REG - Insig AI Plc - Interim Results
19/12/2024 07:00
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RNS Number : 6683Q Insig AI Plc 19 December 2024
Insig AI plc / EPIC: INSG / Market: AIM
19 December 2024
INSIG AI PLC
("INSG" or the "Company")
Unaudited Interim Results for the Six Months ended 30 September 2024
Insig AI plc (AIM:INSG), the data science and machine learning solutions
company serving the asset management industry, is pleased to announce its
unaudited interim results for the six months ended 30 September 2024 ("H1-24")
and to provide an update on the Company's progress post the half year end.
Highlights
· Adjusted EBITDA loss of £0.4 million in H1-24 (H1-23: £0.4
million, which benefitted from the contribution of the now disposed Sport in
Schools business)
· Quadrupling of pipeline of new sales prospects in the last six
weeks, to in excess of £2.5 million
· Progressing discussions with potential strategic partners
· Increasing visibility of regulatory tailwinds: Corporate
Sustainability Reporting Directive effective from January 2025
· Cash of £0.2 million (30 September 2023: £0.7 million) but
£0.3 million R&D tax refund received post period end (whilst £0.5
million refund received pre-period end in H1-23)
Richard Bernstein, CEO commented: "I am pleased to report that since the
period end, we have seen year on year revenue growth, a dramatic increase in
our sales pipeline, broadening engagement with regulators and incoming
requests for proposals to meet business needs as a result of a strategic
business development shift. Alongside structural tailwinds within the markets
we address, we can look forward to 2025 with confidence."
For further information, please visit www.insig.ai (http://www.insig.ai) or
contact:
Insig AI plc richard.bernstein@insig.ai (mailto:richard.bernstein@insig.ai)
Richard Bernstein
Zeus (Nominated Adviser & Broker) +44 (0)20 3829 5000
David Foreman / James Hornigold
Chief Executive's Report
Dear Shareholders, it is now a little over six months since I became Chief
Executive. In September, I set out the corrective actions that I had started
to put in place. I am pleased to report on early indicators of meaningful
progress. Whist I have previously referred to sales cycles in emerging
technologies taking up to 18 months, over the last six weeks, our pipeline of
new sales prospects has quadrupled to in excess of £2.5 million, due to a
newly implemented business development strategy and a clearly defined value
proposition. This is not only a function of providing focussed offerings where
there are clear business requirements but a transformation in how we are
accessing and engaging with these potential customers. This augurs well for
2025.
Financial headlines
In summary, the operating loss we are reporting of £1.4 million is before
adjusting for depreciation and amortisation of £1 million. This compares with
an operating loss of £1.8 million for the corresponding period to September
2023, when depreciation and amortisation comprised £1.4 million. Whilst the
consolidated income statement shows a decline in revenue, this is entirely due
to the corresponding period including sales from Sport in Schools, a business
which was sold in November 2023. Revenues from the machine learning and data
science business were unchanged at £0.2 million. Cash and cash equivalents at
the period end were £0.2 million, as against cash and cash equivalents for
the corresponding period of £0.7 million, which included the receipt of an
R&D tax refund of £0.5 million. Last month, post period end, the Company
received an R&D tax refund of £0.3 million.
Equity funding
In April and May 2024, I subscribed to the Company for 1,250,000 shares at
20p. In June 2024, the Company successfully raised £0.8 million at 12.5p per
share.
The markets we serve
As I set out in September, there are two clearly defined parts of the
business.
AI Ready ESG Data
First, a vast repository of corporate reports that enables regulators,
corporates, asset managers and all market participants to access, interrogate
and compare disclosures within and between companies. We believe that our
database uses the best of machine learning and AI tools in this area. It is
our automated traceability back to source corporate disclosures that separates
us from our competition. Recently, we have significantly increased our
engagement with regulators, as well as with corporates and substantial
consulting practices.
Data Engineering for Asset Managers
Second, our ability to provide accessible AI-ready data engineering solutions
to asset managers. This enables them to gain insights into their holdings,
manage risk and increase alpha. We are able to structure and centralise data,
making it secure, whilst increasing the efficiency and productivity. A recent
survey from PwC's Asset & Wealth Management Report, which surveyed 264
asset managers and 257 institutional investors, found that 80% of those who
took part believed that AI and other new technologies will improve revenues
going forward. The report highlighted a skills and investment gap when it
comes to AI, with revenue growth expected from internal changes rather than
direct services to clients, with 84% of respondents arguing it would improve
operational efficiency.
