Ondo Insur Tech (LSE:ONDO) — Interim Results to Sep 30 2023

0:01 Good morning, and welcome to the ONDO INSURTECH PLC Interim Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Just click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself. Have the company review all questions submitted today and published responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Craig Foster, CEO. Good morning.

0:31 Thank you. Paul. Good morning, everyone. Thank you for joining, today's webinar, to go through our interim results for the six months ending, September 30, this year. I'm my name is Craig Foster. I'm the chief executive of ONDO INSURTECH, and I'm joined today by our CFO, Kevin Withington. So I know some of you on the call are already very familiar with ONDO and what we've been doing, But I'm also conscious that many people on the call will will not be so familiar, and this might be the first time they're learning about the company. So if you do know a bit about ONDO already, forgive us that we will start with just a basic overview of what the company does before we get into the more recent updates and and and the results.

1:19 So at ONDO, we have a product called Leakbot. And quite simply, Leakbot prevents water leaks. We have a rapidly growing customer base. We just announced in the interims it's now 84,000 households that the device is is live in. And in all of those households, it's detecting whether those houses have a leak. And we do this really because it's a win for insurance companies. We've now signed insurance companies that collectively, cover 5,000,000 households, whereas it was about half a million households just over just over a year ago. And, the important thing is homeowners love the solution. We've got 4.8 out of five trust pilot score.

2:05 So our vision is to become a world leader in claim prevention technology for the home insurance industry, And the mission that we're on is to protect homes, to reduce waste, and to help the planet. And I say that because there's an important environmental benefit from what we do because we save a lot of water. And that's the reason why we've been awarded the green economy mark on on the stock exchange. So we're really focused, as a team, as a business on two problems. One is the problem for insurance companies caused by water leaks. So if you think in your own home, where is the plumbing in the house? It's hidden in cavity walls. It's hidden in ceilings. And those pipe that pipework is prone to leak.

2:51 And often what happens is those leaks go unnoticed. So something starts as a small drip, and it causes damage over time without you noticing. Now that's a massive problem for the insurance industry. It's 20 to 30% of all of the claims expenditure that insurance companies pay out. It's putting houses back to how they were before, after one of those leaks. If you take The United States and The UK, that's 1,600,000 claims a year, an average, in The US of $11,000 each time there's a claim. So it adds up to £14,000,000,000 worth of claims, every year, which is just a huge waste putting houses back to how they were before, as a result of these types of leaks. So it's a big problem within insurance.

3:37 Now what's interesting is household water leaks are also a massive problem for the environment, and this is something people all of us are becoming more conscious of as a result of climate change, as a result of population growth, water resources are becoming increasingly scarce all around the world. The UK is no exception. Despite the fact that it rains a lot here, we're, on our way to also, having a huge amount of water shortage if, current trends continue. In The UK, 8% of toilets are leaking. You know when you see the water running down the back of a of a toilet system? And that might not you might not think that wastes a lot of water, but that can waste between 200 to 400 liters per day when one of those lose, is is leaking.

4:25 And, they're exactly the the leaks again that LeakBot can detect and can fix, and that's where really we drive that environmental, benefit. So the LeakBot solution is a water leak prevention system, and it's unique for a number of different reasons. One is it's a unique sensor technology, and the reason why this is particularly relevant is, this is a small unit, and we can send this in the post to homeowners. It's cheap enough that insurance companies give this away for free as part of their policy, and it's self installed. So you just clip that to a pipe, and there's a clip on on the back, and you just clip that to a pipe, and that's how you install it, in the home. And that device can detect a leak anywhere on a mains water system, and then we alert the homeowner. If there's a leak, you get an alert on on the app on your phone. And through the app, you can book a plumber to come and find and fix the root cause of the problem. And that's all provided for free, paid for by the insurance company.

5:29 And the way that that technology works is it's something unique that we invented, and we own the IP on this all around the world. So it works by detecting temperature. The device itself detects the temperature of the incoming water and compares it to the ambient temperature as you can see by the the chart on on the screen. So the simple idea is that if there's a leak in the property, there's a permanent flow of water through the pipe, and therefore, a permanent differential in the temperature as you can see by the red icons. If there's no leak in the property, as soon as you stop using water, the water stands still in the pipe and goes back to an equilibrium point as demonstrated by the the green ticks. Our algorithm picks that out very accurately, and it's very sensitive. It can detect a leak down to about three milliliters per minute.

6:17 And the cool thing about that is we own the patents on that basic idea, all all around the world, including in the in The United States. So this is a big win for insurance companies. We can reduce household claims by up to 70%. It's a big win for the environment. We estimate a lead bot, when it's fitted in the home, will say 30,000 liters, over a five year period. And it's also a big win for homeowners. I'm not gonna labor the point here, but if you go on yourself and have a look at our reviews online, and read for yourself, these reviews are just from the the the last two weeks. And you can see that when this is provided, your home insurance is normally quite an intangible faceless product. And with something like this, you have a nice piece of technology for free.

7:04 If we detect a leak, especially if you don't think you've got one, and we send a a uniformed engineer with some high-tech equipment and then finds a leak that you didn't know that you had, it adds up to to an impressive experience that homeowners really like.

