REG - Insig AI Plc - Trading and operations update

Insig AiAnnouncement

24/04/2023 07:15

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RNS Number : 1420X  Insig AI Plc  24 April 2023

The information contained within this announcement is deemed by the Company to
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(EU) No. 596/2014 as it forms part of  UK domestic law by virtue of
the European Union (Withdrawal) Act 2018.  Upon the publication of this
announcement via the Regulatory Information Service, this inside information
is now considered to be in the public domain.

24 April 2023

Insig AI plc

("Insig AI" or the "Company")

 

Trading and operations update, and

Richard Bernstein appointment as Executive Chairman

 

Trading update

Group revenue (unaudited) for its financial year ended 31 March 2023 ("FY-23")
is expected to be at least £2.0 million comprising approximately £1.4m from
the Group's legacy Sport In Schools business and approximately £0.6 million
from the Insig AI business. This represents sales growth of around six per
cent at Sport In Schools and 60 per cent at the Insig AI business.

During the year, Sport in Schools invested £0.1 million in a significant
marketing campaign that later this month culminates with Gareth Southgate
providing a coaching session to pupils coached by Sport in Schools. After this
investment, which has been expensed in full, it is expected that Sport in
Schools will deliver a modest operating profit.

Convertible loan facility

The Company has received the final £0.1 million tranche of Richard
Bernstein's £0.75 million convertible loan facility agreement as announced on
12 September 2022 ("the Loan Agreement.") The previous tranches totalling
£0.65 million were drawn down between October 2022 and January 2023.

Cash at bank as at 31 March 2023 was c.£0.3 million.

Outlook for FY-24

Whilst it is very early in the Group's current financial year, it has started
positively. We have recently been awarded a financial database assignment from
a new client, as well as an annual licencing agreement for our ESG data from
another new client asset manager.

We are forecasting further sales growth for the Insig AI business, with
revenue of not less than £1.4 million in FY-24. This is expected to come from
follow-on contracts from existing clients, additional new client wins and
recurring revenues from strategic partnerships. We have also recently been
tasked by a client to deliver a high-volume Cloud based automated solution for
client settlements. In addition, we are optimistic of building substantial and
sustainable revenues following the commercialisation of AB CarVal's ESG
Scoring Tools.

Furthermore, we are having encouraging discussions, including proof of
concepts, where our ESG Disclosure tool and underpinning ESG disclosure
database can be used to undertake ESG risk assurance, which is becoming an
increasingly important part of the corporate audit process.

The board remains of the view that subject to some further business wins, the
Group should achieve operational profitability in its Q2 (ending 30 September
2023). The board remains optimistic that it will achieve operating
profitability in FY-24.

With recent world events, investment markets are recalibrating how ESG
categorisation for investment funds should be treated. Regardless, we are
confident that our ESG Disclosure tools will be used in the future to help
investors and regulators identify possible greenwashing in corporate
disclosures.

Data and technology collaboration with the Financial Conduct Authority ("FCA")

Insig AI is proud to announce that it will be providing data and software
platform to the FCA's 2023 TechSprint, known as the Global Financial
Innovation Network's (GFIN) Greenwashing TechSprint. The GFIN Greenwashing
TechSprint will bring together 13 international regulators and multiple
participants in each jurisdiction, including innovative tech firms and teams
from large consultancies.

The goal of the project is to develop a tool or solution that can help
regulators tackle or mitigate the risks of greenwashing in financial services
across the globe. The project will focus on how technology, including AI and
Machine Learning, can enable regulators and supervisors to verify that
ESG-related product claims to retail consumers are accurate and complete and
how technology can help monitor, collate and identify examples of greenwashing
from financial services firms' websites, social media platforms, and other
documentation or data which can also be shared across jurisdictions.

Insig AI will provide its data and technology platform for onboarding of
partners and participants of the GFIN Greenwashing TechSprint. The core data
set will be Insig AI's database of pdf and machine-readable corporate
financial and ESG documents for approximately 4,000 companies, with entity
mapping and sentence-level classification against 15 ESG issues.

