TIDMMMX
RNS Number : 7736R
Minds + Machines Group Limited
26 September 2017
Strictly Embargoed until 07.00: 26 September 2017
Minds + Machines Group Limited
("MMX", the "Company" or "Group")
Unaudited Interim Results for the six month period ended 30 June
2017
Minds + Machines Group Limited (AIM:MMX), the top-level domain
registry company, today announces the Group's unaudited interim
results for the six month period ended 30 June 2017 (the
"period").
Toby Hall, CEO of MMX, commented:
"The first half of 2017 has been a period of consolidating the
transformational progress of 2016 with the business on course to
deliver its maiden year of profitability as an operating business
this financial year.
"Importantly, the quality of earnings in H1 2017 have
dramatically improved. Renewal billings have nearly tripled to
$3.1million in the period from $1.1million last year with renewal
revenue more than doubling to $2.4million accounting for 45% of H1
revenue compared to 15% in H1 2016.
"The Company has likewise continued to work hard to manage down
costs with fixed operating costs reduced by 30% to $2.6million in
H1 2017 when compared to those of the continuing operations of H1
2016 ($3.8million) and by 45% when compared to the Group's full
operating costs in H1 2016. This has allowed the business to
achieve one of its central KPI's of renewal billings being greater
than fixed OPEX for the first time in the period allowing new sales
to increasingly drop to the bottom line.
"As a result of the completed restructuring, off comparatively
lower H1 billings of $5.6m due to the decision to hold back key new
inventory releases to H2 - the business has transformed a H1 2016
billings based group loss of $0.5million to a H1 2017 $0.2million
profit. And with the current momentum of Q3 sales, where sales of
approximately $6million have already been achieved to date, the
business is well on course to deliver its first year of
profitability. The Directors therefore look forward with
confidence, the strategic review process remaining ongoing as the
Company and its advisors look to an outcome that can best enable an
acceleration of what we increasingly consider to be a de-risked,
proven business model that is delivering a balanced mix of revenues
across the regions."
Financial highlights from period
-- H1 top-line billings of $5.6million (revenues $5.3million), a
strong performance given key 2017 inventory releases held back to
H2 - H1 2016 $8.1million billings ($7.4million revenue) driven by
.vip launch;
-- Domains under management increased 34% from 31 December 2016
to 1.1million registrations at 30 June 2017*;
-- H1 billing based profit of $0.2million for the period
compared to a loss of $0.5million for H1 2016;H1 2017 billings
primarily driven by the above industry renewal rates across each of
the regions and the organic sales of standard registrations -
domains under management up 58% since year-end;
-- Quality of earnings significantly improved, renewal revenues
increased more than two-fold to $2.4million (45% of H1 2017 gross
revenue), compared to $1.1million H1 2016 (15% of gross
revenue);
-- Central KPI target of renewal billings to be greater than
fixed OPEX achieved for first time in period:
- H1 renewal billings nearly tripled to $3.1million;
- Fixed OPEX reduced 45% to $2.6million when compared to the
Group's full operating costs in H1 2016 (30% when compared to 2016
ongoing operations);
-- H1 Operating EBITDA of $0.2million (H1 2016: $1.1 million)
generated in spite of $2.1million lower revenue in period;
-- Net cash contribution of $0.2million generated from operations, $80k ahead of H1 2016;
-- Cash and cash equivalents of $14.2 million at period end (H2
2016: $15.3 million), the decrease primarily due to payment of
provisioned liabilities;
-- H1 2016 group losses of $1.9million reduced to $0.5million
group loss H1 2017 - H1 2016 loss per share of 0.24cents** reduced
to 0.08cents H1 2017.
*excludes approximately 200,000 committed registrations outside
of China
**combined loss per share from 2016 continuing and discontinuing
operations
Post Period End
-- $6.0million of sales generated in Q3-to-date bringing sales year-to-date in-line with 2016;
-- Cash and cash equivalents increased to $15.3million as of 30
August 2017 primarily through collection of aged receivables;
-- An additional $2.4million of cash due as a result of the
private auctions for .llc and .inc in which the Company withdrew
its applications - of which $2.0million will be used towards
repaying provisioned liabilities resulting from contracts
restructured in 2016;
-- Business on course to deliver first year of profitability.
The unaudited interim accounts for the six months ended 30 June
2017 are available at www.mmx.co.
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
-ends-
For further information:
Minds + Machines Group Limited
Toby Hall, CEO Tel: +44 (0)
7713 341072
Michael Salazar, COO/CFO Tel: +1 (310)
740 7499
finnCap Ltd Tel: 020 7220
0500
Corporate finance - Stuart Andrews/Carl
Holmes/Simon Hicks
Corporate broking - Tim Redfern/Camille
Gochez
Belvedere Communications Limited Tel: +44 (0)
20 3567 0510
John West
Kim van Beeck
About MMX
Minds + Machines Group Limited (LSE: MMX) is the owner and
operator of a world class portfolio of top-level domain assets
(gTLDs). As a sales and marketing-led registry business, we are
focused on commercializing our portfolio in partnership with our
expanding global network of distribution partners.
