H1 unaudited interims 2018 September 26 2018 Disclaimer This - - PowerPoint PPT Presentation

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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


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Minds nds + Machi hine nes Group up Limited

H1 unaudited interims 2018

September 26 2018

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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

  • r opinions contained in the Presentation and no responsibility or liability whatsoever is or will be accepted for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred

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.

Disclaimer

Minds + Machines Group Limited | Confidential

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MMX H1 a Glance

Minds + Machines Group Limited | investor presentation

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H12018 group revenue

22% YoY increase

$6.4million

Registered digital identities

1.65million

H12018 renewal revenue

$3.4million

Domain registry portfolio

Including ICM acquisition –completed 16.6.18

32 new gTLDs

40% YoY increase 1.5m at 30.06.18 -38% YoY increase

Ticker Symbol: LSE: MMX

H12018 operating EBITDA

$0.7million

176% YoY increase

LOCATIONS

  • Seattle, WA
  • London, UK
  • Dublin, Ireland
  • Munich, Germany
  • Xiamen, China

Commenced trading

2014

Employees

27

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Contents

Minds + Machines Group Limited | investor presentation

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  • 1. H1 summary financials
  • 2. The investment case
  • 3. Innovation
  • 4. Our portfolio
  • 5. Management team
  • 6. Major shareholders
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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

  • 2.11

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)

  • Impairment loss on intangibles

(4.10)

  • Onerous lease provision

(6.99)

  • Other (FX, etc)

(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

H1 2018 summary income statement

Minds + Machines Group Limited | Interim Results H1 2018

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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

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One-off adjustments

  • $721k paid to restructure an existing agreement on a specific Top Level Domain – no further restructuring payments

are foreseen

  • $691k paid to third parties covering the $30million + acquisition of ICM and wrap up strategic review
  • $11.1million write down based on onerous contract provisions – includes a $4.1million impairment of an intangible

asset and a $7.0million provision based on expected current and future losses

  • $2.1million provision for bad debt based on new accounting standards in effect in 2018 (IFRS 9) - Company still seeks

to collect on outstanding debt

Minds + Machines Group Limited | investor presentation

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H1 2018 summary balance sheet

Minds + Machines Group Limited | Interim Results H1 2018

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Group Statement of Financial Position COMMENTS

Non current Assets H1 2016 $millions H1 2017 $millions YE 2017 $millions

  • Goodwill

2.83 2.83 2.83

  • Intangible assets

81.48 46.18 45.94

  • FFE

0.06 0.08 0.07

  • Investments

0.30 0.50

  • JVs

0.43 0.43 0.42

  • Other LT Assets

0.56 2.96 3.33 Total Non current Assets 85.65 52.98 52.59 Current Assets

  • Receivables

6.34 8.83 5.74

  • Cash

9.46 15.87 14.23 Total Current Assets 15.80 24.70 19.97 Current & Non Current Liabilities

  • Trade and other payables

(23.61) (12.71) (12.43)

  • Provisions

(6.76)

  • Total Current Liabilities

(30.37) (12.71) (12.43) NET ASSETS 71.08 64.97 60.14 Equity

  • Share Capital + to be issued

80.66 60.06 60.06

  • FX and other

0.91 1.20 1.05

  • RE

(10.42) 3.78 (0.62)

  • Non controlling interest

(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

  • f $10M + shares)

Deferred rev increased by $8.5M mostly due to ongoing rev

  • bligations as part of ICM acquisition and drawdown of w.c.facility

Onerous contract provision ICM acquisition included 225M @ 6.99p being issued/to be issued

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ICM acquisition

Minds + Machines Group Limited | investor presentation

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  • Earnings enhancing
  • Imputed multiple of 8.9 times Net Profit before Tax
  • De-risks MMX’s historic dependency on one-time revenue from Asia market
  • majority of revenue coming from renewals (> 75%)
  • Strengthens MMX influence with distribution partner with US and EU regions
  • Majority of registrants based in the US and EU
  • Licensed by ICANN to better segment internet content – improve protection to consumers
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H1 2018 summary cashflow

Minds + Machines Group Limited | Interim Results H1 2018

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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)

  • Change in AR/AP/other

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)

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Key KPI’s

Minds + Machines Group Limited | Interim Results H1 2018

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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%

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RENEWAL BASE

Year 3 Year 2 Year 1

Renewal base growth model

Minds + Machines Group Limited | Interim Results H1 2018

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MODEL A

Heavily Discounted

5% ratio 70%+

MODEL B

Minimal Discount

60% ratio 75%+

MODEL C

Premiums

HIGH MID MID LOW MID LOW

High Volume Low Volume

2017: average registration price across full portfolio (ie. standards, premiums & renewals) = $12

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MMX investment case

  • Core business transitioning into stable company able to support a share price based on fundamentals
  • Sustainable topline organic registration growth and continuing growth of renewal revenue base to underpin

targeted Operating EBITDA improvements over next three years

  • Renewal base on track to surpass all operating costs (partner payments, cost of sales, OPEX) within 24

months

  • Strategy in place to accelerate scale and value through:
  • innovation
  • bolt-on acquisitions

Minds + Machines Group Limited | investor presentation

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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

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Innovation: the wider market for digital identifiers

Minds + Machines Group Limited | investor presentation

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blockchain www IoT

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:

  • 42m identifiers
  • Growing at 99k daily
  • Targeting 1m transactions per sec BUT

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

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.luxe: one identifier, two protocols

Minds + Machines Group Limited | investor presentation

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domain.luxe

First dedicated TLD to serve as a digital identifier on two different platforms – launching 6.11.2018

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Existing distribution channel in place

Minds + Machines Group Limited | investor presentation

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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

Key

Established & expanding sales channel in place through which to sell new services

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Summary

Minds + Machines Group Limited | investor presentation

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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

  • Onerous contract provisioning: removes drag from P&L moving forward
  • New IFRS standards: provisioning made on long-term agreements reflecting

potential collection risks – Company to date has had no material bad debts Expansion of potential addressable markets through innovation

  • MMX portfolio now exceeds 1.65m digital identifiers
  • .luxe first TLD to serve two platforms; WWW and Ethereum
  • Positions MMX to drive conversations across multiple digital identifier initiatives

ICM acq. completed Revenue mix better balanced across regions

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Portfolio

Minds + Machines Group Limited

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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

.cpa .gay .hotel In partnership .music

  • Generic and vertical

interest

  • Geographic
  • Largest portfolio
  • 6 in Europe & US
  • China licensed

icm icm icm icm .fashion .fit .yoga

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Management Team

Minds + Machines Group Limited | Investor Presentation

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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

Sheri Falcon

ICANN Policy & General Counsel

Len Bayles

Group CTO

Tony Farrow

COO - ICM

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Major shareholders

Minds + Machines Group Limited | investor presentation

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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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Thank you

http://mmx.co