CATENAE INNOVATION PLC
("Catenae" or the "Company")
HALF YEARLY REPORT
Catenae Innovation Plc ("Catenae" or the "Company"), the AIM quoted (AIM: CTEA) provider of digital media and technology, announces its half yearly report for the six months ended 31 March 2018.
Highlights
- Change of name to Catenae Innovation Plc
- Strategy revised to focus on distributed ledger (DLT/MDL) and blockchain technology based services to the digital media and fintech markets
- Greatly reduced costs through streamlining and restructuring of the business
- Signed Joint Venture with Martin Heath to form Trust in Media
- Post period-end
- Trust in Media signs first agreement for Fanbase service with its associated revenues
- Memorandum of Understanding signed for the acquisition of Tribe of Noise
- Trust in Media creates and launches first blockchain product to the music industry
- Proof of concept agreement signed for Trust in Media's blockchain solution
- Proof of concept agreement signed by Aston Villa for OnsidePro
- Revenues received from both new and legacy product areas
Tony Sanders, Chief Executive, said:
"The Group has been through a transformation both in terms of the Group's management and also in its strategic focus. We have been working on streamlining the various business units and are pleased to be able to show these results through the 50% reduction in costs compared to the same period last year. The Group is now well positioned to focus on executing the new strategy, building revenues from the products and services now available to the Group, particularly those utilising blockchain technology in the digital media and fintech markets."
For further information:
Catenae Innovation Plc
Tony Sanders Tel: 020 7929 7826
Cairn Financial Advisers LLP, Nominated Adviser
Liam Murray / Jo Turner Tel: 020 7213 0880
Cornhill Capital, Broker
Dan Gee Tel: 020 3700 2500
CHIEF EXECUTIVE'S STATEMENT
Since September 2017, the Group has been through a transformation both in terms of the Group's management and also in its strategic focus. The Board has been working on streamlining the various business units as can be seen by the 50% reduction in costs compared to the same period last year. The Group is now well positioned to focus on creating revenues from the products and services available to the Group, particularly those utilising blockchain technology in the digital media and fintech markets.
Change of Name
As part of the transformation, our Shareholders voted in March 2018 to change the name of the Company from Milestone Group Plc to Catenae Innovation Plc. The name change marks the beginning of a new era for the Group. It takes the Latin for 'Chain' into the modern world with links to blockchain as well as the vision of the Group to chain together synergistic subsidiary businesses for the mutual benefit of all.
Trust in Media
The first synergeous business was created in March 2018 with the Company signing a joint venture agreement with Martin Heath and Seed Media to create Trust in Media ("TiM"). Initially focusing on the music industry, TiM uses GDPR compliant social media analytics, digital asset registration, transaction and payment tracking solutions, utilising both private and public blockchain technology.
Post period-end, in June 2018, TiM launched its Digital Asset Registration and Transactional Tracking system; the first phase of its distributed ledger based application (DLT / blockchain). This product is now undergoing proof of concept with a leading provider of rights included music. This will allow the provider to record digital asset rights information for individual music tracks and capture the playout details of those assets when they are streamed or downloaded. Whilst initially focussed on the music sector, the ability to register and track digital assets can be applied across many sectors including images, moving images, books etc, providing significant opportunity. In terms of the music industry alone, the 2017 Annual Report for the Performing Rights Society ("PRS") highlights as a principal risk the uncertainty of the ongoing administration costs due to the growing trend towards digital music (online up 52.7%), currently these are not easily validated by the Performing Rights Organisations (PROs). In the year to 31st December 2017, the PRS show revenues of £717 million and administration and finance costs of around 13%. A blockchain driven solution, such as the one created by TiM, could significantly reduce these costs by providing an automated audited breakdown of digital playout. Assuming transactional fees for TiM's service of only 0.5%, it would be a significant revenue opportunity for the Group, especially when we take into account that other PROs around the world have similar issues. According to ASCAP (Ascap.com), the worldwide market for royalty payments is US$5 billion.
Tribe of Noise
Post period-end, in May 2018, the Company made a step towards its second synergeous business by signing a Memorandum of Understanding to acquire 51% of Tribe of Noise ("ToN"). Award winning ToN is a leading provider of quality, direct licensed music and fair remuneration models for a growing community of 30,000 musicians globally. ToN's product offering is complimentary to those being developed by TiM and provides a ready built audience and cross-selling opportunities for both entities.
OnSide / OnGuard
Post period-end, the Company was pleased to sign a proof of concept agreement with Aston Villa Club for the OnSide Pro solution. This product will be used to manage a number of coaching sessions and community engagements.
Management Team
One important element in the execution of the revised strategy was to ensure we had the right management team to ensure the appropriate skills sets were in place. The Company has made the following appointments;
- Martin Heath of Trust in Media Ltd - Music Industry Specialist - March 2018
Post period appointments:
- Alan Simpson CTO Catenae Innovation Plc - Technology specialist -May 2018
- Tony Sanders CEO Catenae Innovation Plc, previously appointed Interim CEO - May 2018
As announced on 18 May 2018, it is anticipated that Hessel von Oorshott of the proposed acquisition of Tribe of Noise will become a member of the management team when the acquisition is finalised.
