1.14) (0.67)

  • Other (FX, loss on withdrawal of gTLDs)

0.26 0.26 Cash from Operating Activities 2.32 4.63 Cash from Investing Activities (10.64) (4.00) Cash from Financing Activities 2.82 (0.03) Net (decrease) / increase in cash (5.50) 0.59

  • Cash at beginning of year

15.87 15.28 Cash at end of period 10.37 15.87

ICM acquisition $10m and paying down of restructuring liabilities from 2016 amended contracts 2017 includes one-off gTLD contested application fees of $2.1m 2018 is net of one-off gTLD contested application fees. Reflects proceeds from W.C. facility

Minds + Machines Group Limited | Financial Results FY2018

Decrease due to unwinding of deferred revenue

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  • Successful acquisition accelerating growth of highly predictable, recurring revenues
  • Use of data-driven insights increasingly now shaping strategy and driving organic growth
  • Historic contracts impacting performance addressed in period resulting in provisions of $13.4m

A robust operating and financial platform in place and well-positioned for future growth ICM acq. completed Revenue mix better balanced across regions Strong outlook

  • Continued growth

and progress against KPIs

  • Debt repaid ahead
  • f schedule
  • Continued

innovation: .luxe integration into Bitcoin and EOS blockchains progressing

Summary: 2018 a transformational year

Operating performance

  • Strong growth in

domains under management

  • Regional split

improved – China dependency reduced

  • Innovation: launch
  • f .luxe

Financial performance

  • Strong YoY growth

across key metrics

  • Renewal revenue

doubled for the second year - exposure to lumpy

  • ne-off income

reduced

  • Renewal revenue

surpassed COGs and Fixed Overheads for first time

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Thank you

http://mmx.co

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Management Team

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Executive Directors Non Executive Directors

Toby Hall

Chief Executive Officer

Michael Salazar

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 Sales + Operations

Sheri Falcon

ICANN Policy & General Counsel

Len Bayles

Group CTO

Tony Farrow

Group COO

Minds + Machines Group Limited | Financial Results FY2018

Christa Taylor

CMO

Bryan Disher

Non-Executive Director

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Appendix 1

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Holder Amount Percent

Stuart Lawley 147,258,683 15.92% London and Capital Asset Management Ltd 121,921,243 13.18% Lombard Odier Asset Management 117,449,116 12.70% Hargreave Hale 64,014,389 6.92% Oryx International Growth Fund Limited 52,550,000 5.68% Hony Capital 50,107,692 5.42% Afilias 28,507,314 3.08% Guy Elliott 20,750,000 2.24% Michael Salazar 1,975,050 0.21% Caspar von Veltheim 916,613 0.10% Toby Hall 500,000 0.05%

Major Shareholders

The Company’s issued share capital consists of 924,857,562 Ordinary Shares of no par value. No Ordinary Shares are held in treasury. The total number of voting rights in the Company is 924,857,562. The percentage of Ordinary Shares not in public hands is 44.42% 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:

Minds + Machines Group Limited | Financial Results FY2018