The MMX portfolio is currently focused around geographic domains
(e.g. .london, .boston, .miami, .bayern), professional occupations
(e.g. .law, .abogado, and .dds), consumer interests (e.g. .fashion,
.wedding, .vip), lifestyle (e.g. .fit, .surf, .yoga), outdoor
activities (e.g..fishing, .garden, .horse) and generic names such
as .work and .casa. As a business, we work through our expanding
international network of registrars and distribution partners to
bring the benefits of affinity based domain addresses to B2B and
consumer audiences. For more information on MMX, please visit
www.mmx.co
Executives' Summary
The first half of 2017 has been a period of consolidating the
transformational progress of 2016 and establishing a solid platform
for the business to deliver its maiden year of profitability as an
operating business in the current year.
In the period under review:
-- Domains under management increased 34% from 31 December 2016
to 1.1million registrations at 30 June 2017*;
-- H1 top-line billings of $5.6million (revenues $5.3million), a
strong performance given key 2017 inventory releases held back to
H2 - H1 2016 $8.1million billings ($7.4million revenue) driven by
.vip launch;
-- Quality of earnings significantly improved, renewal revenues
increased more than two-fold to $2.4million (45% of H1 2017 gross
revenue), compared to $1.1million H1 2016 (15% of gross
revenue);
-- H1 renewal billings nearly tripled to $3.1million and fixed
OPEX reduced 30% to $2.6million (H1 2016 $3.8million for ongoing
operations) allowing the Company to achieve a central KPI of
renewal billings being greater than fixed OPEX for the first
time;
-- Billing based profit of $0.2million delivered versus $0.5million group loss in H1 2016;
-- H1 Operating EBITDA of $0.2million (H1 2016: $1.1 million)
delivered in spite of $2.1million lower revenue in period;
-- Net cash contribution of $0.2million generated from operations, $80k ahead of H1 2016;
-- H1 2016 group losses of $1.9million reduced to $0.5million
group loss H1 2017 - H1 2016 loss per share of 0.24cents** reduced
to 0.08cents H1 2017; and
-- Cash and cash equivalents at 30 June 2017 of $14.2million (H2
2016: $15.3 million), the decrease primarily due to payment of
provisioned liabilities in period.
Post period:
-- $6.0million of sales generated in Q3-to-date bringing sales year-to-date in-line with 2016;
-- Cash and cash equivalents increased to $15.3million as of 30
August 2017 primarily through collection of aged receivables;
and
-- An additional $2.4million of cash due as a result of the
private auctions for .llc and .inc in which the Company withdrew
its applications - of which $2.0million has been used towards
repaying provisioned liabilities resulting from contracts
restructured in 2016.
-- Business on course to deliver first year of profitability.
*excludes approximately 200,000 committed registrations outside
of China
**combined loss per share from 2016 continuing and discontinuing
operations
Financial Overview
H1 2016 was a transformational period for the Company with the
major restructuring of the Group commenced and the successful
launch into China undertaken through .vip. As previously announced
to the market, in the absence of a TLD launch in the H1 2017, and
management's decision to hold back the release of the 2017 China
premium inventory allocation to Q3 2017, top-line billings were
expected to be impacted. Due however to the exceptional renewal
rates seen across each of the regions and growth of standard
registrations in the period (see highlighted KPIs), top-line
billings of $5.6million and revenues of $5.3million were achieved
(H1 2016 $8.1million billings and $7.4million revenue
respectively). For reference, billings in H1 2015 were
$2.0million.
As a result, the Company successfully delivered a billing based
profit of $0.2million for the period compared to a Group loss of
$0.5million for H1 2016 due to the restructuring expenditures and
ongoing costs of the discontinued operations at that time totaling
over $1.8million.
As a consequence of the renewals performance during the period
under review, the quality of earnings also dramatically improved,
with renewal revenue more than doubling to $2.4million in H1 2017
from $1.1million last year. In percentage terms, H1 renewal
revenues accounted for 45% of revenues compared to 15% of revenues
in H1 2016. From a billings perspective, H1 2017 renewal billings
were $3.1million (55% of H1 2017 billings) compared to $1.1million
in H1 2016.
The Company likewise continued to work hard to manage down
costs: fixed operating costs reduced 30% to $2.6million in H1 2017
when compared to those of the continuing operations of H1 2016
($3.8million), and reduced by 45% when compared to the Group's full
operating costs in H1 2016, given the associated ongoing costs of
the operations being discontinued at that time.
As a result, the Group has achieved one of its central KPI's in
the period - that of recurring renewal billings being greater than
fixed overheads - a trend that is continuing into H2 2017.
Consequently, new sales can increasingly drop to the bottom-line
after cost of sales and partner payments have been deducted.
In the context of the full year, steady progress has also been
made in H1 to ensure that the Company achieves its maiden year of
profitability as an operating company, $0.2million of operating
EBITDA generated in the period. For reference, operating EBITDA in
H1 2016 was $0.9million higher at $1.1million for the ongoing
operations but from $2.1million greater revenue.
Indeed, this year's H1 operating EBITDA contribution was
achieved in spite of an increase in Costs of Goods due in part to
certain one-off annual marketing costs impacting in H1 (H1 2017 -
$1.4million; H1 2016 $1.1million). Management therefore expects
COGs to reduce as a percentage of gross billings in H2 so that they
are broadly in-line with management's previously stated KPI of
tracking to 20% of gross billings for the full-year.
