Financial Results FY2019 Presentation 24 March 2020 http://mmx.co - - PowerPoint PPT Presentation

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Financial Results FY2019 Presentation 24 March 2020 http://mmx.co - - PowerPoint PPT Presentation

Minds + + Mac achin ines G Group L Limited Financial Results FY2019 Presentation 24 March 2020 http://mmx.co Disclaimer The following is a presentation (the Presentation) relating to Minds + Machines Limited (MMX). The


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Minds + + Mac achin ines G Group L Limited

Financial Results FY2019

Presentation – 24 March 2020

http://mmx.co

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Disclaimer

Minds + Machines Group Limited | Financial Results YE 2019

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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.

  • -----------------------------~mmx
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A leading pure-play registry

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

now delivering a predictable annuity stream

  • ff a SaaS type revenue model

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 YE 2019

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Market Cap: GBP47.8m/USD54.9m | Ticker Symbol: LSE: MMX

Cash generation**

170%

$6.2m

(YE 18: $2.3m)

YE 19 revenues*

25%

$18.9m

(YE 18: $15.1m)

YE 19 op EBITDA*

79%

$6.4m

(YE 18: $3.6m) * From normal operations, net of auction revenues ** Net of onerous contract settlement, inclusive of auction proceeds

YE 19 renewal revenue

25%

$11.7m

(now represents 62% of total revenue)

YoY registrations

36%

2.46m

(31.12.18: 1.81m)

YE 19 profit after tax

$4.8m

(YE 18: $12.6M loss)

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Business model

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END USERS

MMX

EXTERNAL SALES CHANNEL (registrars) TECHNICAL BACK-END OUTSOURCED

  • Infrastructure assets: 32 top-level domains
  • Revenue model: SaaS type annual recurring fee for end-users
  • Sales channel: independent third-party sales channel

(registrars)

  • Technical platform: highly scalable, low-cost:
  • all technical infrastructure outsourced

Typical usage

  • Email
  • Websites
  • Marketing
  • Investment

Minds + Machines Group Limited | Financial Results YE 2019

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.beer

Infrastructure assets

  • Generic and vertical

interests

Minds + Machines Group Limited | Financial Results YE 2019

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Wholly owned top-level domains

In partnership On behalf of clients

.bradesco .gop

In negotiation

.hotel

  • Geographic
  • Largest portfolio
  • 6 in Europe & US

.fit .rodeo .work icm .fashion .budapest icm .boston .fishing .abogado .casa .miami .vodka .购物 .cooking .bayern .dds .nrw .wedding icm .garden .horse .luxe .law .surf icm

  • China licensed

.country .london .review .vip .yoga

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Global sales reach

Minds + Machines Group Limited | Financial Results YE 2019

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North America (+3) 61 South America 3 UK (+1) 11 China (+4) 63 Rest of the world (+1) 16 Continental Europe (+1) 58 Japan (+1) 7 India/South East Asia (-1) 11 Internal headcount (Excluding Board) 21 Registrar partners per region

Key

* Numbers include Registrar and Corporate consolidations

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Stated grow th strategy

Minds + Machines Group Limited | Financial Results YE 2019

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ORGANIC GROWTH

To deliver top-line revenue growth based on automated recurring revenue through the channel

SELECTIVE ACQUISITION

To leverage operational gearing in platform

INNOVATION

To create relevant value-added services for end-users to enhance value of product

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Organic: registration & revenue grow th

Minds + Machines Group Limited | Financial Results YE 2019

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cdd Revenue & renewals Registrations

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Organic: improved revenue mix

C]

Minds + Machines Group Limited | Financial Results YE 2019

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2016 Guidance 2019 Update

Brokered & premium name billings Standard names and renewals

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

Channel - Premium Channel - Standard Channel - Renewals

  • 91% of revenues now automated through the channel
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Organic: improved regional mix

Minds + Machines Group Limited | Financial Results YE 2019

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Channel - premium Channel - standards Channel - Renewals

