TIDMINSG
RNS Number : 3670F
Insig AI Plc
21 March 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. It forms part of United Kingdom
domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement, this inside information
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21 March 2022
Insig AI plc
("Insig AI" or the "Company")
Trading and operations update,
indicative terms for GBP1.0m Convertible Loan Facility agreed
and
Board composition update
Insig AI plc (AIM: INSG), the data science and machine learning
solutions company serving the asset management industry, is pleased
to announce the launch of a New Funds division and provide a wider
operations update, a trading update for the financial year ending
31 March 2022 ("FY-22")and to advise that it has agreed indicative
terms for a GBP1.0m convertible loan facility to be provided by
Richard Bernstein, non-executive chairman of the Company
("Convertible Loan").
Trading update
Group revenue (unaudited) for FY-22 is expected to be not less
than GBP1.8m comprising approximately GBP1.4m from the Group's
legacy Sport In Schools business and GBP0.4m from Insig AI
businesses. Cash as at 31 January 2022 was GBP1.1m and is expected
to be approximately GBP0.5m as at 31 March 2022. In addition, an
R&D tax refund of approximately GBP0.8m is expected once the
Company has published its audited accounts for FY-22.
The focus of the Group during the last several months has been
on both broadening its universe of data and on securing the
recently announced CarVal partnership. The Board believes that such
partnership agreements can deliver significant and growing revenue
streams in the medium term. During December 2021, the Board decided
to secure a long-term revenue agreement based on assets under
management at the expense of material revenues that could have been
recognised in the current quarter.
The Board recognises that further working capital is required to
support the Group as it commercialises its suite of AI/machine
learning and data tools. Furthermore, given recent progress, the
Board believes that as well as satisfying working capital
requirements, there should be a greater focus on sales and
marketing. Accordingly, the Group has agreed indicative terms for
the Convertible Loan, further details of which are set out in the
section below.
Should the Company enter into a legally binding agreement with
regards to the Convertible Loan, it will be deemed a Related Party
Transaction under AIM Rule 13. As matters currently stand, the
Board (except for Richard Bernstein who would be involved in the
proposed transaction) consider that the proposed transaction would
be fair and reasonable insofar as the Company's shareholders are
concerned.
Operations update
The omicron variant of Covid and more recently, the war in
Ukraine, has understandably resulted in fund managers and other
decision makers prioritising more immediate needs of their own
businesses. This has inevitably caused some disruption and delays
in closing some smaller prospects. In spite of these challenges,
the notable success in securing the CarVal High Yield ESG
partnership agreement and the signing of a number of smaller
contracts demonstrates that we offer compelling solutions to our
target investment management market. The pipeline of opportunities
continues to develop across the Group's offerings of ESG
disclosures research tool, data science bespoke solutions and
alternative dataset for investment managers.
Establishment of New Funds Launch division
In September 2021, Insig AI announced that it had secured the
ability and expertise to partner with asset managers as they launch
new funds across the ESG spectrum. We also stated that these
partnership opportunities provide the Group with potential revenues
of a magnitude several times more than the traditional licence sale
to an asset manager and that the business was directing its focus
principally to this source of revenue and that converting these
large opportunities would be the key driver to the Group's
longer-term success.
On 25 February 2022, Insig AI announced that it had entered into
a long-term services agreement to develop and launch a new line of
high yield and investment grade ESG scoring tools with CarVal. The
agreement entitled Insig AI to fees based on CarVal's assets under
management ("AUM").
Insig AI notes and welcomes last week's announcement that CarVal
has been acquired by Alliance Bernstein. We believe that this
transaction will not only accelerate the timing and quantum of fees
earned by Insig AI but it should also allow us to access other
funds within the combined entity.
Furthermore, Insig AI is pleased to announce that it is in early
stage discussions with a UK based investment manager with AUM in
excess of GBP40 billion, with the objective of launching an ESG
Global Opportunities Equities Fund.
These discussions, together with the recent CarVal agreement
have given Insig AI confidence to establish a New Funds Launch
division. Based on our success in securing the partnership with
CarVal, we now have visibility that the scale of these new funds
can provide Insig AI with recurring revenues of several million
pounds per annum.
