Trading and operations update
The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (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:
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Insig AI plc Richard Bernstein (chairman) Colm McVeigh (CEO) |
richard.bernstein@insg.ai colin.mcveigh@insg.ai |
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Zeus (Nominated Adviser & Broker) David Foreman / James Hornigold / Danny Philips |
+44 (0)20 3829 5000
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