ALLIED MINDS PLC
ANNUAL REPORT AND ACCOUNTS
For the year ended 31 December 2021
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Contents
Overview
Chairman’s Report
Strategic Report
Highlights
Company Overview
Portfolio Review and Developments
Key Performance Indicators
Financial Review
Risk Management
Management and Governance
The Board
Directors’ Report
Corporate Governance Report
Sustainability
Directors’ Remuneration Report
Audit Committee Report
Financial Statements
Independent Auditor’s Report
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Company Balance Sheet
Notes to the Financial Statements
Company Information
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Overview
Allied Minds plc (Allied Minds or the Group) is an IP commercialisation company primarily focused on early
stage company development within the technology sector.
It has historically invested in companies at an early stage, including seed investments to build companies
based on a technical breakthrough or invention. As such, investments have significant upside potential,
but also carry significant risk inherent in the early stage model.
The Group is currently comprised of six portfolio companies based upon a broad range of underlying
innovative technologies ranging from wireless connectivity to space-based imagery and analytics.
The ability of the Group’s portfolio companies to raise funds and continue achieving important technical
and commercial milestones while building upon key partnership relationships is a key strength. The Group
continues to progress as it works to execute on growing the value of its portfolio company interests for
its shareholders.
For some time, the Board has been reviewing the range of strategic options available to it in order to
return value to shareholders. Following the successful first close of the Series D fundraising by Federated
Wireless announced in February 2022, the Board subsequently announced in March 2022, its intention to
undertake a formal review of the Company's strategic options (the “Strategic Review”) including, but not
limited to, a sale of the Company itself, which the Board intends to conduct under the framework of a
“Formal Sale Process" in accordance with Rules 2.4 and 2.6 of the Takeover Code. alternatively, to seek to
distribute certain assets and any cash reserves directly back to shareholders through a re-structure. The
Strategic Review is solely aimed at creating and/or realising shareholder value.
Subject to conclusion of the Strategic Review, the Board will continue to aim to monetise the Group’s
ownership positions at the appropriate time, recognising the value and benefit in achieving well-timed
risk-adjusted returns for the benefit of shareholders. Upon the event of successful monetisation events
from the sale of portfolio companies or portfolio company interests, Allied Minds anticipates distributing
the net proceeds to its shareholders, after due consideration of potential follow-on investment
opportunities within the existing portfolio and working capital requirements.
The Board aims to ensure that the Group is being managed in as cost efficient manner as possible,
regularly reviewing the on going costs associated with being a listed company. The Board notes that the
costs of maintaining a premium listing on the London Stock Exchange are prohibitive for a company of
Allied Minds’ current size and maintaining a public listing is expensive with more than 50 per cent of the
Company’s annual budget devoted to meeting the requirements of being a listed company.
That said, the Directors believe the Group’s cash balance is sufficient to continue to support Allied Minds'
operations and portfolio companies in accordance with its current strategy.
3
Chairman’s Report
This is my last Chairman’s letter to you having taken the decision to stand down from the Board upon
signing off these accounts.
Following this decision and conscious of the recent board changes, there is a need to appoint additional
directors to the board of the Company. The Directors are working closely with the Company’s largest
shareholders to identify and recruit new directors to the board of the Company.
Allied Minds has an unusual Board structure, having been comprised solely of Non-Executive Directors,
with each portfolio company having its own Board of Directors. The Non-Executive Directors of Allied
Minds serve on the Boards or have observer status on each active portfolio company. This has enabled
us to work in a cost-efficient manner while utilising the skills of the Allied Minds directors.
Over my time as Chairman I, and my Board colleagues, have reviewed the portfolio of investments we
inherited and took the appropriate tough decisions to ensure we maximise those investments with the
most perceived value and move them towards monetisation.
As at the start of 2021, all the portfolio companies Allied Minds was invested in were essentially pre or at
the early stages of generating revenue, and a number of them faced substantial challenges. These
challenges resulted in us exiting or closing our investments in several companies, leaving us with six
companies which, in my and the Board’s view, have significant potential and merit support.
This restructuring of the portfolio has been challenging. In several cases hopes and expectations of the
value of our investments were out of line with reality and this has had a consequential impact on the
share price. However, this rebasing of the value of the investments, and providing clarity to all
shareholders, needed to take place, and we now have six investments which have potential. Of these our
investment in Federated Wireless is the most valuable, as demonstrated by the recent Series D upround
at a post-money valuation of $302 million.
As part of the Board’s review of its strategic options, and its frustrations with the undervaluation of the
Company on the stock market, and the costs of being a listed entity, the Board announced in March 2022
that we were undertaking a formal strategic review and sale process. This review may lead to an offer for
the Company, or a distribution of assets and cash to shareholders.
It has been my pleasure to serve as your Chairman, and I wish my successor every success.
Harry Rein
Chairman
14 June 2022
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Highlights
Investment & Financial Highlights
$68.5 million invested in portfolio companies, of which $61.8 million was raised from third-party
investment.
Cash and cash equivalents at 31 December 2021: $9.7 million (FY20: $24.5 million), of which $9.0
million is held within Allied Minds (FY20: $22.3 million).
Revenues of $1.5 million (2020: $0.5 million) mainly from non-recurring engineering (NRE) and
service contracts within Bridgecomm, reflecting the early stage nature of our portfolio companies.
Share buyback programme launched in June 2021 to buy back up to $3.0 million of the Group's
shares to redistribute excess capital for the benefit of shareholders.
o A total of 2,537,712 shares, to date, have been purchased at a cost of $0.7 million.
Selected Portfolio Company Highlights
BridgeComm (consolidated subsidiary):
o Commenced sales of its Optical Inter-Satellite Link terminals - used in programs for space
and ground applications with commercial and US Government customers.
o Launched Managed Optical Communication Array (MOCA) technology which allows for
multi-domain capabilities to share large volumes of data significantly faster with
increased security.
o Developed a proprietary, patent awarded set of technologies around point to multipoint
optical communications using MOCA technology.
o Advanced one-to-many optical wireless communications (OWC) using MOCA technology
to support Low Earth Orbit (LEO) constellations.
o Post year end, Allied Minds and AE Industrial HorizonX Venture Fund I, LP (HorizonX),
jointly contributed an aggregate of $0.8 million of convertible bridge financing to
BridgeComm, each contributing $0.4 million. The bridge financing will be applied to
support the business to the completion of a new financing round.
Federated Wireless (equity accounted investment):
o Awarded multi-million-dollar contract from the US Department of Defense as part of its
o
5G Smart Warehouse Initiative.
In November 2021, Allied Minds invested $4,283,000 in Federated as bridge financing,
which is held at fair value of $4,500,000 at 31 December 2021.
o Post year end, Federated Wireless announced two Series D fundraises for a total of $72
million, giving Federated Wireless a post money valuation of $302 million.
o Allied Minds’ bridge financing fully converted following the post year end completion of
the Series D funding rounds. As a result, Allied Minds' fully‐diluted ownership of the issued
share capital of Federated Wireless stands at 23.96%.
o Key appointments made to the company’s leadership team in 2021, including Chief
Commercial Officer and Chief Financial Officer.
o Achieved 3.8x revenue growth in 2021 and expects continued momentum through 2022
and beyond.
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OcuTerra (ordinary and preference share holding):
o Closed $35 million Series B funding from new investors and as part of the raise the
company was deconsolidated from the group financial statements.
o Proceeds will be used to fund a Phase II clinical trial of its OTT166 asset in diabetic
retinopathy, as well as for other working capital needs.
o The company is preparing for the start of the Phase 2 trial, and is building out its
managerial and clinical team.
o Now funded for the immediate future.
Orbital Sidekick (investment held at fair value):
o Closed $16 million Series A funding led by Temasek - included new investors Energy
Innovation Capital and Syndicate 708 and existing investors Allied Minds and 11.2 Capital.
o Launched most powerful satellite yet, Aurora, to collect and analyse hyperspectral data,
with a broad focus on sustainability.
o Expanded the team from 12 to 39, which is expected to reach 65 employees by the end
of 2022.
o Expanding satellite operations within existing partnerships with Phillips 66 and iPIPE to
leak prevention and monitoring for the energy sector - full
provide better
commercialisation anticipated during 2023.
o Signed a contract with one of the largest pipeline operators in North America - Energy
Transfer - to deliver recurring monitoring services from our satellites through 2023.
o Orbital has sufficient cash to fund the business until August 2022 and is in advanced talks
with potential investment firms and strategic partner groups to secure the required
funding.
Touch Bistro (investment held at fair value)
On 28 March 2022, Allied Minds announced that it had completed the disposal of its
residual shareholding in Touch Bistro for $5.5m CAD ($4.4m USD) in line with its strategy
of monetising its investment portfolio. Of the sale proceeds, $4.97m CAD has been
received and $0.53m CAD is to be held in escrow, with an initial release date in Q3 2022,
subject to any then outstanding claims.
Corporate Developments
Post-period end, Allied Minds announced in March 2022 that it will undertake a formal review of the
Company's strategic options (the “Strategic Review”) including, but are not limited to, a sale of the
Company itself, which the Board intends to conduct under the framework of a "Formal Sale Process" in
accordance with Rules 2.4 and 2.6 of the Takeover Code, alternatively, to seek to distribute certain assets
and any cash reserves directly back to shareholders through a re-structure. The rationale for the strategic
review is detailed later in the strategic report on page 7. The Company also announced the resignation of
Non-Executive Directors, Mark Lerdal and the forthcoming resignation of Harry Rein. Harry Rein and Bruce
Failing, the Senior Independent Director, and the Company's largest shareholders are working to ensure
an orderly transition to any new Independent Directors.
Company Overview
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Overview
Allied Minds is an IP commercialisation company primarily focused on early stage company development
within the technology sector.
We have historically invested in companies at an early stage, including seed investments to build
companies based on a technical breakthrough or invention. As such, our investments have significant
upside potential, but also carry significant risk inherent in the early stage model.
The Group is currently comprised of six portfolio companies based upon a broad range of underlying
innovative technologies ranging from wireless connectivity to space-based imagery and analytics.
The Group remains focused to execute its plan to maximise the value of its portfolio company interests
and deliver well-timed, risk-adjusted returns for its shareholders.
Model
As a manager of a technology-focused portfolio in which we hold significant ownership positions, we seek
to provide hands-on support over the life of our companies to support their growth, focusing on enabling
and driving commercialisation, supporting follow-on investment rounds, and positioning for superior
monetisation opportunities.
We seek to play an active role in developing the strategic direction of our portfolio companies and driving
ongoing planning and assessment. Our Non-Executive Directors serve on the boards of directors of our
portfolio companies, working with them to develop and implement strategic, operating and funding plans.
We evaluate on an on-going basis the progress and potential of each of the portfolio company’s
businesses, and make strategic and funding decisions based on the regular review of operational and
financial performance and the achievement of key milestones. Together with our management, the
respective portfolio company boards of directors define the critical milestones, or inflection points, for
each portfolio company and measure tangible progress towards commercialisation and the key factors
for a successful monetisation event.
Where appropriate, we seek to include partners who validate the market opportunity and can provide
support and/or commercial commitments to accelerate, expand and/or de-risk the path to
commercialisation. Co-investors in later rounds include financial, strategic and commercial partners.
Strategy
Allied Minds is focused on supporting its existing portfolio companies and maximising monetisation
opportunities for portfolio company interests. For some time, the Board has been reviewing the range of
strategic options available to it in order to return value to shareholders. The Board resolved, in March
2022, to undertake a formal review of the Company's strategic options (the “Strategic Review”) including,
but not limited to, a sale of the Company itself, which the Board intends to conduct under the framework
of a “Formal Sale Process" in accordance with Rules 2.4 and 2.6 of the Takeover Code, alternatively, to
seek to distribute certain assets and any cash reserves directly back to shareholders through a re-
structure. The Strategic Review is solely aimed at creating and/or realising shareholder value.
Subject to conclusion of the Strategic Review, the Board will continue to aim to monetise the Group’s
ownership positions at the appropriate time, recognising the value and benefit in achieving well-timed
7
risk-adjusted returns for the benefit of shareholders. Upon the event of successful monetisation events
from the sale of portfolio companies or portfolio company interests, Allied Minds anticipates distributing
the net proceeds to its shareholders, after due consideration of potential follow-on investment
opportunities within the existing portfolio and working capital requirements.
The value of Allied Minds is dependent upon the value of our existing portfolio companies and our ability
to translate that value into cash as effectively and efficiently as possible and to deliver that cash, net of
our obligations and operating cash needs, to our shareholders.
The Board aims to ensure that the Group is being managed in as cost efficient manner as possible,
regularly reviewing the on going costs associated with being a listed company. The Board notes that the
costs of maintaining a premium listing on the London Stock Exchange are prohibitive for a company of
Allied Minds’ current size and maintaining a public listing is expensive with more than 50 per cent of the
Company’s annual budget devoted to meeting the requirements of being a listed company.
Outlook
There was substantial technical and commercial progress from within some portfolio companies during
2021 and post period, including successful funding rounds, development milestones, contract wins and
industry partnerships. The milestones achieved demonstrate examples of solving difficult technical
problems, developing innovative products and services across a range of large potential markets,
establishing important partnerships to develop technology and go to market channels, and the creation
of shareholder value.
The Board of Allied Minds continually assesses its portfolio of investments and with a member of the
Board sitting on or leading the boards of all our material investments, the Board can ensure it is optimally
placed to take timely decisions based on up to date information. This will not be impacted by the
departure of Harry Rein as Chairman and a process is currently underway to ensure the appropriate
number of non-executive directors serve on the board.
This approach has ensured that decisive actions are taken, even if these are sometimes difficult such as
the decision to liquidate Spin Memory, and sell Spark Insights.
Although the remaining portfolio companies are mostly at a relatively early stage in their lifecycle, the
Board is positive about their prospects upon exit if the portfolio companies continue to meet their planned
technical and commercial goals.
Portfolio Company Valuation
Of the Company’s six active portfolio companies, one is currently majority owned and controlled, and
therefore fully consolidated in the Company’s consolidated financial statements prepared in accordance
with UK adopted International Accounting Standards.
Of the remaining five portfolio companies, the Company holds a significant minority stake in three of these
companies and small positions in both TouchBistro, Inc. (as a result of the stock-for-stock sale of TableUp,
Inc.) and Concirrus (as a result of the stock-for-stock sale of Spark Insights, Inc.). In each case, where Allied
Minds holds a significant minority stake, it is able to exercise significant influence over the portfolio
company by virtue of its large, albeit minority, ownership stake in the portfolio company and its
representation on the board of directors. The investment in preferred stock in these portfolio companies
8
is accounted for under IFRS 9 and is classified by the Company as an investment at fair value in the
Company’s consolidated financial statements. Due to the equity-like characteristics of the Company’s
common stockholdings in Federated Wireless, this investment is accounted for under IAS 28 and is
classified by the Company as investments in associates. Accordingly, since Allied Minds has significant
influence over this entity through the voting rights/potential voting rights held, it gives access to the
returns associated with an ownership interest in this associate. For Ordinary stock holdings, where the
group does not have significant influence, these investments are held at fair value in the Company’s
consolidated financial statements.
Allied Minds provides qualitative and quantitative disclosure in relation to the commercial and financial
progress of its portfolio companies, and directional commentary on valuation. In addition, where
commercially possible, Allied Minds provides, for each portfolio company: (i) the date of the last equity
funding round, (ii) the post-money valuation of such round, (iii) the named key co-investors in such round,
and (iv) the Company’s issued and outstanding ownership, and fully-diluted ownership, of such portfolio
company.
This information is set forth in the Portfolio Review and Developments section below. The ownership
interests are as of 03 May 2022. The fully-diluted percentages take into account outstanding stock options
granted to employees, directors and advisors, current stock options available for grant pursuant to the
company’s stock option plan, and outstanding warrants to purchase common and preferred stock.
The post-money valuations disclosed for each entity below do not represent IFRS 13 fair values but rather,
are based on the pre-money valuation set by the investors in the latest financing round plus the total
money raised in that round.
There can be no guarantee that the aforementioned post-money valuations of the portfolio companies
will be considered to be correct in light of the future performance of the various companies, or that the
Company would be able to realise proceeds in the amount of such valuations, or at all, in the event of a
sale by it of any of its portfolio companies or its ownership interest in such portfolio companies.
Portfolio Review and Developments
----------
1) BridgeComm Inc. (BridgeComm) (consolidated subsidiary)
BridgeComm is developing high-speed optical wireless communications to provide fast, secure,
enterprise-grade broadband service for space, terrestrial and 5G connectivity. Interest in the optical
communications market is growing with commercial space opportunities and government programs
looking for the unique characteristics of high speed and security.
BridgeComm has developed a proprietary, patent awarded set of technologies around point to multipoint
optical communications using Managed Optical Communication Array (MOCA) technology. This means
BrideComm can truly complement legacy Radio Frequency (RF) technology.
BrideComm has
demonstrated this capability to customers and is now developing terminals for specific applications. Key
partners include Space Micro for production of point to multipoint terminals based on MOCA technology
and Boeing that has supported BridgeComm and partnered on key applications.
9
The conflict in the Ukraine has highlighted the value of Bridgecomm’s point to multi point technology.
BridgeComm’s one-to-many high-speed optical communications technology allows for dispersed
communications which are difficult to detect and/or intercept. Current battlefield communications tend
to use a single point of distribution with the risk of a single point of failure. BridgeComm’s one-to-many
communications enables a mesh network, eliminating this point of failure. The goal is to install 1000’s of
satellites with BridgeComm’s non mechanical software driven optical communications system. This
would allow dispersed battlefield control from space. In addition it is hoped that BridgeComm’s
technology will provide the optical intersatellite communications capability of choice for all proliferated
low earth orbit constellations.
BridgeComm will require up to $5mm additional capital to deliver an existing contract with The Space
Development Agency, the objective of which is to prove MOCA technology over longer distances.
BridgeComm is currently in partnering discussions with Aeroequity Industrial partners to provide
additional funding and US government sourcing expertise. In addition, for BridgeComm to succeed as a
US government vendor, it will need to be a US based company. Because AEI brings technical and
government knowledge, it is planed that Allied Minds will be a large minority shareholder post transaction
which is expected to be a down round to the last valuation.
Holdings and valuation:
Date of Last Funding Round: September 2018
Post-Money Valuation: $38.0 million
Co-Investors: Boeing HorizonX Ventures (venture arm of Boeing Company)
Allied Minds’ Issued and Outstanding Ownership: 81.15%
Allied Minds’ Fully-Diluted Ownership: 62.92%
2) Federated Wireless Inc. (Federated) (equity accounted investment)
Founded in 2012, Federated is the market leader in Citizen Band Radio Service (CBRS) shared spectrum.
Shared spectrum, also known as CBRS, is an innovative technology that delivers the best attributes of
traditional wireless and Wi-Fi, with lower fixed cost, higher quality, and greater efficiency and scale.
As the first to market with a Spectrum Access System (“SAS”), Federated Wireless is the nationwide leader
in enabling, commercializing, and driving adoption of shared spectrum. With more than 350 customers
and over 90,000 connected devices across the United States and territories, the company serves a
customer base spanning defense, government, manufacturing, telecommunications, utilities, real estate,
and education, with a wide range of use cases ranging from network densification and mobile offload to
private wireless and industrial IoT. Noteworthy customers include Charter, Comcast, Verizon, the US
Department of Defense and Carnegie Mellon University.
The company has driven several significant advancements in 2021. These include the launch of the
secondary CBRS spectrum market via its Spectrum Exchange; significant deployments of a dedicated CBRS
network for IoT research at Fort Carson, CO, and another for modernization of the Marine Corps Logistics
Command warehouse operations in Albany, GA; along with deployment of the first CBRS networks in
Puerto Rico and the U.S Virgin Islands, delivering service to the region’s Wireless Internet Service Providers
(WISPs) and Mobile Network Operators (MNOs). The last year has seen its customer and partner base
10
expand rapidly into new verticals and the number of active CBRS devices grow significantly. As of the
publication of this report, the company has more than 350 customers, with more than 90,000 devices
deployed, which together indicate strong momentum for the entire market segment.
Accelerating private 5G wireless for enterprise
Federated Wireless is powering innovation in how networks are delivered and reshaping wireless
connectivity for cloud-enabled technologies. The company is focused on accelerating enterprise adoption
of private wireless networking and delivering new capabilities for network edge innovation. Its goal is to
simplify and automate how wireless networks are purchased, deployed, provisioned, and managed,
making it easier for organizations to customize their network to business requirements, and speed time
to market with advancements in IoT, VR/AR, and other digital technologies.
Critical to the Federated Wireless strategy is expanding its edge solutions, which it will achieve through
collaboration with hyperscale providers that have been growing and strengthening over the past two
years, including AWS, Intel, HPE-Aruba, JMA, Cisco, and others. The company’s top priorities include:
Investing in cloud-native tools to empower edge innovation, including automation, application
analytics, and zero touch provisioning (ZTP);
Mobilizing the ecosystem with a heightened focus on relationship management, business
development, and sales enablement;
Expanding product capabilities for sharing in 6 Ghz and promoting its adoption domestically and
internationally; and,
Ramping up commercial capacity with increased investment in Sales, Marketing, and Customer
Success.
Investing in growth
In addition to significant investments in product development, Federated Wireless made key
appointments to the company’s leadership team in 2021, including:
Industry veteran Chris Swan joined as Chief Commercial Officer to focus on delivering the very
significant growth opportunity for the business with leadership over sales, marketing, and
customer care.
Strategic operations and finance executive Loren Buck joins as Chief Financial Officer.
Financially, Federated Wireless saw 3.8x revenue growth in 2021 and expects continued momentum
through 2022 and beyond.
Subsequent to year end, Federated Wireless raised $72 million through a two stage Series D funding to
fuel growth in 5G private wireless and other strategic focuses. An affiliate of Cerberus Capital
Management, L.P. led the round, with affiliates of Fortress Investment Group, Giantleap Capital, and
LightShed Ventures added as new investors with existing investors Allied Minds and GIC, Singapore’s
sovereign wealth fund, also participating.
Holdings and valuation:
11
Date of Last Funding Round: May 2022
Post-Money Valuation: $302 million
Co-Investors: Cerberus Capital Management LLP and GIC (Singapore’s sovereign wealth fund)
Allied Minds’ Fully-Diluted Ownership: 23.96%
3) OcuTerra Therapeutics, Inc. (ordinary and preference share holding)
OcuTerra is a clinical stage ophthalmology company developing innovative small molecule drugs for non-
invasive use in treating ophthalmologic diseases that are currently treated in the early stages with a
“watch and wait” protocol. The company has announced a Series B financing of $35m that will be used
to fund a Phase 2 trial starting in Q3 2022 of its non-invasive eyedrops (OTT166) for use in early active
management of Diabetic Retinopathy. It will be studied in the trial for the treatment of moderate to
severe non-proliferative and mild proliferative Diabetic Retinopathy. Diabetic Retinopathy is a disease
that results in loss of vision for diabetic patients.
Phase 1b clinical trials of OTT166 eye drops in patients with diabetic retinopathy and wet AMD have
demonstrated safety, tolerability and clear clinical evidence of biological activity. OTT166 is a novel small
molecule selective integrin inhibitor that has been engineered to have the required physiochemical
characteristics to be able to reach the retina , where the damage occurs, from eye drop application. The
current standard of care involves injections into the eye and/or laser treatment. The OcuTerra drops are
intended to be used earlier in the treatment of Retinopathy, potentially delaying or eliminating the need
for intravitreal injections. If the Phase 2 trial is successful, the next step would be a Phase 3 trial involving
more patients and if successful in meeting the clinical end points application to the FDA for approval.
The company believes that it is well positioned to transform the treatment of Diabetic Retinopathy.
Currently the company is preparing for the start of the Phase 2 trial, and is building out its managerial and
clinical team.
Allied Minds is a minority shareholder in OcuTerra and as such there is no current intention to invest any
further capital in the company.
Holdings and valuation:
Date of Last Funding Round: November 2021
Valuation: $51.3 million
Co-Investors: Various third parties
Allied Minds’ Issued and Outstanding Ownership: 17.06%
Allied Minds’ Fully-Diluted Ownership: 12.33%
4) Orbital Sidekick Inc. (Orbital) (investment held at fair value)
Orbital has developed a proprietary analytics platform based upon its hyperspectral technology that
allows it to take a proprietary “chemical fingerprint” from space. Initially, Orbital is addressing the very
current and large concerns about the environment by focusing on potential energy pipeline failures. By
employing its space-based technology, it is able to detect and identify natural gas, oil leaks and other
failures much more rapidly than current monitoring techniques in a more cost effective way and the added
benefit of helping to minimise environmental damage.
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Orbital SideKick has grown significantly over the past 12 months, expanding the team from 12 to 39. The
Company is expected to reach 65 employees by the end of 2022. Orbital has invested heavily in product
development, engineering, and analytics, and is now growing the Sales & Marketing Team ahead of the
launch and commissioning of 6 satellite GHOSt constellation beginning in Q3 of 2022. The Company’s
technology demonstration mission - Aurora - successfully validated its hyperspectral sensor technology
performance in a space environment and served as a dress rehearsal for the GHOSt constellation. The
company has recently signed a contract with one of the largest pipeline operators in North America -
Energy Transfer - to deliver recurring monitoring services from its satellites through 2023. The Company
recently signed a significant work program contract with In-Q-Tel, and expects to expand its footprint
within the defense & intelligence community in 2022 and beyond. The Company is also developing
products for the mining and agriculture industries, along with fire fuel and carbon mapping capabilities.
Orbital has sufficient cash to fund the business until August 2022. Orbital is in advanced talks with
potential investment firms and strategic partner groups to secure the required funding. The additional
funding will allow the company to add its product to an additional six satellite launches.
Holdings and valuation:
Date of Last Funding Round: April 2021
Post-Money Valuation: $46 million
Co-Investors: Temasek, Energy Innovation Capital and 11.2 Capital
Allied Minds’ Issued and Outstanding Ownership in respect of preference shares: 26.52%
Allied Minds’ Fully-Diluted Ownership: 24.11%
5) Concirrus (acquirer of Spark Insights Inc.) (common shares in Concirrus)
On 1 November 2021, Allied Minds announced the disposal of portfolio company Spark Insights, Inc. to
Concirrus, a private UK-based insurance technology company. The disposal is valued at $700,000 USD and
was paid in Concirrus stock.
6) TouchBistro, Inc. (acquirer of TableUp, Inc.) (common shares in TouchBistro)
On 28th March 2022, Allied Minds announces that it had completed the disposal of its residual
shareholding in Touch Bistro for $5.5m CAD ($4.4m USD) in line with its strategy of monetising its
investment portfolio. Of the sale proceeds, $4.97m CAD has been received and $0.53m CAD is to be held
in escrow, with an initial release date in Q3 2022, subject to any then outstanding claims.
Key Performance Indicators
In 2020, the Company measured its performance through the percentage level of achievement of
management by objectives (MBOs). These objectives sought to link financial, operational, technical and
other performance milestones established by the Board directly to remuneration and KPIs. In 2021,
however, MBOs were removed following changes in the Company’s management structure and the
absence of Executive Directors.
The following Key Performance Indicators (KPIs) were selected to measure the performance of the
Company in 2021. These objectives seek to link financial, operational, technical and other performance
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milestones established by the Board directly to remuneration and KPIs, as further set out in the director
compensation schemes previously disclosed to the market.
1.
Increase Company Non-Executive Director (NED) engagement at each portfolio company. We
have continued to hold NED roles on the board of each of the significant portfolio investments.
2. Provide strategic, operational and financing support and assistance to the portfolio companies
through representation on the board of each portfolio company. We have continued to provide
this support to each of the portfolio companies throughout the period.
3. Critically evaluate and monitor portfolio company progress with objective of maximising
shareholder return on investment (ROI). We have critically evaluated the performance and this
has resulted in the investment portfolio changes in the period.
4. Manage HQ cash and expenses to maximise shareholder ROI, HQ expenses in the current year
were $5.69m (2020: $7.11m).
We note that as a result of the strategic changes announced by the Board on 15 January 2021, the
portfolio shall be managed by the Board, all of whom are Non-Executive Directors, on a go-forward basis.
The Board places equal importance on each of the listed KPIs.
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Financial Review
During 2021, $68.5 million was invested into existing portfolio companies. This included $6.8 million
invested by Allied Minds, with $61.7 million coming from third-party investment, to further accelerate the
development of the Group’s existing companies.
Consolidated Statement of Comprehensive Loss
For the years ended 31 December
Revenue
Cost of revenue
Selling, general and administrative expenses
Research and development expenses
Finance cost, net
Other expense
Other comprehensive loss
Total comprehensive loss
of which attributable to:
Equity holders of the parent
Non-controlling interests
2021
$ '000
2020
$ '000
1,544
(443)
(10,569)
(2,650)
(2,788)
(1,338)
(41)
(16,285)
480
(210)
(10,497)
(4,712)
(1,786)
(38,779)
(116)
(55,620)
(15,575)
(710)
(53,141)
(2,479)
Revenue increased by $1.0 million, to $1.5 million in 2021 (2020: $0.5 million). This increase is primarily
attributable to revenue from existing and new contracts in 2021 at BridgeComm. Cost of revenue at $0.4
million (2020: $0.2 million) was lower as a percentage of revenue, when compared to the prior year,
mainly due to the nature of the revenue being delivered.
Selling, general and administrative (SG&A) expenses increased by $0.1 million, to $10.6 million (2020:
$10.5 million). This increase was mainly due to additional professional fees incurred in regards to the
latest financing at OcuTerra Therapeutics in the first half of 2021.
Research and development (R&D) expenses decreased by $2.1 million, to $2.6 million (2020: $4.7 million).
The decrease was primarily due to the deconsolidation of two subsidiaries in 2021. The remainder of the
decrease reflects the net effect from R&D spend at the remaining subsidiaries.
Net finance cost increased by $1.0 million in 2021 to $2.8 million (2020: $1.8 million). The increase in the
net cost reflects the impact from the deconsolidation of OcuTerra in the first half of 2021 of $7.7 million
and $0.1 million increase of a convertible note payable due to the fair value adjustment. This increase was
offset by the $5.2 million decrease of the subsidiary preferred shares liability balance at BridgeComm as
a result of IFRS 13 fair value accounting. Lastly, interest expense, net of interest income, was $0.2 million
in 2021 (2020: $23 thousand).
Other expenses decreased to $1.3 million (2020: $38.8 million) reflecting $14.2 million of gain on
deconsolidation of OcuTerra and Spark Insights, $0.4 million of gain from Paycheck Protection Program
(PPP) loan forgiveness and $0.3 million of compensation from third parties for disposal of fixed assets,
offset by $13.9 million loss on investments held at fair value as well as the company’s share of loss of $2.3
million from its associates.
15
As a result of these factors, total comprehensive loss decreased by $39.3 million to $16.3 million (2020:
$55.6 million). Total comprehensive loss attributed to the equity holders of the Group was $15.6 million
(2020: loss of $53.1 million) and $0.7 million loss (2020: $2.5 million) was attributable to the owners of
non-controlling interests.
Consolidated Statement of Financial Position
As of 31 December
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Equity
Total liabilities and equity
2021
$ '000
2020
$ '000
35,229
20,672
55,901
44,416
32,584
77,000
213
11,033
44,655
55,901
2,246
16,468
58,286
77,000
Significant performance-impacting events and business developments reflected in the Company’s
financial position at year end include:
Non-current assets
Property and equipment decreased by $0.8 million to $0.8 million (2020: $1.6 million), reflecting
depreciation expense of $0.5 million, impairment loss of $0.5 million offset by $0.2 million in gain on
disposal of fixed assets.
Investments at fair value decreased to $33.9 million (FY20: 41.6 million). The change reflects the
recognition of a $5.7 million investment as a result of the deconsolidation of OcuTerra and $0.7 million
investment as a result of the disposal of Spark Insights. The increase was offset, in part, by a loss of $14.1
million of the fair value accounting for other investments held at fair value.
Right-of-use assets decreased to $0.4 million (2020: $0.6 million) primarily related to depreciation of $0.3
million offset by recognition of a new lease entered into by BridgeComm of $0.1 million in 2021.
Current assets
Cash and cash equivalents decreased by $14.8 million to $9.7 million (2020: $24.5 million). The decrease
is mainly attributed to $9.1 million of net cash used in operations, $18.7 million cash used in investing
activities, offset by $13.0 million cash provided by financing activities.
Trade and other receivables decreased by $0.1 million to $5.9 million (2020: $5.8 million) due to a
cumulative decrease in trade receivables and prepaid expenses of $0.1 million as a result of
deconsolidation of OcuTerra in the first half of 2021.
Other financial assets have increased by $2.8 million to $5.1 million (FY2020: $2.3 million) primarily due
to the conversion of Orbital’s convertible note of $1.5 million into preferred shares upon the closing of
the Series A funding offset by Allied Minds’ $4.3 million investment in Federated Wireless in the form of
16
SAFEs (simple agreements for equity).
Current liabilities
Subsidiary preferred shares decreased by $5.2 million to $1.3 million (2020: $6.5 million) primarily driven
by $5.2 million in IFRS 9 fair value adjustment at BridgeComm for the year.
Deferred revenue increased by $1.3 million to $4.9 million (2020: $3.6 million) primarily due to new
revenue contracts recognised at BridgeComm in 2021.
Loans decreased by $0.1 million (2020: $3.1 million) primarily due to forgiveness of PPP loans.
Non-current liabilities
Lease liabilities decreased by $1.0 million to $0.8 million (2020: $1.8 million) primarily due to lease
payments offset by issuance of a new lease at BridgeComm in second half of 2021.
Other non-current liabilities decreased by $1.4 million (2020: $1.4 million) primarily due to loan payments
of convertible promissory notes at OcuTerra Therapeutics.
Equity
Net equity decreased by $13.6 million to $44.7 million (2020: $58.3 million) reflecting the combination of
comprehensive loss for the period of $16.3 million, repurchase of ordinary shares of $0.7 million offset by
the effect of deconsolidation of OcuTerra and Spark Insights of $3.2 million and $0.2 million charge due
to equity-settled share based payments.
Consolidated Statement of Cash Flows
For the years ended 31 December
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents in the beginning of the year
Cash and cash equivalents at the end of the year
2021
$ '000
2020
$ '000
(9,060)
(18,749)
13,030
(14,779)
24,489
9,710
(17,057)
(11,341)
(37,684)
(66,082)
90,571
24,489
The Group’s net cash outflow from operating activities of $9.1 million in 2021 (2020: $17.1 million) was
primarily due to the losses for the year of $16.3 million offset by the net effect from movement
in
working capital of $1.7 million, other finance charges of $2.6 million, the adjustment for non-cash items
such as depreciation, amortisation, impairments, share of net loss of associate, gain on deconsolidation,
loss on investments held at fair value and share-based payment expenses of $2.9 million.
The Group had a net cash outflow from investing activities of $18.7 million in 2021 (2020: $11.3 million).
This outflow was predominately related to the deconsolidation of OcuTerra and Spark Insights totaling
$13.3 million, the $0.9 million investment made in the Orbital Series A funding and $4.3 million investment
made in Federated in the form of a SAFE.
17
The Group’s net cash inflow provided by financing activities of $13.0 million in 2021 (FY20: $37.7 million)
reflects, in part, proceeds from issuance of preferred shares in subsidiaries of $14.6 million and the receipt
of $0.2 million of PPP loans. The increase was offset by $1.1 million in lease payments and $0.7 million
payments to repurchase the company’s own shares.
The Group’s strategy is to maintain healthy, highly liquid cash balances that cover its operating expenses
as a publicly listed entity and are readily available for small, follow-on investments in portfolio companies
in a manner consistent with the Board’s strategy for the Company and Group. To further minimise its
exposure to risks the Group does not maintain any material borrowings or cash balances in foreign
currency.
The Directors have further considered the on-going viability of the Company for the next three years, as
required pursuant to the 2018 version of the UK Corporate Governance Code, in the Management and
Governance section of the Annual Report and Accounts at pages 26 to 27.
18
Risk Management
The execution of the Group’s strategy is subject to a number of risks and uncertainties. The Board has
adopted a system of continuous review in which it regularly consults with management to identify
principal and emerging risks facing the Group and to assess and determine how to address and mitigate
against such risks in a manner consistent with the Company’s risk appetite to achieve its strategic goals.
Throughout the year, the Board considers and reviews both risks arising from the internal operations of
the Group, and those arising from the business environment in which it operates. It is possible that one
or more of these identified risks could impact the Group in a similar timeframe which may compound
their effects.
With our focus on early stage company development, commercialisation and monetisation, the Group
inherently faces significant risks and challenges. The overall aim of the risk management policy is to
achieve an effective balance of risk and reward, although ultimately, no strategy can provide an absolute
assurance against loss.
The Board has carried out a robust assessment of the principal and emerging risks facing the Group,
including those that would threaten its business model, future performance, solvency and/or liquidity.
The major risks and uncertainties identified by the Board are set out below, along with the consequences
and mitigation strategy of each risk.
1.
The science and technology being developed or commercialised by the Group’s businesses may
fail and/or the Group’s businesses may not be able to develop their innovations and intellectual
property into commercially viable products or technologies. There is also a risk that some of the
portfolio companies may fail or not succeed as anticipated, whether as a result of technical,
product, market, fund-raising or other risks, resulting in an impairment of the Group’s value.
Impact: The failure of any of the Group’s portfolio companies would impact the Group’s value. A failure
of one of the major portfolio companies could also impact the Group’s reputation as a builder of high
value businesses and possibly make additional fund raising at the Group or portfolio company level more
difficult.
Mitigation:
Before making any follow-on investment in the current portfolio, extensive due diligence is carried
out by the Group which covers all the major business risks including market size, strategy,
adoption and intellectual property. Where appropriate, we seek validation through co-
investment by other strategic and/or financial parties.
