Notes to the Financial Statements

For the year ended 31 December 2020

1        Nature of Operations

Minds + Machines Group Limited is a company registered in the British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1412814. The address of the Company's registered office is Craigmur Chambers, Road Town, Tortola, British Virgin Islands VG1110.

The Company's ordinary shares are traded on the AIM market operated by the London Stock Exchange.

The Group is the owner and operator of a portfolio of generic top level domain names ("gTLD's") licensed to it by the Internet Corporation for Assigned Names and Numbers ("ICANN"). Its principal business is generating revenues through the registration and renewal of domain names within its gTLDs ("Registry"). It also is a registry service provider ("RSP") providing back-end services for the owners of other gTLDs.

On 7 April 2021, the Company entered into an asset purchase agreement with Registry Services, LLC (the "GoDaddy Transaction") whereby Registry Services, LLC ("GoDaddy Registry") will acquire, subject to certain conditions precedent, substantially all the Group's Registry assets and business for cash of $120 million. The GoDaddy Transaction was approved by the Company's shareholders on April 23, 2021. Closing of the GoDaddy Transaction, which must occur on or before 7 August 2021 unless an extension is mutually agreed to by the Company and GoDaddy Registry, requires approval by ICANN and certain commercial partners for the transfer of the gTLD's, and Chinese government approval for the transfer of the Company's Chinese subsidiary and license.

These financial statements have been prepared on the going concern basis which assumes the Group and the Company will continue to operate and will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As the Group will continue to operate in the normal course until such time as the GoDaddy Transaction closes and for a period thereafter providing transition services to GoDaddy Registry, the Directors believe that the continued use of the going concern assumption is appropriate.

The COVID-19 pandemic has created a dramatic slowdown in the global economy. The duration of the COVID-19 outbreak and the resultant government responses, business closures and business disruptions can all have an impact on the Group's operations.  To date the Group has not experienced any significant business disruption from the pandemic but there can be no assurance that the Group will not be impacted by adverse consequences that may be brought about by the COVID-19 pandemic. The extent to which COVID-19 impacts the Group's operations will depend on future developments, which continue to be highly uncertain and cannot be predicted with confidence. Management is closely monitoring the impact of the pandemic on all aspects of its business.

 

2       Significant Accounting Policies

 (a)        Basis of preparation

The Group's and Company's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standard Board ("IASB"). These financial statements are presented in US Dollars and rounded to the nearest thousand. Foreign operations are included in accordance with the policies set out in Note 2(j).

New and amended standards adopted by the Group

In the current year, the Group has applied the amendments to IFRS Standards and Interpretations issued by the IASB that were effective from 1 January 2020. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

New and amended standards not yet adopted by the Group

At the date of authorization of these financial statements, several new, but not yet effective, new IFRS Standards and amendments to existing IFRS Standards, and Interpretations have been published by the IASB. None of these IFRS Standards or amendments to existing IFRS Standards have been adopted early by the Group. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New IFRS Standards, amendments and Interpretations not adopted in the current year are not expected to have a material impact on the Group's financial statements.

(b)         Basis of consolidation

The consolidated financial information incorporates the results of the Company and entities controlled by the Company (its subsidiaries) (the "Group") made up to 31 December each year. Control is achieved when the Company:

·        has the power over the investee;

·        is exposed or has rights, to variable return from its involvement with the investee; and

·        has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amounts by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributable to the owners of the Company.

When the Group loses control of a subsidiary, the gain or loss on disposal recognized in profit or loss is calculated as the difference between the aggregate of the fair value of the consideration received and the fair value of any retained interest and the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified / permitted by applicable IFRS). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

When a separate identifiable segment meets the definition of Discontinued Operations (i.e. when agreement has either been reached to sell a component of the Group's business or the sale has taken place in the reporting period), results of that segment are accounted for, in line with those applicable accounting standards, as discontinued operations on the Group Statement of Total Comprehensive Income. Prior period results are also disclosed on a like for like basis. Any assets still held by the Group at the end of the reporting period in respect of these discontinued operations are classified as held for sale in the Group Statement of Financial Position.

(c)          Going concern

The financial statements have been prepared on a going concern basis.

The Group's projections show that the Group is well funded to continue to operate as normal over the next 12 months. At the year end, the Group had current assets of $12.4m and current liabilities (excluding deferred revenue) of $7m and therefore net current assets (excluding deferred revenue) of $5.4m. This includes $8.9 million held as cash and cash equivalents.

The Directors have a reasonable expectation that the Company and the Group have adequate resources, with or without the completion of the GoDaddy Registry sale, to continue operational existence for the foreseeable future. Thus, the Group and Company continue to adopt the going concern basis of accounting in preparing the annual financial statements.

As set out in Note 1, the Company entered into an asset purchase agreement with GoDaddy Registry to sell substantially all the Group's Registry assets and business for cash of $120 million. The Directors have considered the impact of the GoDaddy Transaction on the basis of preparation and have concluded that, as the sale remains conditional upon the satisfaction conditions precedent, it is appropriate to continue to adopt the going concern basis of preparation. 

(d)         Business combinations

Acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognized at their fair value at the acquisition date, except that:

·        deferred tax assets of liabilities and assets or liabilities related to employee benefits arrangement are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits, respectively: and

·        assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that IFRS Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of identifiable assets acquired and liabilities assumed.

 (e)       Joint ventures

A joint venture is an entity where the Group has joint control and has rights to the net assets of the arrangement. The Group has interests in joint ventures, which are jointly controlled entities, whereby the ventures have a contractual arrangement that establishes joint control over the economic activities of the entity. The contractual agreement requires unanimous agreement for financial and operating decisions among ventures. 

The Group's interests in jointly controlled entities are accounted for by using the equity method. Under the equity method, the investment in the joint ventures is carried in the statement of financial position at cost plus post acquisition changes in the Group's share of net assets of the joint venture.  The income statement reflects the share of the results of operations of the joint venture. The financial statements of the joint venture are prepared for the same reporting period as the Group. Adjustments are made where necessary to bring the accounting policies in line with those of the Group.

Losses on transactions are recognized immediately if the loss provides evidence of a reduction in the net realizable value of current assets or an impairment loss. The joint venture is accounted for using the equity method until the date on which the Group ceases to have joint control over the joint venture.

Upon loss of joint control, the Group measures and recognizes its remaining investment at its fair value. Any difference between the carrying amount of the former jointly controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds on disposal are recognized in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an associate.

(f)          Goodwill impairment

Goodwill is not amortized but is reviewed for impairment at least annually.  For impairment testing, goodwill is allocated to each of the Group's cash-generating units ("CGUs") expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss recognized for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(g)         Leases (the Group as a lessee)

For any new contracts entered into the Group considers whether a contract is, or contains, a lease. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

·        the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group.

·        the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.

·        the Group has the right to direct the use of the identified asset throughout the period of use.

Measurement and recognition of leases as a lessee

At lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.

 

At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

 

Subsequent to initial measurement, the liability is reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

 

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

 

(h)         Revenue recognition

The Group and Company recognize revenue to depict the transfer of services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for services. Specifically, the Group and Company follow these steps;

1.         Identify the contract(s) with a customer.

2.         Identify the performance obligations in the contract.

3.         Determine the transaction price.

4.         Allocate the transaction price to the performance obligations in the contract.

5.         Recognize revenue when (or as) the entity satisfies a performance obligation.

Registry revenue

Registry revenues arise from the sale of domain names (fixed fees charged to registrars for the initial registration or renewals of the domain name) and from the sale of brand protection services (i.e., AdultBlock).

