REG - Ondo InsurTech PLC - Interim Results
20/11/2023 07:00
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RNS Number : 8960T Ondo InsurTech PLC 20 November 2023
20 November 2023
Ondo Insurtech Plc
("Ondo", the "Company")
Interim Results for the six months to 30 September 2023
Ondo Insurtech Plc (LSE: ONDO), the London-listed leader in claims prevention
technology for home insurers, is pleased to announce its unaudited results for
the six-month period ended 30 September 2023. A copy of the Interim Results is
available on the Company's website, www.ondoplc.com (http://www.ondoplc.com) .
FINANCIAL HIGHLIGHTS
● Revenue of £1.2 million for the six-month period ended 30
September 2023 (2022: £0.9 million) an increase of 24%
● Recurring revenue from Software and Services of £0.7m (2022:
£0.5 million) an increase of 50%, consistent with our strategic intent to
drive recurring revenue, with an exit rate in month of September at an
annualised run rate of £1.7m
● Reported operating loss of £1.6m (2022: loss £2.1 million) and
adjusted loss before tax* £1.9 million (2022: £1.5 million)
● Restructuring of 5-year loan notes with its largest shareholder,
HomeServe Assistance Limited, providing additional non-dilutive financing
flexibility and generating non -recurring gain of £0.9 million
● Raised £0.8m through an oversubscribed placing and subscription
in May 2023 to support the growing deployment pipeline of the LeakBot system.
* Adjusted for non-recurring items
OPERATIONAL HIGHLIGHTS
● 18,927 LeakBot units were shipped or sold and awaiting shipment
during the period, 61% up vs the same period a year ago (2022: 11,752)
● Total registered customers on platform at period end approximately
84,000, 77% growth (2022: 47,000)
● New US deals signed with Mutual of Enumclaw to rollout in
Washington state and with Pure Insurance to rollout in New York state
● 5 Year rollout agreed with Länsförsäkringar - the largest home
insurer in Sweden - now live in four regions with further regions planned in
the next 6-12 months
● Post period deal signed with Nationwide - a top 10 homeowners
insurer and Fortune 100 company - to make LeakBot part of their Smart Home
Program in the US
● Addressable Households under contract at 2.5m with 3% penetration
at 30 September 2023 (2022: 0.5m with 10% penetration) an increase of 394%.
Addressable Households increases further to 5m post period with addition of
Nationwide.
Enquiries:
Ondo InsurTech Plc Craig Foster, CEO +44 (0) 800 783 9866
Kevin Withington, CFO
Dowgate Capital Ltd Russell Cook +44 (0) 20 3903 7715
(Broker & Financial Advisor) Nick Chambers
Charlie Hall
Cassiopeia Services Ltd Stefania Barbaglio +44 (0) 7949 690338
(PR & Investor Relations)
CHAIRMAN'S STATEMENT
Today we are pleased to present the unaudited results for the 6-month period
to 30 September 2023. In a relatively short period since publishing our first
audited Group financial results and in a northern hemisphere summer period
that can be quieter for new partner initiatives, the Group has continued to
demonstrate substantial progress in the execution of its strategy, including
in the highly prospective US market.
Unit sales grew by 61% in the period and Registered customers grew by 77%
which resulted in the 50% growth in revenue from Ongoing Software, Services
and Repairs. This growth was primarily driven by further penetration into
our existing partners in the UK, Denmark and Sweden.
Underpinning the Group's revenue projections in the short to medium term, we
were delighted to announce in July 2023 that our pre-existing partner
Länsförsäkringar had signed a new five-year contract to support LeakBot's
rollout across Sweden. Länsförsäkringar is the largest non-life insurer in
Sweden and has approximately 2 million home insurance customers.
Länsförsäkringar first tested LeakBot in the Södermanland regional pilot
which delivered a 40% penetration of addressable policyholders and an
impressive 50% increase in new home insurance sales, in addition to the
prevention of water damage claims. If LeakBot achieve the same results across
the Länsförsäkringar Group, then the total revenue opportunity is over £30
million to Ondo.
Particularly notable have been the steps taken to enter the US, a market with
the structure and dynamic that promises very considerable growth potential for
the Group.
