Q2 2021 MICT Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by good morning, and welcome Mike.
<unk> second quarter of 2021 financial results and corporate update conference call.
At this time, all participants are in listen only mode.
Assistance. Please signal conference specialist by pressing the star can you followed by zero. After today's presentation, there will be an opportunity to ask questions basketball you May Press Star then one on your telephone keypad.
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Okay spent on this call are advised that the audio of this conference is being broadcast live over the Internet and also being recorded for playback purposes, a webcast replay of the call will be.
Available approximately one hour after the end of the call through November 16.2021.
I'd now like to turn the call over to Mr. Scott Gordon President of core IR, the company's Investor relations firm.
Please go ahead sorry.
Thank you operator and good.
Morning, everyone and thank you for joining us for <unk> second quarter, 2021 financial results and corporate update conference call.
Joining us today from M. A C T R. Darren Mercer Chief Executive Officer of M. ICT Moran I'm wrong controller for M. A C T.
During this call management will be making forward looking statements, including statements that address <unk> expectations for future performance or operational results forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements.
For more information about these risks please refer to the risk factors described in <unk>. Most recently filed annual reports.
<unk> Form 10-K quarterly report on Form 10-Q, and form 8-K filed with the SEC today and M. I <unk> press release that accompanies this call, particularly the cautionary statements in it.
The content of this call contains time sensitive information because it's accurate only as of today August 16th 2021.
As required by law <unk> disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Now my pleasure to turn the call over to Darren Mercer Chief Executive Officer Darren. Please go ahead.
Thank you Scott and thank you all for joining us on the cool on the webcast today good morning to everybody.
If I could now turn your attention to slide three.
We are very pleased to report for the second consecutive quarter, we have achieved record revenue for the company.
With second quarter revenue up 38% over the first quarter of 2021.
This is due to the success of our insurance business.
We achieved a 50% increase quarter over quarter with Q2 revenues of $12.3 million compared to $8.2 million in Q1 of 2021.
This increase was driven by our strong growth in the BCP insurance product market.
In February we completed the acquisition of the bike price security.
<unk> knows the required licenses and permits to operate an online platform.
Which enables us to work with stock trading a major stock exchanges in Hong Kong or the United States and China.
This represents a large opportunity in this sector.
Is experiencing very rapid growth.
We are narrowing our final stages of testing I'll start saving platform through the soft launch.
I believe now packed with official launch which is currently scheduled for me Kevin.
In the first quarter. We also entered into an exclusive partnership with Shanghai Petroleum and natural gas trading center.
Which enables us to offshore oil and gas trading to clients with alcohol, representing approximately 20% decline in oil and gas side.
We are currently building out an exciting.
Taxable income by the end of September.
Additionally, in the second quarter as a result.
We're not moving by Mike that I would say to you Mike.
Approximately 37%.
So micro next financial statements will no longer be consolidated within MCC.
Importantly on May 27.
<unk> was added to the M a C.
USA Microcap index.
We believe this addition will enhance liquidity of our stock as well as increases visibility.
Finally, we have very strong balance sheet with $114 million in cash as of June 32021.
This will provide us with the ability to execute our plan and support both our organic and inorganic growth.
Next slide please slide pool.
We have made significant progress during the past quarter.
We grew our insurance brokerage business by 50% over Q1 as a result of the acquisition of the nationwide insurance license throughout China.
We're particularly excited about the competition.
We believe it is mainly at the beginning.
Successful operation of our insurance business.
This revenue ramp up.
Has been there as a result of strictly be to be sale in working with affiliate brokers to offer packages to professionals.
As we will discuss shortly we are now preparing to ramp up that business into more b to b to C.
Got it.
We aim to distribute to a number of online channel followed by direct D to C products, many of which are both custom designed and a significantly higher margin compared to our current <unk> offering.
The groundwork we are laying by attracting large multiples of underlying ensuring provides a strong and considerable platform for what we anticipate to be both repeat insurance business.
And new insurance instrument sales at much higher margins.
Got to migrate from B to B.
<unk> focus.