·        Revenue from the sale of domain names

Revenue from the sale of domain names arise from fixed fees charged to registrars for the initial registration and renewal. 

Where the fee from the initial registration matches the fee from the renewal, the fee from both the initial registration and renewal is recognized on a straight-line basis over the registration term.

Where the fee from the initial registration is higher than the renewal fee (arising mainly from 'premium names'), the 'premium' (the difference between the first-year fee and ongoing renewal fee) is recognized as revenue immediately with the balance recognized on a straight-line basis over the registration period. The renewal fee carries on being recognized on a straight-line basis as well.

Fees from renewals are deferred until the new incremental period commences. 

·        Revenue from the sale of brand protection services

Revenue from the sale of brand protection services arises from fixed fees charged to registrars both for the initial registration and renewal. The fee from the initial registration typically matches the fee from the renewal, subject to promotional discounts.

Revenue for such fees is recognized using the output method as prescribed by IFRS 15. Revenue is recognized on the basis of direct measurement of the value provided to the underlying customer by considering the identified milestones achieved, as follows:

·        verification - occurs at the initial registration and renewals thereafter to ensure that the customer has the right to the label being protected.

·        variants - where purchased, this is a one-time event at the time of registration to create the complete list of confusingly similar labels being protected; and

·        blocking - an ongoing service to ensure that the label (and where applicable, its variants) is blocked from being registered as a domain name over the registration and renewal period.

A percentage of the registration or renewal fee is allocated to each milestone and recognized as revenue when the milestone is reached either at a point in time (verification and creation of variants) or over time (blocking) on a straight-line basis.

RSP services

Revenue is generated by providing RSP services over a period of time. Fees for these services are deferred and recognized as performance occurs, typically on a straight-line basis over the contract period.

 (i)         Partner payments

Partner payments represents contractual amounts payable to partners or co-owners of certain TLDs where royalty and similar payments are required to be made, including any minimum revenue guarantees. Such payments are accrued at the time TLD billings occur and are deferred and expensed on the same basis as the related revenue is recognized.

(j)          Foreign currencies

Functional and presentation currency

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company is expressed in US Dollars, which is the presentation currency for the consolidated financial statements. The Company's functional currency is US Dollars.

Transactions and balances

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing on the dates of transactions.  At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rate prevailing at that date.  Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  Non-monetary items that are measured at historical cost in foreign currencies are not retranslated.

Exchange differences are recognized in profit and loss in the period in which they arise.

In presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognized in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

(k)          Intangible assets

Intangible assets acquired separately  

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment loss.

Internally generated intangible assets -research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally generated intangible asset arising from the development (or from the development phase) of an internal project is recognized if, and only if all of the following conditions have been demonstrated:

·        the technical feasibility of completing the intangible asset so that it will be available for use or sale;

·        the intention to complete the intangible asset and use or sell it;

·        the ability to use or sell the intangible asset;

·        how the intangible asset will generate probable future economic benefits;

·        the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

·        the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Useful lives and amortization

Amortization is recognized so as to write off the cost of assets less their residual values over their useful lives, using the straight-line method, on the following basis.

·        Generic Top Level Domains - indefinite life (not amortized)

·        Contractual based intangible assets - indefinite life (not amortized)

·        Software and development costs - straight-line basis over useful life of three years

The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed when circumstances indicate a change to its useful life. Changes in the expected useful life are treated as a change in accounting estimate.

(l)           De-recognition of intangible assets

An intangible asset is de-recognized on disposal or when no future economic benefits are expected from use or disposal. Gains and losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is de-recognized.

(m)        Fixtures and equipment

Fixtures and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is recognized so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method over 3 to 5 years.

(n)         Impairment of fixtures and equipment and intangible assets, excluding goodwill

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less that its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is being recognized immediately in profit or loss.

(o)         Financial instruments

Financial assets and financial liabilities are recognized in the Group's balance sheet when the Group becomes party to the contractual provision of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit of loss are recognized immediately in profit or loss.

Financial assets

All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial assets within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: 'investments in equity instruments designated at fair value through other comprehensive income' ("FVTOCI") and 'financial assets at amortized cost'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognized on an effective interest basis for debt instrument.        

Financial assets at amortized cost

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'financial assets at amortized cost'. These assets are measured at amortized cost using the effective interest method, less Impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when recognition of interest would not be material.

Financial assets at amortized cost include cash and cash equivalents. Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

Investments in equity instruments designated as FVTOCI

Investments in equity instruments designated as FVTOCI are non-derivatives that are designated as FVTOCI. Changes to the value of investments in equity instruments are accounted for through OCI.

Listed shares held by the Group that are traded in an active market are classified as being investments in equity instruments and are stated at fair value. Gains and losses arising from changes in fair value are recognized in OCI and accumulated in the other reserve. Dividends from investments in equity instruments are recognized in profit or loss when the Group's right to receive the dividends is established.

Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on investment in debt instruments that are measured at amortized cost or at FVTOCI, trade receivables and other financial assets. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

For financial assets carried at amortized cost, the amount of the impairment is based on expected credit losses assessed on the management's historic experience of losses, adjusted for factors that are specific to the debtors and general economic conditions.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit and loss.

With the exception of investments in equity instruments designated at FVTOCI, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

De-recognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On de-recognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received net of direct issue costs.

Financial liabilities

Financial liabilities are classified as trade and other payables.

Trade and other payables

Trade and other payables, including borrowings, are initially measured at fair value, net of transaction costs.

Trade and other payables are subsequently measured at amortized costs using the effective interest method, with interest expense recognized using the effective interest rate method. The effective interest method is a method of calculating the amortized costs of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

De-recognition of financial liabilities

The Group de-recognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

(p)         Taxation

The tax expense represents the sum of the tax currently payable and deferred taxes.       

Current tax

The tax currently payable is based on taxable profit for the year.  Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.  The Group's liability for the current year is calculated using jurisdictional tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realized. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity.

Current and deferred tax for the year

Current and deferred tax are recognized in profit of loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized on other comprehensive income or directly in equity, respectively.

(q)         Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimates to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be measured reliably.

(r)          Share-based compensation

Equity-settled share-based payments to employees are measured at the fair value of the equity instrument issued at the grant date.  The fair value excludes the effect of non-market based vesting conditions.  The fair value is determined by using the Black-Scholes model.

The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the equity instruments that will eventually vest.  At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions.  The impact or the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.

The dilutive effect, if any, of outstanding equity instruments is reflected in the computation of diluted earnings per share.

(s)          Investment in subsidiary

In the parent company financial statements, fixed asset investment in subsidiaries and joint ventures are shown at cost less provision for impairment.

 

3        Significant accounting judgements, estimates and assumptions

The preparation of the Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Other disclosures relating to the Group's exposure to risks and uncertainties includes:

·        Financial instruments risk management and policies                                                                                      Note 27

·        Sensitivity analysis                                                                                                                                                    Note 27

In the process of applying the Group's accounting policies, management has made the following judgements and estimates and assumptions. The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in future financial years, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Judgements and estimates and assumptions, which have the most significant effect on the amounts recognized in the consolidated financial statements:

Judgements

Intangible assets

Intangible assets are comprised of gTLD assets and contract based intangible assets.

Under the requirements of IAS 38, Intangible Assets, the Group has determined that gTLD assets and contract based intangible assets have an indefinite life as the Group has an automatic right to renew the asset every ten years.