7:18 So our strategy, has remained relatively simple. Our goal is to be a world leader in claims prevention technology for home insurers, and we focus really on our core markets of The UK and Scandinavia with an aspiration on can we also break through in The United States. I'm really all we're trying to do at the moment is grow with our existing partners that we've already signed and bring some new partners, bring some new partners on board. So now to get into the, the the, the results itself and talk about what we've been doing in in that reporting period and, in any post period updates. So one important update is the the recent deal that we signed back in July with Lancer Schaffingar.

8:05 So so you may not have heard of them. They're probably the biggest home insurer that you've you've never heard of. So they're the largest home insurance company in Sweden. They've got 2,000,000 households undercover with their home insurance in Sweden, and we ran a successful pilot with them the the other year. In that pilot, we penetrated 40% of the customer base within one test region. We delivered an increase in new business. We delivered a claim saving. And on the back of that, launched off guard, it's decided to roll this product out across the country and across their customer base. Now we since we signed that deal, we expected the volumes to to ramp quite quickly, and they haven't ramped as fast as we expected them to, but for a very good reason.

8:53 So one thing that Lance and Shafengrave decided to do is they as a as a large financial services organization, they've got multiple insurance products. They've also got a Lancashire Schaffengard bank and savings products, and they're trying to drive cross sales across the group. The they they've developed an app for that purpose, but part of the challenge is how do you get customers to install an app? And, somebody bright at, Lancashire and Goth figured out that in the test region in Sodomo land, 40% of all their customers have got a Leakbar app on their phone. So what they decided to do for the rollout is they took our APIs, and we've helped them integrate that into the app so that LF customers can use the Lancer Shopping Cart app to install LeapBot as we roll this out.

9:41 So it really makes us even more strategically important to the group as they roll out the product. We are already live in four regions already.

9:49 The group have been kinda holding the other regions back while they finish the app development, and I think that'll be done early early in January. So it's the it's got off to a slightly slower start than we anticipated, However, for very good reasons and leaves us really well placed for the, for for the future rollout. I think the other really big news from this period is a breakthrough in The United States. The USA is by far the biggest opportunity for us as a business. The unit economics are great in The United States. Water damage claims are an even bigger problem in The US on a on a per home basis. But the jury was really out. Is could a small, you know, company with our market cap based here in The UK really make a breakthrough in that market?

10:40 Obviously, there's a degree of humility because much much bigger UK companies have tried and failed to make a go of it in in The US. In June, we signed a contract with Mutual of Enumclaw, who were an insurer in the Pacific Northwest. We've now launched into Washington state with Mutual of the Employ and that's got off to a really good start. We then also signed a contract with Pure in August. Pure, a really well respected high net worth brand in The United States. That had to go through state regulator approval in the launch date in New York, which has now been now been achieved, and we're looking forward to launching that activity this side of of Christmas. But the real breakthrough came as a post period announcement.

11:29 This was just two weeks ago that we'd signed a deal with Nationwide in The United States. So Nationwide are a Fortune 100 company in The US. They're a top 10 home insurer. We think they've got about 3,400,000 home insurance customers across The United States. And this it's hard to overemphasize the importance of this deal for us, in in The US. Nationwide, they've got a smart home program that they've already launched in 34 states. And what they're doing is more innovative than we've seen, any of our other partners, do in that they've developed their own system that can ingest the data from APIs from different smart home products. And they incent their customers to install something

12:16 that will help manage risk in their home, and they offer a a discount on the premium that happens on a monthly basis as a result of installing the technology. And by the way, the discount disappears if the the device goes offline or or you don't, you don't install it. So they've had some success with a a product called Ting, which prevents household fires that they've been rolling out as part of this platform. And we've now signed a master services agreement for them to distribute LeapBot as part of that smart home program in The US. So this has been a huge deal in the making. It's taken a long time. It's been a real struggle, honestly, for a company of our size to get through that kind of a procurement process, prove that we're kind of ready to work with somebody of Nationwide's magnitude.

13:04 But it's great that we've managed to get this deal over the line. And I can't wait to get that activity launched early in in in January in 2024.

13:14 And there's been a whole host of different innovation projects we've been working on as well. Some of you may remember an announcement that we're working with the largest insurance company in Australia, IAG, to develop an outdoor version of the product for for that market. Some of the team were in Sydney just last week at our test house that you can see on the slide there where we've been testing the first prototypes of of that product, and that's got off to to a good start. We've also done a pilot with g four s.

13:46 So this is a pilot where, it's g four s has a security system, and this is in Denmark. And what they're trying to do is sell the security system, to homeowners, and they wanted to work with insurance companies to kinda generate leads so they can send people into the house to offer an in home security visit. And their idea here was, well, could they, basically incentivize an insurance company by saying, look, we'll, offer free LeadBot, and we'll install that in the home, and then we'll do a home security assessment while we're there. So what we have mentioned in these interim results is that pilot has been successful. We're currently in talks for a rollout into 2024 with them. And I think that's in in and of itself, it's a good opportunity, but that's not that's a kind of, you know, flavor of the go to market model that could have real legs with with other security firms and also in other markets.

14:43 Finally, we've been working with water companies too, opening up a new avenue with them. We did a successful pilot with Portsmouth Water. We just announced a new pilot with, Southern Water, and, it remains a really interesting, avenue. The the publication of the Portsmouth water resource have opened up a huge amount of doors in the water industry, and, there's a real opportunity for us to do something cross industry with a whole bunch of water companies. And, you know, it's something that we're really looking forward to progressing and announcing more about in in due course. So to get into the in the numbers, I'll hand over to Kevin in a moment. But the overview here is you can see continued growth in terms of our registered customer base. It's now 84,000 customers.