H2 2017 outlook
As previously indicated to the market, MMX is historically a
significantly H2 weighted Company. This year that weighting has
been accentuated due to the necessary timings of certain activities
in Asia, Europe and US which have already resulted in a substantial
increase in Q3 sales of approximately $6.0million in Q3 to date,
compared to $3.7million for the same period last year. Year-to-date
sales are in-line with that of last year at $11.6million.
Highlights from Q3 2017 sales to date include:
-- Contracts over $1.0million of .london premium inventory
following the introduction of the new premium pricing policy for
this domain (of which $0.5million will be accounted for in 2017),
which management believes is a significant development as is the
first indication of meaningful investor interest in its European
portfolio;
-- Contracts totaling $4.2million in China, heavily driven by
the release of the 2017 allotted premium China inventory, of which
approximately 80% has now been sold.
Management likewise has good visibility over its Q4 2017 revenue
both in terms of renewals, as this is when the core US and European
renewal revenues occur, and sales pipe-line. As a result,
management remains confident about the full-year outlook for the
Group. This, coupled with the Q3 sales performance and ongoing
containment of operating costs and costs of sale, gives the
Directors confidence about the Company's ability to deliver
bottom-line profitability for the full year for the first time in
the Company's history. In 2015 and 2016, the Group's losses were
$9.4million and $4.5million respectively.
Cash position
During H1, operations contributed a net $0.2million to cash
while monies spent to pay-down liabilities, including contract
restructuring and the strategic review, during the period amounted
to $1.3million. As a result, cash decreased by $1.1million to
$14.2million from cash balances of $15.3million at the end of H2
2016, a positon which has already been reversed, cash balances
having increased to GBP15.2million as of 31 August 2017. The
increase is primarily attributed to the collection of aged
receivables.
Subsequent to 31 August 2017, the Company completed private
auctions for .llc and .inc where the Company did not win the TLDs
but will receive proceeds for withdrawing their applications with
ICANN of $2.4million, of which $2.0million will be used towards
repaying provisioned liabilities resulting from contracts
restructured in 2016.
In summary, significant progress has been achieved in
transitioning MMX into a strong, long-term, annuity based business,
built on a solid bedrock of growing recurring revenues supported by
a steady annual inflow of new sales as underlined by the Q3
performance.
Highlighted KPIs
Growth of domains under management ("DUMs")
New registrations are a key measure for the Company as they
drive the potential renewal revenue of future years. In H1, DUMs
increased from 821,000 at the end 2016 to approximately 1.1million
as of 30 June 2017, with another 200,000+ of committed
registrations from outside of China which are not reflected in H1
billings. The 34% growth of registrations in the period, which is
primarily driven by interest in standard registrations, is
particularly encouraging as Europe, US and Asia regions outside of
China are now starting to contribute meaningfully to this growth.
In the period, the Company processed 318,000 new registrations
compared to 452,000 in H1 2016.
Indeed, as result of the initiatives put in place during the
year, seven domains in the portfolio are now showing registrations
in excess of their end of year-one highs and the remainder are
broadly in line with their end of year-one registrations. At the
beginning of 2016, all of the Company's TLDs were effectively below
their year one highs.
Gross billings
Whilst in H1 billings were off the H1 2016 high that resulted
from the launch of .vip, year-to-date 2017 billings are in line
with 2016, which demonstrates both the underlying strength of the
portfolio and the China premium inventory release strategy given it
is widely recognized in the industry that year 2 billings are
typically significantly lower than year one for a newly launched
TLD.
There are a number of factors currently driving new billings
growth across MMX's portfolio:
-- In China, the uptake and usage of .vip by SME's, some 50% of
.vip bought names now being used either within or outside of
China;
-- Digital entrepreneurs developing projects of potential scale
where new gTLD names effectively form part of their
infrastructure;
-- SME's increasing awareness in Europe of the alternative
choices outside of their respective country code and .com endings;
and
-- Investors outside of China recognizing the potential of new
gTLDs as a potential asset to trade.
Indeed, we are seeing the ongoing balancing out of billings
across the regions in the current year, with China, whilst still
growing, on track to represent no more than 50% of total billings
in the year compared to 62% in 2016.
Growth of renewals
The ongoing growth of the Company's renewal revenue is central
to the vision of developing MMX into a business with significant
annuity revenue.
Management is therefore greatly encouraged that renewal billings
in the period have nearly tripled from $1.1million in H1 2016 to
$3.1million in H1 2017, increasing from 13% of H1 2016 billings to
55% in H1 2017. From a revenue perspective, renewal revenue
accounted for 15% of revenue in H1 2016 and 45% in the current
period.
Over the last three periods, renewal billings have progressed as
follows: H1 2016, $1.1million; H2 2016, $2.7million; H1 2017,
$3.1million.
The significant increase in renewal billings recorded in H1 2017
flows from the above industry average renewal rates achieved across
each of our geographic regions.
As reported in late July, first year renewal rates of 75% were
achieved in China on the 400,000+ name registered in the first four
weeks of .vip's launch in 2016, effectively setting the bar at a
new level for the industry in this region. Indeed, much of the
renewals success was a direct result of the premium pricing policy
introduced for that extension.
