NAV upside with additional ‘option’ value

Allied Minds 9 June 2020 Update
Download PDF

Allied Minds

NAV upside with additional ‘option’ value

FY19 results update

Investment companies

9 June 2020

Price

34.13p

Market cap

£82m

US$1.27/£

Parent cash ($m) at 31 December 2019

84.1

Shares in issue

241.6m

Free float

91%

Code

ALM

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.4

1.0

(41.5)

Rel (local)

(8.4)

1.5

(34.5)

52-week high/low

87p

28p

Business description

Allied Minds is an IP commercialisation company with a concentrated investment portfolio predominantly focused on early-stage technology companies. Its portfolio companies are spinouts from US federal government laboratories and universities.

Next events

AGM

June 2020

Interim results

September 2020

Analysts

Richard Williamson

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

Allied Minds is a research client of Edison Investment Research Limited

Allied Minds made significant progress in FY19, focusing on its slimmed down portfolio of seven investee companies, with strategic funding rounds for Federated Wireless (FW) and HawkEye 360, before the sale of HawkEye 360. Recurring central costs have been cut to $6m in FY20, with a headcount of seven. Post the period-end, FW announced partnerships with AWS and Microsoft Azure with initial revenues expected in FY20. Parent cash at 31 December 2019 was $84.1m. The company no longer discloses NAV, but we estimate net cash at 4 June 2020 of $31.9m (adjusted for the 12.6p special dividend, investments and costs) and NAV of 90.9p/share (78.4p/share fully diluted). Based on seemingly conservative valuations, the shares trade at a 56–62% discount to our estimated NAV.

Period end

Portfolio fair value (US$m)

Parent-level net cash (US$m)

NAV
(US$m)

NAV/share
(p)

P/NAV
(x)

06/18

350.1

66.0

416.1

132.4

0.26

12/18

226.7

50.6

277.3

88.8

0.38

06/19*

266.1

31.3

297.3

100.2

0.34

12/19*

209.0

31.9

240.8

78.4

0.44

Note: NAV is calculated as fair value plus net cash at the parent level and is based on our estimate of fair value as this is no longer disclosed by the company. *H119 and FY19 net cash and NAV are adjusted for post period-end investments.

FY19 results

FY19 results were dominated by the deconsolidation of subsidiaries (the holding in FW fell from 52.2% to 42.6% at YE19). FY19 revenues fell to $2.7m (2018: $5.6m) with R&D falling by 36% to $16.1m (2018: $44.9m). Net profit rose to $50.3m (FY18: $45.4m restated). Investments at fair value increased to $61.9m (2018: $56.5m) reflecting a $37.5m increase in fair value adjustments, with $22.2m from the deconsolidation of Federated Wireless. Cash and cash equivalents decreased by $7.2m to $90.6m (2018: $97.7m), with $84.1m held at the parent level (2018: $50.6m).

Portfolio update: Core assets continue to progress

With demonstrable progress at FW (fair value unchanged) and management confident of progress at Spin Memory and BridgeComm (partners prefer progress to remain confidential), Allied Minds’ remaining portfolio appears sound. The three principal investments represent 95% of fair value, while TableUp, Orbital Sidekick, Spark Insights and SciFluor offer additional option value. Recurring central costs have been cut to c $6m pa, giving management the three- to four-year cash runway it sought to maximise returns from the remaining portfolio.

Valuation: 56%+ discount to robust NAV

Allied Minds paid a special dividend of 12.62p in Q120 ($40m in total) from the sale of HawkEye 360. With this material cash exit validating the investment model, together with the group’s focus on cash preservation, we believe this provides a solid platform for robust NAV progress over time. The 56–62% discount to NAV does not reflect the prospects of the group’s streamlined portfolio – we estimate NAV per share of 90.9p (undiluted), or 78.4p fully diluted.

FY19 results summary

As with FY18, the group’s results were dominated by the impact of the deconsolidation of subsidiaries (ALM’s holding in FW fell from 52.2% to 42.6% at YE19, now 43.1%). Allied Minds also restated its FY18 figures to reflect valuation and accounting errors on the deconsolidation of Spin Memory and HawkEye 360, including a $2.4m understatement of associate’s losses for Spin Memory; the gain on the deconsolidation of Spin Memory was understated by $16.4m; and the gain on the deconsolidation of HawkEye 360 was overstated by $11.1m.

