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The unconditional grant of options is pretty bad form. There should be vesting conditions over a number of years, EPS targets, TSR etc… these are used as incentive to stay and perform, not just to stay. I can see why this annoyed BOO as it annoys me as a shareholder.
More concerning is the potential re-suspension, concerns of key customers and banking covenants. It could just be smoke and mirrors from the Board but it’s is worrying nonetheless.
I think everyone will be dumping this today sadly, except BOO!
We’ll see in a few minutes :(
The big worry is this quote "the fact that the Company had, prior to the meeting, received notice from certain key customers of the Group that they would not be prepared to continue doing business with the Group during the current uncertainty"
IMHO this will now tank on readmission. No one is gong to buy with this uncertainty, it doesn't matter what the underlying metrics are, the market moves on sentiment more than fact and nothing drives negative sentiment more than uncertainty. I say this as a six figure holder.
I doubt this will trade again before the final results for FY23 are published. Think about it - they are due in 12 weeks time, why would the exchange risk readmitting REVB in a few weeks only to have to boot them off again when BDO miss the deadline? it goes against their own credibility, not helped by the continuous missing of expectations on publishing dates over the last few months.
I speak as a sizeable (six figure) holder here, but the results and outlook are a major disappointment. This is no longer a high growth business. The comparisons made to ELF market cap have no meaning as you cannot compare a London AIM listed business to a US listed one. The better comparison was to Warpaint - but these results make it clear that they are a MUCH better business.
Let's do the analysis:
REVB Sales Growth EBITDA EBITDA Margin Assumptions
FY22A 184.6 35% (0.8) - [Actuals]
FY23O 188.3 2% (0.1) - Low single digit growth, slight loss
FY24O 203.4 8% 8.0 4% High single digit growth, high single digit EBITDA
W7L Sales Growth EBITDA EBITDA Margin Assumptions
FY21A 50.0 24% 7.7 15% [Actuals]
FY22A 64.1 28% 11.9 19% [Actuals]
FY23O 89.7 40% 16.7 20% Q1 growth rate ontinues, margin improvements
For the current year outlook, Warpaint has 5x the growth rate of REVB and 5x the EBITDA margin. It is a far better and morei investible business by the two key qualifications.
Warpaints market cap is £186m, its valued over 10x forward EBITDA as a high growth business.
REVB forward EBITDA is circa £8m ("high single digits") and it would not achieve a 10x forward EBITDA high growth business multiple with single digit sales growth rates. This makes, unfortunately, the current market cap look about right... there will likely be no multi baggers here I'm afraid.
Of mounting concern is also the FY 23 accounts. If these aren’t published by the end of August, they risk suspension again. If they haven’t yet published the FY 22 accounts, that’s only leaving a three-month window to get the next ones out, which is about average for a plc audit… but this is BDO and REVB
Be careful with your maths. Allied referring to a VC like return would relate to their own investment in Federated. From what I can see, they have invested around $25m in total, thus a 3x return would be $75m which is more or less what their stake was worth at the last investment round.
So they could quite easily claim "VC like returns" by simply exiting Federated in full at the same price as the last round - which would net about 24p per share of ALM.
If the rest of the portfolio is worthless (Federated and Spin were the two big plays and now Spin has spun down the toilet) then the current share price is reflective of NAV.
Indeed... and value based investors (like Berkshire Hathaway's famous founder) have long proved that they can significantly outperform the market by buying stocks at less than their intrinsic value and holding them long term.
The gamblers should go and back another horse. The sensible and educated investors will believe there is significant long term value here but that value will only come through sales of the subsidiary companies. Not through the annual reports of the parent company. Neither from the six monthly report in June.
When someone comes sniffing around Federated or Spin comes out of stealth mode and shows it's true value, this will come good. Not before. This is definitely not one for day/week traders. Buy a lottery ticket instead.
Have done the homework for you guys. Updated NAV is 66p.
Cash: $31.5m ($90.6m - $40m dividend - $16.1m further investments - $3m head office costs) = 10p / share
Federated Wireless = 26p / share
Bridgesat = 8p / share
Spin Memory = 19p / share
Orbital Sidekick = 1p / share
Spark Insights = 1p / share
Table Up = 1p / share
All based on current declared diluted holdings, post money valuations from last round, todays exchange rate and total issued share capital of Allied Minds.
The last three companies are worthless (but only 3p of NAV) as they were founded by the desperate board a couple years ago trying to make it look like they were still an investment vehicle.