A disciplined approach to capital allocation is pursued whereby we closely monitor milestone
developments before committing additional capital. Should a project fail to achieve sufficient
progress or is unable to attract other co-investors, we may terminate the investment.
Dedicated leadership with deep industry or sector knowledge, and relevant technical and/or
leadership experience, is recruited to management positions, and the Group ensures that each
portfolio company has independent directors and/or other advisors, as appropriate for the
relevant stage of development.
19
Each portfolio company holds board of director meetings at least quarterly, with participation
from the Group’s Directors, management and/or
investment team, along with senior
management and independent directors and/or advisors, as appropriate, of such portfolio
company.
Within the Group there is meaningful operating and investment expertise that provide direct,
hands-on and strategic, operating and fund-raising support to its portfolio companies, as
appropriate.
The Group actively uses third party advisors and consultants, specific to the particular domain in
which a portfolio company operates, to assist on market strategy and direction.
2.
The portfolio companies expect to incur substantial expenditure in further research and
development, product development, sales and marketing and other operational activities of its
businesses. There is no guarantee that the Group or any of its individual portfolio companies will
become profitable prior to the achievement of a portfolio company sale or other liquidity event,
and, even if the Group or any of its individual portfolio companies does become profitable, such
profitability may not be sustainable. The Group may not be able to attract other co-investors, or
monetise its ownership interests in portfolio companies, during any specific time frame or
otherwise on desirable terms, if at all.
Impact: Allied Minds’ objective is to generate returns for its shareholders through early stage company
development within the technology sector. Such value is expected to be delivered through the
commercialisation and monetisation of these businesses via a sale or other liquidity event for each. The
timing and size of these potential inflows is uncertain and, should liquidity events not be forthcoming, or
in the event that they are achieved at values significantly less than the amount of capital invested, then it
would be difficult to sustain the current levels of investment in the other portfolio companies. This would
lead to reduced participation in funding rounds, which will result in a lower ownership position, or
potentially impact the ability of a company to raise additional funds.
Mitigation:
The Group retains sufficient cash balances in order to support its cash flow requirements,
including Allied Minds’ investment requirements for each portfolio company and for corporate
resources.
The Group has close relationships with a wide group of investors, including within its current
shareholder base, and continues to identify and develop strategic and financial relationships for
co-investing in the Group’s portfolio companies.
Non-Executive Directors seek to build and maintain strategic and financial relationships for the
Group, and each portfolio company continually seeks to engage in strategic and financial
relationships relevant to their respective markets and to maintain current information on, and
awareness of, potential fund-raising and monetisation strategies.
3.
A significant portion of the Group’s intellectual property relates to technologies which originated
in the course of research conducted in, and initially funded by, US universities or other federally-
funded research institutions. Although the Group has been granted exclusive licenses to use this
20
intellectual property, there are certain limitations inherent in these licenses, for example as
required by the Bayh-Dole Act of 1980.
Impact: There are certain circumstances where the US government has rights to utilise the underlying
intellectual property without any economic benefit flowing back to the Group. In the event that this were
to happen, this could impact the financial return to the Group on its investment in the applicable portfolio
companies.
Mitigation:
To the Board’s knowledge, while these so called “march in” rights exist, the US government has
never had cause to use them.
The Group seeks to develop dual use capabilities for the technology it licenses and generally tends
to avoid use cases directly applicable to government use.
This risk is also mitigated through employing experienced technology transfer experts supported
by our legal team to assess risks that may arise out of this eventuality.
4.
Certain of the portfolio companies currently have in place cooperative research and development
agreements with certain US Department of Defense laboratories and other federally funded
government institutions. Certain regulatory measures apply to these agreements which restrict
the export of information and material that may be used for military or intelligence applications
by a non-US person. Compliance with these regulatory measures may be complex and limit
commercial alternatives.
Impact: If certain portfolio companies were to breach restrictions on the use of certain licensed
technologies, particularly those derived from federally funded research facilities, this could materially
impact upon the Group’s ability to license additional intellectual property from these establishments. In
certain circumstances, it may also lead to the termination of existing licenses. In the event that this were
to happen, this could materially affect a number of the Group’s businesses, potentially harm the
reputation and standing of the Group and cause the termination of certain important relationships with
federally funded research institutions.
Mitigation:
Prior to licensing any technology under these agreements, the Group’s management seeks to
identify the commercial and other alternatives available for products and services associated with
such technology and innovations, and to ensure that there are sufficient markets available to
justify the capital investment.
Prior to the commercialisation process, the Group’s management seeks to obtain all the necessary
clearances from applicable regulatory bodies to ensure that the export of products based upon
the licensed IP is strictly in accordance with government guidelines.
The Group, including certain of the portfolio companies, employs a number of individuals with
experience in working with various government agencies.
21
Senior management is fully cognisant of the regulations and sensitivities in relation to this issue,
in particular with International Traffic in Arms Regulations (ITAR) which regulate the use of
technologies for export, and has numerous mitigating actions available should issues arise.
5.
The Group operates in complex and specialised business domains and requires highly qualified
and experienced management to implement its strategy successfully. All of the operations of the
Group are located in the United States, which is a highly competitive employment market.
Furthermore, given the relatively small size of the senior management at the corporate level, the
Group is reliant on a small number of key individuals. As announced on 31 March 2022 and
updated on 31 May 2021, the Chairman of the Company has announced his intention to resign
from the board of directors following the publication of these annual report and accounts for the
year ended 31 December 2021. The Company has an urgent need to appoint new directors to the
board in order to ensure effective management to implement the execution of its strategy.
Impact: There is a risk that the Group may lose key personnel, or fail to attract or retain new personnel.
The loss of key personnel may negatively affect the Group’s competitive advantage. The Company also
needs to identify and appoint new non-executive directors to the board of the Company with sufficient
experience to execute the Company’s strategy.
Mitigation:
The Company is working with its largest shareholders to identify and appoint new non-executive
directors to the board of directors of the Company.
Senior management continually monitor and assess compensation levels to ensure the Group
remains competitive in the recruitment market.
6.
A large proportion of the overall value of the Group’s businesses may be concentrated in a small
proportion of the Group’s businesses. If one or more of the intellectual property rights relevant
to a valuable business were terminated, this would have a material adverse impact on the overall
value of the Group’s businesses.
Impact: The termination of critical IP licenses would materially impact the value of the portfolio company
and have a consequent effect on the value of the overall Group.
Mitigation:
In each portfolio company, the management is specifically directed to pursue a policy of
generating and patenting additional intellectual property to both provide additional protection
and create direct IP ownership for the company.
Where possible, the Group seeks to negotiate intellectual property ownership rights in any
research and development agreement it enters into with a network partner, such that the Group
becomes a part owner of the underlying IP.
7.
The US Investment Company Act of 1940 regulates companies which are engaged primarily in the
business of investing, reinvesting, owning, holding or trading in securities. Securities issued by
companies other than consolidated partner companies are generally considered ‘‘investment
securities’’ for purposes of the Investment Company Act, unless other circumstances exist which
22
actively involve the company holding such interests in the management of the underlying
company.
Impact: If the Company is deemed to be an ‘‘investment company’’ subject to regulation under the
Investment Company Act, applicable restrictions could make it impractical for the Group to continue its
business as contemplated and could have a material adverse effect on its business. If anything were to
happen which would cause the Company to be deemed to be an investment company under the
Investment Company Act, requirements imposed by the Investment Company Act, including limitations
on capital structure, ability to transact business with portfolio companies and ability to compensate key
employees, could make it impractical for it to continue its business as currently conducted.
Mitigation:
The Company intends to monitor and conduct its operations so that it will not be deemed to be
an investment company under the Investment Company Act.
The Company seeks to build value through its current portfolio companies; it is not engaged
primarily in the business of investing, reinvesting, owning, holding or trading in securities and
does not own or propose to acquire investment securities above prescribed thresholds under the
Investment Company Act.
Currently the Company holds more than 50% of the voting securities in one of its portfolio
companies, and more than 20% of all of its other portfolio companies (except TouchBistro,
OcuTerra and Concirrus), and intends to continue to try to maintain significant influence in
portfolio companies.
The Company seeks to maintain significant influence in portfolio companies through a
combination of the following:
o Rights to elect representatives to the board of directors, with ability to exercise influence over
the portfolio company’s business strategy, operating plans, budgets and key corporate
decisions;
o Legal rights, such as access to information (books and records) and financial statements,
liquidation preferences, registrations rights, rights of first refusal, pre-emptive rights and co-
sale rights; and
o Protective provisions, such as rights to block certain portfolio company actions.
8.
As a result of the Group’s strategy, the Group’s overall success is dependent on a limited, finite
portfolio of businesses. If one or more of such businesses were to fail, this would have a material
adverse impact on the overall value of the Group’s businesses and the Group’s ability to return
money to shareholders.
Impact: The failure of one or more remaining Group businesses would materially impact the overall value
of the Group’s portfolio and have a consequent effect on the returns available to shareholders.
23
Mitigation:
The Board is committed to engaging and working closely with the remaining portfolio companies
to provide guidance and advice as they navigate funding, operational, and other needs.
The Board continues to monitor performance, progress, and development of each portfolio
company to critically assess the return prospects of the remaining portfolio and make
adjustments as necessary.
9.
Given its current cash and financial position, the Group expects to remain operational through
the next three years. However, if the Group is unable to generate sufficient revenue,
appropriately manage expenses, attract co-investors to participate in follow-on portfolio
company financings, or generate a sale or other liquidity event for any of its existing portfolio
companies or portfolio company interests prior to the end of such period, then the Group’s
business, financial condition, results of operations, prospects and future viability could be
adversely affected.
Impact: Lack of capital could restrict the Group’s ability to further fund, develop and commercialise its
existing businesses. In turn, this could ultimately lead to failure of individual portfolio companies and loss
of investment as well as failure of the Group as a whole.
Mitigation:
The Board and Senior management continually seek to build and maintain close relationships with
its shareholder base and other strategic partners at the Group level, and each portfolio company
continually seeks to engage in strategic relationships relevant to their respective markets and to
maintain current information on and awareness of potential fund-raising and monetisation
strategies.
The Company strives to maintain majority ownership and/or primary control over all of the
portfolio companies and/or portfolio company board representation, so that it can seek to
influence optimal capital allocation, use of cash, and fund-raising strategy.
The Company has built a valuable portfolio of companies since its inception.
The Company continuously and critically reviews the progress of its portfolio companies against
pre-set milestones to ensure its financial capital and human resource is properly allocated to the
more promising areas of its portfolio to help strengthen and accelerate the Group’s path to
monetisation.
The Company recognises the need to identify and appoint new non-executive directors to the
board of the Company with sufficient experience to execute its strategy. It is working with its
largest shareholders to identify and appoint new non-executive directors to the board of directors
of the Company.
COVID-19
As Allied Minds navigates the continued consequences of the coronavirus pandemic, we continue to
closely monitor, assess, and respond to the impacts of the pandemic. The Group took several actions to
24
enable Allied Minds and its portfolio companies to continue operating safely and effectively, including
implementing remote working environments, using virtual meeting platforms, and reducing travel.
While the consequences of the coronavirus pandemic have had varying degrees of commercial impact
across the portfolio in the past year, the actions and mitigation put in place by the Group enabled day-to-
day operations to continue effectively across the portfolio. Allied Minds remains in close communication
with all customers, suppliers and partners to collaborate on how to best support each other's needs in
the post-pandemic environment.
Ukraine
The Board has considered the potential impact on the Group of the current situation in Ukraine. The Group
has no operations in Russia, Ukraine or Belarus and, as such, does not expect and direct, material impact
on its business. Any possible impact to the Group would likely manifest itself in inflationary pressure, and
deterioration in global economic performance and confidence. These impacts are being monitored closely
by the Board.
Corporate and Social Responsibility
Details on the Group’s policies, activities and aims with regard to its corporate and social responsibilities,
including diversity, are included in the Sustainability section on pages 53 to 56 and are incorporated into
this Strategic Report by reference.
This Strategic Report has been approved by the Board of Directors.
ON BEHALF OF THE BOARD
Harry Rein
Chairman
14 June 2022
25
MANAGEMENT AND GOVERNANCE
The Board
Non-Executive Directors
Harry Rein – Non-Executive Chairman (stepping down from the Board upon publication of these accounts)
Harry joined Allied Minds as an independent Non-Executive Director in November 2017, and has served as the Non-
Executive Chairman since March 2020.
Harry Rein has over 50 years business experience. Starting his career in manufacturing and strategic consulting
positions before joining General Electric Company in 1978 and directed several of GE’s lighting businesses as general
manager before joining the GE’s venture capital subsidiary as President and CEO.
Harry then led the spin out of GE’s Venture business in 1987 which became the foundation of Canaan Venture Partners,
where he was founder and managing partner raising $1.65bn and investing into venture capital opportunities. Harry
retired from Canaan in 2002. Canaan still thrives today, and at this time the firm has raised 12 Funds for an excess of
$6.0bn.
At the time of retiring from Canaan, Harry became general partner of Foundation Medical Partners (“FMP”), a venture
capital firm focused on early-stage healthcare venture capital companies. FMP started life as a small affiliated venture
fund of The Cleveland Clinic Foundation. Harry was instrumental in the conception and creation of the firm. Harry
stepped back from his role at FMP in 2012. The firm continues to operate successfully out of Boston under the name
of Flare Capital.
Harry has served on the board of directors of over 20 public and private entrepreneurial companies, including:
Anadigics (NASDAQ: ANAD), Cell Pathways, OraPharma (acquired by Johnson & Johnson), National MD (acquired by
GE), OmniSonics, GenVec (NASDAQ: GNVC), CardioNet (NASDAQ: BEAT) and Spine Wave, and was an investor in
Praecis Pharmaceuticals (NASDAQ: PRCS).
In addition to serving as Chairman of the Board of Allied Minds, Harry is also chairman of the board of Federated
Wireless, and also serves on the board of DeliverCareRx.
Harry Rein attended Emory University and Oglethorpe College (1968) and holds an M.B.A. from the Darden School at
the University of Virginia (1973).
Bruce Failing – Senior Independent Director
Bruce joined Allied Minds as the Senior Independent Director in March 2020. Bruce has over 40 years of management
and investment experience in the areas of media and consumer products, applied technology and logistics
management. He founded and currently is the General Partner of Alerion Partners and serves on the Boards of
Directors of Grand Brands, Enviroscent and DeliverCareRX. Previously, he was CEO of Productivity Solutions, Electronic
Retailing Systems and Actmedia, and Executive Chairman of ScentAir Technologies and Lamaze Publishing & the
Newborn Channel. Bruce attended Tufts University (1971) and holds an MBA from Harvard Business School (1973).
Bruce serves on each of the Audit, Nomination and Remuneration (Chair) Committees.
26
Mark Lerdal - Independent Non-Executive Director (resigned effective from 10 March 2022)
Mark joined Allied Minds as an independent Non-Executive Director in December 2019. Mark brings more than 30
years of executive leadership to his role at Allied Minds, as well as numerous executive and non-executive board
directorships at public and private companies. Mark currently serves as the executive chairman of Leaf Clean Energy
Company. Previously, Mark has served as managing director of MP2 Capital, LLC, president of Hydrogen Energy
California, a developer of a carbon capture and sequestration facility, and a managing director at KKR Finance in its
debt securities division. Mark served on the Boards of Directors of Trading Emissions plc (LSE: TRE) until January 2019,
TerraForm Global Inc. (NASDAQ: GLBL) until December 2017, and TerraForm Power (NASDAQ: TERP) until November
2015. Mark also serves on a number of private company boards, including Empower Energies, Southern Current,
Cotton Plains Holding III and Canadian Breaks. Mark attended Stanford University (1981) and holds a JD from
Northwestern University Pritzker School of Law (1984). Mark served on each of the Audit (Chair), Nomination and
Remuneration Committees.
Table of Board Attendance
The table below summarises the attendance of the Directors at the scheduled meetings held during the year:
Director
Harry Rein (1)
Mark Lerdal (2)
Bruce Failing
---------------
Meetings Attended
Audit
Committee
1 of 1
1 of 1
1 of 1
Nomination
Committee
1 of 1
1 of 1
1 of 1
Remuneration
Committee
1 of 1
1 of 1
1 of 1
Board
4 of 4
3 of 4
4 of 4
1 Mr. Rein resigned from the Board effective as of the date of these accounts.
2 Mr. Lerdal resigned from the Board effective as of 10 March 2022.
27
Directors’ Report
The Directors present their report together with the audited financial statements for Allied Minds plc and its
subsidiaries for the year ended 31 December 2021. The Company was incorporated on 15 April 2014 under the UK
Companies Act 2006 (Companies Act).
Directors
The Directors of the Company as at 31 December 2021 were those listed on pages 26 to 27 and these pages are
incorporated into this Directors’ Report by reference. During the year, Joseph Pignato resigned as an Executive
Director on 14 January 2021. Post-period end, Mark Lerdal resigned as a Non-Executive Director on 10 March 2022
and Harry Rein is due to step down from the Board upon publication of these accounts.
The Directors are conscious of the recent board changes and the need to appoint additional directors to the board of
the Company. The Directors are working closely with the Company’s largest shareholders to identify and recruit new
directors to the board of the Company.
The Directors’ interests in the share capital of the Company are as shown in the Directors’ Remuneration Report on
pages 56 to 59. None of the Directors were materially interested in any significant contract to which the Company or
any of its portfolio companies were party during the year.
Corporate Governance
Information that fulfils the requirements of the corporate governance statement can be found in the Corporate
Governance Report on pages 36 to 45, the Directors Remuneration Report on pages 56 to 59, and the Audit Committee
Report on pages 81 to 85, and is incorporated into this Report of the Directors by reference.
Directors’ Compensation for Loss of Office and Payments to Past Directors
During the year, Joe Pignato, was paid a severance package following his resignation as a Director of the Company on
14 January 2021 and the details of this package are set out on page 70 of the Directors’ Report below. Save for the
severance package for Joe Pignato following his resignation as a Director of the Company on 14 January 2021 and save
for payments to past directors and loss of office payments previously disclosed in our 2019 Annual Report and
Accounts, no payments to past directors were made during the last financial year.
Employees
The Group’s policies in relation to employees are disclosed on pages 54 to 55, and these pages are incorporated into
this Directors’ Report by reference.
Results and Dividends
During the period, the Group generated a net comprehensive loss after taxation for the year ended 31 December
2021 of $16.3 million (2020: $55.6 million). The Directors do not recommend the payment of an ordinary dividend
for 2021 (2020: nil).
Strategic Report
The Group’s Strategic Report can be found on pages 3 to 69, and includes information as to the Group’s activities in
the field of research and development, and as to the likely future development of the Group. Financial key
performance indicators can be found on pages 13-14.
28
The Strategic Report contains forward-looking statements with respect to the business of Allied Minds. These
statements reflect the Board’s current view, are subject to a number of material known and unknown events, risks
and uncertainties, and could change in the future. Factors that could cause or contribute to such changes include, but
are not limited to, anticipated changes to senior management of the Company, general economic climate and trading
conditions, as well as specific factors relating to the financial or commercial prospects or performance of the Group’s
individual portfolio companies, and the ability to consummate expected fundraising and other transactions.
Strategic review
Allied Minds is focused on supporting its existing portfolio companies and maximising monetisation opportunities for
portfolio company interests. For some time, the Board has been reviewing the range of strategic options available to
it in order to return value to shareholders and following the successful first close of the Series D fundraising by
Federated Wireless announced in February 2022, thanks he Board resolved, in March 2022, to undertake a formal
review of the Company's strategic options (the “Strategic Review”) including, but not limited to, a sale of the Company
itself, which the Board intends to conduct under the framework of a “Formal Sale Process" in accordance with Rules
2.4 and 2.6 of the Takeover Code, alternatively, to seek to distribute certain assets and any cash reserves directly back
to shareholders through a re-structure. The Strategic Review is solely aimed at creating and/or realising shareholder
value.
Subject to conclusion of the Strategic Review, the Board will continue to aim to monetise the Group’s ownership
positions at the appropriate time, recognising the value and benefit in achieving well-timed risk-adjusted returns for
the benefit of shareholders. Upon the event of successful monetisation events from the sale of portfolio companies
or portfolio company interests, Allied Minds anticipates distributing the net proceeds to its shareholders, after due
consideration of potential follow-on investment opportunities within the existing portfolio and working capital
requirements.
The Board aims to ensure that the Group is being managed in as cost efficient manner as possible, regularly reviewing
the on going costs associated with being a listed company. The Board notes that the costs of maintaining a premium
listing on the London Stock Exchange are prohibitive for a company of Allied Minds’ current size and maintaining a
public listing is expensive with more than 50 per cent of the Company’s annual budget devoted to meeting the
requirements of being a listed company.
Principal and Emerging Risks and Uncertainties and Financial Instruments
The Group, through its operations, is exposed to a number of risks. The Group’s risk management objectives and
policies are described on pages 19 to 25 and in the Corporate Governance Report on 36 to 45. Further information on
the Group’s financial risk management objectives and policies, including those in relation to credit risk, liquidity risk
and market risk, is provided in note 21 to the consolidated financial statements, along with further information on the
Group’s use of financial instruments. The pages referenced in this paragraph are incorporated into this Directors’
Report by reference.
Significant Agreements
The Group has not entered into any significant agreements which may be impacted by a change of control following a
takeover bid.
29
Share Capital
Details of the structure of the Company’s share capital and the rights attaching to the Company’s shares are set out in
note 14 to the consolidated financial statements. Other than the minimum share ownership policy adopted by the
Board in April 2016 with respect to Executive Directors, there are no specific restrictions on the holding of securities
or on the transfer of shares, which are both governed by the general provisions of the Company’s Articles of
Association (Articles) and prevailing legislation. None of the ordinary shares carry any special rights with regard to
control of the Company and there are no restrictions on voting rights.
At the last Annual General Meeting of the Company held on 12 May 2021 (2021 AGM), authority was given to the
Directors, pursuant to the relevant provisions of the Companies Act, to allot unissued relevant securities in the
Company up to a maximum amount equivalent to approximately two thirds of the issued ordinary share capital on 2
April 2021 at any time up to the earlier of the conclusion of the next Annual General Meeting (AGM) of the Company
and 31 May 2022. In addition, at the 2021 AGM, the Directors were also given authority, effective for the same period
as the aforementioned authority, to allot relevant securities in the Company up to a maximum of approximately one-
third of the total ordinary share capital in issue on 2 April 2021 in connection with an offer by way of a fully pre-
emptive rights issue. The Company did not allot any shares under these authorities during the past year. The Directors
do not intend to issue any new ordinary shares over the coming year and do not propose to renew these authorities
at the Company’s next AGM.
Under the Companies Act, the Company has the power to purchase its own shares in accordance with Part 18, Chapter
5 of the Companies Act. At the 2021 AGM, a special resolution was passed which granted the Directors authority to
make market purchases of the Company’s shares pursuant to these provisions of the Companies Act up to a maximum
of approximately 10% of the Company’s issued share capital on 2nd April 2021 provided that the authority granted set
a minimum and maximum price at which purchases can be made and is exercisable at any time up to the earlier of the
conclusion of the next AGM and 31 May 2022.
On 23 June 2021, the Company announced the launch of a share buyback programme to buy back up to $3.0 million
of the Company’s shares to run until 15 October 2021 or, if earlier, the date of the announcement of the Group’s
interim results for the six months ending 30 June 2021. Pursuant to the share buyback programme, the Company
bought back a total of 2,537,712 shares at a cost of $0.7 million.
The Directors will seek to renew the authority within similar parameters and for a similar period at the next AGM,
expected to be held on 27 July 2022.
Articles of Association
The Company’s Articles may be amended by a special resolution of the shareholders.
Substantial Shareholders
As at 31 December 2021, the Company had been advised of the following notifiable interests in the Company’s voting
rights under DTR 5. Other than as shown, so far as the Company (and its directors) are aware, no other person holds
or is beneficially interested in a disclosable interest in the Company.
30
Shareholder
Crystal Amber Fund Limited
Invesco
GIC
Mr Mark Pritchard
Hargreaves Lansdown Asset Mgt
Invesco (OppenheimerFunds)
Janus Henderson Investors
Partners Group
Castellain Capital
Number of Shares
43,378,770
39,537,697
19,382,360
19,382,360
11,466,271
10,170,033
9,250,000
7,721,846
7,349,772
Percentage
18.10%
16.50%
8.09%
5.53%
4.78%
4.24%
3.86%
3.22%
3.07%
Between the year end and 31 May 2022 (the latest practicable date prior to publication), Metage Capital has accrued
a notifiable interest of 3.63% and Charles Stanley has accrued a notifiable interest of 3.55% in the voting rights of Allied
Minds.
Research and Development
Details of the Group’s research and development activities are included in the Portfolio Review and Developments
section on pages 9 to 13.
Stakeholder Engagement
Details of the Group’s engagement with key stakeholders, including suppliers, customer and other business
relationships are included in the Stakeholder Engagement section on pages 50 to 55.
Political and Charitable Donations
The Group did not make any political or charitable donations in 2020 or 2021.
Corporate and Social Responsibility
Details on the Group’s policies, activities and aims with regard to its corporate and social responsibilities are included
in the Sustainability section on pages 46 to 50, and are incorporated into this Directors’ Report by reference.
Greenhouse Gas Emissions
Details on the greenhouse gas emissions associated with the Group’s operations are included in the Sustainability
section on pages 46 to 50.
Directors’ Indemnity and Liability Insurance
During the year, the Company has maintained liability insurance in respect of its directors who held office during the
period. Subject to the provisions of the Companies Act, the Articles provide that every director is entitled to be
indemnified out of the funds of the Company against any liabilities incurred in the execution or discharge of his or her
powers or duties.
Issuance of Equity by Major Subsidiary Undertaking
None of the Company’s major subsidiary undertakings (as defined in the Listing Rules) issued equity in 2021.
31
Requirements of the Listing Rules
The following table provides references to where the information required by Listing Rule 9.8.4R is disclosed:
Section
1
2
4
5
6
7
8
9
10
11
12
13
14
15
Listing Rule requirement
Interest capitalised
Publication of unaudited financial information
Details of long-term incentive schemes for an
individual director
Waiver of emoluments by a director
Waiver of future emoluments by a director
Non pre-emptive issues of equity for cash
Location
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Notes to the Consolidated
Financial Statements, Note 15
Not applicable
Non pre-emptive issues of equity for cash by any major
subsidiary undertaking
Parent participation in a placing by a listed subsidiary
Not applicable
Not applicable
Contract of significance with director
Contract of significance with a controlling shareholder Not applicable
Not applicable
Provision of services by a controlling shareholder
Not applicable
Shareholder waivers of dividends
Not applicable
Shareholder waivers of future dividends
Not applicable
Relationship agreements with the controlling
shareholder
Viability Statement
While the financial statements and accounts have been prepared on a going concern basis, provision 31 of the 2018
version of the UK Corporate Governance Code (Code) requires the Directors to make a statement in the Annual Report
with regard to the viability of the Group, including explaining how they have assessed the prospects of the Group, the
period of time for which they have made the assessment, and why they consider that period to be appropriate.
Accordingly, the Directors conducted this assessment over a three year period, taking into account the Group’s current
position and capital allocation strategy. This considered sensitivities around the Company’s operating costs,
particularly as a premium listed company on the London Stock Exchange, and the future capital requirements of its
portfolio companies. As stated in the Company Overview on pages 7 to 9, the Directors remain focused on supporting
our six existing portfolio companies and maximising monetisation opportunities for portfolio company interests, and
not to deploy any capital into new portfolio companies. This approach reflects the continuation of the Company’s
existing strategy and, taken together with significant reductions of its central costs, allows the Company to remain
viable for the next three years. This strategy, pursued to its conclusion, would see the Group’s existing assets continue
to be managed and eventually monetised, with no new investments being taken on and with a view to returning
surplus proceeds to shareholders. As described in the Directors’ report on pages 28 to 35 above, the Directors have
also initiated a Strategic Review aimed at a Formal Sale Process in accordance with Rules 2.4 and 2.6 of the Takeover
Code, alternatively, to seek to distribute certain assets and any cash reserves directly back to shareholders through a
re-structure. While this review may affect the Directors’ assessment of viability, at the date of this report, the Directors
still expect the Company to remain viable over the three year viability period.
Consequently, in terms of reporting on the viability of the Group as required under the Code, the Directors have
prepared projections running out three years as, in their view, this remains an appropriate period, notwithstanding
the eventual conclusion to the strategy and Strategic Review as outlined above.
32
The Directors are conscious of the recent board changes and the need to appoint additional directors to the board of
the Company. The Directors are working closely with the Company’s largest shareholders to identify and recruit new
directors to the board of the Company.
The Directors also carried out a robust assessment of the principal and emerging risks facing the Group, including
those that would threaten its business model, future performance, solvency or liquidity, and the other principal and
emerging risks detailed in the Strategic Report. The three-year period includes the assumption that further funding is
not required by the Group in the form of proceeds from either the sale of individual portfolio companies, the sale of
certain portfolio company interests in secondary market transactions, or a combination thereof. The Directors believe
that a three-year assessment is most appropriate as it aligns with the Group’s normal and well-established budgeting
process. In making their assessment, the Directors considered a wide range of information, including present and
future economic conditions, future projections of profitability, cash flows and capital requirements, and the potential
sale of certain portfolio company interests in secondary market transactions.
The Group’s annual budgeting process builds into a robust three-year plan, which is the period the Directors consider
as an appropriate period to be covered by the viability statement. This plan forms the basis for strategic decisions
across the Group. The consolidated plan is reviewed and approved annually by the Directors at the beginning of the
year. Progress against the original plan is reviewed quarterly by the Directors, and adjustments to the plan can be
made if needed to address new risks or to take advantage of new opportunities.
In summary, the Directors have assessed the viability of the Group over the three year period. As part of this
assessment they intend to continue to take proactive steps to manage cash expenses, consider capital allocation
decisions, careful control over how working capital requirements are met, and careful budgeting by the Group for
such period. The Directors recognise the pressing need for the appointment of additional board members to support
the future management of the Company, but do not consider this position to impact the viability of the Company.
Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the three-year period.
Disclosure of Information to Auditor
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is
unaware; and
the Director has taken all steps that he or she ought to have taken as a Director in order to make himself or
herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the Companies
Act.
Annual General Meeting
The Annual General Meeting (AGM) will be held at 14:00 EDT on 27 July 2022 at Allied Minds’ headquarters located at
374 Congress Street, Suite 308, Boston, Massachusetts 02210, USA. The Notice of AGM circulated with this Report
and Accounts contains a full explanation of the business to be conducted at that meeting.
33
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the appointment of BDO LLP as auditor of
the Company is to be proposed at the forthcoming AGM.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors are required to prepare the group financial statements, in accordance with applicable law and UK adopted
internation accounting standards.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and company and of their profit or loss for that period.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the entity’s
financial position and financial performance;
prepare the financial statements on the going concern basis unless it is inappropriate to presume the group
will continue in business; and
prepare a director’s report, a strategic report and director’s remuneration report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with the Companies Act 2006. The Directors
are responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and
accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for
shareholders to assess the group’s performance, business model and strategy.
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the company’s website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in
34
other jurisdictions. The maintenance and integrity of the company’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
•
the consolidated and Parent Company financial statements, prepared in accordance with the relevant financial
reporting framework, give a true and fair view of the assets, liabilities, financial position and loss of the
Company and the undertakings included in the consolidation taken as a whole; and
• The annual report includes a fair review of the development and performance of the business and the financial
position of the group and the parent company, together with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, are fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s position, performance, business model and strategy.
ON BEHALF OF THE BOARD
Harry Rein
Chairman
14 June 2022
35
Corporate Governance Report
Compliance with the UK Corporate Governance Code
The Directors are committed to a high standard of corporate governance and have prepared this Annual Report with
reference to the 2018 UK Corporate Governance Code (Code) which was published by the Financial Reporting Council
(FRC) in July 2018. The Code is available at the FRC website at www.frc.org.uk. During the year ended 31 December
2021, the Directors consider that the Company has been in compliance with the provisions set out in the Code with
the following exceptions:
Contrary to Principle G of the Code, the Board solely comprises Non-Executive Directors, given the strategic shift
of the Group and the stated objective of the Group for the next two to three years.
Contrary to provision 34 of the Code, certain Non-Executive Directors hold restricted stock units (RSUs) that vest
over time. These RSUs were granted to the Non-Executive Directors in 2016, 2017, 2018, 2019, 2020 and 2021
and do not have performance conditions. After careful consideration, given that the level of the awards are
limited, do not have performance-based vesting, and effectively operate like cash remuneration, the Board does
not believe that ownership of these RSUs impacts the independence of the Non-Executive Directors.
Contrary to provision 24 of the Code, the Chairman, Harry Rein, was a member of the Audit Committee in 2021.
The Board believes that Mr. Rein’s professional background and experience made him a valuable member of the
Audit Committee and that his membership was in the best interests of our shareholders. Further, this appointment
was made in good faith to conserve Company cash resources rather than potentially seeking to appoint an
additional Non-Exective Director.
Contrary to provision 20, an external search consultancy was not used to identify and recruit Mr. Failing as a Non-
Executive Director. Mr. Failing was proposed as a director candidate by a Non-Executive Director on the Board.
After careful consideration of Mr. Failing’s qualifications and upon recommendation by the Nomination
Committee, Mr. Failing was appointed to the Board on 10 March 2020 and his appointment was approved by
shareholders at the AGMs held in June 2020 and May 2021.
Effective as of 14 January 2021, the Company no longer employs a chief executive officer. Given the strategic shift
of the Group, the Company’s Board and management determined that the most effective and efficient path to
execute upon such strategy is to eliminate the chief executive officer role and to have direct participation by the
Board on the boards of the portfolio companies. This is contrary to provision 9 of the Code.
Contrary to provision 21 of the Code, the Board does not intend to engage in an externally facilitated board
evaluation every three years. The Board is of the view that this would be contrary to the Company’s objective to
effectively manage costs.
Further explanation as to how the principles and provisions set out in the Code have been applied by the Company is
provided in the following statements, the Directors’ Remuneration Report, the Audit Committee Report and the
Strategic Report.
The Board
Role and Responsibilities of the Board
The Board is responsible to shareholders for the overall management of the Group as a whole, providing
entrepreneurial leadership within a framework of controls for assessing and managing risk; defining, challenging and
interrogating the Group’s strategic aim, direction and culture; maintaining the policy and decision-making framework
in which such strategic aims are implemented; ensuring that the necessary financial and human resources are in place
to meet strategic aims; monitoring performance against key financial and non-financial indicators; succession
36
planning; overseeing the system of risk management; setting values and standards in governance matters; and
monitoring policies and performance on corporate social responsibility. The Directors are also responsible for ensuring
that obligations to shareholders and other stakeholders are understood and met, and a satisfactory dialogue with
shareholders is maintained. All Directors are equally accountable to the Company’s shareholders for the proper
stewardship of its affairs and the long-term success of the Group.
The responsibility of the Directors is collective. The Directors are responsible for constructively developing and
challenging proposals on strategy, scrutinising the performance of management of portfolio companies, determining
levels of remuneration and for succession planning for the senior management of the company and portfolio
companies. The Non-Executive Directors must also satisfy themselves on the integrity of financial information and
that financial controls and systems of risk management are robust.
The Board reviews strategic issues on a regular basis and exercises control over the performance of the Group by
agreeing on budgetary targets and monitoring performance against those targets. The Board has overall responsibility
for the Group’s system of internal controls and risk management, as described on pages 50 to 52. Any decisions made
by the Board on policies and strategy to be adopted by the Group or changes to current policies and strategy are made
following presentations by the Directors or senior management at the Company and a detailed process of review and
challenge by the Board. Once made, the Directors are fully empowered to implement those decisions.
Except for a formal schedule of matters which are reserved for decision and approval by the Board, the Board has
delegated the day-to-day management of the Group to the Chairman who is supported by members of the senior
management team. The schedule of matters reserved for Board decision and approval are those significant to the
Group as a whole due to their strategic, financial or reputational implications.
This schedule is reviewed and updated regularly and currently includes those matters set forth below:
• Approval and monitoring of the Group’s strategic aims and objectives, and approval of the annual operating
budget.
• Strategic acquisitions by the Group.
• Major disposals of the Group’s assets or subsidiaries.
• Changes to the Group’s capital structure, the issue of any securities and material borrowing of the Group.
• Approval of the annual report and half-year results statement, accounting policies and practices or any matter
having a material impact on future financial performance of the Group.
• Ensuring a sound system of internal control and risk management.
• Approval of all circulars, prospectuses and other documents issued to shareholders governed by the FCA’s
Listing Rules, Disclosure Guidance and Transparency Rules or the City Code on Takeovers and Mergers.
• Approving Board appointments and removals, and approving policies relating to Directors’ remuneration.
• Approval of terms of reference and membership of Board Committees.
• Considering and, where appropriate, approving Directors’ conflicts of interest.
• Approval, subject to shareholder approval, of the appointment and remuneration of the auditors.
• Major changes in employee share schemes.
37
•
Insurance and litigation.
The schedule of matters reserved to the Board is available on request from the Company Secretary or within the
Investors section of the Group’s website at www.alliedminds.com.
The Board delegates specific responsibilities to certain Committees that assist the Board in carrying out its functions
and ensure independent oversight of internal control and risk management. The three principal Board Committees
(Audit, Nomination and Remuneration) play an essential role in supporting the Board in fulfilling its responsibilities
and ensuring that the highest standards of corporate governance are maintained throughout the Group. Each
Committee has its own terms of reference which set out the specific matters for which delegated authority has been
given by the Board. The initial terms of reference for each of the Committees, which are fully compliant with the
provisions of the Code and which reflect both best practice and the recommendations arising from the external
evaluation process undergone by the Board and its Committees in connection with the Company’s IPO, were adopted
by the Board during 2014. These were reviewed in in 2021 and will be reviewed annually on an ongoing basis and
updated where necessary. All of these are available on request from the Company Secretary or within the Investors
section of the Group’s website at www.alliedminds.com.
