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Much more likely a Bed and ISA - someone maximising their £20k allowance for the new tax year.

Ummm, we've already had a buzz cut - from 15p (or 25p depending on where you start from) down to less than 4p. That represents a 73% or 84% drop in the SP respectively, which is massively overdone for the size of any likely fund-raise. That just shows what you get when you trail a funding requirement without a placing at the same time.

There is clearly much more going on here than a simple fund-raise - the BOD have accepted that a 'financial repositioning' is required and are implementing a comprehensive package of measures to effect that. We've now had two very material appointments which will have already strengthened the board's control over financial planning operational decision-making. And we've had the loan note restructuring which defers both the interest repayments and the capital to give some additional breathing space over the next 18 months. What we've not heard yet is anything about the material contract expansions (plural) that we know are coming, any changes to the pricing model, or what form the short-term financing will take. Given that they could likely have got a straight equity placing away at the time of the last trading update on better terms than the current SP would suggest, my thoughts now are that the two are closely linked. They have raised very recently at 25p - within the last six months, which gives an indication of the underlying strength of the business model, so perhaps the BOD simply believe that's the kind of level they should be raising at if they have to.

However it's structured, I think they are intending to address the short-term funding alongside the commercial news. This will either be significant expansions, or a change to the pricing model (ideally both) which will allow them to limit the impact of any dilution from an equity raise (which is still not the only option). My guess is that there are very significant commercial negotiations now in train and that those will determine the extend of any equity raise required.

Whatever happens next, it's clear that the BOD are seeking to minimise the near-term funding requirements (and therefore the impact of any dilution) by removing all non-operational costs to beyond the point they expect to be EBITDA positive. Worth remembering too that HomeServe are not just the loan providers, they're also the biggest shareholder (10%). And that United Farm Family Mutual (a major client/partner) have 3m shares and the Chairman and CEO each have 2.5m shares, so all the major players have material skin in the game.

Another heavyweight appointment which recognises the current challenges and faces into them directly. Graham Bird’s linked in profile gives a bit more info about his background - good to see such deep financial expertise joining the board and that he has experience in both debt and equity finance, including strategic investors.

The Board clearly have a plan for fixing not just the funding, but also the whole financial model. It also occurred to me that these two new appointments both go beyond executive responsibility and they both have heavyweight commercial expertise. That will be invaluable in the ongoing negotiations that are happening about the material increases in orders from existing partners.

Mark Wood is down a lot more than that - he and Craig each hold 2.5m shares, so are both down around £900k since the peak of 40p. It’s good to know they are sharing the pain and have such a big incentive the fix this.

MM99 - if the poster your referring to on ADVFN is WashingMachine they said Rox were looking for multiples of their investment early next year, not multiples of the delisting price (as Danno highlights). The delisting price was completely unreflective of the value of the company at the time - it was brought about by the decision to delist. If that hadn’t happened, it was heading back into double figures, so I reckon we would be 20-30p or more by now.

……and from what was said in the trading update, the company is on the brink of multiple significant expansions of orders with their existing clients, which IMHO will likely eclipse current installed devices and therefore transform contracted annual revenues. Go figure……….

I was thinking the same thing about Nationwide, but not just Nationwide, I think they could justifiably charge a higher annual premium in the first year to cover their set up costs and to allow for the fact that they have to have the plumber coverage in place from the start. The insurers see a bigger claims saving in year 1 anyway because of the leaks that are already happening undetected (which underpins the need for the plumbers to be available from day 1). So why not charge say $90 for the first year and then drop back to $60. With the upfront payments they’re now getting, that would make a huge difference to cashflow.

However it’s packaged, if this ends up being how they resolve the financing, just imagine the SP reaction to an RNS that announces a huge contract win and no equity fund raise required. That would make Ondo an Aim legend overnight.

LawrenceH

Just wanted to acknowledge that many of the points you’re raising are valid - I have a different perspective on how important they are in the context of the market opportunity, but I personally find your input a helpful balancing contribution to this board (and I would emphasise that you have been here far longer than many of the new faces who have arrived this week).

On the batteries, if it needs fixing, I’m sure they’ll fix it, but I think we’re not far away from the first discounted premiums in return for mandated connectivity to these kind of devices (akin to black boxes in cars, but much simpler), which will place the onus on the owner to keep the device working if they want to continue receiving the discount, which I’m sure would lead to a change in behaviour pretty quickly.

The batteries are a complete red herring - the universal way of measuring customer satisfaction is through Net Promoter Score, which is now +88 for Ondo/Leakbot. That is beyond world class - Amazon is +73 which tells you all you need to know.

This is more than good - Mark Wood has an extremely distinguished career and has been CEO of two of the UK’s top insurers. That will add further credibility and strength to the relationships Ondo has built with insurance partners in US and elsewhere.

