Audited results for year ended 31 December 2013

For immediate release

10 June 2014

Minds + Machines Group Limited

("MMX", the "Company" or "Group")

Audited results for year ended 31 December 2013

The Directors of Minds + Machines Group Limited (AIM: MMX) are pleased to announce the Group's audited results for the year ended 31 December 2013 ("the Period").

Period highlights

Financial:

· operating profit of £776,000 for year ended 31 December 2013 (2012: £3.07 million loss);

· profit after tax for year ended 31 December 2013, £729,000 (2012: £3.06 million loss); and

· cash reserves increased to £9.1 million at year end (31.12.2012: £2.4 million).

Operational:

· business transitioned from an investment company to a fully operating company covering all facets of the domain name business: registry, registry service provider and registrar operations;

· registry service operations expanded in Dublin and London; and

· registrar operations launched in November 2013.

Post period highlights

· cash reserves increased to £21.7 million as at 30 April 2014 following equity raise in January 2014;

· Company re-named and readmitted to AIM as Minds + Machines Group Limited on 21 March 2014;

· .london successfully launched on 29 April 2014;

· 7 other new domains in which the Group has an interest successfully soft-launched on the Internet;

· further 22 uncontested domain applications - 17 of which the Company either wholly or majority owns - now going through the final pre-launch phases; and

· Company looking to resolve a further 43 contested new domain applications in which it has an interest through private auctions.

Executive Chairman, Fred Krueger, commented:

"We believe that we are at the start of a very significant new trend in the entire Internet, where small businesses and individuals will over time dramatically increase the amount of names they use online, and do so with far greater ease. The very first results from the new TLD programme are in, and on that basis are highly encouraging. We believe that our cash resources are more than sufficient to get us to profitability and take advantage of these tremendous opportunities. This is though only the beginning and the Board is excited about the prospects for the Group."

The information in this announcement is extracted from the audited accounts which are available at http://investors.mindsandmachines.com/investors/

Further Information:

Minds + Machines Group Limited

North America

Antony Van Couvering Tel: +1 310 452 1491

Beaumont Cornish Limited (Nomad) Tel: +44 (0)20 7628 3396

Roland Cornish / Michael Cornish

N+1 Singer (Broker)

Shaun Dobson / Ben Wright Tel: +44 (0)20 7496 3000

gth media relations

Toby Hall / Suzanne Johnson Walsh Tel: +44(0)20 7822 7493/92

For further information, please go to www.mindsandmachines.com/investors

About Minds + Machines Group Limited

Minds + Machines Group Limited is a publicly traded operating company listed on the AIM market of the London Stock Exchange focused on the new generic top-level domain ('New gTLD') space. Top-level domains, such as .com and .net, are regulated by ICANN. ICANN is currently expanding the number of new generic top-level domains from the current 23 to over 1000 through its 'New gTLD program'. The Group is one of the leading applicants for, and owner and/or operator of, New gTLDs under this programme.

About Minds + Machines' Registry and Registrar operations

Minds + Machines' registry operations are delivered by its wholly owned registry services providers: Minds + Machines Limited (Ireland), which works internationally with commercial organisations, cities, not-for-profits and entrepreneurs to operate New gTLDs; and Minds and Machines Limited (UK), which partners with the official promotional organization for London, London & Partners, to operate the .london New gTLD. In addition, the Group wholly owns Minds + Machines Registrar Limited (Ireland) and Minds and Machines Registrar UK Limited, each an ICANN accredited registrar. Further information on Minds + Machines' registry and registrar operations can be found at www.mm-registry.com and www.mindsandmachines.com, respectively.

Executives Statements

CHAIRMAN'S STATEMENT

Our company was set up, from the start, as a pure play on the new top-level domain space. Our vision was, and remains, that new top-level domains will replace .com and country code domains as the mainstream solution for naming things on the Internet.

From the beginning, we decided that we would build our entire technology independently, without requiring - or paying for - a third party platform, which means we can both own and operate our domains. We developed, built and deployed our own registry service platform in Dublin. This has been a deliberate capital investment, but one that is now paying off. It also enabled us to secure the rights to 5 key geographic top-level domains, including .London, which shows significant early promise. Over the last 9 months, we have also significantly invested in our own registrar and affiliate programme, which means we can capture additional revenue through the sales of domain addresses within our domains as well as through the ownership and operation of those domains. We believe that this will be an advantage for us in exploiting vertical markets such as .horse or .wedding.