Board changes
In May 2024, the Company announced that I was appointed Chief Executive and
John Wilson was appointed as Independent Non-Executive Chairman. John is a
globally experienced Chairman and Chief Executive, with a strong background in
the technology sector. The Company also announced that Warren Pearson, Chief
Technical Officer was stepping down from the Board and staying within the
business as a full-time employee, allowing Warren to focus time on product
development and deployment of Insig's machine learning solutions.
Prospects
I am pleased to report that since the period end, and as a result of our
revised strategy, revenue is now ahead of the corresponding period last year.
Importantly, in recent weeks, engagement with potential new customers has
increased significantly. Next month, the Corporate Sustainability Reporting
Directive will come into effect. Our curated repository of corporate reports
provides the ideal foundation for automating the myriad of over 1,000 new data
points that will require reporting on. We believe that as these new reporting
requirements come into force, corporates will need to collate data in a way
that is well suited to our solutions. This nascent market looks set to spring
into life, as manual data collection and analysis will become relatively
costly, cumbersome and ultimately obsolete. On the data engineering side,
asset managers now require automated, accurate and accessible data. We
continue to progress discussions both with regulators and with potential large
scale strategic partners.
As Insig AI's largest shareholder and someone who has invested several million
pounds on the same terms as and alongside institutional and retail investors,
I am as keen as any for the business to convert its potential into long-term
sustainable and substantial revenues.
Of late, we have broadened engagement with international regulators and have
recently been invited to be fast tracked onto the preferred vendor list of an
overseas regulator. Discussions with accounting practices and management
consultancy firms are ongoing. Last month, we announced a new business win
from an asset manager with assets under management of more than £100 billion.
We now expect additional work from this client in the coming months.
It is encouraging that the team has responded very well to my initial actions
of refocusing the business. This has already resulted in incoming requests for
proposals, as well as a quadrupling in the quantum of new business
engagements. Initially this was concentrated within the data engineering side
of the business but in the last fortnight, a number of new prospects for the
ESG data division have emerged. In the coming months, our sales pipeline is
expected to continue to build. As 2025 progresses, we plan to convert this
into consistent new business wins, as our investments in new technology, sales
and marketing deliver substantial payback. I am excited about prospects for
2025 and beyond.
Richard Bernstein
Chief Executive Officer
18 December 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 6 months to 30 September 2024 Unaudited 6 months to 30 September 2023 Unaudited
£ £
Continuing operations
Revenue 165,780 882,478
Cost of sales - (384,916)
Gross profit 165,780 497,562
Administration expenses (1,525,803) (2,175,056)
Other gains/(losses) (299) 59,470
Other income - 877
Operating loss (1,360,322) (1,617,147)
Finance income 299 147
Finance costs (73,250) (64,841)
Loss before income tax (1,433,273) (1,681,841)
Deferred tax (253,805) (129,255)
Loss for the period after income tax from continued operations (1,687,078) (1,811,096)
Discontinued operations
Profit/(loss) for the period from discontinued operations 8 - -
Group loss for the period (1,687,078) (1,811,096)
Total comprehensive loss attributable to owners of the Parent (1,687,078) (1,810,660)
Total comprehensive profit/(loss) attributable to non-controlling interests - (436)
Basic and diluted earnings per share 5 (1.56)p (1.74)p
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 September 2024 Unaudited 31 March 2024 Audited 30 September 2023 Unaudited
£ £ £
Notes
Non-Current Assets
Property, plant and equipment 3,640 5,652 14,759
Right of Use Assets - - 23,127