The most significant judgement involved in the impairment review of intangible assets is the determination of CGUs.  The Directors have grouped the Company's portfolio of gTLDs into a single CGU, a change from 2019. In 2019, gTLD assets were allocated to various CGUs based on shared characteristics and interdependence of cash inflows within those CGUs. In 2020 the Group completed a move away from managing its gTLDs as clusters. It now manages all gTLDs as a single group when marketing them to its Registrar partners, highlighting the interdependence of their cash flows. The CGUs are detailed in Note 16.

Details of goodwill and intangible assets are set out in Note 15 and 16 respectively.

Revenue recognition

Revenue from the sale of domain names

Revenue is primarily driven from fixed fees charged to registrars for initial registrations or renewal of domain names. Determining whether a single or multiple performance obligations exist requires judgement, in this case considered to be a single performance obligation. Consideration has been given whether to recognize this revenue on a straight-line basis over the period of the contract, on an input method (i.e., based on the costs incurred) or output method (i.e., based on direct measurement of the value to the customer of the services transferred to date) as prescribed by IFRS 15.

The output method, including using certain milestones identified (the sale of a premium name and the ongoing obligation to a registered domain name) as the measure of determining the relevant output is considered to best depict the value of the service provided to the end customer. Revenue is therefore recognized as the milestones are achieved either at a point in time once the milestone is achieved or over a period of time on a straight-line basis where the milestone is provided over a period of time.

Where the fee from the initial registration matches the fee from the renewal (the 'ongoing obligation', the fee from both the initial registration and renewal is recognized on a straight-line basis over the registration term.

Where the fee from the initial registration is higher than the renewal fee (arising mainly from 'premium name'), the 'premium' (the difference between the first-year fee and ongoing renewal fee) is recognized as revenue immediately, as the performance obligation is satisfied, with the balance recognized on a straight-line basis over the registration period. The renewal fee carries on to be recognized on a straight line basis as well.

Fees from renewals are deferred until the new incremental period commences. 

Any fees charged on a variable basis is not recognized as revenue until each party's performance obligations are met.

Revenue from the sale of brand protection services

Revenue includes revenue from the sale of brand protection services, which arises from fixed fees charged to registrars both for the initial registration and renewals. The fee from the initial registration typically matches the fee from the renewal, subject to promotional discounts.

In considering the revenue recognition for brand protection services, the Group's and Company's existing revenue recognition policy, pursuant to the requirements of IFRS 15 is applied. That policy includes the identification of performance obligations in the contract. Determining whether a single or multiple performance obligations exists requires judgement. The contract with the underlying customer is considered to be a single performance obligation as the benefit of providing contract elements on their own do not provide the intended benefit of brand protection. The entire transaction price as determined is therefore allocated to this performance obligation.

Consideration has been given whether to recognize this revenue on a straight-line basis over the period of the contract, on an input method (i.e., based on the costs incurred) method or output (i.e.. based on direct measurement of the value to the customer of the services transferred to date) as prescribed by IFRS 15.

The output method, including using certain milestones identified (verification, creation of variants and blocking) as the measure of determining the relevant output is considered to best depict the value of the service provided to the end customer. The value of each milestone is estimated based on the information available, including third party data.

Revenue is therefore recognized as the milestones are achieved either at a point in time once the milestone is achieved or over a period of time on a straight-line basis where the milestone is provided over a period of time.

In the year, the Directors reviewed the estimates and assumptions that formed the basis of attributing a value to such milestones, resulting in a change in estimate. The change, applied with effective from 1 July 2020, was necessitated by developments in the year that suggested that the values attributable to such milestones is lower than initially estimated. The effect of the change in estimate has been recognized prospectively as the revision of this estimate does not relate to prior periods as it is not the correction of an error.

The change in accounting estimate reduces net profit for the year by $184k which comprise a reduction in revenue of $241k and cost of goods sold of $57k. The impact of this change to future periods is unknown as it is dependent on the billings from such services.

Going concern

The Directors have adopted the going concern basis of accounting in preparing the annual financial statements. Determining whether it is appropriate to adopt the going concern basis requires significant judgement. In making this judgement, the Directors have considered current trading results, the Group's funding level, the asset purchase agreement with GoDaddy Registry to sell, subject to certain conditions precedent, substantially all the Group's Registry assets and business for cash of $120m and external factors such as the impact of COVID-19.

Leases

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has the option, under some of its leases, to lease the assets for additional terms. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

Estimates and assumptions

Taxes

Deferred tax assets or liabilities are recognized, where appropriate, for unused tax losses and temporary differences to the extent that it is probable that taxable profit will be available against which the losses can be utilized, or temporary differences will be subject to future taxes. Significant management judgement is required to determine the amount of deferred tax assets or liabilities that can be recognized, based upon the likely timing, level of future taxable profits and temporary differences subject to future taxes. The carrying value of deferred tax assets or liabilities is nil (2019: $Nil). Further details on taxes are disclosed in Note 12.

4        Prior period adjustment

In October 2020, the Company determined that as the result of management's override of the Group's internal controls, certain contracts had not been accounted for correctly in 2019, as follows:

·        The Company billed $1,125k in connection with a contract amendment and recognized revenue of $938k. The Company concluded that the cash sums received pursuant to this contract amendment should have been classified as a deposit against future sales and then recognized as revenue as the Company's partner made sales to end-users. Consequently, the revenue of $938k that was originally recognized has been reversed and revenue only recognized to the extent that the Company's partner has made sales to end-users.

·        Two other contracts totaling $790k were incorrectly recognized as revenue. These contracts had offsetting payment contracts and as such, the contracts should have been recognized based on the net proceeds received by the Group. The payment contracts had been initially recorded as deferred charges or capital expenditures (Intangible assets and Right-of-use-assets), thereby impacting the timing of earnings. Consequently, the revenue and the associated deferred charges and capital expenditures of $790k have been reversed.

·        Payments made by the Group in 2019 under service contracts totaling $500k were returned to the Group and incorrectly categorized as a collection of overdue trade receivables. The payment contracts were recorded as deferred charges or capital expenditures, thereby impacting the timing of earnings. The deferred charges and capital expenditures (Intangible assets and Right-of-use-assets) of $500k have been reversed and the write-off of the overdue receivable recorded as a bad debt expense.

There is no correction or adjustment required to the 2018 financial statements and as such the opening 2019 balance sheet has not been presented. The impact to the 2019 financial statements is summarised below.

Group

Impact on the 2019 Profit and Loss account

Statement of Profit and Loss (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Revenue		18,942	(1,715)	17,227
Cost of sales		(3,637)	300	(3,337)
Bad debt expense		(1,433)	(500)	(1,933)
Depreciation and amortisation charge		(1,207)	20	(1,187)
Profit for the year		4,738	(1,895)	2,843
Earnings per share (cents)
Basic		0.51	(0.20)	0.31
Diluted		0.49	(0.20)	0.29

 

Impact on the 2019 Balance Sheet

Balance Sheet (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Non-current assets
Intangible assets		81,494	(100)	81,394
Right-of-use assets		2,673	(130)	2,543
Current assets
Trade receivables		3,863	(625)	3,238
Prepayments and other receivables		3,626	(131)	3,495
Current liabilities
Trade and other payables		(5,835)	(1,084)	(6,919)
Deferred revenue		(13,662)	174	(13,488)
Retained earnings and net assets		78,357	(1,896)	76,462

 

Impact on the 2019 Statement of Cash Flows

Cash flow (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Net cash from operating activities		731	(250)	481
Net cash flows from investing activities		161	100	261
Net cash flows from financing activities		(4,676)	150	(4,526)
Net increase / (decrease) in cash and cash equivalents		(3,784)	-	(3,784)

 

 

 

 

 