As we expected, private auctions have become the key method of settling contention between applications and we have benefited from this development, as it has enabled our cash to work on a leveraged basis: the domains we have lost in private auction (for example .property and .website) have helped finance new TLDs we have acquired such as .wedding and .garden. We now have an uncontested TLD portfolio of the highest possible quality, and while not the largest, I believe that the grade of our domains is truly first-rate. We look forward to continuing to add to our portfolio through the private auction process.

And so now, five years on from our first investment in this space, the vision is starting to become a reality. The very first results from the new TLD programme are in, and they are encouraging. While brands have still not yet engaged with the programme, end users have, and the numbers prove it. Still, this is very, very early and it will take a significant amount of time before the average golf store registers its name as .golf, as opposed to .com, or .co.uk. But we are convinced it will happen.

The next twelve months should be extremely interesting for us as we believe we are at the start of a very significant new trend in the entire Internet, where small businesses and individuals dramatically increase the amount of names they use online, and do so with far greater ease. Minds + Machines wants to be the first and last stop for these users to get online.

We believe that our cash resources are more than sufficient to get us to profitability and take advantage of these tremendous opportunities. As they say in American Baseball, this is the beginning of the first innings. It's going to a very exciting game. To that end, I am also delighted to have welcomed both Keith Teare and Elliott Noss onto the Board, both of whom have brought significant operational perspectives to the Board. Again, we would like to thank those directors who retired in the year for their input in the early stage development of the Group.

Fred Krueger

Executive Chairman

9 June 2014

CHIEF EXECUTIVE OFFICER'S BUSINESS REVIEW

I am delighted to report that the twelve months ended 31 December 2013 was one of significant development and progress for the Group as we transitioned from an investment company to a fully operating business - a process that completed with the re-naming and readmission of the Group on AIM post year-end on 21 March 2014.

During the year under review our registry service operations were expanded in Dublin, where we have a team of 16 people, and our London office launched where we now have a team of 4.

In Germany our majority-owned businesses, Bayern Connect GmbH and Minds + Machines GmbH, have continued to work closely with the governments of the Free State of Bavaria and North Rhine Westphalia, respectively, to prepare for the launches of .bayern and .nrw, both launching later this year. There are now 2 people located in Munich.

In November 2013, we were also delighted to launch our registrar operations, which enabled us as an ICANN-accredited registrar to be part of the distribution network of registrars able to sell domain addresses to the public. The Minds + Machines registrar is a powerful tool for capturing additional revenue from our portfolio of top-level domains, as well as from those of others, and we soon plan to offer additional goods and services with each domain, further increasing our revenue potential.

With regards to our portfolio, we have successfully used the private auction process to grow selectively the number of uncontested applications we own, while monetising those which we feel our competitors have over-valued.

As of May 28 2014, we have 8 generic Top Level Domains (gTLDs) in which we have an interest already live on the Internet: .cooking, .country, .fishing, .horse, .kiwi, .rodeo, .vodka, and most notably .london which launched to significant media and public interest on 29 April 2014.

We have a further 22 uncontested applications - of which 17 are wholly or majority owned by the Company - that continue to go through the delegation and pre-launch processes broadly in sequence to their original Priority Draw Number.

In addition, we have a further 35 wholly-owned contested applications - as well 8 partner/client applications - that we will be looking to resolve through the ongoing private auction rounds.

As our CFO Michael Salazar will expand upon, we have also worked hard to husband our financial resources during the period under review while at the same time expanding our business. As at 31 December 2013 our cash reserves stood at £9 million, and now stand at over £21.7 million following the £21 million placing announced on 31 January 2014. In addition, we continue to keep in place a funding facility for up to US$15 million (approximately £9.4 million) to compete in a specific domain string private auction.

As a result of the above, we believe the Company is exceptionally well placed to now develop into a highly cash generative business over the coming 12 - 24 months.

Antony Van Couvering

Chief Executive Officer

9 June 2014

CHIEF FINANCIAL OFFICER'S FINANCIAL REVIEW

First and foremost we are pleased to report an operating profit of £776,000 in 2013 (2012: 3.07 million operating loss). Profit was primarily a result from participating three private auctions, which resulted in gross revenue of £4.12 million and an increase in intangible assets in 2013 of £1.3 million. Profit after tax for the period under review was £729,000, a significant improvement over the preceding year where the loss was £3.06 million.