During FY19, revenues from engineering and service contracts fell to $2.7m (2018: $5.6m), primarily due to the deconsolidation of Federated Wireless in FY19, as well as the deconsolidation of HawkEye 360 and Spin Memory at the end of FY18. This was in part offset by new contract revenue from BridgeComm of $1.0m.

Cost of revenue at $1.4m in FY19 (2018: $2.8m) fell largely in line with revenues. SG&A expenses decreased by 30%, to $34.3m (2018: $49.3m), with the reduction in central costs implemented in FY19, as well as restructuring charges for subsidiaries closed or deconsolidated in FY18 and FY19. For similar reasons, R&D fell by 36%, to $16.1m (2018: $44.9m).

Net finance income fell to $10.0m (2018: $92.9m) due to the deconsolidation of subsidiaries, partly offset by $9.3m (2018: $91.6m) from IFRS 9 fair value accounting adjustments. Other income rose to $89.4m (2018: $44.0m, restated), partly offset by the company’s share of the $28.9m loss from the deconsolidated entities. Together, this resulted in net profit rising to $50.3m (FY18: $45.4m restated).

Investments held at fair value increased to $61.9m (2018: $56.5m) reflecting a $37.5m increase in fair value adjustments, with $22.2m from the deconsolidation of Federated Wireless. The increase was offset by the sale of Allied Minds’ stake in HawkEye 360 for a cash consideration of $65.6m.

Cash and cash equivalents decreased by $7.2m to $90.6m (2018: $97.7m), with net cash of $69.8m used in operations, $26.5m cash from investing activities and $33.7m cash from financing activities. Of this net cash figure, $84.1m (2018: $50.6m) was held at the parent level.

Outlook: Portfolio progress continuing

In FY19, management largely delivered on the measures outlined in the April 2019 strategic review:

focus remaining cash resources on key assets in the current portfolio;

new investment on indefinite hold; and

further cuts to central costs (to reduce opex to $5–6m pa).

With cost efficiencies implemented including restructuring management incentive schemes, reducing headcount, subletting its HQ office space and eliminating other nonessential third-party costs, on 11 December 2019 management confirmed that recurring central costs would be approximately $6m from 1 January 2020 (although there are expected to be incremental one-off items eg severance payments).

Allied Minds’ portfolio has been shrunk to seven assets, of which only three are material, with the other four representing ‘option value’. The sale of HawkEye 360 led to a subsequent $40m (12.62p per share) return of proceeds from the disposal, paid in February 2020.

With estimated net cash of $31.9m at 4 June 2019 (adjusted for the 12.6p special dividend, investments and costs), management expects to have sufficient cash to allow it to continue to invest in existing assets and maximise the value of its portfolio to shareholders over a three- to four-year time horizon.

In terms of its three principal assets, Allied Minds also reiterated the key operational objectives for each over the course of FY20:

Exhibit 1: FY20 portfolio company key operational objectives

Federated Wireless

Build a significant pipeline of annual recurring revenue

Meet customer service level agreement and service level objective targets

Develop and launch a scalable cloud enterprise solution

Spin Memory

Expand the commercial relationship with Applied Materials, including securing the first turnkey magnetics licence customer

Expand the design pipeline with Arm and secure its first macro deals

Expand upon opportunity provided by the US government project

BridgeComm

Successfully execute the development of applications of one-to-many (OTM) technology with Boeing HorizonX Ventures

Expand the capacity of the global ground network through industry partnerships and ground station installations

Expand government customer backlog

Source: Allied Minds

Portfolio: Demonstrable progress achieved in FY19 and 2020

Each of these principal assets made demonstrable progress during FY19 and post year end in FY20, but developments often remain confidential until key partners are ready to disclose progress. All valuations remain unchanged from the values established at the last major funding rounds.