In June 2023, we announced that premium US insurer Mutual of Enumclaw ("MOE")
had signed a contract to distribute Ondo's LeakBot system to homeowner
insurance customers in Washington State, followed in August 2023 by a new
partnership with PURE Insurance and then, post period end, in November 2023
the contract signed with Nationwide.
Nationwide is a breakthrough opportunity in the United States for the Group.
Nationwide is a Top 10 US homeowner insurer, and a Fortune 100 company. They
have a Smart Home Program already live in 34 US states. LeakBot is now being
integrated into that technical platform and we look forward to seeing the
customer launch into the first US states in early 2024.
Building on its Green Economy credentials, the Group was excited to announce
in June 2023 the results of a pilot deployment by Portsmouth Water to assess
the ability of LeakBot devices to reduce household water leakage. UK water
regulator, Ofwat has created an innovation fund of up to £100m to encourage
solutions that can drive water efficiency in England and Wales from 2024
onwards.
In further pursuit of this, the Group went on to announce in July 2023 a new
affiliate partnership with Waterwise - the leading UK water efficiency NGO and
in August 2023 a second pilot with Southern Water. Ondo and Waterwise are
collaborating to promote the wise use of water, including supporting the
rollout of technologies such as LeakBot that can help reduce pressure on the
UK's water resources.
In May, the Group raised £0.8m through an oversubscribed placing and
subscription to support the growing deployment pipeline of the LeakBot system.
My fellow directors Kevin Withington and Andy Morrison joined me in
participating in the fund-raising with details as set out in the announcement
of 12 May 2023.
The traction demonstrated by the business has been recognised by the market,
with the shares attracting new buyers over the summer. After the period end,
in October 2023, Ondo announced the appointment of Dowgate as brokers to the
Company. With its active wealth management arm and experience in addressing
family office and institutional investors, we believe this will help ensure
that the Company is in the right hands as it continues to expand its
operations and heads for cash break-even.
In generally difficult market conditions, the Group has performed well. I
would like to thank everyone for their extraordinary effort over an extended
period of sustained activity.
Gregory Mark Wood CBE
Chairman
20 November 2023
CHIEF EXECUTIVE'S REPORT
Ondo has the opportunity, over the next few years, to create a large and
valuable technology company; a company founded in the UK, listed in London,
with a product Made in Britain and now being exporting around the world - and
since our last financial report we have made further significant steps towards
this ambition.
The need for our product is growing in the current macro-economic
environment. The Association of British Insurers ("ABI") reported in
September that home insurance average claims costs in the UK have increased by
24%(1) putting pressure on insurers' loss ratios. A new World Wildlife Fund
report in October states that a looming water shortage crisis endangers water
resources and freshwater ecosystems valued at $58 trillion annually(2). Now,
more than ever, there is a pressing need for insurers to reduce claims costs
and improve profitability, and for Governments and societies to act to waste
less water.
Operational Highlights
In this recent trading period, management has been laying the right
foundations to achieve the Company's vision of becoming a world leader in
claim prevention technology, and we have remained focused on executing our
strategy.
In Europe we were very pleased in July to announce the new rollout contract
with Länsförsäkringar ("LF") in Sweden. As Sweden's largest non-life
insurer with 2 million home insurance customers, this partnership is a
significant growth opportunity for Ondo. Länsförsäkringar is taking a
strategic approach to the rollout and has decided to use the roll-out to drive
mass adoption of a new upgraded Länsförsäkringar app that is designed to
deepen and broaden their customer relationships across insurance and banking
products. LF customers will use the LF app to install LeakBot, using
LeakBot to help drive mass adoption of their app, demonstrating the
commitment and central role LeakBot is set to play for LF over the coming
months and years. While this technical development work has delayed the
immediate ramp in volumes that we expected, it leaves us well placed for 2024.
The big news during the period under review is the significant progress made
in the United States.
The United States represents by far the largest opportunity for Ondo. There
are over 90,000,000 homeowners with household insurance in the United States.
It is a $133 billion a year insurance market. Water damage is a major peril in
the United States with $16 billion of claims on water damage every year. On
every policy there is over $200 of underwriting cost allocated to water damage
claims. Together, this means that on a unit economic basis, the US is a highly
attractive market.