  • US revenues doubled in percentage terms to 62% since 2017
  • Asia reliance has more than halved in percentage terms to 21% over 2yr period
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Innovation: strategy overview

Minds + Machines Group Limited | Financial Results YE 2019

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Ease of Use Secure Network User Identity IP Protection

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Blockchain association service - .luxe R&D initiative

  • To create relevant value-added services for end-users that enhance value of our assets
  • Services focused around addressing the disconnect between the DNS/WWW promise

and current realities

Brand protection

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Innovation: progress

  • > 90m addresses on Ethereum, 40+ bitcoin wallets
  • Most use hexadecimal addresses
  • No interoperability between chains
  • .luxe developed to allow a single human-readable address to

be used across the WWW and blockchain

  • Launched Q4 ’18 with WWW and Ethereum interoperability
  • H1 ‘19 – multi-chain association engine developed; now

integrating into recently launched Ethereum multi-chain solution

  • Currently marketed as a premium product - 15k registrations

to date

Minds + Machines Group Limited | Financial Results YE 2019

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  • Over last decade ICANN has authorised multiple new

scripts resulting in look-alike homoglyphs being created by bad actors

  • AdultBlock+ launched Q4 ’19 to provide protection

against this potential abuse

  • Over 5m addresses now blocked for brands across ICM

portfolio

  • $1.1m of revenue generated in Nov and Dec ‘19
  • MMX now deepening sales into existing market whilst

looking to widen addressable market

Brand Protection Blockchain – end-to-end security

domain.luxe

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Operations: OPEX & COGs management

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In 2016, management set as its target OPEX to be capped at $6.0m 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

Minds + Machines Group Limited | Financial Results YE 2019

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Performance: adjusted op EBITDA & profit/(loss)

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Operating EBITDA – net of auction rev Profit/(loss)

Minds + Machines Group Limited | Financial Results YE 2019

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Cash generation

Minds + Machines Group Limited | Financial Results YE 2019

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Cash generation

Inclusive of auction proceeds but net of 2019 onerous contract settlement

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Capital returns policy

Minds + Machines Group Limited | Financial Results YE 2019

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  • Maiden annual progressive dividend decision delayed until September
  • Current £1.0m share buyback to be resumed
  • 5,837,160 shares bought back in year at average pps of 5.99p
  • Total cost £0.35M / $0.44M in 2019
  • £1.0m buyback authority to be renewed at the appropriate time, conditions permitting
  • Scope to supplement the shareholder returns under the progressive dividend programme with

either special dividends or tender offers as circumstances dictate in future periods

  • Priority to maintain healthy cash balances and robust balance sheet in current times
  • ---------------------------~mmx
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COVID-19 statement

Minds + Machines Group Limited | Financial Results YE 2019

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“The momentum experienced in Q4 has continued into the first quarter with healthy trading being experienced across all regions through the channel in Q1 2020 with no initial signs of automated sales through the channel from any region (notably China) being negatively impacted by coronavirus. That said, working practices are having to be significantly adjusted as a result of key industry events being cancelled, international travel being temporarily curtailed, and our office-based staff having to work remotely. “Any immediate impact is therefore likely to be most noticeable in our one-off brokered sales, which currently accounts for less than 10% of our business, and certain aspects of business development. Longer term, the extent to which the wider environment may impact us is an unknown. However, the high levels

  • f our recurring revenues and online nature of the majority of our sales should, in theory, shield us from

the worst of the immediate storm. But to believe that we are fully insulated from the global crisis would be unwise and as such we do not intend to provide guidance for the full year at this time. “Finally, we would like to thank our staff and commercial partners for their effort and support in delivering a successful year of growth and transformation. Their commitment has been outstanding, not least during the current uncertainty and upheaval caused by the coronavirus pandemic.”