In addition, we have made significant progress in preparing and testing magnify our stock trading at in preparation for its upcoming anticipated launch in the middle of September.
Followed by the launch of a commodity trading platform.
To launch by the end of September.
The initial focus for this segment will be the oil and gas market.
As we've just mentioned our micro net state we've reduced to approximately 37%, resulting in the elimination of this entity from being consolidated into our P&L.
With Mike Burnett removed from our consolidated income statements, we will now be able to provide investors a clearer view of our core segments, enabling them to more clearly monitor our progress.
Finally, and perhaps most significantly we have following several offering among significant cash resulting in $114 million on our balance sheet as of June 30.
The strong cash position.
Good luck on Covid throughout all business segments.
Including the build out of our new businesses.
Whilst also providing significant runway to support the early discuss growth of our trading segment.
If I can now turn your attention to slide five.
Yeah.
As we previously discussed we launched our insurance business in late December of last year.
Revenue even in the short week following that initial award.
In our first full quarter of operations <unk> generated $8.2 million in this segment and then in Q2, we grew revenue in this segment by 50% sequentially to $12.3 million.
The nationwide license that we acquired enables us to sell a full range of insurance products to Europe, China, providing a massive opportunity for us to grow this segment.
With the penetration rate of only four 4% for the China insurance market. The market is still in its very early stages, providing us with a significant opportunity to build that business.
Now we are in the place to being able to expand on our progress.
Further by obtaining the local licenses necessary to significantly expand our network of brokers on our system.
Allowing we will localize and spectra life insurance product by region.
Unsupported by being able to offer more ensure that's come to the products.
Thereby growing that business onto a wider opportunity for our higher margin b to b to C business and eventually moving to an even higher margin b to C product offering.
Okay.
We believe our business will not only grow from a rapidly growing market.
It is growing at a CAGR of over 40%.
But also from our ability to cross sell our products through our <unk> relationships.
The 50% growth that we had over the first quarter is just the very beginning of a long tail of growth that we expect to generate in this sector.
We are also currently exploring relationships with additional online platform with the intention to significantly expand our user base.
Biding additional access to direct customers ultimately facilitating the emergence of the <unk> platform that would then allow us to access networks customers directly.
We believe this will be a significant driver towards selling these bespoke and higher molecule b to C offering and look forward to providing updates on progress in this area.
If I can now turn your attention to slide six please.
Sure.
The second quarter has also been very productive with regard to our stock trading business.
Specifically, our Mark Titrating up.
It is in the final stages of testing.
<unk> commenced a soft launch of the product in early Q3.
And now has a scheduled for launch in mid September.
We are particularly excited about our upcoming launch and believe that our offering will be amongst the best in the marketplace.
Our license from the Hong Kong SFC, one of the premiere exchanges in the World will drive confidence and trust between the provider and customer driving strong customer acquisition.
In addition, we believe <unk> is very competitive with protocols rate and will offer improved features in a number of areas.
The current offerings in the marketplace.
Our strong balance sheet with approximately $114 million in cash provides the ability to offer significant margin finance capability, which carries extremely high margin.
Finally, we have access to a large and growing database that will provide the ability to target a wide customer base.
If I could now turn your attention to slide seven please.
Our commodity trading business, which rounds out our fintech offerings in China, and Southeast Asia provides a significant opportunity.
Through our relationship with Shanghai facility, even natural gas trading center, we have direct access to that customers who account for approximately 20%.
China's oil and gas side.
Our offering in this segment will provide trade execution margin financing and say clearing capabilities.
Our large cash balance will enable us to provide highly profitable margin financing with these customers.
We are prudently working on fine tuning the top team.
Our initial launch by the end of September.
And we expect to see continued growth of this division.
Q4, as we regularly onboard new clients to use the platform throughout 2021 and into next year.
I'd like now to take a moment to discuss the mice business on the changes in how we report base since the last quarter.
So if you could please turn to slide eight.
Given our new focus on the Fintech market.
<unk> has become a noncore business in the second quarter as a result of the Microsoft offering our ownership was reduced from approximately 53% in Q1 to approximately 37% in Q2.