In Europe, the rates are currently higher at over 80%; and in
the US, they are tracking at 67% when .work and .casa are
discounted given the aggressive sales models historically deployed
with each.
Looking forward, the Company's emphasis will, however, be to
increasingly prioritize renewal revenue growth over DUM's renewal
rates. To illustrate this point, whilst the US might have the
lowest renewal rates on a registration perspective, it is currently
on track to contribute over 50% of this financial year's
renewals.
Operating Expenditure
Following on from the restructuring of 2016, management has
continued to manage down fixed OPEX, H1 fixed OPEX of $2.6million
being 30% lower than that of the ongoing operations in H1 2016, and
healthily within the $6million annual cap. It should be noted that
the H1 2017 figure takes into account a number of senior hires made
at the beginning of 2017 to strengthen business development
activities.
OPEX a percentage of renewal billings
As highlighted earlier, we have now completed the first period
where fixed OPEX has been less than renewal billings ($2.6million
to $3.1million) a trend we expect to continue into H2 2017 and
beyond. This is a major milestone for the business as we continue
developing towards our goal of being a significant annuity based
company.
Gross margin
One of our key KPI's set out in 2016 was for annual gross
margins to be not less than 80%. As a result of certain annual
marketing contract payment timings and the lower level of billings
in the period, gross margin has dropped to 67% for the period (H1
2016, 84%). We expect this to be closer to our gross margin KPI
goal by the end of 2017.
Ongoing growth
Launching new TLDs, expanding registrations in launched TLDs in
existing regions through new initiatives, as well as taking them
into new regions, drives our growth. In the near term, this
objective is being supported by the forthcoming launch of .boston
in October and the ongoing business development/marketing
initiatives in each of the regions across the portfolio. In the
mid-term, the Company looks forward to further TLD releases both
internationally and in China in 2018. The release schedule will be
released at a later date as it is in part dependent on China's MIIT
approval process for up to eight of the Company's properties in
China.
Strategic review
On 25 May 2017, MMX announced the appointment of Headwaters, a
West Coast based US investment banking firm, to conduct a strategic
review to look at all options open to the Group. The Company and
Headwaters have held conversations with a number of strategic
parties in the US, Europe and Asia and continue to explore a range
of options to determine the best path forward, which may or may not
result in an offer being made for the Company as a whole. A further
update on progress will be provided when there are material
developments.
Conclusion
H1 2017 has been a defining period where for the first time we
have been able to see both the benefits of a portfolio approach
operating across regions and how one-off premium sales can support
the development of a long-term annuity based business as well as
provide stimulus for significant standard registration growth.
Registrations across the portfolio are up by 34% from 31 December
2016 at the half year.
As we look forward to the completion of the strategic review,
our goal is to achieve an outcome that therefore allows an
acceleration of what we increasingly consider to be a de-risked,
proven business model for monetizing top-level domains and creating
a significant annuity based business.
In terms of the current year, our billings profitability, net
cash contribution of operations, and improved quality of earnings
in H1 2017, combined with the trading since the half year, means we
are more confident than ever about the prospects for the business
and delivering its maiden year of profitability as an operating
registry in the current year.
Executives' Summary
Toby Hall, CEO
Michael Salazar, COO/CFO
Consolidated Statement of Total Comprehensive Income
for the period ended 30 June 2017
Notes Period Ended Period Ended Year Ended
30 June 2017 30 June 2016 31 Dec 2016
(unaudited) (unaudited) (audited)
$ 000's $ 000's $ 000's
========================= ===== ============= ============= ============
Billings 5,611 8,050 15,800
------------------------- ----- ------------- ------------- ------------
Continuing Operations:
========================= ===== ============= ============= ============
Of which:
========================= ===== ============= ============= ============
Revenue 5,277 7,384 15,001
========================= ===== ============= ============= ============
Less: Partner payments 2 (1,008) (544) (1,520)
========================= ===== ============= ============= ============
Revenue less partner
payments 4,269 6,840 13,481
========================= ===== ============= ============= ============
Cost of sales 3 (1,401) (1,104) (2,541)
========================= ===== ============= ============= ============
Gross Profit 2,868 5,736 10,940
========================= ===== ============= ============= ============
Gross Profit Margin
% 67% 84% 81%
========================= ===== ============= ============= ============
Loss on withdrawal
of gTLD applications - - (148)
========================= ===== ============= ============= ============
Operating expenses
- ongoing (2,630) (3,525) (6,536)
========================= ===== ============= ============= ============
Operating expenses
- forfeited - (238) (646)
========================= ===== ============= ============= ============
Operating earnings
before interest,
taxation, depreciation
and amortisation
(Operating EBITDA)
before restructuring
costs 238 1,973 3,610
========================= ===== ============= ============= ============
Restructuring costs
- operating - (875) (1,166)
========================= ===== ============= ============= ============
Restructuring costs
- contracts - - (3,748)
========================= ===== ============= ============= ============
Operating earnings
before interest,
taxation, depreciation
and amortisation
(Operating EBITDA) 238 1,098 (1,304)
========================= ===== ============= ============= ============
Strategic review
costs 4 (143) - -
========================= ===== ============= ============= ============
Foreign exchange
(loss) / gain (21) (604) 251
========================= ===== ============= ============= ============
Profit on disposal
of fixed assets 3 - (18)
========================= ===== ============= ============= ============
Share based payments 5 (505) (397) (745)
========================= ===== ============= ============= ============
Share of results
of joint venture 4 (15) (25)
========================= ===== ============= ============= ============
(Loss) / earnings
before interest,
taxation, depreciation,
and amortisation
(EBITDA) (424) 82 (1,841)