Company

Impact on the 2019 Profit and Loss account

Statement of Profit and Loss (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Revenue		7,788	(640)	7,148
Cost of sales		(2,585)	269	(2,316)
Bad debt expense		(1,433)	(500)	(1,933)
Loss for the year		(12,614)	(871)	(13,485)

Impact on the 2019 Balance Sheet

Balance Sheet (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Non-current assets
Intangible assets		39,543	(100)	39,443
Current assets
Prepayments and other receivables		6,408	(131)	6,277
Current liabilities
Trade and other payables		(14,861)	(640)	(15,501)
Retained earnings and net assets		72,801	(871)	71,930

 

Impact on the 2019 Statement of Cash Flows

Cash flow (extract)		As reported $ 000's	Adjustment $ 000's	As adjusted $ 000's
Net cash from operating activities		2,302	(100)	2,202
Net cash flows from investing activities		(150)	100	(50)
Net cash flows from financing activities		(3,960)	-	(3,960)
Net increase / (decrease) in cash and cash equivalents		(1,808)	-	(1,808)

 

5        Operating segments - Group 

Information reported to the Group's Chief Executive Officer for the purposes of resource allocation and monitoring segment performance is focused on the Group's two business lines: Registry and RSP. These categories are considered the Group's segments under IFRS 8.

Segment revenues and results

2020	Registry $ 000's	RSP $ 000's	Unallocated $ 000's	Total $ 000's
Revenue
External sales	16,141	688	-	16,829
Total Revenue	16,141	688	-	16,829
Operating EBITDA	5,536	(396)	17	5,157
Non-operating cost	(1,000)	-	-	(1,000)
EBITDA	4,536	(396)	17	4,157
Amortisation and depreciation				(706)
Finance revenue				-
Finance costs				(461)
Profit before tax				2,990
Income tax				(7)
Profit after tax				2,983

 

2019 (Restated)	Registry $ 000's	RSP $ 000's	Unallocated $ 000's	Total $ 000's
Revenue
External sales	16,558	669	-	17,227
Total Revenue	16,558	669	-	17,227
Operating EBITDA / EBITDA	4,662	1,042	(894)	4,810
Amortisation and depreciation				(1,187)
Finance revenue				9
Finance costs				(649)
Profit before tax				2.983
Income tax				(140)
Profit after tax				2,843

 

Other segment information

		Segment assets				Depreciation and amortisation
		2020		Restated 2019		2020		Restated 2019
		$ 000's		$ 000's		$ 000's		$ 000's
Registry		97,225		97,455		348		714
RSP		2,059		3,361		358		473
Total		99,285		100,816		706		1,187

 

All assets are allocated to reportable segments. Goodwill has been allocated to the Registry segment as described further in Note 15.

Geographic information

The Group's information about its segments by geographic location of assets is detailed below.

		Revenue from external customers				Non-current assets			Additions to Non-current assets
		2020		Restated 2019		2020		Restated 2019	2020	2019
		$ 000's		$ 000's		$ 000's		$ 000's	$'000's	$'000's
British Virgin Islands		8,044		7,887		39,683		40,086	-	-
Ireland		-		-		1,322		1,558	-	-
United Kingdom		688		735		-		-	-	-
Germany		1,037		1,074		394		385	-	-
Hungary		-		-		203		185	-	-
USA		7,060		7,531		45,281		45,253	196	231
China		-		-		17		31	-	-
Total		16,829		17,227		86,900		87,498	196	231

Included in revenues arising from the Registry segment are $2,869k (2019: $2,558k) of sales to the Group's largest customer.

The timing of revenue recognition is detailed below:

			Group			Company
		2020 $ 000's	Restated 2019 $ 000's		2020 $ 000's	Restated 2019 $ 000's
Timing of revenue recognition
At a point in time (i.e., 'premium name revenue')		1,251	1,953		1,107	1,779
Over time		15,578	15,274		7,922	5,369
Total		16,829	17,227		9,029	7,148

 

 

6        Cost of sales 

			Group			Company
		2020 $ 000's	2019 (Restated) $ 000's		2020 $ 000's	2019 (Restated) $ 000's
Third party fees		459	378		264	131
ICANN fees		1,212	1,239		993	866
Marketing		1,081	1,341		958	1,250
Commissions		379	379		103	69
Total		3,131	3,337		2,318	2,316

 

7        General administrative expenses

				Group			Company
		Notes	2020 $ 000's	2019 $ 000's (Restated)		2020 $ 000's	2019 $ 000's (Restated)
Operating expenses			5,637	5,977		5,574	3,502
Bad debt expense		21	52	1,933		52	1,933
Share-based payment (credit) / expense		26	(143)	1,272		194	969
Employee and other termination costs			707	63		109	-
Foreign exchange (gain) / loss			(148)	(378)		(140)	(230)
Onerous contract provision credit / (charge)		23	-	(1,351)		-	-
Gain on termination of lease		24	-	(299)		-	(59)
Investigation costs			183	-		183	-
			6,288	7,217		5,972	6,115

 

Termination costs consist of severance paid to employees during the year and costs related to supplier contract terminations. No severance or other separation amounts were paid to the Group's former CEO and CFO.

 

Investigation costs are legal costs in relation to the Board's formal investigation concluded on 29 October 2020 to determine the appropriateness of accounting treatment of certain revenue contracts. The investigation resulted in the restatement of prior year results (Note 4).

 

8        Other non-operating expense

The $1,000k settlement to the vendors of ICM Registry, LLC ('ICM') was pursuant to alleged warranty claims under the acquisition agreement entered into with ICM in 2018. Whilst the Company believes that the alleged claims are without merit, the Directors' concluded a settlement was in the best interest of the Company, allowing it to focus on restoring shareholder value without the distractions of potentially expensive and time-consuming litigation. The amount was paid after the year-end. 

 

9        EBITDA

EBITDA is arrived at after charging/(crediting):

		Group			Company
	2020 $ 000's	2019 $ 000's		2020 $ 000's	2019 $ 000's
Auditors' remuneration
- Audit of these financial statements	156	103		156	103
- Review of Interim financial statements	15	15
- Audit of the financial statements of subsidiaries	5	5		-	-
- Tax compliance	11	11		-	-
- Other services	1	1		-	-
Directors' emoluments - fees and salaries	1,091	818		573	619
Foreign exchange gain/(loss)	148	378		140	230

 

 

 

 

10     Employee information (excluding directors)

		Group			Company
		2020 $ 000's	2019 $ 000's		2020 $ 000's	2019 $ 000's
Staff costs comprise:
Wages and salaries		2,060	2,453		-	-
Monthly average number of employees:
Back office (Operations, Finance / Legal and IT)		8	14		-	-
Sales and marketing		8	9		-	-
Total average		16	23		-	-

 

11     Finance costs

			Group			Company
		2020 $ 000's	2019 $ 000's		2020 $ 000's	2019 $ 000's
Interest on working capital facility		-	137		-	137
Interest and finance charges related to lease liability (refer Note 24)		461	512		114	113
		461	649		114	250

 

The working capital facility of $3m was entered into in 2018 and was repaid in full in 2019.

