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SLJ, your ICM exit options were clearly limited but kudos for structuring it well. The cash was effectively the negotiated value for ICM with the MMX shares being a long dated call on the success of xxx renewals. The seculars for the space appear to be an outgoing tide.
Hi SJL and others
I have started to follow MMX just recently and I would like to ask some explanation regarding your message. First about the part:
"The most striking and for me, insidious part was the reference to writing off “ all aged Chinese debtors”.
Notably it didn’t state just the Chinese debt that had been marked before but ALL ."
If I understand properly, they realized that they will not be able to collect those, which I assume were a part of the "Bad debt provision" e.g. in the income statement of the 2018 annual report. I Also assume that they were part the the Assets stated as "Trade and other receivables". Am I right up to this point?
Since those were already stated as a loss, while it is a pity, it never counted as some earning and would "only" decrease the net Asset value. Am I still correct? Therefore, I think I do not quite understand what looks like a rant from you SJL. But again, I have been following MMX only very shortly and I am quite probably missing something there so I would be very happy to get some clarification.
For the rest, from what I get, the concern is that in the end, the main and maybe only cash contributor is the ICM portfolio. Is that correct?
Thanks for clarifying those points.
Based on SJL's summary and assumptions MMX made an excellent acquisition in ICM.
I wonder if the chinese write offs are a legacy from Mr. Weill?
SJL, fair comment! Question for me now is do I have confidence that Toby et al can get the best out of the other 28 domains?
sSB ,
Remember 2019 should have been $8MM nett
$4 from icm and 4 from the 28 , plus the unexpected adultblock which is almost all profit of perhaps $1-2MM?
So if it comes in at $6MM from operations we can safely say that’s almost all icm . If it comes in at 8-10 then we can agree that the 28 brought some profit .
Let’s see ....
'Designed by Clowns… Supervised by Monkeys'
Some might say that is insulting to clowns and monkeys..lol.
bakky & silver ,
If adult block had even a modicum of success I can guarantee you that the Icm cash profit collection for 2019 would have been MORE than the $4.6 ... probably nearer $6Mm in my opinion .
Draw your own conclusions from that that means for the rest of the business bottom line performance .
Yes such comments may not help the SP right now but you guys did ask what my take on the RNS was .
I do plan to attend the agm as I Hope others will too and I intend to submit written questions to the Board in advance so they can prepare the answers for then rather than just swat them away with “ will will get back to you “.
'With a largely fixed operating cost and capacity across the platform, we therefore expect future growth to be incrementally positive'.
Incrementally being the key word for me. A steady as she goes heading it seems.
'Designed by Clowns… Supervised by Monkeys'
not sure what to make of all that, other than it does not surprise me in the slightest.Might be worth turning up at the AGM this time as they have had an easy ride of it every other year.Might have been better to have kept the 'powder dry' until the AGM as I can't see it will help the sp any just now.
Thanks SJL. By Chinese debtors we are basically talking about sales in .vip. In the 12 months from June 2016 to June 2017 we 'sold' $8m+ covering standard sales, premiums, and portfolio's. As far as the current accounts go - we are carrying a $2m bad debt - the majority of which appears to be subject to a write off following some cash collection. That is not to say we have other liabilities in relation to .vip sitting in our accounts. I thought we had moved away from the smoke and mirrors policy used to mask P&L and Balance Sheet issues - perhaps not.
If you take away the auction income we 'collected' about $4.6m in cash - I'm going out an a limb and suggest this was largely icm cash collections. The financial reporting needs to much clearer and robust - we have a highly paid FD and year after year we seem to score own goals.
And just to add salt we are going to have a huge share based payment accounting treatment for the 30m options awarded last year to contend with. The scale of these appears to make up for the 15m 2016 awards forfeited in the year - and the way we are going the 6m 2017 awards will be forfeited as well.
If your golfing with Guy, might want to ask him what is really going on here. SB
Silver et al ,
Tend to agree ... “ weasel words “ is the phrase that springs to mind .
Update was pretty lame imho .
The most striking and for me, insidious part was the reference to writing off “ all aged Chinese debtors”.
Notably it didn’t state just the Chinese debt that had been marked before but ALL .
When icm carried out its detailed reverse due diligence in early 2018 we were concerned about what was then , if I recall correctly without checking my notes , some $5.6 Million of Chinese debt for premiums sold in 2017 that basically represents more than 100% of the 2017s profit .
We literally almost begged them to admit that those amounts were highly suspect in terms of collection.
We were assured that they were and indeed in the final sale documentation mmx “ warranted “ they they were and even restated those written warranties at closing on 15 June 2018 . You can imagine our dismay when the interims to 30th June , just 2 weeks later ended up with a provision against that debt of over $2M . It looks like they may have collected just around $1M of the $5+ million in 2018 and 2019 and now the remainder of the debt is to be written down .
So in truth the entirety and more of 2017 profits were in fact illusory and over 2 years this amount has been brushed under the carpet .
I am sure , had ICM pulled the same trick and warranted such numbers and over $5M of profits had subsequently disappeared then mmx would have been rightly enraged and seeking their money back under the warranties in the sale and purchase agreement .