Reflecting the transition to an operating business, administrative expenses, including marketing, increased to £2.9 million in 2013 (2012: £2.6 million) as a result of undertaking a new line of business, registrar services, and preparation for the rollout of the 8 new gTLDs as highlighted above. General administrative expenses, excluding marketing, are expected to increase slightly while marketing expenses will increase significantly in 2014. Marketing expenses through the first quarter of 2014 amounted to £252k.

Cash reserves increased to £9.1 million in 2013 from £2.4 million in 2012. Net cash outflow from operating activities amounted to £2.4 million (2012: £12.8 million). The change in cash reserves and cash fluctuations throughout the year primarily relates to private auction participation and an equity raise (£6.7 million) in June 2013. In 2014 our cash reserves have increased to £21.7 million as at 30 April 2014 as a result of a subsequent equity raise of £19.6 million (net of expenses) in January 2014 and private auction transactions.

As we begin generating revenues from our first live gTLDs in which the Group has an interest, we anticipate revenues from ongoing operations - as opposed to those derived from one-off private auctions and the equivalent - to move the Group into a cash neutral position during the latter part of 2014. We further expect revenues to continue growing in 2015 as a result of the ongoing launch programme of our gTLD portfolio. In conclusion, the Company's progress in 2013 has placed the Group in a financial highly secure position.

Michael Salazar

Chief Financial Officer

9 June 2014

Group Statement of Comprehensive Income

for the year ended 31 December2013

All operations are considered to be continuing

The notes form an integral part of these financial statements.

Company Statement of Comprehensive Income

for the year ended 31 December2013

All operations are considered to be continuing

The notes form an integral part of these financial statements.

Group Statement of Financial Position

as at 31 December 2013

The notes form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 9 June 2014 and signed on its behalf by:

Antony Van Couvering Michael Salazar

Director Director

Company Statement of Financial Position

as at 31 December 2013

The notes form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 9 June 2014 and signed on its behalf by:

Antony Van Couvering Michael Salazar

Director Director

Group Cash Flow Statement

for the year ended 31 December 2013

The notes form an integral part of these financial statements.

Company Cash Flow Statement

for the year ended 31 December 2013

The notes form an integral part of these financial statements.

Group Statement of Changes in Equity

for the year ended 31 December 2013

The notes form an integral part of these financial statements.

Company Statement of Changes in Equity

for the year ended 31 December 2013

The notes form an integral part of these financial statements.

Notes to Financial Statements

for theyear ended 31 December 2013

1 Summary of Significant Accounting Policies

(a) General information

Minds + Machines Group Limited is a company is registered in the British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1412814. The Company's ordinary shares are traded on the AIM market operated by the London Stock Exchange. The nature of the group's operations and its principal activities are set out in note 2 and in the Strategic Report - please refer to the full set of the Report & Accounts on the Company's website.

These financial statements are presented in pounds sterling because that is the currency of the economic environment in which the group operates. Foreign operations are included in accordance with the policies set out in note 1k.

(b) Statement of compliance with IFRS

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 Standards Board (IASB).

Adoption of new and revised standards

In the current year, the following new and revised Standards and Interpretations have been adopted.

There have been no material changes to the accounting policies as a result of adopting the above standards.

Future changes in accounting policies

At the date of authorization of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

The directors do not expect that the adoption of the Standards and Interpretations listed above will have a material impact on the financial statements of the Group in future periods, except as that IFRS 9 will impact both the measurement and disclosure in of Financial Instruments.

Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards unit a detailed review has been completed

(c) Basis of accounting

The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments that are measured at re-valued amounts or fair value at the end of each reporting period, as explained in the accounting policies.

 (d) 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 losses 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 transitions 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 recognised directly in equity and attributable to the owners of the Company.

When a Group loses control of a subsidiary, the gain or loss on disposal recognised 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 recognised 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 IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the costs on initial recognition of an investment in an associate or jointly controlled entity.

 (e) Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further detail is contained in the Strategic Report.

(f) Business combinations

Acquisition of subsidiaries and business 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 recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised 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 recognised 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 Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquire, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceed the sum of the consideration transferred, the amount of any non-controlling interests in the acquire and the fair value of the acquirer's previously held interest in the acquire (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes assets or liability resulting form a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospective, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as at asset or liability is re-measured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group's previously held interests in the acquired entity is re-measured to its acquisition date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

(g) Joint Ventures

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 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 venture 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 recognised immediately if the loss provides evidence of a reduction in the net realisable 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 recognises 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 recognised in profit or loss. When the remaining investment constitutes significant influence, it is accounted for as investment in an associate.