 

12     Income tax expense - Group

The charge for the current year can be reconciled to the loss per the Group statement of comprehensive income as follows:

		2020 $ 000's	2019 $ 000's
Current tax (charge) / credit		(7)	(140)
Deferred tax		-	-
		(7)	(140)
		2020 $ 000's	Restated 2019 $ 000's
Profit / (loss) before tax		2,990	2,983
Tax at the BVI tax rate of 0%		-	-
Income tax (charge) / credit		(7)	(140)
		2,983	2,843

Company

The charge for the current year can be reconciled to the loss per the Company statement of comprehensive income as follows:

	2020 $ 000's	2019 $ 000's (Restated)
Current tax	-	-
Deferred tax	-	-
	2020 $ 000's	2019 $ 000's (Restated)
Loss before tax on continuing operations	(10,350)	(13,485)
Tax at the BVI tax rate of 0%	-	-

 

The British Virgin Islands imposes no corporate taxes or capital gains. However, the Company may be liable for taxes in the jurisdictions where it is operating. The Group tax charge of $7K (2019: $140k) relates to operations taxed in their local jurisdiction.

A deferred tax asset or liability has not been recognized in respect of the US and Germany as any deferred tax liabilities from temporary differences are offset by the availability of tax losses.

No deferred tax assets have been recognized in other jurisdictions because there is insufficient evidence of the timing of suitable future profits against which they can be recovered. Tax losses carried forward, which may be utilized indefinitely against future taxable profits amount to $5.7m (2019: $6.5m) in Ireland and $16.4m (2019: $16.7m) in the United Kingdom.

13       Dividends

No dividends were paid or proposed by the Directors in 2020 and 2019.

14       Earnings per share

The calculation of earnings per share is based on the profit after taxation divided by the weighted average number of shares in issue during the period. Average and diluted number of ordinary shares are as follows:

	2020	2019 (Restated)
Profit for the year	2,983	2,843
Number of shares	2020 million	2019 million
Weighted average number of ordinary shares used in calculating basic loss per share	905.18	922.04
Effect of dilutive potential ordinary shares - share options, RSUs and warrants	12.35	48.69
Weighted average number of ordinary shares for the purpose of diluted earnings per share	917.53	970.73
Earnings per share	2020	2019
Basic	$0.33	$0.31
Diluted	$0.33	$0.29

 

15       Goodwill

	Group $ 000's
31 December 2020 and 31 December 2019	2,828

 

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination as a result of expected synergies from combined operations.  Goodwill has been allocated to the 'Registry' segment (a single 'CGU').

Impairment review

As at 31 December 2020, the Directors carried out an impairment review of goodwill and concluded that no impairment charge is required. The recoverable amount of the CGU that includes goodwill was initially determined from value in use calculations, which included assumptions regarding discount rates and growth rates, using cash flow forecasts based on the most recent financial budgets and extrapolated cash flows into perpetuity.

Following the Groups' announcement on 7 April 2021 that it has conditionally agreed to sell the majority of its assets and business to GoDaddy Registry for $120m, the Directors concluded that this third party transaction provides stronger evidence that the recoverable amount of the CGU exceeds its carrying value, and that no impairment is therefore required.

16     Intangible assets

 

Group	gTLDs $ 000's	Software & development costs $ 000's	Contract based intangible assets  $ 000's	Other $ 000's	Total $ 000's
Cost
At 1 January 2019	81,210	2,707	4,206	170	88,293
Additions	-	93	-	-	93
Exchange differences	(12)	36	-	-	24
At 31 December 2019 (Restated)	81,198	2,836	4,206	170	88,410
Additions	171	24	-	-	195
Disposal / scrapped	-	(2,490)	(4,206)	(170)	(6,866)
Exchange differences	49	39	-	-	88
At 31 December 2020	81,418	409	-	-	81,827
Accumulated Amortisation and Impairment charges
At 1 January 2019	-	(2,459)	(4,206)	(170)	(6,835)
Amortisation charge for the year	-	(209)	-	-	(209)
Exchange differences	-	28	-	-	28
At 31 December 2019 (Restated)	-	(2,640)	(4,206)	(170)	(7,016)
Amortisation charge for the year	-	(117)	-	-	(117)
Disposal / scrapped		2,490	4,206	170	6,866
Exchange differences	-	(30)	-	-	30
At 31 December 2020	-	(297)	-	-	(297)
Carrying amount
At 31 December 2020	81,418	112	-	-	81,530
At 31 December 2019 (Restated)	81,198	196	-	-	81,394

 

Company	gTLDs $ 000's	Software & development costs $ 000's		Other $ 000's		Total $ 000's
Cost
At 1 January 2019	39,379		106		99		39,584
Additions	-		59		-		59
At 31 December 2019 (Restated)	39,379		165		99		39,643
Additions	-		24		-		24
Disposal / scrapped			(54)		(99)		(153)
At 31 December 2020	39,379		135		-		39,514
Accumulated amortisation
At 1 January 2019	-		(78)		(99)		(177)
Amortisation charge for the year	-		(23)		-		(23)
At 31 December 2019 (Restated)	-		(101)		(99)		(200)
Amortisation charge for the year	-		(42)		-		(42)
Disposal / scrapped	-		54		99		153
At 31 December 2020	-		(89)		-		(89)
Carrying amount
At 31 December 2020	39,379		46		-		39,425
At 31 December 2019 (Restated)	39,379		64		-		39,443

 

 

The Group applies for new gTLDs to ICANN. Successful applications are transferred from other long-term assets to Intangible assets. The Group capitalizes the full cost incurred to pursue the rights to operate gTLDs, including amounts paid at auction to gain this right where there is more than one applicant to ICANN for the same gTLDs.

This class of intangible assets is assessed to have an indefinite life as it is deemed that the application fee and amounts paid at auction give the Group an indefinite right to the gTLDs.

The Group tests its gTLDs annually for impairment, or more frequently if there are indicators that the asset might be impaired.

Impairment review

In 2020 the Group completed a move away from managing its gTLDs as 'clusters', and now manages all gTLDs as a single group to its Registrar partners, highlighting the interdependence of their cash inflows. As a result, all gTLD assets with indefinite lives are allocated to a single CGU.

As at 31 December 2020, the Directors carried out an impairment review of the other intangible assets in the Group's portfolio and concluded that no impairment charges were required. The recoverable amounts of the Group's gTLDs, software, and other intangible assets were initially determined from value in use calculations, which included assumptions regarding discount rates and growth rates, using cash flow forecasts based on the most recent financial budgets and extrapolated cash flows into perpetuity.

Following the Group's announcement on 7 April 2021 that it has conditionally agreed to sell the majority of its assets and business to GoDaddy Registry for $120m, the Directors concluded that this third party transaction provides stronger evidence that the recoverable amount of the intangible assets exceeds their carrying value, and that no impairment is therefore required.

17     Fixtures and equipment - Group

	$000's
Cost
At 1 January 2019		391
Additions		38
Exchange differences		(2)
At 31 December 2019		427
Additions		32
Disposals		(405)
Exchange differences		15
At 31 December 2020		69
Accumulated Depreciation
At 1 January 2019		(332)
Depreciation charge for the year		(28)
Exchange differences		1
At 31 December 2019		(359)
Depreciation charge for the year		(58)
Disposals		405
Exchange differences		(16)
At 31 December 2020		(28)
Carrying amount
At 31 December 2020		41
At 31 December 2019		68

 

 

 

 

 

 

 

18     Investment in subsidiaries

	Company
	2020 $ 000's	2019 $ 000's
Cost
At the beginning of the year	79,596	79,306
Movement in the year	10	290
At 31 December	79,606	79,596
Impairment
At the beginning of the year	37,899	35,037
Charge in the year	6,192	2,862
At 31 December	44,091	37,899
Carrying amount
At 31 December	35,515	41,697

                                                                                                                                                                              

During the year, the Company attributed $10k (2019: $290k) of share option expense to its subsidiaries.