Our first big step was a new partnership announced in June with Mutual of
Enumclaw (approx. 100,000 homeowners insured) in the Pacific Northwest, with
activity starting in Washington State in September (so having a relatively
minor impact on the period results).The campaign has begun well with leaks now
being repaired in Washington State. In August, we signed premium insurer
PURE (approx. 100,000 homeowners insured nationally) with a plan to commence
in New York State. The regulator has approved the activity and campaigns are
due to go live before the end of the calendar year.
Last week, we announced a new deal with top 10 carrier and Fortune 100 company
Nationwide. The importance of this particular contract for Ondo cannot be
overemphasized. The Top 10 carriers control 64% of the Homeowner insurance
market in the United States. Nationwide has developed a Smart Home Program
that is live already in 34 states, offering products such as Ting (a solution
designed to prevent house fires caused by electrical arcs). Customers receive
a policy premium discount for installing the product. We are currently
working to complete the technical work to integrate LeakBot into Nationwide's
Smart Home Platform and expect to launch into the first state in early 2024.
We then expect to expand across the wider client book, assuming that we can
demonstrate to Nationwide that we are capable of executing in a way that can
match their demand and scale.
Looking ahead, a key focus for 2024 will be on maintaining excellence of
execution across territories to prove to our valued partners that we can scale
as required.
The management team is also pleased with progress on other initiatives. The
G4S pilot announced in June has successfully concluded. G4S sell their
security systems to homeowners via in home security assessments (with a
significant marketing investment to source these leads). G4S ran a pilot
with one of Denmark's largest insurers offering their insurance customers a
free LeakBot system installed during an in-home security visit. Based on the
pilot's results, we are discussing terms for a possible rollout in 2024. We
are also partnering with Australia's largest insurer IAG to develop an outdoor
version of the LeakBot device suitable for the Australian market, with test
units now located on site in Sydney and we signed a new deal with Southern
Water to further test whether the UK water industry could use LeakBot to drive
water efficiency and reduce consumption. Given the focus of the UK regulator
OFWAT on this area this is a potentially compelling additional route to market
for Ondo.
Financial Highlights
Even though there were no new launches that made any major impact on the
numbers in the specific reporting period under review, the registered customer
base grew by +77% year-on-year ("YOY") to 84,000. Unit sales also grew by
+61% YOY.
The change in pricing strategy towards prioritising recurring revenues
continued to impact the numbers. While unit sales growth was +61%, upfront
revenue from unit sales was flat at £0.5m for the 6 months. Recurring
revenue from Software, Services and Repairs grew by +50%.
The prospect of continued growth is held out by the last month annualised run
rate of £1.7m in September 2023. We intend to continue to drive recurring
revenue in preference to one-off upfront device fees, and recent US deals
announced have been consistent with this pricing strategy at ~$5 per month.
Notable in the accounts is the stock that we have built in the last 6 months
with a balance now worth £0.8m (at cost) which relates to the £1m of
deferred income where insurance customers have prepaid for these deployments
that will rollout in the coming months. Given the recent contract wins and
strong sales pipeline this stoick build leaves us well positioned to deal with
near to medium-term demands without being limited by production capacities.
Given the recent contractual wins with Länsförsäkringar and Nationwide and
the huge growth in the Addressable Households under contract (as described
below) the business is poised for a period of significant growth and as such
we expect that we will want to raise additional capital during the next 12
months to invest to fully pursue this opportunity - continuing our
excellence of execution on these contracts and supporting sales and
marketing to drive topline growth.
Outlook
The need for our product is growing, with inflated claims costs for insurers,
and increased pressure on water resources driven by climate change and
population growth. Ondo's partnerships are increasingly shifting from small
pilots to larger more strategic initiatives that are core to our partners'
long term strategies, and the size of our partners is increasing.
In September 2022 the number of Addressable Households (defined as the number
of households that could be offered LeakBot via the already signed contracts
in place) was around 0.5m and we had penetrated around 10% of those
Addressable Households. As of September 2023 this Addressable Household base
was approaching 2.5m driven primarily by the Länsförsäkringar rollout
contract. With the recent addition of Nationwide this would take our
Addressable Households to over 5 million - suggesting we have only now
penetrated around 1.5% of the opportunity represented by already signed deals.