“Mark Wood is one of the UK’s leading financial figures. He has held several senior positions in global institutions, including Head of Cash Management at Barclays Bank, Chief Executive of Prudential UK and Europe, and CEO of AXA UK. In 2006, with £500m of private equity backing, Mark founded Paternoster, which quickly became the market leader in bulk annuities”.

More importantly, in the short term, it completely removes any possibility of the SP drop being orchestrated - there is absolutely no way that a figure of his standing would step into the middle of anything that wasn’t completely above board.

It also raises another possibility for the equity raise - would Mark Wood be willing (and able) to provide some or all of that funding on condition he takes up this role?

I was a bit surprised that the capital raise didn't complete yesterday and with nothing yet today either, I've started to wonder whether an alternative scenario might be playing out here.

To follow the logic, you need to forget everything that's happened this week and take yourself back to the SP bumping along at 15p. Putting sentiment aside, I keep coming back to ask myself why the hell the company would allow the SP to be (further) trashed by the uncertainty they have created by making reference to a relatively manageable bump in the road and not resolving it before the Trading Update was issued.

I can only see four reasons why they would do that:

1. The Board have weak financial acumen and didn't plan for this scenario at the last fund-raise (i.e. they assumed everything would go to plan and only raised the very minimum that was needed at the time, so built in no contingency). While it's easy to assume this to be the case, it conflicts with everything else the company is doing - Ondo has executed the rest of its strategy absolutely flawlessly, which takes very considerable strategic, operational and financial skill, so it seems pretty unlikely to me that they would drop the ball on such a basic principle of financial management.

2. It serves the interests of certain parties for the SP to drop to enable them to take a large position at a knock down price. While the conspiracy theorists will lean towards this, Craig Foster and the team seem to play a pretty straight bat to me, so this scenario seems very unlikely to me as it's just not the way they've operated to date and would come with very significant reputational damage for all concerned (as well as the personal financial hit on their existing holdings).

3. The Board felt that getting the bad news out of the way before the good news of the "substantial extensions to existing demand from current partners" was the best strategy - the short-term hit on the SP would be corrected when the good news comes out. If that's the case, then I think they've underestimated the strength of the market reaction, as any news would have to be astronomically good to offset the drop we've now seen.

4. The SP isn't relevant to the equity raise - they have either already agreed terms with a major investor who knows the full story of the pending contract extensions, or the equity raise is in some way wrapped up with those contract extensions (e.g. Nationwide take a stake like Indiana Farm Bureau did previously).

I keep coming back to these "substantial extensions to existing contracts". That's not just one, it's multiple significant extensions. So, it's more than one and possibly several, which collectively would very likely exceed (and possibly eclipse) the current customer numbers. There's more to play out here in my view and the longer it goes without an RNS about a simple equity raise, the more I think the next news may be more positive than the market is anticipating.

I have to admit that I was pretty stunned when I read the RNS this afternoon, but in pure financial terms this discussion needs some balance.

- Recent growth has been on a slower trajectory, but is still positive - and very strong in the US, where it matters most.

- The RNS references "discussions with partners concerning substantial increases to their existing demand" and "The Board expects further growth in the current financial year"...... This points to a short-term bump in the road (albeit a nasty one for investors), rather than a fundamental problem with the growth of the business (in fact it signals that some big further contracts are expected soon).

- They have very much alluded to their needs being short-term (the loan note restructuring only moves the repayments out by 3-6 months) and as the only major creditor, Homeserve must know better than anyone what the cashflow forecasts look like, or they would not have agreed to the short deferral on such supportive terms (with just a 1% increase in the interest rate). They also have the most to lose from the share price tanking as they hold just under 10% of the stock.

- Ondo has more cash at this point than they had before the last raise

- Ondo is a revenue earning business, so the amount they need to cover is not the same as a start-up with no revenue.

- There are a number of other major investors who hold a further 20% of the shares, so they've been hammered today too (including the Chair and CEO, who each have 2.5m shares, so have both seen a personal paper loss of more than £0.5m in the last six months).

I'm in no way dressing this up as good news (and I'm pretty hacked off that they've let this happen again, given the last raise), but I also don't think it necessarily points to a complete disaster. Everything hangs on how they raise the money, how much they raise and on what terms - and there is a broad spectrum of outcomes against all of those variables (with the CEO and CFO's reputations hanging on it). If we believe the RNS, then the amount of the raise ought to be relatively small, so it all depends on how they raise the money and at what price. We're being prepared for an equity raise, but that's not 100% certain and we're assuming that it will be around or at a discount to the closing share price, but that's not certain either.