Board Size and Composition
As at 31 December 2021, there were three Directors on the Board: the Non-Executive Chairman, and two Non-
Executive Directors. During the year, Joseph Pignato resigned as an Executive Director on 14 January 2021. Post-period
end, Mark Lerdal resigned as a Non-Executive Director on 10 March 2021. On 31 March 2022 , the Company announced
that Harry Rein, informed the Board that he did not intend to stand for re-election at this year's AGM. As announced
on 31 May 2022, Harry Rein will leave the Board on the day following the publication of these annual report and
accounts for the year ended 31 December 2021.
The Directors recognise the pressing need for the appointment of additional board members to support the future
management of the Company, but do not consider this position to impact the viability of the Company.
The biographies of all of the Directors are provided on pages 26 to 27.
The Company’s policy relating to the terms of appointment and the remuneration of both Executive and Non-Executive
Directors is detailed in the Directors’ Remuneration Report on pages 56 to 80.
The size and composition of the Board is regularly reviewed by the Board, and in particular the Nomination Committee,
to ensure there is an appropriate and diverse mix of skills and experience on the Board.
The Company’s Articles allow appointment of Directors by ordinary resolution and require all Directors to submit
themselves for re-election by the shareholders at the Company’s AGM following their first appointment and thereafter
at each AGM in respect of which they have held office for the two preceding AGMs and did not retire at either of them.
In addition, each director who has held office with the Company for a continuous period of nine years or more must
retire and offer themselves up for re-election at every AGM. The Directors have carefully considered the composition
of the board of directors following the resignation of Mark Lerdal on 10 March 2022 and the forthcoming departure
of Harry Rein from the board. This position means that, unless additional board members are appointed in the
meantime, Bruce Failing will become the sole Director of the Company. A process is currently underway to restore the
appropriate number of non-executive directors to the board. Nevertheless, given this position, and after consultation
with the Company’s largest shareholders, the Directors have concluded that Bruce Failing shall not stand for re-
election at this year’s AGM in order to avoid a situation where the Company could potentially have not Directors if
Bruce Failing were not re-elected.
38
Diversity
The Board is committed to a culture that attracts and retains talented people to deliver outstanding performance and
further enhance the success of the Company. In that culture, diversity across a range of criteria is valued, primarily in
relation to skills, knowledge and experience and also in other criteria such as gender and ethnicity. The Company will
give careful consideration to issues of overall Board balance and diversity in making new appointments to the Board.
In identifying suitable candidates, the Nomination Committee will seek candidates from a range of backgrounds, with
the final decision being based on merit against objective criteria. In addition, the terms of reference of the Nomination
Committee include a requirement for the Committee to consider diversity, including gender, age, professional
background, and ethnicity, in evaluating the composition of the Board and in identifying suitable candidates for Board
appointments. A breakdown of employee gender showing the percentage of persons who were Directors of the
Company and senior managers during the period covered by this Annual Report can be found on page 55.
Non-Executive Directors
The Non-Executive Directors provide a wide range of skills and experience to the Group. They bring their own senior
level of experience in each of their respective fields, robust opinions and an independent judgement on issues of
strategy, performance, risk and people. They are well-placed to constructively challenge and scrutinise the
performance of management at Board and Committee meetings. The Code sets out the circumstances that should be
relevant to the Board in determining whether each Non-Executive Director is independent. The Board considers Non-
Executive Director independence on an annual basis as part of each Non-Executive Director’s performance evaluation.
Having undertaken this review and with due regard to provision 10 of the Code, the Board has concluded this year
that all of the Non-Executive Directors are considered by the Board to be independent of management and free of any
relationship or circumstance which could materially influence or interfere with, or affect, or appear to affect, the
exercise of their independent judgement.
Non-Executive Directors are required to obtain the approval of the Chairman before taking on any further
appointments and the Chairman and any Executive Directors require the approval of the Board before adding to their
commitments. In all cases, the Directors must ensure that their external appointments do not involve excessive time
commitment or cause a conflict of interest.
The Role of Chairman
On 31 March Harry Rein informed the Board that he does not intend to stand for re-election at this year’s AGM. On
31 May 2021, it was announced that Harry Rein would step down from the board of directors with effect from the day
following the publication of these annual report and accounts for the year ended 31 December 2021.
Until that date, Harry Rein has been working closely with Bruce Failing, the Senior Independent Director and the
Company's largest shareholders to ensure an orderly transition to any new Independent Directors.
The Chairman is responsible for the leadership and conduct of the Board, the conduct of the Group’s affairs and
strategy and for ensuring effective communication with shareholders. The Chairman facilitates the full and effective
contribution of Non-Executive Directors at Board and Committee meetings, ensures that they are kept well informed
and ensures a constructive relationship between the Non-Executive Directors. The Chairman also ensures that the
Board Committees carry out their duties, including reporting back to the Board either orally or in writing following
their meetings at the next Board meeting. The Chairman was deemed to be independent of management upon his
appointment to the role.
Senior Independent Director
39
Bruce Failing is the current Senior Independent Director, succeeding Harry Rein upon his assumption of the Chairman
role. A key responsibility of the Senior Independent Director is to be available to shareholders in the event that they
may feel it inappropriate to relay views through the Chairman or Executive Directors. In addition, the Senior
Independent Director serves as an intermediary between the rest of the Board and the Chairman where necessary
and takes the lead when the Non-Executive Directors assess the Chairman’s performance and when the appointment
of a new Chairman is considered. Further, the Senior Independent Director will lead the Board in its deliberations on
any matters on which the Chairman is conflicted.
Given the resignation of Mark Lerdal on 10 March 2022 and the planned retirement of Harry Rein upon publication
of these accounts, the Directors recognise the urgent need for the appointment of additional board members to
support the future management of the Company. Unless additional board members are appointed in the meantime,
Bruce Failing will become the sole Director of the Company . Given this position, and after consultation with the
Company’s largest shareholders, the Directors have concluded that Bruce Failing shall not stand for re-election at this
year’s AGM in order to avoid a situation where the Company could potentially have not Directors if Bruce Failing were
not re-elected.
After consultation with the Company’s largest shareholders, it is intended that Bruce Failing shall serve as Chairman
of the Company pending appointment of additional board members.
Board Support
The Company Secretary is responsible to the Board for ensuring Board procedures are followed, applicable rules and
regulations are complied with and that the Board is advised on governance matters and relevant regulatory matters.
All Directors have access to the impartial advice and services of the Company Secretary. There is also an agreed
procedure for directors to take independent professional advice at the Company’s expense. In accordance with the
Company’s Articles and a contractual Deed of Indemnity, Directors have been granted an indemnity issued by the
Company to the extent permitted by law in respect of liabilities incurred to third parties as a result of their office. The
indemnity would not provide any coverage where a director is proved to have acted fraudulently or with willful
misconduct. The Company has also arranged appropriate insurance coverage in respect of legal action against its
directors and officers.
Board Meetings and Decisions
The Board meets regularly during the year, as well as when required by business needs. The Board had four scheduled
Board meetings in 2021. During their term of service, each of the Directors were present at the meetings during the
year as set out in the table on page 27.
The schedule of Board and Committee meetings each year is, so far as is possible, determined before the
commencement of that year and all Directors or, if appropriate, all Committee members are expected to attend each
meeting. Supplementary meetings of the Board and/or the Committees are held as and when necessary. Each
member of the Board receives detailed Board packs, including an agenda based upon the schedule of matters reserved
for its approval, appropriate reports and briefing papers in advance of each scheduled meeting. If a director is unable
to attend a meeting due to exceptional circumstances, he or she will still receive the supporting papers and is expected
to discuss any matters he or she wishes to raise with the Chairman in advance of the meeting. The Board, Chief
Financial Officer and Company Secretary work together to ensure that the Directors receive relevant information to
enable them to discharge their duties and that such information is accurate, timely and clear. This information includes
quarterly management accounts containing analysis of performance against budget and other forecasts. Additional
information is provided as appropriate or if requested. At each meeting, the Board receives information, reports and
40
presentations from members of senior management as required. This ensures that all Directors are aware of, and are
in a position to monitor effectively, the overall performance of the Group, its development and implementation of
strategy and its management of risk.
Any matter requiring a decision by the Board is supported by a paper analysing the relevant aspects of the proposal
including costs, benefits, potential risks involved and proposed executive management action and recommendations.
The Board meetings give members of the Company’s senior management team, as well as the senior managers of the
portfolio companies, the opportunity to formally present to the Board. This assists the Board in gaining a deeper
understanding of the breadth, stage of development and diversity of the Group’s portfolio companies.
Directors’ Conflicts of Interest
Each director has a statutory duty under the Companies Act to avoid a situation in which he or she has or can have a
direct or indirect interest that conflicts or may potentially conflict with the interests of the Company. This duty is in
addition to the continuing duty that a director owes to the Company to disclose to the Board any transaction or
arrangement under consideration by the Company in which he or she is interested. The Company’s Articles permit
the Board to authorise conflicts or potential conflicts of interest. The Board has established procedures for managing
and, where appropriate, authorising any such conflicts or potential conflicts of interest. It is a recurring agenda item
at all Board meetings and this gives the directors the opportunity to raise at the beginning of every Board meeting,
any actual or potential conflict of interests that they may have on the matters to be discussed, or to update the Board
on any change to a previous conflict of interest already declared. In deciding whether to authorise any conflict, the
directors must have regard to their general duties under the Companies Act and their overriding obligation to act in a
way they consider, in good faith, will be most likely to promote the Company’s success. In addition, the directors are
able to impose limits or conditions when giving authorisation to a conflict or potential conflict of interest if they think
this is appropriate. The authorisation of any conflict matter, and the terms of any authorisation, may be reviewed by
the Board at any time. The Board believes that the procedures established to deal with conflicts of interest are
operating effectively.
Induction, Awareness and Development
A comprehensive induction process is in place for new directors. The programme is tailored to the needs of each
individual director and agreed with him or her so that he or she can gain a better understanding of the Group and its
businesses. This will generally include an overview of the Group and its businesses, structure, functions and strategic
aims; site visits to the Group’s head office in Boston, Massachusetts, USA; and, upon request, site visits to a number
of the Group’s portfolio companies, which will include meeting with such companies’ management and a presentation
from them on their businesses. In addition, the Company facilitates sessions as appropriate with the Group’s advisers,
in particular its corporate broker, Numis Securities Limited, as well as with appropriate governance specialists, to
ensure that any new directors are fully aware of and understand their responsibilities and obligations as a director of
a listed company and of the governance framework within which they must operate. A new director may also seek to
meet major shareholders.
In order to ensure that the Directors continue to further their understanding of the issues facing the Group, the Board
may also receive presentations at Board meetings by relevant members of the Group’s or portfolio company staff. In
addition, other members of senior management present to the Board to enhance the Board’s awareness of how the
Group operates on a day-to-day basis and how such functions operate so as to assist in the execution of the Group’s
strategy of maximising total returns to all shareholders through monetisation of its existing portfolio.
41
As a further aspect of their ongoing development, each Director also receives feedback on his or her performance
following the Board’s performance evaluation in each year and, through the Company Secretary, access is facilitated
to relevant training and development opportunities including those relevant to the Non-Executive Directors’
membership on the Board’s Committees.
Board Effectiveness and Performance Evaluation
A performance evaluation of the Board and its Committees is carried out annually to ensure that they continue to be
effective and that each of the Directors demonstrates commitment to his or her respective role and has sufficient time
to meet his or her commitment to the Company. The Board conducts an internally facilitated Board evaluation led by
the Chairman, assisted by the Company Secretary, and covering the effectiveness of the Board as a whole, its individual
Directors and its Committees. This review includes each of the Board and Committee members completing a detailed
questionnaire. A summary of the results of the questionnaire and review, together with the Chairman and Company
Secretary’s observations and recommendations, are prepared and shared with members of the Board. The Board
engages in a discussion of these results, provides feedback on the observations and recommendations, and develops
a list of proposed improvements and actions, as deemed necessary. In addition to the aforementioned annual reviews,
the performance of the Executive Director is reviewed by the Board on an ongoing basis, as deemed necessary.
During the 2021 financial year, the Board assessed its own effectiveness through an internal Board evaluation process.
This process was based on: a review of documentation including Board and Committee terms of reference, the
completion of a survey to Directors comprising quantitative and qualitative questions; and discussions with all Board
members and a number of stakeholders who regularly interact with the Board, including the Company Secretary.
The results were analysed by the Chairman and the Company Secretary, and a detailed discussion was facilitated with
the Board to outline the observations and recommendations. Overall it was concluded that the Board continues to
work effectively. The changes to the Board composition in recent years have resulted in a well-balanced Board with a
range of skills and experience. Following the resignation of Mark Lerdal on 10 March 2022 and the forthcoming
retirement of Harry Rein, the Company is currently undertaking a recruitment process with the intention to restore
the appropriate number of non-executive directors to the Board. As such, the size of the Board will continue to be
appropriate given the Group’s current position and capital allocation strategy to focus exclusively on supporting our
six existing portfolio companies and maximising monetisation opportunities for portfolio company interests, and not
to deploy any capital into new portfolio companies. The Board did not recommend any changes it considered
necessary.
Committees of the Board
The composition of the three Committees of the Board and the attendance of the members throughout the year is set
out in the table on page 27. The terms of reference of each Committee are available on request from the Company
Secretary or within the Investors section of the Group’s website at www.alliedminds.com.
Remuneration and Audit Committees
Separate reports on the role, composition, responsibilities and operation of the Remuneration Committee and the
Audit Committee are set out on pages 56 to 59, and pages 81 to 85, respectively, and are incorporated by reference
into this Corporate Governance Report.
Nomination Committee
The Nomination Committee leads the process for Board appointments, re-election and succession of directors and the
42
Chairman. Its key objective is to ensure that the Board is comprised of individuals with the necessary skills, knowledge
and experience to ensure that it is effective in discharging its duties. It is responsible for making recommendations to
the Board and its Committees concerning the composition and skills of the Board including any changes considered
necessary in the identification and nomination of new directors, the reappointment of existing directors and the
appointment of members to the Board’s Committees. It also assesses the roles of the existing directors in office to
ensure there continues to be a balanced Board in terms of skills, knowledge, experience and diversity. In addition, the
Nomination Committee reviews the senior leadership needs of the Group to enable it to compete effectively in the
marketplace. The Nomination Committee also advises the Board on succession planning for Executive Director
appointments, although the Board itself is responsible for succession generally.
The Committee was chaired by Harry Rein and its other members as at 31 December 2021 were Bruce Failing and
Mark Lerdal, being a majority of independent Non-Executive Directors as prescribed by the Code. The Nomination
Committee meets as and when required or as requested by the Board. The Nomination Committee met once during
2021 to review the structure, size and composition of the Board, following which it discussed the conclusions with the
Chairman. Messrs. Rein, Failing, and Lerdal, were present at all meetings during the year, as applicable.
Before selecting new appointees to the Board, the Nomination Committee shall consider the balance, skill, knowledge,
independence, diversity (including gender) and experience on the Board to ensure that a suitable balance is
maintained. The Committee shall adopt a formal, rigorous and transparent procedure for the appointment of new
directors to the Board. Consideration shall always be given as to whether identified candidates have sufficient time
available to devote to the role. When searching for appropriate candidates, the Committee shall give consideration
to using an external search company, but may also consider candidates who are proposed by existing Board members
or employees of the Group. When the Committee has found a suitable candidate, the Chairman of the Committee
will make a proposal to the whole Board. The appointment of a candidate is the responsibility of the whole Board
following recommendation from the Committee. The Committee did not use the services of an external search
company in 2021.
The Committee and the full Board fulfilled its duties in 2021.
Internal control
The Board fully recognises the importance of the guidance contained in Guidance on Risk Management, Internal
Control and Related Financial and Business Reporting (FRC). The Group’s internal controls and risk management
systems, which are Group wide, were in place during the whole of 2021, were reviewed by the Board and Audit
Committee. After careful consideration and discussion of the Group’s financial statements and underlying control
systems by the Board and Audit Committee, including extensive review and collaboration with the Company’s
executive team to remedy issues identified, the Group’s internal controls and risk management systems were
considered to be effective throughout the year ended 31 December 2021 and up to the date of approval of the Annual
Report and Accounts.
The Board and Audit Committee are responsible for establishing and monitoring internal control systems and for
reviewing the effectiveness of these systems. The Board views the effective operation of a rigorous system of internal
control as critical to the success of the Group; however, it recognises that such systems are designed to manage rather
than eliminate risk of failure and can provide only reasonable and not absolute assurance against material
misstatement or loss. The key elements of the Group’s internal control system, all of which have been in place during
the financial year and up to the date these financial statements were approved, are as follows:
Control environment and procedures
43
The Group has a clear organisational structure with defined responsibilities and accountabilities. It adopts the highest
values surrounding quality, integrity and ethics, and these values are documented and communicated clearly
throughout the whole organisation.
Detailed written policies and procedures have been established covering key operating and compliance risk areas.
These are reviewed and updated at least once a year. The effectiveness of the systems of internal control is reviewed
at least annually by the Board. The Board reviews and evaluates the internal control policies and procedures in place
against the nature of the Group’s business, the size of its workforce and the competing risks and interests being
managed. Through these actions and considerations, the Board has satisfied itself that the controls been effective for
the year ended 31 December 2021.
Identification and evaluation of risks
The Board actively identifies and evaluates the risks inherent in the business, and ensures that appropriate controls
and procedures are in place to manage these risks. The Board obtains an update regarding the portfolio companies
on a regular basis, and reviews the performance of the Group and its portfolio companies on a quarterly basis, although
performance of specific investments may be reviewed more frequently if deemed appropriate. The Board also obtains
a risk management report from members of senior management on a regular basis. The key risks and uncertainties
faced by the Group, as well as the relevant mitigations, are set out on pages 19 to 25.
Information and financial reporting systems
The Group evaluates and manages significant risks associated with the process for preparing consolidated accounts by
having in place systems and controls that ensure adequate accounting records are maintained and that transactions
are recorded accurately and fairly to permit the preparation of financial statements in accordance with IFRS. The
Board approves the annual operating budgets and each quarter receives details of actual performance measured
against the budget.
Principal and emerging risks and uncertainties
The operations of the Group and the implementation of its objectives and strategy are subject to a number of key risks
and uncertainties. Risks are formally reviewed by the Board and Audit Committee at least annually and appropriate
procedures are put in place to monitor and, to the extent possible, mitigate these risks. Were more than one of the
risks to occur together, the overall impact on the Group may be compounded. A summary of the key risks affecting
the Group and the steps taken to manage these is set out on pages 19 to 25.
Relations with shareholders
The Company is committed to a continuous dialogue with shareholders as it believes that this is essential to ensure a
greater understanding of and confidence amongst its shareholders in the medium and longer term strategy of the
Group. It is the responsibility of the Board as a whole to ensure that a satisfactory dialogue does take place.
The Board’s primary shareholder contact is through the Chairman. The Senior Independent Director and other
Directors, as appropriate, make themselves available for contact with major shareholders and other stakeholders in
order to understand their issues and concerns. The Chairman and the other Directors met with major shareholders, IP
commercialisation sector brokers and analysts, and other stakeholders, on numerous occasions throughout the year
in order to discuss the Company and its business as well as to receive feedback on the Company’s remuneration
programme and other related matters.
The Company uses the AGM as an opportunity to communicate with its shareholders. Notice of the AGM, which will
44
be held at 14:00 EDT on 27 July 2022 at the Company’s headquarters located at 374 Congress Street, Suite 308, Boston,
MA 02210 USA, is enclosed with this Report and Accounts. In accordance with the Code, the Notice of AGM is sent to
shareholders at least 20 working days before the meeting. Details of the resolutions and the explanatory notes thereto
are included with the Notice. To ensure compliance with the Code, the Board proposes separate resolutions for each
issue and proxy forms which allows shareholders who are unable to attend the AGM to vote on each resolution. The
results of all proxy voting shall be published on the Group’s website after the meeting and at the meeting itself to
those shareholders who attend. Shareholders who attend the AGM will have the opportunity to ask questions and
the Chairman and the Directors are expected to be available to take questions.
The Group’s website at www.alliedminds.com is the primary source of information on the Group. The website includes
an overview of the activities of the Group, details of its portfolio companies, and details of all recent Group and
portfolio company announcements.
Political expenditure
It is the Board’s policy not to incur political expenditure or otherwise make cash contributions to political parties and
it has no intention of changing that policy.
Going concern
The Directors acknowledge that the current global socio-economic situation has the potential to disrupt all aspects of
the Group’s business, including potential negative impacts on the Group’s financial position. However, the Directors
are closely monitoring these with portfolio company management in order to mitigate against such impact, including
careful financial planning to allow for continued operations. The Directors confirm that, after taking all applicable
factors into consideration, they have a reasonable expectation that the Group will have adequate resources to
continue operations for a period of not less than 12 months from the date of approval of the financial statements. For
this reason, they continue to adopt the going concern basis in preparing the financial statements. For further
explanation, see note 1 of the financial statements on page 102.
ON BEHALF OF THE BOARD
Harry Rein
Chairman
14 June 2022
45
Sustainability
The Directors note the obligation for Allied Minds to report on its climate-related risk in line with the recommendations
of the global Taskforce on Climate-related Financial Disclosures (TCFD).
The group has not included the following recommended disclosures:
Disclosure of the organisations governance around climate-related risks and opportunities
Disclosure of the actual and potential impacts of climate-related risks and opportunities on the group’s business,
strategy and financial planning where such information is material
Disclosure of how the group identifies, assesses and manages climate-related risks
Disclosure of the metrics and targets used to assess, manage and report relevant climate-related risks and
opportunities where such information is material
The group has not been able to collate the necessary information for the group for the current period as it was not
considered appropriate, in line with the group’s current strategy, and prior to the forthcoming changes to the Board.
The Group is currently in the process of evaluating those risks relating to its portfolio companies and intends to
incorporate TCFD disclosures into its future reporting over the next calendar year. This will be taken forward by the
Board under its new composition following the conclusion of the current recruitment process.
Policy Statement
Allied Minds aims to conduct its business in a socially responsible manner, to contribute to the communities in which
it operates and to respect the needs of its employees and all of its stakeholders.
The Group is committed to operating the business while ensuring a safe environment for employees as well as
minimising the overall impact on the environment.
Allied Minds endeavours to conduct its business in accordance with established best practice, to be a responsible
employer and to adopt values and standards designed to help guide staff in their conduct and business relationships.
Greenhouse Gas (GHG) Emissions
Given the overall size of the Group, we consider the direct environmental impact of the Group as relatively low.
However, we firmly recognise our responsibility to ensure that our business operates in an environmentally
responsible and sustainable manner. The Group complies with all current regulations on emissions including GHG
emissions, where such regulation exists in our markets.
Though the Group’s day-to-day operational activities have a relatively limited impact on the environment, we do
recognise that the more significant impact occurs indirectly through the nature and operations of the companies that
we choose to support with human and financial capital.
The Group therefore considers it important to establish and nurture businesses that comply with existing applicable
environmental, ethical and social legislation. It is also important that these businesses can demonstrate that an
appropriate strategy is in place to meet future applicable legislative and regulatory requirements and that these
businesses can operate to specific industry standards, striving for best practice.
The section below includes our first year of reporting under the new Streamlined Energy & Carbon Reporting
requirements. The reporting period is the same as the Group’s financial year, 1st January 2021 to 31st December 2021.
46
Organisation Boundary and Scope of Emissions
We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2018. These sources fall within the Group’s consolidated financial statement.
An operational control approach has been used in order to define our organisational boundary. This is the basis for
determining the Scope 1 and 2 emissions for which the Group is responsible.
Methodology
For the Group’s reporting, the Group has employed the services of a specialist adviser, Verco, to quantify and calculate
the Greenhouse Gas (GHG) emissions associated with the Group’s operations.
The following methodology was applied by Verco in the preparation and presentation of this data:
the Greenhouse Gas Protocol published by the World Business Council for Sustainable Development and the World
Resources Institute (the “WBCSD/WRI GHG Protocol”);
application of appropriate emission factors from Defra, eGrid and EPA to the Group’s activities to calculate GHG
emissions;
scope 2 reporting methods – application of location-based and market-based emission factors for electricity
supplies;
inclusion of all the applicable Kyoto gases, expressed in carbon dioxide equivalents, or CO2e;
presentation of gross emissions as the Group does not purchase carbon credits (or equivalents);
presentation of annual energy use; and
where data was missing, values were estimated using an extrapolation of available data.
Absolute Emissions
The total Scope 1 and 2 GHG emissions from the Group’s operations in the year ending 31st December 2021 were:
13.5 tonnes of CO2 equivalent (tCO2e) using a ‘location-based’ emission factor methodology for Scope 2 emissions;
and
13.8 tonnes of CO2 equivalent (tCO2e) using a ‘market-based’ emission factor methodology for Scope 2 emissions.
Scope 1 emissions from onsite combustion of natural gas and refrigerant gas losses have been included in the reporting
scope, although there was no such consumption and therefore no Scope 1 emissions have been reported.
Scope 2 emissions included purchased electricity using the location-based and market-based method.
Intensity Ratio
As well as reporting the absolute emissions, we express the Group’s GHG emissions as tonnes of CO2 equivalent per
full-time (FTE) employee, excluding remote workers, and as tonnes of CO2 equivalent per square foot of occupied
office space. These were decided as the most appropriate metrics for the Group.
The intensity metrics have been calculated as follows:
47
0.795 tCO2e per full-time employee (FTE) using the location-based method and 0.812 tCO2e per full-time employee
(FTE) using the market-based method; and
0.001 tCO2e per ft2 using the location-based method and 0.001 tCO2e per ft2 using the market-based method.
Target and Baselines
The Group’s objective is to maintain or reduce its GHG emissions per FTE and per square footage of occupied office
space each year, and to report each year on whether it has been successful in this regard.
The Company’s absolute emissions have seen a decrease of 28% using the location-based method for Scope 2
emissions, and a decrease of 27% using the market-based method for Scope 2 emissions. This was due to a decrease
in electricity consumption.
There was an increase in emissions per full-time employee using both location-based and market-based methods. This
was due to a decrease in the number of employees.
There was a decrease in emissions per ft2 of occupied space using both location-based and market-based methods.
This was due to decrease in total emissions with no change in the associated footage.
Key Figures
Allied Minds plc - Breakdown of emissions by scope
2020
2021
0
0
18.9
18.7
13.8
13.5
0
5
10
tCO2e
15
20
Scope 2 (market-based)
Scope 2 (location-based)
Scope 1
GHG emissions
Scope 11
Scope 22
Scope 23
Total GHG emissions (Location-based
Scope 2)
Total GHG emissions (Market-based
Scope 2)
Tonnes
CO2e
-
13.5
13.8
2021
tCO2e /
emp. 4
-
0.795
0.812
tCO2e /
sq. ft. 5
-
0.001
0.001
Tonnes
CO2e
-
18.7
18.9
2020
tCO2e /
emp. 4
-
0.720
0.727
tCO2e /
sq. ft. 5
-
0.002
0.002
13.5
0.795
0.001
18.7
0.720
0.002
13.8
0.812
0.001
18.9
0.727
0.002
48
1 Scope 1 being emissions from the Group’s combustion of fuel and operation of facilities.
2 Scope 2 being electricity emissions (from location-based calculations), heat, steam and cooling purchased for
the Group’s own use.
3 Scope 2 being electricity emission (from market-based calculations), heat, steam and cooling purchased for the
Group’s own use.
4 Employee numbers (FTE excluding remote workers): 17 (FY2021), 26 (FY2020)
5 Occupied office space: 9,866 ft2 (FY2021 and FY2020)
Total Energy Use
The total energy use for the Company for FY2021 was 44,191 kWh.
Electricity
(kWh)
Energy Use
Gas (kWh)
Total Energy Use
(kWh)
2021
2020
44,191
70,532
-
-
44,191
70,532
Energy Efficiency Actions
The Group did not implement any new energy efficiency actions during the reporting year. Each of the businesses had
its employees working from home for a large portion of the year.
Understanding the Indirect Environmental Impacts of our Business Activities
The Group’s day-to-day operational activities have a limited impact on the environment. The Group does recognise
that the more significant impact occurs indirectly, through the investment decisions made and the operation of the
companies that the Group chooses to invest in. The Group therefore considers it important to establish and invest in
businesses that comply with existing applicable environmental, ethical and social legislation. It is also important to
the Group that these businesses can demonstrate that an appropriate strategy is in place to meet future applicable
legislative and regulatory requirements and that these businesses can operate to specific industry standards, striving
for best practice.
Our Business Ethics and Social Responsibility
The Group seeks to conduct all of its operating and business activities in an honest, ethical and socially responsible
manner. We are committed to acting professionally, fairly and with integrity in all our business dealings and
relationships wherever we operate, and for the Group’s directors and staff to have due regard to the interest of all of
its stakeholders including investors, partners, employees, customers, suppliers and the businesses in which the Group
invests. We expect our entire workforce to maintain high standards in accordance with our internal policies on
conduct. The Company has in place avenues through which employees can raise matters confidentially or
anonymously and the Board, through the Audit Committee, regularly reviews whistleblowing reports provided by the
whistleblowing officer and the Chairman of the Audit Committee.
49
We take a zero tolerance approach to bribery and corruption and implement and enforce effective systems to counter
bribery. The Group is bound by the laws of the UK, including the Bribery Act 2010, and has implemented policies and
procedures to address such laws, as well as the laws in each jurisdiction where the Group operates, including the US.
The Group’s management and employees are fundamental to our success and as a result we are committed to
encouraging the ongoing development of our staff with the aim of maximising the Group’s overall performance.
Emphasis is placed on staff development through work-based learning, with senior members of staff acting as coaches
and mentors. Allied Minds has continued to employ regular all-staff update meetings as the main source of employee
communication.
Stakeholder Engagement
Section 172 of the Companies Act requires Directors to take into consideration the interests of stakeholders in their
decision making. The Board is committed to understanding and engaging with all key stakeholder groups of the
Company in order to maximise value and promote long-term Company success in line with its strategic objectives. The
Board recognises its duties under Section 172 and continuously has regard to the likely consequences of any decision
for the long term, how the Company’s activities and decisions will impact employees, those with which it has a business
relationship, the community and environment, and its reputation for high standards of business conduct. In weighing
all of the relevant factors, the Board, acting in good faith and fairly between members of the Company, makes
decisions and takes actions that it considers will best lead to the long-term success of the Company in accordance with
its strategy. The Board strives to be a good employer to its workforce, responds to shareholder feedback, supports its
communities and focuses on maintaining strong partner relationships.
During the year, the Board assessed its current activities between the Board and its stakeholders through direct
conversations with investors, receiving reports from the executive team regarding workforce feedback, direct
engagement with portfolio company management teams, and review of key partners at Board meetings throughout
the course of the year, all of which demonstrated that the Board actively engages with its stakeholders and takes their
various objectives into consideration when making decisions. Furthermore, in its decision-making, the Board evaluates
and considers the long-term effects and consequences resulting from such decisions. For example, in line with the
Group’s strategy to focus exclusively on funding and operating its existing portfolio companies with the objective of
maximising value for its shareholders, the Board considers how the decision to invest additional capital in Federated
Wireless and protect its ownership in such company was an appropriate action after considering the interests of its
shareholders, impact to the rest of the portfolio, partnership relationships, and other long-term operational impact.
This statement also focuses on how the Directors have had regard during the year to the matters set out in Section
172(1)(a) through (f) of the Act as considered further below.
The Board identified that its key stakeholders include shareholders, employees, portfolio companies, partners,
advisors and communities. Specifically, actions the Board has taken to engage with its stakeholders in 2021 include:
SHAREHOLDERS (Companies Act 2006, sections 172(1)(a) and (f))
Why they matter to us
What matters to them
They are our investors and we measure success
through delivering value to our shareholders. Our
shareholders play an important role in monitoring
and safeguarding the governance of the Group.
Broad range of issues spanning from financial and
operational performance, strategic execution,
investment plans and capital allocation.
50
How the Board engaged
How they influenced the Board’s decision making
Engaged with our major shareholders and
discussed their viewpoints and concerns, including
via teleconference and email correspondence
throughout the year. In particular we discussed
with our shareholders the commencement of the
on market share buyback programme launched on
23 June 2021.
Chairman actively contacts and make himself
available to shareholders who have questions,
issues or concerns to raise.
Shareholder feedback, opinions and concerns are
taken into consideration throughout the year as
the Board makes decisions on the Company’s
strategy, investment decisions, capital allocation,
remuneration and other key matters. The Board
actively engages with shareholders for such
feedback ahead of making key decisions when
appropriate and in accordance with regulatory
requirements.
EMPLOYEES (Companies Act 2006, section 172(1)(b))
Why they matter to us
What matters to them
How the Board engaged
Our
talented, dedicated and experienced
workforce is a key asset to the Group and critical
for the Group’s success.
Opportunities for career development, culture of
inclusion and diversity, compensation and
benefits, acknowledgement for high performance
and ability to meaningfully contribute to the
Group’s success.
including NEDs
Monitored company culture,
visiting and
interacting with the Company’s
employee base, and received reports from senior
executives on morale throughout the year.
How they influenced the Board’s decision making
For additional information on employee retention,
rewarding our workforce and diversity, please see
page 61.
The Board is committed to creating a positive
working environment in line with the Company’s
culture that retains and rewards our workforce.
For additional information on steps taken, please
see page 60.
PORTFOLIO COMPANIES (Companies Act 2006, sections 172(1)(a) and (c))
Why they matter to us
The success of our portfolio companies is what
enables us to bring value to our shareholders. We
51
What matters to them
How the Board engaged
in
invested
strategic
supporting our portfolio
are
companies, the management teams at those
companies, and helping them achieve their
operational and strategic goals.
objectives, meeting
Achieving
performance milestones, fundraising, growth, and
overall company success.
Met with executive teams of multiple portfolio
companies in person or via video teleconference
to better understand such companies’ objectives,
strategies, and goals and provide feedback and
offer ongoing assistance to help further such
companies’ progress and growth.
Active engagement through representation on
portfolio company boards to assist companies
with
fundraising activities and partnership
opportunities.
How they influenced the Board’s decision making Understanding the various objectives of our
portfolio companies allows the Board to make
informed and thoughtful decisions regarding the
portfolio as a whole for the overall benefit of the
Group.
PARTNERS AND CUSTOMERS (Companies Act 2006, sections 172(1)(c) and (e))
Why they matter to us
Strategic partners throughout the portfolio help
the Group succeed as a whole. Their points of
view provide unique perspectives in the various
markets
in which our portfolio companies
operate.
What matters to them
revenue.
to generate
Key customer relationships through the portfolio
are critical to our portfolio companies’ success and
Customer
ability
satisfaction, demands and requirements help
define success for our companies.
These partners have invested in our portfolio
companies and/or have strategic partnerships in
place with our portfolio companies. They want
our companies
their
partnership arrangements to be well-executed.
to succeed and
for
Customers want products and services that will
bring them value and fulfill their business needs.
Successful relationships with our companies will in
turn bring success to such customers.
52
How the Board engaged
How they influenced the Board’s decision making
Direct engagement with key partners of the
Company and its portfolio companies by Executive
Director participation and
interaction on
strengthening relationships and understanding
objectives.
Working with portfolio company management
teams to understand customer needs that in turn
dictate certain aspects of how to further develop
or grow such company’s technology and products.
The Board routinely considered the interests of
our various partners to ensure that they are
aligned with the Company’s strategy, values and
objectives.
The Board considers the needs and interests of key
customers to better understand the portfolio
company businesses and to influence key strategic
decisions through
its representation on the
portfolio company boards of directors.
ADVISORS (Companies Act 2006, sections 172(1)(c) and (e))
Why they matter to us
What matters to them
How the Board engaged
How they influenced the Board’s decision making
to
the Group across
Independent and third party perspectives allow
the Board to make better decisions on behalf of all
of its stakeholders.
Good communication and the ability to work
closely with the Company to enable them to
provide strategic and thoughtful advice and
excellent service to help guide the Board and
its
provide support
operations.
Direct engagement with advisors and key service
providers to discuss Company strategy and to
receive advice and recommendations from such
advisors on a variety of matters.
The Board considers and values the objective
input and advice provided by its trusted advisors
and relies on such advice in various aspects of
decision making when determining how to
navigate the various transactions, issues, strategic
shifts, regulatory matters, and other matters
facing the Board.
COMMUNITIES / ENVIRONMENT (Companies Act 2006, section 172(1)(d))
Why they matter to us
We are committed to maintaining strong ethical
and corporate responsibility principles. We care
about doing business responsibly.
53
What matters to them
How the Board engaged
How they influenced the Board’s decision making
Sustainability and environmental impact resulting
from operations.
Through the Group’s sustainability strategy, aimed
to make a positive contribution to the community
and environment by reducing our carbon footprint
and energy use. Please see pages 53 to 56 for
additional information.
the direct
to
The Board aims
environmental impact of the Group’s operations.
reduce
The Board believes that appropriate steps and considerations have been taken during the year so that each Director
has an understanding of the various key stakeholders of the Company.
The Board recognises its responsibility to contemplate all such stakeholder needs and concerns as part of its
discussions, decision-making, and in the course of taking actions and will continue to make stakeholder engagement
a top priority in the coming years.
Focus on Culture
The Company is committed to maintaining a dynamic culture focused on bringing value to its shareholders by taking
a hands-on approach in supporting its portfolio companies, and in particular, working directly with the management
teams at such companies to help them achieve milestones, accelerate growth and realise monetisation opportunities.