Federated Wireless – ‘significant progress’ since last funding round

In February 2020, Federated Wireless announced new connectivity-as-a-service (CaaS) offerings with Microsoft Azure and Amazon Web Services (AWS), bringing to market the first private 4G/5G wireless cloud solution (Federated Wireless moves towards commercialisation). The company also announced trials with the UK government, highlighting the untapped international potential of its technology. In April 2020 Federated Wireless raised an additional $13.7m (split equally between Allied Minds and Pennant Investors) in an extension round to the September 2019 Series-C funding round (FW accelerates Microsoft and AWS partnerships).

BridgeComm – ‘reasonable progress’ since last funding round

BridgeComm entered a joint development agreement with Boeing HorizonX Ventures (Boeing) to collaborate on its OTM technology (bidirectional, ultrahigh-speed mesh connectivity for terrestrial, airborne and space systems), a development from its initial point-to-point solution. The development programme is expected to be completed in phases over the course of FY20–21. In December 2019, BridgeComm secured $1.0m of funding by way of convertible debt from Boeing, with an additional $1.5m committed subject to milestones. Allied Minds subsequently subscribed for $2.0m of convertible debt on the same terms.

Spin Memory – ‘significant progress’ since last funding round

During FY19, Spin Memory achieved significant technical milestones with both Arm and Applied Materials. With Arm, Spin Memory completed the design of a prototype demonstration vehicle of Spin Memory’s Endurance Engine coupled with a working MRAM array to show an order of magnitude improvement in MRAM endurance, one of the key challenges in the industry. The demonstration vehicle will also show the performance of many other patented circuits. The prototype and test results are expected later this year. In magnetics, Spin Memory and Applied Materials also made good progress with MRAM solutions, which are expected to displace most onchip memory, including both longterm storage (Flash) and working memory (SRAM). Hightemperature data retention (critical for longterm memory storage) was demonstrated with good yield. In FY19 Spin Memory was also awarded a ‘multiphase, multiyear, multimillion dollar’ US government project as the sub-contractor to a leading US semiconductor company.

COVID-19: Slowdown in progress

The company confirmed that, with adequate cash reserves to cover central costs until 2023, COVID19 has not had a direct impact on Allied Minds. However, as experienced by the company in the preparation of its final FY19 accounts, we would expect a slowdown in progress for a number of its portfolio companies while travel restrictions persist.

Portfolio: Condensed, with solid underpinnings

Exhibit 2 sets out our NAV estimate (as at 4 June 2020) based on the FY19 portfolio fair values.

Exhibit 2: Allied Minds’ portfolio – Edison fair value estimate

Company

Business description

Latest funding round

Latest post-money value (100%) ($m)

Undiluted value*
($m)

P / share

Fully diluted value*
($m)

P / share

ALM holding 4/6/20

ALM fully diluted holding**

Basis of estimate for fair value assessment

Federated Wireless

Cloud-based SaaS business

Sep 19

215.0

92.7

30.2

78.7

25.6

43%

37%

Valuation of last round (Strategics)

Spin Memory

MRAM semiconductor memory

Apr 19

172.0

73.4

23.9

57.3

18.8

43%

33%

Valuation of last round (Strategics)

BridgeComm

Optical communications service provider

Sep 18

38.0

30.9

10.1

23.9

7.8

81%

63%

Valuation of last round (Strategics)

TableUp

Restaurant supply chain software provider

Apr 18

12.0

4.3

1.4

3.6

1.2

36%

30%

Valuation of last round

Orbital Sidekick

Space-based hyperspectral imaging and analytics

Apr 18

11.7

3.9

1.3

3.5

1.1

33%

30%

Valuation of last round (third-party)

Spark Insights

Property insurance analytics

Apr 19

3.2

2.3

0.7

1.9

0.6

71%

60%

Valuation of last round

SciFluor

Developer of a topical eye droplet treatment

Nov 19

130.7

-

-

-

-

63%

54%

Written down to zero

Special dividend (HawkEye 360)

Payable post year-end on 14 February 2020

40.0

12.6

40.0

12.6

Portfolio fair value (year end)

 

247.4

80.1

209.0

67.7

 

 

 

Net cash at parent company (year end)

84.1

27.4

84.1

27.4

Post year-end adjustments

Investments (post period end)

(9.2)

(3.0)

(9.2)

(3.0)

Special dividend

(40.0)

(12.6)

(40.0)

(12.6)

Cash burn

(3.0)

(1.0)

(3.0)

(1.0)

Parent net cash (latest)

31.9

10.8

31.9

10.8

Estimated NAV (latest)

 

279.3

90.9

240.8

78.4

 

Estimated NAV (pence per share)

90.9

78.4

Latest share price

34.1

34.1

Share price discount to estimated NAV

62%

56%

Source: Allied Minds data, Edison Investment Research. Note: *As at 31 December 2019. **As at 4 June 2020.