Whatever the case, I think it will likely be sorted within the next few days - my gut feeling is that there will be another RNS in the morning with everything set out and pretty much done and dusted. Probably an equity raise, but I also imagine there could be a twist (another insurer investing; Homeserve upping their stake, further warrants to sweeten the terms and limit the initial dilution etc.). We'll soon find out.

I am hoping the trading update may either be being held back pending a major contract win, or may allude to the need for a significant further scaling of the business in the coming months.

Why do I think this? Because late last year Natiowide announced that they had earmarked $1.5 bn for technology investments over the next 18 months (12 months or so left of that period now), with $300m of that focused on AI.

And then in February they announced that they were extending Ting from 80,000 households to an additional 500,000 households.

Apart from the sheer scale of this investment being a clear opportunity for Leakbot, the AI investment will need the right data sources to work from, which is a core part of the Leakbot proposition.

How long until Nationwide and Ondo make an announcement like this:

https://news.nationwide.com/from-risk-to-resolution-how-ting-is-helping-nationwide-members-prevent-electrical-fires/

I’m convinced it’s coming……………..

Opti, I agree with your comment "Avacta just said to Astra Zeneca, when Enhertu's patent expires in 2033/5 and you're selling about $14 billion dollars a year, here is the perfect replacement. You have a patent cliff problem, we have a patent cliff solution for you."

However, I would also add "............and if you don't step in soon, someone else will and that cliff edge will come into very sharp focus as a new and disruptive standard of care emerges in the hands of a competitor"

Mr Onions - it’s unusual to see a post like that on a share that’s not currently listed (so no benefit for anyone in ramping without reason). What leads you to believe it’s the case?

The importance of this RNS is not about flashy headlines (although it could easily have been presented as “Avacta’s cancer platform stops untreatable cancer in its tracks for 90% of patients” if that’s what you’re looking for). The importance of this announcement is that it further validates the prior findings and gives the partners the further data they are looking for. Expect CC to reference this later.

GC555 - Your analysis has some sensible assumptions in it, but I think you may be understating the revenue growth a bit and are very likely over-stating the costs. The notes to the accounts highlight that the loan repayment might be renegotiated again (remember Homeserve hold nearly 10% of the company, so they won't want to force anything that damages the sp). And we know that they are carrying double the normal levels of inventory at the moment so they can meet their commitments in H2, so they won't need to spend as much on new devices as they did in H1. And we know that the plumbers will be getting more efficient by the day as density improves, and we'll have more devices in Y2 (with lower call-outs) and we know they're steadily improving the installation rate (which improves the unit cost per installed device). So if you add all that up, my guess is that they have genuinely raised what they reasonably expect to need for what will be the fastest year of growth yet (by some distance). And if they need to raise again in 12 months' time, which is obviously a possibility, they would be doing so from a position of significantly stronger revenues. And of course, equity is not the only way to raise capital - with a demonstrably accelerating forward revenue profile and relatively little debt on the balance sheet, they could be well placed to raise a million or two through a further loan (maybe even from Homeserve, if they see it's in their interests?).

Thanks for the link to the desktop version of the slides from the presentation iantobach - much easier to follow as you say.

Reading the presentation again in detail, two things struct me that I hadn't appreciated when Craig was talking to them. Firstly, if you look to the right of all the US carrier logos on slide 14, there's a graph showing just how quickly customer numbers in the US are growing. It's literally a hockey stick and we're only at the very start. The animation on slide 17 reinforces that picture - that's the slide with the map of the US lighting up to show how the device deployment has progressed over time. Let the animation run - nothing happens for the first ten seconds or so and then suddenly the eastern side starts to light up and then explodes within a couple of seconds. It's just like a virus spreading. Those two slides tell you all you need to know about what's coming in the US.

Additionally, a further thought struck me over the weekend that Craig didn't talk about, but which I think is really important to understanding how the financial dynamics are working. We all know how important the shift to the recurring revenue model is for Ondo's sustained growth, but it occurred to me that, by definition, it must also have suppressed this year's earnings (because the model trades a larger up front fee for a lower recurring charge). I haven't been able to find a definitive figure for what Ondo was previously charging, but AI suggests it was around £100, whereas the $5/month fee equates to about £45 per year. So, at the most basic level, while the shift to a recurring revenue model is transformational over the medium and long-term, in the short term it suppresses in-year earnings below what they would have been under the up-front payment model. Additionally, I suspect that the advance payments now being made by the insurers won't be classed as revenues in the same way that the recurring revenues are scored once the devices are installed and active (which is the point they 'draw down' on the advance payment). If that's true, then there may be a further dynamic at play which further suppresses in-year earnings under the recurring model, simply as a result of how revenues accrue for new deployments later in the year (when there are fewer months of revenue per device versus the devices deployed at the start of the year). At it's most extreme, that could mean that, under a recurring revenue model, devices deployed in March (at the year end) would only contribute 1/12th of the revenue of devices deployed the previous April. That's probably not an issue for a stable business, but for a rapidly growing business it would mean that the most productive months of the year (which are always at the end of the year simply because of the month-on-month growth) actually yield much less revenue in current year terms. I'm going to ask Kevin Withington about this, as I think it would explain why this year's numbers are down when the trajectory

I listened to the whole presentation last night and it's well worth a listen. It's clear that the US market is where Ondo's potential is going to be realised and it's also clear that the opportunity for Leakbot to become the industry leader in water claims prevention is right here and right now.

