Minds nds + Machi hine nes Group up Limited
H1 unaudited interims 2018
September 26 2018
H1 unaudited interims 2018 September 26 2018 Disclaimer This - - PowerPoint PPT Presentation
Minds nds + Machi hine nes Group up Limited H1 unaudited interims 2018 September 26 2018 Disclaimer This presentation ( Presentation ) is being provided to you ( Recipient ) by Minds + Machines Limited ( Company or MMX ). The information in
September 26 2018
This presentation (Presentation) is being provided to you (Recipient) by Minds + Machines Limited (Company or MMX). The information in the Presentation is subject to updates, revisions and amendments. The Presentation is not an admission document or an advertisement and is being provided for information purposes only. The content of this Presentation has not been approved by an authorised person for the purposes of Section 21(2)(b) of the Financial Services and Markets Act 2000 (FSMA), and does not constitute or form part of, and should not be construed as, any offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any securities of MMX (Shares) in the United States or any other jurisdiction. Neither the Presentation, nor any part of it nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any commitment whatsoever in relation to the Shares. Reliance on this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all the property or other assets invested. Whilst the Presentation has been prepared in good faith, no representation or warranty expressed or implied is given by MMX or any of its officers, employees, agents or affiliates as to the accuracy or completeness of the information
howsoever arising, directly or indirectly, from any use of this Presentation. Any such liability is expressly disclaimed. Nothing in this Presentation is, or should be relied on as, a promise or representation as to the future. This Presentation contains forward-looking statements, which reflect the views of MMX with respect to, among other things, MMX’s operations (including sales projections and revenues). Forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Should any assumptions underlying the forward-looking statements contained in this Presentation prove to be incorrect, the actual outcome or results may differ materially from outcomes or results projected in these statements. MMX is under no obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law or regulation. The Recipient should not place undue reliance on forward-looking statements, which speak only as of the date of this Presentation. This Presentation is exempt from the general restriction on communications contained in section 21 of FSMA on the grounds that it is being provided only 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 or to persons who are otherwise permitted by law to receive it (the “Relevant Persons”). Any recipient of this Presentation who is not a Relevant Person, or to whom distribution is otherwise not lawful, may not act or rely on it, and should return the Presentation to MMX immediately. The contents of this Presentation are not to be construed as legal, financial or tax advice. MMX is not responsible to the Recipient for providing regulatory and legal protections afforded to customers (as defined in the rules of the UK Financial Conduct Authority) nor for providing advice in relation to the contents of this Presentation on any matter, transaction or arrangement referred to in it. MMX, any adviser or any person involved in the preparation of this Presentation does not owe 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 the Recipient is in any doubt as to what action to take, MMX recommends seeking independent financial advice from a stockbroker, solicitor, accountant or other independent financial adviser immediately. MMX does not intend to offer its Shares into the United States through any public means and similarly does not intend to register its securities with the United States Securities and Exchange Commission and therefore any offer and sale into the United States will be required to be in compliance with an exemption or exemptions from various state and federal laws regarding securities registration. Further, MMX intends to restrict any offer and sale of its Shares and its business activities to remain in compliance with exemptions from the requirement to register its securities in the United States. In receiving any information relating to MMX (whether in written or oral form), including the information in this Presentation, the Recipient will be deemed to have represented and agreed for the benefit of MMX and its legal and financial advisers (i) that the Recipient will only use such information for the purposes of discussions with MMX; (ii) to hold such information in strict confidence and not to disclose it (or any discussions with MMX) to any person, except as may be required by law, regulation or court order; (iii) not to reproduce or distribute, in whole or in part, directly or indirectly, any of the information in this Presentation; (iv) that the Recipient will comply with all laws applicable to possessing such information, including without limitation insider trading laws, Market Abuse Regulations and applicable regulations and recommendations of the UK Financial Services Authority or any other relevant regulator; and (v) that the Recipient is permitted, in accordance with all applicable laws, to receive such information. The distribution of this Presentation in certain non-UK jurisdictions may be restricted by law and therefore persons into whose possession this Presentation comes should inform themselves about and observe any such restrictions. Any such distribution could result in a violation of the law of such jurisdictions.