Our workforce maintains the appropriate balance of skills, capabilities, experience and training that allows it to
effectively execute on its strategy. Our Non-Executive Directors have decades of experience in venture capital
investing and are well-positioned to assist our portfolio companies towards achieving successful exits. Our culture is
critical to our success and we strive to align our workforce through the way we conduct our business. Over the course
of the year, we have continued to embed our values by offering career development opportunities throughout our
workforce, providing direct access and engagement between executives and senior management with the rest of the
workforce, and rewarding high performance, all of which encourages our employees to be engaged and invested in
the execution of our strategy.
Employee Diversity and Employment Policies
The Group seeks to operate as a responsible employer and has adopted standards which promote corporate values
designed to help and guide employees in their conduct and business relationships. The Group seeks to comply with
all laws, regulations and rules applicable to its business and to conduct the business in line with applicable and
established best practice. The Group’s policy is one of equal opportunity in the selection, training, career development
and promotion of employees, regardless of age, gender, sexual orientation, ethnic origin, religion and whether
disabled or otherwise. The Group is committed to recruitment and retention of the talent required to execute on
maximising shareholder value, as described above. Specifically, in line with company culture, the Group is committed
to providing a working environment that allows its workforce to succeed, including providing career advancement
opportunities internally within the Group and providing flexible work arrangements that allow employees to earn
additional degrees. The Group engages with its workforce throughout each year to receive feedback and evaluate
whether practices and behaviour throughout the business are aligned with the Group’s purpose, values and strategies.
When issues are identified, the Group takes corrective actions such as revising policies and implementing changes
collaboratively with its workforce to improve alignment and overall culture. Allied Minds and its consolidated
companies had 19 employees as at 31 December 2021. A breakdown of employees by gender as at 31 December 2021
54
can be seen in the illustrations below. Allied Minds supports the rights of all people as set out in the UN Universal
Declaration of Human Rights and ensures that all transactions the Group enters into uphold these principles.
Total Employees
Senior Management
Directors
21%
79%
0%
100%
Female Male
0%
100%
55
Directors’ Remuneration Report
Statement by Chairman of the Remuneration Committee
I am pleased to present, on behalf of the Board, the Directors’ Remuneration Report for the year ended 31 December
2021.
What’s in this report?
The Directors’ Remuneration Report sets out: (i) an annual statement by the Chairman of the Remuneration
Committee on pages 62 to 65; (ii) the current Remuneration Policy for the Company on pages 60 to 69, and an Annual
Report on Remuneration on pages 70 to 85 which describes the implementation of the current Remuneration Policy
during 2021, and expected implementation in 2022. It has been prepared in accordance with the Large and Medium-
sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended. The current Remuneration Policy
was developed taking into account the principles of the UK Corporate Governance Code 2018, the Listing Rules and
shareholders’ executive remuneration guidelines.
The Statement by Chairman of the Remuneration Committee on pages 56 to 59, together with the Annual Report on
Remuneration on pages 70 to 85, will be subject to an advisory vote at the 2021 AGM.
Remuneration Overview
Our current Remuneration Policy received 85.13% shareholder support at our 2019 AGM, took effect from that date,
and has operated for the past three years. In accordance with section 439A of the Companies Act, the Remuneration
Policy is subject to shareholder vote every three years and will be subject to binding shareholder vote at the
forthcoming AGM of the Company expected to be held on 27 July 2022. The Remuneration Committee reviewed the
approach to remuneration for the senior management to assess whether it continues to (i) meet its design objectives,
(ii) support the ongoing business strategy, and (iii) balance good governance practice in the UK-listed company
environment with the ability to attract and retain US-based management and employees of the highest calibre to
execute on this business strategy. The Remeneration Committee determined that the overall remuneration structure
continues to be broadly appropriate and it would seek renewal of the current Remuneration Policy.
The Company believes that remuneration should be weighted toward rewarding entrepreneurial achievement and the
creation of value over time. In 2019, after engaging in extensive discussions with its major shareholders, the
Remuneration Committee approved a number of changes to the remuneration programme, as detailed in our 2019
Annual Report and Accounts, to better align remuneration with the Company’s revised strategy focused on supporting
its existing portfolio companies and maximising monetisation opportunities. During 2021, we continued to execute
upon such strategy and evaluate the appropriateness of the remuneration programme as such changes came into
effect in 2021.
The 2020 Directors’ Remuneration Report received a 61.06 % vote in favour at the 2021 AGM, as detailed on page 79.
While this resolution was passed, the Committee was disappointed that there was a significant minority of votes
against the advisory resolutions.
Overall, the Committee considered that the remuneration programme, including the changes implemented in 2019,
continued to be broadly appropriate and aligned with the Company’s revised strategy while balancing typical UK-listed
market practice with US practice in our market for talent. In line with our commitment to maintaining an open and
transparent dialogue with shareholders, the Company consulted with its major shareholders in the second half of 2021
to gain their input.
56
After extensive engagement with its major shareholders, the Board noted that shareholder concerns were primarily
focused on remuneration schemes in place for 2021 and prior which have since been addressed through the
substantial amendments the Company made to its remuneration programme for 2021 and onwards, as described on
pages 66 to 69 and further detailed in the Group’s 2019 Annual Report and Accounts. The Committee believes that
such changes have and continue to appropriately address shareholder concerns while supporting the Company’s
strategy and aligning Executive Directors’ interests directly with shareholders.
The Committee will continue to monitor the alignment and effectiveness of the Remuneration Policy and its
implementation in light of the Company’s current strategy and developments in the UK remuneration environment.
The Committee remains conscious of the current external economic environment, and will be mindful of this when
determining 2022 out-turns.
Resignation of Joseph Pignato
With effect from 14 January 2021, Mr. Pignato resigned as Chief Executive Officer and as an Executive Director of the
Company. He continued to serve as Chief Financial Officer of the Company for an interim period until 14 April 2021,
and has remained a paid consultant as part of the finance function of the Company.
Performance and Reward for 2021
No performance-based LTIP awards vested to the Executive Director in 2021.
The Work of the Remuneration Committee
The Remuneration Committee has responsibility for setting the Remuneration Policy for, and determining
remuneration of, the Executive Directors and senior management, and reviewing pay and conditions of the wider
workforce.
The Committee met once during the year. All members were present at all meetings during the year. In addition,
Bruce Failing, the Chairman of the Committee, met several times during the year with members of senior management
in order to review all elements of remuneration and their operation. The Committee also received professional advice
from Deloitte LLP where appropriate.
During the year, the key activities carried out by the Committee were:
Review of Remuneration Programme
Conducted a review of all elements of remuneration for the senior management to determine their alignment
and effectiveness in light of the Company’s strategy;
Obtained and reviewed feedback received from major shareholders and shareholder advisory services, in
connection with each of the implementation of the current Remuneration Policy and the subsequent changes
to the remuneration programme in late 2019;
Remuneration for 2021
Determined the 2021 cash incentive bonus and prior LTIP award outcomes for employees;
Reviewed the remuneration reporting regulations in connection with the review of the Group’s Remuneration
Policy and preparation of the Directors’ Remuneration Report;
57
Reviewed remuneration and related policies for the wider workforce, including taking into consideration the
impact of COVID-19;
Approved the delivery of a proportion of 2021 fees to Non-Executive Directors in the form of equity-based
payments (subject to time-based vesting only);
Reviewed and approved the remuneration elements of the resignation of Joseph Pignato, details of which are
provided on pages 80 to 81. As set out elsewhere in the Annual Report, effective as of 14 January 2021, Mr.
Pignato stepped down as an Executive Director. In furtherance of its focused strategy, the Company’s Board
and management determined that the most effective and efficient path forward is for the Company to be a
Non-Executive Board-led company. The Company does not have any current intention of appointing a new
Chief Executive Officer. The scope of the Directors’ Remuneration Report going forward will therefore be
limited to reporting on the remuneration of non-executive directors and details of any payments to past
executive directors.
Remuneration for 2022
Determined base salaries of the senior management, for the period starting 1 January 2022;
Determined the 2022 cash incentive bonus award performance targets;
Exercise of Discretion
No discretion has been exercised in relation to the formulaic outturns under the Company’s incentive plans for
Executive Directors.
Alignment to the UK Corporate Governance Code Principles
When reviewing the appropriateness of the Remuneration Policy and determining its operation for 2021, the
Committee took into consideration, and feels it has appropriately addressed, the following design principles set out in
the revised Corporate Governance Code:
Clarity
Simplicity
Risk
The Committee welcomes open and frequent dialogue with shareholders on the
approach to remuneration.
We have sought to clearly explain how we have implemented the Remuneration
Policy in the year and how the Committee intends to operate it for the year ahead.
Following the cancellation of all outstanding performance awards and the future
operation of the LTIP for Executive Directors, in addition to the Executive Directors
voluntarily forfeiting their interests in the MIP and outstanding stock options
awards, the only performance-based incentive plans in operation for the Executive
Director are the annual Incentive Bonus Awards and the Phantom Plan.
The remuneration approach taken for our Executive Director is cascaded down the
organisation as appropriate.
The Committee considers that the structure of incentive arrangements does not
encourage inappropriate risk-taking.
Under the Incentive Bonus Awards, discretion may be applied where formulaic
outturns are not considered reflective of overall performance.
No bonus payments arising under the Phantom Plan will be made to participants
until the Company has generated $109.2 million of gross proceeds (plus any future
additional invested capital made after October 1, 2019) in one or more future
liquidity events.
Malus and clawback provisions apply to the Incentive Bonus Awards.
58
Predictability
Our Remuneration Policy contains details of threshold and maximum opportunity
levels under our Incentive Bonus Awards, with actual outcomes dependent on
performance achieved against predetermined measures and target ranges.
Proportionality
Alignment to
culture
The Committee’s ability to apply discretion ensures appropriate outcomes in the
context of long-term performance.
The Committee is satisfied that the Remuneration Policy does not reward poor
performance. Our performance measures and target ranges under the Incentive
Bonus Awards, and the construct of the Phantom Plan, are aligned to Company
strategy.
Our reward arrangements are designed to reward delivery of the Group’s strategy
which is focused on supporting our six existing portfolio companies and
maximising monetisation opportunities for portfolio company interests. This is
achieved through our Incentive Bonus Award MBOs and the operation of the
Phantom Plan.
Our remuneration structure for Executive Directors cascades as appropriate
throughout the Company.
We continue to appreciate any feedback shareholders may have.
Bruce Failing
Chairman of the Remuneration Committee
14 June 2022
59
Remuneration Policy (pages 60 to 69)
The Remuneration Policy for the Executive and Non-Executive Directors (Policy) was approved by
shareholders at the 2019 AGM and is proposed for shareholder approval at the 2022 AGM. If approved,
the Policy will take effect from the date of the 2022 AGM. If the Policy is not approved, the current policy
will remain in effect.
The Committee will consider the Policy annually to ensure that it continues to align with the Company’s
strategic objectives; however, it is intended that the Policy will apply for three years from the 2022 AGM.
Where appropriate, commentary has been added to the policy to reflect the changes to the remuneration
program in late 2019 as described above.
The Remuneration Policy Table for Executive and Non-Executive Directors
The table below sets out the Policy for each element of remuneration for Executive and Non-Executive
Directors and how they support the Company’s short- and long-term strategic objectives.
Operation
Opportunity
Performance metrics
Element of
remuneration and
how it supports the
Company’s objectives
An Executive Director’s basic salary is considered by the
Committee on appointment and normally reviewed once per
year or when there is a significant change to role or
responsibility.
Salary will normally be paid twice per month in cash. In
Salary
Provides an
appropriate level of
salary in order to be
competitive and to
maintain the ability to exceptional circumstances, part of the salary may be deferred More significant increases may
be made from time to time, for
recruit and retain
example to recognise an
Executive Directors of date.
increase
to the individual’s role and
the required calibre.
responsibilities, or a significant
increase in the scale or size of the
Company.
There is no prescribed maximum There are no performance
annual salary or increase,
conditions attached to the
however annual increases will
payment of salary, although
there are a number of
normally be in line with those of
the wider workforce.
performance-based factors
both at the individual and
Company level that
influence the level of
salaries provided to
Executive Directors.
Salaries and salary increases are set taking into consideration
a number of factors including (but not limited to):
at the request of the individual and become payable at a later
scale, scope and responsibility of the role;
skills and experience of the individual;
individual and Company performance;
the impact on other remuneration elements and the total
remuneration package;
the individual’s marketability;
pay and conditions across the Company;
the wider economic environment; and
market-appropriate pay positioning against relevant US and
UK listed peers and other companies of a similar size
and complexity.
The cost of benefits provided
varies from year to year in
accordance with market
conditions, therefore there is no
prescribed monetary limit.
N/A
Benefits
Provides a benefits
package in line with
US employment
market practice.
The main benefits provided to Executive Directors include
(but are not limited to):
life insurance;
disability insurance;
medical benefits and dental care;
a car allowance; and
an annual payment to cover personal legal and tax advice.
Executive Directors may also participate in any all-employee
share plans that may be operated by the Group from time to
time on the same terms as other employees.
Additional benefits, which may include relocation expenses,
housing allowance or other benefits-in-kind, may be provided
in certain circumstances if considered appropriate and
reasonable by the Committee, for example on recruitment.
60
Element of
remuneration and
how it supports the
Company’s objectives
Pension
Provides pension
benefits in line with
US employment
market practice.
The Company is not
required to provide
pension benefits in
order to be
competitive and to
ensure its ability to
recruit and retain
Executive Directors.
Incentive Bonus
Awards
Incentivises the
achievement of pre-
determined strategic
goals – management
by objectives (MBOs)
– over a single year
period.
Allied Minds Long
Term Incentive Plan
(LTIP)
Incentivises and
rewards the
achievement of the
Company’s long-term
strategic objectives.
Provides alignment
with shareholders
through long-term
time horizons and the
facilitation of share
ownership.
Operation
Opportunity
Performance metrics
A consistent pension policy operates for all employees across
the Company, creating alignment between Executive
Directors and the wider workforce.
In line with US market practice, no element of the Executive
Directors’ remuneration is pensionable, and the Company
does not operate any pension scheme or other scheme
providing retirement or similar benefits.
However, in line with the approach taken for all employees, the
Company offers a retirement plan in accordance with
subsection 401(k) of the Internal Revenue Code in which
Executive Directors may make voluntary pre-tax contributions
toward their own retirement. The Company does not make any
payments or contributions to such 401(k) Plan.
Annual MBOs and their respective weightings and targets, are
set at or around the start of each financial year.
An Executive Director’s incentive bonus award is considered
by the Committee upon completion of each financial year.
The decision to provide any award and the amount and terms
of any such award, are determined based on the level of
achievement against the MBOs set at the start of the year.
The Committee may exercise its discretion and make
adjustments to the formulaic payout level (both upwards and
downwards, including a reduction to zero) if the formulaic
outcome is not considered to be appropriate. When making
this judgement, the Committee will consider a number of
factors, including (but not limited to) the overall shareholder
experience, underlying business performance (including
financial, operational and technical performance) and
individual performance during the year.
An award over Company stock is typically made to Executive
Directors annually, subject to pre-determined performance
measures which are typically tested over a period of three
years.
The specific performance measures, weightings and targets
are set at or around the start of each financial year.
Performance will normally be tested after three years,
subject to the Committee’s assessment of the extent to
which the performance measures have been met. This
assessment may take into account any additional relevant
factors, at the Committee’s discretion.
A further two-year holding period will typically apply to
awards, giving a total period between the date of the initial
award was made and the end of the holding period of five
years.
Awards are subject to malus and clawback provisions, as
described in the notes to this Policy table.
Operation for 2020 onwards: the LTIP has been retired for
Executive Directors, senior management and other
employees, with no further awards to be made under this
plan to these persons. In addition, the Executive Directors
voluntarily agreed to forfeit the performance-based LTIP
awards made to them in 2017 and 2018, and no LTIP awards
were made in 2019 to them.
61
N / A
N / A
Incentive Bonus opportunities
are capped at 225% of salary per
annum, which is only achieved if
performance significantly
exceeds expectations across all
MBOs set for the year.
The level of annual bonus
payable for on-target
performance is set at a level
significantly below the maximum
opportunity, and will be
disclosed each year in the Annual
Report on Remuneration.
Operation for 2020 onwards:
Incentive Bonus opportunities
will be capped at 150% of salary
per annum.
The Committee and senior
management review the
Group’s MBOs annually
prior to the start of each
financial year to ensure the
detailed performance
measures and weightings
are appropriate and
continue to support the
business strategy.
MBOs may include financial,
operational, technical and
other performance targets.
The MBOs will be weighted
primarily towards Group,
and not individual, MBO
performance.
LTIP awards are normally granted
to an individual each financial year
and are capped at 300% of salary.
The award will only vest in full if
performance significantly exceeds
expectations over the
performance period.
The proportion of the award that
will vest for threshold
performance will be 16.67%.
When attracting a new executive
director of the required calibre,
an additional LTIP award of up to
300% of salary may be granted in
the executive’s first year of
appointment if deemed
appropriate by the Committee.
Thereafter, LTIP awards granted
to the executive would be made
under the normal policy
maximum above.
The Committee may vary
specific measures and
targets applicable to LTIP
awards from year to year, to
ensure they continue to
support the achievement of
the Company’s strategy and
to ensure that the target
range remains sufficiently
stretching.
In respect of the LTIP
awards to be granted in
2019, 60% of vesting will be
based on the Company’s
relative total shareholder
return (rTSR) performance
in respect of a three-year
performance period, and
40% of vesting will be based
upon the monetisation of
portfolio companies over
such period.
Element of
remuneration and
how it supports the
Company’s objectives
Allied Minds Phantom
Plan
Rewards participants
for a successful
portfolio company
liquidity event, a key
strategic objective of
the Group and its
shareholders, thereby
providing alignment
between the interests
of participants and
shareholders.
Operation of such
plans is common
practice amongst our
peers in the venture
creation / IP
commercialisation
sectors, therefore the
Phantom Plan allows
the Company to
provide a market-
competitive
remuneration offering
within the relevant
market for talent
across this industry.
Share ownership
requirement
Encourages
Executive Directors
to build a meaningful
shareholding in the
Company, providing
alignment between
the long-term
interests of Executive
Directors and
shareholders.
Non-Executive
Directors’ Fees
Provides an
appropriate level of
fees in order to be
competitive and to
maintain the ability
to recruit and retain
Non-Executive
Directors of the
required calibre and
experience.
Partial delivery in
Company stock
encourages alignment
of interests with
shareholders.
Operation
Opportunity
Performance metrics
The Phantom Plan is a performance-based, cash settled
bonus plan for Allied Minds’ Executive Directors and
management.
The Plan is triggered by a successful portfolio liquidity
event, including (i) a portfolio company IPO, (ii) the sale of
all or substantially all of a portfolio company’s assets, (iii)
the sale of at least two-thirds of the outstanding shares of a
portfolio company’s voting equity, (iv) the merger or
consolidation of a portfolio company with or into another
entity, or (v) a portfolio company’s liquidation.
Upon a liquidity event, Allied Minds will deduct the amount
it invested in such portfolio company and deduct the
accrued interest in respect of such investment, and will then
allocate 10% of the remaining net proceeds to the Phantom
Plan account for allocation among the participants.
Participants receive “units”, which equates to a pro-
rata share of the Phantom Plan pool.
Vesting of units is determined at the time of grant
of the units.
Operation for 2020 onwards: the Phantom Plan will not be
available to any new unitholders nor will any companies
be added to the Plan.
The maximum aggregate number
of units that may be awarded
under the Phantom Plan is
200,000 units.
Awards to Executive Directors
under the Phantom Plan may
not exceed 30,000 units.
Upon a liquidity event Allied
Minds will distribute 80% of the
Phantom Plan account to the
participants based on their pro
rata share of all vested units on
the date of the applicable
liquidation event, and the
remaining 20% of the Phantom
Plan account will be distributed
to participants at the discretion
of the Committee.
Operation forrom 2020
onwards: Executive Directors
are subject to a cap of 25% of
any allocated proceeds in
connection with a specific
liquidity event.
Executive Directors are required to acquire and maintain a
minimum ownership level of ordinary shares in the Company.
N/A
This minimum level is set at the equivalent of 400% of
salary for the CEO.
No amounts accrue under
the Phantom Plan, and no
amounts are distributed to
participants, until and
unless a successful portfolio
company liquidity event
occurs, and the cash
generated in such liquidity
event exceeds the amount
Allied Minds invested in
such portfolio company,
plus accrued interest and
expenses in respect of such
investment. No other
performance metrics apply.
Operation for 2020
onwards: an additional
underpin has been
introduced, such that no
payments arising under
the Phantom Plan will be
made to participants until
the Company has
generated $109.2 million
of gross proceeds (plus any
future additional invested
capital) in one or more
future liquidity events.
N/A
There is no prescribed
maximum fee or increase,
however total fees payable are
subject to the limits set out in
the Articles of Association.
N/A
Non-Executive Directors receive an annual fee, with
additional fees paid to reflect additional time
commitment and responsibilities for certain roles, e.g.
Chairmanship of a Board Committee / the Board.
Non-Executive Directors’ fee levels are typically
reviewed annually, taking into consideration a number
of factors, including (but not limited to):
scale, scope and responsibility of the role;
relevant skills and experience required; and
market-appropriate pay positioning against relevant US and
UK listed peers and other companies of a similar size and
complexity.
Non-Executive Directors are not entitled to participate in
any Company pension scheme or to receive benefits, other
than the reimbursement of reasonable and properly
documented expenses incurred in performing the duties of
their office (and any associated taxes).
62
Operation
Opportunity
Performance metrics
Element of
remuneration and
how it supports the
Company’s objectives
Non-Executive Directors do not receive any
performance-related awards.
Given the US-based nature of the Group’s business, and
the need to attract and retain independent directors with
significant US business and leadership experience, a
proportion of the fees are paid in stock (with the
remainder paid in cash). The stock element is subject to
time-based vesting over a three-year period, however no
performance conditions are applied.
Careful consideration has been given as to whether including
an equity component would affect the independence of the
Non-Executive Directors, and the conclusion was reached
that it would not, given the level of the awards and the
fact that they are not performance-related.
Common award terms
The Committee will operate the LTIP in accordance with the Policy table above and the respective
rules. Awards under these schemes:
will normally take the form of restricted share units (RSUs) in respect of shares in Allied
Minds, although instruments with similar economic effect may be used if considered
appropriate;
may incorporate the right to receive an amount (paid in cash or additional shares) equal
to the value of dividends that would have been paid on the shares under the award that
vests up to the time of vesting (and where awards are subject to a holding period, the end
of the holding period). This amount may be calculated assuming the dividends have been
reinvested in the Company’s shares;
may exceptionally be cash-settled at the Committee’s discretion;
may have the applicable performance conditions amended or substituted by the
Committee if an event occurs which causes the Committee to determine an amended or
substituted performance condition would be more appropriate and not materially less
difficult to satisfy; and
may be appropriately adjusted in the event of any variation of the Company’s share capital
or any demerger, delisting, special dividend or other event that may affect the Company’s
share price.
Any use of these discretions above would, where relevant, be explained in the relevant year’s
Annual Report on Remuneration and may (if deemed appropriate) be subject to prior
consultation with the Company’s major shareholders.
As noted, the Committee has determined that no further awards will be made under
the LTIP to Executive Directors, senior management or other employees.
63
Minor amendments
The Committee may make minor amendments to the Policy set out in this report (for regulatory,
exchange control, tax or administrative purposes or to take account of a change in legislation)
without obtaining shareholder approval for the amendment(s).
Malus and clawback
Awards under the annual Incentive Bonus and the LTIP are subject to malus provisions (allowing for the
reduction of deferred awards) and clawback provisions (the recovery of awards to which the participants
are entitled) in the case of:
Material misstatement of the Group accounts;
A material correction of any figures used to assess satisfaction of any performance conditions;
A participant’s gross misconduct;
Serious reputational damage; or
Corporate failure.
Under both plans, the clawback provision applies for the two-year period following vesting.
Legacy awards
The Committee reserves the right to make any remuneration payments and payments for loss of office,
notwithstanding that they are not in line with the Policy set out in the table on the previous pages, where
the terms of the payment were agreed:
before the 2016 AGM (being the date on which the previous Policy came into effect);
before the Policy set out above came into effect at the 2019 AGM, provided that the terms of the
payment were consistent with the shareholder-approved Remuneration Policy in force at the time they
were agreed; or
at a time when the relevant individual was not a Director of the Company and, in the opinion of the
Committee, the payment was not in consideration for the individual becoming a Director of the
Company.
For these purposes “payments” include the Committee satisfying awards of variable remuneration and,
in relation to an award over shares, the terms of the payment are “agreed” at the time the award is
granted.
Details of any such payments will be set out in the Annual Report on Remuneration as they arise.
Consideration of employee remuneration arrangements and policies elsewhere in the company
Although the Policy set out above applies only to Executive and Non-Executive Directors of the Company,
in practice the Committee is responsible for setting the policy for, and determining remuneration of, the
Company’s senior management team, and reviewing workforce remuneration and related policies. In
considering changes to the remuneration of the Executive Directors, for example when determining salary
increases, the Committee is mindful of pay and conditions in the wider Group.
64
The Group’s senior management team also participate in the components of remuneration set out above
(i.e. salary, benefits, pension, Incentive Bonus, LTIP and Phantom Plan). The operation of the incentive
schemes for senior management varies from Executive Directors where appropriate, for example award
maxima and vesting criteria.
All US employees at the Allied Minds (parent company) level are eligible for discretionary incentive bonus
awards. While a range of bonus plans are operated at the portfolio company level, appropriate to the
relevant business, the main drivers of these portfolio company plans, in common with the annual Incentive
Bonus awards to Executive Directors, are the achievement of company milestones, and other company
and individual objectives.
In addition, the Company remains committed to fostering alignment with shareholders. Therefore, equity
incentive plans are operated within the portfolio companies, with the aim of incentivising and rewarding
employees of those companies to achieve long-term shareholder value and the delivery of the Company’s
long-term strategic and business objectives.
As noted, in light of the Company's revised strategy, the LTIP has been retired for all Executive Directors,
senior management and other employees, and the Phantom Plan has been closed to new participants and
new portfolio companies.
How the views of shareholders and employees are taken into account
Through the Board, the Committee is regularly updated as to employees’ views on remuneration generally
and receives periodic updates in relation to salary and bonus reviews across the Company. As set out above,
in setting remuneration for the Executive Directors, the Committee takes note of the overall approach to
reward employees in the Company and salary increases will ordinarily be considered in light of those of the
wider workforce. Thus, the Committee is satisfied that the decisions made in relation to Executive Directors’
pay are made with an appropriate understanding of the wider workforce.
The Committee values the input of shareholders and is committed to dialogue on material matters. Any
feedback received from time to time from shareholders, and the AGM voting results in respect of
remuneration-related resolutions, are considered as part of the Committee’s annual review of the Policy.
When developing the 2019 Policy, a key part of the process was the engagement with the Company’s
major shareholders and proxy voting agencies on the proposed remuneration changes, prior to finalising
the Policy.
The Committee will seek to engage formally with shareholders and their representative bodies when it is
proposed that any material changes are to be made to the Policy, and also welcomes and appreciates
feedback at any other time. Extensive shareholder meetings were undertaken ahead of changes to the
remuneration program in late 2019.
Approach to recruitment remuneration
The Committee will apply the principles set out in the Policy table above for any new Executive Director
recruited to the Board, in particular:
Providing a remuneration package that attracts, retains and motivates individuals of the required
calibre, while at all times ensuring that the Company pays no more than necessary;
65
Taking into consideration a number of factors when determining the appropriate package on
recruitment, including the individual’s skills and experience, scale, scope and responsibility of the role,
and pay conditions across the Company;
Ongoing remuneration arrangements for the individual will be limited to those elements listed within
the Policy table above;
Additional benefits in kind, pensions and other allowances, such as relocation, education and tax
equalisation, may be provided in order to recruit the intended candidate; and
Full disclosure will be made of the recruitment package provided to the individual within the next Annual
Report on Remuneration, including rationale for the decisions made where appropriate.
Salaries may be set below market levels on appointment with a view to increase them to broad market
levels, subject to individual performance and progression within the role, by making phased salary
increases above inflation levels.
The maximum level of variable remuneration under the annual Incentive Bonus and LTIP that may be
awarded will be within the usual maximums set out in the Remuneration Policy, subject to the exceptional
limit provided under the LTIP. However, as noted, in light of the Company's revised strategy, the LTIP has
been retired for all Executive Directors, senior management and other employees.
The Committee may make awards on hiring an external candidate to buy out remuneration arrangements
forfeited on leaving a previous employer. In doing so, the Committee will seek to structure buyout awards
on a comparable basis to awards forfeited, taking into account relevant factors including any performance
conditions attached to these awards and the likelihood of achieving these conditions, the form in which they
were granted (e.g. cash or shares) and the timeframe of awards. It is intended that the value awarded would
be no higher than the expected value of the forfeited awards. The Committee would seek as far as possible
to make such buyout awards under the Company’s existing share plans but, if necessary, may rely on the
Listing Rules provision which allows for the grant of awards to facilitate, in exceptional circumstances, the
recruitment of a Director without seeking prior shareholder approval.
In addition to the above principles, the following additional considerations may be applied as appropriate
depending on the circumstances:
In the case of internal promotion, any pre-existing arrangements arising from an individual’s previous
role will continue to be honoured in line with their original terms and conditions.
In the case of promotion to Executive Director following an acquisition or other business combination,
the Committee may permit equity-based incentive arrangements to continue in force if they can be
“rolled-up” into awards over Allied Minds’ shares provided the performance and vesting conditions are
considered appropriate.
In the case of the recruitment of an executive at a time of the year when it would be inappropriate or
not possible to provide an LTIP award for that year (for instance due to price sensitive information or if
there is insufficient time to assess performance), the quantum in respect of the months employed during
the year may be transferred to and amalgamated with the subsequent year’s award if considered
reasonable to do so by the Committee.
66
Similarly, the Remuneration Policy for a new Chairman or Non-Executive Director would be to apply the
same remuneration elements as applicable to existing Non-Executive Directors under the Remuneration
Policy.
Remuneration Policy on payment for loss of office
The Directors believe the policy on payments for loss of office detailed below are aligned with UK
corporate governance expectations and local market practice, and appropriate to attract and retain senior
management of the highest calibre.
The Committee reserves the right to make payments where they are made in good faith in discharge of
an existing obligation (or by way of damages for breach of such an obligation) or by way of settlement or
compromise of any claim arising in connection with the termination of a Director’s office or employment
where they are in the best interests of Allied Minds and its shareholders and reflecting the directors’
contractual and legal rights.
If an Executive Director’s employment is terminated by the Company for “Cause”, the Director shall only
be entitled to amounts that are accrued or owing but not yet paid and reimbursement of any properly
incurred business expenses but excluding any bonus payments or other compensation provided pursuant
to the Company’s incentive compensation plan (such amounts, the “Standard Benefit”).
If the Executive Director terminates the service contract for “Good Reason” or the Company terminates
the service contract without Cause, the Executive Director shall be entitled to:
payment of twelve (12) months’ base salary in accordance with regular payroll;
an annual incentive award equal to the product of: (A) the level of Group and individual MBO
performance during the current year, as determined by the Committee; and (B) a fraction based on the
number of days in which the Executive Director was employed during that year; or, alternatively, an annual
incentive award equal to the product of: (A) the Executive Director’s average bonus for the prior three (3)
years; and (B) a fraction based on the number of days in which the Executive Director was employed during
that year;
payment of the portion of the premiums paid by the Company at the time of such termination under
COBRA for medical, dental, hospitalisation and other employee welfare benefit plans, programs and
arrangements covered by COBRA, for a period of twelve (12) months for the Director and eligible
dependents; and
payment of the Standard Benefit.
In the event of death or disability, similar payments will be made as those payable as a termination for
Good Reason save that the payment of base salary shall only continue for 90 days after the death of the
Executive Director and/or until the commencement of long term disability payments in the case of
termination due to disability.
If the Executive Director terminates employment with Allied Minds without Good Reason (and not
because of death or due to disability), the Executive Director shall be entitled solely to payment of the
Standard Benefit.
67
LTIP participants who cease to be employees, directors or service providers to the Group will normally
forfeit any unvested awards. However, if a participant leaves as a result of death, disability, dismissal other
than for cause or any other reason determined by the Committee, awards will normally vest on the normal
vesting date on a pro-rata basis taking into account performance and the period of time during the
applicable performance measurement period in which the participant continuously provided services. The
Committee may in its discretion determine that there are exceptional circumstances justifying vesting to
a greater or lesser extent. The Committee also has discretion to determine that awards will vest at the
time of cessation of employment, taking into account performance up to that time, and pro-rated to
reflect the time worked in the performance period (with discretion to determine vesting to a greater or
lesser extent).
Impact of change of control on awards under LTIP
If there is a change of control of the Company, the number of ordinary shares over which awards will vest
will be calculated on the basis of the extent to which the performance criteria applicable to those awards
have been satisfied as at the date of the change of control. The resulting number of shares will then be
reduced on a pro-rata basis to reflect the reduced period between the date the award was made and the
date of the change of control, unless the Committee decides otherwise. In exceptional circumstances, the
Committee may recommend full vesting with respect to a change of control. This discretion to accelerate
vesting upon a change of control is included in the LTIP to meet the expectations of a US-based workforce.
Illustration of application of the Remuneration Policy – updated for implementation in respect of 2020
The value and composition of the Executive Director’s remuneration package for the year ending 31
December 2020 is illustrated in the chart below under the following four scenarios:
Minimum
On-target
Maximum
Maximum plus 50%
share price growth
2020 salary ($500,000) plus estimated value of benefits
Two-thirds of
maximum
opportunity
100% of the
maximum
opportunity
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maximum
opportunity
None
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Fixed Pay
Incentive
Bonus
LTIP
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,
MANAGEMENT AND GOVERNANCE
Individual Elements of Remuneration
Share awards made during 2021 (audited information)
Long Term Incentive Plan Vesting during 2021 (audited information)
Non-Executive Director Awards
Equity-based awards were granted to the Non-Executive Directors in 2015, 2016, 2017, 2018, and 2019,
subject to time-based vesting in three equal instalments over a three year period. The LTIP was used as
the mechanism to grant these awards, however they are not subject to performance conditions. These
awards partially vested in 2019, 2020 and 2021. As a result of such vesting in 2019, ordinary shares were
allotted and issued to Mr. Rohr (22,913) and Mr. Rein (24,170). As a result of such vesting in 2020,
ordinary shares were allotted and issued to Mr. Rein (36,154). As a result of such vesting in 2021, ordinary
shares were allotted and issued to Mr Rein (74,100), Mr Failing (36,857) and Mr Lerdal (36,857). As a result
of such vesting in 2022, ordinary shares are due to be allotted and issued to Mr Rein (136,113) and Mr
Failing (90,742).
Payments to Past Directors and Loss of Office Payments (audited information)
With the exception of payments to past directors and loss of office payments previously disclosed in our
2019 Annual Report and Accounts, no payments to past directors were made during the last financial year.
During the year, Joe Pignato, was paid a severance package following his resignation as a Director of the
Company on 14 January 2021 and the details of this package are set out on pages 77 to 78 of the Directors’
Report below.
Total Pension Entitlements (audited information)
No payments for pension entitlements were made to Directors during 2021. The Company offers a
retirement plan in accordance with subsection 401(k) of the Internal Revenue Code (401(k) Plan) in which
Executive Directors may make voluntary pre-tax contributions toward their own retirement. The
Company does not make any payments or contributions to such 401(k) Plan.
Statement of Directors’ Shareholding and Share Interests (audited information)
Share ownership plays a key role in the alignment of our executives with the interests of shareholders,
therefore the Committee operates a share ownership policy for Executive Directors. The policy currently
requires Executive Directors to acquire and maintain a minimum ownership level of ordinary shares in the
capital of the Company equal to 400% of base salary. At 31 December 2021, the Executive Director was
making progress against this requirement. Given the changes to the management structure of the
Company, it was considered appropriate that no post-cessation shareholding requirements policy should
be developed.
The table below sets out the number of shares held by Directors as at 31 December 2021.
72
MANAGEMENT AND GOVERNANCE
Shares
held
outright
Total
222,824 222,824
-
454,300 454,300
-
Non―Executive
Directors
Harry Rein
Mark Lerdal
Bruce Failing
Performance Graph
The graph below illustrates the Company’s Total Shareholder Return (TSR) performance relative to the
constituents of the FTSE 250 index excluding investment companies and the FTSE All Share index, from
the Admission date of 25 June 2014 to 31 December 2021. These indices were chosen since the Company
was / is a constituent for a significant proportion of the relevant period. The graph shows performance
of a hypothetical £100 invested and its performance over that period.
73
MANAGEMENT AND GOVERNANCE
Historical CEO remuneration outcomes
The table below summarises the Chief Executive Officer single total figure for total remuneration, annual
incentive bonus award, LTIP vesting as a percentage of maximum opportunity, payments made under the
Phantom Plan, if any, and US Stock Plan share award vesting as a percentage of maximum opportunity,
for the last seven financial years. As the company listed in 2014, the comparative begins with the 2014
period.
2021
2020
2019
2018
2015
$1,192 $1,328 $9,178 $1,067
2017
2016
$0,019 $1,023 $1,543
n/a
50.0% 58.40% 42.67% 87.33% 74.13%
n/a
0.00%
0.00%
0.00% 33.00% 94.33%
n/a
n/a
2014
$15,942
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
100%
CEO single total figure
for remuneration
($’000) (1)
Joe Pignato(2)
Annual incentive
bonus award pay-out
(% of maximum)(3)
LTIP award vesting (%
of maximum)(4)
US Stock Plan award
vesting (% of
maximum)(5)
Notes:
(1) With respect to 2019, the figures represent the remuneration to Joseph Pignato his appointment as
Co-CEOs on 10 June 2019. With respect to 2020, the figures represent the remuneration for Joseph
Pignato for the full year.