15:31 It's grown, almost 80% year on year. Our change in pricing strategy is working, and you can see that as evidenced in in in the numbers that we showed in these interims. So we used to charge an upfront device fee, and what we've decided to do is change the footing of the business so it's more about generating recurring revenues. So we increase lifetime value and ultimately increase the valuation of the business as we prove that we can generate a real recurring revenue business that has some kind of characteristics of a SaaS business. And you can see that that strategy is working. Device fees are flat year on year, but recurring revenue grew by 50% and is now the majority of the revenue. And we've also published an exit rate, an annualized exit rate, from September so you can show the continue see the continued growth, in that. But I think the most important number really, and we'll come back to it in a moment, is the growth in addressable households, as that's really most of these results are backward looking, but the addressable households is an indication for the locked in potential of the business just from the deals that we've already signed. And we've gone from penetrating 10% of a half a million customer base in September 22, to now having an addressable households of 5,000,000 customers that we've only penetrated less than one and a half percent of.

16:51 So I'll hand over to Kevin at this point, and he'll hit the the highlights in the income statement, some of the balance sheet items.

16:59 Thanks, Craig. Thanks, Craig. Good morning good morning all. In terms of in terms of the financials, so we're on the income statement. So revenue up 24% on the six months to September. Obviously, this because of the year end change, that's that's the comparative comparative period. In terms of, as Craig has said, that revenue splits between 500,000, which is one off device device and device and project fees that that,

17:30 we receive and one point nil 700,000 of the recurring revenue from repairs and subscription subscription revenue. And that that revenue was built month on month throughout the period and is now an exit run rate at the end of September of 1,700,000. So that represents that represents the, effectively, the September income from those sources annualized to give you the to give you the the run rate. The overall margin, came in at just so, again, came after direct costs. It came in at 25%. And that that that, is a impact is impacted by the mix of business in terms of how the age of a how long a leak bot has been deployed.

18:17 Because under 12 under twelve months, their margin is lower because we've got the device costs and the shipping and other sort of cost within there. And then over twelve months over twelve months, that margin increases, probably in some cases as high as 80%. So over over time and that mix of business, so where we've had a rapid rollout in the period, that impacts impacts the margin. You'd expect that margin to to recover over recover over time or increase over time. In terms of other things that are sort of in the in the income statement, as you say, the the loss is down period the operating loss is down against the, two periods. The, the loss before tax does include a exceptional gain on the restructuring of the loan note that we told investors about a number of, number of number of months ago, but that is really more of an accounting change because of the because the impact of the terms the impact of the terms was more than 10%. The IFRS nine basically says that you almost repay the loan note from an accounting terms and re and re and and reestablish it on the new terms. But that generated an an exceptional gain, of $87.07, which is in the in the numbers.

19:34 The the I think as we touched on in previous previous results, the reason we did that was basically to move the cash, the the impact when that loan that started costing us money out another year and also extend the push out the repayment terms. So it was driven by driven by maintaining cash resources with the within the business. In terms of in terms of the balance sheet, the, I think the the key the we're obviously showing a summary balance sheet on this slide, but there's obviously more detail in the the full r and s. But the things I would draw investors' attention to is, stock has increased. You know, we've we've invested in stock, as Craig's mentioned, preparing for rollouts with LF and The US. So we're sitting on 800,000 of 800,000 of stock.

20:24 That is effectively doubled from the year end, where I think it's 400 and for about 400,000, but that is that was building for building for rollouts. And then in addition to, within their current liabilities, and the detail is in note seven of the financial statements, you can see that we've got a million pounds, a million and 50, a million and 50 of, deferred revenue. So this is cases where the partner has paid, has paid us in advance for fees, and that and that basically, that cash has been invested in majority of that cash has been invested in stock. So that that's sort of the the sort of key area. And and, obviously, you can see that the loan note restatement period on period goes from 6.1 to 6.142.

21:11 So the the, as I touched on the the loan that is, sort of does does sort of impact. But that was more of an accounting change more than any than anything else. But the rest of the, I mean, the rest of the balance sheet, the small amount of assets, you know, we're pleased to see that we have we've got slightly more cash than we had at the at the thirty first thirty first of March. But the predominant the predominant increase is the value of the stock that we've that we've got, that we expect to deploy in the next, the next six months. Other than that, I see there's various questions, but I'm sure we can deal with any bits and pieces as part of, that, and I'll hand back to Craig. Very good. Thank you, Kevin. So so the other highlights really are, as we've mentioned, the continued growth in the registered customer base.

22:04 That's grown 77% year year on year to 84,000. And as we've already mentioned, you can see here the change in that revenue, change in that pricing strategy with partners. So as mentioned, we used to charge an upfront device fee, with the deals. And, obviously, that was important because we were helps drive the headline revenue number, and it helps get cash into the business. However, that can be at the detriment of the long run recurring revenues. So we knew it was the right thing for the business to, reposition the the pricing a 100% onto recurring recurring revenue. The, the kind of two downsides of doing it in the short term are, one, it makes the headline revenue number a bit less racy, and, it also has a short term impact on gross margin because the gross margin is squeezed in year one but looks, much better, you know, as as, you know, around 80% from year two, on onwards because most of our costs are in the first year.