Minds + Machines Group Limited | Confidential
Slide 2
Minds + Machines Group Limited | investor presentation
Slide 3
H12018 group revenue
22% YoY increase
Registered digital identities
H12018 renewal revenue
Domain registry portfolio
Including ICM acquisition –completed 16.6.18
40% YoY increase 1.5m at 30.06.18 -38% YoY increase
H12018 operating EBITDA
176% YoY increase
LOCATIONS
Commenced trading
Employees
Minds + Machines Group Limited | investor presentation
Slide 4
H1 2018 $millions H1 2017 $millions YE 2017 $millions
Revenue 6.42 5.28 14.32 Less Partner payments (1.14) (1.00) (2.36) Cost of Sales (2.00) (1.40) (3.44)
Gross Profit 3.28
2.88
8.51
gTLD applications
Opex (2.61) (2.63) (5.29)
Operating EBITDA Costs 0.67 0.25 5.33
Strat, Acq and Restructuring costs (1.41) (0.14) (0.30) Bad debt provisions (2.12)
(4.10)
(6.99)
(0.70) (0.53) (1.05)
EBITDA (14.64) (0.42) 3.99
Other (Deprec, etc) (0.09) (0.08) (0.16) Income Tax 0.05 (0.02) (0.02)
Net Profit (14.68) (0.53) 3.81
Minds + Machines Group Limited | Interim Results H1 2018
Slide 5
Group Statement of Comprehensive Income COMMENTS
Revenues increased 22% Renewal revenue increased 40% to $3.4M (H1 2017: $2.4) Major benefits of onerous contractprovision to hit from H2 onwards COGs being actively managed down for 2019 One-off 2017 revenue Flat but will increase for FY then reduced for FY 2019 as ICM integration completes Includes $721k legacy contract restructuring payment Reflects new IFRS 9 standard - historically no bad debt Consequence of onerous contract provision Provision made following failure of partners' marketing to impact minimum revenue commitments of contract Near 3x increase in operating EBITDA
are foreseen
asset and a $7.0million provision based on expected current and future losses
to collect on outstanding debt
Minds + Machines Group Limited | investor presentation
Slide 6
Minds + Machines Group Limited | Interim Results H1 2018
Slide 7
Group Statement of Financial Position COMMENTS
Non current Assets H1 2016 $millions H1 2017 $millions YE 2017 $millions
2.83 2.83 2.83
81.48 46.18 45.94
0.06 0.08 0.07
0.30 0.50
0.43 0.43 0.42
0.56 2.96 3.33 Total Non current Assets 85.65 52.98 52.59 Current Assets
6.34 8.83 5.74
9.46 15.87 14.23 Total Current Assets 15.80 24.70 19.97 Current & Non Current Liabilities
(23.61) (12.71) (12.43)
(6.76)
(30.37) (12.71) (12.43) NET ASSETS 71.08 64.97 60.14 Equity
80.66 60.06 60.06
0.91 1.20 1.05
(10.42) 3.78 (0.62)
(0.07) (0.07) (0.35) TOTAL EQUITY 71.08 64.97 60.14
Acquisition of ICM ($39.6M) and impairment of intangible asset ($4.1M) ICANN letters of credit reclassified to cash Decrease from year end reflects receipts from payment plans and bad debt provision Decrease mostly due to purchase of ICM (cash consideration
Deferred rev increased by $8.5M mostly due to ongoing rev
Onerous contract provision ICM acquisition included 225M @ 6.99p being issued/to be issued
Minds + Machines Group Limited | investor presentation
Slide 8
Minds + Machines Group Limited | Interim Results H1 2018
Slide 9
Group Cash Flow Statement COMMENTS
H1 2018 $millions H1 2017 $millions YE 2017 $millions
Operating EBITDA 0.66 0.24 5.33 One-off (restructuring / strategic review) (1.41) (0.14) (0.30) Bad debt provision (2.11)
3.58 (0.94) (0.67) Other (FX, loss on withdrawal of gTLDs) (0.22) (0.09) 0.26 Cash from Operating Activities 0.50 (0.92) 4.63 Cash from Investing Activities (9.91) (0.11) (4.00) Cash from Financing Activities 3.00 (0.01) (0.03) Net (increase / (decrease) in cash (6.41) (1.04) 0.59 Cash at the beginning of the year 15.87 15.28 15.28
Cash at end of year 9.46 14.23 15.87
Reflects reclassification of ICANN LoCs $1.42M turnaround over same period Overall reduction to acquisition of ICM for cash consideration of $10M (+ shares)
Minds + Machines Group Limited | Interim Results H1 2018
Slide 10
Domains under Management Accounting Revenue Accounting Renewals OPEX % of Renewal Revenue
1,108 2,400 3,356 6,750 1,000 2,000 3,000 4,000 5,000 6,000 7,000
H1 2016 H1 2017 H1 2018 H2 2018
$’000 -Renewal revenue
729,000 821,000 1,100,000 1,320,000 1,522,000 1,650,000 700,000 900,000 1,100,000 1,300,000 1,500,000 1,700,000 H1 2016 YE 2016 H1 2017 YE 2017 H1 2018 NOW 7,384 5,277 6,423 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