(2) The 2019 figures for Mr. Pignato include the payments made to him under the Phantom Plan resulting
from a successful portfolio company liquidity event in 2019 (as further described on page 86 of the
2019 Annual Report and Accounts). As illustrated on in the 2019 Annual Report and Accounts, the
single total figure of remuneration excluding the Phantom Plan payment for each such individual was
$673,000.
(3) With respect to 2015, 2014 and 2013, the percentage of maximum is not applicable because the
Company did not have any cap on incentive bonus award payments in those financial years. As a
percentage of base salary, the award was 65.7% in 2013, 125.0% in 2014 and 105.0% in 2015.
(4) No performance-based equity awards vested to the CEO under the LTIP during 2020, 2019, 2016,
2015, 2014 or 2013.
(5) All equity awards, including stock options and restricted stock, under the US Stock Plan became vested
and fully exercisable, or vested and fully transferable, in connection with the IPO.
74
MANAGEMENT AND GOVERNANCE
Change in remuneration of Chief Executive Officer compared to US Group employees
The table below sets out the increase in total remuneration of the Chief Executive Officer (Mr. Pignato),
Non-Executive Directors and that of our US Group employees (excluding Directors) from 2020 to 2021.
Our US Group employees were chosen since they are exposed to the same economic factors as the Chief
Executive Officer, who is also US-based.
Executive Directors
Joe Pignato
Non-Executive Directors
Harry Rein
Mark Lerdal(3)
Bruce Failing
Average of all US Group
employees
2020 to 2021
Taxable
benefits
-
17.44%
Incentive
Bonus
1.63%
―
―
―
―
―
―
Salary/fees
(50%)
0.00%
6.67%
5.26%
23.19%
(6.66)%
28.72%
(51.76)%
*Note, the percentages in the chart above are calculated based on actual fees paid to each individual.
There have been several changes to the Board of Directors and management team as set forth below.
The base salary for the Executive Director and the NED fees for 2020 and 2021 remain constant, as
further detailed on page 76 below.
(1) Mr. Lerdal resigned as a Non-Executive Director effective as of 10 March 2021.
Relative importance of spend on pay
The chart below shows the total employee costs, and change in share price from 2020 to 2021.
The information shown in this chart is based on the following:
Total employee pay: Total US Group employee staff costs from note 5 to the consolidated financial
statements, including salaries and wages, payroll taxes, healthcare benefit, and share-based
payments.
Returns to shareholders: Since the Group does not currently pay an annual dividend, returns to
shareholders are represented by the change in the Group’s share price over the period from 31
December 2020 to 31 December 2021.
75
MANAGEMENT AND GOVERNANCE
39.7
32.5
21.4
8.5
6.3
Total employee costs ($)
Share price (p)
Special dividend
2020
2021
Statement of implementation of remuneration policy in the following financial year (2021)
The Committee reviewed the remuneration approach in the year, including the implementation of the
changes to the operation of the remuneration programme made in 2019 and their continued
appropriateness, and input was received from the Executive Director while ensuring that conflicts of
interest were suitably mitigated. The approach to operation for 2021 has been set out below.
Executive Director
Given the announced departure of the Executive Director, no changes were made to the individual’s
remuneration in 2021. Details of the resignation arrangements for the Executive Director are set out on
pages 77 to 78.
Chairman and Non-Executive Directors
The 2021 fee arrangements of the Chairman and Non-Executive Directors remain unchanged from 2020:
Cash Component
Non-Executive Director Annual Fee
Audit Committee Chair Annual Fee
Remuneration Committee Chair Annual Fee
Nomination Committee Chair Annual Fee
Chairman of the Board Annual Fee
Equity Component
Non-Executive Director LTIP Award Value
Chairman of the Board LTIP Award Value
2020
$75,000
$25,000
$10,000
$10,000
$75,000
$50,000
$75,000
The additional fee for serving as Chairman shall only be payable where the Chairman is a Non-Executive
Director. Given the US-based nature of the Group’s business, and the need to attract and retain
76
MANAGEMENT AND GOVERNANCE
independent directors with significant US business and leadership experience, the fees above include an
equity component, which is subject to time-based vesting over three years.
Service Contracts and Letters of Appointment
The Executive Director’s contracts do not provide for extended notice periods or compensation in the
event of a change of control. Details on the treatment of remuneration on loss of office or on a change
of control are provided in the Remuneration Policy.
The Non-Executive Directors have letters of appointment, which are for an initial fixed term of three years.
The letters are reviewed and may be extended, and are terminable on one months’ notice by either party.
The letters of appointment do not provide for any compensation on termination, other than payment of
fees accrued or owing but not yet paid.
The letters of appointment and service contracts are available for inspection at the Company’s registered
office. In accordance with the Code, all Directors submit themselves for election at the first AGM following
their appointment to the Board, and for annual re-election by shareholders at each AGM.
Resignation of Joseph Pignato
As previously noted, with effect from 14 January 2021, Mr. Pignato resigned as Chief Executive Officer
and as an Executive Director of the Company. He continued to serve as Chief Financial Officer of the
Company for an interim period until 14 April 2021.
The Remuneration Committee approved the arrangements below which are in line with the terms of the
agreements with Mr. Pignato and the Company’s Remuneration Policy approved by the Company’s
shareholders at the 2019 AGM, and as disclosed in full in the Company’s Section 430(2B) announcement
on 15 January 2021.
Pursuant to the terms of Mr. Pignato’s service contract, he will be entitled to:
payment of one year’s salary equal to $500,000 based on his rate of annual base salary;
an annual incentive award for 2021 which will be equal to the product of: (A) $373,360 (his
average annual bonus for the three full years preceding his resignation) and (B) a fraction, the
numerator of which is the number of days he was employed by the Company during 2021 and the
denominator of which is the number of days in such year; and
participation at the Company’s expense under COBRA for six months for him and each of his
eligible dependents in all medical, dental, hospitalization and other employee welfare benefit
plans, programmes and arrangements covered by COBRA.
Prior to the Resignation Date, Mr. Pignato had outstanding awards in the form of units (“Phantom Units”)
granted under the Allied Minds Phantom Plan (“Phantom Plan”), details of which are set out in the
Company’s Annual Report and Accounts for the year ended 31 December 2019. The Phantom Units are
settled in cash.
As set out in the Annual Report and Accounts for the year ended 31 December 2019, during 2019,
Executive Directors and all current employees voluntarily agreed to introduce an underpin that $109.2
million of gross proceeds (plus any future additional invested capital) must be generated from one or
77
MANAGEMENT AND GOVERNANCE
more liquidity events prior to any future allocations of proceeds in connection with an individual liquidity
event under the Phantom Plan and to a personal cap (set at 25% for Executive Directors) of any allocated
proceeds in connection with an individual liquidity event under the Phantom Plan. As of the date hereof,
Mr. Pignato’s total units would entitle him to his capped amount of 25% of any allocated bonus proceeds.
In accordance with the terms of his Phantom Units, for the period ending on the date falling 24 months
after his employment terminates, Mr. Pignato will remain entitled to a proportion of the payment he
would have received on a Liquidity Event had he remained an employee. That proportion is 90% if the
Liquidity Event occurs within 6 months after his employment termination date, 75% if 7-12 months after
his employment termination date; 50% if 13-18 months after his employment termination date; 25% if
19-24 months after his employment termination date, and 0% if later than 24 months after his
employment termination date.
As at 31 December 2021, no payments were due to Mr. Pignato under the Phantom Plan.
No further payments will be made to Mr. Pignato in connection with his resignation.
Staff retention plan
During 2021 the Board put in place a retention plan for the remaining full time employees at Allied Minds.
They were paid a retention bonus of 50% of their base salaries payable in two tranches. The first half was
paid assuming they were still employed on 30 September 2021 and the second half will be paid assuming
they are still employed on 30 April 2022.
The Board has also put a similar program in place for 2022. All employees will be paid a retention bonus
of 100% of their base salaries assuming they are still employed on 30 April 2023.
Limits on the number of shares used to satisfy share awards (dilution limits)
All of the Group’s incentive schemes that contain an element that may be satisfied in Allied Minds plc
shares incorporate provisions that in any ten-year period (ending on the relevant date of grant), the
maximum number of the shares that may be issued or issuable under all such schemes shall not exceed
10% of the issued ordinary share capital of the Company from time to time (excluding shares issued
pursuant to awards granted prior to IPO under the US Stock Plan).
The Committee regularly monitors the position and prior to the making of any share-based award,
considers the effect of potential vesting of outstanding awards to ensure that the Company remains within
these limits. Any awards which are required to be satisfied by market purchased shares are excluded from
such calculations. No treasury shares were held or utilised in the year ended 31 December 2021.
Remuneration Committee: details and governance
The full terms of reference of the Committee, which are reviewed annually, are available on the Group’s
website at www.alliedminds.com. In summary, the Remuneration Committee has specific responsibility
for advising the Board on the remuneration and other benefits of the Executive Director and senior
management, an overall policy in respect of remuneration of other employees of the Group and
establishing the Group’s policy with respect to employee incentivisation schemes.
The Remuneration Committee is currently comprised of the following independent Non-Executive
Directors, whose backgrounds and experience are summarised on pages 26 to 27:
78
MANAGEMENT AND GOVERNANCE
Bruce Failing (Chair)
Harry Rein
Messrs. Rein and Failing served during the entire financial year. Mr. Lerdal resigned from the Board
effective as of 10 March 2022.
Committee meetings are administered and minuted by the Company Secretary.
Key activities carried out by the Committee during 2021 are set out in the Committee Chairman’s
statement on pages 56 to 59.
External advisers
The Remuneration Committee is authorised, if it wishes, to seek independent specialist services to provide
information and advice on remuneration at the Company’s expense, including attendance at Committee
meetings.
During the year, the Remuneration Committee continued its review of executive remuneration and took
into consideration professional advice from Deloitte LLP. Fees paid to Deloitte LLP in connection with
advice to the Remuneration Committee in 2021 were $27,744 USD (2020: $30,242). Deloitte provided no
other services or advice to the Group during the year. The Remuneration Committee is satisfied that the
advice given is objective and independent. Deloitte LLP is a founding member of the Remuneration
Consultants Group and adhere to its Code of Conduct in relation to executive remuneration consulting in
the UK.
Statement of voting at general meeting
The table below sets out the proxy results of the vote on the Group’s Remuneration Report at the Group’s
2021 AGM and the Remuneration Policy at the Group’s 2019 AGM:
Votes for
Votes against
Remuneration Report
Remuneration Policy
Number
93,703,754
129,448,525
% of
cast
votes
Number
61.06 % 59,747,294
85.13% 22,612,862
% of
Votes
cast
withheld
votes
38.94 %
2,781,471
14.87% 152,061,387 19,409,374
Votes cast
153451048
As set out in the Statement of the Committee Chairman, the Committee was disappointed that there was
a significant minority of votes against the Remuneration Report at the 2021 AGM.
Overall, the Committee considered that the remuneration programme,
including the changes
implemented in 2019 that came into effect for 2020, continued to be broadly appropriate and aligned
with the Company’s revised strategy while balancing typical UK-listed market practice with US practice in
our market for talent. In line with our commitment to maintaining an open and transparent dialogue with
shareholders, the Company consulted with its major shareholders in the second half of 2020 to gain their
input.
After extensive engagement with its major shareholders, the Board noted that shareholder concerns were
primarily focused on remuneration schemes in place for 2019 and prior which have since been addressed
79
MANAGEMENT AND GOVERNANCE
through the substantial amendments the Company made to its remuneration programme for 2020 and
onwards. The Committee believes that such changes have and continue to appropriately address
shareholder concerns while supporting the Company’s strategy and aligning Executive Directors’ interests
directly with shareholders.
Approval
This Directors’ Remuneration Report, including both the Remuneration Policy and Annual Report on
Remuneration has been approved by the Board of Directors.
Bruce Failing
Chairman of the Remuneration Committee
14 June 2022
80
MANAGEMENT AND GOVERNANCE
Audit Committee Report
The Audit Committee plays an integral role in assisting the Board in fulfilling its oversight responsibilities,
and as a whole, has the competence relevant to the sector in which the Company operates. In performing
its duties, the Committee strives to maintain effective working relationships with the Board, the
Company’s management and the external auditors. The Committee reviews the integrity of the financial
statements of the Group, reviews all proposed half-yearly and annual results, and advises the Board
whether it believes the annual report and accounts, taken as a whole, fairly present the Company’s
financial position and provide the necessary information to the shareholders of the Company to assess
the Company’s position and performance, business model, and strategy.
Membership
The Committee comprises two independent Non-Executive Directors. Members of the Committee are
appointed by the Board. The appropriate members of the Company and the external auditors also
participate in Committee meetings by invitation. Following the resignation of Mr Lerdal, Mr Failing had
been appointed as Chair of the Audit Committee on an interim basis pending the recruitment of a new
non-executive director to step into this role in due course.
During the year under review, the Chair of the Audit Committee was Mr. Lerdal who had relevant, recent
financial experience with over thirty years of senior management and executive experience. Messrs. Rein
and Lerdal served on the Audit Committee during the entire financial year.
The Committee met once in 2021, and the external auditors participated in this meeting. Reflecting the
meetings for which each member was then appointed to the Committee, all members were present at all
meetings during the year during their term of service.
Responsibilities
The Committee’s main responsibilities are to monitor the integrity of the financial statements of the
Company, including its annual and half-yearly reports and accounts and any other formal announcement
relating to its financial performance; and reviewing and reporting to the Board on significant financial
reporting issues and judgements made and matters communicated to it by the auditor. The roles and
responsibilities of the Audit Committee additionally include to:
• Review the Company’s internal financial controls and the Company’s internal control and risk
management systems;
• Advise on the need for and monitor and review the effectiveness of the Company’s internal audit
function;
• Make recommendations to the Board, for it to put to the shareholders for their approval in
general meeting, in relation to the appointment of the external auditor and to approve the
remuneration and terms of engagement of the external auditor;
• Review and monitor the external auditor’s independence and objectivity and the effectiveness of
into consideration relevant UK professional and regulatory
the audit process, taking
requirements;
81
MANAGEMENT AND GOVERNANCE
• Develop and implement policy on the engagement of the external auditor to supply non-audit
services, taking into account relevant ethical guidance regarding the provision of non-audit
services by the external audit firm; and to report to the Board, identifying any matters in respect
of which it considers that action or improvement is needed, and making recommendations as to
the steps to be taken;
Conduct a performance evaluation of the Committee annually, including review of Committee
member experience and background, and discussion by the Board of each Committee member as
further described on page 42, to ensure that it continues to be effective and that each of the
Directors on the Committee demonstrates commitment to his or her respective role and has
sufficient time to meet his or her commitment to the Company; and
• Report to the Board on how it has discharged its responsibilities.
As a whole, the Committee has the relevant experience and skills necessary to effectively execute its
responsibilities. The Committee carries out these duties for the Company, major subsidiary undertakings
and the Group as a whole, as appropriate. In 2021, the Committee discharged all such duties as further
described below, including, without limitation, completing an annual review of its internal controls and
risk management systems with its external auditors and reviewing the Financial Position, Prospects and
Procedures of the Company on an ongoing basis throughout the year to enable the Board to make proper
judgements.
Activities during the year
The Committee’s activities for the year ended 31 December 2021 included the responsibilities set forth
above, as well as the items set forth below:
Financial reporting
• Reviewed and approved the appropriate audit plan, before the start of the annual audit cycle;
• Reviewed and provided comments and recommendations in respect of the financial statements
in the half-yearly report for the period ended 30 June 2021, and the financial statements in the
Annual Report and Accounts for the year ended 31 December 2021;
• Reviewed the Company’s approach and methodology for determining the fair value of
investments and the preferred share liability. Considered and recommended the involvement of
an external valuation specialist firm to assist management and the Board in deriving the fair value
of the subsidiary undertakings; and
• Considered significant matters, risk areas, and areas of judgement in relation to the Group’s
financial statements taking into account the areas highlighted by the external auditors in their
presentations to the Committee, and challenged where necessary.
The Committee is satisfied with the integrity of the financial statements of the Company in all material
aspects, including the application of significant accounting policies, the methods used to account for
significant transactions, use of judgements and estimates made by management, including those made in
deriving the fair value of the subsidiary undertakings, and the quality and completeness of the disclosures
in the financial statements of the Company.
82
MANAGEMENT AND GOVERNANCE
The Committee is satisfied that this Annual Report as a whole is fair, balanced and understandable, and
provides the information necessary for a reasonable shareholder to assess the Company’s position and
performance, business model and strategy.
Internal controls and risk management systems
• Reviewed the principal elements of the Company’s risk management framework as set out on
pages 19 to 25 of this Annual Report. The Committee gives consideration and provides guidance
on enhancing the internal controls and risk management framework, as needed;
• Reviewed the established procedures, which provide a reasonable basis for the Board to make
proper judgements on an ongoing basis as to the Financial Position, Prospects and Procedures
(FPPP) of the Company following the adopted risk approach; and
• Reviewed the whistleblower policy that was established and approved by the Board in 2014,
which has been communicated to employees. The Audit Committee is satisfied that the policy
has been designed to encourage staff to report suspected wrongdoing as soon as possible, provide
staff with guidance on how to raise those concerns, and ensure staff that they should be able to
raise genuine concerns without fear of reprisals, even if they turn out to be mistaken.
Significant areas reported to the Board
Fair value of financial assets and liabilities held under IFRS9
Significant judgements are made in valuing the assets and liabilities and complex models are used to give
a fair value, which present a high risk for the financial statements.
Judgment on whether the Company has significant influence under IAS28
There is a significant judgement in relation to whether the shares are accounted for as an investment in
associate per IAS 28. This judgement includes, among others, an assessment of whether the Company has
representation on the board of directors of the investee, whether the Company participates in the policy
making processes of the investee, whether there is any interchange of managerial personnel, whether
there is any essential technical information provided to the investee and if there are any transactions
between the Company and the investee.
Accounting treatment of investments under IFRS10
It has been determined that the Group no longer has control as defined in IFRS 10 but has maintained
significant influence over some of its former subsidiaries and due to the fact that the Group holds a variety
of instruments in these entities, which have varying risks and rights, there is significant judgement in
relation to the accounting for these instruments. The valuation of these financial assets also includes a
significant level of judgement and external valuation specialists are utilised in this process. The
Committee believes that the Group considered the pertinent terms and accurate accounting of each of
the financial instruments (and sought external expertise as well).
Viability
The Committee reviewed the Company’s viability as further stated in the Overview on pages 32 to 33. As
previously reported, the Company’s strategic objective is to focus exclusively on its existing portfolio
83
MANAGEMENT AND GOVERNANCE
companies and to maximise total returns to all shareholders from monetisation of such portfolio. The
Board resolved, in March 2022, to undertake a formal review of the Company's strategic options (the
“Strategic Review”) including, but not limited to, a sale of the Company itself, which the Board intends to
conduct under the framework of a “Formal Sale Process" in accordance with Rules 2.4 and 2.6 of the
Takeover Code, alternatively, to seek to distribute certain assets and any cash reserves directly back to
shareholders through a re-structure. The Strategic Review is solely aimed at creating and/or realising
shareholder value. In line with this strategy, the Board anticipates delivering such returns within the next
three years. After careful assessment of the Company’s cash position and projections through such
period, the Committee reasonably expect the Group to continue in operation and meet its liabilities as
they fall due in order to execute on this strategy during such period.
Impact of coronavirus pandemic and Going concern
There is judgement relating to whether the Group and Company have sufficient financial resources to
continue as a going concern based on the Group and Company’s business model and other applicable
factors that may impact such determination. As previously noted, the impact of the coronavirus pandemic
has the potential to negatively impact the Group’s and the Company’s financial position. However, the
Group continues to closely monitor the pandemic, its impact on its workforce, the global economy and its
suppliers, customers and partners in order to make decisions and take meaningful actions to mitigate
against disruption to operations across the portfolio and the potential negative financial impact. Taking
all factors into consideration, management have assessed that the Group and Company continue to be a
going concern and the Committee is satisfied with the assessment made.
External audit
• Engaged in competitive process for determining the Group’s new independent auditor, including
assessing and performing diligence on various independent audit firms.
• Recommended the appointment of BDO LLP to the Board as the Group’s independent auditor for
the financial year ending 31 December 2021.
• Reviewed and approved the scope of the procedures over the half-yearly report for the period
ended 30 June 2021, and the Annual Report and Accounts for the year ended 31 December 2021;
• Discussed with management and agreed upon the terms of the engagement of the external
auditors and the auditors’ remuneration for audit and non-audit services. In assessing
independence, the Audit Committee received the auditor’s presentation and confirmation that in
its professional judgment, BDO LLP (from its engagement on 12 May 2021), are independent
within the meaning of regulatory and professional requirements and the objectivity of the partner
and audit staff is not impaired. The Committee was satisfied that throughout the year that the
objectivity and independence of BDO LLP, as applicable, was not in any way impaired by the non-
audit services they provided to the Group during the year, by the amounts of non-audit fees, or
by any other factors;
• Assessed the independence, objectivity and qualifications of BDO LLP as the external auditor and
evaluated the quality and effectiveness of the audit procedures. In doing so, the Committee
reviewed the audit plan and monitored performance against the plan, reviewed the periodic
reports of BDO LLP to the Committee that highlighted key areas of focus during the audit and the
84
MANAGEMENT AND GOVERNANCE
applied audit approach, and obtained feedback from the finance department in respect to quality
and status of BDO LLP work in the course of the audit. The Committee concluded that the audit
process during the year was effective; and
• Reviewed and discussed the principal areas of financial reporting risk, as highlighted above, and
reported to the Board.
In 2021, the Committee reviewed the performance of the independent auditor and after careful
consideration and deliberation, the Committee determined that BDO LLP’s performance asindependent
auditor was satisfactory and recommended to the Board that the retention of BDO LLP as independent
auditors of the Company remained in the best interests of the Company’s shareholders. Accordingly,
upon recommendation by the Committee, which was free from influence by any third party, the Board
approved the appointment of BDO LLP as the Company’s auditor for the financial year ending 31
December 2021. No contractual term of the kind under the Audit Regulations was imposed on the
Company. The total fees to BDO LLP for the year ended 31 December 2021 were $526,000 USD (see note
5 of the consolidated financial statements, which includes the breakdown of audit and non-audit related
fees). Given the appointment of BDO LLP in 2021, the next anticipated requirement to tender audit will
be for the 2030 calendar year. As such, the Company is complying with the Statutory Audit Services Order.
Internal audit
Given the size and composition of the Group, taking into account relevant significant matters, risk areas,
areas of judgement in relation to the Group’s financial statements, and that all Group financial systems,
transactions, and processes are conducted at the central office, the Board did not consider it necessary to
have an internal audit function during the year. The Board will keep this decision under annual review.
Bruce Failing
Chairman of the Audit Committee
14 June 2022
85
Independent auditor’s report to the members of Allied Minds Plc
Opinion on the financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2021 and of the Group’s loss for the year
then ended;
the Group financial statements have been properly prepared in accordance with UK
adopted international accounting standards;
the Parent Company financial statements have been properly prepared in accordance
with UK adopted international accounting standards and as applied in accordance with
the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Allied Minds Plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2021, which comprise the
Consolidated Statement of Comprehensive (Loss), the Consolidated Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash
Flows, the Company Balance Sheet, the Company Statement of Changes in Equity, the Company
Statement of Cash Flows and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards, and as regards the Parent
Company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion. Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Directors on 4
August 2020 to audit the financial statements for the year ended 31 December 2020 and
subsequent financial periods. The period of total uninterrupted engagement is 2 years, covering
the years ended 31 December 2020 to 31 December 2021. We remain independent of the Group
and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. The non-audit services prohibited by that standard were not provided to
the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to
continue to adopt the going concern basis of accounting included:
a detailed audit of forecasts prepared by the Directors for a period of at least 12 months
from the date of approval of the financial statements;
a review of stressed forecasts, as prepared by the Directors, which detailed the changes
of key assumptions which would lead to the business no longer being a going concern.
As part of this we reviewed the likelihood of these changes against documentation
provided by the Directors and from external sources;
We have assessed the accuracy of the Directors’ forecasts by confirming the accuracy
of historic forecasts, corroborating the inputs to supporting documentation and agreeing
expected changes from historic actuals; and
we carried out discussions with management and board members to challenge the future
outlook (including the impact of recent board resignations) and cash commitments of the
Group and how these had been included within the forecasts reviewed and further
potential impacts on the forecasts.
Further details of the Directors’ assessment of going concern is provided in note 1.
Based on the work we have performed, we have not identified any material uncertainties relating
to events or conditions that, individually or collectively, may cast significant doubt on the Group
and the Parent Company’s ability to continue as a going concern for a period of at least twelve
months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the Directors’ statement
in the financial statements about whether the Directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Overview
Coverage1
Key audit matters (‘KAM’)
100% (2020: 100%) of Group profit before tax
100% (2020: 100%) of Group revenue
100% (2020: 99%) of Group total assets
2021
2020
X
X
-
X
-
X
of
and
share
of
previously
KAM 1
Valuation
investments
preference
liabilities
KAM 2
Deconsolidation
entities
consolidated
KAM 3
Consolidation
and
accounting
judgement of
the
Group not meeting
for an
the criteria
investment
entity
(2020 only: as it was
adequately addressed in
the prior year audit and
there have been no
changes expected to be
made or actually made to
management’s
judgement in the year).
Materiality
Group financial statements as a whole
$1.141m (2020: $1.1662m) based on 2% (2020: 2%) of net
assets
1 These are areas which have been subject to a full scope audit by the group engagement team
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including the Group’s system of internal control, and assessing the risks of material misstatement
in the financial statements. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group comprises 4 components: one incorporated UK company, being a holding company
and, which were deemed significant components and 3 significant non-UK (and all USA)
components; the remaining entities were deemed non-significant.
In establishing the overall approach to the Group audit, we assessed the audit significance of
each component in the Group by reference to both its individual financial significance to the Group
or other specific nature or circumstances. The four identified individually significant components,
makes up 100% of Group loss before tax and also covers 100% of the total assets of the Group.
Separate to the four significant components we carried out specified audit procedures on the one
investment which is equity accounted for, to Group materiality.
The significant components were located in the UK and the USA. The significant component
incorporated in the UK had its books and records held in the USA alongside the entities
incorporated in the USA and therefore, all the entites were subject to a full scope audit, with the
support of our network member firm in the USA, with the oversight of the Group auditor.
For components of the Group not considered to be significant components the component audtior
performed specified audit procedures over areas considered to be significant risks to the Group
audit. Furthermore, the Group auditor has been responsible for directing all the audit work
completed, the audit risks identified, the audit of the consolidation and the contents of the annual
report and disclosures accompanying the consolidated and Parent Company financial
statements.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed
in order to be able to conclude whether sufficient appropriate audit evidence has been obtained
as a basis for our opinion on the Group financial statements as a whole. Our involvement with
component auditors included the following:
We provided instructions to the component auditor setting out the risks and procedures to be
performed as part of their full scope audit, reporting to us on the significant components and equity
investments accounted for in this territory, and determined appropriately scoped risks, procedures
and agreed responses to those risks with the component audit team.
We held planning meetings with the component team to discuss the component risk assessment
including materiality, and overall reporting process that was then communicated formally in Group
audit instructions. Our instructions required a number of reporting deliverables including the
component auditor opinion that was received and reviewed. We took an active part in reviewing
the work performed; this was performed both on site and remotely with the component auditor in
attendance or both methods.
This, together with the additional procedures performed at Group level over the consolidation
process gave us the evidence we needed for our opinion on the financial statements as a whole.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit, and directing the efforts of the engagement team. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
1
of
Valuation
investments
and preference
share liabilities
Note
Financial
instruments and
value
Fair
measurement
policies, Note 11
and 16
–
financial
The
statements
include significant investment
assets and preference share
liabilities which are held at fair
value under IFRS 9.
to
made
the number of
Due
judgements and
significant
estimates
by
management in valuing the
assets and liabilities, as well
complexity of the models used
to give a fair value, there is a
high
of material
misstatement.
risk
in
the
Due to the complexity of the
disclosure
financial
statements, the disclosures
made are considered to be a
significant risk of material
misstatement
This was
identified as a
significant risk as part of the
audit planning and a key audit
matter to be included in the
audit report.
How the scope of our audit addressed
the key audit matter
The work carried out on the risk identified
was a follows:
Use of an auditor’s internal expert in
valuations prepared under IFRS9 to
review the models used to value the
investments and preference share
liability in order to determine whether
they were aligned with recognised
valuation models and that they were
appropriate for valuing the underlying
investment or liability.
A re-performance of the numerical
and arithmetic accuracy of the model
compared with the inputs used to
ensure the final output value was
accurately calculated.
agreement
A review of the inputs into the models
and
supporting
evidence to corroborate whether the
inputs were
and
appropriate.
reasonable
to
information
Challenged management on all
judgemental or estimated inputs into
the models to determine whether they
appear reasonable
in respect of
from
corroborating
management and third party sources.
Carried out sensitivity analysis in
respect of the key and judgemental
inputs into the models to understand
potential impacts on the valuation of
the underlying instruments.
the disclosure
Reviewed
in
the
annual report to understand if this
the underlying
was aligned with
calculation from the models used and
that all information of importance to
the users of
the accounts was
adequately disclosed in accordance
with the accounting standards. We
have also agreed the disclosure is
aligned to the accounting policy as
disclosed in the annual report.
Key observations:
Based on
consider
that
the work performed we
the
investments and
Deconsolidation
of entities no
longer
consolidated
Note 11
During the period the Group
lost control and significant
influence over one of the
consolidated entities
following a funding round,
further to this the Group also
disposed of and
deconsolidated an entity
following their share of the
business being sold in a
stock for stock exchange.
There are a significant
number of judgements and
estimates made by
management as part of the
accounting treatment,
including the value of the
residual investment held,
whether they maintain any
significant influence in the
entities, the value of assets
and liabilities at the date of
the deconsolidation.
in
the
Due to the complexity of the
disclosure
financial
statements, the disclosures
made are considered to be a
significant risk of material
misstatemetn
This was
identified as a
significant risk as part of the
audit planning and a key audit
matter to be included in the
audit report.
liability have been
preference share
valued appropriately and in accordance
with the Group’s accounting policy for
these financial statement areas.
The work carried out on the risk identified
was a follows:
Use of an auditor’s internal expert in
valuations prepared under IFRS 9 to
review the models used to value the
residual investments held which have
been used to calculate the gain on
disposal and deconsolidation of the
the
entities. By determining
that
valuations were
aligned with
recognised valuation models and that
they were appropriate for valuing the
underlying
the
have
date
transaction
reperformed the calculation for the
fain on reconcolidation.
investment as at
we
Audit procedures on the fair value of
the assets and liabilities disposed of
at the transaction date in the former
subsidiary company.
the
required
journal entries
A reperformance and recalculation of
the
to
correctly recognise the transactions
in
financial
consolidated
statements and corroboration of all
journals
the
consolidationfor reasonableness in
line with the understanding of the
transactions obtained..
posted
in
Agreed that the transactions are
accurately and clearly disclosed in
the financial statements.
Key observations:
Based on
the work performed we
consider that the deconsolidation of the
entities bas been treated correctly and
disclosed correctly
financial
statements.
the
in
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating
the effect of misstatements. We consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of reasonable users that are taken
on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed
materiality, we use a lower materiality level, performance materiality, to determine the extent of
testing needed. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as
a whole and performance materiality as follows:
Materiality
Basis for
determining
materiality
Rationale for the
benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
Group financial statements
Parent company financial
statements
2021
$’000
1,118
2% of net
assets
2020
$’000
1,166
2021
$’000
31
2% of net assets 2% of net assets
2020
$’000
36
2% of net
assets
The Parent Company benchmark
was set in line with that of the
Group for the individual Parent
entity.
risk areas
The performance of the Group is
measured by management based
on
the
the performance of
underlying investments. Further,
the
as noted above, one of
significant
the
is
valuation of
investments and
preference share liabilities in the
Group. These two balances make
up the majority of the statement of
financial position, indicating net
assets
appropriate
the
as
benchmark.
671
699
19
22
Performance materiality was
determined
to be 60% of
materiality in our work. This level
was chosen based on our
understanding on the business
and the nature of the underlying
activity. Therefore, a a lower level
of performance materiality was
used to ensure sufficient audit
work
to ensure
sufficient and appropraite audit
work was carried out on the Group.
is completed
chosen
basedon
Performance materiality was
determined
to be 60% of
materiality in our work. This level
our
was
understanding of the company and
it’s activity, therefore a lower level
of performance materiality was
used to ensure sufficient audit
work is completed on the Parent
Company.
Component materiality
We set materiality for each significant component of the Group based on a percentage of between
20% and 90% (2020: 20% and 90%) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that component. Component materiality
ranged from $923k to $155k (2020: $1,166k to $233k). In the audit of each component, we further
applied performance materiality levels of 60% (2020: 60%) of the component materiality to our
testing to ensure that the risk of errors exceeding component materiality was appropriately
mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences
in excess of $34k (2020:$35k). We also agreed to report differences below this threshold that, in
our view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual Report and Accounts other than the financial statements and
our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-
term viability and that part of the Corporate Governance Statement relating to the Parent
company’s compliance with the provisions of the UK Corporate Governance Code specified for
our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the Corporate Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit.
Going
concern and
longer-term
viability
Other Code
provisions
The Directors' statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified set out on page 45; and
The Directors’ explanation as to their assessment of the Group’s
prospects, the period this assessment covers and why the period is
appropriate set out on pages 32 and 83.
Directors' statement on fair, balanced and understandable set out on
page 36;
Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 44;
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on page 83; and
The section describing the work of the audit committee set out on page
81.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the
audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions
and matters as described below.
Strategic
report
Directors’
report
and
In our opinion, based on the work undertaken in the course of the audit:
the information given in the Strategic report and the Directors’ report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has
been properly prepared in accordance with the Companies Act 2006.
Matters
on
which we are
to
required
report
by
exception
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
the Parent Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not
made; or
we have not received all the information and explanations we require
for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and
the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud is detailed below:
We identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and then design and perform audit procedures responsive to those risks,
including obtaining audit evidence that is sufficient and appropriate to provide a basis for our
opinion.
We have identified and assessed the potential risks related to irregularities, including fraud,
by considering the following:
o Enquiries of management regarding: the compliance with laws and regulations; the
detection and response to the risk of fraud and any knowledge of actual, suspected
or alleged fraud; and the controls in place to mitigate risks related to fraud or non-
compliance with laws and regulations;
o We communicated relevant identified laws and regulations and potential fraud risks
to all engagement team members and the component auditor, who were all deemed
to have appropriate competence and capabilities, to remain alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit; and
o Obtaining an understanding of the legal and regulatory framework in which the Group
operates. The key laws considered are accounting standards, the Companies Act
2006 and tax legislation.
We have responded to risks identified by performing procedures including the following:
o Enquiry of management and review of legal correspondence concerning actual and
potential litigation and claims;
o Performing analytical procedures to identify any unusual or unexpected relationships
which may indicate risks of misstatement due to fraud;
o Reading the minutes of meetings of those charged with governance; and
o Review of financial statements disclosures and testing to supporting documentation.
We have also considered the risk of fraud through management override of controls by:
o Testing on a sample basis the appropriateness of journal entries and other
adjustments; and
o Assessing whether the judgements made in making accounting estimates are
indicative of potential bias.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further removed non-compliance with laws
and regulations is from the events and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that
we might state to the Parent Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Parent Company and the Parent
Company’s members as a body, for our audit work, for this report, or for the opinions we have
formed.