Ondo recently exhibited at the world's largest InsurTech conference: InsurTech
Connect in Las Vegas. I had the pleasure of meeting with the Founder of
Whisker Labs who created Ting - a scalable self-install sensor supported by an
in-home electrical service that helps prevent fire claims. Ting has signed
deals with State Farm and Nationwide and currently has ~500,000 live devices,
expanding at a rate of ~40-50,000 units a month. At this same conference
four years ago the Internet of Things ("IOT") was a hot new technology and
there were multiple vendors with fresh VC finance offering all manner of IOT
sensors, platforms and consultancy services offering to help insurers mitigate
claims costs through the power of IOT. This year there were really only two
vendors - Ondo's LeakBot and Whisker Lab's Ting - offering scalable solutions,
now proven in market, to home insurers. While AI has replaced IOT as the
"hot new tech", the size of the ITC conference has grown significantly, and we
had a very productive conference in terms of the number and quality of leads
from new prospects in the United States.
The market is looking for a solution for water damage claims, and because of
our proprietary technology and unique value proposition we have the answer for
this $16bn problem. Now we need to both (i) execute well on the signed deals
and (ii) drive the sales machine to capitalise on this momentum.
Thanks to all the team at Ondo who have worked so hard over the last period to
make these recent gains. We are all confident in our strategy and in the
success that lies ahead for Ondo, and it is great that investors are starting
to see it too.
Craig Foster
Chief Executive Officer
Ondo InsurTech PLC
CONSOLIDATED STATEMENT OF COMPRENSIVE INCOME
Unaudited Unaudited Audited
Six months Ended Six months Ended Period
Ended
30 September 2023 30 September 2022 31
March
2023
Note £'000 £'000 £'000
Revenue 1,186 959 2,384
Cost of sales (892) (617) (1,534)
Gross profit 294 342 850
Administrative expenses 5 (1,928) (1,695) (5,766)
Reverse acquisition expenses - (706) (956)
Operating loss (1,634) (2,059) (5,872)
Financial expense (265) (176) (351)
Gain on loan note liability derecognition 10 877
Loss before tax (1,022) (2,235) (6,223)
Tax credit - - 217
Loss for the period and total comprehensive loss (1,022) (6,006)
(2,235)
Earnings per share attributable to equity owners
Basic and diluted (loss) per share (pence) 8 (1.37) (3.28) (9.13)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
As at As at As at
30 30 31
September September March
2023 2022 2023
Note £'000 £'000 £'000
Intangible assets 73 - 89
Property, plant and equipment 60 - 65
Non-current assets 133 - 154
Current assets
Cash and cash equivalents 492 1,580 376
Inventories 808 258 423
Trade and other 6 1,341 330 829
receivables
Total current assets 2,641 2,168 1,628
Total assets 2,774 2,168 1,782
Current liabilities
Trade and other payables 7 (2,419) (576) (2,020)
Total current liabilities (2,419) (576) (2,020)
Net current liabilities 222 1,592 (392)
Non-current liabilities
Loans and borrowings 10 (6,142) (6,401) (6,401)
Total non-current liabilities (6,142) (6,401) (6,401)
Total liabilities (8,561) (6,977) (8,421)
Net liabilities (5,787) (4,809) (6,639)
Equity
Share capital 4,046 3,408 3,408
Share premium 5,088 3,902 3,902
Share based payments reserve 217 214 170
Reverse acquisition reserve 21,769 21,769 21,769
Retained deficit (36,907) (34,102) (35,888)
Total equity (5,787) (4,809) (6,639)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Share based payments reserve Retained Total
capital premium Reverse acquisition reserve deficit
£'000 £'000 £'000 £'000 £'000 £'000
At 01 April 2023 3,408 3,902 21,769 170 (35,888) (6,639)
Issue of ordinary shares 627 1,255 - - - 1,882
Cost of share issued - (81) - - - (81)
Exercise of Options 11 12 - - - 23
Share based payment - - - 47 3 50
Loss for the period - - - - (1,022) (1,022)
At 30 September 2023 4,046 5,088 21,769 217 (36,907) (5,787)
Share Share Retained Total
capital premium Reverse acquisition reserve Share based payments reserve deficit
£'000 £'000 £'000 £'000 £'000 £'000
At 01 April 2022 3,408 3,909 21,769 164 (31,867) (2,617)
Share based payment - (7) - 50 - 43
Loss for the Period - - - - (2,235) (2,235)
At 30 September 2022 3,408 3,902 21,769 214 (34,102) (4,809)
Share Share Shares based payments Reverse Acquisition Retained Total