========================= ===== ============= ============= ============
Depreciation and
amortisation charge (92) (50) (286)
========================= ===== ============= ============= ============
Finance revenue 11 24 39
========================= ===== ============= ============= ============
Loss on disposal
of joint ventures - - (276)
========================= ===== ============= ============= ============
(Loss) / profit
before taxation (505) 56 (2,364)
========================= ===== ============= ============= ============
Income tax (21) - 195
========================= ===== ============= ============= ============
(Loss) / profit
from the period
from continuing
operations (526) 56 (2,169)
========================= ===== ============= ============= ============
Loss from discontinued
operations - (1,963) (2,332)
========================= ===== ============= ============= ============
Retained loss for
the period (526) (1,907) (4,501)
========================= ===== ============= ============= ============
Notes Period Period Ended Year Ended
Ended
30 June 30 June 31 December
2017 (unaudited) 2016 (unaudited) 2016 (audited)
$ 000's $ 000's $ 000's
=========================== ===== ================== ================== ================
Other comprehensive
income
=========================== ===== ================== ================== ================
Items that may be
reclassified subsequently
to profit or loss:
=========================== ===== ================== ================== ================
Foreign exchange
hedge - (1,729) -
=========================== ===== ================== ================== ================
Currency translation
differences 281 534 (648)
=========================== ===== ================== ================== ================
Other comprehensive
income / (loss) for
the period net of
taxation 281 (1,195) (648)
=========================== ===== ================== ================== ================
Total comprehensive
loss for the period (245) (3,102) (5,148)
=========================== ===== ================== ================== ================
Retained (loss) /
profit for the period
attributable to:
=========================== ===== ================== ================== ================
Equity holders of
the parent (528) (1,804) (4,508)
=========================== ===== ================== ================== ================
Non-controlling interests 2 (103) 7
=========================== ===== ================== ================== ================
(526) (1,907) (4,501)
=========================== ===== ================== ================== ================
Total comprehensive
(loss) / profit for
the period attributable
to:
=========================== ===== ================== ================== ================
Equity holders of
the parent (224) (3,006) (5,169)
=========================== ===== ================== ================== ================
Non-controlling interests (21) (96) 20
=========================== ===== ================== ================== ================
(245) (3,102) (5,149)
=========================== ===== ================== ================== ================
(Loss) / earnings
per share (cents)
=========================== ===== ================== ================== ================
From continuing operations
=========================== ===== ================== ================== ================
Basic 6 (0.08) 0.02 (0.29)
=========================== ===== ================== ================== ================
Diluted 6 (0.08) 0.02 (0.29)
=========================== ===== ================== ================== ================
From discontinued
operations
=========================== ===== ================== ================== ================
Basic N/A (0.26) (0.31)
=========================== ===== ================== ================== ================
Diluted N/A (0.26) (0.31)
=========================== ===== ================== ================== ================
Condensed Consolidated Statement of Financial Position
as at 30 June 2017
Notes 30 June 2017 31 Dec 2016 30 June 2016
(unaudited) (audited) (unaudited)
$'000's $'000's $'000's
==================== ===== ============ =========== ============
ASSETS
==================== ===== ============ =========== ============
Non-current
assets
==================== ===== ============ =========== ============
Goodwill 2,828 2,828 2,828
==================== ===== ============ =========== ============
Intangible
assets 7 45,940 45,603 40,273
==================== ===== ============ =========== ============
Tangible assets 73 89 131
==================== ===== ============ =========== ============
Interest in
join ventures 422 385 820
==================== ===== ============ =========== ============
Other long-term
assets 8 3,327 3,327 3,298
==================== ===== ============ =========== ============
Total non-current
assets 52,590 52,232 47,350
==================== ===== ============ =========== ============
Current assets
==================== ===== ============ =========== ============
Cash and cash
equivalents 14,228 15,275 29,051
==================== ===== ============ =========== ============
Trade and
other receivables 10 6,330 7,953 5,145
==================== ===== ============ =========== ============
Total current
assets 20,558 23,228 34,196
==================== ===== ============ =========== ============
TOTAL ASSETS 73,148 75,460 81,546
==================== ===== ============ =========== ============
LIABILITIES
==================== ===== ============ =========== ============
Current liabilities
==================== ===== ============ =========== ============
Trade and
other payables 11 (12,426) (14,984) (6,989)
==================== ===== ============ =========== ============
Total current
liabilities (12,426) (14,984) (6,989)
==================== ===== ============ =========== ============
NET ASSETS 60,722 60,476 74,557
==================== ===== ============ =========== ============
EQUITY
==================== ===== ============ =========== ============
Share capital - - -
==================== ===== ============ =========== ============
Share premium 12 60,060 60,060 72,732
==================== ===== ============ =========== ============
Other reserves - - (1,729)
==================== ===== ============ =========== ============
Foreign exchange
reserve 1,046 742 1,930
==================== ===== ============ =========== ============
Retained earnings (33) 4 2,052
==================== ===== ============ =========== ============
TOTAL EQUITY 61,073 60,806 74,985
==================== ===== ============ =========== ============
Non-controlling
interests (351) (330) (428)
==================== ===== ============ =========== ============
Total Equity 60,722 60,476 74,557
==================== ===== ============ =========== ============
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2017