Iain Henderson (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
14 June 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
For the year ended 31 December
Note
Revenue
Operating expenses:
Cost of revenue
Selling, general and administrative expenses
Research and development expenses
Operating loss
Other income:
Gain on deconsolidation of subsidiary
Loss on investments held at fair value (net)
Other income
Other income /(expense)
Finance income
Finance cost
Finance cost from IFRS9/ fair value accounting
Finance loss, net
3
4,5
4,5
4,5
11
11
18
7
7
7
Share of net loss of associates accounted for using the equity method 11
Taxation
Loss before taxation
Loss for the period
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences
Other comprehensive loss, net of taxation
Total comprehensive loss for the period
Loss attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
Loss per share
Basic
Diluted
98
23
15
15
8
8
2021
$ '000
2020
$ '000
1,544
480
(443)
(10,569)
(2,650)
(12,118)
14,213
(13,894)
705
1,024
45
(255)
(2,578)
(2,788)
(2,362)
(16,244)
—
(16,244)
(41)
(41)
(16,285)
(15,534)
(710)
(16,244)
(15,575)
(710)
(16,285)
$
(0.06)
(0.06)
(210)
(10,497)
(4,712)
(14,939)
—
(31,934)
—
(31,934)
291
(314)
(1,763)
(1,786)
(6,845)
(55,504)
—
(55,504)
(116)
(116)
(55,620)
(53,025)
(2,479)
(55,504)
(53,141)
(2,479)
(55,620)
$
(0.22)
(0.22)
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of 31 December
Note
2021
$ '000
2020
$ '000
Non-current assets
Property and equipment
Investment at fair value
Right-of-use assets
Other financial assets
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Total assets
Equity
Share capital
Treasury shares
Translation reserve
Accumulated profit
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Non-current liabilities
Lease liabilities
Loans
Total non-current liabilities
Current liabilities
Trade and other payables
Deferred revenue
Loans
Preferred shares
Lease liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
9
11,20
19
20
12
13
20
14
14
14
14
14,15
19
17,18
17
3
18
16
19
787
33,984
414
44
35,229
9,710
5,912
5,050
20,672
55,901
3,767
(738)
1,302
40,156
44,487
168
44,655
213
—
213
1,061
4,948
3,109
1,255
660
11,033
11,246
55,901
1,596
41,588
651
581
44,416
24,489
5,816
2,279
32,585
77,000
3,767
—
1,343
55,440
60,550
(2,264)
58,286
806
1,440
2,246
2,101
3,697
3,149
6,497
1,024
16,468
18,714
77,000
Allied Minds Plc
Registered number: 08998697
The financial statements on pages 98 to 159 were approved by the Board of Directors and authorised
for issue on 14 June 2022 and signed on its behalf by:
Harry Rein
Non-Executive Chairman
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c
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December
Cash flows from operating activities:
Loss for the year
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation
Amortisation
Impairment losses on property and equipment
Share-based compensation expense
Forgiveness of Paycheck Protection Program (PPP) loan
Loss on investments held at fair value
Gain on deconsolidation of subsidiary
Share of net loss of associate
Other income
Changes in working capital:
Increase in trade and other receivables
Decrease/(increase) in other assets
Decrease in trade payables
Decrease in accrued expenses
Increase in deferred revenue
Increase/(decrease) in other liabilities
Unrealised gain on foreign currency transactions
Other finance expense
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property and equipment, net of disposals
Purchase of investments at fair value
Receipt of payment for finance sub-lease
Cash derecognised upon loss of control over subsidiary
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of convertible notes
Receipt of PPP loan
Payment of lease liability
Dividend payment
Payments to repurchase ordinary shares
Proceeds from issuance of share capital
Proceeds from issuance of preferred shares in subsidiaries
Net cash provided by /(used in) financing activities
Net decrease in cash and cash equivalents, and restricted cash
Cash and cash equivalents, beginning of the period
Cash and cash equivalents, end of the period
101
Note
2021
$ '000
2020
$ '000
(16,244)
(55,504)
9,19
10
9
5,6
18
11,20
11
11
9
13
17
17
3
7
9
11
19
11
18
18
19
14
14
6,14
16
839
—
458
281
(443)
13,894
(14,213)
2,362
(262)
(96)
693
(78)
(691)
1,386
517
(41)
2,578
(9,060)
(185)
(5,283)
45
(13,326)
(18,749)
—
259
(1,100)
—
(738)
—
14,609
13,030
(14,779)
24,489
9,710
819
197
—
1,052
—
31,934
—
6,845
—
(114)
(874)
(876)
(1,643)
240
(780)
(116)
1,763
(17,057)
(564)
(10,855)
78
—
(11,341)
2,981
184
(1,150)
(39,707)
—
8
—
(37,684)
(66,082)
90,571
24,489
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
(1) Accounting Policies
Basis of Preparation
Allied Minds Plc (“Allied Minds” or the “Company”) is a company incorporated and domiciled in the UK.
The Annual Report and Accounts of Allied Minds and its subsidiaries (together referred to as the “Group”)
are presented for the year ended 31 December 2021. The Group financial statements have been prepared
and approved by the directors in accordance with UK adopted international accounting standards (“IFRS”)
for the year ended 31 December 2021. The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these consolidated financial statements.
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except that the
following assets and liabilities are stated at their fair value: investments held at fair value and financial
instruments classified as fair value through the profit or loss.
Use of Judgments and Estimates
In preparing these consolidated financial statements, management has made judgments, estimates and
assumptions that affect the application of the Group’s accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an on-going basis. Revisions to estimates are recognised
prospectively. The effects on the amounts recognised in the consolidated financial statements, or on other
alternative performance measures, is included in the following notes:
Significant estimates made include:
Note 11 and 16 – Valuation of financial instruments measured at fair value through profit/loss:
There is uncertainty in estimating the fair value of subsidiary note payables, subsidiary preferred
shares, and convertible note assets and investments carried at fair value through profit and loss
(FVTPL) according to IFRS 9 at initial recognition and upon subsequent measurement. This
includes determining the appropriate valuation methodology and making certain estimates
including future earnings potential of the subsidiary businesses, appropriate discount rate and
earnings multiple to be applied, marketability, the probability weighting of the scenarios and
other industry and company specific risk factors.
Significant judgements made include:
Note 11 – there is judgement in considering whether the power to control the subsidiary exists or
retaining significant influence as it is dependent on certain factors including the voting power the
entity exercises over the company, the proportion of seats the company controls on the board
and the investees dependence on the investor for funding, knowledge and its operations. Further
to the above the group has considered its position under IFRS10 in respect of whether it is an
102
FINANCIAL STATEMENTS
investment entity for the purposes of this standard. Management have reviewed the operations
of the group in line with the standard, and whilst there are characteristics which indicate the
group could be considered an investment company, the underlying measurement of success for
the consolidated portfolio investments is progress in relation to key strategic milestones in
bringing their products to market and not the fair value of the business. Based on this
management have judged the business to not be an investment entity and consolidate its
subsidiaries under IFRS10.
Note 11 – as the entities in the group progress they require further external funding which in
some scenarios reduces the Group’s shareholding to an extent that it loses control under IFRS 10
which results in them no longer being able to consolidate the entity. There is a further significant
judgement in relation to whether the shares are accounted for as an investment in associate per
IAS 28 or as a financial asset per IFRS 9 and therefore held at fair value, i.e. whether the Group
maintain significant influence over the Company. This judgement includes, among others, an
assessment of whether the Company has representation on the board of directors of the investee,
whether the Company participates in the policy making processes of the investee, whether there
is any interchange of managerial personnel, whether there is any essential technical information
provided to the investee and if there are any transactions between the Company and the investee.
Note 16 and 20 – financial instrument liability classification: when determining the classification
of financial instruments in terms of liability or equity. These judgements include an assessment
whether the financial instrument include any embedded derivative features, whether they
include a contractual obligations upon the Group to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party, and whether that obligation
will be settled by the Company’s exchanging a fixed amount of cash or other financial assets for a
fixed number of its own equity instruments. Further information about these critical judgments is
included below under Financial Instruments.
Note 3 – revenue recognition: in determining the correct amount of revenue to be recognised,
the Directors make estimates of the fair values of each component of a contract to be able to
allocate the overall consideration to each component based on the relative fair value method or
make estimates of future costs when applying the inputs method.
Note 3 – timing of revenue recognition: making certain judgements when determining the
appropriate accounting treatment of key customer contract terms in accordance with the
applicable accounting standards and in determining whether revenue should be recognised at a
point in time or over a period of time.
Other estimates and judgments:
Note 19 – discount rate used in lease treatment: in determining the appropriate discount rate to
calculate the present value of lease payments. These judgements include an assessment of what
Group’s incremental borrowing rate is where there is no rate implicit within the lease. The
incremental borrowing rate will take into account the credit standing of the lessee, the length of
the lease, the nature and quality of the collateral provided and the economic environment in
which the transaction occurs.
103
FINANCIAL STATEMENTS
Going Concern
The Directors have taken proactive cost management measures that include reduction in expenses of the
management function of the head office at the parent level. They have also decided to focus exclusively
on supporting the six existing portfolio companies , albeit do not make or have and enforceable financial
or working capital commitments, and maximising monetisation opportunities for portfolio company
interests, and not to deploy any capital into any new portfolio companies. In the event of successful
monetisation events from the sale of portfolio companies or portfolio company interests, the Directors
anticipate distributing the net proceeds to shareholders, after due consideration of potential follow-on
investment opportunities within the existing portfolio and working capital requirements. The Directors
expect this strategy to take at least two years to be fully implemented, and as a matter of good
governance, will continue to keep this strategy under review at appropriate intervals. They have prepared
trading and cash flow forecasts for the parent through 2025. Reflecting this revised strategy, although the
Group is currently loss making and is likely to continue to be so, at least in the short term, after making
enquiries and considering the impact of risks and opportunities on expected cash flows, and given the fact
that the Group has $9.7 million of available funds in the form of cash and cash equivalents as at 31
December 2021, and added to this with the sale if the holding in TouchBistro post year end for
consideration of $3.9 million, the Directors have a reasonable expectation that the Group has adequate
cash to continue in operational existence for a period of not less than 12 months from the date of approval
of the financial statements. Furthermore, the directors have considered the timeline of when it plans to
dispose of, divest or reinvest in its portfolio companies and there is no intention to cease trading or
liquidate the business for the period under the going concern review.
Though the majority of the Company’s operations are in the United States and the functional currency of
the group is the U.S. dollar, Allied Minds is based in the United Kingdom and therefore susceptible to
various international risks such as economic headwinds, including inflationary pressure, interest rates and
component price increases, as well as changes in political and regulatory requirements. These risks are
continuously monitored and reviewed by management. The Group cannot predict all future events or
conditions, however, the directors have concluded that there are no material uncertainties that could cast
significant doubt over the ability of the Group to continue as a going concern for at least the going concern
period as assessed above and the Company’s existing measures are sufficient to mitigate the inherent
risks to its business model.
The Directors have also put in measures to mitigate against the risks to the business due to the continued
impact of COVID-19. Any continued impact from COVID-19 or the situation in Ukraine will not affect Allied
Minds from a going concern perspective. In fact, it is expected that the impact of COVID-19 will continue
to add cost savings during 2022 as a result of suspension of most travel for board meetings, investor
meetings and the 2022 Annual General Meeting. These savings have a positive impact on Allied Minds as
a going concern.
The Directors are conscious of the recent board changes and the need to appoint additional directors to
the board of the Company. The Directors are working closely with the Company’s largest shareholders to
identify and recruit new directors to the board of the Company.
The directors’ judgement concludes there is no material uncertainty in relation to going concern. For this
reason, they have adopted the going concern basis in preparing the financial statements.
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FINANCIAL STATEMENTS
Basis of Consolidation
Allied Minds Plc was formed on 15 April 2014 and the consolidated financial statements for each of the
years ended 31 December 2021 and 2020 comprises the financial statements of Allied Minds Plc and its
subsidiaries.
Subsidiaries
The financial information of the subsidiaries is prepared for the same reporting period as the parent
Company, using consistent accounting policies. Subsidiaries are entities controlled by the Group. The
Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases. Losses applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling
interests to have a deficit balance.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as
equity transactions. Where the Group loses control of a subsidiary, the assets and liabilities are
derecognised along with any related NCI and other components of equity. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value under
IFRS 9 when control is lost and it will be assessed whether significant influence remains. Where this is the
case the ongoing accounting will be under IAS 28, if significant influence is also lost, the remaining
investment is accounted for under IFRS 9.
Associates
Associates are those entities in which the Group has significant influence, but not control, over the
financial and operating policies. Significant influence is presumed to exist when the Group holds between
20 and 50 percent of the voting power of another entity. It is also evidenced in one or more of the
following ways:
representation on the board of directors or equivalent governing body of the investee;
participation in policy-making processes, including participation in decisions about dividends or
other distributions;
material transactions between the entity and its investee;
interchange of managerial personnel; or
provision of essential technical information.
Associates are accounted for using the equity method (equity accounted investees) and are initially
recognised at cost. The Group’s investment includes goodwill identified on acquisition, net of any
accumulated impairment losses. The consolidated financial statements include the Group’s share of the
total comprehensive income and equity movements of equity accounted investees, from the date that
significant influence commences until the date that significant influence ceases. When the Group’s share
of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount is reduced to
$nil or up to additional losses are provided for, and a liability is recognised, to the extent that the entity
has incurred legal or constructive obligations or made payments on behalf of the associate. Recognition
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FINANCIAL STATEMENTS
of further losses is discontinued except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of an investee. To the extent the Group holds interests in
associates that are not providing access to returns underlying ownership interests and are more akin to
debt like securities, the instrument held by Allied Minds is accounted for in accordance with IFRS 9.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra- group
transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees
are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
Changes of non-controlling interests
Non-controlling interests (‘‘NCI’’) are measured at their proportionate share of the acquiree’s identifiable
net assets at the acquisition date. Changes in the Group’s interest in a subsidiary that do not result in a
loss of control are accounted for as equity transactions.
Changes of non-controlling interests that do not result in a change of control are accounted for as
transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result
of such transactions. The adjustments to non-controlling interests are based on a proportionate amount
of the net assets of the subsidiary. Any difference between the price paid or received and the amount by
which non-controlling interests are adjusted is recognised directly in equity and attributed to the owners
of the parent.
Functional and Presentation Currency
These consolidated financial statements are presented in US dollars, which is the functional currency of
most of the entities in the Group. The parent has a functional currency of GBP. All amounts have been
rounded to the nearest thousand unless otherwise indicated.
Foreign Currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are retranslated to the functional currency
at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the consolidated statement of comprehensive loss. Non-monetary assets and liabilities that
are measured in terms of historical cost in a foreign currency are translated using the exchange rate at
the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that
are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the
dates the fair value was determined.
The assets and liabilities of foreign operations, including fair value adjustments arising on consolidation,
are translated to the Group’s presentational currency (US dollar) at foreign exchange rates ruling at the
balance sheet date. The revenues and expenses of foreign operations are translated at an average rate
for the year where this rate approximates to the foreign exchange rates ruling at the dates of the
transactions. Exchange differences arising from this translation of foreign operations are reported as an
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FINANCIAL STATEMENTS
item of other comprehensive income and accumulated in the translation reserve or non- controlling
interest, as the case may be. When a foreign operation is disposed of, such that control, joint control or
significant influence (as the case may be) is lost, the entire accumulated amount in the translation reserve,
net of amounts previously attributed to non-controlling interests, is reclassified to profit or loss as part of
the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that
includes a foreign operation while still retaining control, the relevant proportion of the accumulated
amount is reattributed to non-controlling interests. When the Group disposes of only part of its
investment in a subsidiary or an associate that includes a foreign operation while still retaining significant
influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or
loss.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid instruments with original maturities of three months or
less.
Financial Instruments
Classification – Financial Assets
IFRS 9 contains a classification and measurement approach for financial assets that reflects the business
model, in which assets are managed, and their cash flow characteristics. IFRS 9 contains three principal
classification categories for financial assets: measured at amortised cost, fair value through other
comprehensive income (“FVOCI”) and fair value through profit or loss (“FVTPL”). Under IFRS 9, derivatives
embedded in contracts where the host is a financial asset in the scope of the standard are never
bifurcated. Instead, the hybrid as a whole is assessed for classification.
Under IFRS 9 all fair value changes of assets designated as at fair value through profit or loss are generally
presented in profit or loss.
Cash and cash equivalents: Represent basic cash balances in banks used to fund operations. These are
classified as assets at amortised cost under IFRS 9.
Trade Receivables: Under IFRS 9 trade receivables that do not have a significant financing component have
to be initially recognised at their transaction price rather than at fair value. The Group initially recognises
receivables and deposits on the date that they are originated at their transaction price, which is the same
as their fair value. As such, Trade and other receivables are classified as assets at amortised cost under
IFRS 9.
Short-term notes: The short-term note from an associate, since its contractual terms do not consist solely
of cash flow payments of principal and interest on the principal amount outstanding, is initially and
subsequently measured at fair value, with changes in fair value recognized through profit or loss under
IFRS 9. The Group designates the SAFE note assets at FVTPL under IFRS 9. Hence, any gains and losses on
the these notes are recognised in profit or loss and are measured in the same way as investments as fair
value above.
Security and other deposits: These generally represent security deposits paid by the Group to landlords as
part of operating lease commitments. As the Company’s objective is that those deposits will be collected
back, they are classified as assets at amortised cost under IFRS 9.
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FINANCIAL STATEMENTS
Investments at fair value: Reflect investments made by the Group in non-derivative instruments of the
investees that are designated in this category or not classified in any other category. These financial assets
are initially measured at fair value and subsequently re-measured at fair value at each reporting date, and
on derecognition. The Company elects if the gain or loss will be recognised in the Consolidated Statements
of Comprehensive Income/ (Loss) in Other Comprehensive Income/(Loss) or through the profit and loss
on an instrument by instrument basis. Investments at fair value are presented in the Consolidated
Statements of Financial Position as non-current assets, unless the Group intends to dispose of them within
12 months after the end of the reporting period. If the investments at fair value continue to be held for
the same long-term strategic purposes, per the application of IFRS 9, the Group may elect then to classify
them as FVOCI or FVTPL. The Group classifies them as FVTPL. In this case, all fair value gains and losses
would be recognised in profit or loss as they arise, increasing volatility in the Group’s profits. These
financial assets do not have exposure to credit risk and are not considered credit-impaired. As a result,
there are no adjustments considered for movement in credit risk as this is not applicable within the
specific valuation frameworks utilised for the fair values of the Group’s preferred stock assets. To the
extent the Group holds interests in associates that are not providing access to returns underlying
ownership interests and are more akin to debt like securities, the instrument held by Allied Minds is
accounted for in accordance with IFRS 9.
Classification – Financial Liabilities
Under IFRS 9 all fair value changes of liabilities designated as at fair value through profit or loss are
generally presented in profit or loss.
The Group designates the subsidiary preferred shares liability at FVTPL under IFRS 9. Hence, any gains and
losses on the preferred shares liability are recognised in profit or loss, unless they relate to changes in the
entity’s own credit risk for financial liability designated as at fair value through profit or loss. The effect of
changes in the entity’s own credit risk in the fair value of the financial liabilities are presented in other
comprehensive income. For the underlying financial instruments no adjustments are considered for
movement in credit risk as this is not applicable within the specific valuation frameworks utilized for the
fair values of the Group’s preferred share liability.
Trade and other payables and loans are designated at amortised cost under IFRS 9.
Impairment
IFRS 9 includes a ‘forward looking expected credit loss’ (“ECL”) model. The impairment methodology
applied depends on whether there has been a significant increase in credit risk. For trade receivables, the
group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
Financial Instruments Issued by the Group
Under IAS 32, financial instruments issued by the Group are treated as equity only to the extent that they
meet the following two conditions:
they include no contractual obligations upon the Group to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with another party under conditions that are
potentially unfavourable to the Group; and
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FINANCIAL STATEMENTS
where the instrument will or may be settled in the Company’s own equity instruments, it is either
a non-derivative that includes no obligation to deliver a variable number of the Company’s own
equity instruments or is a derivative that will be settled by the Company’s exchanging a fixed
amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the financial instrument is classified as a financial liability.
Where the instrument so classified takes the legal form of the Company’s own shares, the amounts
presented in the financial information for share capital and merger reserve account exclude amounts in
relation to those shares.
Where a financial instrument that contains both equity and financial liability components exists, these
components are separated and accounted for individually under the above policy.
Paycheck Protection Program (PPP) loan
The US CARES Act created the Paycheck Protection Program (PPP) to provide qualifying small businesses
with necessary funds to support their operations during the COVID-19 pandemic. Entities have to meet
certain eligibility requirements to receive PPP loans, and they must maintain specified levels of payroll
and employment to have the loans forgiven. The conditions are subject to audit by the US government,
but entities that borrow less than $2 million will be deemed to have met the initial eligibility requirements.
Under IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, the initial
receipt of PPP loans is recognized as a liability. This liability can be derecognized when there is “reasonable
assurance” that the loan conditions will be met and forgiveness will be granted. Once forgiven, the
company records the amount as other income.
Share Capital
Ordinary shares are classified as equity. The Group considers its capital to comprise share capital, share
premium, merger reserve, translation reserve, and accumulated deficit.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Assets under
construction represent machinery and equipment to be used in operations, R&D activities, or to be leased
to customers once completed.
When parts of an item of property and equipment have different useful lives, they are accounted for as
separate items (major components) of property and equipment. Depreciation is calculated using the
straight-line method over the estimated useful lives of the related assets:
Computers and electronics
3 years
Furniture and fixtures
5 years
Machinery and equipment
5 -20 years
Under construction
Not depreciated until transferred into use
Shorter of the lease term or estimated useful life of the asset
Leasehold improvements
Right-of-Use Assets Shorter of the lease term or estimated useful life of the asset
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FINANCIAL STATEMENTS
Depreciation methods, useful lives and residual values are reviewed at least annually and adjusted if
appropriate.
The Directors have considered the value of fixed assets without revaluing them.
The Directors are satisfied that the aggregate value of those assets at the time in question is or was not
less than aggregate amount at which they are or were for the time being stated in the company's accounts.
Intangible Assets
Software
Software intangible assets that are acquired by the Group and have finite useful lives are measured at
cost less accumulated amortisation and any accumulated impairment losses.
Finite-lived intangible assets are amortised on a straight-line basis over their estimated useful lives, from
the date that they are available for use. Intangible assets which are not yet available for use (and therefore
not amortised) are tested for impairment at least annually.
Amortisation
Amortisation is charged to the consolidated statement of comprehensive loss on a straight-line basis over
the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for impairment at each balance sheet date.
Other intangible assets are amortised from the date they are available for use. Amortisation methods,
useful lives and residual values are reviewed at least annually and adjusted if appropriate.
The estimated useful lives of the Group’s intangible assets are as follows:
Software
Leases
2 years
IFRS 16 is a single, on-balance sheet lease accounting model for lessees and requires leases to be
accounted for using a right-of-use model, which recognises that, at the date of commencement, a lessee
has a financial obligation to make lease payments to the lessor for the right to use the underlying asset
during the lease term. The lessee recognises a corresponding right-of-use asset related to this right.
Upon adoption, the Group applied the following practical expedients:
excluding initial direct costs from the right-of-use assets;
use hindsight when assessing the lease term;
not reassessing whether a contract is or contains a lease; and
not separating the lease components from the non-lease components in lease contracts.
The Group accounts for lease payments as an expense on a straight-line basis over the life of the lease
for:
Leases with a term of 12 months or less and containing no purchase options; and
Leases where the underlying asset has a value of less than $5,000.
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FINANCIAL STATEMENTS
The lease liability is initially measured at the present value of the remaining lease payments at the
transition date or date of entering the lease, discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the Group used its incremental borrowing rate. The right-of-use asset is
depreciated on a straight-line basis and the lease liability will give rise to an interest charge.
Finance leases will continue to be treated as finance leases. In November 2020 the Company relocated its
corporate headquarters as part of management’s initiative to minimise headquarters expenses. As a
result, starting November 2020, the Company entered into a sublease for the remaining period of the
head lease.
Under IFRS 16, this sublease led to the de-recognition of the right of use asset and the recognition of an
investment receivable in respect of this sublease. The lease liability remains in respect of the head lease
as a lease liability on the balance sheet.
The Group recognised lease liabilities of $0.9 million and $0.4 million in lease assets at 31 December 2021.
Those rights and obligations are primarily related to operating leases for office and laboratory space.
BridgeComm entered into a new lease in 2021. Further information regarding the right of use asset and
lease liability can be found in Note 19.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current Income Tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax
rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred Income Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to
the extent that it is probable that future taxable profits will be available against which they can be used.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity,
or on different tax entities where the Group intends to settle current tax liabilities and assets on a net
basis or their tax assets and liabilities will be realised simultaneously.
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FINANCIAL STATEMENTS
Deferred taxes are recognised in profit or loss except to the extent that it relates to items recognised
directly in equity or in other comprehensive income.
Impairment
Impairment of Non-Financial Assets
Non-financial assets consist of property and equipment and intangible assets with finite lives and such
intangible assets which are not yet available for use.
The Group reviews the carrying amounts of its property and equipment and finite-lived intangibles at each
reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. Intangible assets which are not yet available for use are
tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or cash-
generating units (‘‘CGUs’’).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash flows, 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 or CGU.
An impairment loss is recognised in profit and loss if the carrying amount of an asset or CGU exceeds its
recoverable amount. Impairment losses are allocated to reduce the carrying amounts of assets in a CGU
on a pro rata basis.
Impairment of Financial Assets
The company recognises loss allowances for expected credit losses (ECLs) on financial assets measured at
amortised cost.
The company measures loss allowances at an amount equal to lifetime ECL, except for other debt
securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life
of the financial instrument) has not increased significantly since initial recognition, which are measured
as 12-month ECL.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to
lifetime ECL.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECL, the company considers reasonable and supportable information
that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the company’s historical experience and informed credit assessment
and including forward-looking information.
Share-based Payments
Share-based payment arrangements in which the Parent receive goods or services as consideration for
their own equity instruments are accounted for as equity-settled share-based payment transactions,
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FINANCIAL STATEMENTS
regardless of how the equity instruments are obtained by the Group or its subsidiaries. Grants of equity
instruments under the subsidiary stock option incentive plans are accounted for as equity-settled in the
consolidated accounts of the parent and are reflected in equity as a credit to Non-Controlling Interest.
The grant date fair value of share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees become
unconditionally entitled to the awards. The fair value of the options granted is measured using an option
pricing valuation model, taking into account the terms and conditions upon which the options were
granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for
which the related service and non-market vesting conditions are expected to be met, such that the
amount ultimately recognised as an expense is based on the number of awards that do meet the related
service and non-market performance conditions at the vesting date. For share-based payment awards
with market or non-vesting conditions, the grant date fair value of the share-based payment is measured
to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Employee Benefits
Short-term Employee Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognised for the amount expected to be paid if the Group has a
present legal or constructive obligation to pay this amount as a result of past service provided by the
employee, and the obligation can be estimated reliably.
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed
contributions into a separate entity and has no legal or constructive obligation to pay further amounts.
Obligations for contributions to defined contribution plans are recognised as an employee benefit
expense in the periods during which related services are rendered by employees. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
Phantom Plan
The Phantom Plan is a cash settled bonus plan. Expense is accrued when it is determined that it is probable
that a payment will be made and when the amount can be reasonably estimated.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive
obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Revenue Recognition
The Group recognises revenue to depict the transfer of promised goods to customers in an amount that
reflects the consideration to which it expects to be entitled in exchange for those goods. In order to
achieve this, the Group uses the five step model outlined in IFRS 15: 1) to identify the contract with the
customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4)
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FINANCIAL STATEMENTS
allocate the transaction price to the performance obligation(s); and 5) recognise revenue when (or as) we
satisfy the performance obligation(s).
IFRS 15 implements a uniform method of recognising revenue based on the actual contract and
performance obligation. Under IFRS 15, revenue is recognised when the Company satisfies a performance
obligation by transferring a promised good or service to its customer. As such, the amount of revenue
recognised is the amount allocated to the satisfied performance obligation. A performance obligation may
be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically
for promises to transfer services to a customer).
Determining the timing of the transfer of control – at a point in time or over time – requires judgement.
Based on Group’s assessment, it was concluded that the majority of the Company’s projects that:
Render a service is performed on a time and materials basis and revenue is recognised as services
are provided based on actual hours worked for a set period. The performance obligations
identified within these projects are distinct and meet the criteria resulting in transfer of control
over time.
Sell goods, revenue is recognised when the control of the products were transferred to the
customer. The performance obligations identified within these projects are distinct and meet the
criteria resulting in transfer of control at a point in time.
Refer to Note 3, "Revenue Recognition," for additional information related to the revenue recognised in
the consolidated statements of operations.
Finance Income and Finance Costs
Finance income mainly comprises interest income on funds invested and foreign exchange gains. Finance
costs mainly comprise fair value movements on preferred share liabilities, loan interest expense and
foreign exchange losses. Interest income and interest payable are recognised as they accrue in profit or
loss, using the effective interest method.
Fair Value Measurements
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels
of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level
of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
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FINANCIAL STATEMENTS
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
The carrying amount of cash and cash equivalents, accounts receivable, deposits, accounts payable,
accrued expenses and other current liabilities in the Group’s Consolidated Statements of Financial Position
approximates their fair value because of the short maturities of these instruments.
Operating Segments
Allied Minds determines and presents operating segments based on the information that internally is
provided to the executive management team, the body which is considered to be Allied Minds’ Chief
Operating Decision Maker (‘‘CODM’’).
An operating segment is a component of Allied Minds that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions with
any of the Allied Minds’ other components. The operating segment’s operating results are reviewed
regularly by the CODM to make decisions about resources to be allocated to the segment, to assess its
performance, and for which discrete financial information is available.
Newly adopted standards
New standards and interpretations adopted in the current year that did not have a material impact on the
Company’s financial statements were as follows:
Effective date
1 January 2021
New standards or amendments
Amendments to References to Conceptual Framework in IFRS
Standards
Definition of a Business (Amendments to IFRS 3)
Definition of Material (Amendments to IAS 1 and IAS 8)
Amendments to IFRS 9, IAS 39 and IFRS 17: Interest
Benchmark reform
(2) New Standards and Interpretations not yet effective
There are a number of new standards, amendments to standard, and interpretations which have been
issued by the IASB that are effective in future periods that the group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2022:
Effective date
1 January 2022
New standards or amendments
Onerous contracts – Cost of Fulfilling a Contract
(Amendments to IAS 37)
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FINANCIAL STATEMENTS
References to Conceptual Framework (Amendments to IFRS 3)
Property, Plant and Equipment: Proceeds before Intended Use
(amendments to IAS16
Improvements
Annual
(Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41)
IFRS Standards 2018-2020
to
1 January 2023
IFRS 17 Insurance Contracts
The Group does not expect any other standard issued by the IASB, but not yet endorsed by the UK
Endorsement Board (“UKEB”), to have a material impact on the group.
(3) Revenue
Revenue recorded in the Statement of Comprehensive Loss consists of the following:
For the year ended 31 December:
Service revenue (and transferred over time)
Total revenue in Consolidated Statement of Loss
Contract Balances
2021
$'000
2020
$'000
1,544
1,544
480
480
Contract liabilities represent the Group’s obligation to transfer products or services to a customer for
which consideration has been received. When applicable, contract assets and liabilities are reported on a
net basis at the contract level, depending on the contracts position at the end of each reporting period.
Contract liabilities are included within deferred revenue on the Consolidated Statement of Financial
Position. At the point of inception all contracts were expected to be completed within 12 months and
therefore, no discounting of the contract liabilities has been accounted for.
As of 31 December:
Deferred revenue, current
2021
$'000
(4,948)
2020
$'000
(3,697)
116
FINANCIAL STATEMENTS
(4) Operating Segments
Basis for Segmentation
For management purposes, the Group’s principal operations are currently organised in three types of
activities:
(i)
(ii)
Early stage companies – subsidiary businesses that are in the early stage of their lifecycle
characterised by incubation, research and development activities;
Later stage companies – subsidiary businesses that have substantially advanced with or
lifecycle to
completed their research and development activities, are closer
commercialisation, and/or have a potential of realising material return on investment through a
future liquidity event;
in their
(iii) Minority holdings companies – reflects the activity related to portfolio companies other than
consolidated subsidiary businesses where the Group has made a minority investment and does
not control or exercise joint control over the financial and operating policies of those entities. This
segment will only include the results of entities which were deconsolidated during the accounting
period. As of 31 December 2021, this operating segment includes OcuTerra Therapeutics, Inc.
profit and loss for the period up to deconsolidation on 27 April 2021 as well as Spark Insights, Inc.
profit and loss for the period up to its disposal on 29 October 2021.
Minority holdings: During the period there was one deconsolidation and one disposal. The results of the
two companies up to the point of deconsolidation and disposal, respectively, is included in the Minority
Holdings segment below and included the following:
OcuTerra Therapeutics, Inc., one of the company’s subsidiaries that was deconsolidated during
the first half of 2021 as a result of financing events at the company.
Concirrus LTD (Spark Insights, Inc.) a company in which Allied Minds holds a minority stake. Spark
was disposed of during the second half of 2021 as a result of the sale of the subsidiary to Concirrus.
The Group’s CODM reviews internal management reports on these segments at least quarterly in order
to make decisions about resources to be allocated to the segment and to assess its performance.
Other operations include the management function of the head office at the parent level of Allied Minds.
Information about Reportable Segments
The following provides detailed information of the Group’s reportable segments as of and for the years
ended 31 December 2021 and 2020, respectively:
Statement of Comprehensive Loss
Revenue
Cost of revenue
Selling, general and administrative
expenses
Later
Stage
1,544
(443)
(3,089)
Minority
Holdings
Other
Operation
Consolidate
d
―
―
(1,875)
s
―
―
(5,605)
1,544
(443)
(10,569)
117
FINANCIAL STATEMENTS
Research and development expenses
Other expense
Finance cost, net
Share of net loss of associates accounted
for using the equity method
Loss for the period
Other comprehensive loss
Total comprehensive loss
(2,026)
520
15,889
―
12,395
―
12,395
(624)
14,398
(8,089)
―
3,810
―
3,810
―
(13,894)
(10,588)
(2,362)
(32,449)
(41)
(32,490)
(2,650)
1,024
(2,788)
(2,362)
(16,244)
(41)
(16,285)
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
12,209
186
4,706
(896)
(32,449)
―
(15,534)
(710)
Total comprehensive loss
12,395
3,810
(32,449)
(16,244)
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets/(liabilities)
820
6,262
7,082
(75)
(12,820)
(12,895)
(5,813)
―
―
―
―
―
―
―
34,409
14,410
48,819
(138)
1,787
1,649
50,468
35,229
20,672
55,901
(213)
(11,033)
(11,246)
44,655
Statement of Comprehensive Loss
Revenue
Cost of revenue
Selling, general and administrative
Research and development expenses
expenses
Other expense
Finance cost, net
Share of net loss of associates accounted
for using the equity method
Loss for the period
Other comprehensive loss
Total comprehensive loss
Early Stage
―
―
(526)
(1,420)
―
(20)
―
(1,966)
―
(1,966)
Later
Stage
480
(210)
(2,788)
(3,292)
―
(5,241)
―
(11,051)
―
(11,051)
Total comprehensive loss attributable to:
Equity holders of the parent
Non-controlling interests
58
(2,024)
(10,596)
(455)
Total comprehensive loss
(1,966)
(11,051)
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets/(liabilities)
320
502
822
(105)
(3,756)
(3,861)
(3,039)
1,288
7,105
8,393
(1,380)
(27,707)
(29,087)
(20,694)
118
2020
$'000
Minority
Holdings
Other
Operation
Consolidate
d
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
―
s
―
―
(7,183)
―
(31,934)
3,475
(6,845)
(42,487)
(116)
(42,603)
480
(210)
(10,497)
(4,712)
(31,934)
(1,786)
(6,845)
(55,504)
(116)
(55,620)
(42,487)
―
(53,025)
(2,479)
(42,487)
(55,504)
42,808
24,977
67,785
(761)
14,995
14,234
82,019
44,416
32,584
77,000
(2,246)
(16,468)
(18,714)
58,286
FINANCIAL STATEMENTS
Early Stage companies comprise those that receive an array of business support resources and services
from Allied Minds in order to successfully develop early stage technologies. In addition, all closed or
dissolved subsidiaries were presented in the Early Stage segment up to the time at which they were all
dissolved.
Later Stage companies comprise those that have graduated from Early Stage by way of further
advancements in their development as described above. This currently includes BridgeComm Inc.
The results of the management function of the head office at the parent level of Allied Minds are reported
separately as Other Operations. As the investment in associate is a parent activity, the share of loss, gain
on deconsolidation, remeasurement of the investments to fair value and investment in associate are
disclosed in the Other Operations segment.
Summarised information related to the Company’s operating revenues by reporting segment for the years
ended 31 December 2021 and 2020 is as follows:
Early Stage
Later Stage
Minority
Total revenue
2021
2020
Service
revenue
-
1,544
-
1,544
Software
revenue
-
-
-
-
Total
-
1,544
-
1,544
Service
revenue
-
480
-
480
Software
revenue
-
-
-
-
Total
-
480
-
480
In 2021, Cost of revenue and Selling, general and administrative expenses of Early Stage, Later Stage,
Minority Holdings and Other Operations segments included depreciation and amortisation expense of
$nil, $374,240, $9,239, and $166,626, respectively (2020: $10,100, $460,880, $0, and $179,637,
respectively).
The proportion of net assets shown above that is attributable to non-controlling interest is disclosed
further in notes 11 and 15.
Geographic Information
The Group revenues and net operating losses for the years ended 31 December 2021 and 2020 are
considered to be entirely derived from its operations within the United States and accordingly no
additional geographical disclosures are provided.
(5) Operating Expenses
The average number of persons employed by the Group (including Directors) during the year, analysed by
category, was as follows:
For the year ended 31 December:
2021
2020
Selling, general and administrative
Research and development
16
14
28
46
119
FINANCIAL STATEMENTS
Total
30
74
The aggregate payroll costs of these persons were as follows:
For the year ended 31 December:
Selling, general and administrative
Research and development
Total
Total operating expenses were as follows:
For the year ended 31 December:
Salaries and wages
Payroll taxes
Healthcare benefit
Other payroll cost
Share-based payments
Total
Cost of revenue
Other SG&A expenses
Other R&D expenses
Total operating expenses
Auditor's remuneration
Audit of these financial statements
Audit-related assurance services
2021
$'000
4,959
1,378
6,337
2021
$'000
4,669
333
1,020
34
281
6,337
443
5,610
1,272
13,662
2021
$'000
430
96
526
2020
$'000
5,873
2,619
8,492
2020
$'000
5,903
158
1,338
41
1,052
8,492
210
4,624
2,093
15,419
2020
$'000
419
96
515
The Group recorded an impairment charge on property and equipment of $0.4 million (2020: $ nil million).
See note 6 for further disclosures related to share-based payments and note 22 for management’s
remuneration disclosures.
(6) Share-Based Payments
UK Long Term Incentive Plan
120
FINANCIAL STATEMENTS
Under the UK Long Term Incentive Plan (“LTIP”), awards of Ordinary Shares may be made to employees,
officers and directors, and other individuals providing services to the Company and its subsidiaries.
Awards may be granted in the form of share options, share appreciation rights, restricted or unrestricted
share awards, performance share awards, restricted share units, phantom-share awards and other share-
based awards. Vesting is subject to the achievement of certain performance conditions and continued
services of the participant.