Available for sale investments 123,750 - -
Intangible assets 7 3,796,971 4,404,000 19,464,501
3,924,361 4,409,652 19,502,387
Current Assets
Trade and other receivables 67,654 104,740 161,812
Cash and cash equivalents 226,376 37,847 659,670
294,030 142,587 821,482
Total Assets 4,218,391 4,552,239 20,323,869
Non-Current Liabilities
Lease liabilities - - 11,971
Deferred tax liabilities 1,354,805 1,101,000 2,715,350
1,354,805 1,101,000 2,727,321
Current Liabilities
Trade and other payables 173,526 338,238 611,515
Lease liabilities - - 10,386
Convertible loans 9 1,609,324 1,544,324 2,318,173
1,782,850 1,882,562 2,940,074
Total Liabilities 3,137,655 2,983,562 5,667,395
Net Assets 1,080,736 1,568,677 14,656,474
Capital and Reserves Attributable to
Equity Holders of the Company
Share capital 3,230,499 3,149,058 3,109,804
Share premium 41,915,534 40,810,725 39,977,403
Other reserves 516,015 516,015 377,381
Share based payments reserve 15,372 2,485 18,845
Retained losses (44,567,944) (42,880,866) (28,775,506)
Equity attributable to shareholders of the parent 1,109,476 1,597,417 14,707,927
Non-controlling interests (28,740) (28,740) (51,453)
Total Equity 1,080,736 1,568,677 14,656,474
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Note Share capital Share premium Share based payment reserve Other reserves Retained losses Total equity Non-Controlling Interest Total equity
£ £ £ £ £ £ £ £
Balance as at 1 April 2023 3,109,804 39,077,403 18,845 377,381 (26,964,846) 15,618,587 (51,017) 15,567,570
Loss for the period - - - - (1,810,660) (1,810,660) (436) (1,811,096)
Total comprehensive loss for the period - - - - (1,810,660) (1,810,660) (436) (1,811,096)
Sale of treasury shares - 900,000 - - - 900,000 - 900,000
Total transactions with owners, recognised in equity - 900,000 - - - 900,000 - 900,000
Balance as at 30 September 2023 3,109,804 39,977,403 18,845 377,381 (28,775,506) 14,707,927 (51,453) 14,656,474
Balance as at 1 April 2024 3,149,058 40,810,725 2,485 516,015 (42,880,866) 1,597,417 (28,740) 1,568,677
Loss for the period - - - - (1,687,078) (1,687,078) - (1,687,078)
Total comprehensive loss for the period - - - - (1,687,078) (1,687,078) - (1,687,078)
Issue of shares 81,441 1,104,809 - - - 1,186,250 - 1,186,250
Share based payment - - 12,887 - - 12,887 - 12,887
Total transactions with owners, recognised in equity 81,441 1,104,809 12,887 - - 1,199,137 - 1,199,137
Balance as at 30 September 2024 3,230,499 41,915,534 15,372 516,015 (44,567,944) 1,109,476 (28,740) 1,080,736
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months to 30 September 2024 6 months to 30 September 2023 Unaudited
Unaudited £
£
Notes
Cash flows from operating activities
Loss before taxation (1,687,078) (1,810,660)
Adjustments for:
Depreciation and amortisation 1,025,865 1,382,456
Increase in deferred tax provision 253,805 129,255
Minority interest - (436)
Disposal of Property Pant and Equipment - 4,803
Finance expense 73,250 (4,898)
Share options expense 12,887 -
Cash received for R&D refund - 542,000
Increase/(decrease) in trade and other receivables 37,086 19,146
Increase/(decrease) in trade and other payables (172,962) (265,008)
Net cash used in operations (457,147) (3,342)
Cash flows from investing activities
Purchase of property, plant and equipment - (595)
Disposal of Property Pant and Equipment - 3,160
Development expenditure 7 (416,824) (517,018)
Net cash used in investing activities (416,824) (514,453)
Cash flows from financing activities
Proceeds from share allotments 1,062,500 -
Funds from sale of treasury shares - 900,000
Repayment of leasing liabilities and bank borrowings - (3,119)
Net cash generated from financing activities 896,881
1,062,500
Net decrease in cash and cash equivalents 188,529 379,086
Cash and cash equivalents at beginning of period 37,847 280,584
Cash and cash equivalents at end of period 659,670
226,376
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General Information
Insig AI plc is a data science and machine learning company listed on the AIM
Market of the London Stock Exchange.
The Company is domiciled in the United Kingdom and incorporated and registered
in England and Wales, with registration number 03882621. The Company's
registered office is 6 Heddon Street, London, W1B 4BT.