  • ---------------------------~mmx
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FY 19 summary income statement

2019 $’M 2018 $’M

Revenue 18.94 15.09 Less: Partner payments (2.88) (2.52) Cost of Sales (3.64) (3.48) Gross Profit 12.42 9.09 gTLD applications 0.59 0.48 OPEX (6.04) (5.53)

Operating EBITDA 6.97 4.05

Strategic, acquisition and restructuring costs

  • (1.45)

Bad debt provisions (1.43) (2.11) Impairment loss on intangibles

  • (4.15)

Onerous contract provision 1.35 (7.15)

Gain on sale of join.law

0.38

  • Other (FX, etc.)

(0.55)

(1.50)

EBITDA 6.73 (12.31)

Other (depreciation, etc.)

(1.85)

(0.38) Income tax

(0.14)

0.05

Net Profit / (Loss) for the year 4.74 (12.64)

Group Statement of Comprehensive Income

25% increase. Organic channel sales increased 40% representing 91% of total revenues. All aged receivables from China nowwritten off

COMMENTS

Reduced to 32% of rev (2018: 35%) reflecting improved operational gearing and underlying scalability of platform Reduced to 19% of rev (2018: 23%) in spite of 36% registration growth 72% improvement in Op. EBITDA Increase reflects IFRS 16 adjustments on leases Arising from onerous contract provision Sold reseller business Onerous contract settled resulting in a savings of over $3m over the remainder of the contract along with a resulting accounting gain.

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Minds + Machines Group Limited | Financial Results YE 2019

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FY 19 summary balance sheet

Group Statement of Financial Position COMMENTS

Non-current Assets 2019 $’M 2018 $’M

  • Intangible Assets

81.49 81.46

  • Goodwill

2.83 2.83

  • FFE

0.07 0.06

  • Investments
  • 0.06
  • Right-of-use asset

2.67

  • JVs

0.48 0.43

  • Other LT Assets

0.19 0.44 Total Non-current Assets 87.73 85.27 Current Assets

  • Cash

6.58 10.37

  • Receivables

7.49 9.13 Total Current Assets 14.07 19.50 Total Assets 101.80 104.77 Current Liabilities

  • Trade Payables & Other

(19.50) (24.39)

  • Provisions
  • (5.77)
  • Lease liabilities

(3.95)

  • Total Current Liabilities

(23.45) (30.16) NET ASSETS 78.36 74.6 Equity

  • Share Capital

80.22 80.66

  • FX and other

0.90 1.14

  • RE

(2.76) (6.87)

  • Non-controlling Interests
  • (0.33)

TOTAL EQUITY 78.36 74.60 Reduction to due repayment of working capital facility ($3m) and release of marketing obligation from onerous contract $2m Onerous contract settled Value of “leases” as a result of IFRS 16 Impact of IFRS 16 (Leases) Decrease reflects share buyback Repayment of $3m WC facility, settlement of onerous contract and share buyback. Adjusted cash generation of $6.2m (2018: $2.3m) Decrease resulting in part from the write-offs of China related debt

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Minds + Machines Group Limited | Financial Results YE 2019

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FY 19 summary cashflow

Minds + Machines Group Limited | Financial Results YE 2019

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Group Cash Flow Statement COMMENTS

2019 2018 Operating EBITDA 6.97 4.05

  • One-off (restructuring / strategic review)
  • (0.85)
  • Cash in AR / AP / Other

0.19 (1.14)

  • Onerous contract payments

(6.68)

  • Other (FX, loss on withdrawal of gTLDs)

0.25 0.26 Cash from Operating Activities 0.73 2.32 Cash from Investing Activities (0.16) (10.64) Cash from Financing Activities (4.68) 2.82 Net (decrease) / increase in cash (3.79) (5.50)