By way of commentary on Exhibit 2, our fair value estimate includes valuations on both an undiluted and fully diluted basis; the realisation value of any asset is likely to fall between these two values.

The FY19 net cash position includes the special dividend of 12.62p ($40m in total) paid in February 2020 from the sale proceeds of HawkEye 360. To the $84.1m parent cash figure, we have then deducted: 1) the $40m special dividend; 2) post year-end investments including $2.0m in convertible notes in BridgeComm, $0.375m in convertible notes in SciFluor and $6.85m in the Federated Wireless extension round; and 3) an allowance for central costs of $3m (at a rate slightly above the $0.5m per month targeted to allow for one-off costs).

This leads to our NAV estimate of 90.9p per share (undiluted) or 78.4p per share (fully diluted), based on historical portfolio company fair values, none of which have been updated subsequent to their last major funding rounds despite continuing positive newsflow.

Valuation: 56–62% discount to robust NAV

As a technology holding company with a narrow portfolio, Allied Minds offers exposure to a concentrated number of emerging technology businesses.

Allied Minds paid a special dividend of 12.62p in Q120 ($40m in total) from the sale of HawkEye 360. This material cash exit helps to validate the investment model and together with the group’s focus on cash preservation and reduction in operating costs, we believe it provides a solid platform for robust NAV progress over time.

With our estimated NAV of 90.9p per share (undiluted) or 78.4p per share (fully diluted) (Exhibit 2), the implied 56–62% discount to NAV does not reflect the prospects of the group’s streamlined portfolio.

For reference, we also include Allied Minds’ peer group NAV discounts below in Exhibit 3.

Exhibit 3: Peer group comparison

 

Price
(p)

Market cap (£m)

NAV (£m)
(last reported)

Cash
(£m)

NAV
premium/
discount (x)

NAV per share (p)

Allied Minds

34.1

82.0

191

25

0.44

78.4

Augmentum FinTech

105.0

121.2

131

29

0.92

112.2

Draper Esprit

510.0

606.5

666

79

0.91

560.0

HgCapital

235.0

958.6

963

100

1.00

236.0

IP Group

68.0

722.4

1,172

71

0.62

110.6

Mercia Asset Management

20.0

88.0

135

33

0.65

30.6

Oakley Capital

200.0

391.2

686

160

0.57

345.0

Source: Refinitiv data; Edison Investment Research. Note: Priced at 8 June 2020.

Exhibit 4: Financial summary

$'000

2015

2016

2017

2018

2019

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

3,300

2,664

5,001

5,561

2,692

Cost of Sales

(3,925)

(5,563)

(5,242)

(2,827)

(1,433)

Gross Profit

(625)

(2,899)

(241)

2,734

1,259

Normalised operating profit

 

 

(89,372)

(103,925)

(94,542)

(83,583)

(49,997)

Amortisation of acquired intangibles

0

0

0

0

0

Exceptionals

(309)

(1,365)

(2,363)

(545)

(671)

Share-based payments

(7,041)

(8,385)

(7,562)

(7,413)

1,465

Reported operating profit

(96,722)

(113,675)

(104,467)

(91,541)

(49,203)

Net Interest

670

2,318

305

1,313

741

Joint ventures & associates (post tax)

0

0

0

(3,658)

(28,850)

Fair value changes

(1,937)

(17,585)

(6,953)

139,240

127,566

Profit Before Tax (norm)

 

 

(90,639)

(119,192)

(101,190)

53,312

49,460

Profit Before Tax (reported)

 

 

(97,989)

(128,942)

(111,115)

45,354

50,254

Reported tax

0

0

0

0

0

Profit After Tax (norm)

(90,639)

(119,192)

(101,190)

53,312

49,460

Profit After Tax (reported)

(97,989)

(128,942)