(h) Goodwill

Goodwill is initially recognised and measured as set out above.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units 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 cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised 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.

(i) Leases (the group as a lessee)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease assets are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

(j) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. Revenue is reduced for estimated customer rebates and other similar allowances.

Rendering of services (Registry service provider ("RSP") revenue and consultancy services)

Revenue is generated by providing RSP and consultancy services over a period of time. Fees for these services are deferred and/or accrued and recognised as performance occurs.

(k) Foreign Currencies

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 are expressed in pounds sterling, which is the presentation currency for the consolidated financial statements. The Company's function currency is US Dollars.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised 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 in terms of historical cost in foreign currencies are not retranslated.

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

For the purpose of 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 recognised 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 recognised 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.

(l) Intangible assets

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimates useful life and amortisation 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.

(m) Derecognition of Intangible assets

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

 (n) Fixtures and equipment

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

- Fixtures and Equipment - over 3 to 7 years

(o) Impairment of tangible 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 and 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.

An intangible asset which an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

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 recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.

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 recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is being recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(p) Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group's accounting policies, described in this note, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumption are based on historic experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group's accounting policies

The Group does not have any critical judgements, apart from those involving estimations (which are dealt with separately below).

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainly at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(i) Impairment of goodwill and intangible assets

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill and intangible assets has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Goodwill and intangible assets have not been impaired.

Details of goodwill and intangible assets are set out in note 11 and 12 respectively.

(q) Finance costs/revenue

Borrowing costs are recognised as an expense when incurred.

Finance revenue is recognised as interest accrued using the effective interest method.

(r) Financial instruments

Financial assets and financial liabilities are recognised 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 recognised immediately in profit or loss.

Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset in 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: 'available for sale' financial assets and 'loans and receivables'. 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 amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimates 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 recognised on an effective interest basis for debt instrument.

(I) Loans and other receivables

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

Loans and receivables 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.

(II) Available for sale Investments

Available for sale investments are non-derivatives that are either designated as available or are not classified as any other category of financial assets.

The Group has investments in unlisted shares that are not traded in an active market but are classified as available for sale financial assets and stated at fair value. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investment revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is reclassified to profit or loss.

Impairment of financial asset

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For unlisted equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets objective evidence of impairment could include:

- significant financial difficultly of the issuer or counterparty; or

- default of delinquency in interest or principal payments; or

- it becoming probable that the borrower will enter bankrupt or financial re-organisation.

Certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount an the present value of estimated future cash flows, discounted at the financial asset's original effective rate.

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 recognised in profit and loss.

When an available for sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

With the exception of available for sale equity instruments, 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 recognised, the previously recognised 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 amortised cost would have been had the impairment not been recognised.

In respect of available for sale equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of available for sale debt securities, impairment losses are subsequent reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

De-recognition of financial assets

The Group derecognises 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 recognises 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 recognise the financial asset and also recognises a collateralised 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 recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On de-recognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognised on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative fain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair value of those parts.

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 recognised at the proceeds received net of direct issue costs.

Financial liabilities

Financial liabilities are classified as other financial liabilities.

(I) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised costs using the effective interest method, with interest expense recognised on a effective yield basis.

The effective interest method of calculating the amortised 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-recognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

(s) Taxation

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

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 recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

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

(t) Provisions

Provisions are recognised 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 recognised 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 recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

(u) Share-based payment transactions

Equity-settled share-based payments to employees are measured at the fair value of the equity instrument 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. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 22.

The fair value determined at the grant date of the equity-settled shared-based payments 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 recognised 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 options is reflected as additional share dilution in the computation of earnings per share (see Note 10).

(v) Investment in subsidiary undertakings

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

2 Operating segments - Group

Information reported to the Group's management and internal reporting structure (including the Group's Chief Executive Officer) for the purpose of resources allocation and assessment of segment performance is focused on the category for each type of activity. The principal categories (and the Group's segments under IFRS 8) are:

- Registry ownership (segment A) - applicant of top level domain name from ICANN and wholesaler of domain names of those top level domain names

- Registry service provider (RSP) and consulting services (segment B) - back end service provider for a registry

- Registrar (segment C) - retailer of domain names

Segment revenues and results

The accounting policies of the reportable segments are the same as the group accounting policies described in Note 1. Segment results represent results earned by each segment without allocation of centralised costs and income tax expenses. This is the measure reported to the Group's Chief Executive Officer for the purpose of resource allocation and assessment of segment performance.

Other segment information