capital premium reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000
At 01 October 2021 28,250 - - (29,969) (1,719)
Issue of Ordinary Shares 2,276 3,146 - - - 5,422
Cost of shares issued - (192) - - - (192)
Leakbot Acquisition (27,118) 955 164 21,769 - (4,230)
Share based payment - (7) 93 - - 86
Exercise of options - - (87) - 87 -
Total Comprehensive loss for the period - - (6,006) (6,006)
- -
At 31 March 2023 3,408 3,902 170 21,769 (35,888) (6,639)
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Six months Ended Six months Ended Period
Ended
30 September 30 September 31 March 2023
2023 2022
£'000 £'000 £'000
Cash flows from operating activities
Loss before income tax (1,022) (2,235) (6,223)
Adjustments:
Share based payments 50 42 85
Reverse acquisition share based payment expense - 706
706
Depreciation and amortisation 24 - 13
Gain on loan note liability derecognition (877) - -
Financial expense 265 176 351
Movement in working capital
(Increase)/Decrease in trade and other receivables (513) (669)
(516)
(Increase)/Decrease in Inventories (385) (258) (412)
Increase/(Decrease) in trade and other payables 753 1,217
(104)
Cash used from operations (1,705) (2,189) (4,932)
Group tax relief received - - 217
Net cash used in operations (1,705) (2,189) (4,715)
Cash flow from investing activities
Cash acquired with subsidiary - 1,670 1,670
Purchase of investments - (1,600) (1,600)
Purchase of tangible assets (3) - -
Purchase of intangible assets - - 96
Purchase of investments - - 71
Net cash flow from investing activities (3) 70 237
Cash flows from financing activities
Issue of ordinary shares (net of costs) 1,824 3,148 6,580
Net cash flows from financing activities 1,824 3,148 6,580
Net increase in cash and cash equivalents 116 1,029 2,102
Cash and cash equivalents at beginning of period 376 (1,726)
551
492 376
Cash and cash equivalents at end of period 1,580
The accounting policies and notes form an integral part of these financial
statements.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION
For the six months ended 30 September 2023
1. General Information
Ondo InsurTech Plc (the "Company") was incorporated on 23 February 2021 in
England and Wales, with registered number 13218816 under the Companies Act
2006. The registered office of the company is 6(th) Floor 60 Gracechurch
Street, London, United Kingdom, EC3V 0HR.
The Company was initially incorporated with the name Spinnaker Acquisitions
Limited. On 12 May 2021, the Company re-registered as a public limited
company.
On 21 March 2022, the Company completed the acquisition of Leakbot Limited via
a reverse takeover which resulted in the Company becoming the ultimate holding
company of "the Group". On 22 March 2022, the Company changed its name from
Spinnaker Acquisitions Plc to Ondo InsurTech Plc.
During the period ended 30 September 2023, the principal activity of the Group
was that of the provision of domestic leak detection services and technology
to the home insurance industry and homeowners.
2. Basis of preparation
The consolidated interim financial information and accompanying notes are
based on the following policies which have been consistently applied:
The financial information of the Company has been prepared in accordance with
the Companies Act 2006 and UK-adopted International Financial Reporting
Standards ("UK adopted IFRS").
The financial information presented in Sterling, which is the Company's
functional and presentational currency and has been prepared under the
historical cost convention.
The preparation of financial information in conformity with UK adopted IFRS's
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Company's
Accounting Policies.
On 21 March 2022, Ondo InsurTech Plc completed the acquisition of Leakbot
Limited ("Leakbot") via a reverse takeover which resulted in the Company
becoming the ultimate holding company of the Group. The transaction did not
meet the definition of a business combination under IFRS 3 and was under the
scope of IFRS 2. In accordance with IFRS 2, a share based payment expense
equal to the deemed cost of the acquisition less the fair value of the net
assets of the Company at acquisition was recognised. The comparatives
represent that of the legal subsidiary and accounting acquirer, Leakbot.
The financial information for the interim period covers the unaudited period
from 1(st) April 2023 to 30 September 2023 with the comparison being the 1(st)
April 2022 to 30 September 2022.