The carrying value of the Investment in subsidiaries exceed the net asset position of the respective subsidiary suggesting an impairment. Of the impairment charge of $6,192k in 2020 (2019: $2,862k), $3,318k (2019: $1,438k) was allocated to the Registry CGU and $2,874k (2019: $1,424k) was allocated to the RSP CGU. The investment in these subsidiaries was impaired to reflect the recoverable amounts, being their net asset positions.

In addition to the impairment charge of $6,192k (2019: $2,862k), the Company also impaired inter-company balances of $3,481k (2019: $7,894k) giving rise to a total impairment charge of $9,673k (2019: $10,757k).

Details of the Company's subsidiaries are as follows:

Name	Place of Incorporation (or registration) and operation	Principal activity	Proportion of ownership interest (%)	Proportion of voting power (%)
Minds + Machines US, Inc. (DE)	US	Holding company	100	100
Minds + Machines LLC (1)	US	Registry	100	100
Minds + Machines LLC (FL) (1)	US	Registry	100	100
Bayern Connect GmbH	Germany	Registry	100	100
Minds and Machines GmbH	Germany	Registry	100	100
Minds + Machines Ltd (Ireland)	Ireland	RSP	100	100
Minds and Machines Ltd (UK)	England & Wales	RSP	100	100
Minds + Machines Registrar Ltd (IE) (2)	Ireland	Dormant	100	100
Minds and Machines Registrar UK Ltd	England & Wales	Dormant	100	100
Minds + Machines Hungary	Hungary	Registry	100	100
Emerald Names Inc (3)	US	Dormant	100	100
Boston TLD Management LLC	US	Registry	99	99
LW TLD Ltd	BVI	Registry	100	100
Beijing MMX Tech Co. Ltd	China	Registry	100	100
ICM (BVI) Ltd.	BVI	Registry	100	100
ICM Registry, LLC (1, 4)	US	Registry	100	100
ICM Registry AD, LLC (5)	US	Registry	100	100
ICM Registry PN, LLC (5)	US	Registry	100	100
ICM Registry SX, LLC (5)	US	Registry	100	100

 

(1)       Minds + Machines LLC (CA), Minds + Machines LLC (FL), ICM Registry, LLC, ICM Registry AD, LLC, ICM Registry PN, LLC and ICM Registry SX, LLC are direct subsidiaries of Minds + Machines US, Inc (DE).

(2)       Minds + Machines Registrar Limited (Ireland) is a direct subsidiary of Minds + Machines Ltd (Ireland).

(3)       During the year Emerald Names Inc was dissolved.

(4)       ICM Registry, LLC was acquired by the parent entity Minds + Machines Group Limited in 2018. In 2020, as part of a group reorganization, ICM Registry, LLC is now a subsidiary of Minds + Machines US, Inc (DE)

(5)       ICM Registry AD, LLC, ICM Registry PN, LLC and ICM Registry SX, LLC are direct subsidiaries of ICM Registry, LLC.

 

19     Other long-term assets

		Group and Company
		2020 $ 000's		2019 $ 000's
Application process payments for gTLD applications		185		185

 

During the gTLD application process payments for gTLD applications are recorded as other long-term assets. These are reclassified as intangible assets once the gTLD strings are available for their intended use, which generally occurs following the delegation of gTLD strings by ICANN.

There is no assurance that MMX will be awarded gTLDs it applies for. In general, MMX does not withdraw its gTLD 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 the application. If MMX withdraws its application, a portion of the application fee is refundable. Any un-refundable portion is accounted for as an expense. If MMX sells its interest in an application, the profit, net of the un-refundable application fee, is recognized in the profit and loss account as gain on gTLDs auction. In 2019 MMX realized a gain of $588k.

 

20     Cash and cash equivalents

Of the Group's total cash balances, $722k (2019: $1,741k) are restricted funds, of which $572k (2019: $1,592k) is held to fund letters of credit required by ICANN.

Of the Company's total cash balances, $600k (2019: $1,620k) are restricted funds, of which $450k (2019: $1,470k) is held to fund letters of credit required by ICANN.

 

21     Trade and other receivables

				Group				Company
		2020 $ 000's	2019 (Restated) $'000's			2020   $ 000's	2019 (Restated) $'000's
Trade receivables		1,479	3,239			969	1,136
Allowance for doubtful debts		(52)	-			(52)	-
		1,427	3,239			917	1,136
Other receivables (including VAT)		144	1,420			-	187
Prepayments (including partner payments and marketing)		1,910	1,967			1,066	1,663
Accrued revenue		-	59			-	-
Balances due from subsidiaries		-	-			1,522	4,377
Due from joint ventures		-	50			-	50
		2,054	3,496			2,588	6,277
Total		3,481	6,734			3,505	7,413

 

The loans to subsidiaries are interest free and are repayable on demand. The loans have been classified as current receivables as the directors assess these balances to be recoverable in 2021. The difference between the carrying value and the fair value of the loan at the reporting date is deemed to be immaterial.

Provision for doubtful debt

	2020 $ 000's	Restated 2019 $ 000's
At 1 January	-	2,107
Bad debt provision	52	-
Utilization of provision	-	(2,107)
At 31 December	52	-
Additional bad debt write-off	-	1,933

 

Group

Ageing of receivables:

	2020 $ 000's		2019 (Restated) $ 000's
0 - 30 days	992		2,129
31 - 60 days	300		756
61 - 90 days	57		89
91 days and over	130		265
Total	1,479		3,239

 

Company

Ageing of receivables:

	2020 $ 000's		2019 $ 000's
0 - 30 days	687		665
31 - 60 days	117		412
61 - 90 days	54		34
91 days and over	111		25
Total	969		1,136

 

22     Trade and other payables

			Group			Company
		2020   $ 000's	2019 (Restated) $ 000's		2020   $ 000's	2019 (Restated) $ 000's
Trade payables		181	1,863		72	297
Registrar prepayments		2,333	2,052		195	850
Other liabilities		215	524		118	35
Accruals		3,267	2,234		1,368	1,132
Due to joint ventures		66	246		66	241
Due to subsidiaries		-	-		17,607	12,946
Trade and other payables		6,062	6,919		19,426	15,501
Deferred revenue		13,427	13,488		5,674	5,094
Trade and other payables including deferred revenue		19,489	20,407		25,100	20,595

 

Deferred revenue references the transactions price allocated to unsatisfied performance obligation. Management expects that 68% (2019: 63%) of the transaction price allocated to the unsatisfied performance obligations as at 31 December 2020 will be recognized as revenue in the next reporting period. The remaining 32% ($4.3m, 2019: $5.0m) will be recognized in the years 2022 and beyond.

Of the $13,488k deferred revenue as at 31 December 2019, $8.4m was recognized as revenue in 2020.

Trade and other payables are due within one year and approximate their fair value.

 

 

 

 

 

 

 

23     Provisions

	Onerous contract provision $'000's
At 1 January 2019	5,774
Payment during the year	(1,396)
Foreign exchange	155
Settlement of onerous contract	(4,533)
At 31 December 2019 and 2020	-

 

In December 2019, the Group reached a settlement in respect of an onerous contract and paid a full and final settlement of $5.3m.  The settlement removed any obligations for future minimum revenue guarantees and marketing liabilities under the contract.

