Minds + + Mac achin ines G Group L Limited
Financial Results FY2019
Presentation – 24 March 2020
http://mmx.co
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
Presentation – 24 March 2020
http://mmx.co
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
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.
.vip
.casa
.beer
.work
.yoga .fashion
.fit
.cooking .law
Minds + Machines Group Limited | Financial Results YE 2019
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Cash generation**
$6.2m
(YE 18: $2.3m)
YE 19 revenues*
$18.9m
(YE 18: $15.1m)
YE 19 op EBITDA*
$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
$11.7m
(now represents 62% of total revenue)
YoY registrations
2.46m
(31.12.18: 1.81m)
YE 19 profit after tax
(YE 18: $12.6M loss)
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END USERS
MMX
EXTERNAL SALES CHANNEL (registrars) TECHNICAL BACK-END OUTSOURCED
(registrars)
Typical usage
Minds + Machines Group Limited | Financial Results YE 2019
.beer
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
.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
.country .london .review .vip .yoga
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
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
Minds + Machines Group Limited | Financial Results YE 2019
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cdd Revenue & renewals Registrations
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
Minds + Machines Group Limited | Financial Results YE 2019
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Channel - premium Channel - standards Channel - Renewals
Minds + Machines Group Limited | Financial Results YE 2019
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12
Blockchain association service - .luxe R&D initiative
and current realities
Brand protection
be used across the WWW and blockchain
integrating into recently launched Ethereum multi-chain solution
to date
Minds + Machines Group Limited | Financial Results YE 2019
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scripts resulting in look-alike homoglyphs being created by bad actors
against this potential abuse
portfolio
looking to widen addressable market
Brand Protection Blockchain – end-to-end security
domain.luxe
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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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Operating EBITDA – net of auction rev Profit/(loss)
Minds + Machines Group Limited | Financial Results YE 2019
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
Minds + Machines Group Limited | Financial Results YE 2019
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either special dividends or tender offers as circumstances dictate in future periods
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
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.”
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
Bad debt provisions (1.43) (2.11) Impairment loss on intangibles
Onerous contract provision 1.35 (7.15)
Gain on sale of join.law
0.38
(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
Group Statement of Financial Position COMMENTS
Non-current Assets 2019 $’M 2018 $’M
81.49 81.46
2.83 2.83
0.07 0.06
2.67
0.48 0.43
0.19 0.44 Total Non-current Assets 87.73 85.27 Current Assets
6.58 10.37
7.49 9.13 Total Current Assets 14.07 19.50 Total Assets 101.80 104.77 Current Liabilities
(19.50) (24.39)
(3.95)
(23.45) (30.16) NET ASSETS 78.36 74.6 Equity
80.22 80.66
0.90 1.14
(2.76) (6.87)
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
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
0.19 (1.14)
(6.68)
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)
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
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
through online channel
not impacted by COVID-19 - Asia online channel sales up YTD
potential impact in US & European markets
healthy cash balances and robust balance sheet
Operating performance
kicking in
51% of rev (FY18: 60%)
improved – 91% now through online channel (FY 18: 82%)
improved - 79% now from US & Europe (FY 18: 71%)
Financial performance
(FY18: $12.6m loss)
$18.9m
auction rev, up 79% to $6.4m
generation up 170% to $6.2m
loss)
Minds + Machines Group Limited | Financial Results YE 2019
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http://mmx.co
Minds + Machines Group Limited | Financial Results YE 2019
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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
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%
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:
Global new gTLD Registrants per Country
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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