(111,115)

45,354

50,254

Minority interests

20,192

32,609

35,337

(7,999)

1,081

Discontinued operations

0

0

0

0

0

Net income (normalised)

(70,447)

(86,583)

(65,853)

45,313

50,541

Net income (reported)

(77,797)

(96,333)

(75,778)

37,355

51,335

Basic average number of shares outstanding (m)

215

217

236

240

241

EPS - basic normalised ($)

 

 

(0.33)

(0.40)

(0.28)

0.19

0.21

EPS - diluted normalised ($)

 

 

(0.33)

(0.40)

(0.28)

0.19

0.21

EPS - basic reported ($)

 

 

(0.36)

(0.44)

(0.32)

0.16

0.21

Dividend ($)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

(57.2)

(19.3)

87.7

11.2

(51.6)

Gross Margin (%)

-18.9

-108.8

-4.8

49.2

46.8

Normalised Operating Margin

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

92,784

38,232

28,369

83,739

72,695

Intangible Assets

4,384

2,762

1,074

1,221

197

Tangible Assets

34,173

31,882

26,627

5,997

1,485

Right of use assets

0

0

0

0

1,016

Investments & other

54,227

3,588

668

76,521

69,997

Current Assets

 

 

158,427

232,007

184,792

107,034

97,854

Stocks

1,511

2,551

0

0

0

Debtors

7,342

5,900

15,642

6,400

5,702

Cash & cash equivalents

105,555

209,151

158,075

100,234

90,571

Cash at parent*

 

 

N/A

136,700

84,200

50,600

84,100

Other

44,019

14,405

11,075

400

1,581

Current Liabilities

 

 

(108,974)

(155,402)

(200,202)

(69,557)

(13,159)

Creditors

(14,268)

(13,941)

(14,276)

(13,030)

(4,685)

Tax and social security

(395)

(458)

(4,296)

(2,333)

(3,457)

Short term borrowings

(228)

(115)

0

0

0

Subsidiary preferred shares

(94,083)

(140,888)

(181,630)

(54,194)

(5,017)

Long Term Liabilities

 

 

(863)

(720)

(867)

(436)

(4,819)

Long term borrowings

(112)

0

0

0

0

Lease liabilities

0

0

0

0

(2,854)

Other long-term liabilities

(751)

(720)

(867)

(436)

(1,965)

Net Assets

 

 

141,374

114,117

12,092

120,780

152,571

Minority interests

10,631

20,797

59,241

(18,484)

(115)

Shareholders' equity

 

 

152,005

134,914

71,333

102,296

152,456

CASH FLOW

Op Cash Flow before WC and tax

(85,286)

(97,290)

(88,440)

(77,525)

(47,173)

Working capital

2,652

468

(2,477)

6,033

506

Exceptional & other

0

0

0

(1,261)

267

Tax

0

0

0

0

0

Net operating cash flow

 

 

(82,634)

(96,822)

(90,917)

(72,753)

(46,400)

Capex

(23,213)

(4,087)

(1,522)

(9,110)

(3,675)

Acquisitions/disposals

(51,786)

74,816

5,853

(18,884)

25,180

Net interest

716

1,602

138

1,313

741

Payment of lease liability

0

0

0

0

(1,540)

Equity financing

2,443

79,319

1,595

1,594

(10,069)

Dividends

0

0

0

0

0

Other

36,165

48,993

33,892

39,438

25,292

Net Cash Flow

(118,309)

103,821

(50,961)

(58,402)

(10,471)

Opening net debt/(cash)

 

 

(223,524)

(105,215)

(209,036)

(158,075)

(100,234)

FX

0

0

0

561

808

Other non-cash movements

0

0

0

0

0

Closing net debt/(cash)

 

 

(105,215)

(209,036)

(158,075)

(100,234)

(90,571)

Source: Company accounts. Note: *For clarity, cash at parent has been broken out as a separate line from cash & cash equivalents. As a line item, it does not form part of the calculation for current assets.

General disclaimer and copyright

This report has been commissioned by Allied Minds and prepared and issued by Edison, in consideration of a fee payable by Allied Minds. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Allied Minds and prepared and issued by Edison, in consideration of a fee payable by Allied Minds. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in