23:08 But you can see the evidence here of that pricing strategy working where the the proportion of revenues from recurring revenue from software and services is is growing. And you can see the growth in the, the annualized run rate here from specific from the recurring revenue. So out of all of the, of all the stats, I think this is really the most interesting to give you an idea for the future potential for the for the business. So what this chart is showing, and some of you will remember this from from the full year results, which showed a kind of similar breakdown. Addressable households refers to from the contracts that we've already signed, how many households undercover can we market LeapBot to.

23:56 So if you look at September 22,

23:58 under contract, we were able to get into a total addressable market of about half a million households. And at the time, we penetrated about 10% of that customer base. Is 10% the limit of where we can get to? Obviously not, but that 10% is where we were up to at the at the time. The what you can then see is by September 2023, there's been a big jump from recent deals that we've signed. And Lance and Schaffingar is obviously a big chunk of that where we were up to almost two and a half million multiple households. You can see then again that a a further step change that's come from the nationwide deal, which has taken the overall addressable households to 5,000,000.

24:45 It means we've only really penetrated less than one and a half percent of that opportunity. So the things you can see here are the recent deals that we've been signing have been an order of magnitude bigger. And, and, you know, obviously, the plan is to, sign many more partners. But you can see even if we get to 10% penetration of that 5,000,000 customer base, even without signing another deal, this is, already has the potential to be a a really significantly sized business.

25:20 And also worth mentioning is the environmental benefits. You can see the growth in actual leaks that we've resolved in the period. So in the last six months, we resolved 19,000 leaks, saved about two and a half million liters of water a day. So that's about enough water to fill an Olympic sized swimming pool every day. And if you're interested more in the environmental benefits, I was invited to talk on the stock exchanges sustainable growth podcast recently. So you might you might possibly find find that interesting. So our strategy is simple. Our aim is to be the world leader in claims prevention technology for home insurers. Our goal is to protect homes, reduce waste, and help the planet, and our strategy today is relatively focused. And we look forward to executing that further in the future and, continuing to to grow the business. We've really got an exciting opportunity over the next few years to create a really valuable technology based business, listed here in in The UK, and, we thank you all for your interest and your support so far, at the start of the this journey that we're on.

26:27 So, that's the end of the formal presentation, and, I think we'll go next to the to the q and a. John, is that right? Yeah. Absolutely. Thank you both, Craig, Kevin, for the, presentation. Ladies and gentlemen, do please continue to submit your questions just using that q and a tab situated in the right hand corner of the screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q and A could be accessed via your investor dashboard. Guys, as you can see, we've received a number of questions both pre submitted and throughout today's presentation. If I may just ask you to click on that q and a tab, start at the top and just where appropriate to do so read out the question and give your response and I'll pick up from you at the end. Thank you. Very good. Okay. Well, I can see there's lot on here. So we'll try and get through we'll try and answer them quickly and get through as many as we can.

27:16 So is there any update on the g four s trial? I think we probably covered that off already. But just to underline, the trial's been a success, and we're in talks with g four s and the the, so far, unnamed insurance company that was involved in the pilot as well. But it's one of the larger ones in in Denmark, and we're looking forward to asking the the specific details of what we're gonna do with that in in due course. How much scope is there to materially reduce the manufacturing cost of the Leakbot, which might enable us to reduce price and increase the serviceable market? Kevin, do you do you wanna take that one? Yeah. I would say there probably is a little bit of scope to it, and I think we've touched on this before if we were to move production from The UK to a lower cost environment.

28:08 But I think in in practice, The UK line works works well for us and has and has capacity. I think the more likely step strategic step will be to look at another line in another line in another in a low cost area to support the expansion into The US. In terms of The UK line, you know, we're comfortable we have you know, it has enough capacity for the medium term. But we are, you know, we are obviously looking with the nationwide deal, looking at future demands for devices and where where would be best to manufacture them to to cover The US market. Thanks, Kevin. Could you please remind us why Leakbot doesn't work in apartment blocks?

28:58 So Leakbot is if if anyone doesn't isn't is not aware, it's specifically tuned for houses specifically. And the reason we say that is if you remember how I explained what works the technology in terms of using temperature in a house, the underground the the mains water comes from underground up into the property, and there's normally a stop tap somewhere in in the house. So the LeapBot device, clip clips to that. And, the reason why it works there is because the basically, the fact that the water's coming from underground controls that, that temperature of the water, and you can compare that to the ambient temperature where the device is located. In an apartment block, the reason why that's more problematic is because there's normally like a trunk main that goes up the middle of a building, and the temperature of that water is variable depending on the characteristics of the building. The easiest way to explain it is, you know, sometimes if you go to a hotel and you turn on the cold water tap and the water's warm and you have to run the water for, like, five minutes before there's any cold water, That basically kind of sums up the the problem. Now the good news is there are a lot of houses. So in The UK and The US, 80% of the housing stock is is houses.

30:14 And when we're working with insurers, they obviously know in advance, what they've covered. So it's very easy for them to select the universe of customers specifically in the right type of house for us. So we've decided to just both focus on exploiting the the kind of product that we've got for the time being. The discussion session with Portsmouth Water was interesting regarding smart meters in particular. Is it fair to say from a water company's perspective, the leak detection capabilities, smart meters are probably sufficient. They don't really need the extra sensitivity of LeapBot. So LeapBot would just be a stop gap unless they didn't have to fully fund it themselves. No. That's a that's a a a very good point. So I think it depends on on, what types of leaks are different industries, interested in.

