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Minds + Machines higher as it unveils £1mln share buyback

The buyback will be funded from existing cash resources after the domain registry firm found itself on a “solid cash-generative footing”

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Registrations in the first half had risen 19% to 1.82mln

Minds + Machines Group Limited (LON:MMX) shares jumped on Thursday after it announced plans for a £1mln share buyback alongside “healthy” growth in its first half.

The top-level web domain registry firm said that trading progress in its first half had given it confidence that the business was on a “solid cash-generative footing” and that the buyback would be funded from its existing cash resources.

READ: Minds + Machines set to launch adult domain name trademark protection service

The buyback would commence “shortly”, with full details in a separate announcement.

The company also delivered a trading statement for the six months ended 30 June, saying that results for the period were expected to be in line with management expectations.

Registrations in the first half had risen 19% to 1.82mln year-on-year while new sales billings through its original 28 properties has increased by 30%.

MMX also said that cash in-flows for the period had been “ahead of expectations” at US$8.6mln, up from US$6.3mln in the prior year.

Meanwhile, the firm said a historical decline in its ICM portfolio had stabilised in the first half delivering US$2.8mln, the same as the prior year but an improvement on the 16% decline in the first half of 2018.

MMX said it now believed that there was a “clear pathway” to future growth for the ICM division, with new initiatives due to come online in its third quarter.

Following the “positive” performance for the first half, MMX said it had also agreed a one-off payment of US$5.1mln to settle a legacy onerous contract issue, with payment due in the second half.

Toby Hall, MMX chief executive, said that the group was “extremely encouraged” by its first-half progress.

“Our revenues are increasingly predictable, with healthy channel sales and strong renewal revenues now driving the business forward”, Hall said, adding that with the legacy contract issue in the process of being resolved and innovation activity supporting organic growth, the outlook for the firm was “bright”.

The group's first-half results are to be announced on 24 September.

In a note, analysts at MMX's 'house' broker finnCap reiterated their 17p target price on the stock, saying that the company was continuing to deliver on its strategy of “profitable organic growth allied to targeted acquisitions and innovative development”.

The broker added that they expected MMX’s revenue growth to deliver “strong cash generation” and that the market would be looking for more visibility on execution at the interims.

In mid-morning trading, the shares were up 5.3% at 6p.

--Adds broker comment and share price--

Quick facts: Minds + Machines Group Limited

Price: 4.75 GBX

Market: AIM
Market Cap: £41.59 m

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