Awards have been granted under the LTIP based on the following vesting criteria:
awards subject to performance conditions based on the Company’s total shareholder return (“TSR”)
performance or relative total shareholder return (rTSR) performance over a defined of time;
awards subject to performance conditions based on a basket of shareholder value metrics (“SVM”).
Performance is assessed on these measures on a scorecard basis over a defined period of time;
awards that vest 100 per cent after a period of time subject to continued service condition only.
On 10 June 2019, the Board determined to retire the long term incentive plan (LTIP) scheme and therefore
no future awards will be made to executive directors, management and other employees. Historic awards
remained outstanding and eligible to vest in accordance with their terms. A significant majority of the
outstanding awards are subject to relative total shareholder return (TSR) performance; however, at the
current share price, the performance criteria of these awards will not be met and therefore, no shares are
expected to be issued under such awards.
No shares were issued in respect of historic awards under the LTIP during 2021 (2020: 387,000 Ordinary
shares). A summary of stock option activity under the UK LTIP for the years ended 31 December 2021 and
2020, respectively, is shown below:
For the year ended 31
December:
Number of shares granted
at maximum (‘000)
Weighted average fair value ($)
Fair value measurement basis
rTSR
—
—
Monte
Carlo
2021
SVM
—
—
Market
value of
ordinary
share
Time
rTSR
—
—
Monte
Carlo
—
—
Market
value of
ordinary
share
2020
SVM
—
—
Market
value of
ordinary
share
Time
387
0.36
Market
value of
ordinary
share
The share grants that vest upon the occurrence of a market condition (i.e. the TSR performance) and
service condition were adjusted to current market price at the date of the grant to reflect the effect of
the market condition on the non-vested shares’ value. The Company used a Monte Carlo simulation
analysis utilising a Geometric Brownian Motion process with 50,000 simulations to value those shares.
The model takes into account share price volatilities, risk-free rate and other covariance of comparable
UK public companies and other market data to predict distribution of relative share performance. This is
applied to the reward criteria to arrive at expected value of the TSR awards.
The share grants that vest only upon the occurrence of a non-market performance condition (i.e. the SVM
grants) and service condition or upon passage of time were valued at the fair value of the shares on the
121
FINANCIAL STATEMENTS
date of the grants the vesting conditions are taken into account. The number of instruments included in
the measurement of the transaction amount is subsequently adjusted so that, ultimately, the amount of
recognised share-based expense is based on the number of instruments that eventually vest. None of the
outstanding awards under the LTIP as of 31 December 2021 are subject to SVM vesting.
The accounting charge does not necessarily represent the intended value of share-based payments made
to recipients, which are determined by the Remuneration Committee according to established criteria.
The share-based payment charge for the fiscal year ended 31 December 2021 related to the UK LTIP was
$0.3 million (2020: $0.9 million).
U.S. Stock Option/Stock Issuance Plan
The U.S. Stock Option/Stock Issuance Plan (the “U.S. Stock Plan”) was originally adopted by Allied Minds,
Inc. (now Allied Minds, LLC) in 2008. The U.S. Stock Plan provides for the grant of share option awards,
restricted share awards, and other awards to acquire common stock of Allied Minds, Inc. (now Allied
Minds, LLC). All stock options granted to employees under this plan are equity settled, for a ten-year term.
Pursuant to the Company’s IPO in 2014, Allied Minds Plc adopted and assumed the rights and obligations
of Allied Minds, Inc. (now Allied Minds, LLC) under this plan except that the obligation to issue Common
Stock is replaced with an obligation to issue ordinary shares to satisfy awards granted under the U.S. Stock
Plan. As of 19 June 2014, the maximum number of options reserved under the plan were issued and
outstanding and as a result of the Company’s IPO in 2014, all issued and outstanding options vested on
19 June 2014. The Company does not intend to make any further grants under the U.S. Stock Plan.
No new stock option grants were awarded in 2021 and 2020 under the Allied Minds 2008 Plan. A summary
of stock option activity in the U.S. Stock Plan is presented in the following table:
For the twelve months ended:
31 December 2021
Number of
options
Weighted
average
exercise
price
—
—
—
—
—
$ nil
—
—
—
—
—
Outstanding as of 1 January
Exercised during the period
Forfeited during the period
Outstanding as of period end
Exercisable at period end
Intrinsic value of exercisable
31 December 2020
Number of
options
Weighted
average
exercise
price
230,000
—
(230,000)
—
—
$ nil
$ 2.49
—
$ 2.49
—
—
As of 31 December 2021 no options were exercised (2020: nil) resulting in $nil (2020: $ nil) additional
share premium for the period.
Allied Minds Phantom Plan
In 2007, Allied Minds established a cash settled plan for Allied Minds employees, also known as its
Phantom Plan. In 2012, the Board of Directors adopted the Amended and Restated 2007 Phantom Plan.
Under the terms of the Amended and Restated Plan, upon a liquidity event Allied Minds will allocate 10%
of the value (after deduction of the amount invested by Allied Minds and accrued interest at a rate not
122
FINANCIAL STATEMENTS
exceeding 5% per annum) of the invested capital owned by Allied Minds of each operating company to
the plan account. Upon a liquidity event, plan participants holding units will receive their proportionate
share of the plan account. The allocated shares at all times remain the sole and exclusive property of Allied
Minds and holders of units have no rights or interests in Allied Minds.
Allied Minds has not accrued any expense relating to the Phantom Plan as of 31 December 2021 and 2020.
Management records an expense relating to this plan when it is probable that a subsidiary will be sold
and the amount of the payout is reasonably estimable or will be paid out in accordance with the plan.
Given the current valuation of the investments and the thresholds required for payments to be made,
management has judged that is unlikely there will be any future payouts in respect of this plan based on
the position at 31 December 2021.
Share-based Payment Expense
The Group recorded share-based payment charge/ credit related to stock options of approximately
$281,471 and $1,052,000 for the years ended 31 December 2021 and 2020, respectively. There was no
income tax benefit recognised for share- based payment arrangements for the years ended 31 December
2021 and 2020, respectively, due to operating losses.
The following table provides the classification of the Group’s consolidated share-based payment expense/
income as reflected in the Consolidated Statement of Loss:
For the year ended 31 December:
Selling, general and administrative
Research and development
Total
(7) Finance Cost, Net
2021
$'000
270
11
281
2020
$'000
991
61
1,052
The following table shows the breakdown of finance income and cost:
For the year ended 31 December:
Interest income on:
– Bank deposits
Foreign exchange gain
Finance income
Interest expense on:
– Financial liabilities at amortised cost
Foreign exchange loss
Finance cost contractual
Loss on fair value measurement of
subsidiary preferred shares
Finance cost
Total finance cost, net
2021
$'000
2020
$'000
45
—
45
(250)
(5)
(255)
(2,578)
(2,833)
(2,788)
292
(1)
291
(313)
(1)
(314)
(1,763)
(2,077)
(1,786)
See note 16 for further disclosure related to subsidiary preferred shares.
123
FINANCIAL STATEMENTS
(8) Loss Per Share
The calculation of basic and diluted loss per share as of 31 December 2021 was based on the loss
attributable to ordinary shareholders of $15.5 million (2020: $53.0 million) and a weighted average
number of ordinary shares outstanding of 242,187,985 (2020: 241,901,871), calculated as follows:
Loss attributable to ordinary shareholders:
2021
$'000
2020
$'000
Basic
Diluted
Basic
Diluted
Loss for the year attributed to
the owners of the Company
Loss for the year attributed to
the ordinary shareholders
(15,534)
(15,534)
(53,025)
(53,025)
(15,534)
(15,534)
(53,025)
(53,025)
Weighted average number of ordinary shares:
2021
2020
Basic
Diluted
Basic
Diluted
Issued ordinary shares on 1 January
242,187,985
242,187,985
241,563,123
241,563,123
Effect of RSUs issued
Effect of dilutive shares
―
―
―
―
338,748
338,748
―
―
Weighted average ordinary shares
242,187,985
242,187,985
241,901,871
241,901,871
Loss per share:
Loss per share
(9) Property and Equipment
2021
$
2020
$
Basic
(0.06)
Diluted
(0.06)
Basic
(0.22)
Diluted
(0.22)
Information regarding the cost and accumulated depreciation of property and equipment, net, consists
of the following:
Cost
in $'000
Balance as of 31 December 2019
Additions
Transfers
Machinery
and
Equipment
1,049
64
(454)
Furniture
and
Fixtures
71
—
—
Leasehold
Improvements
871
—
—
Computers and
Electronics
355
353
—
Under
Construction
208
147
454
Tota
l
554
564
0
124
FINANCIAL STATEMENTS
Balance as of 31 December 2020
Additions
Disposals
Impairment
Deconsolidation of
subsidiaries
Balance as of 31 December 2021
Accumulated Depreciation
and Impairment loss
in $'000
Balance as of 31 December 2019
Depreciation
Impairment loss
Disposals
Balance as of 31 December 2020
Depreciation
Disposals
Deconsolidation of
subsidiaries
Balance as of 31 December 2021
Property and equipment, net
in $'000
Balance as of 31 December 2020
Balance as of 31 December 2021
659
309
(347)
—
—
621
71
—
—
—
—
71
871
—
—
—
—
871
708
15
—
809
—
(139)
3,11
8
324
(486
)
—
(458)
(458)
(34)
689
—
212
(34)
2,46
4
Machinery
and
Equipment
Furniture
and
Fixtures
Leasehold
Improvements
Computers and
Electronics
Under
Construction
(300)
(175)
―
―
(475)
(221)
347
—
(349)
(3)
(14)
―
―
(17)
(14)
—
—
(31)
(493)
(143)
―
―
(636)
(143)
—
—
(779)
(273)
(121)
―
―
(394)
(144)
—
21
(518)
―
―
―
―
—
—
—
—
Machinery
and
Equipment
Furniture
and
Fixtures
184
272
54
40
Leasehold
Improvements
235
92
Computers and
Electronics
314
171
Under
Construction
809
212
Tota
l
(1,0
69)
(453
)
―
―
(1,5
22)
(523
)
347
21
(1,6
77)
Tota
l
1,59
6
787
Impairment of property and equipment of $0.5 million and $ nil for the years ended 31 December 2021
and 2020, respectively, is mainly attributed to the closing of subsidiary companies, which resulted in the
associated assets being impaired. Impairment of property and equipment is included in selling, general
and administrative expenses in the consolidated statement of comprehensive income.
Property and equipment under constructions represents assets that are in the process of being built and
not placed in service as of the reporting date.
(10)
Intangible Assets
Information regarding the cost and accumulated amortisation of intangible assets is as follows:
Cost
in $'000
Balance as of 31 December 2019
Additions - Acquired separately
Disposals
Software
926
—
—
Total
926
—
—
125
FINANCIAL STATEMENTS
Balance as of 31 December 2020
Additions - Acquired separately
Disposals
Balance as of 31 December 2021
Accumulated amortisation
and Impairment loss
in $'000
lance as of 31 December 2019
Amortisation
Balance as of 31 December 2020
Amortisation
Impairment loss
Balance as of 31 December 2021
926
—
—
926
Software
(729)
(197)
(926)
—
—
(926)
926
—
—
926
Total
(729)
(197)
(926)
—
—
(926)
Intangible assets, net
in $'000
Software
—
Balance as of 31 December 2020
—
Balance as of 31 December 2021
Amortisation expense is included in selling, general and administrative expenses in the consolidated
statement of comprehensive loss. Amortisation expense, recorded using the straight-line method, was
approximately $nil and $197,000 for the years ended 31 December 2021 and 2020, respectively. This is
mainly attributed to software assets being fully amortized.
Total
—
—
Impairment of intangible assets was $nil for the years ended 31 December 2021 and 2020. Impairment
expense is included in selling, general and administrative expenses in the Consolidated Statement of
Comprehensive Loss.
At each reporting period, management considers qualitative and quantitative factors that define the
future prospects of the respective investment and assesses whether it supports the value of the
underlying intangible.
(11)
Investments
Group Subsidiaries, associates and investments
As of 31 December 2021, Allied Minds has six portfolio companies, including subsidiaries, associates and
investments and two holding companies. As at the 31 December 2021 the investments in each of the
companies and the accounting treatment is summarized below:
Portfolio company
Financial instruments held
Allied Minds LLC
Ordinary shares
Accounting treatment of financial
instruments
Consolidated by the group in line
with IFRS 10 and following
management assessment of
significant control.
126
FINANCIAL STATEMENTS
Allied Minds Securities Corp. Ordinary shares
BridgeComm, Inc.
Ordinary share capital and
preferred shares
Concirrus,
Insights, Inc.)
LTD
(Spark
Preferred shares
OcuTerra Therapeutics, Inc.
Ordinary share capital and
preferred shares
Federated Wireless, Inc.
Ordinary share capital and
preferred shares
127
Consolidated by the group in line
with IFRS 10 and following
management assessment of
significant control.
Consolidated by the group in line
with IFRS 10 and following
management assessment of
significant control.
Preferred shares are eliminated on
consolidation between group
companies, preferred shares held by
third parties are fair valued through
profit and loss under IFRS 9.
The Group has a minority stake in
the investment and does not have
significant influence over the
company. The investment in
preferred shares is accounted for at
fair value through the profit and loss
under IFRS 9.
The Group has consolidated the
company up to the point it lost
control in OcuTerra due to its latest
financing event and was no longer a
majority owner. As a result, the
company was deconsolidated and it
retained a minority stake in the
investment. As of the year end, the
Group does not have significant
influence over the company.
Therefore, the investment in
ordinary shares is accounted for at
fair value through the profit and loss
under IFRS 9. Preferred share
holdings are accounted for at fair
value through profit and loss as
investments held by the Group
under IFRS 9.
The ordinary share capital ownership
means that the group has significant
influence but not control over the
entity. Therefore, the investment in
ordinary shares is accounted for by
the equity method of accounting
FINANCIAL STATEMENTS
Orbital sidekick, Inc.
Preferred shares
TouchBistro, Inc.
Ordinary shares
under IAS 28.
Preferred share holdings are
accounted for at fair value through
profit and loss as investments held
by the Group under IFRS 9.
No ordinary shares are owned by
Allied Minds and the directors have
judged, at the year end, that the
group does not have significant
influence over the entity through its
preferred share holding.
Preferred share holdings are
accounted for at fair value through
profit and loss as investments held
by the Group under IFRS 9.
The group has a minority stake in the
investment and does not have
significant influence over the
company. Therefore, the investment
in ordinary shares is accounted for at
fair value through the profit and loss
under IFRS 9.
The following outlines the formation of each subsidiary and evolution of Allied Minds’ ownership interest
over the two year period ended 31 December 2021:
Inception
Date
Location (2)
Issued and Outstanding
Ownership percentage
at 31 December (1)
2020
2021
Active subsidiaries
Holding companies
Allied Minds, LLC
Allied Minds Securities Corp.
Later stage company
BridgeComm, Inc. (3)
Number of active subsidiaries at 31 December:
Associates
Federated Wireless, Inc. (3)
Spin Memory, Inc.
Other investments
TouchBistro, Inc (4)
Orbital Sidekick, Inc. (3)
OcuTerra Therapeutics, Inc. (3)(4)
Concirrus, LTD. (Spark Insights, Inc.) (3)
19/06/14
21/12/15
09/02/15
08/08/12
03/12/07
08/05/20
02/08/16
14/12/10
10/29/21
Boston, MA
Boston, MA
Denver, CO
100.00%
100.00%
81.15%
3
100.00%
100.00%
81.15%
3
Arlington, VA
Fremont, CA
42.72%
N/A
43.11%
43.01%
Boston, MA
San Francisco, CA
Cambridge, MA
London, UK
1.40%
26.29%
17.06%
0.98%
1.52%
33.23%
62.67%
70.59%
128
FINANCIAL STATEMENTS
Notes:
(1) Represents ownership percentage held by Allied Minds Plc based on the equity interest owned in ordinary shares plus
potential equity interest owned in convertible preference shares. The current percentage ownership of each company
ordinary share capital is as follows: Allied Minds LLC 100%, Allied Minds Securities Corp. 100%, BridgeComm, Inc.
98.47%, OcuTerra Therapeutics, Inc. 75.26%, Federated Wireless 91.71%, TouchBistro 1.40%, Orbital Sidekick 0%;
(2) Allied Minds LLC, BridgeComm, Inc., OcuTerra Therapeutics, Inc., Federated Wireless, Inc. and Federated Wireless
Government Solutions, Inc. have a registered office address at CT Corporation System, Corporation Trust Center, and
1209 Orange Street, Wilmington, DE 19801, United States. Allied Minds Securities Corp. has a registered office
address at CT Corporation System, 155 Federal Street, Suite 700, Boston, MA 02110, United States. TableUp Inc. have
a registered office address at 1209 Orange Street, Wilmington, DE 19801. Orbital Sidekick Inc. has a registered office
at Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808. Concirrus, LTD. has a registred office
address at New City Court, 20 St. Thomas Street, London SE1 9RS.
(3) The preferred shares that Allied Minds has in these companies are accounted for under IFRS 9.
(4) The common shares that Allied Minds has in these companies are accounted for under IFRS 9.
The following tables summarise the financial information related to the Group’s subsidiaries with material
non-controlling interests, aggregated for interests in similar entities, and before intra-group eliminations.
As of and for the year ended 31 December:
Statement of Comprehensive Loss
Revenue
Income for the year
Other comprehensive income
Total comprehensive income
Comprehensive (loss)/ income attributed
to NCI
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net liabilities
Carrying amount of NCI
Statement of Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Early Stage
2021
$'000
Later Stage
Minority
Holdings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,544
12,395
-
12,395
186
-
3,810
-
3,810
(896)
820
6,262
7,082
(75)
(12,820)
(12,895)
(5,813)
168
(2,089)
(184)
1,387
(886)
-
-
-
-
-
-
-
-
13,916
-
(1,186)
12,730
129
FINANCIAL STATEMENTS
Statement of Comprehensive Loss
Revenue
Loss for the year
Other comprehensive loss
Total comprehensive loss
Comprehensive loss attributed to NCI
Statement of Financial Position
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net liabilities
Carrying amount of NCI
Statement of Cash Flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Investment in Associates
Early stage
2020
$'000
Later stage
Minority
holdings
-
(1,966)
480
(11,051)
-
-
(1,966)
(2,024)
320
502
822
(105)
(3,756)
(3,861)
(3,039)
(3,441)
(1,953)
(20)
184
(1,789)
(11,051)
(455)
1,288
7,105
8,393
(1,380)
(27,707)
(29,087)
(20,694)
1,180
(6,621)
(538)
4,707
(2,452)
-
-
-
-
-
-
-
-
-
-
-
-
-
At 31 December 2021, the Group has one associate, Federated Wireless, which is material to the Group
and is equity accounted. During the year, the group held Spin Memory as an equity accounted for
associate. Its operations were ceased in the period as the board made the decision to liquidate this
company.
Spin Memory: : As of 31 December 2020, Allied Minds’ ownership percentage went from 42.69% to 43.01%
as a result of the entity’s latest financing round in July 2020. In accordance with IAS 28, once the share of
losses of an associate equals or exceeds its "interest in the associate", the investor discontinues
recognising its share of further losses. Once Allied Minds’ interest in Spin Memory was reduced to zero
no further adjustments were made to the investment balance at 31 December 2020. As of 31 December
2021, Allied Minds’ ownership percentage remained at 43.01%.
On 23 June 2021, the Board of Spin Memory has taken the decision to liquidate the company. Allied Minds
first invested $1.5 million in Spin Memory in November 2007 and continued to provide funding in
subsequent fundraising rounds. Allied Minds' total investment in Spin Memory is $50.5 million. As
indicated at the full year results in March, and due to the fact the company was not able to secure further
investment from third parties, despite shareholders providing operational and financial support, Spin
Memory faced significant liquidity issues. These were due to challenges in securing new customers,
alongside the impact of COVID-19 which significantly delayed the required testing of its development chip
with ARM. In light of these challenges and the significant quantum of capital committed to Spin Memory
to date, the Board of Allied Minds has concluded that it is no longer prepared to make any further
investment into Spin Memory. As of 31 December 2021, the liquidation process is pending final
130
FINANCIAL STATEMENTS
environmental issues and is expected to be completed in Q2 2022. Based on the Assignments For The
Benefit Of Creditors (ABC) proceedings Allied Minds expects to get no payment from the process.
Spin Memory, Inc.
Group’s interest in net assets of investee, beginning of period
Share of loss from continuing operations
Carrying amount for equity accounted investees
Unrecognised share of losses in associate
Total outstanding
Ownership percentage
31 December
2021
31 December
2020
43.01%
43.01%
Location
Fremont,
CA
31 December
2021
$'000
31 December
2020
$'000
―
―
―
(37,393)
(37,393)
―
―
―
(37,393)
(37,393)
Federated Wireless: As of 31 December 2020, Allied Minds’ ownership percentage went from 42.57% to
43.11% and the investment in Federated Wireless continues to be subject to the equity method
accounting. In accordance with IAS 28, the Company’s investment was adjusted by the share of profits
and losses generated by Federated Wireless subsequent to the date of deconsolidation. As a result, Allied
Minds recorded a share of loss of $6.8 million in the Consolidated Statements of Comprehensive Loss for
the year ended 31 December 2020, that reduced the investment in Federated to a zero balance.
As of 31 December 2021, Allied Minds’ ownership percentage went from 43.11% to 42.72% and continues
to be subject to the equity method accounting. No further adjustments were made to the investment
balance at 31 December 2021. If Federated Wireless subsequently reports profits, Allied Minds will
resume recognising its share of those profits only after its share of the profits equals the share of losses
not recognised.
Ownership percentage
Location
31 December 2021
31 December 2020
Federated Wireless, Inc.
Arlington,
VA
42.72%
43.11%
Group’s interest in net assets of investee, beginning of
period
Addition in the year
Share of loss from continuing operations
Carrying amount for equity accounted investees
Unrecognised share of losses in associate
Total outstanding
131
31 December 2021
31 December 2020
$'000
$'000
―
―
―
―
(53,169)
(53,169)
6,845
―
(6,845)
―
(19,432)
(19,432)
FINANCIAL STATEMENTS
The following is summarised financial information for Federated Wireless, based on their perspective
consolidated financial statements prepared in accordance with IFRS:
Federated Wireless
$'000
2021
2020
11,021
(36,788)
10,067
24,209
34,276
(4,516)
(86,607)
(56,847)
2,882
(28,073)
17,948
30,597
48,545
(5,804)
(133,917)
(91,176)
Revenue
Loss for the period
Total non-current assets
Total current assets
Total assets
Total non-current liabilities
Total current liabilities
Net assets
Investments at fair value
The Group’s investments at fair value represent securities of portfolio companies where Allied Minds
holds preferred shares or a minority stake in those companies. These investments are initially measured
at fair value through profit or loss and are subsequently re-measured at fair value at each reporting date
and on derecognition.
The fair value of these investments is derived using the option pricing model (“OPM”), the Probability-
Weighted Expected Return Method (“PWERM”) or a hybrid of the two.
The key inputs into these valuation models include the equity value of the portfolio company, the term of
the instrument, risk free rate and volatility.
The valuation methodologies utilised for determining the equity value include market approach, income
approach or cost approach or hybrid of these approaches. Other methodologies such as asset based and
cash in are also utilised where deemed appropriate. It is noted that in the current year none of the equity
values were determined using the income approach.
Other valuation approaches
In certain cases, the value of a portfolio company is determined using a market instead of income- based
approach.
Where there has been a third party funding round in the year this has been used as the implied value of
the portfolio company or comparable guideline public companies or comparable transactions, adjusted
for indexation where this is deemed to be appropriate.
Whilst the Board considers the methodologies and assumptions adopted in the valuation are supportable,
reasonable and robust, because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready market for the investment
existed and the differences could be material.
132
FINANCIAL STATEMENTS
PWERM and OPM
The principal methods the Group applies for allocation of value are the PWERM, the OPM as well as a
hybrid of the two. These models take assumptions such as the equity values, term of the instruments, risk
free rate and volatility to determine the fair value of each share class.
The PWERM estimates the value of equity securities based on an analysis of various discrete future
outcomes, such as an IPO, merger or sale, dissolution, or continued operation as a private enterprise until
a later exit date. The equity value today is based on the probability-weighted present values of expected
future investment returns, considering each of the possible outcomes available to the enterprise, as well
as the rights of each security class. The key judgement relates to probability weighting of the scenarios.
The OPM treats common stock or derivatives thereof as call options on the enterprise’s value or overall
equity value. The value of a security is based on the optionality over and above the value securities that
are senior in the capital structure (e.g. preferred stock), considering the dilutive effects of subordinate
securities. In the OPM, the exercise price is based on a comparison with the overall equity value rather
than per-share value.
Those investments are presented in the below table:
31 December
2021
$'000
14,154
-
8,528
4,330
6,276
696
33,984
Disposals
$'000
―
―
―
―
―
―
―
Finance
(income)/cost
from IFRS 9 fair
value accounting
$'000
(14,378)
(4,821)
564
1,559
2,965
―
(14,111)
Additions*
$'000
―
―
2,500
―
3,311
696
6,507
31 December
2020
$'000
28,532
4,821
5,464
2,771
―
―
41,588
Federated Wireless, Inc.
Spin Memory, Inc.
Orbital Sidekick, Inc.
TouchBistro, Inc.
OcuTerra Therapeutics,
Inc.
Concirrus, LTD
Total investments at
fair value
* Of the total amount presented in the additions column, $1.0 million was cash used in investing
activities. related to Orbital Sidekick’s latest financing. As such, on the cash flow statement, the
total cash used for purchase of investments consists of that $1.0 million and the $4.3 million noted
below related to Federated Wireless SAFE.
Federated Wireless: The Company’s investment at fair value in Federated Wireless has changed from
$28.5 million, as reported at 31 December 2020, to $14.2 million at 31 December 2021. The decrease in
investment balance primarily relates to the IFRS 9 fair value accounting during the period.
In November 2021, Allied Minds invested $4,283,000 in the form of SAFEs (simple agreements for equity)
in Federated Wireless, which will convert into shares of preferred stock in the company’s next equity
financing round. The entire instrument is measured at fair value through profit or loss. The SAFE is
classified as a current receivable on Allied Minds’ financial position. At 31 December 2021, the entire
instrument was adjusted by a fair market gain of $0.2 million.
133
FINANCIAL STATEMENTS
Spin Memory: The company’s investment at fair value in Spin Memory has changed from $4.8 million, as
reported at 31 December 2020, to $nil at 31 December 2021. The change was due to the Board’s decision
to liquidate the company.
Orbital Sidekick: On 6 April 2018, Allied Minds made an investment in Orbital Sidekick, a company
developing capabilities in aerial and space-based hyperspectral imaging and analytics, initially for the oil
and gas industry. Allied Minds has significant influence over financial and operating policies of the investee
by virtue of its large, albeit minority, stake in the company and its representation on the entity’s board of
directors. Allied Minds only held shares of preferred stock in Orbital Sidekick. The preferred shares held
by Allied Minds are not equity-like and therefore these fall under the guidance of IFRS 9 and will be treated
as a financial asset held at fair value where all movements to the value of Allied Minds’ share in the
preferred stock will be recorded through the Consolidated Statements of Comprehensive Loss.
On 13 April 2021, Orbital Sidekick, Inc. ("OSK") completed the closing of its $16 million Series A funding
round led by Temasek, an investment company headquartered in Singapore, with participation from
Energy Innovation Capital, Syndicate 708, and existing investors Allied Minds and 11.2 Capital. Out of the
total financing capital raised, Allied Minds invested $2.5 million (including the conversion of its SAFE of
$1.5 million). As of 31 December 2021, Allied Minds' ownership of Orbital Sidekick's issued share capital
is 26.29% compared to 33.23% at 31 December 2020. As of 31 December 2021, Allied Minds investment
held at fair value related to its Preferred Shares in Orbital Sidekick was valued at $8.5 million (31 December
2020: $5.5 million).
TouchBistro: On 6 April 2018, Allied Minds made an investment in TableUp, a software provider enabling
end-to-end transparency through the restaurant supply chain to enable more effective inventory and
operations management. On 5 August 2020, TableUp was acquired by TouchBistro, Inc. (“TouchBistro”).
The acquisition was structured as a stock-for-stock transaction in which TouchBistro acquired 100% of the
shares of TableUp in exchange for the issuance of TouchBistro common shares to the shareholders of
TableUp. As such, Allied Minds’s investment in preferred stock, along with the convertible note, was fully
converted into common shares in TouchBistro. A total of 2,542,662 common shares of TouchBistro was
paid to Allied Minds valued at $5.99 million at the time of the transaction. As a result of the acquisition,
Allied Minds’ ownership percentage was 1.52% at 31 December 2020. Allied Minds does not have
significant influence over the investee as it does not hold 20% or more of the voting power of the investee
as well as it does not have any board representation. As such, the investment does not meet the definition
of an associate under IAS 28 Equity Accounting (“IAS 28”) and therefore, the common shares are classified
as an investment at fair value, under IFRS 9 Financial Instruments (“IFRS 9”). As of 31 December 2021,
Allied Minds' ownership of TouchBistro's issued share capital is 1.40% compared to 1.52% at 31 December
2020. At 31 December 2021, the fair value of Allied Minds’ investment in TouchBistro was measured at
$4.3 million (31 December 2020: $2.8 million).
OcuTerra Therapeutics: As of April 2021, OcuTerra Therapeutics was deconsolidated from the Group’s
financial statements as a result of the first closing of its Series B Preferred Stock financing round. On that
date Allied Minds’ issued and outstanding ownership percentage dropped from 62.67% to 27.58%.
Consequently, since the Company no longer held a majority of the voting rights in OcuTerra Therapeutics
and did not hold a majority on its board of directors, Allied Minds did not exercise effective control over
OcuTerra Therapeutics. However, even after the transaction, Allied Minds was able to exercise significant
influence over the entity by virtue of its large, albeit minority, stake in the company and its representation
134
FINANCIAL STATEMENTS
on the OcuTerra Therapeutics’s board of directors. As such, only the profits and losses generated by
OcuTerra Therapeutics through April 2021 were included in the Group’s Consolidated Statements of
Comprehensive Loss. Upon the date of deconsolidation, Allied Minds recognised an investment in
OcuTerra Therapeutics related to its common shares of $2.4 million. Series A Preferred Stock and Series
B Preferred Stock (collectively the “OcuTerra Therapeutics Preferred Stock”) held by Allied Minds are not
equity-like and therefore these fall under the guidance of IFRS 9 and will be treated as a financial asset
held at fair value where all movements to the value of Allied Minds’ share in the preferred stock will be
recorded through the Consolidated Statements of Comprehensive Loss. At the date of deconsolidation
these were classified as an investment at fair value of $3.3 million. The fair value of the investment in
associate at the date of deconsolidation was based on the value implied from the third party funding
round which lead to the loss of control. This is a market based valuation approach. As a result of the
deconsolidation, Allied Minds recorded an unrealised gain of $14.2 million in the Consolidated Statements
of Comprehensive Loss. The gain was calculated by taking the difference between the fair value of the
interest retained in the former subsidiary at the date control is lost less the carrying amount of net assets
adjusted for the non-controlling interests of the former subsidiary.
On 21 June 2021, OcuTerra completed the third closing of the same Series B financing and as a result,
Allied Minds’ ownership dropped to 18.98% of the issued and outstanding shares. In addition, Allied Minds
has only 1 out 7 Board of Directors representation and therefore it is limited in its participation in
operating and capital. Based on these factors management have judged that Allied Minds cannot alone
impact the policy making processes of the company and there are no other material transaction between
the investor and investee. It has therefore been determined, Allied Minds no longer has significant
influence over the investee and the investment does not meet the definition of an associate under IAS 28
at this date. As such, Allied Minds’ share of common stock is accounted as an investment at fair value in
accordance with IFRS 9 for the period beyond 21 June 2021.
Allied Minds’ investment in common shares was adjusted by the share of loss of $2.4 million generated
by OcuTerra Therapeutics for the period 27 April through 21 June 2021. This reduced the investment in
OcuTerra to a zero balance. At 21 June 2021, the investment in OcuTerra’s common shares was accounted
as an investment at fair value in accordance with IFRS 9. The investment in OcuTerra’s common shares
was subsequently measured at $2.6 million from $nil at 21 June 2021. This resulted in a gain through profit
and loss in relation to the fair value of this amount.
Allied Minds recognised $2.4 million as its share of loss from OcuTerra Therapeutics through the
Consolidated Statements of Comprehensive Loss as follows:
Ownership percentage
Location
31 December 2021
31 December
2020
OcuTerra Therapeutics, Inc.
Cambridge
, MA
17.06%
62.67%
31 December 2021
$'000
31 December
2020
$'000
135
FINANCIAL STATEMENTS
Group’s interest in net assets of investee, beginning
of period
Addition in the year
Share of loss from continuing operations
Carrying amount for equity accounted investees
Unrecognised share of losses in associate
Total outstanding
―
2,362
(2,362)
―
(1,406)
(1,406)
―
―
―
―
―
―
Spark Insights: On 29 October 2021, Allied Minds Plc has disposed of its portfolio company, Spark Insights,
Inc. to Concirrus, a private UK-based insurance technology company. The acquisition was structured as a
stock-for-stock transaction in which Concirrus acquired 100% of the shares of Spark in exchange for the
issuance of Concirrus’ Series A1 preferred shares. As such, Allied Minds’s investment in preferred stock,
along with the promissory notes, was fully converted into preferred shares in Concirrus. A total of 61,252
Series A1 preferred shares of Concirrus was paid to Allied Minds, valued at $700,000. As at 29 October
2021, Allied Minds' issued and outstanding ownership of Spark Insights was 70.44% and fully-diluted
ownership was 60.00%. As a result of the acquisition, Allied Minds’ ownership percentage in Concirrus is
0.98%. Allied Minds has not retained any board representation as it waived that with the disposal of Spark
Insights. As such, the company does not exercise effective control over Spark and as a result was
deconsolidated from the Group’s financial statements.
Allocation Model Inputs
Allied Minds holds shares of preferred stock in Federated Wireless and Orbital sidekick and has significant
influence over financial and operating policies of the investee by virtue of its stake in the companies and
representation on the entity’s board of directors. Allied Minds holds a minority interest in the ordinary
share capital of TouchBistro and a minority interest in the preferred share of Concirrus, where significant
influence is not held. It also hold a minority interest in the ordinary share capital and preferred stock of
OcuTerra Therapeutics. The preferred shares and ordinary share capital in the investments noted above
fall under the guidance of IFRS 9 and will be treated as a financial asset held at fair value and all
movements to the value of Allied Minds’ share of these assets will be recorded through the Consolidated
Statements of Comprehensive Income/(Loss). The following presents the quantitative information about
the significant unobservable inputs used in the fair value measurement of the Group’s financial assets:
As of 31 December:
Volatility
Time to Liquidity (years)
Risk-Free Rate
IPO/M&A/Sale Probability
Sensitivity Analysis
2021
51.8%-81.2%
0.75 - 2.75
0.29% - 0.89%
0%/ 100%/ n/a
2020
38.8%-73.5%
1.50 - 3.27
0.10% - 0.2%
0%/ 100%/ n/a
The following summarises the sensitivity from the assumptions made by the Company in respect to the
unobservable inputs used in the fair value measurement of the Group’s financial assets. The sensitivities
provided reflect reasonably possible changes to the key assumptions:
As of 31 December:
2021
$'000
2020
$'000
136
FINANCIAL STATEMENTS
Input
Enterprise Value
Volatility
Time to Liquidity
Risk-Free Rate (1)
Sensitivity range
Financial assets increase/(decrease)
-2%
+2%
-10%
+10%
-6 months
+6 months
-0.23%/-0.09%
0.18% /0.02%
(780)
677
171
(79)
534
(1,756)
809
(465)
(451)
613
602
(290)
445
(198)
445
(198)
(1) Risk-free rate is a function of the time to liquidity input assumption.
(12)
Cash and Cash Equivalents
As of 31 December:
Bank balances
Total cash and cash equivalents
(13)
Trade and Other Receivables
As of 31 December:
Trade receivables
Prepayments and other current assets
Total trade and other receivables
(14)
Equity
2021
$'000
2020
$'000
9,710
9,710
24,489
24,489
2021
$'000
2020
$'000
434
5,478
5,912
394
5,422
5,816
ALM's Board of Directors (the "Board") approved a new programme to buy back up to $3.0 million of the
Group's shares ("Buyback Programme") during 2021. Share purchases took place in open market
transactions and were made from time to time depending on market conditions, share price, trading
volume and other factors. The Buyback Programme ran from the date of the announcement to 6 October
2021. The Buyback Programme was in accordance with Allied Minds' general authority to purchase a
maximum of 24,218,799 Ordinary Shares, granted by its shareholders at the Annual General Meeting held
on 12 May 2021 and the purpose was to reduce share capital. Shares purchased under the Buyback
Programme will be cancelled. As of 31 December 2021, the company has repurchased 2,537,712 of its
own shares for a total value of $737,678.
During 2021 and 2020, there were no options exercised under the U.S. Stock Plan. Additionally, no shares
(2020: 624,862 shares) were issued to existing and former employees of the Group during the year as
result of vesting of RSUs under the LTIP.
137
FINANCIAL STATEMENTS
As of 31 December 2021, 11,551,496 ordinary shares were reserved under the U.S. Stock Plan and
24,781,174 were reserved under the LTIP, see note 6 for further discussion of the share-based payment
plans.
The table below explains the composition of equity:
As of 31 December:
2021
$'000
2020
$'000
Equity
Share capital, $0.01 par value, issued and fully paid
242,187,985 and 242,187,985, respectively
Treasury shares
Translation reserve
Accumulated profit
Equity attributable to owners of the Company
Non-controlling interests
Total equity
3,767
(738)
1,302
40,156
44,487
168
44,655
3,767
―
1,343
55,440
60,550
(2,264)
58,286
Holders of Ordinary Shares are entitled to vote, on all matters submitted to shareholders for a vote. Each
Ordinary Share is entitled to one vote. Each ordinary share is entitled to receive dividends when and if
declared by the Company’s Board of Directors. The Company has not declared any dividends prior to 2020.