2. Basis of Preparation
The condensed consolidated interim financial statements have been prepared in
accordance with the requirements of the AIM Rules for Companies. As permitted,
the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information. The condensed interim financial
statements should be read in conjunction with the annual financial statements
for the year ended 31 March 2024, which have been prepared in accordance with
UK adopted international accounting standards.
The interim financial information set out above does not constitute statutory
accounts within the meaning of the Companies Act 2006. It has been prepared on
a going concern basis in accordance with the recognition and measurement
criteria of UK adopted international accounting standards.
Statutory financial statements for the year ended 31 March 2024 were approved
by the Board of Directors on 5 September 2024 and delivered to the Registrar
of Companies. The report of the auditors on those financial statements was
unqualified with a material uncertainty in relation to the Company's ability
to continue as a going concern. The condensed interim financial statements are
unaudited and have not been reviewed by the Company's auditor.
Going concern
These financial statements have been prepared on the going concern basis.
Given the Group's current cash position and its demonstrated ability to raise
capital, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of accounting
preparing the condensed interim financial statements for the period ended 30
September 2024.
Notwithstanding the above, a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going concern and,
therefore, that the Group may be unable to realise their assets or settle
their liabilities in the ordinary course of business. As a result of their
review, and despite the aforementioned material uncertainty, the Directors
have confidence in the Groups forecasts and have a reasonable expectation that
the Group will continue in operational existence for the going concern
assessment period and have therefore used the going concern basis in preparing
these consolidated financial statements.
The factors that were extant at 31 March 2024 are still relevant to this
report and as such reference should be made to the going concern note and
disclosures in the 2024 Annual Report and Financial Statements ("2024 Annual
Report").
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Company's medium term performance and the
factors that mitigate those risks have not substantially changed from those
set out in the Company's 2024 Annual Report and Financial Statements, a copy
of which is available on the Company's website: www.insgai.com
(http://www.insgai.com) . The key financial risks are liquidity risk, credit
risk, interest rate risk and fair value estimation.
Critical accounting estimates
The preparation of condensed interim financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the end of the reporting period. Significant items subject
to such estimates are set out in Note 2 of the Company's 2024 Annual Report
and Financial Statements. The nature and amounts of such estimates have not
changed significantly during the interim period.
3. Accounting Policies
Except as described below, the same accounting policies, presentation and
methods of computation have been followed in these condensed interim financial
statements as were applied in the preparation of the Company's annual
financial statements for the period ended 31 March 2024.
3.1 Changes in accounting policy and disclosures
The following amendments to standards have become effective for the first time
for annual reporting periods commencing on 1 January 2023 and have been
adopted in preparing these financial statements:
Standard Impact on initial application Effective date
IAS 1 (Amendments) and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
IAS 8 (Amendments) Definition of Accounting Estimate 1 January 2023
IAS 12 Income Taxes (Amendments) Deferred Tax Related to Assets and Liabilities Arising from a Single 1 January 2023
Transaction
The adoption of these amendments had no material impact on the financial
statements.
At the date of approval of these financial statements, the following
amendments to IFRS which have not been applied in these financial statements
were in issue, but not yet effective, until annual periods beginning on 1
January 2024:
Standard Impact on initial application Effective date
IAS 7 (Amendments) and IFRS 7 Supplier Finance Arrangements 1 January 2024
IAS 1 (Amendments) Classification of Liabilities as Current or Non-Current 1 January 2024
IFRS 16 (Amendments) Lease Liability in a Sale and Leaseback 1 January 2024
IAS 1 (Amendments) Presentation of Financial Statements 1 January 2024
IAS 1 (Amendments) Non-Current Liabilities with Covenants 1 January 2024
IAS 21 (Amendments) Lack of Exchangeability 1 January 2024
None are expected to have a material effect on the Group or Company Financial
Statements.
4. Dividends
No dividend has been declared or paid by the Company during the six months
ended 30 September 2024 (six months ended 30 September 2023: £nil).
5. Loss per Share
The calculation of earnings per share is based on a retained loss of
£1,687,078 for the six months ended 30 September 2024 (six months ended 30
September 2023: £1,810,660) and the weighted average number of shares in
issue in the period ended 30 September 2024 of 108,059,330 (six months ended
30 September 2023: 103,566,056).
No diluted earnings per share is presented for the six months ended 30
September 2024 or six months ended 30 September 2023 as the effect on the
exercise of share options would be to decrease the loss per share.