I am seriously not impressed with this kind of behavior as it is misleading at best ...
On the brighter side the fact that the company is making “ substantial “ gains in revenue and mix is good but the whole escapade leaves a very sore taste in my mouth .
The sweeping broad brush generalities without harder numbers , given this prior example of “ rolling disclosure “ gives rise to concern .
The 30 % of revenue being new sales will of course include adultblock but again no specificity just more “weasel words “ .
Even though I am sure you guys are sick of hearing it I will restate my belief that by far the Lions share of 2019 profits will be from the old icm stable of TLDs with the “ other 28 “ barely scraping by in terms of bottom line .
That belief together with the eventual admission as that’s what it is that 2017 profits for MMX were totally illusory is disappointing.
I for one will be asking some very pointed questions at the AGM .
To obtain a good exit price the 28 need to be shown to be making a substantial contribution to the bottom line , more than what I suspect , from reading this RNS , than they appear to be doing in 2019 .
At least I guess “ dodgy “ Chinese deals will be off the books and it appears that hopefully they won’t replaced with more of the same .
Excuse typos as it’s 6 am here and I am using iPhone in my back garden before I take my dog for a walk
Sunday - i don't disagree on the fincap opinion - but as mmx broker i would expect they have access to certain info/conversations on which to base their reporting - and their trading forecasts have been relatively accurate. At the point of audited accounts i expect we will see a Fincap update on predicted 2020 trading (revenue, editda, eps, div etc) - which will have some level of agreement with the company. As for the 17p target........we wished. As you say - SJL - what's your take? SB
Its now 24 hours since the company published its trading update. Depressingly, like previous updates and results, the share price reaction has been negative – despite what appeared to be good news. Why; well possibly it is linked to what wasn’t said as opposed to what was. Why no detail on our actual revenue – we expected $18.5m as per forecast – so why not make a clear statement of the ball park number as opposed to ‘significantly ahead’ of 2018 performance (of course we are – we have a full year of the adult domains). In relation to renewals – we were led to believe they should now cover all costs (although again – no mention of total costs) – and now it’s a claim that they are at 60% of the unstated revenue – why not be unambiguous and report renewals cover all costs. New sales revenue makes up the 40% balance – and yes there are less brokered sales – but in combination our sales appear flat – but again without knowing the numbers this is guesswork. Percentages are meaningless without the quantum. There are decent signs on cashflow, cash in bank, London sorted (but the accounting gain for this year is being used to write off Chinese bad debts). In relation to the dividend – I am hoping this has not been introduced to mask overall trading progress – will have to wait until March to find out. I just feel there were opportunities for greater clarity which were missed. I imagine fincap’s divi estimate will be pretty accurate – this will not have been plucked out of thin air. SB
'...estimating that the coming dividend will be around 0.13p per share with a yield of 1.6%.' Imo it will be higher. With an amazing start of the year they will have more funds to give us back unless they are planning to acquire something. And let's be honest who reads or listens to FinCrap they have not a clue about the business.
This was in last year's final results
"Provisions of $13.4m made including a bad debt provision of $2.1m, onerous contract provision of $7.2m and impairment of the underlying asset of $4.1m, leading to an overall accounting loss of $12.6m"
Good to see you on the BB SongSungBlue - it's a time of resurrection all round.
Hopefully we'll get a certain tree worshiping druid back too ;)
No doubt there'll be an exhaustion of the profit taking soon and we can welcome an influx of 'new blood' to this stock.
A very transient pool of red, followed by a rising sea of blue over the coming weeks.
Atb
"....it is likely that all remaining aged Chinese debtors will be provided for at the year end broadly negating the gain from the onerous contract settlement. "
is... " negating the gain from the onerous contract settlement".... just refering to the $0.6m in cash collected , or the $3.0m+ saved over the remainder of the contract??
I am a bit unclear on exactly what they are saying....
Can anyone clarify ?
Mucking about dropping the price to pick up stock, couldn’t buy at 8.22 earlier, good signs.
We have a normal company now! the update quite frankly is devoid of detail, the broad brush approach nevertheless makes our positioning in the market and direction of travel pretty clear. Great turnaround job Toby. I guess the sell off guys will be gone soon and we may see a slow but steady climb in the sp with new investors interested in sp growth and a divi culture....all good....just need to consolidate.....done atb...Huckster
Excellent results , just what we all wanted, especially the confirmation of a dividend. Well done to Toby et al..
$4.6m increase in cash (excluding one-offs), after paying off $10m worth of exceptional loans/bad contracts... sounds pretty good to me!
An initial $1.5m dividend would be a good start and a gesture to the future, but with those kinds of profits I can only see that value increasing.
Most importantly (for me), we ripe for a takeover now. There's clearly a few bad Chinese debtors, but the reduced cost of the London contract show that's already built in. For someone in the industry with the existing infrastructure they'd be able to take even higher profits by reducing the duplicated costs.
Finncap says 0.13p dividend. That makes it 1.6%yield returning 1.5m usd to start with. Not bad for a start and probably half again for interim