As a result of this change this business is no longer consolidated into our P&L, but accounted for as a one off below the line gain or loss attributable to noncontrolling interests.
With my <unk>, no longer being consolidated within our P&L, our indexes will be able to clearly see the performance of Austin SEC segments, increasing transparency within their credentials.
As of Q2 and beyond Mike <unk> will be accounted for using the equity method of a long term investment.
The value of this investment as of June 30 was $965000.
If I can now turn your attention to slide nine please.
As you can see the first half of 2020 wall has been extremely busy unsuccessful.
We have achieved record revenue quarter over quarter.
And while we have made significant progress since the beginning of 2020, while much of the work is just the beginning of laying the foundation for success.
<unk> opinion benefits along the way.
We have put our Chinese national licenses in place, particularly for our insurance has stopped trading businesses.
Develop these trading platforms and so until <unk> multiple partnerships.
I'll now poised to drive dramatic growth in the coming years.
Now that many of these authorities are firmly in place we are extremely excited for the potential successes, we anticipate in the second half of the year.
For example, having.
Having launched our insurance business unsecured our Chinese national licensing to set up a strong <unk> product offering we have secured significantly more localized Chinese licensing during Q3.
Undeveloped partnerships underlying <unk> to allow for more penetration into the high end module b to B to C marketplace.
Ultimately, we expect to create relationships with additional online platforms to more directly with the DTC market.
Offering the highest margin insurance offerings, including the potential offering of health insurance products.
Similarly, we created the infrastructure from our Mifi offering during the first half of the year, including securing all the required Chinese regulatory approval Moody to office utility savings on all the major exchanges in Hong Kong U S and China.
With those licenses in hand, we have been would non stop on the developments have been trading at.
Which upon its anticipated.
Launch in mid September will make a significant contribution to revenues in the second half.
Finally from a commodities trading perspective.
All of the necessary pieces.
<unk> successful enterprise are in place.
Including partnering with Shanghai Petroleum and natural gas these clients account for 20%.
China's oil and gas side.
Which now has direct connectivity to the Shandong commodities trading platform.
All of them in our diligence.
Building this platform.
We're expecting to launch by the end of September shortly following the market viable.
And secure the places MCT forefront financial technology offering in the Asian marketplace.
I continue to be both enthusiastic and optimistic about our business on a quarter over quarter. During 2021, we have seen exponential growth. Even if we are just getting started.
Given that we are maybe at the beginning of each of these offerings.
And the feedback we've already received has been tremendous I believe there is reason for optimism that perhaps towards the end of 2021 celebration.
I would now like to turn the call over to Miranda I'm wrong for a financial review of the quarter.
Ron.
Thank you Dan.
And the second question with $23 million $8.9 million in defense Clinton and increase of 38% adjusted for 726 times didn't do enough interface quicker, we check from consolidated in my clinic.
Close like 50% family farmland in reinsurance division, which will launch in late December.
Gross profit in the second quarter was <unk> $7 million, yeah cause one 9 million in defense quicker.
Gross profit from the premium quote and what does that mean.
He joins us an increasing incentive.
That's great to kind of mix of new insurance brokerage and our customers as well as seasonality reduction in insurance company right now.
<unk> are expected to recover in the third quarter and beyond.
<unk> expenses in the second quicker with 388 times didn't go down too.
$231000 in the opinion of your question.
Selling and marketing expansion. The second question was $1.3 million to join.
1 million exactly.
Yeah.
General and administrative expense in the second quick it was $14.9 million totaling 6 million in defense Clinton.
The increase in G&A.
Hey, a quick it was driving by noncash issuance of shares and options for director.
He also book Similarly, $8.8 million.
The operating loss in the second quarter was $16.6 million versus a loss of $12.8 million interface Clinton.
Excluding the $8.8 million dollar.
So an auction based compensation.
Operating loss was only 7.8 meetings.
Net loss attributed to I might kick in the second quarter was $84 million very tasteful point 5 million interface quicker.
The increase in the operating loss and the net loss was the result of I Hope I didn't explain associated with the company launch into the China market.
Slide 11 please.