Funding
During the period, the Company continued to raise funds through the issue of shares to support the development of the business. The Company raised £295,000 cash and settled £30,000 of services through the issue of shares. The Company continues to carefully manage its working capital position and is currently considering a number of funding opportunities. Further announcements will be made in due course.
Outlook
The Group is entering exciting times as the strategy for bringing together a portfolio of synergeous businesses for the benefit of all takes shape and the business moves from planning and development into the execution phase.
Tony Sanders
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Unaudited six months ended 31 March 2018 £ | Unaudited six months ended 31 March 2017 £ | Audited year ended 30 Sept 2017 £ | |
| Revenue | 10,372 | 19,161 | 24,640 |
| Cost of sales | - | (1,964) | (1,964) |
| Gross profit | 10,372 | 17,197 | 22,676 |
| Realised gain on disposal | - | - | 1 |
| Administrative expenses | (557,071) | (1,139,005) | (2,261,107) |
| (557,071) | (1,139,005) | (2,261,106) | |
| Loss from operations | (546,699) | (1,121,808) | (2,238,430) |
| Net Finance income/(expense) | (2,121) | 9 | (2,961) |
| Loss before taxation | (548,820) | (1,121,799) | (2,241,391) |
| Taxation charge | - | - | - |
| Loss from continuing operations | (548,820) | (1,121,799) | (2,241,391) |
| (Loss) / profit from discontinuing operations net of tax | - | (11,137) | (16,133) |
| Total comprehensive loss for the year | (548,820) | (1,132,936) | (2,257,524) |
| Attributable to equity shareholders of the parent | (548,820) | (1,132,936) | (2,257,524) |
| Total basic and diluted loss per share | (0.05) | (0.12) | (0.20) |
There were no comprehensive income and expense items (2017: nil) other than those reflected in the above income statement. All results relate to continuing activities.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Note | Unaudited six months ended 31 March 2018 £ | Unaudited six months ended 31 March 2017 £ | Audited year ended 30 Sept 2017 £ | |
| Non-current assets | ||||
| Intangible fixed assets | 11 | 1 | 1 | |
| 11 | 1 | 1 | ||
| Current assets | | |||
| Trade and other receivables | 42,438 | 101,871 | 77,137 | |
| Cash and cash equivalents | 126,213 | 33,794 | 749,972 | |
| 168,651 | 135,665 | 827,109 | ||
| Current liabilities | ||||
| Trade and other payables | (831,748) | (1,346,944) | (1,179,967) | |
| Interest-bearing loans | (158,300) | (163,027) | (293,027) | |
| (990,048) | (1,509,971) | (1,472,994) | ||
| Net Liabilities | (821,397) | (1,374,306) | (645,885) | |
| Capital and reserves attributable to equity holders of the company | ||||
| Share capital | 4 | 1,925,435 | 1,082,141 | 1,778,768 |
| Share premium account | 18,124,709 | 16,831,053 | 17,954,376 | |
| Shares to be issued | 50,000 | 29,695 | - | |
| Share reserve | (1,250,000) | (1,250,000) | (1,250,000) | |
| Merger reserve | 11,119,585 | 11,119,585 | 11,119,585 | |
| Capital Redemption Reserve | 2,732,904 | 2,732,904 | 2,732,904 | |
| Retained losses | (33,524,019) | (31,919,683) | (32,981,517) | |
| Total Equity | (821,386) | (1,374,305) | (645,884) |
CONSOLIDATED STATEMENT OF CASH FLOWS
| Unaudited six months ended 31 March 2018 £ | Unaudited six months ended 31 March 2017 £ | Audited year ended 30 Sept 2017 £ | |
| Loss for the period | (548,820) | (1,132,936) | (2,257,524) |
| Adjustments for: | |||
| Net bank and other interest (income) / charges | 2,121 | 9 | 2,961 |
| Issue of share options / warrant charge | 6,318 | 5,827 | 68,581 |
| Services settled by the issue of shares | 38,000 | 57,126 | 45,326 |
| Net (loss) before changes in working capital | (502,381) | (1,069,974) | (2,140,656) |
| Decrease in trade and other receivables | 34,699 | 85,965 | 110,700 |
| (Decrease) / increase in trade and other payables | (323,437) | 144,997 | (20,793) |
| Cash from operations | (791,119) | (839,012) | (2,050,749) |
| Interest received | 1 | 9 | 14 |
| Interest paid | (1,414) | - | (1,475) |
| Net cash flows from operating activities | (792,532) | (839,003) | (2,052,210) |
| Financing Activities | |||
| Issue of ordinary share capital | 305,000 | 715,335 | 2,516,220 |
| Repayment of loan | (241,227) | (25,000) | (155,000) |
| New loans raised | 105,000 | 54,000 | 312,500 |
| Net cash flows from financing activities | 168,773 | 744,335 | 2,673,720 |
| Net increase / (decrease) in cash | (623,759) | (94,668) | 621,510 |
| Cash and cash equivalents at beginning of period | 749,972 | 128,462 | 128,462 |
| Cash and cash equivalents at end of period | 126,213 | 33,794 | 749,972 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share Capital | Share Premium | Shares to be issued | Other reserves | Retained losses | Total Equity | |
| £ | £ | £ | £ | £ | £ | |
| Balance at 31 March 2017 | 1,082,141 | 16,831,053 | 29,695 | 12,602,489 | (31,919,683) | (1,374,305) |
| Loss for the period | - | - | - | - | (1,124,588) | (1,124,588) |
| Shares issued | 696,627 | 1,123,323 | (29,695) | - | - | 1,790,255 |
| Share options | - | - | - | - | 62,754 | 62,754 |
| Balance at 30 Sept 2017 | 1,778,768 | 17,954,376 | - | 12,602,489 | (32,981,517) | (645,884) |
| Loss for the period | - | - | - | (548,820) | (548,820) | |
| Cash received in advance of share issue | - | - | 50,000 | - | - | 50,000 |
| Shares issued | 146,667 | 170,333 | - | - | - | 317,000 |
| Share options | - | - | - | - | 6,318 | 6,318 |
| Balance at 31 March 2018 | 1,925,435 | 18,124,709 | 50,000 | 12,602,489 | (33,524,019) | (821,386) |
NOTES TO THE HALF YEARLY REPORT
1. General information
The principal activity of Catenae Innovation Plc ("Catenae" or "the Company") and its subsidiaries (together "the Group") is the provision of digital media and technology.