While the fundraising was a surpise (although I think the market has massively over-reacted, as it's less than 10% dilution), I think it's an entirely justified step to take to ensure that the business is able to support the rapid expansion that's happening across the US. It's hugely significant that EVERY client in the US has now expanded their roll-out programme beyond their initial commitments, so every new client Ondo contracts with is further adding to an already accelerating expansion. It's not simply a matter of Ondo taking each new order and dispatching the devices - every new device that's installed is a callout waiting to happen (remembering that many of the homes will already have leaks, so the early days of installation will be the peak in terms of average callouts), so the plumbers need to be in place to service that demand as soon as it comes in.

Craig has (correctly in my view) identified that it's critical that the outstanding service levels (NPS) and ROI on each batch of deployments are maintained. If either of those start to slip, then the expansion will need to slow to allow the Ondo team to catch up and re-establish them. That's the very last thing we want at this point, as it would impact on both the speed of ramping up the expansion and create uncertainty in the market about Ondo's ability to scale effectively. Far better to be on the front foot with it and demonstrate that this is a business that is ready and able to scale as fast as the market wants to adopt the technology.

I think it's also really helpful that Craig is sharing the financial dynamics of the business with us. Those numbers are only going to get better and better over time as the established book of installations grows (so the impact of 1st year callouts on overall margin reduces) and as deployment density increases, making each plumber more efficient. LeakBot will also shortly be able to detect the risk of freezing pipes, so is that a new peril and therefore a potential additional revenue stream? And we have LeakBot Edge coming along to open up the southern US states and potentially apartments too.

So, while I initially read this week's news and thought 'huh?', I'm now firmly convinced that Craig has done exactly what he's paid to do (and what shareholders need him to do) - spot the opportunities and position the business to take advantage of them. Given what he has said previously it must have been a tough call for him personally to do this fundraise, but I am not only now supportive of it, but believe it will materially accelerate progress, which has to be good for shareholders.

Some interesting discussion on here this evening (and I actually think some balanced perspectives), but I'm looking forward to the interims for quite a few reasons:

Firstly, and most obviously, we'll not only get the formal numbers, but a trading update with the latest device deployment numbers. Difficult to say where the number will end up as the rate of growth has jumped around quite a bit, so hard to plot a curve at this point. I think the snowball effect will be evident, but we're still quite near the top of the hill, so we shouldn't be expecting it to grow from the size of a tennis ball to the size of a small planet overnight. I'm not sure all of the additional devices will have been RNS's though - for example I doubt they'll be issuing an RNS for any vipHomeLink devices, but that partnership started in July so it's probably starting to contribute to the numbers, albeit on a small scale for each contract. When Craig was asked in his recent StockBox interview whether he wanted to say anything about the interims, he said "of course not, we'll reveal that when we release the results to the market". I may be over thinking it, but I thought that 'reveal' was an interesting word to use (not simply "we'll update the market at that time" which is what most CEOs say).

More importantly, it sounds like something is brewing with Nationwide. In the same interview, Craig talked about the huge investment that Nationwide were making in "AI and home connected technologies" - $1.5Bn over the next three years. Even more interestingly, Craig also said that $300m of that investment was going to be in AI, from which we might reasonably deduce that $1.2Bn is going to be invested in home connected technologies. And Craig said that Ondo was the ONLY partner mentioned when they made that announcement AND he was the only partner in the room at their technology strategy away day a few weeks earlier when they discussed their plans AND Nationwide have already integrated Ondo's API feeds into their smart technology stack to fuel the AI with all the data it needs. That can't all be a coincidence - I'm convinced that a game changer is already on the cards and I'm sure we'll either here more ahead of the interims, or some further clues during the presentation.

Whatever we end up with in the interims, it's clear to me that we are in an inflection phase that the market has yet to recognise. The business model is the dream of most Finance Directors - recurring revenue model; virtually zero debt; no competitors to speak of; IP protected; 'sticky' sector; green credentials; delighted customers (insurers and homeowners); scale-up capital covered (and by the way, the devices now probably subsidise most of the additional costs of having more plumbers, because the payments are made up front and then devices are drawn down against the credit as they are shipped). If Carlsberg made business models....................

I think things are going to start motoring here soon.