The comparative financial information for the period ended 31 Match 2023 in
this interim report does not constitute statutory accounts for that period
under section 435 of the Companies Act 2006. Statutory accounts for the period
ended 31 March 2023 have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The comparative for the period ended
31 March 2023 is for the period from 01 October 2021 to 31 March 2023.
The auditors' report on the accounts for the period ended 31 March 2023 was
unqualified but did contain a material uncertainty related to going concern as
follows:
"Material uncertainty related to going concern.
We draw attention to note 2 in the financial statements, which indicates that
the group's and Parent Company's ability to continue as a going concern relies
heavily on the successful execution of their strategic plan within the next
twelve months from the approval of the financial statements. The achievement
of the plan's objectives is dependent on factors such as securing new
partnerships, finalising ongoing negotiations with potential customers, and
raising additional funds. The outcomes are contingent on the successful
realisation of strategic initiatives, external market conditions and investor
appetite.
As stated in note 2, these events or conditions indicate that a material
uncertainty exists that may cast significant doubt on the group's and parent
company's ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
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's and parent company's ability to continue to adopt
the going concern basis of accounting included:
· Reviewing management's assessment of the going concern basis
drawn up to 31 July 2024, including their evaluation of future funding
requirements and funding availability, while challenging their key assumptions
and inputs to ensure reasonableness and appropriateness;
· Agreeing the underlying cash flow projections to
management-approved forecasts, examining their alignment with the strategic
plan and progress towards its successful implementation;
· Assessing the group's and parent company's liquidity and the
impacts on the reliability of the going concern evaluation;
· Assessing whether key assumptions and inputs to the model were
reasonable, in light of the group's relevant principal risks and
uncertainties, and conducting our independent assessment of those risks; and
· Conducting sensitivity analysis on management's key assumptions
and inputs against plausible scenarios."
The directors' assessment on going concern at the date of the consolidated
interim financial information is disclosed in note 4.
3. Estimates and judgements
The preparation of consolidated interim financial statements requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expense.
Actual results may differ from these estimates. In preparing these condensed
consolidated interim financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were:
Share based payments
The estimates of share-based payment costs require that management selects an
appropriate valuation model and makes decisions on various inputs into the
model, including the volatility of its own share price, the probable life of
the options before exercise, and behavioral consideration of employees. A
significant element of judgement is therefore involved in the calculation of
the charge.
4. Going concern
In accordance with the QCA Corporate Governance, the Directors have assessed
going concern over a twelve-month period from the approval of these financial
statements i.e., up to 30 November 2024. As part of this assessment, the
Directors have analysed the prospects of the Group by reference to its current
financial position, recent trading trends and momentum, forecasts and
financial projections, strategy, economic model and the principal risks and
mitigating factors.
The strategic plan forms the base case for the scenario modelling that
underpins the long term going concern assessment. It has been built out from
the Board approved budget. Principal assumptions include continued activity
with existing insurance partners, and new activity with pipeline partners;
pricing assumptions based on signed contracts or active negotiations; direct
cost assumptions based on current run-rates; assumptions about fixed overhead
and operational costs being largely stable through the period; some limited
capital expenditure in technology and manufacturing.
The Directors have reviewed the Group's forecasts and projections for the
12-month period to November 2024 (the 'Assessment Period'), which is aligned
to the Group's current strategic planning cycle. The Directors have assessed
the future viability of the Group by reviewing the Base Case and risk
scenarios based on the Principal Risks. These circumstances have been
evaluated based on principal and emerging risks identified by management
through its risk management process, with consideration given to broader
social economic factors.
The Directors have concluded that it will be necessary to raise additional
funding within the Assessment Period for the Group to implement its strategic
plan within the proposed timeframe.
During the period ended 30 September 2023, a placing was completed raising
£815,000, this is alongside the exercise of share warrants and options for
£1,089,187. The Directors are confident that further fund-raising could be
undertaken, if required, to support business growth.
The Director's note that there remains 27.3m equity warrants in issue at the
end of the period. The total value of these is £6.1m with an average exercise
price of 22.5p. The Directors note that if a proportion of these warrants
are exercised, this could provide additional funding but that this remains
uncertain and dependent on market conditions.
Overall, the Directors have a reasonable expectation that the Group will be
able to access adequate funding via debt or equity to continue in operational
existence for a period being at least the next twelve months from the date of
issue of the Interim results. On this basis, the Directors continue to adopt
the going concern basis in preparing these accounts.
