TIDMALM
RNS Number : 0304Y
Allied Minds PLC
02 September 2022
2 September 2022
Allied Minds plc
("Allied Minds" or the "Company")
Trading Update
On 15 June 2022, the Company announced its annual results for
the year ended 31 December 2021. The Company expects to release its
half year results by no later than 30 September 2022. In advance of
then, the Board provides the following update on the Portfolio
Companies, Formal Sale Process, the cash position, and outlook.
Portfolio Companies:
Federated Wireless ("Federated")
Federated has delivered an encouraging first half performance
with revenue growth in all segments delivering revenues for the
period in line with the plan which underpinned the most recent
fundraise and valuation. Quarter on quarter growth was particularly
noteworthy with the second quarter being up 30% on the first. The
business delivered a gross margin on track for the year in first
half that was 7% ahead of plan, resulting in EBITDA and cash coming
out well ahead of expectations. The Board of Federated continue to
expect significant growth over the second half of the year,
particularly in the fourth quarter. These expectations come with
the usual risks commensurate with high growth businesses of this
nature.
BridgeComm, Inc. ("BCI")
Allied Minds current ownership of BCI is 62.92%. Boeing HorizonX
Ventures (venture arm of Boeing Company) is the other major
investor.
As highlighted in the Allied Minds full year results, BCI was
having partnering discussions with aerospace private equity firm,
Aeroequity Industrial Partners ("AEI") to provide additional
funding and US government sourcing expertise as it became clear
that BCI was strategically and commercially restricted as a result
of Allied Minds majority shareholding qualifying BCI as a UK
company. As a consequence of that, BCI could not bid for US Space
Development Agency business as a prime contractor, a significant
source of potential revenue opportunities.
As Allied Minds has continued with its strategic review and
considerations, it has concluded it is necessary to agree a new
ownership structure with AEI which reduces Allied Minds' ownership
to 49% before dilution from management options. The restructured
value of Allied Minds investment will be $5.6m.
In addition to the restructuring enabling BCI to qualify as a US
company, BCI will also benefit from the significant US government
contacts and aerospace knowledge that AEI brings to the company.
Also, Boeing, a significant BCI customer is an investor through
Space X in AEI. Allied Minds believes that taking an economic
write-down now sets the company up for future success and the
potential for a significant total return.
BCI has created in the lab, and demonstrated over 100 meters,
high capacity, secure, one to many optical communications
capabilities that may represent a paradigm shift in the low earth
orbiting satellite constellations communications, battlefield
communications and offers a potential low-cost alternative to
laying fibre optic cable in underserved and hard to reach cellular
geographies.
BCI now needs to commercialize their technology. This will take
approximately $40m and 18 months.
BCI will seek to raise $10m from interested investors and is in
the later stages of bidding on two contracts. Either of those
contracts is capable of providing funding of up to $30m of the
required $40m through non-recurring engineering fees paid for by
the customer.
In the meantime, Allied Minds and AEI have each committed an
additional $1m of capital to BCI to finance its activities during
the capital raise period.
While the process of going from the lab to a commercialized
product is uncertain the economic upside for BCI and Allied Minds
could be substantial and as such we are optimistic for BCI's
success.
Orbital Sidekick ("OSK")
As previously disclosed, OSK had sufficient funding until the
end of August 2022. OSK was seeking to raise $40m which it had
hoped to close in mid 2022. Unfortunately, this has not been
achieved with extraneous market events likely being a factor.
However, OSK continues to have investor support and a bank facility
to allow it to continue operating. The business has strong interest
from a number of clients wishing to participate in its alpha/beta
launch of 6 satellites in 2023. The current investor group plans to
invest an additional $4-$5 million in OSK in the next 30 days. That
coupled with a $5 million banking facility will extend OSK's cash
runway until June 2023. It is expected that the launch of two
additional satellites in the first half of 2023 will demonstrate
OKS's hyperspectral data capability and position the business for
additional follow-on funding.
OcuTerra Therapeutics ("OcuTerra")
OcuTerra commenced the Phase 2 trial of its non-invasive
eyedrops, an important milestone in its efforts to develop the
first, topical eye drop treatment for diabetic retinopathy.
OcuTerra continued to strengthen its managerial and clinical team
with the appointment of eye care industry veteran, Majid Andersi,
MD, as Vice President of Clinical and Medical Affairs.
Formal Sale Process
Notwithstanding the contemplated de-listing, the Formal Sale
Process remains on-going but no notable interest has been
forthcoming to date. If Allied Minds' consultation with
shareholders concludes that it is appropriate to proceed with a
de-listing and receives the necessary shareholder approval to do so
, the Takeover Code would no longer apply at the point that Allied
Minds shares officially de-list as a consequence of the "residency
test" and accordingly, the Formal Sale Process would be terminated.
Notwithstanding that, the Board remain receptive to any proposal
for the whole or part of the business, prior or subsequent to any
proposed de-listing, if it believes it is in shareholders' best
interests.
Cash position
Allied Minds has current net cash position of c.$10.0m. As a
result of the Board's strategic review, the Board believes that a
successful de-listing of Allied Minds could reduce annual running
costs by approximately $2.2m per annum. The Board believes that
such savings when combined with the current cash position should
provide two years of cash runway for Allied Minds with necessary
headroom to make strategic investments in portfolio companies if
deemed appropriate and necessary to maximise value for Allied Minds
shareholders.
Outlook
The Board remain of the view that there is substantial value to
be realised within the portfolio of investments and that this can
be achieved within a time frame of 18 to 24 months. It is therefore
important that the Company has sufficient resources, including an
appropriate buffer, to achieve this which is the key reason for
considering and consulting with Allied Minds shareholders on a
potential delisting.
For further information, please contact:
Allied Minds plc c/o Instinctif Partners
Bruce Failing
Instinctif Partners alliedminds@instinctif.com
Tim Linacre / Rozi Morris / Joe +44 7949 939237
Quinlan
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END
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