In February 2020, Allied Minds made a special cash dividend payment to shareholders of $39.7 million as
a result of the sale of Allied Minds’ share in HawkEye in the second half of 2019.
Translation reserve comprises all foreign exchange differences arising from the translation of the financial
statements of foreign operations.
(15)
Changes in Non-Controlling Interest (“NCI”)
The following summarises the changes in the non-controlling ownership interest in subsidiaries by
reportable segment, calculated on the basis of percentage ownership of non-controlling interest in
voting stock on an as converted basis, excluding liability classified preferred shares:
Early Stage
$'000
Later Stage
$'000
Consolidated
$'000
Non-controlling interest as of 31
December 2019
Share of comprehensive loss
Effect of change in Company’s
ownership interest
Equity-settled share based payments
Non-controlling interest as of 31
December 2020
Share of comprehensive loss
Effect of change in Company’s
ownership interest
Equity-settled share based payments
Deconsolidation of subsidiaries
1,533
(455)
(18)
117
1,177
(3,424)
(38)
32
2,421
115
(2,479)
(18)
118
(2,264)
(710)
(96)
31
3,207
(1,418)
(2,024)
—
1
(3,441)
2,714
(58)
(1)
786
138
FINANCIAL STATEMENTS
Non-controlling interest as of 31
December 2021
(16)
Preferred Shares
—
168
168
Certain of the Group’s subsidiaries have outstanding preferred shares which have been classified as a
subsidiary preferred shares in current liabilities in accordance with IFRS 9 as the subsidiaries have a
contractual obligation to deliver cash or other assets to the holders under certain future liquidity events,
and/or a requirement to deliver an uncertain number of common shares upon conversion. The preferred
shares do not contain mandatory dividend rights. The preferred shares are convertible into common stock
of the subsidiary at the option of the holder and mandatorily convertible into common stock of the
subsidiary upon a qualified public offering at or above certain value and gross proceeds specified in the
agreements or upon the vote of the holders of a majority of the subsidiary preferred shares. Under certain
scenarios the number of common stock shares receivable on conversion will change. The Group has
elected not to bifurcate the variable conversion feature as a derivative liability, but account for the entire
instrument at fair value through the income statement.
The preferred shares are entitled to a vote with holders of common stock on an as converted basis. The
holders of the preferred shares are entitled to a liquidation preference amount in the event of a
liquidation or a deemed liquidation event of the respective subsidiary. The Group recognises the
subsidiary preferred shares balance upon the receipt of cash financing, and records the change in its fair
value for the respective reporting period through profit and loss. Preferred shares are not allocated shares
of the subsidiary losses.
As of April 2021, OcuTerra Therapeutics was deconsolidated from the Group’s financial statements as a
result of the first closing of its Series B Preferred Stock financing round and Allied Minds’ issued and
outstanding ownership percentage dropped from 62.67% to 27.58%. On that date, OcuTerra has issued
$14.1 million in Series B Preferred Shares to its third party investors. In addition, as a result of the round
OcuTerra’s Series A Preferred Shares and Special Stock went up in value by $7.7 million.
The following summarises the subsidiary preferred shares balance:
As of 31 December:
BridgeComm
OcuTerra Therapeutics
Total subsidiary preferred
shares
Fair value
gain or loss
under IFRS 9
$'000
Disposals
$'000
Additions
$'000
(5,242)
7,704
―
(21,841)
―
14,137
2020
$'000
6,497
―
2,462
(21,841)
14,137
6,497
2021
$'000
1,255
―
1,255
The redemption is conditional on occurrence of uncertain future events beyond the control of the
Group. The amount that would be payable in case of such events is as follows:
139
FINANCIAL STATEMENTS
As of 31 December:
BridgeComm
Total liquidation preference
2021
$'000
1,260
1,260
2020
$’000
6,500
6,500
The fair value is derived using the option pricing model (“OPM”), the Probability-Weighted Expected
Return Method (“PWERM”) or a hybrid of the two.
The key inputs into these valuation models include the equity value of the subsidiary, the term of the
instrument, risk free rate and volatility.
The valuation methodologies utilised for determining the equity value include the market approach,
income approach or cost approach or hybrid of these approaches. Other methodologies such as asset
based are also utilised where deemed appropriate. It is noted that in the current year none of the equity
values were determined using the income approach.
Where there has been a third party funding round in the year this has been used as the implied value of
the portfolio company or comparable guideline public companies or comparable transactions, adjusted
for indexation where this is deemed to be appropriate.
Whilst the Board considers the methodologies and assumptions adopted in the valuation are supportable,
reasonable and robust, because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready market for the investment
existed and the differences could be significant.
PWERM and OPM
The principal methods the Group applies for allocation of value are the PWERM, the OPM as well as a
hybrid of the two. These models take assumptions such as the equity values, term of the instruments, risk
free rate and volatility to determine the fair value of each share class.
The PWERM estimates the value of equity securities based on an analysis of various discrete future
outcomes, such as an IPO, merger or sale, dissolution, or continued operation as a private enterprise until
a later exit date. The equity value today is based on the probability-weighted present values of expected
future investment returns, considering each of the possible outcomes available to the enterprise, as well
as the rights of each security class. The key judgement relates to probability weighting of the scenarios.
The OPM treats common stock or derivatives thereof as call options on the enterprise’s value or overall
equity value. The value of a security is based on the optionality over and above the value securities that
are senior in the capital structure (e.g. preferred stock), considering the dilutive effects of subordinate
securities. In the OPM, the exercise price is based on a comparison with the overall equity value rather
than per-share value.
140
FINANCIAL STATEMENTS
Allocation Model Inputs
The following presents the quantitative information about the significant unobservable inputs used in the
fair value measurement of the Group’s subsidiary preferred shares liability:
As of 31 December:
Volatility
Time to Liquidity (years)
Risk-Free Rate
Probability M&A
Sensitivity Analysis
2021
77.7%
2.00
0.73%
n/a
2020
53.6%
2.00
0.10%
100%
The following summarises the sensitivity from the assumptions made by the Company in respect to the
unobservable inputs used in the fair value measurement of the Group’s subsidiary preferred shares
liability. Option Pricing Model and Probability Weighted Expected Return Method Inputs for Investments
Held at Fair Value at 31 December 2021 and 2020 respectively:
OPM Measurement Date
As of:
Input
Sensitivity range
Enterprise Value
Volatility
-2%
+2%
-10%
+10%
Time to Liquidity
-6 months
+6 months
Risk-Free Rate
-0.17/-0.02
0.12/ 0.02
2021
$'000
(3)
35
35
(3)
35
(3)
35
(3)
2020
$'000
(112)
114
266
(264)
117
(112)
117
(112)
(1) Risk-free rate is a function of the time to liquidity input assumption.
The subsidiary preferred shares are measured at fair value through profit/loss (FVTPL) according to IFRS
9 at initial recognition and upon subsequent measurement. Hence, any gains and losses on the preferred
shares liability are recognised in profit or loss, unless they relate to changes in the entity’s own credit risk
for financial liability designated as at fair value through profit or loss. The effect of changes in the entity’s
own credit risk in the fair value of the financial liabilities are presented in other comprehensive income.
There were no adjustments considered for movement in credit risk as this is not applicable within the
specific valuation frameworks utilized for the fair values of the Group’s preferred share liability. The
subsidiary preferred shares values and movement in credit risk, if applicable, are being constantly
monitored as new information becomes available. For the year ended 31 December 2021, the change in
141
FINANCIAL STATEMENTS
fair value of the subsidiary preferred shares is recorded in Finance cost, net in the consolidated statement
of comprehensive loss.
(17)
Trade and Other Payables
As of 31 December:
Trade payables
Accrued expenses
Other current liabilities
Trade and other payables, current
(18)
Loans
As of 31 December:
Current liabilities - Loans:
Unsecured loans
Paycheck Protection Program (PPP)
loans*
Non- Current liabilities - Loans:
Unsecured loans
Total loans
2021
$'000
210
525
326
1,061
2020
$'000
319
1,457
325
2,101
2021
$'000
2020
$'000
3,109
―
―
3,109
2,965
184
1,440
4,589
*Two subsidiaires of the Group during the year, Spark Insights and BridgeComm, have received PPP loans
under the CARES Act in 2020 ($0.2 million) and 2021 ($0.2 million). At 31 December 2021, the full PPP
balance decreased from $443 thousand to $nil due to PPP loan forgiveness in current period.
The terms and conditions of outstanding loans are as follows:
2021
$'000
2020
$'000
As of 31 December:
Unsecured loan(1)
Unsecured loan(2)
Unsecured loan(3)
Total interest bearing
liabilities
Currency
Nominal
interest
rate
Year of
maturity
Face value
Carrying
amount
Face value
Carrying
amount
USD
USD
USD
5.0%
12.0%
8.0%
2020-22
2021-21
2020-22
2,500
―
―
2,500
3,109
―
―
3,109
2,500
100
1,325
3,825
2,862
103
1,440
4,589
BridgeComm convertible note (1)
On 16 December 2020, BridgeComm secured $1.0 million of funding through the issuance of a convertible
bridge note to Boeing HorizonX Ventures, LLC (“Boeing”). All principal and accrued interest shall be due
and payable on 30 June 2022. In August 2021, as a result of achieving certain development milestones
under the JDA with Boeing, BridgeComm secured the remaining $1.5 million of convertible debt from
142
FINANCIAL STATEMENTS
Boeing. The $2.5 million promissory note was issued at a 5.0% interest rate that will be compounded
monthly and computed on the basis of a year of 365 days for the actual number of days elapsed and shall
be paid on the maturity date. The loan balance is due to amortize withinthe 12 months following the
reporting date and will be classed as a current liability. The entire instrument is measured at fair value
through profit or loss due to the conversion feature being an embedded derivative. At 31 December 2021,
the entire instrument was adjusted upward by a fair market change of $0.1 million.
OcuTerra Therapeutics promissory note (2)
On 23 September 2020, OcuTerra Therapeutics secured $0.1 million of funding through the issuance of a
promissory note to multiple investors at annual interest rate of 12.0% payable within one year from the
date of issuance. The note was issued at an interest rate that will accrue on the unpaid Principal Amount
at the rate of twelve (12%) per annum computed on the basis of a 365-day year. The note converted into
preferred shares upon the closing of the Series B funding in April 2021.
OcuTerra Therapeutics convertible note (3)
On 5 November 2020, OcuTerra Therapeutics secured $0.95 million of funding through the issuance of a
convertible bridge note to multiple investors at annual interest rate of 8.0%. On 10 January 2021,
OcuTerra Therapeutics raised an additional $0.4 million in the second closing of its convertible note
financing. The note was issued at an interest rate that will accrue on the unpaid Principal Amount at the
rate of eight (8%) per annum, payable at the maturity date (36 month anniversary of the closing date). All
accrued interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months,
and shall be payable on the date the outstanding principal amount shall become due and payable,
whether on the Maturity Date or by acceleration or otherwise, or upon conversion. The entire instrument
and the offsetting discount will be measured at fair value through profit or loss as the conversion feature
fails the fixed for fixed equity classification. The convertible note of $1.5 million converted into preferred
shares upon the closing of the Series B funding in April 2021.
(19)
Leases
Office and laboratory space is rented under non-cancellable operating leases. These lease agreements
contain various clauses for renewal at the Group’s option and, in certain cases, escalation clauses typically
linked to rates of inflation.
Right of use asset
Balance at 1 January
Additions
Depreciation
Deconsolidation
Balance at 31 December
2020
$000s
1,016
-
(365)
-
651
2021
$000s
651
192
(316)
(113)
414
143
FINANCIAL STATEMENTS
Lease liability
Balance at 1 January
Additions
Cash paid
Interest expense
Deconsolidation
Balance at 31 December
2021
$000s
1,830
192
(1,100)
71
(120)
873
2020
$000s
2,854
-
(1,150)
126
-
1,830
The following details the short term and long-term portion of the lease liability as at 31 December 2021:
Lease liability released in < 1 year
Lease liability released in over 1 year
Total Lease Liability
Total lease liability
$000s
660
213
873
During 2019, the Group relocated its corporate headquarters and as a result it sub-leased the office space
that has been presented as part of a right-of-use asset. As the sub-lease is for all of the remaining useful
economic life of the right-of-use asset, the sub-lease is classified as a finance lease.
The following table sets out a maturity analysis of lease receivables, showing the undiscounted lease
payments to be received after the reporting date. Under IAS 17, the Group did not have any finance leases
as a lessor.
In thousands of $
Less than 1 year
Between 1 and 5 years
More than 5 years
Total undiscounted lease receivable
Unearned finance income
Net investment in the lease
31 December 2021
438
-
-
438
(24)
414
Additions in the period relate to site leases that were entered into by Allied Minds’ consolidated
subsidiaries during 2021. Amounts were arrived at using the contractual minimal lease payments, present
valued using the applicable incremental borrowing rate of 5.0%.
Amounts recognised in profit or loss
In thousands of $
2021 – Leases under IFRS 16
Interest on lease liabilities
Income from sub-leasing right-of-use assets presented in
‘interest income’
31 December 2021
71
45
144
FINANCIAL STATEMENTS
(20)
Financial Instruments and Related Disclosures
The following table shows the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy:
As of 31 December:
Financial assets designated as fair
value through profit or loss
Investments at fair value
Convertible note receivable
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Security and other deposits
Total
Financial liabilities designated as fair
value through profit or loss
Convertible notes
Subsidiary preferred shares
Financial liabilities measured at
amortised cost
Trade and other payables
Lease liability
Total
As of 31 December:
Financial assets designated as fair
value through profit or loss
Investments at fair value
Convertible note receivable
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Security and other deposits
Total
Financial liabilities designated as fair
value through profit or loss
Convertible notes
Subsidiary preferred shares
2021
$'000
Fair value
Level 1
Level 2
Level 3
Total
—
—
—
—
—
—
—
—
—
—
33,984
33,984
4,500
4,500
38,484
38,484
3,109
1,255
3,109
1,255
—
—
4,364
4,364
2020
$'000
Fair value
Level 1
Level 2
Level 3
Total
—
—
—
—
41,588
41,588
1,500
1,500
—
—
43,088
43,088
Carrying
Amount
33,984
4,500
9,710
5,912
594
54,700
3,109
1,255
1,061
873
6,298
Carrying
Amount
41,588
1,500
24,489
5,816
1,360
74,753
4,590
6,497
—
—
—
—
4,590
6,497
4,590
6,497
145
FINANCIAL STATEMENTS
Financial liabilities measured at
amortised cost
Trade and other payables
Lease liability
Total
2,101
1,830
15,018
—
—
11,087
11,087
Total other financials assets were as follows:
For the year ended 31 December:
Deposits
Other long term assets
Total
Convertible note receivable
Other current assets
Total
2021
$'000
44
—
44
4,500
550
5,050
5,094
2020
$'000
81
500
581
1,500
779
2,279
2,860
The fair value of financial instruments that are not traded is determined by using valuation techniques
that maximise the use of observable market data where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in Level 2. Where the inputs for determining the fair value of financial instruments
are not based on observable market data, the instrument is included in Level 3. See the assumptions for
the valuation of the Convertible note receivable as disclosed in note 11 of the financial statements. As
such, for assumptions used in the fair value measurement of the Group’s convertible notes designated as
Level 3, see note 18.
For assumptions used in the fair value measurement of the Group’s subsidiary preferred shares liability
designated as Level 3, see note 16. For assumptions used in the fair value measurement of Investments
at fair value designated as Level 3, see note 11.
Cash and cash equivalents, trade receivables, and trade payables are carried at cost, which approximates
fair value because of their short-term nature.
The movement in the convertible loan note assets are presented in the below table:
31 December
2021
$'000
4,500
―
Disposals
$'000
―
(2,500)
Movement from
IFRS 9 fair value
accounting
$'000
217
―
Additions
$'000
4,283
1,000
31 December
2020
$'000
―
1,500
4,500
(2,500)
217
5,283
1,500
Federated Wireless, Inc.
Orbital Sidekick, Inc.
Total convertible loan
note assets at fair value
146
FINANCIAL STATEMENTS
(21)
Capital and Financial Risk Management
The Group’s policy is to maintain a strong asset base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. Management monitors the level of capital
deployed and available for deployment in subsidiary projects. The Board of Directors seeks to maintain a
balance between the higher returns that might be possible with higher levels of deployed capital and the
advantages and security afforded by a sound capital position.
The Group’s executive management and Board of Directors have overall responsibility for establishment
and oversight of the Group’s risk management framework. The Group is exposed to certain risks through
its normal course of operations. The Group’s main objective in using financial instruments is to promote
the commercialisation of intellectual property through the raising and investing of funds for this purpose.
The Group’s policies in calculating the nature, amount and timing of funding are determined by planned
future investment activity. Due to the nature of activities and with the aim to maintain the investors’ funds
secure and protected, the Group’s policy is to hold any excess funds in highly liquid and readily available
financial instruments and reduce the exposure to other financial risks.
The Group has exposure to the following risks arising from financial instruments:
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Financial instruments that potentially subject the Group to
concentrations of credit risk consist principally of cash and cash equivalents, investments held at fair
value, and trade and other receivables.
The Group held following balances:
As of 31 December:
2021
$'000
2020
$'000
Cash and cash equivalents
Investments held at fair value
Trade and other receivables
9,710
33,984
5,912
49,606
24,489
41,588
5,816
71,893
Risk control assesses the credit quality of the customer, taking into account its financial position, past
experience and other factors. Individual risk limits are set based on ratings in accordance with limits set
by the Board. The utilisation of credit limits is regularly monitored. The credit quality of financial assets
that are neither past due nor impaired can be assessed by reference to credit ratings (if available) or to
historical information about counterparty default rates.
Group policy is to maintain its funds in highly liquid deposit accounts with reputable financial institutions.
The Group’s investments in preferred stock are accounted for at fair value through profit or loss (FVTPL)
in accordance with IFRS 9. This measurement is appropriate as these financial assets are not held with the
objective to collect contractual cash flows which are solely payments of principal and interest (SPPI) on
147
FINANCIAL STATEMENTS
the principal amount outstanding. The entity is primarily focused on fair value information and uses that
information to assess the asset’s performance and to make decisions. The subsidiary preferred shares
values and movement in credit risk are being constantly monitored as new information becomes available.
The Group has a concentration of credit risk in respect of its financial assets held at fair value through the
profit or loss which relate to ordinary and preferred share investments with movements in fair value of
$14.1 million. Of this balance $14.4 million in losses relates specifically to the preferred shares held in
Federate Wireless for the period. These investments are reviewed in detail in note 11. The Group assesses
the credit quality of customers, taking into account their current financial position.
The aging of trade receivables that were not impaired was as follows:
As of 31 December:
2021
$'000
2020
$'000
Neither past due nor impaired
Past due 30-90 days
Past due over 90 days
Reserve for bad debt
434
―
―
―
434
135
259
―
―
394
An analysis of the credit quality of trade receivables that are neither past due nor impaired is as follows:
As of 31 December:
Customers with less than three years of
trading history with the Group
Liquidity Risk
2021
$'000
2020
$'000
434
434
394
394
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach
to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities
when they are due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Group’s reputation.
The Group seeks to manage liquidity risk, ensuring that sufficient liquidity is available to meet foreseeable
requirements.
The following are the remaining contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted, and include estimated interest payments and exclude the impact
of netting agreements.
As of 31 December 2021:
$'000
Carrying
amount
Total
Contractual cash flows
Less than
1 year
2-5 years
More than
5 years
Trade and other payables
1,061
1,061
1,061
—
—
148
FINANCIAL STATEMENTS
Convertible loan notes
Subsidiary preferred shares
Lease liability
3,109
1,255
873
6,298
3,109
1,255
873
6,298
3,109
1,255
660
6,085
—
—
213
213
—
—
—
—
As of 31 December 2020:
$'000
Trade and other payables
Convertible loan notes
Subsidiary preferred shares
Lease liability
Carrying
amount
Total
Contractual cash flows
Less than
1 year
2-5 years
More than
5 years
2,101
4,590
6,497
1,830
15,018
2,101
4,590
6,497
1,830
15,018
2,101
3,150
6,497
1,830
13,578
—
1,440
—
—
1,440
—
—
—
—
—
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or
at significantly different amounts.
Market Risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and
equity prices – will affect the Group’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return. The Group maintains the exposure to market risk from such
financial instruments to insignificant levels. The Group exposure to changes in interest rates is determined
to be insignificant.
Capital Risk Management
The Group is funded by equity finance and long term borrowings. Total capital is calculated as ‘total equity’
as shown in the consolidated statement of financial position.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital
structure, the Group may issue new shares or borrow new debt. The Group has some external debt in the
form of preferred shares and no material externally imposed capital requirements. The Group’s share
capital is set out in note 16.
149
FINANCIAL STATEMENTS
(22)
Related Parties
Transactions with Key Management Personnel
Key Management Personnel Compensation
Key management personnel compensation received comprised the following:
For the year ended 31 December:
Short-term employee benefits
Share-based payments
Total
2021
$'000
18
—
18
2020
$'000
1,022
105
1,127
Short-term employee benefits of the Group’s key management personnel include salaries and bonuses,
health care and other non-cash benefits.
Share-based payments include the value of awards granted under the LTIP during the year. Share-based
payments under the LTIP are subject to vesting terms over future periods. See further details of the two
plans in note 6.
Key Management Personnel Transactions
Directors’ remuneration for the year comprised the following:
For the year ended 31 December:
Executive Directors’ fees
Non-executive Directors' fees
Total
2021
$'000
18
345
363
2020
$'000
1,127
359
1,486
Executive management and Directors of the Company control 0.6% of the voting shares of the Company
as of 31 December 2021 (2020: 0.6 %).
The Group has not engaged in any other transactions with key management personnel or other related
parties.
(23)
Taxation
Amounts recognised in profit or loss
No current income tax expense was recorded for the years ended 31 December 2021 and 2020 due to
accumulated losses.
For the year ended 31 December:
2021
$'000
2020
$'000
Net income/(loss)
(15,534)
(53,025)
150
FINANCIAL STATEMENTS
Income taxes
Net income/(loss) before taxes
—
(15,534)
—
(53,025)
Reconciliation of Effective Tax Rate
The Group is primarily subject to taxation in the US, therefore the reconciliation of the effective tax rate
has been prepared using the US statutory tax rate. A reconciliation of the US statutory rate to the effective
tax rate is as follows:
US federal statutory rate
Effect of state tax rate in US
Research credits
Share-based payment remeasurement
Permanent differences from consolidation
Other permanent differences
Current year income/(losses) for which no deferred
tax asset/(liability) is recognised
2021
%
2020
%
21.0
5.7
1.4
(0.5)
52.7
2.2
(82.5)
—
21.0
5.3
0.7
(0.4)
1.2
(0.7)
(27.1)
—
Factors that may affect future tax expense
The Group is subject to taxation in the US and UK. Additionally, the Group is exposed to state taxation in
various jurisdictions throughout the US. Changes in corporate tax rates can change both the current tax
expense (benefit) as well as the deferred tax expense (benefit). A UK corporation tax rate of 25% (effective
1 April 2023) was substantively enacted on 23 May 2021, increasing the rate from 19% to 25% for future
periods.
Unrecognised Deferred Tax Assets
Deferred tax assets have not been recognised in respect of the following items, due to history of operating
losses and no convincing evidence that future taxable profit will be available against which the Group can
use the benefits therefrom, as well as due to potential permanent restrictions under Internal Revenue
Code Section 382 rules:
As of 31 December:
Tax loss carry forward
Research credits
Temporary differences
Deferred tax assets
Other temporary differences
Deferred tax liabilities
Deferred tax assets, net, not recognised
2021
$’000
2020
$'000
74,282
5,201
24,291
103,774
—
—
103,774
79,285
7,022
15,494
101,801
—
—
101,801
151
FINANCIAL STATEMENTS
Deferred tax is measured at the rates that are expected to apply in the period when the temporary
differences are expected to reverse, based on tax rates and laws that have been enacted or substantially
enacted by the statement of financial position date.
As of 31 December 2021 the Company had United States federal net operating losses carry forwards
(“NOLs”) of approximately $277.6 million (2020: $292.7 million) available to offset future taxable income,
if any. These carryforwards start to expire in 2024 and are subject to review and possible adjustment by
the Internal Revenue Service. The Company may be subject to limitations under Section 382 of the
Internal Revenue Code as a result of changes in ownership. The Company’s preliminary analysis on the
impact from Section 382 limitations suggests that there is unlikely to be a material restriction on NOLs. A
detailed exercise is ongoing. Upon the completion of the study, there may or may not be limitations on
the Company’s ability to utilise its current NOLs against future profits, although these are not expected to
be material.
(24)
Subsequent Events
On 28 March 2022, Allied Minds plc (LSE: ALM) has completed the disposal of its residual shareholding in
TouchBistro for $5.5 million CAD ($4.4 million USD) in line with its strategy of monetising its investment
portfolio. Of the sale proceeds, $5.0 million CAD has been received and $0.5 million CAD is to be held in
escrow, with an initial release date in the third quarter of 2022, subject to any then outstanding claims.
On 2 May 2022, Federated Wireless, Inc., ("Federated"), the industry leader in enterprise shared
spectrum 5G private wireless, completed a $72.0 million in Series D funding at a pre new-money
valuation of $230.0 million. Participants in Federated's latest financing round include an affiliate of
Cerberus Capital Management, L.P. ("Cerberus"), a new investor, alongside existing investors GIC
(Singapore's sovereign wealth fund) and Allied Minds.
On 8 June 2022, Allied Minds and AE Industrial HorizonX Venture Fund I, LP (HorizonX), jointly
contributed an aggregate of $0.8 million of convertible bridge financing to BridgeComm, each
contributing $0.4 million. The bridge financing will be applied to support the business to the completion
of a new financing round.
COMPANY BALANCE SHEET
As of 31 December
Note
2021
$ '000
2020
$ '000
Non-current assets
Loan to subsidiary
Total non-current assets
Current assets
Cash and cash equivalents
Trade and other receivables
53,271
53,271
1,682
307
92,648
92,648
1,756
284
3
2
152
FINANCIAL STATEMENTS
Total current assets
Total assets
Equity
Share capital
Treasury shares
Translation reserve
Accumulated reserves
Total equity
Current liabilities
Trade and other payables
Total current liabilities
Total liabilities
Total equity and liabilities
4
4
4
4
4
1,989
55,260
3,767
(738)
(55,215)
107,357
55,171
89
89
89
55,260
2,040
94,688
3,767
—
(59,394)
150,080
94,453
235
235
235
94,688
As permitted by Section 408 of the Companies Act 2006, the Company’s profit and loss account has not
been included in these financial statements. The Company’s loss for the year was $38,177,000 (2020:
$55,917,000).
Registered number:
The financial statements on pages 98 to 159 were approved by the Board of Directors and authorised for
issue on 14 June 2022 and signed on its behalf by:
Harry Rein
Non-Executive Chairman
153
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31
December 2021
Balance at 31 December
2019
Total comprehensive loss for
the year
Loss for the year
Foreign currency
translation
Total comprehensive loss for
the year
Issuance of ordinary
shares
Dividend payment
Equity-settled share
based payments
Balance at 31 December
2020
Total comprehensive loss for
the year
Loss for the year
Foreign currency
translation
Total comprehensive loss for
the year
Issuance of ordinary
shares
Repurchase of ordinary
shares
Equity-settled share
based payments
Balance at 31 December
2021
241,563,123
—
—
624,862
—
—
$'000
3,759
—
—
8
—
—
242,187,985
3,767
—
—
—
—
—
—
—
—
—
—
Share capital
Treasury shares
Share
Translation
Accumulated
Shares
Amount
Shares
Amount
$' 000
premium
$'000
reserve
$'000
reserves
$'000
Total
equity
$'000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(2,538)
(738)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(54,612)
239,876
189,023
—
(55,917)
(55,917)
(4,782)
(4,782)
—
—
—
4,894
112
(51,023)
(55,805)
—
(39,707)
934
8
(39,707)
934
94,453
(59,394)
150,080
—
4,179
4,179
—
—
—
(38,177)
(38,177)
(4,796)
(617)
(42,973)
(38,794)
—
—
250
—
(738)
250
(55,215)
107,357
55,171
242,187,985
3,767
(2,538)
(738)
154
FINANCIAL STATEMENTS
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December:
Cash flows from operating activities:
Net operating loss for the year
Adjustments to reconcile net loss to net cash
used in operating activities:
Share-based compensation expense
Impairment loss in loan to subsidiary
Changes in working capital:
Increase in trade and other receivables
Decrease in trade and other payables
Other finance income /(cost)
Net cash used in operating activities
Cash flows from investing activities:
Proceeds from issuance of note receivable
Repayments of note receivable from subsidiary
Net cash provided by investing activities
Cash flows from financing activities:
Payments to repurchase ordinary shares
Proceeds from issuance of share capital
Dividend payment
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
Note
2021
$ '000
2020
$ '000
(38,177)
(55,917)
3
3
4
4
250
36,674
(23)
(147)
19
(1,404)
1,070
(3,138)
2,068
(738)
—
—
(738)
(74)
1,756
1,682
934
53,755
(199)
(340)
(2,086)
(3,853)
1,910
(45,133)
43,223
—
8
(39,705)
(39,697)
(328)
2,082
1,756
155
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021
(1)
Accounting Policies
Basis of Preparation and Measurement
The financial statements of the parent company have been prepared under the historical cost convention,
in accordance with international accounting standards as applied inaccordance with the provisions of the
Companies Act 2006 and in accordance with UK Adopted International Accounting Standards (”IFRS”). A
summary of the more important accounting policies which have been applied consistently throughout the
year are set out below.
Functional and Presentation Currency
The functional currency of the parent company is British Pounds. The financial statements of the parent
company are presented in US dollars to the nearest $’000s.
Foreign Currency
Transactions in foreign currencies are translated to the respective functional currencies of the parent
company at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are retranslated to the functional currency
at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of
historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are
retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was
determined.
On translation of the Company financial statements from functional currency to presentational currency
the assets and liabilities are translated at the closing exchange rates. Profit and loss accounts are
translated at the average rates of exchange during the year. Gains and losses arising on these translations
are taken to reserves. Each reporting date, the retained earnings reserve, as measured in the functional
currency, is translated to the presentational currency using the closing exchange rate. The retained
earnings balance represents the deemed amount in US Dollars, measured at the reporting date,
equivalent to the functional currency Great British Pounds available for distrubtion to the shareholders
from the parent company’s distributable reserves. Any differences between this amount and the
aggregate of the opening retained earnings measured at the opening rate and the profit in the period
measured at the average rate are recognised in the Translation reserve.
Intercompany Loans
All intercompany loans are initially recognised at fair value and subsequently measured at amortised cost.
Where intercompany loans are intended for use on a continuing basis in the Company’s activities and
there is no intention of their settlement in the foreseeable future, they are presented as non-current
assets.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid instruments with original maturities of three months or
156
FINANCIAL STATEMENTS
less.
Impairment
If there is an indication that an asset might be impaired, the Company will perform an impairment review.
An asset is impaired if the recoverable amount, being the higher of net realisable value and value in use,
is less than its carrying amount. Value in use is measured based on future discounted cash flows (“DCF”)
attributable to the asset. In relation to the investment held in subsidiaries and intra group receivable
balance the net realisable value is the fair value of the underlying subsidiaries. In such cases, the carrying
value of the asset is reduced to recoverable amount with a corresponding charge recognised in the profit
and loss account. The underlying assumptions in determining the fair value of the subsidiaries are key
estimates and include the determination of the fair value as described in note 11 and 16 of the group
financial statements.
Financial Instruments
Currently the Company does not enter into derivative financial instruments. Financial assets and financial
liabilities are recognised and cease to be recognised on the basis of when the related titles pass to or from
the Company.
Share-based Payments
Share-based payment arrangements in which the Company receives goods or services as consideration
for its own equity instruments are accounted for as equity-settled share-based payment transactions,
regardless of how the equity instruments are obtained by the Company. The Company’s share based
payment scheme, which awards shares in the parent entity, includes recipients who are not employees
the company, but in its subsidiaries. Where beneficiaries are employees in a subsidiary, their element of
the share based payment charge would usually be capitalized to recognize the service received by the
subsidiary. To the extent that these amounts will not be recovered the charge has continued to be
expensed by the Company.
The grant date fair value of share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees become
unconditionally entitled to the awards. The fair value of the options granted is measured using an option
valuation model, taking into account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that do meet the related service and non-
market performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such conditions
and there is no true-up for differences between expected and actual outcomes.
(2)
Cash and Cash Equivalents
As of 31 December:
Bank balances
Cash and cash equivalents
2021
$'000
2020
$'000
1,682
1,682
1,756
1,756
157
FINANCIAL STATEMENTS
(3)
Loan to Subsidiary
Balance at 1 January
Additions
Impairment
Repayments
Effect from currency translation
Balance at 31 December
2021
$'000
2020
$'000
92,648
1,070
(36,674)
(3,138)
(635)
53,271
187,431
1,910
(53,755)
(45,133)
2,195
92,648
The Company has loaned its excess cash to its operating subsidiary Allied Minds, LLC (‘the subsidiary’) , as
part of its continuing working capital investment programme in the wider group, and to be further
deployed by the subsidiary, to enable the group to deliver its strategic plans. The note bears an interest
of 1.25% and in the foreseeable future, repayment is neither planned nor likely to occur.
During 2021, the Directors reviewed the value of the underlying business and concluded an impairment
charge of $36.7 million should be recorded. The asset’s recoverable amount is determined to be based
on the fair value of the company’s subsidiaries together with its associates, preferred shares held and the
recoverable cash. This has been recorded against the loan to subsidiary balance (this note).
(4)
Share Capital and Reserves
Allied Minds Plc was incorporated with the Companies House under the Companies Act 2006 as a public
company on 15 April 2014. Full detail of the share capital and reserves activity for the year can be found
in note 16 to the consolidated financial statements.
As of 31 December:
2021
$'000
2020
$'000
Equity
Share capital, $0.01 par value, issued and fully paid
242,187,985 and 242,187,985, respectively
Treasury Shares
Translation reserve
Accumulated deficit
Total equity
3,767
(738)
(55,215)
107,357
55,171
3,767
—
(59,394)
150,080
94,453
In December 2016, the Company issued 17,457,015 ordinary shares of one pence at 367 pence, which
were admitted to the premium listing segment of the Official List of the UK Listing Authority and to trading
on the LSE’s Main Market for listed securities. This resulted in approximately $78.1 million of net proceeds
from the equity placing (net of issue cost of $2.2 million). The amounts subscribed for share capital in
excess of the nominal value in relation to this transaction are reflected in the merger reserve balance as
of 31 December 2016.
158
FINANCIAL STATEMENTS
ALM's Board of Directors (the "Board") approved a new programme to buy back up to $3.0 million of the
Group's shares ("Buyback Programme") during 2021. Share purchases took place in open market
transactions and were made from time to time depending on market conditions, share price, trading
volume and other factors. The Buyback Programme ran from the date of the announcement to 6 October
2021. The Buyback Programme was in accordance with Allied Minds' general authority to purchase a
maximum of 24,218,799 Ordinary Shares, granted by its shareholders at the Annual General Meeting held
on 12 May 2021 and the purpose was to reduce share capital. Shares purchased under the Buyback
Programme will be cancelled. As of 31 December 2021, the company has repurchased 2,537,712 of its
own shares for a total price of $737,678.
Holders of Ordinary Shares are entitled to vote, on all matters submitted to shareholders for a vote. Each
Ordinary Share is entitled to one vote. Each ordinary share is entitled to receive dividends when and if
declared by the Company’s Board of Directors.
The share-based payment credit for the fiscal year ended 31 December 2021 included in accumulated
deficit was $0.3 million (2020 charge: $0.9 million).
In the period, management have calculated that an amount of $4,796k foreign exchange on converting
their functional currency retained earnings to the presentation currency retained earnings. The
cumulative, foreign exchange, amount recorded in retained earnings is $8,045k.
(5)
Profit and Loss Account
As permitted by Section 408 of the Companies Act 2006, the Company’s profit and loss account has not
been included in these financial statements. The Company’s loss for the year was $38,177,000 (2020:
$55,917,000).
(6)
Directors’ Remuneration, Employee Information and Share-based Payments
The remuneration of the Directors of the Company is disclosed in note 23 to the consolidated financial
statements. Full details for their remuneration can be found in the Directors’ Remuneration Report on
pages 56 to 59. Full detail of the share-based payment charge and related disclosures can be found in note
6 to the consolidated financial statements.
The Company had no employees during 2021 (2020: none).
159
Company Information
Company Registration Number 08998697
Registered Office
Beaufort House
51 New North Road
Exeter EX4 4EP
United Kingdom
Website
www.alliedminds.com
Board of Directors
Harry Rein
(Non-Executive Chairman)
Bruce Failing
(Senior Independent Director)
Company Secretary
JTC (UK) Limited
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
Broker
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
United Kingdom
TEL: +44 207 260 1000
Registrar
Link Group
The Registry
Unit 10
Central Square
29 Wellington Street
Leeds
LS1 4DL
TEL UK: 0871 664 0300
TEL Overseas: +44 208 639 3399
Solicitors
DLA Piper UK LLP
160 Aldersgate Street
London EC1A 4HT
United Kingdom
TEL: +44 207 349 0296
Independent Auditor
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
TEL: 020 7486 5888
Media Relations
Instinctif Partners
65 Gresham Street,
London EC2V 7NQ
United Kingdom
TEL: +44 20 7457 2020
160