Catenae is the Group's ultimate parent company and is incorporated in the United Kingdom with registration number 4689130. Catenae is domiciled in the United Kingdom and has its registered office at 27 Old Gloucester Street, London WC1N 3AX, and its principal place of business for the Group is 1 Primrose Street, London EC2A 2EX.
Catenae's shares are quoted on the AIM market of the London Stock Exchange.
Catenae's consolidated financial statements are presented in Pounds Sterling (£).
This consolidated financial information has been approved for issue by the Board of Directors on 28th June 2018.
2. Basis of preparation
The financial information in the half yearly report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the half yearly report are those the Group expects to apply in its financial statements for the year ending 30 September 2018 and are unchanged from those disclosed in the Group's Directors' Report and consolidated financial statements for the year ended 30 September 2017.
The financial information for the six months ended 31 March 2018 and the six months ended 31 March 2017 is unaudited and does not constitute the Group's statutory financial statements for those periods. The comparative financial information for the full year ended 30 September 2017 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies.
While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.
Going concern
As stated in the accounts for the year to 30 September 2017, the future business model of the Group is based around the generation of sustainable revenues and profits through strategic partnerships and joint ventures. As described in the Chief Executive's statement, progress has been and continues to be made to develop the Group's activities and associated revenues. However, as also noted in the 30 September 2017 accounts, the Group needs to raise further funds from the placing of shares whilst the revenues and profits from these solutions are fully developed.
During the period the Group has raised funds of £295,000 through the issuing of shares for cash and settled £30,000 of services through the issue of shares. Since the period end further funds of £11,500 have been raised through further share placements for cash and settled £40,000 of services through the issue of shares.
In line with the plans and projections prepared by the Board, the Group's activities continue to build, however in accordance with those plans, in the short term the Group needs to continue to raise funds from a combination of trading and placement of shares to fund its activities.
- Loss per share
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the average weighted number of shares in issue during the period. The calculation of diluted loss per share is based on the basic loss per share, adjusted to allow for the issue of shares and the post tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.
There were 163,213,116 share options and 385,098,130 share warrants outstanding at 31 March 2018 (2017: 174,189,116 and 110,931,460), however the figures have not been adjusted to reflect conversion of these share options as the effects would be anti-dilutive.
| Loss for 6 months to 31 March 2018 £ | Weighted average number of shares | Per share amount (pence) | Loss for 6 months to 31 March 2017 £ | Weighted average number of shares | Per share amount (pence) |
| (548,820) | 1,120,104,463 | (0.05) | (1,132,936) | 975,529,255 | (0.12) |
4. Share Capital
| 31 March 2018 | 30 Sept 2017 | ||||
| Number | £ | Number | £ | ||
| Allotted, called up and fully paid | |||||
| Ordinary shares of 0.1p | 1,925,434,986 | 1,925,435 | 1,778,768,317 | 1,778,768 | |
| 1,925,434,986 | 1,925,435 | 1,778,768,317 | 1,778,768 | ||
On 19 December 2017, the Company issued 30,000,000 ordinary shares at a price of 0.5 pence per share for a cash consideration of £150,000 as a result of warrants being exercised.
On 23 March 2018, the Company issued 96,666,669 ordinary shares at a price of 0.15 pence per share for a cash consideration of £145,000 and 20,000,000 ordinary shares at a price of 0.15 pence per share for the settlement of outstanding trade payables of £30,000.
5. Availability of the Half Yearly Report
Copies of the half yearly report are available to shareholders on the Company's website at www.catenaeinnovation.com and from Catenae's trading address: 1 Primrose Street, London EC2A 2EX.