31:07 So in the insurance sector, they're into the reason why we deliver the value proposition for insurers is we're trying to spot very small leaks that are hidden behind cavity walls, hidden in ceilings, and we spot those leaks really early before they've managed to cause damage to the property. So for that to work, you need a really high degree of sensitivity. The leaks that derive the most amount of benefit for the water industry are those leaking overflows on toilets, and they're much higher volume leaks, you know, a couple 100 liters per day. So a smart meter is not nearly as sensitive as a leak bot, but probably can just about pick up those leaking toilet overflows. So therefore, I mean, the thrust of the question is why why are the water companies at all interested in leak bot? Well, there's a few reasons for that.

31:58 One is the smart meter rollout is gonna take really a long time in in The UK. And even if you extrapolate far into the future, it's still only a proportion of The UK are expected to ever get smart meters in the first place. There's lots of parts of The UK where the the, the economic case for putting in a smart meter just doesn't make any sense. So I think the reason why the water industry are interested is this is a a high impact, a relatively fast way of deploying something that can make an immediate benefit from a water efficiency point of view. So, that's that's the really the role that Leapbox got to got to play specifically with the with the water industry. Next question is, the WNS deal requires the customer to sign up to their claims handling services. Presumably, this significantly lengthens the sales cycle even for existing WNS clients.

32:56 Are WNS actively marketing the LeapBot to their customers? How much easier would the sale be if ONDO could provide the guarantee itself? And is it possible to say what kind of balance sheet strengths we need to be able to do that on a large scale? Yeah. That's a really interesting question. So WNS are, marketing this to their to their partners. As kind of anticipated, the WNS, the kind of nature of those deals are kind of very large and and therefore very long winded. So we kinda always anticipated it might take a while before we get to the point of announcing anything as a as a result of that partnership, but that is, remains ongoing. The question here is really interesting because one thing that WNS have got the balance sheet strength to do is to say to partners, well, look, we'll guarantee the result. We do think that's a really, great proposition.

33:43 And, I think if we did have the balance sheet strength, it'd be something we definitely, could do and our insurance partners would be interested in. What balance sheet strength would we need to be able to do that? I I don't know exactly the answer to that answer to that question, but I think it's, yeah, very perceptive. I think I think the thrust of that is correct. I could add to that and just say a lot of it depends on the balance sheet, how the partner views your balance sheet. So it's more to do with it more to do with that and the sources of funding. So it isn't it isn't I don't think it is actually possible to put a number on balance sheet strength. It comes back to the perception of the partner. Yeah. Yeah. It's a good point, Kevin.

34:30 The next one says, conscious that it might make sense for a large insurer to buy ONDO in order to have exclusivity, over the lead bot, which should theoretically enable them to materially reduce their costs or materially increase their market share. What are management's long term aspirations? Do they hope to still be operating independently in ten years' time? For instance, which is probably the length of time it would take to enable the business to come remotely close to maximizing value creation, for its shareholders. So, yeah, great, great question. You know, obviously, any company that's growing quickly and has got a unique technology and a unique IP, could be interesting to various different strategic buyers, at some point in the future.

35:21 I mean, your guess is as good as good as mine. Would an insurance company ever be interested in in in buying a solution? I'm not sure that a single insurance company, it would ever warrant the acquisition because the ultimate value of our company and of our solution is the fact that, you know, you can generate this this value across all of the all of the carriers, in various parts of the world. So I'm I'm not sure whether a single insurance company would ever be interested in buying us. And what I can say in terms of management's aspiration, I mean, in this regard, our motivations are very aligned as we've all invested a lot of our own money in the business. Our motivations are very aligned with shareholders.

36:07 So, you know, we would think it was a great shame if someone was to make, make an offer and we were to sell the business before we really thought we had time to, you know, a really good opportunity to grow this business and and, you know, maximize that potential. So, certainly, our aspiration is not to, you know, do some quick sell to an insurance company. That definitely not the case. And, certainly, our, objective is to grow this business and maintain it as an independent organization. Is the company considering, raising any further capital over the next twelve months? If not, how do you propose to fund your future growth plans? So I think the first thing I would say is we've been very careful to design, the business model and the pricing, in such a way that all the deals that we do are cash generative.

37:03 So how how can that be the case if, well, since we've, you know, evolved to flat pricing with recurring revenue? Well, we've been very careful to although we've moved to a flat pricing model, what we've been saying to our insurance partners is, let's say in the in The US, for example, it's $5 a month for the solution. What we still say is our payment terms are, however, you you know, whatever is the volume of the first order, we ask for the full twelve month fees, for that volume in a cash lump sum upfront, as soon as they sign the as soon as they sign the deal. And so far, that seems our partners are receptive to that. They tend to be insurance companies tend to be quite cash rich. They're much more focused on how the cost will hit their p and l account.

37:49 So so far, that seems to be working. What we didn't want is a a kind of pricing model that was very hungry for working capital just as a as a straight factor of of growing. So I think we've managed to avoid that in in in the design. The other thing that I would say is, again, just to labor the point that our motivations as a management team, as directors are highly aligned with you as shareholders because we've invested a lot of our own money in the business. So we absolutely aren't interested in diluting our own holdings or your holdings. You know? So so in that in that regard, we're we're very much on on the same page. We did say both in the interims, and in, the full year accounts that there is a possibility, of course, that we might need to raise money or might choose to raise money, in in the next twelve month period, Especially with the the nature of the deal that we've just signed with Nationwide, it's a very interesting question on, could it make sense that, know, more capital could help us grow the business, faster?