We have made significant improvement to our balance sheet in 2021 after executing a couple of capital raising.
As a result, our cash balance increased to 100 can fucking median doing them at $129 million and at year end.
Back to you Dan.
Thank you Brian.
As I hope you can clearly see.
We have already made exceptional progress during the first half of 2021.
<unk> is now well positioned to see significant impact from the emerging Chinese fintech market.
Our insurance business already has significant revenue is poised for expansion beyond our original <unk> services and into emerging b to B to C and B to C offerings that include both tailored products based on market, but also health insurance and other high margin in demand in Florida.
We anticipate the launch of a world class innovative stopped trading platform.
Driven by a targeted marketing strategy and our already significant investments.
Software development acquisition of mud pie and a highly experienced management team.
We also expect to launch our commodities and futures trading platform shortly thereafter.
You supported through our unique relationship with a major player in the Chinese oil and gas industry.
We have an extremely strong balance sheet with $114 million in cash.
Which will enable us to execute on our growth strategy, providing both the insurance division and <unk>.
Stop trading efficiency significantly the losses.
That current respective growth fund and support margin trading that would result in larger profit opportunities.
We are just getting started and we could not be more excited about the future of ICT.
We thank you for your continued support and we look.
Forward to sharing our progress with you as it develops.
I will now turn the call over to Scott Gordon for our Q&A session.
Thank you Darrin the company received many questions from investors for today's call and we thank them for their interest feedback and continued support of shareholders. Many of these questions were repetitive and so on today's call. We will be addressing the most frequently asked questions. Additionally, the company has received a number of questions that are seeking information about things now.
Disclosed by the company or are forward looking as well as a number of questions regarding share price fluctuations and the trading activities of its shares.
As a matter of policy and regulatory compliance the company does not offer interim operational or financial update forward looking guidance for capital market strategies or comments on the performance of its shares in the market with that the first question is one of your valuable assets as the cash on your balance sheet, what is the latest position on cash.
Byrne and why did you apply for such a large shelf registration in may.
Okay.
Well I think as you can see from the movements in our cash position between 31 to March of this year on the 13th of June.
And bearing in mind that we funded considerable development costs across all three are often SEC verticals.
Especially as we near the launch of both the Mic pie.
Stock trading up in all commodity trading platform, our operational cash burn is pretty small.
As you've seen from the presentation that can be announcements today, we still amount of $114 million in cash on the balance sheet.
With regards to the shelf registration statement. This is denominated in monetary terms and in line with best practice, we felt it was important to ensure that we have sufficient headroom moving forward.
Thank you. Our next question your growth in insurance revenues has been impressive again in Q2.
Do you have an approximate split.
Of the revenue between the main categories of insurance product and is all the Q2 revenue from <unk> sales.
Yes, good question.
You would expect we offer a full range of the most popular forms of insurance policy call, how life property and so on.
As far as the splits of that for these numbers I'm not sure until it's appropriate to go into that today.
What I can say that at least to Australia has been ultimately to get access to as many underlying insurer eased through brokers as possible with two particular items in mind. The first is to ultimately migrate those insurers from the visa b to B to C model.
And which will have a significant positive impact on our margins and secondly swap of more profitable insurance products higher margin products in China right now there's a huge surge.
Currently ongoing.
Towards medical and life insurance, both of which are quick section of high profit margins and we clearly want to be a very major operator in this particular area of insurance.
What I can also tell you is that we are seeing a significant rise in the number of underlying ensure reasonable proxy and we believe this will continue well into the second half.
But we do have one eye.
On executing stage C and we're confident will evidence some shift in the second half of this year.
Thank you.
I know from the results that gross margins were lower in Q2.2021 compared to Q1 'twenty 'twenty. One what is the reason for this and will it be a continuing trend.
Yeah as you can see our gross margin was down in Q2 and there are a couple of very good reasons for that.
He is very much in line with my explanation.
Our rosarito strategy, which involves assigning as many new underlying insurance through the brokers on smallpox.
Space and time if possible.
We have done that by offering certain incentives, which is what has it has had an impact.