Notes Period ended Period ended Year ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
$ 000's $ 000's $ 000's
=========================== ====== ============ ============ =============
Cash flows from operations
=========================== ====== ============ ============ =============
Operating EBITDA 238 1,973 3,610
=================================== ============ ============ =============
Adjustments for:
=========================== ====== ============ ============ =============
Loss from discontinued
operations - (937) (1,312)
=================================== ============ ============ =============
Restructuirng costs - (875) (1,166)
=================================== ============ ============ =============
Decrease / (increase)
in trade and other
receivables including
long term receivables 1,623 (1,851) (1,926)
=================================== ============ ============ =============
(Decrease) / increase
in trade and other
payables (2,559) (529) (350)
=================================== ============ ============ =============
Loss on withdrawal
of gTLD applications - - 148
=================================== ============ ============ =============
Foreign exchange
(gain) / loss (87) (240) 367
=================================== ============ ============ =============
Net cash outflows
from operations (785) (2,459) (629)
=================================== ============ ============ =============
Cash flows from investing
activities
=========================== ====== ============ ============ =============
Interest received 11 24 39
=================================== ============ ============ =============
Amounts transferred
from restricted cash - 150 (64)
=================================== ============ ============ =============
Payments to acquire
intangible assets (116) - (3,796)
=================================== ============ ============ =============
Receipts from the
disposal of intangible
assets - 25 -
=================================== ============ ============ =============
Payments to acquire
fixtures & equipment (3) (14) (28)
=================================== ============ ============ =============
Receipts from the
disposal of tangible
assets 3 - 90
=================================== ============ ============ =============
Net cash flow from
investing activities (105) 185 (3,759)
=================================== ============ ============ =============
Cash flows from financing
activities
=========================== ====== ============ ============ =============
Issue of ordinary
shares - 96 6,811
=================================== ============ ============ =============
Share issue costs - - (300)
=================================== ============ ============ =============
Strategic review
costs (143) - -
=================================== ============ ============ =============
Purchase of own shares - (1,179) (20,267)
=================================== ============ ============ =============
Repurchase of vested
equity instruments (14) (681) (1,220)
=================================== ============ ============ =============
Net cash flow from
financing activities (157) (1,764) (14,976)
=================================== ============ ============ =============
Net decrease in cash
and cash equivalents (1,047) (4,038) (19,364)
=================================== ============ ============ =============
Cash and cash equivalents
at beginning of period 15,275 34,651 34,651
=================================== ============ ============ =============
Exchange loss on
cash and cash equivalents - (1,562) (12)
=================================== ============ ============ =============
Cash and cash equivalents
at end of period 14,228 29,051 15,275
=================================== ============ ============ =============
Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June 2017
Share Share Other Foreign Retained Total Non-controlling Total
Capital premium Reserves currency earnings interest equity
reserve translation
reserve
====================== ======== ======== ========= ============ ========= ======= =============== =======
$ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's $ 000's
====================== ======== ======== ========= ============ ========= ======= =============== =======
At 1 January
2016 - 73,816 - 1,403 4,140 79,359 (332) 79,027
====================== ======== ======== ========= ============ ========= ======= =============== =======
Loss for the
period - - - - (1,804) (1,804) (103) (1,907)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Other comprehensive
income - - (1,729) 527 - (1,202) 7 (1,195)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Total comprehensive
(loss) / income - - (1,729) 527 (1,804) (3,006) (96) (3,102)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Share capital
issued - 95 - - - 95 - 95
====================== ======== ======== ========= ============ ========= ======= =============== =======
Acquisition
of own shares - (1,179) - - - (1,179) - (1,179)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Credit to equity
for equity-settled
share based
payments - - - - 359 359 - 359
====================== ======== ======== ========= ============ ========= ======= =============== =======
Share based
payments (repurchase
of vested equity
instruments) - - - - (643) (643) - (643)
====================== ======== ======== ========= ============ ========= ======= =============== =======
As at 30 June
2016 - 72,732 (1,729) 1,930 2,052 74,985 (428) 74,557
====================== ======== ======== ========= ============ ========= ======= =============== =======
As at 1 January
2017 - 60,060 - 742 4 60,806 (330) 60,476
====================== ======== ======== ========= ============ ========= ======= =============== =======
Loss for the
period - - - (528) (528) 2 (526)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Currency translation
differences - - - 304 - 304 (23) 281
====================== ======== ======== ========= ============ ========= ======= =============== =======
Total comprehensive
(loss) / income - - - 304 (528) (224) (21) (245)
====================== ======== ======== ========= ============ ========= ======= =============== =======
Credit to equity
for equity-settled
share based
payments - - - - 505 505 - 505
====================== ======== ======== ========= ============ ========= ======= =============== =======
Share based
payments (repurchase
of vested equity
instruments) - - - - (14) (14) - (14)
====================== ======== ======== ========= ============ ========= ======= =============== =======
As at 30 June
2017 - 60,060 - 1,046 (33) 61,073 (351) 60,722
====================== ======== ======== ========= ============ ========= ======= =============== =======
Notes to Financial Statements
for the period ended 30 June 2017
1. Basis of preparation
The condensed financial statements have been prepared under the
historical cost convention.
