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Allied Minds halts new investments

Slow progress with the investment group's life sciences holdings has intensified the cash burn
April 26, 2019

What is the point of an intellectual property investor that cannot invest? Shareholders in Allied Minds (ALM) may have asked themselves that question following publication of full-year results, which unveiled a new strategy to cease all investments in new companies.

IC TIP: Hold at 63p

Management has little option but to hunker down. Total cash, including equivalents and bank balances held at subsidiaries, fell 42 per cent in the year, and the group again warned that its financial viability until the end of 2021 is contingent on co-investors’ participation in follow-on portfolio company financings, as well as profitable disposals.

Indeed, the focus is now largely on monetising and financing existing holdings, while reducing annual central operating expenses to between $5m (£3.9m) and $6m. Key shareholders have apparently offered their support for these measures, but will no doubt want further signs of external validation for Allied’s investments – building upon successful funding rounds for portfolio companies HawkEye 360, BridgeSat and Spin Memory in the second half of 2018.

Numis has lowered its forecast net asset value forecast to 119¢ a share by the end of 2019, by which point it expects net cash at the parent level to have fallen to $36.6m.

ALLIED MINDS (ALM)   
ORD PRICE:63pMARKET VALUE:£152m
TOUCH:60.1-63.812-MONTH HIGH:131pLOW: 37p
DIVIDEND YIELD:nilPE RATIO:5
NET ASSET VALUE:51.2¢NET CASH:$97.7m
Year to 31 DecTurnover ($m)   Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20147.7-58-24.0nil
20153.3-98-36.0nil
20162.7-129-44.0nil
20175.0-111-32.0nil
20185.646.816.0nil
% change+11
Ex-div:na   
Payment:na   
£1=$1.29