Considerable impact on the margin in Q2, and secondly added to that there is a seasonality in the market place and this particular time of the year the rates for a number of insurance providers are reduced.
Some of this reduction we've had to absorb ourselves, but what I can say and I'm pleased to say is we expect the margins in Q3 and Q4 the patent box.
Thank you wonder what other areas of insurance do you intend to launch over the next 12 months.
Well I think as I said in a couple of hours ago.
I think I pretty much covered that.
It is worth emphasizing however.
The larger we grow our customer base of insurers.
The better positioned we are to expand our product base and also to move it's more specialized niche higher margin insurance products.
A key part of our growth strategy and it's something that we believe we are executing against all of the world.
Thank you when do you expect to launch B to B to C and B to B sales in your insurance business and do you expect this to have a material impact on acceleration in growth.
Yeah.
You know as I said in the presentation a few minutes ago.
It really is a key focus for us and we hope to be able to move this forward in the beach speaks to see arena in the very near future.
We are all being very targeted specific as to which online channel people to work with.
We will keep shareholders clearly fully up to speed with our progress in that particular arena.
Additionally, it should be noted that we.
To support both the beat to be in the beach B to C channels.
You do need a very broad licensing base to help explain that a bit.
On the one hand is great and we have the nationwide brokerage internet license, which enables us to sell online anywhere in the country.
Eugene.
But we also need to be able to process them, particularly the business that we win in the province, where it originates.
So that and I can say, we've made very significant progress already in Q2, Q3, and extending those provincial licensees considerably.
Thank you.
Your magpie launch appears to be slightly behind schedule. What is the reason for this and when is the launch now scheduled for.
Okay.
Those you could I think it is for as opposed to say it has taken us.
Little longer to get to the point to a full launch than.
We had hoped for but by but very much of a very small number of weeks.
But what I want all the shareholders that team to understand what is critically important.
Is how important this particular parts of the business. This particular vertical is to shareholder value.
And so we went into a software in Chile in Q3, as we said we would.
As a result of which we have undergone very extensive testing.
And what that's enabled us to do lead to improve the functionality of the App.
It's enabled us to add a number of enhancements, which we think will add to the to the user experience.
Very definitely ensured that we will have a very robust products at launch.
And I think overall, the feeling from the taxes without providing guidance.
Very favorable customer user experience.
Particularly when compared with other apps that are out there.
But I do want the shareholders to understand.
Yes.
From our own in house.
Development number we do rely on a number of data feeds from companies outside of the ball control and so to some extent we are beholden to pull that timetable in turning around.
Any bug fixes to.
Changes on feeds and that can have an overview of the knock on effect to the development timeframe.
Well again, I must reiterate tools such as the importance of this out for the company.
Nevertheless, as to take any risks in terms of launching before we're completely ready.
We are happy to open the necessary testing has been completed.
Thank you would you say that the testing of magpie has been a success and what has the feedback been like have any of the trial users compared magpie to food to up Fintech, We bowl and even robinhood.
Okay. So the benefits of those who don't know <unk> Fintech because you quote is actually tiger.
Perfect.
She talked my answer really.
First I think I've already dealt with it in the previous answer the previous question.
The importance of testing.
Secondly.
Yes. It is correct that the majority if not all of the tests that we have been using.
It also uses all have used certainly at least one if not more of the other opposite as I mentioned in the question.
We are now increasingly confident of what you've already did after the middle of September.
And the plans for further technical developments improvements only later this year and into next year or so.
Providing a very exciting roadmap.
Thank you.
How do you intend to acquire new users and to market Magpies. So that you can penetrate the market quickly and effectively.
As you'd expect we have a very targeted marketing plan with all of the required data analytical tools.
Not necessary for successful customer acquisition in this marketplace.
Brought on leading data on less both in house to external partnerships and we believe that our marketing plan is very exciting.
We will keep shareholders updated on our progress as we continue.
Uh huh.
I'm not really prepared foods seamless granularity about what this particular protocol because.
Our competitor has found out what we were doing well because we've launched.
Rather than get ahead of that I think it makes complete sense.
Thank you what is the latest update on the commodity trading in futures business and what is the current position on a launch date.