In my mind it's now Spin Memory that is the gem. Federated has enough information out there to have been valued reasonably fairly at the last round ($215m), but Spin memory is effectively in stealth mode, especially the mention of a contract with a "US government project as subcontractor to a leading US semiconductor company.". The company has not raised any money since 2018, is partnered with ARM and getting US govt contracts.....
No.
$90.6m cash at 31/12/2019
$40m returned to shareholders Feb 2020
$16.1m invested post period end
= net cash now of $34.5m, less 6m of head office costs
Cash should be around $50-55m right now, or about 21-22c / share. At today’s exchange rate that’s 18-19p/share so the market is valuing this just over cash, or to out it another way it’s enterprise value is next to nothing.
One way to look at it is that for a company with illiquid and mainly speculatively valued assets based on unproven future potential, this make sense.
Another is that for a few pence per share over cash, there are a few companies in the portfolio that make this an absolute bargain, but don’t expect any realisation or readjustment any time soon. This will be a long burn to realise true value with a fair amount of risk along the way.
Do your research, make your choice..!
This is an easy one : a quick search of Allied Minds RNS feed shows Federated Wireless last raised capital less than six months ago in September 19 at a post-money valuation of $201m
Only a small part of it (based on what has been declared so far). Shareholding increased (relatively) by 6% but dividend to share price ratio on the day of payment was more like 36%. So 1/6th reinvested so far.
Perhaps there is more to come or perhaps they decided to bank the majority of it.
Research. Just read through all the RNS, it's all there in black and white.
Cash at 30th June (RNS H1 results) : $56.8m
Investment in Hawkeye360 Series C August 2019 (RNS) : -$10m
Investment in Federated Wireless Series C September 2019 (RNS) : -$10m
Sale of Hawkeye 360 (RNS) : +$65.6m
Phantom Plan payout (Crystal Amber requisition) : -$4.9m
Special Dividend (RNS) : -$40m
6 months of running costs (estimated) : -$4m
Net cash : somewhere around $53.5m assuming no other undeclared expenditures/investments
Current share capital (RNS) : 241,568,306
= Cash per share estimate : 22c = 17p
A little bit of maths last night : what would a conservative NAV for ALM be at the moment?
Hawkeye 360 was cashed out at a 15% discount to the last rounds post-money valuation, which is not bad for a investor exit prior to an overall exit (i.e. prior to an IPO or full trade sale).
So what if the same was applied to the three remaining companies that are generating revenue and have been partly validated by third party investors?
Federated Wireless - last post money valuation = 23p/share * 85% = 20p/share
BridgeSat- last post money valuation = 7.6p/share * 85% = 5.7p/share
Spin Memory - last post money valuation = 18.4p/share * 85% = 15.6p/share
Current cash at hand = 15-17p/share (estimated)
Total : 56-58p / share
This assumes:
All the other companies are effectively worthless (probably true)
Federated valuation has not increased since last round and commercial rollout (probably not true)
Management do not burn through remaining cash making more rubbish early stage investments (hopefully not with CRS non-exec on board)
So even at a conservative valuation there would appear to be a large upside to current market price.
Edison do not have insider knowledge. They will just be basing it on last years timetable.
I would be very happy to see a trading udpate (especially given recent news with Federated Wireless) but I don't think anyone should make an investment decision based upon the likelihood of it:
2019 - Trading Statement in February
2018 - Trading Statement in May
2017 - No Trading Statement
2016 - Trading Statement in February
2015 - No Trading Statement
As you can see it's hardly a pattern
Federated wireless last post-money valuation (validated by new investors other than ALM) : $201m = 23p / share
Bridgesat last post-money valuation (validated by new investors other than ALM) : $31m = 8p / share
Cash Balance post Hawkeye sale and less investments / payouts = approx $52m = 17p / share
This all from publicly available information. NAV total on that = 48p / share
Then you have spin memor (validated by new investors other than ALM) for which they haven't cleanly disclosed pre/post money valuation but is likely in the order of federated wireless = estimate 20p / share
Then you have all the other companies, which aren't 3rd party validated = estimate 2p / share
For a NAV of 70p / share with 1/3 in cash and 2/3 validated by institutional investors, I am very happy to hold and keep buying more.
This is a MEDIUM to LONG play but will almost certainly come good. Hyping up or down short term on bulletin boards to try and make a quick buck on a purchase / short is pointless.
Probably just because there was one this time last year which is a weak baseline. ALM has no history of releasing trading updates at regular intervals.