Participants will have access to Insig AI's technology via the ESG Research
Tool app, which combines machine learning, Natural Language Processing and
Elasticsearch capability for efficient document interrogation and comparison
across the database of reports. Insig AI will facilitate the collection,
tagging and addition of new corporate documents into the database if required
by participants.

Further details are contained in Insig AI's RNS announcement "Insig AI Data
and Technology Collaboration with the FCA" released at 07.01 a.m. on 24 April
2023.

Successful equity funding

The Company is pleased to announce that it has completed an equity
subscription raising £0.9 million at 17p per share, being the closing price
on 20 April 2023. £0.45 million of these funds are from a new institutional
investor. Insig AI Chairman, Richard Bernstein, also subscribed for £0.15
million. It is intended that funds will be utilised to invest in sales and
marketing as well as for working capital purposes. Given the board's
expectations for revenues and profitability, it is expected that save for
potential strategic partnership or corporate opportunities, the Group will not
need to raise any further equity for working capital purposes in the short to
medium term.

The newly subscribed for shares will be issued from Treasury, from shares
gifted to the Company in December 2022 by founders Steve Cracknell and Warren
Pearson, Chief Product Officer and Chief Technology Officer.  One-third of
these shares will be issued immediately with the balance being issued on 23
June 2023.

Further details are contained in Insig AI's RNS announcement "Equity
subscription" released at 07.02 a.m. on 24 April 2023.

CarVal partnership

In February 2022, the Company announced a landmark agreement with CarVal
Investors, L.P. ("CarVal") to develop and launch a new line of high yield
("HY") and investment grade ("IG") ESG scoring tools to be used by CarVal to
optimise HY and/or IG portfolios based on ESG considerations. In April, these
scoring tools were successfully delivered. As previously stated, our share of
fees is based on CarVal's assets under management ("AUM") raised in connection
with these HY and/or IG focused investment pools and that we anticipate that
as CarVal secures mandates, our fees will increase commensurably and continue
for several years.

In July 2022, CarVal was acquired by Alliance Bernstein, which we hope will
provide further opportunities.

We are pleased to report that over the last nine months, we have worked very
closely with AB CarVal on refining the ESG scoring tools. We believe that
these tools are now ready for commercialisation. As a result, in the coming
months, we look forward to being able to provide updates on our returns from
this investment.

Commenting, John Withrow, Principal, High Yield, AB CarVal said: "I'm pleased
with how Insig AI's team has worked steadfastly with us over many months to
deliver what we believe to be a market-leading product."

Board composition

The Board is pleased to announce that Richard Bernstein, currently
non-Executive Insig AI Chairman, has agreed to become Executive Chairman. This
will be effective from 1 June 2023.

Investor Day

The Company will be hosting an investor meeting at 11.00 a.m. on 27 April 2023
at The City of London Club to demonstrate how Generative AI is applied to its
datasets.

Commenting, Colm McVeigh, Chief Executive said: "We have previously spoken
about the nascent nature of the ESG market. However over time, we will see the
exclusion of greenwashing being rigorously policed by regulators and financial
products with transparent ESG credentials. Insig AI will be extremely well
placed from our judicious investments, ahead of the market yielding
significant results. I am also mindful that in a bear market for asset
managers, it is all too easy for many to defer investment. However, for those
who see that now is the right time to apply advanced technologies to underpin
a step change in their business to identify market trading opportunities,
reduce risk and to better protect their investors, we know how our team can
deliver positive, high impact benefits for our customers."

We are using our machine learning and data science optimisation capabilities
to drive better performance outcomes, reducing risk and improved decision
making. Through partnerships, we intend to significantly broaden our user base
and translate this into increasing revenues and profits. I am also pleased
that this successful equity investment will enable us to direct additional
resources into increasing our pipeline of sales opportunities. I am also
delighted with our collaboration with the FCA."

 

For further information, please visit www.insg.ai or contact:

 Insig AI plc

 Richard Bernstein (chairman)                      richard.bernstein@insg.ai

 Colm McVeigh (CEO)                                colin.mcveigh@insg.ai
 Zeus (Nominated Adviser & Broker)                 +44 (0)20 3829 5000

 David Foreman / James Hornigold / Danny Philips

 

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