5. Operating expenses by nature
Unaudited Unaudited Audited
Six months Six months Period
Ended Ended Ended
30 September 30 September 31 March 2023
2023 2022
£'000 £'000 £'000
Directors' remuneration 324 164 568
Professional fees 194 284 1,218
Share based payments 50 42 -
Staff cost 914 789 2,794
Depreciation and amortisation 24 - 13
Contract staff - 91 138
IT systems & platform 236 121 476
Sundry expenses 186 204 559
1,928 1,695 5,766
6. Trade and Other receivables
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
£'000 £'000 £'000
Trade Receivables 898 292 630
Other Receivables 443 38 199
1,341 330 829
7. Trade and Other payables
As at 30 September 2023 As at 30 September 2022 As at 31 March 2023
£'000 £'000 £'000
Trade Payables 1,123 157 795
Other Payables 142 12 108
Deferred Revenue 1,050 180 655
Accruals 104 51 111
Sub Total 2,419 400 1,669
Loan Note interest - 176 351
2,419 576 2,020
8. Earnings per share
The basic earnings per share is calculated by dividing the loss attributable
to equity shareholders by the weighted average number of shares in issue.
The Company had in issue 80,922,736 ordinary shares at 30 September 2023 with,
68,169,162 ordinary shares at 30 September 2022 and 68,169,162 as at 31 March
2023.
The loss attributable to equity holders and weighted average number of
ordinary shares for the purposes of calculating diluted earnings per ordinary
share are identical to those used for basic earnings per ordinary share.
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 September 30 September 31
2023 2022 March
2023
Loss for the period attributable to equity holders (£'000) (1,022) (6,006)
(2,235)
Weighted average number of shares in issue (000s) 74,435 65,760
68,169
Basic and diluted (loss) per share (pence) (1.37) (9.13)
(3.28)
9. Share based payments.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non-market based vesting conditions) at the date of grant.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Company's estimate of shares that will eventually vest and adjusted for
the effect of non-market based vesting conditions.
On 19 May 2023, 250,000 share options were granted with an exercise price of
£0.12 and an expiry period of 4 years.
The fair value of the options has been calculated using the Black-Scholes
valuation model. The assumptions used in the fair value calculation were as
follows:
Options Options Options Options Options
Date of grant 7 March 2022 7 March 2022 7 March 2022 1 October 2022 19 May 2023
Number 653,333 1,864,520 3,374,766 689,071 250,000
Exercise price (pence) 12p 5p 12p 12p 12p
Risk free interest (%) 1.18% 1.12% 1.12% 1.18% 3.91%
Expected volatility (%) 18% 18% 18% 61% 74%
Expected life (years) 3.75 2 4 4 4
Fair value 0.02 0.07 0.02 0.02 0.11
Option life 4 years 2 years 4 years 4 years 4 years
The total share-based payment expense recognised in the income statement for
the period ended 30 September 2023 in respect of the share options granted was
£50,159.
Volatility was determined by reference to the standard deviation of daily
share prices.
10. Loans and borrowings
On 21 March 2022, the Company issued £6,401,000 loan notes to the seller for
acquisition of Leakbot Limited (the "Loan Notes"). The Loan Notes carry a
fixed interest rate of 10% per annum on the principal amount of the notes
outstanding from time to time. The first interest payment due on this loan is
on 31 March 2024.
On 9 July 2023, the Company agreed with the Loan Note holders to revise the
terms of the Loan Note.
The key changes are:
· First repayment of principal deferred from 31 March 2025 to 31
March 2026
· Final redemption extended by 1 year to 31 March 2029 from 31
March 2028
· Interest due from 31 March 2024 to 31 March 2025 is rolled up and
deferred with repayments made in 4 equal instalments in line with the revised
repayment of principal.
· Interest rate increased from 10% to 12% from 31 March 2024
In accordance with IFRS 9, interest has been calculated using the effective
interest rate over the relevant period with interest of £265,625 (31 March
2023 £351,878). In line with IFRS 9, the changes in the Loan Note terms have
led to a derecognition of the original loan note instrument and the
establishment of the new instrument reflecting the revised terms. This
derecognition has led to a gain of £877,418 during the period.
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended Ended
30 September 2023 30 September 2022 31 March 2023
£'000 £'000 £'000
Interest expense 265 176 351
Gain on loan liability derecognition (877) - -
612 176 351
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