Yeah, we're very much on track to launch our platform through the end of September.
And as anticipated this will be shortly after the launch of the <unk> plant.
I hope people understand from the presentation or the Shanghai oil and gas trade center is responsible.
At least 20% of all oil and gas trades in China.
Narrow association.
In access of two and a half that members, including companies shoot the huge oil and gas companies through to city of provincial government departments that are oil and gas requirements through to a hosted medium size corporations involved in the industry.
We are hoping to act as a broker or a few hundred of those numbers.
How do we monetize that Shanghai straight sensors connected with the shunted commodity exchange from a converting business for more has historically been more of a sales and purchase platform onto an exchange that offers the potential for multiple transactions around the same trade spend.
Benefits the underlying customer on the market are obviously example, facilitating hedging.
Sanctions against.
Forex risk embedded managements and market volatility.
Our plan is to start as I said at the end of September Army will increase off the numbers of customers that we bring onto the proxy on a monthly basis throughout Q4 and into 2022.
And it's something we're particularly excited about.
Thank you.
Lot of talk in the press and on financial web sites at the moment about the Chinese government clamping down on certain business sectors, including on technology.
Is my understanding that both the insurance sector and the financial services sector are already highly regulated in China do you feel that this significantly reduces the risk of government intervention in the future would you say that the recent and expected future actions of the Chinese government will ultimately help M ICT or do you.
See it as a major risk.
Oh, that's a good question.
And it's a great question I think given a lot of the press commentary we've seen around this loss small number of weeks.
Look there are many opinions on this some more qualified than others.
Sure it would rank amongst those.
I'll give it a batch.
I think in my humble opinion, a number of question Jim with some compensates us for how to overwrite zealousness of the Chinese government.
Production of regulation in a number of <unk>.
Industries and recent headlines.
So with the cap amongst service into a political statement, but what I think I would say sure.
If you look at China as an economy that revenue would culminate civil code is 40 years old yet.
So it has a lot of catching up to do and I think it's catching up and as these businesses, particularly in the online and mobile space are growing at a rate of knots.
You have seen until recent times.
Clearly the one.
They have like benign is regulating those particular industries.
I think what we are witnessing now.
Walter that he's putting a regulatory framework.
The underlying customers to ensure fairness of operations and scientists in play.
Around those new verticals.
Candidly speaking a lot of the regulation that putting in place all no different than what we see in the United States and in Europe.
So.
Yes, let's see.
Let's move onto the question of how it really impacts us.
My tie he's currently licensed by the Hong Kong SFC without down to remedy or international stock exchange.
Decades of good standing a robust regulatory framework that matches any exchange anywhere in the world.
Sure.
Firstly, we are very upset with all the requirements.
In China on <unk>.
Currently we have to and so this is already a very heavily.
Heavily regulated financial services sector.
And what is trading again, we work within the framework that hearing.
What the rules are.
Two minutes.
They're all strong regulations around that so.
I can never guarantee that there will be no change is that.
That would adversely impact any of those integrations.
We operate.
Something well above my pay grade, but I do take comfort in that the three areas in which we are operating.
Long standing.
History, all strong regulation and a robust regulatory framework in which to operate.
Thank you.
Yes.
Do you expect to make any further acquisitions across any of the fin tech verticals or perhaps into new complementary fintech vertical in the foreseeable future.
Yeah.
I'm not sure how that question sure absolutely something I wouldnt be allowed to answer.
And I'm, not really going to answer it except to say.
That.
That was never ever an opportunity brought to us.
Hum shareholder value and clearly we'd have to give it full consideration.
And I think that's all I could possibly say to us no question.
You clearly have.
A very valuable financial services and Securities license in Hong Kong do you intend to apply for licenses in any other jurisdictions.
Yeah, I think in line with.
The people who sees all key competitors.
We too are looking to other areas of the world.
While we can introduce our app.
Rollouts of our offering.
And we are looking at the required licensing regimes in each of those jurisdictions and there are certain areas already under consideration.
The most important thing for US right now is to ensure we complete the full launch of the App.
By the middle of September and so.
That business rolling.