	2019 $'000's
Release of onerous contract provision	4,533
Release of liabilities relating to onerous contract	2,098
Total liabilities released	6,631
Payment to settle onerous contract	(5,280)
Gain on settlement of onerous contract	1,351

 

24     Leases

			Right-of-use Assets				Lease Liabilities	Right-of-use Assets	Lease Liabilities
							Group		Company
		Registry Platform $ 000's		Property Leases $ 000's	Total   $ 000's		Lease Liabilities $ 000's	Registry Platform $ 000's	Lease Liabilities $ 000's
A 1 January 2019		2,328		119	2,447		3,574	678	1,065
Additions		865		244	1,109		1,259	258	258
Depreciation and amortisation expense		(874)		(76)	(950)		-	(264)	-
Gain on termination of lease							(299)	-	(59)
Interest expense		-		-	-		512	-	113
Lease payments		-		-	-		(1,036)	-	(383)
Foreign exchange		(19)		(44)	(63)		(63)	-	-
At 31 December 2019 (Restated)		2,300		243	2,543		3,947	672	994
Additions		-		-	-		-	-	-
Depreciation and amortisation expense		(434)		(81)	(515)		-	(93)	-
Interest expense		-		-	-		456	-	114
Lease payments		-		-	-		(787)	-	(127)
Foreign exchange		110		(6)	104		211	-	-
At 31 December 2020		1,976		156	2,132		3,827	579	981

 

	Lease Liabilities		Group			Company
		2020 $ 000's	2019 $ 000's		2020 $ 000's	2019 $ 000's
Current		972	907		197	197
Non-current		2,855	3,040		784	797
Total		3,827	3,947		981	994

 

 

 

25     Share capital and premium

Called up, allotted, issued and fully paid ordinary shares of no par value	Number of shares	Price per share (cents / pence)	Total $ 000
As at 1 January 2019	796,556,797		68,912
Shares issued:
Issued for the acquisition of ICM Registry, LLC	128,300,765	9.2c/6.9p	11,745
Share buy back	(5,837,160)	7.5c/5.9p	(440)
31 December 2019	919,020,402		80,217
Share buy back	(42,991,406)	6.6c/5.1p	(2,846)
31 December 2020	876,028,996		77,371

Subsequent to the year end the Company bought back a further 545,988 ordinary shares at an average price of 7.3c/5.6p for an aggregate of $30k.            

 

26     Share-based payments

Share-based payment expense	2020 $ 000's		2019 $ 000's
Equity settled share-based compensation	(143)		1,272

 

Directors and Employees Share Option and RSU Plans

	2020			2019
	Number of share options/RSUs	Weighted average exercise price (cents / pence)		Number of share options/RSUs	Weighted average exercise price (cents / pence)
Outstanding at 1 January	63,900,000	1.5c/1.2p		50,700,000	2.2c/1.7p
Granted	25,168,600	Nil		28,500,000	Nil
Forfeited	(47,862,399)	Nil		(300,000)	Nil
Repurchased	(6,840,475)	0.4c/0.3p		-	N/A
Expired	(21,362,500)	4.1c/3.1p		(15,000,000)	Nil
Outstanding at 31 December	13,003,226	0.6c/0.5p		63,900,000	1.5c/1.2p
Exercisable at 31 December	3,593,226	2.3c/1.7p		9,150,000	1.2c/0.9p

 

The weighted average remaining contractual life of outstanding options and RSUs at 31 December 2020 is 2.8 years (2019: 1.2 years).

 

Granted

During the year, 25,168,600 (2019: 28,500,000) options and RSU's were issued to the Executive and employees. The aggregate estimated fair value of these options and RSUs is $2,024k (2019: $2,122k) which was determined by reference to the share price on the date of grant as the exercise price of such options is nil. The weighted average fair value of the options/RSUs granted is 8.1c/6.3p (2019: 7.4c/6.0p).

Options and RSUs issued under the Company's plans generally vest over a 3 year period subject, in part, to achieving certain cash generation or share price targets. 400,000 share options issued during the year vested immediately. Some options and RSUs become exercisable on a change of control, including the sale of substantially all the Group's assets.

 

Forfeited

During the year, 46,000,000 options and RSU's were forfeited upon the departure of the former Executive team and a further 1,862,399 were forfeited on termination of certain employees as part of restructuring the business. The associated share-based payment charge was reversed through the profit and loss.

Repurchased

During the year, the Group repurchased 6,840,475 share options and RSUs at 4.4c/3.4p per option/RSU for an aggregate amount of $305k. This buy back was treated as a modification of share-based payments from equity settled to cash settled. The amount payable under this settlement had been recognized as an expense in prior years and therefore does not impact the profit and loss account in the current year. Instead, the amounts paid directly reduce retained earnings.

After year end the Group repurchased a further 2,343,226 employee options and RSUs at 6.6c/5.9p per option for an aggregate of $154k.

Expired

During the year 21,362,500 options and RSUs expired unexercised.

Warrants

During the year nil (2019:10,500,000) warrants to purchase ordinary shares expired unexercised. No warrants were exercised in 2020 and 2019.

As of 31 December 2020, there were 650,000 outstanding unexercised warrants in issue, which expired on 18 March 2021, with an exercise price of 15p.

 

27     Financial instruments

Capital risk management

The Group and Company manages its capital to ensure that entities in the Group will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity ratio. 

The capital structure of the Group and Company consists of cash and cash equivalents and equity attributable to equity holders of the parent comprised of issued capital, reserves, and retained earnings.

The Group and Company are not subject to any externally imposed capital requirements.

The Group and Company's strategy is to ensure availability of capital that matches the profile of the Group and Company's expenditures.  To date the Group has principally relied on cash flows from operations and equity fund the business.

The Group and Company do not use derivative financial instruments for hedging purposes and therefore are exposed to changes in market rates in respect of foreign exchange risk. Currency exposures relating to monetary assets held by foreign operations are included within the foreign exchange reserve in the Group Balance Sheet.

Categories of financial instruments

Group

Financial Instruments	2020 $ 000's	2019 $ 000's
Cash and bank balances	8,904	6,583
Financial assets at amortized cost	2,991	8,903
Investments in equity instruments at FVTOCI	-	-
Financial liabilities at amortized cost	396	3,335

 

Company

Financial Instruments	2020 $ 000's	2019 $ 000's
Cash and bank balances	5,342	3,589
Financial assets at amortized cost	3,646	7,731
Investments in equity instruments at FVTOCI	-	-
Financial liabilities at amortized cost	17,829	13,456

 

There are no material differences between the book values of financial instruments and their market values.

Financial risk management objectives

The Group and Company's finance function provides services to the business, co-ordinates access to domestic and international financial markets, and monitors and manages financial risks related to the operations of the Group and Company. 

The main risks arising from the Group and the Company's financial instruments are foreign currency risk, credit risk, liquidity risk, interest rate risk and capital risk. Management reviews and agrees policies for mitigating each of these risks, which are summarised below.

Market risk

The Group and Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. This risk is managed by maintaining cash and cash equivalents in the foreign currencies it operates in. Management has not established a financial instruments policy for managing the Group and Company's exposure to interest rates and foreign currency risk.

Foreign currency risk

The Group and Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. The Group and Company aims to maintain foreign currencies sufficient to match expenditures in foreign currencies. The carrying amount of the Group and Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows.

 

 

 

Group	Liabilities			Assets
	2020 $ 000's	2019 $ 000's		2020 $ 000's	2019 $ 000's
Sterling	-	1,055		1,667	53
USD	263	2,216		8,704	13,896
Euro	133	64		1,429	1,509
CNY	-	-		95	29
At 31 December	396	3,335		11,895	15,487

 

Company	Liabilities		Assets
	2020 $ 000's	2019 $ 000's	2020 $ 000's	2019 $ 000's
Sterling	-	-	1,653	1,180
USD	16,572	12,326	6,313	8,914
Euro	1,257	1,131	1,022	939
CNY	-	-	-	287
At 31 December	17,829	13,457	8,988	11,320

 

Foreign currency sensitivity analysis                                                                                                

The following table details the Group and Company's sensitivity to a 10% increase and decrease in the US Dollar against relevant foreign currencies. 10% represents management's assessment of the reasonably possible change in foreign exchange rates.  A negative number below indicates a decrease in profit or loss and other equity if the US Dollar strengthens 10% against the relevant currency. For a 10% weakening of the US Dollar against the relevant currency, there would be a comparable inverse impact on the profit or loss and other equity.