The same accounting policies, methods of computation and
presentation have been followed in these condensed financial
statements as were applied in the preparation of the Group's
financial statements for the year ended 31 December 2016.
The adoption of Standards and Interpretations in 2017 has not
affected the Group's accounting policies.
Basis of consolidation
The condensed consolidated financial information incorporates
the results of the Company and its subsidiaries.
Approval
The Board of Directors approved this Interim Financial Report on
25 September 2017.
2. Partner Payments
H1 2017 H1 2016
$'000's $'000's
================= ========= =========
Partner Payments 1,008 544
================= ========= =========
Partner payments represent the expense relating to certain TLDs
where royalty and similar payments are required to be made.
3. Cost of Sales
H1 2017 H1 2016
$'000's $'000's
================= ========= =========
Third Party Fees 371 276
================= ========= =========
ICANN Fees 428 283
================= ========= =========
Other 602 545
================= ========= =========
1,401 1,104
================= ========= =========
4. Strategic Review Costs
Following the successful restructuring of the business in 2016,
the Group has incurred $143k (H1 2016:Nil) in strategic review
costs as part of reviewing various strategic options open to
it.
5 Share based payments
H1 2017 H1 2016
$'000's $'000's
============================== ========= =========
Equity settled share based
payments 505 359
============================== ========= =========
Expense as a result of
modification of equity
settled share based payments - 38
============================== ========= =========
505 397
============================== ========= =========
Equity settled share based payments relate to directors and
employees share options and restricted stock option plans.
6. Earnings/(loss) per share
H1 2017 H1 2016
$'000's $'000's
=============================================================== ========= =========
Earnings for the purpose of basic and diluted earnings
per share
=============================================================== ========= =========
Earnings from continuing operations (528) 159
=============================================================== ========= =========
Earnings from discontinued operations - (1,963)
=============================================================== ========= =========
Total earnings for the period (528) (1,804)
=============================================================== ========= =========
Number of shares
=============================================================== ========= =========
Weighted average number of ordinary shares used in calculating
basic loss per share (millions) 699.86 748.72
=============================================================== ========= =========
Effect of dilutive potential ordinary shares - share options
and warrants (millions) 28.26 30.42
=============================================================== ========= =========
Weighted average number of ordinary shares for the purpose
of diluted earnings per share (millions) 728.12 779.14
=============================================================== ========= =========
Earnings/(loss) per share from continuing operations
=============================================================== ========= =========
Basic (cents) (0.08) 0.02
=============================================================== ========= =========
Diluted (cents) (0.08) 0.02
=============================================================== ========= =========
Earnings/(loss) per share from discontinued operations
=============================================================== ========= =========
Basic (cents) N/A (0.26)
=============================================================== ========= =========
Diluted (cents) N/A (0.26)
=============================================================== ========= =========
In H1 2017, for the purpose of calculating loss per share from
continuing operations, and in H1 2016 for the purpose of
calculating loss per share from discontinued operations, all
potential shares were anti-dilutive due to the losses reported.
7. Intangible Assets
Generic top Software & development Contract Other Total
level domains costs based intangible $ 000's $ 000's
$ 000's $ 000's assets
$ 000's
===================== ============== ====================== ================= ======== ========
Cost
===================== ============== ====================== ================= ======== ========
At 1 January
2016 40,078 2,070 - 171 42,319
===================== ============== ====================== ================= ======== ========
Additions 1,500 261 3,815 - 5,576
===================== ============== ====================== ================= ======== ========
Exchange differences (17) (34) - (1) (52)
===================== ============== ====================== ================= ======== ========
At 31 Decemeber
2016 41,561 2,297 3,815 170 47,843
===================== ============== ====================== ================= ======== ========
Additions - 116 - - 116
===================== ============== ====================== ================= ======== ========
Exchange differences 41 80 228 - 349
===================== ============== ====================== ================= ======== ========
At 30 June
2017 41,602 2,493 4,043 170 48,308
===================== ============== ====================== ================= ======== ========
Accumulated
Amortization
===================== ============== ====================== ================= ======== ========
At 1 January
2016 - (857) - (171) (1,028)
===================== ============== ====================== ================= ======== ========
Charge for
the year - (1,171) - - (1,171)
===================== ============== ====================== ================= ======== ========
Exchange differences - (42) - 1 (41)
===================== ============== ====================== ================= ======== ========
At 31 December
2016 - (2,070) - (170) (2,240)
===================== ============== ====================== ================= ======== ========
Charge for
the period - (63) - - (63)
===================== ============== ====================== ================= ======== ========
Exchange differences - (65) - - (65)
===================== ============== ====================== ================= ======== ========
At 30 June
2017 - (2,198) - (170) (2,368)
===================== ============== ====================== ================= ======== ========
Carrying amount
===================== ============== ====================== ================= ======== ========
At 30 June
2017 41,602 295 4,043 - 45,940
===================== ============== ====================== ================= ======== ========
At 31 December
2016 41,561 227 3,815 - 45,603
===================== ============== ====================== ================= ======== ========
generic Top Level Domains
In 2012, the Group applied for new generic Top Level Domains to
the Internet Corporation for Assigned Names and Numbers (ICANN).