Bearing in mind, how much development and testing you have undertaken on magpie, which appears to have taken a little longer to complete than you. Originally expected do you still believe you made the right decision to build your own platform and technology, rather than white labeling a third party solution.
Unquestionably unquestioned.
I believe he is the right thing to do to build our revenue.
The benefits to shareholders and shareholder value significantly.
Ways field services.
It provides us flexibility on the product we want to offer and I hope our shareholders will realize the distinction between ora and none of our competitors when they see it as an action and a small number of weeks.
I think secondly, not having to share significant parts of our margin with a white label provider.
Oh really beneficial.
Thirdly, providing our own margin finance will be setting the whole without margin without having to share again increases the profitability of the app by building it ourselves and also I think there's almost always over those I think I mentioned this last time owning all of the data relating to all of the customers over 100%.
This is Barry.
And that's something clearly wouldn't share with others, then somebody argues who owns it or no.
The value of owning our own.
Proprietary platform is considerably significantly outweigh the cost of additional time involved in getting this 12 launch date by the middle of September.
Thank you.
With your stake in micro net reduced to 37%.
And you no longer having to consolidate its numbers into MRC team what is your strategy.
<unk> for your investment in micro <unk> and why did you choose not to keep majority control.
That's a fair question.
Let me deal with the second part of your question first.
We were given the opportunity to invest and to Mike.
Racing, which I'll bore with respect to the decline.
Given that the operations of Micromet really are no longer core to the direction. The rest of the group's businesses are going.
I think the board felt it was more appropriate to ensure that the considerable resources, we have on the balance sheet, most notably the cash we're best invested in the core businesses.
In the Fintech arena, which we are concentrating on rather than into Mike mentioned so.
Nevertheless.
Unless we still remain a very large shareholder with 35% will be a passive shareholder. These days in micro that and as I've said he was no reflection our decision not to invest it's not a reflection on Mike and his management team, maybe a decision of allocation of resource within the group.
I really wish.
Microphone all the success in the future.
So as a 37% shareholder they can achieve the goals that they set up themselves.
Our last question.
The company's share price performance has been disappointing since your first post merger, placing in November there was concern about displacing in the subsequent two have seriously damage shareholder value are you able to address those concerns.
Okay.
They have to address this point every meeting.
Less of what we've done as a management team since November.
We created and launched a new insurance platform, which generate significant revenues and a strong quarter on quarter growth.
We secured nationwide instant license, which enables us now sell products with b to B to C and it beats a fee basis with.
We're supporting that with a broad range of local provincial licensees to ensure we can process.
That's business.
We built a proprietary software platform for both the <unk> market on the B to B to C. On the BCC that requires investment that are quite unique right working capital to support the business we needed the fundraising just to support that business.
Mike by itself.
We have client.
Uh huh.
The Hong Kong SFC license in February of this year.
We built our own proprietary software, which you will see I hope in the middle of September competes favorably.
We believe with everybody else.
And we provide is a platform.
Enables us now to make the same offerings on products with margin finance and IPO finance that without the fund raising we couldnt have done.
Commodities platform would have won that contract if we could not demonstrated so are very important Chinese partners that we had a balance sheet or what's I guess the balance sheet that could deliver and support the product solution. The break so that's an opportunity for us I think on the country I would argue that the fundraising that we have done.
Significantly with the result.
Impact of insurance business.
Business, we're about to launch in the Middle of September and my time on the commodity trading platform at the end of September I think the opposite because in reality.
Thank you.
Thank you Darren.
We're now going to turn the call back over to the operator for.
Q&A. Please go ahead.
I'll begin the question and answer session to ask them questions. My first Star then one on you touched on phone.
Youre using a speakerphone please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two.
This time, we'll pause momentarily to assemble the roster.
First question comes from Brian Kiplinger lines Global Partners. Please go ahead.
Thank you Darren and thanks for taking my questions.
You talked about starting obviously b to B to C business soon.
And then eventually the D to C launch.
Are there any events at M ICT needs to accomplish in order to get started in the DTC business.
No.
And I think it's a very good question Brian.
The important thing for US really is you can get enough.