38:59 So, you know, we can't rule that out, and it might be the right thing to do, at some point in the in the next twelve months. But, nevertheless, our our motivations are absolutely aligned, with, with shareholders. Back to the water companies. Are the pressure to reduce leaks as prevalent in other countries as they are in The UK? I don't profess to be an expert, but I think so. So leaking loose on toilets seems to be a universal issue. As far as our experience, we see exactly the same thing in Sweden and Denmark and exactly the same thing in The United States. I know that some of the stats in in, in The United States, the Environmental Protection Agency says the households in The US are wasting a trillion gallons of water every year as a result of leaks in the house, those, those same toilet leaks.

39:52 So I think it is an issue all all over the world. So far, our kind of foray into that has been specifically in The UK, but I do think it's a it's a massive global opportunity. The current the company is currently, a loss making enterprise. Capital is relatively low. Let the yeah. The director's remuneration was £568,000 in the last financial year. How do you justify those amounts, and will it be similar in the future? Kevin, do you wanna take that one? Yeah. I'm so in terms of the last the last financial statements, which were to the March 31, the $5.68 that's quoted includes a 184,000 of, effectively, bonuses paid to the the, effectively, cash or the SPAC, directors.

40:43 And that that was that was in as part of the LeapBot concluding the LeapBot transaction. And it was also that that team of people, and not all of them are still in place, effectively didn't draw any fees or fees or salaries over the period. So there's a it represents a bit of a catch up on the the conclusion of the transaction. I think the only other comment I'd make on the remuneration is certainly for that period is that I was only in place since, September 22. So when you compare future periods future periods, I was only partly in partly in that in that period. And when you get when we publish information in March 24, obviously, all of that will be outlined in the remuneration report.

41:31 Very good. Thanks, Kevin. The the next question, has there been any discussions with Ting regarding a possible merger and subsequent listing in The United States? And if not, could it possibly be considered in the future? I mean, so the direct answer is no. No. There hasn't been any discussion with them about a a possible merger. If if for people on the call who are not aware of what the question is referring to, there is a a US solution that in some ways is analogous to what we do at at with LeadBot. The product's called Ting and the company's called Whisker Labs. And what they've developed is and some of this might sound familiar, a small, device that can be sent in the post, and it plugs into the mains electricity in a US home, and it monitors for electrical arcs that could cause a house fire.

42:30 So in The UK, this sounds a bit unfamiliar because we have 240 mains voltage and the systems are earthed. So we don't tend to have this problem. We don't have really have houses burning down because of electrical faults in The UK, really. But that is more prevalent in The United States. So Ting have developed a system that can help reduce the risk of that that happening, and they've had quite some success. So their two main customers are State Farm and Nationwide. And, they've just reached half a million live devices. They're shipping about 50,000 units a month according to their chief executive when I I met him, in The United States a couple of weeks ago. And I think what's really interesting when I met with Bob Marshall as CEO, it was really apparent to both of us how many, similarities there are in what we're both doing, although we're not competing with each other because we're both addressing different problems for insurers.

43:29 I mean, I think it's really helpful that Ting have had that success. State Farm have publicly said that their goal is to install a million of these units, with their customer base, in in The US. So the fact that they've hit that kind of scale, albeit tackling a slightly different problem within home insurance, leaves leaves, us well placed to kind of follow in their wake, if if you will. I mean, the the conversation between myself and Bob Marshall at the moment is simply, we should help each other out. You know, we're we're not competing with each other. We're both trying to, ultimately, you know, ride the same trend in insurance, which is this macro trend of using Internet of Things technologies to, actually manage risk and reduce risk rather than just pay out the claims.

44:15 And what was very interesting about the conference, that we went to a couple of years a couple of, weeks ago is this is the biggest insurtech conference in the world. And, this year, everything was about artificial intelligence. So there must have been 50 stands or a 100 stands of startups, you know, with fresh VC money pitching artificial intelligence solutions. If you wind the clock back four years ago, we attended the same conference, and everything was about the Internet of Things. There was consultancies and vendors and loads of different sensors all trying to solve different problems. And what's interesting is how many of those those solutions folded. There was no business case. The technology didn't quite work.

45:03 And what's interesting now, IoT might not be the exciting technology that it was four years ago, and now everything, the hype is all around artificial intelligence. But what's interesting is the likes of us and Ting are the the ones left standing. And, I think that's why we had a such a high kind of conversion rate at the conference of conversations through to, okay. This is really interesting. It looks like you guys have have have cracked this, cracked this equation. So if you haven't heard of that solution, I would, if you are interested, it'd be worth look looking up what they're doing because it is really interesting. Another product related question related to The US. How does LeapBot differ to Flume's sensor, which seems to share some of LeapBot's advantages, e g self install, and is being supported by LA's water department? So this question relates to another, a US product called Flume that is a a leak detection system.

46:01 So the technology, here is quite different. So what, Flume's product does is you, know where the external water meter is normally in a hole in the ground somewhere? This straps around the water meter, and it basically has acoustic sensors that are listening to the click of the meter to derive, you know, is the is the meter turning. And what products like that do is they're listening to does that click keep happening through the night and they're using that to deduce, well, there must be some kind of permanent flow on on the system. So the technology itself is different to Leapbox temperature based solution, and the key difference there is a sensitivity difference.