H1 2016 H1 2017 H1 2018
$’000 -Revenue $’000 Renewals OPEX as a % billings renewals Projected
1,108 2,400 3,356 500 1,000 1,500 2,000 2,500 3,000 3,500
H1 2016 H1 2017 H1 2018 78% 110% 78% 340%
Year 3 Year 2 Year 1
Minds + Machines Group Limited | Interim Results H1 2018
Slide 11
Heavily Discounted
Minimal Discount
HIGH MID MID LOW MID LOW
2017: average registration price across full portfolio (ie. standards, premiums & renewals) = $12
targeted Operating EBITDA improvements over next three years
months
Minds + Machines Group Limited | investor presentation
Slide 12
2016 2017 2018
Standard Revenue 25% 17% N/A One-off Premium Revenue 58% 49% N/A Renewal Revenue $ 2,403 $ 4,751 $ 10m+* Total Revenue $ 14,415 $ 14,315 N/A Adjusted EBITDA $ 3,610 $ 3,226 $ 4,080** Multiple c.27 c.25 c.18
* forecast ** as of 25.9.18
Minds + Machines Group Limited | investor presentation
Slide 13
1. Unparalleled security; 2. Applications far greater than crypto hype; 3. A platform that can potentially disrupt every industry; 4. 68% of IT directors afraid of losing competitive advantage if they don’t adopt; 5. China leading world in DLT patents; 6. Ethereum the leading platform:
currently slow & uses 42 character identifier protocol 1. 20.4bn connected devices by 2020 (Gartner); 2. Unparalleled transaction per sec capabilities; BUT 3. No dominant routing s or naming system currently prevails; 4. Human interoperability impacted SO Natural opportunities for DNS based integrations 1. DNS now over 30yrs old; 2. Human intuitive 3. Offers exceptional processing times -100’sk per second (eg. Google 40k searches per sec); 4. New gTLDs – launched 2014 - fastest growing market segment (c. 26m domains) BUT 5. Concerns over security/stability of wider internet grow 6. Marginal growth in Verisign (148.3m) & country code (146.3m) registration – YoY growth of 3.2% & 2.2% respectively
Distributed Ledger Technology Internet of Things WWW
Minds + Machines Group Limited | investor presentation
Slide 14
First dedicated TLD to serve as a digital identifier on two different platforms – launching 6.11.2018
Minds + Machines Group Limited | investor presentation
Slide 15
North America 58 South America 1 UK 10 China 59 Rest of the world 14 Continental Europe 57 Japan 6 India/South East Asia 12 Registrar partners per region
Established & expanding sales channel in place through which to sell new services
Minds + Machines Group Limited | investor presentation
Slide 16
H1 YoY Registrations up 38% Revenue up 22% Renewals up 40% Renewal revenue FY2018 expected to exceed $10m > 100% ahead of FY2017 One off adjustments
potential collection risks – Company to date has had no material bad debts Expansion of potential addressable markets through innovation
ICM acq. completed Revenue mix better balanced across regions
Minds + Machines Group Limited
Slide 17
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
.cpa .gay .hotel In partnership .music
interest
icm icm icm icm .fashion .fit .yoga
Minds + Machines Group Limited | Investor Presentation
Slide 18
Chief Executive Officer
Chief Operating Officer & Chief Financial Officer
Non-Executive Chairman
Non-Executive Director
Deep Shah
Financial Controller
Solomon Amoako
VP, Channel Management
Yuling Huang
General Manager, China
Caspar von Veltheim
Director of European Operations + Sales
Sheri Falcon
ICANN Policy & General Counsel
Len Bayles
Group CTO
Tony Farrow
COO - ICM
Minds + Machines Group Limited | investor presentation
Slide 19
Holder Amount Percent
Lombard Odier Asset Management 132,999,659 16.70% London and Capital Asset Management Ltd 112,157,877 14.08% Hargreave Hale 64,014,389 8.04% Oryx International Growth Fund Limited 52,550,000 6.60% Hony Capital 50,107,692 6.29% Stuart Lawley 48,765,655 6.12% Afilias 28,507,314 3.58% Guy Elliott 20,250,000 2.54% Michael Salazar 1,975,050 0.25% Caspar von Veltheim 916,613 0.12% Toby Hall 500,000 0.06%
The Company’s issued share capital consists of 796,556,797 Ordinary Shares of no par value. No Ordinary Shares are held in treasury. The total number of voting rights in the Company is 796,556,797. 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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