Or as large number of bonuses and the underlying insurance onto our platform.
She's very small margin business as you know I'm not provides a platform ultimately for us to convert those savings Julie's swallowing beat to see clients in the future that platform is now.
<unk> ready and will launch very soon.
But I'd also add to that.
Also the importance of getting the.
The nationwide.
Into that brokerage license as well which enables it.
Enables us to be able to sell up online and equally on the other stuff. The other that you picked up from a previous question that balance in five minutes ago, which was all about getting the nationwide Internet license. So you can sell the product, but you have to process. It China's large country on do you require a lot of different provincial law.
Distances.
In Q3, we have added considerably considerably about license portfolio.
Which now enables us to process and move a lot more business and so the launch of all beats a C product.
Is timed around the ability to be able to facilitate the underlying business as well.
You will see evidence of that in the second half of this year.
Great and then I couldn't.
Sure I understand from your comments.
Have you made strategic partnerships in either the insurance from trading platform side of your business or are you in various stages of negotiations maybe just update us on the progress that each side of those businesses.
Yes from the insurance perspective, as I said that we have.
We target specific with which platforms, we want you to partner for them.
B to B to C.
Chip.
And we all clearly in discussion a number of partners.
Yes.
I would have made.
So I'll be careful what I say here, but a lot of progress has been made.
And we will keep shareholders up to speed as and when we are able to sign those.
But we do expect as I said to hub contribution.
Or at least the end of this quarter.
Certainly in Q4.
Hum.
And on the I didn't understand your question about the strategic partnerships with the stock trading.
Yes, I'm curious.
It Hasnt gone with a full launch do you have strategic partners lined up.
We're going to help with the customer acquisition process. When you when you launch or.
Maybe you kicked me too on the trading side the plans there.
Okay.
Well as I said in a previous question.
I don't want to give all marketing plan away, but needless to say already some focus we know what I'll, what I'll call normal gene solid core object to soar, which don't require unusual stages a strategic partnership.
But we do have a very detailed plan and we're very hopeful we'll be successful to attract a large number of users onto the platform this year and well into next as well.
Expect to see collapsed around the globe.
Okay last question.
Specifically on the insurance business.
Can you talk about what that recovery might look like on the margin in the second half of the year, but.
More importantly, <unk>.
18 to 24 months out when PTC has become a bigger piece of your business I think it might be helpful to communicate not exactly but some kind of range of what the margin profile might look like at the insurance business.
Okay, well without giving specifics not so very good question.
I think first let's deal with the recovery in Q3 and Q4 with the margin.
In Q2, typically there is a <unk>.
<unk> all about fit lower.
We decided to absorb.
Those are not past the Montreal brokers underlying ensure we use because we wanted to grow that part of the business, particularly because of the long term benefits. It gives shareholders. The movement from B to B to B to C is a multiplication of the margin of a normal b to b margin not this quarter, but the margin you received last quarter.
So.
The move from B to B to B to C.
Even higher multiplication, so very very very significant impact on particularly as we move to.
To more of a b to C model, particularly next year. When we think we will have a very significant number of new shows on the platform. We think we will have.
Wal normal very seamless because the b to B to C.
Contracts and relationships in place you will see that.
Just had a multiplication of that margin.
Enables us to do is to also change.
How we.
Price the products.
Because the margin is so much greater it allows us to offer discounts to the underlying ensure they still have a multiplication about margin I don't want to give specifics away for obvious reasons.
<unk>.
The focus has been get as many insurance on the platform as you, possibly can once that converts it into b to C.
With the additional support of what we will bring on through B to B to C relationship with websites to hop considerable customer.
But considerable number of active users.
We will be transformative transformative.
Okay. Thanks Darren.
Thank you Bob.
Again, if you have a question. Please press Star then one.
Yes.
Yes.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Mr. Marshall for closing remarks. Please go ahead.
Okay. Thank you very much.
Finally, just to like to thank everyone for taking the time today to join the call.
And also for your ongoing support.
I look forward to updating you on the third quarter results conference call and providing further progress updates. Thank you all and have a good day.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Okay.