46:48 So Flume on, on their website, they, claim the sensitivity of that system is somewhere between forty and seventy, 70 milliliters per minute, whereas LeakBot goes down to about three milliliters per minute. And why is that relevant? Well, the flume will detect maybe a leaking overflow on a toilet, but it won't detect those very small micro, leaks in the way that LeapBot does. The reason why that's relevant to insurers is we're trying to catch those leaks really early before they've had chance to cause, any damage to the property. So, Flume have had some success really with primarily with water utilities. So they've done some really good stuff in, The United States, in California, and some water stress states where, they're, you know, it's quite an expensive technology.

47:38 They're having that subsidized, think, by the by the the kind of California water authorities to help reduce the amount of water stress. So that does prove that there's a market there for these types of solutions for for a water efficiency benefit, but we don't, we I haven't seen much evidence of them doing anything in the in the insurance space that's, causing us, anything to worry about. Let's have a look. I'm working my way through these. Some of these are a bit repetitive. Is ONDO's broker publishing forecasts, are other brokers publishing forecasts?

48:26 So, we, announced, we're working with the Dowgate Capital recently. You know, Dowgate have a bit of a different footing where they've got lots of institutional links. And the good news is with the rise in our share price our market cap, we're maybe not quite at the at the point where we've got interest from institutions, but we can see how we get more gears of growth. We're certainly gonna be in that kind of territory, and we certainly think we've got institutional quality story and an institutional quality business in the making. So Dargate have now started publishing proper reporting and full forecasts, and they are they are now available in in the market to professional investors and to institutions.

49:16 There's also somebody called Bloom Analytics that have also done some some some research, some sponsored research on, on ONDO and our products. So there are actually links to both of those things on our website. If you go to the investor section, at ondoplc.com, and there's now a a section for analyst research. If anyone's interested, you can look both of those things up there. The nationwide deal took two years to sign. If another US company was interested after the recent conference, what sort of rough timeline, should shareholder should shareholders expect before a contract announcement? That's, that's an excellent question, Nick. The, it's I guess the the I would say how long is a piece of string because, the time it takes us to sign deals is, really dependent on the particular partner and just the the machinations of the process that they go through to sign off such sign off such a deal. And we've seen a whole range. We've seen we've seen some deals go really quick, and we've been surprised at how fast we've been able to get into market.

50:33 We've seen other deals that have have taken a lot longer or they've kind of stopped and started, and then and then we've got them over the line. So, unfortunately, it's really hard to predict that. We, you know, we've definitely got things from first conversation live into market in kinda six months, nine months in in the past if a partner's mope sufficiently motivated to do it. From our point of view, there doesn't need to be a lot of heavy lifting or a lot of technical integration from the insurer. We've set things up so we can do it on a turnkey basis. Why did Nationwide take take two years? I think there's a couple of reasons for that. One is what they're trying to do is is does involve some technical integration, and we've already done a lot of that technical technical work. So what they want to do to do was ingest all of our APIs and, integrate that with with this with the system, which is obviously, gonna take a little bit longer.

51:33 The other thing is, we noticed a difference between the kind of size of the insurer. So if we're working with a smaller smaller insurance company, maybe a regional one, those deals can be much quicker to get through the contract and the procurement process. Obviously, Nationwide are one of the largest insurance companies in The US, And, it was it was, that was just a more, you know, a lengthy process to get through, get through all the different checks that we needed to do to become a supplier. But, know, it's very good that we got there, and it's a really good signal to the rest of the industry. And I do think that some of the things that we've learned through going through that process will make it much, quicker, to sign someone else of nationwide size. I think it would be we would have faster passage through that process as a result of some of the things that we've we've learned from that process, really.

52:32 What are the pinch points which may restrict the pace of future growth? For example, manufacturing capability, working the number of plumbers available. So manufacturing capability is currently okay. That's not that's not a restriction. I think Kevin's already kind of mentioned that we've got different options even with the same within the group with the same contract manufacturer that we use at the moment to to increase capacity. So Yeah. If we need to increase capacity, there's a lead time to doing it. There's a little bit of capital expenditure, but it's not it's not a really heavy investment if we want to open up new lines. We don't particularly as long as we can forecast and we can see it coming, we don't particularly see that as being a being a a pinch point, so to speak.

53:26 Working capital, I think, is a similar story. Like I've mentioned already, We, we've tried to design the business model. So from a pricing mechanism, it's not working capital hungry to to grow the business. Number of plumbers available. I mean, yeah, that's a it's certainly not as simple as a pure play technology business. If you say we just developed an app and you just wanna roll it out across different countries on the app store, a key part of our value proposition is being able to send in a trained plumber to find and fix the root cause of the problem. So we need to make sure that we've got that in place. There's different ways of getting that done. It doesn't necessarily mean we have to employ the plumber ourselves, but we do need to make sure we've got the right resource trained in the right locations.

54:12 So, again, there's a bit of a lead time to making that happen, but I think the key the myth to dispel here is that we need an army of hundreds and hundreds of plumbers to get to get started. It's actually not the case. And the simple reason is at the beginning, we kind of only base the efficiency of the plumber of being able to do a single job per day when we get first get going. So if you think how far somebody could drive two and a half hours in in in any direction from where they live, you can cover a really huge geographical area with a single person. So to get started, say, for example, in in The United States in to open up a new state, we can normally cover a whole state just with one or two plumbers at the very beginning.