  • Cash at beginning of year

10.37 15.87 Cash at end of period 6.58 10.37

Onerous contract payments and final settlement Reflects WC facility in 2018 and repayment of $3m in 2019 along with IFRS 16 adjustment (Leases) 2018 includes cash to acquire ICM Cash generated from operating activities adjusting for onerous contract settlement and IFRS 16 has increased 170% to $6.2m Decrease in cash due to onerous contract payments of $6.7m, $3m repayment of WC facility, $0.4m share buy-back and receipts of $1.6m from private auctions

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  • Balance sheet repaired with cash on the balance sheet and no debt
  • Business now profitable with incremental cashflow from operations moving forward
  • Share buyback to resume - maiden progressive dividend decision delayed until September

A robust operating platform, with SaaS type revenue model, well-positioned for future growth ICM acq. completed Revenue mix better balanced across regions

Current outlook

  • Over 90% of sales now

through online channel

  • To date, online sales

not impacted by COVID-19 - Asia online channel sales up YTD

  • Too early to measure

potential impact in US & European markets

  • Priority to maintain

healthy cash balances and robust balance sheet

2019: a transformational year

Operating performance

  • Operational gearing

kicking in

  • Total costs reduced to

51% of rev (FY18: 60%)

  • Quality of revenue mix

improved – 91% now through online channel (FY 18: 82%)

  • Geographic mix

improved - 79% now from US & Europe (FY 18: 71%)

Financial performance

  • Profit after tax $4.7m

(FY18: $12.6m loss)

  • Revenues up 25% to

$18.9m

  • Op EBITDA, net of

auction rev, up 79% to $6.4m

  • Adjusted cash

generation up 170% to $6.2m

  • EPS 0.51c (FY18: 1.68c

loss)

Minds + Machines Group Limited | Financial Results YE 2019

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Thank you

http://mmx.co

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Management Team

Minds + Machines Group Limited | Financial Results YE 2019

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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

Solomon Amoako

VP, Channel Management North America

Yuling Huang

General Manager, China

Caspar von Veltheim

Director of European Sales

Vaughn Liley

CRO

Christa Taylor

CMO

Bryan Disher

Non-Executive Director Deep Shah

Financial Controller

Sheri Falcon

ICANN Policy & General Counsel

Ben Anderson

COO

Ronan Prendergast

CTO

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Appendix 1

Minds + Machines Group Limited | Financial Results YE 2019

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Holder Amount Percent

London and Capital Asset Management Ltd 138,821,243 15.11% Lombard Odier Asset Management 120,956,652 13.16% Stuart Lawley 91,593,029 9.97% Hargreave Hale 64,014,389 6.97% Oryx International Growth Fund Limited 52,550,000 5.72% Hony Capital 50,107,692 5.45% Afilias 28,507,314 3.10% Guy Elliott 20,750,000 2.26% Michael Salazar 1,975,050 0.21% 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 with 5,387,160 shares held in treasury. The total number of voting rights in the Company is 919,020,402. The percentage of Ordinary Shares not in public hands is 31.96% 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:

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Global new gTLD Registrants per Country

Market dynamics

China | 42.9%

12,571,104 Domains

US| 10.5%

3,072,698 Domains

Whois Proxy | 19.2%

(Unknown Registrant) 5,616,125 Domains

Other | 14.9%

4,340,699 Domains France 1.9% U.K. 1.4% Canada 1.1% Russia 0.9% Turkey 0.9% Netherlands 0.8% India 0.8%

Main new gTLD users

SME’s, SOHO’s and marketeers Digital entrepreneurs Domain investors/traffic monetisation professionals

Japan | 2.6%

771,670 Domains

Germany | 2.1%

620,958 Domains

31-Dec-15 31-Dec-19

Verisign (.com, .net) 139.8m 158.8m 19.0m 3.4% Country codes 138.4m 157.6m 19.2m 3.5% New gTLDs 11.3m 29.3m 18m 39.8% MMX 289k 2.45m 2.16m 186.9%

Yearly Average Growth over 4 years Net 4 year Growth

Minds + Machines Group Limited | Financial Results YE 2019

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