Convertible Loan facility
The Board has agreed the Convertible Loan in principle. Should
the Board proceed and formally enter into the Convertible Loan
agreement, the funds will provide the Group with sufficient working
capital to enable the Group to convert some of the current key
customer engagements and potential consultancy projects and
increase its sales and marketing resource such that there is
continued improvement in revenue and revenue visibility. This would
allow for another financing, likely an equity financing. It should
be noted however, that the Convertible Loan amount will not meet
the Group's total working capital requirement as set out in its
current business plan, and is considered by the Board to be of a
suitable amount and period that will enable further operational
progress to be made.
Sport In Schools
Separately, following the easing of lock down restrictions, the
Sport In Schools business has recovered to broadly pre-pandemic
levels. The Board has received an expression of interest for the
business which is being actively considered. Further announcements
will be made on this as appropriate in due course.
Convertible loan facility
The Group has agreed indicative terms for the Convertible Loan,
and more specifically that:
- the loan facility is unsecured and will be repayable on or before 31 December 2022
- interest will be accrued from the date monies are drawn down
under the facility at a rate of 5.0 per cent. and repayable at the
end of the term
- the loan will be redeemable or convertible purely at the
discretion of Richard Bernstein, at the earlier of the completion
of an equity placing by the Company raising not less than GBP2.0m
gross proceeds; and 31 December 2022
- If converted, the conversion price will be the higher of 35.0
pence per ordinary share of the Company and the prevailing share
price at the date of conversion. A conversion price of 35.0 pence
per ordinary share represents a premium of approximately 35 per
cent. to the closing share price of 26.0 pence on 18 March
2022.
Revenue forecasts
With the adoption of our new commercial strategy, Insig AI's
revised business plan forecasts revenues of GBP2.4 million for the
year to March 2023, rising to GBP6.2 million in the year to March
2024, to GBP12.5 million in the year to March 2025 and to GBP19.0
million in the year to March 2026. An estimate of the CarVal
revenues are the only revenues included for the New Funds Launch
division. These forecasts exclude the Sport in Schools
business.
Board composition
The Board is pleased to announce that it is in advanced
discussions with highly qualified and experienced candidates with
the intention of making up to two non-executive director
appointments.
Richard Bernstein, Insig AI Chairman, said: "Since joining the
Board last August, the business has been transformed into a
commercially focussed data solutions provider. It is unsurprising
that the transition of the original Insight Capital business from a
consultancy, project-based solutions provider to a SaaS focused
provider of a suite of AI and machine learning solutions has taken
longer that envisaged. Looking forward, the CarVal partnership
together with the recent selection within PWC FinTech programme are
tangible milestones that should lead to significant revenue and
partnership opportunities. Insig AI's product offerings are ideally
positioned for its evolving and fast-growing markets. That is why I
am pleased to be able to offer this funding facility that should
provide the time the Group needs to capitalise on its
solutions."
Steve Cracknell, Insig AI CEO, said "We have achieved some
significant commercial milestones in the last few months. However,
whilst these will undoubtedly underpin our medium and longer term
growth ambitions, we are also focused on securing annuity revenue
streams and other contracts to ensure we move successfully through
FY-23 and beyond through to break even and of course, sustained
cash generation thereafter."
"In addition, and on behalf of the Board, I wish to thank
Richard Bernstein for his continued support for Insig AI, both in
terms of his valued business expertise but for the offering of this
additional convertible loan facility."
Colm McVeigh, Insig AI CCO, said: "The success of Insig AI's
commercial strategy will be a combination of building annuity
revenue streams by winning multiple long-term SaaS contracts for
our ESG disclosures research tool and alternative datasets
products, alongside much larger partnering arrangements with
clients like CarVal. Whilst commercial progress has been made in
the last months, we have not converted sufficient current pipeline
to sales as the attention of our customers has inevitably been
focused on recent geopolitical events. However, in just the short
time since I joined the Board in December, my assessment is that
Insig AI offers strong and unique propositions capable of
transforming how investment managers bring competitively
differentiated ESG investment products to market and how they use
AI technology to optimise their investment portfolios for
out-performance. With this in mind, I believe that the enhanced
focus on business development and sales execution will deliver a
rapid acceleration in this area in the coming 12 months and
beyond."
Insig AI Plc Via SEC Newgate
Steve Cracknell, CEO
Colm McVeigh, CCO
Zeus Capital Limited (Nominated Adviser
& Broker)
David Foreman / James Hornigold / Danny
Philips +44 (0) 203 829 5000
SEC Newgate (Financial PR) +44 (0) 7540 106 366
Robin Tozer / Richard Bicknell insigai@secnewgate.co.uk
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