Successful applications are transferred from other long-term assets
to Intangible assets. The Group capitalises the full cost incurred
to pursue the rights to operate generic Top Level Domains including
amounts paid at auction to gain this right where there are more
than one applicant to ICANN for the same generic Top Level
Domain.
This class of intangible assets are assessed to have an
indefinite life as it is deemed that the application fee and
amounts paid at auction give the Group indefinite right to this
generic Top Level Domain.
8. Other long-term assets
H1 2017 31 December
2016
$'000's $'000's
============================ ========= ===========
Restricted cash 2,217 2,217
============================ ========= ===========
Other long-term receivables 1,110 1,110
============================ ========= ===========
3,327 3,327
============================ ========= ===========
The Group capitalises the costs incurred to pursue the rights to
operate certain gTLD strings as these are deemed to provide
probable future economic benefit.
During the application process capitalised payments for gTLD
applications are included in Other Long Term Assets. While there is
no assurance that MMX will be awarded any gTLDs, long-term
receivables payments will be reclassified as intangible assets once
the gTLD strings are available for their intended use, which is
expected to occur following the delegation of gTLD strings by
ICANN. In general, MMX does not expect to withdraw any of its
applications unless the application has not passed the evaluation
process and there is no further recourse or there is an agreement
to sell or dispose of its interest in certain applications.
During the 2012 financial period, the Group paid US$13.5 million
in application fees to the Internet Corporation for assigned Names
and Numbers (ICANN) under ICANN's New generic Top Level Domain
(gTLD) Program and deposited US$3.6 million to fund the letters of
credit required by ICANN.
Since then, due to withdrawal either as a result of
participation in auctions or management decision, the application
fees to ICANN (where the gTLD is still in application phase) and
the amounts to fund the letter of credit required by ICANN have
decreased to $2,217k (2016: $2,217k) and $1,110k (2016: $2,217k)
respectively.
Where MMX receives a partial cash refund for certain gTLD
applications and/or to the extent the Group elects to sell or
dispose of its interest in certain gTLD applications throughout the
process, it may incur gains or losses on amounts invested. In such
cases the application fee will be reclassified from a long-term
asset. Refunds received will be properly recorded when received,
gains on the sale of the Group's interest in gTLD applications will
be recognised when realised, and losses will be recognised when
deemed probable. Other costs incurred by MMX as part of its gTLD
initiative not directly attributable to the acquisition of gTLD
operator rights are expensed as incurred.
9. Cash and cash equivalents
Restricted cash
Included in the Group cash and cash reserves is restricted funds
of $1million (2016: $1million) held in escrow to satisfy certain
vendor requirements, to be released back to the Group over the next
five years.
10. Trade and other receivables
H1 2017 31 December
2016
$'000's $'000's
======================== ========= ===========
Trade receivables 3,204 3,992
======================== ========= ===========
Other receivables 531 1,940
======================== ========= ===========
Prepayments 1,781 1,943
======================== ========= ===========
Accrued revenue 770 29
======================== ========= ===========
Due from joint ventures 44 49
======================== ========= ===========
6,330 7,953
======================== ========= ===========
11. Trade and other payables
Included within Trade and other payables:
30 June 2017 31 December
2016
$'000's $'000's
====================== ============ ===========
Trade payables 290 878
====================== ============ ===========
Taxation liabilties 2 171
====================== ============ ===========
Other liabilities 5,045 5,917
====================== ============ ===========
Deferred revenue 5,538 6,095
====================== ============ ===========
Accruals 1,484 1,853
====================== ============ ===========
Due to Joint Ventures 67 70
====================== ============ ===========
12,426 14,984
====================== ============ ===========
12. Share capital and premium
Called up, allotted, issued Number of Price per Total
and fully paid ordinary shares share $ 000
shares of no par value (cents/pence)
============================== =============== ============== ==========
As at 1 January 2016 767,104,685 73,816
============================== =============== ============== ==========
Shares repurchased (10,658,568) 11/7.7 (1,179)
============================== =============== ============== ==========
Share warrants exercised:
============================== =============== ============== ==========
24 May 2016 for cash on
exercise of options 1,103,753 8.7/6 95
============================== =============== ============== ==========
Shares repurchased:
3 October 2016 Tender Offer (100,000,000) 16.9/13 (19,088)
============================== =============== ============== ==========
Shares issued:
============================== =============== ============== ==========
10 October 2016 Shares issued
for cash 42,307,692 16.2/13 6,716
============================== =============== ============== ==========
Cost of share issue (300)
============================== =============== ============== ==========
As at 31 December 2016 and
30 June 2017 699,857,562 60,060
============================== =============== ============== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DXGDCBDDBGRU
(END) Dow Jones Newswires
September 26, 2017 02:01 ET (06:01 GMT)
Minds + Machines (LSE:MMX)
Historical Stock Chart
From Apr 2024 to May 2024
Minds + Machines (LSE:MMX)
Historical Stock Chart
From May 2023 to May 2024