Group	Pound Sterling impact		Euro impact		CNY impact
	2020 $ 000s	2019 $ 000s	2020 $ 000s	2019 $ 000s	2020 $ 000s	2019 $ 000s
Profit or loss (i)	(167)	(111)	(157)	(157)	(9)	(3)
Other equity (ii)	-	-	-	-	-	-
	(167)	(111)	(157)	(157)	(9)	(3)

 

Company	Pound Sterling impact		Euro impact		CNY impact
	2020 $ 000s	2019 $ 000s	2020 $ 000s	2019 $ 000s	2020 $ 000s	2019 $ 000s
Profit or loss (i)	(165)	(118)	(228)	(207)	-	(29)
Other equity (ii)	-	-	-	-	-	-
	(165)	(118)	(228)	(207)	-	-

 

·        The exposure is due to outstanding Pound Sterling and Euro balances receivables and payable at the balance sheet date.

·        There is no impact on other equity, as the Group does not hold derivative instruments designated as cash flow hedges and net investments hedges.

Interest rate risk

The Group and Company's exposure to interest rate risk is limited to cash and cash equivalents held in interest-bearing accounts. As at 31 December 2020 the Group has no borrowings.

The impact of interest rate fluctuations is not material to the Group and Company accounts.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group and Company.  The Group and the Company's financial assets are comprised of receivables, cash and cash equivalents, and other long-term assets and the exposure of the Group and the Company to credit risk arises from default of its counterparties, with maximum exposure equal to the carrying amount of these assets.

The credit risk on cash and cash equivalents, including restricted cash, is limited as the counterparties are banks with high credit-ratings as determined by international credit-rating agencies.

The credit risk on other long-term assets is limited as the amount is a deposit with a well-funded, government sponsored global organization that is contractually required to return a portion of these deposits if requested.

The credit risk on receivables is relatively low due to the fact that the business either deals with customers who pay in advance or that are known to the business (i.e., ICANN accredited domain name registrars). The level of receivables is controlled through regular monitoring. Management reviewed and assessed the Group's and the Company's financial assets and amounts due from customers for impairment using reasonable and supportable information that is available without undue cost or effort, in accordance with the requirements of IFRS 9, to determine the credit risk of the respective items at the date they were initially recognized. See Note 21 for further details on the Group and Company's bad debt provision.

The Group and Company do not hold any collateral as security other than as disclosed in Note 20.

Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which monitors the Group and Company's short, medium, and long-term funding and liquidity requirements.  The Group and Company manages liquidity risk by maintaining adequate reserves and banking facilities by monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Cash forecasts are regularly produced to identify the liquidity requirement for the Group and Company.  The Group has relied on its profitability to finance its operations. The Group and Company have no borrowings as at 31 December 2020 and 2019. A $3 million working capital facility entered into in 2018 was repaid in full in 2019.

The Group and Company had no derivative financial instruments as at 31 December 2020 and 2019.

28     Commitments

As at 31 December 2020 and 31 December 2019, the Group and Company have no capital commitments.

29     Related party transactions

Balances and transactions between the Company and its wholly owned subsidiaries, which are related parties, have been eliminated on consolidation. Transactions between the Group and its Joint ventures are disclosed below.

Joint ventures

During the year, the Group and the Company entered into transactions with its Joint Ventures that resulted in amounts owed to or due from the Joint Ventures as set out below. The balances are repayable on demand.

	2020 $ 000's	Group and Company 2019 $ 000's
Due to Entertainment Names Inc	-	212
Due to Dot Country LLC	(66)	(66)

 

Remuneration of Key Management Personnel

The remuneration of the Executive Directors, who are the key management personnel, of the Group, is set out below.

Executive Directors' Remuneration

Executive Directors' emoluments

	Fees / Basic Salary $ 000's	Benefits in kind $ 000s	Bonus $ 000's	2020 Total $ 000s	2019 Total $ 000s
Bryan Disher	30	-	-	30	-
Michael Salazar	275	67	135	477	352
Toby Hall	275	-	135	410	368
	580	67	270	917	720

 

Executive Directors' share options

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the company granted to or held by the directors. Details of Executive Directors' options are as follows:

	1 Jan 2020	Granted	Forfeited	Exercised	Expired	31 Dec 2020
Michael Salazar (1)	21,000,000	5,000,000	23,000,000	-	(3,000,000)	-
Toby Hall (2)	21,000,000	5,000,000	23,000,000	-	(3,000,000)	-
Bryan Disher (3)	-	400,000	-	-	-	400,000
Total	42,000,000	10,400,000	46,000,000	-	(6,000,000)	400,000

 

(1)       At the beginning of the year 21,000,000 RSUs were outstanding, of which 3,000,000 expired during the year. During the year, 5,000,000 RSUs were granted which would vest based on a combination of three-year (2020 through 2022) operating cash generation targets and a measure of total shareholder returns and become exercisable on the publication of the Group's 2022 financial statements. Concurrent with his resignation on 29 October 2020, all outstanding RSUs were forfeited.

(2)       At the beginning of the year 21,000,000 nil priced share purchase options were outstanding, of which 3,000,000 expired during the year. During the year, 5,000,000 nil price options were granted which would vest based on a combination of three-year (2020 through 2022) operating cash generation targets and a measure of total shareholder returns and become exercisable and become exercisable on the publication of the Group's 2022 financial statements. Concurrent with his resignation on 20 October 2020, all outstanding share options were forfeited.

(3)       Bryan Disher was appointed interim CFO on 29 October 2020. As part of his compensation, he is granted 200,000 nil priced options per month. These options vest upon issue.

Recharged costs and services

During the year, the Company and its subsidiaries provided services to the Company and recharged certain costs to the Company as follows:

Recharged costs and services from	2020 $ 000's	2019 $ 000's
Minds and Machines LLC	3,166	2,878
Minds + Machines Limited (IE)	1,452	180
Minds and Machines Group Limited	1,482	134

 

Intercompany Balances

In addition, during the year, the Company provided financing to its subsidiaries. The net balances due to the Company / (to its subsidiaries) are detailed below. The balances are repayable on demand.

Company	2020 $ 000's	2019 $ 000's
Minds and Machines LLC	(2,247)	(4,237)
Bayern Connect GmbH	407	377
Minds and Machines GmbH	615	560
Minds + Machines Limited (IE)	(1,257)	(1,130)
Minds + Machines Registrar Limited (IE)	-	-
Minds and Machines Limited (UK)	139	1,097
Minds and Machines Registrar UK Limited	-	9
Emerald Names, Inc	-	86
Minds + Machines (FL)	(814)	(682)
Minds + Machines, Inc.	-	5
Minds + Machines Hungary	-	329
Dot Law, Inc.	-	-
Boston TLD Management LLC	-	1,539
Beijing MMX Tech Co. Ltd	-	287
ICM Registry, LLC	(11,726)	(6,863)
ICM Registry AD, LLC	116	29
ICM Registry PN, LLC	129	29
ICM Registry SX, LLC	115	29
ICM BVI, LLC	(1,563)	-