54:59 Obviously, that's gonna get more efficient over time as we have a greater density of customers and the travel time reduces. But for the beginning, it's actually it's not nearly as difficult as you might imagine to, put the plumbing services in in place. We just need, you know, a little bit of lead time just to, to find the right person is is the key. And and, also, we restrict the postcodes partly with insurers so you don't have you don't have low density population areas covered, which also helps the need for not having so many plumbers. Does Nationwide ultimately want all of their smart home policyholders to install, to install the LeapBot? I mean, I mean, absolutely. Yeah. Their goal of that smart home program is specifically to have their customers install technology in the home that can help them manage that property better, reduce the risk, and then get a discount on their policy, as a as a result.

56:05 So for some of the reasons we just talked about with from a plumbing point of view, we're gonna launch into a specific state right at the beginning. We'll announce the details of that. I think Nationwide wanna do some of their own PR, so they're gonna do some PR shortly, and we'll announce where we're going to first. And then the goal the goal of both parties is is to then scale that up from there and ex expand the program into sub subsequent states. Is the partnership with Nationwide set up in such a way that they will order prepaid batches at a time, or will they pay month by month? Similarly, is the Lancet Schaffingard contract prepaid for the first year per batch order? It's it's, I can't talk about specific deals, by partner if we haven't publicly disclosed those details in in in the r and s already. So you forgive me if I don't talk about, exact partnerships.

57:02 But how we generally kinda structure these deals is sometimes we'll do a a pilot and it's kind of for a specific amount of time and and and a specific amount of volume. But with something like Lanza Schaffengard or something like Nationwide, it's not a pilot contract. It's it's an ongoing kind of master services agreement to facilitate an expansion and a rollout. So how those deals are structured is, yes, there's the ability to then basically make subsequent one order after the other order for a specific, batches of volumes as we grow the program. And, as I already mentioned, we kind of designing those to do both of those things at the same time. So the pricing, in The US, for example, is based on an ongoing monthly charge, which we which, you know, ultimately, we book that as recurring revenue.

57:58 The payment terms for that is we ask for, the monthly fees for the first year for a particular order upfront. So we take that as a prepayment, and then as we ship the units, we basically build them against that prepayment and draw draw it down. So it is the kind of, the kind of have your cake and eat it pricing strategy where we're locking in that ongoing return recurring revenue, into the future, and that $5 per month continues into years two, three, four, and onwards. But it still enables us to get prepayment when we ship unit new units, so it kinda matches the cash up to when our cash expenditure is in in the first year. Are you a one product company?

58:48 So that's a good question. So I think we see the the shoulders of our company being broad, that our aspiration aspiration is is not to be the world leading leak detection company. It's to be the world leader in claims prevention technology for home insurers. The reality today is that we're obviously really focused specifically on the LeapBot solution. Why do I think that's the right strategy for us? Well, we are still a small company today. We do have limited resources, and we do have, a unique thing, which is a competitive advantage based on a unique technology that's patented that solves a massive global problem. And, you you know, that is a that is a great combination of things to to have.

59:37 So I I think it is the right strategy at the moment for us to really focus on scaling and maximizing the potential with that foothold of that unique combination, the fact that we've got a competitive advantage to solve that that big problem. That said, I think the more successful we are, the more that gonna open up opportunities, and we can look at other perils. I mean, talked about Ting with fire. There are other perils that home insurers are trying to solve. Should we develop technology ourselves? Should we do that through partnerships, through acquisitions? Who knows? But I think the more successful we are in our kind of foothold in leak detection, the, the more success we'll have be able to, address more of these problems for for home insurers.

1:00:25 Craig, just Stephanie, we've just come up to the hour mark. I know we've got a few more questions there. Thanks for everyone for submitting those. You've had a a great q and a session. How about you go on this? There's couple more questions you wanna pick up, and then I'll just ask you for a few closing words, Craig, just to wrap up, if I may. I mean, there's yeah. There's a whole bunch more. I'm sorry that we didn't manage to get through all of these, but, we'll we'll try and I think there's the ability, with with the system here for us to send that out can you can review all the questions submitted. So thanks to all the investors for submitting those and we'll, of course, publish responses where appropriate to do so on the investor meet platform company platform. Just on that base then, Craig, perhaps before redirecting investors to provide you with their feedback, which is particularly important to you both, I could just ask you just for a few closing comments. I mean, I think we've covered off most things that, I wanted to cover, Paul. So I think, it just remains to be said that, we've got a really exciting opportunity over the next few years to create a valuable technology company.

1:01:22 And it really is a great opportunity where we've got a a a tech company here listed in London with a technology that we invented in The UK. We patented it here first. We even manufacture it here, in in England. And I think with the recent contract wins in Sweden, in The United States, we've shown that we've really got the opportunity to export this technology and service around the world, to create a a high growth valuable tech company and deliver a great environmental benefit, as well. And, you know, I think do I wish everything would go faster? Of course. I'm impatient for this, to become multiples time bigger than it is today, but I think the the recent evidence, especially with this contract win, shows that the potential that this business has got. And I just like to thank all all of our investors for taking the time to understand the story and invest, and I'm really grateful for your support.

1:02:19 Fantastic. Great. Kevin, thank you indeed for updating investors today. Can I please ask investors not to close the session? You'll be automatically redirected to provide your feedback, and all of the team can better understand your views and expectations. This will only take a few moments to complete, and that's greatly valued by the company. On behalf of ONDO INSURTECH PLC, we'd like to thank you for attending today's meeting. That concludes today's session, and good afternoon to you all.