6. Business segment analysis
6 months to 30 September 2024 Unaudited
Machine learning and Data services Total
£
£
Revenue 165,780 165,780
Costs of sales - -
Administrative expenses (1,525,803) (1,525,803)
Other gains/(losses) (299) (299)
Other income - -
Finance Income 299 299
Finance costs (73,250) (73,250)
Profit/(Loss) before tax per reportable segment (1,433,273) (1,433,273)
*After the disposal of Sport in Schools Ltd and The Elms Group in November
2023, all the ongoing activity in the Group is related to machine learning and
Data services.
6 months to 30 September 2023 Unaudited
Machine learning and Data services Sport in Schools Total
£
£ £
Revenue 182,797 699,681 882,478
Costs of sales - (384,916) (384,916)
Administrative expenses (1,874,622) (300,434) (2,175,056)
Other gains/(losses) 59,677 (207) 59,470
Other income 490 387 877
Finance Income 147 - 147
Finance costs (64,654) (187) (64,841)
Profit/(Loss) before tax per reportable segment (1,696,165) 14,324 (1,681,841)
7. Intangible assets
The movement in capitalised intangible costs during the period was as follows:
Cost and Net Book Value Goodwill Development Costs Technology assets Customer relationships Total
£ £ £ £ £
Balance as at 1 April 2024 - 988,929 3,095,296 319,775 4,404,000
Additions - 416,824 - - 416,824
Amortisation - (8,633) (978,143) (37,077) (1,023,853)
As at 30 September 2024 - 1,397,120 2,117,153 282,698 3,796,971
8. Discontinued Operations
On 16 July 2024, Ultimate Player Ltd, a subsidiary of Insig AI Plc, was
dissolved after discussions within management.
9. Convertible loan notes
CLN 1 CLN 2 CLN 3 30 September 2024
£ £ £ £
Convertible loan note 1,000,000 500,000 750,000 2,250,000
Interest
Accrued interest 130,057 75,643 35,076 240,776
Conversion - - (785,076) (785,076)
Modification of convertible loan note (65,021) (31,355) - (96,376)
Total 1,030,036 514,288 - 1,609,324
Equity
Amount classified as equity 86,025 52,618 - 138,643
Total 86,025 52,618 - 138,643
On the 4 May 2022, the Company entered into a formal agreement for a £1.0m
convertible loan note to be provided by Richard Bernstein, Non-Executive
Chairman of the Company.
On 17 June 2022, the Company entered into a convertible loan facility
agreement with David Kyte, a long-term shareholder in the Company for
£500,000.
On the 12 September 2022, the Company entered into a formal agreement for a
£750,000 convertible loan note to be provided by Richard Bernstein,
Non-Executive Chairman of the Company.
On 22 December 2022, the Company agreed revised terms for both the convertible
loan note (CLN) agreements with Richard Bernstein and David Kyte for £1m and
£0.5m respectively.
The revisions for the year ended 31 March 2024 are as follows:
On 20 December 2023, it was agreed that the terms of the CLN with David Kyte
will be extended by six months to 30 June 2024, and the interest rate was
changed from 8% per annum to 12% per annum.
On 14 December 2023, it was agreed that the terms of the CLN with Richard
Bernstein will be extended by six months to 30 June 2024. All other terms of
the agreement remained the same.
On 15 November 2023, the Company received notice from Richard Bernstein to
convert the balance of the agreement entered on 12 September 2022 to 3,925,380
ordinary shares at a conversion price of 20 pence per share. The total amount
converted, including interest, was £785,076.
The revisions for the period ended 30 September 2024 are as follows:
On 2 July 2024, the Company agreed revised terms for the convertible loan note
agreements with Richard and David, extending the redemption dates to 30
September 2025 and adjusting the interest rates to 6% for Richard's CLN, and
12% for David's.
10. Events after the balance sheet date
On 18 October 2024, an application was submitted to Companies House to
dissolve Pantheon Leisure Plc, a subsidiary of Insig AI Plc.
11. Approval of interim financial statements
The Condensed interim financial statements were approved by the Board of
Directors on 19 December 2024.
12. Availability of this announcement
Copies of this announcement are available from Insig AI website at
www.insg.ai.
**ENDS**
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