30 June 2021

Catenae Innovation PLC

("Catenae", the "Company" or the "Group")

Final Results

Catenae Innovation PLC (AIM: CTEA), the AIM quoted provider of digital media and technology, announces its full year results for the twelve months ended 30 September 2020.

Financial overview

• Net loss of £769,186 (2019: £825,230), with revenues of £14,948¹ (2019: £102,549).
• Statement of financial position at the year-end shows net assets of £502,427 (2019 net liabilities: £727,077).
• On 26 March 2020, the Company announced it had agreed a loan facility of £150,000 from Brian Thompson, which was fully repaid on 6 July 2020.

Operational overview

• Developed the Cov-ID app within a consortium of companies led by Z/Yen Group Limited to offer a COVID-19 status verification passport.
• Entered into a partnership agreement with Newcastle Premier Health Limited ("NPH"), an occupational health and wellness business based in the North East of England, to pilot the Cov-ID app.
• Enhanced the Cov-ID app by developing Onsite ID, an advanced GDPR-compliant multi-document digital wallet for the validation of identity, qualifications and access across a range of sectors.
• Signed Afrik-ID strategic market analysis agreement for Onsite ID in SADC (South Africa Development Community) region.
• Resignation of Kevin Everett as Interim Non-Executive Chairman.
• Appointment of Brian Thompson and John Farthing to the Board as Non-Executive Chairman and Chief Financial Officer respectively and appointment of Guy Meyer as Chief Executive Officer on a permanent basis.
• Appointment of Brandon Hill Capital Limited as sole corporate broker.

Guy Meyer, Chief Executive Officer of Catenae, said: 

"COVID-19 presented the Group with a number of challenges given that Catenae's principal trading activity prior to the pandemic involved providing services to clients in the facilities management and local government sectors.

"That being said, the Company responded quickly and efficiently to the situation, acknowledging that its distributed ledger technology lent itself to helping organisations securely record employees' COVID-19 test results. Our proactive involvement in the consortium led by Z/Yen Group and our partnership with NPH were testament to our commitment to stay at the forefront of our industry and expand our network.

"Despite a number of leads and paid-for trials during the period under review, unfortunately the uptake of our product did not meet the Board's anticipations as the marketplace was largely defined by government lockdown restrictions. However, all our product development was designed with multi-purpose applications in mind so the know-how and intellectual property that was gained is retained in the business."

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Notes to Editors:

About Catenae Innovation PLC

Catenae Innovation is an AIM quoted provider of digital media and technology services. Catenae use the power of blockchain to deliver solutions where its people-centric technology enables trust and certainty allowing organisations to gain better control over their operations, manage staff and safely welcome customers.

www.catenaeinnovation.com

Chairman's Statement

Business and performance review

Catenae showed considerable resilience in what was a difficult trading year, and I would like to thank our team for their unwavering dedication and support to the business and in adapting to this 'new normal'.

Following the successful corporate restructuring and business stabilisation process carried out by the Board in 2019, the year started positively as the Company focused on innovating its products and exploring new opportunities for growth. Catenae made a number of inroads into new sectors and markets during its development of the Cov-ID app as well as Onsite ID.

While we acknowledge the commercial uptake of our product set was disappointing, the Company managed its finances prudently to ensure business continuity, with a subscription, conversion of existing liabilities and issue of warrants in January 2020 and a further fundraise in April 2020 resulting in an improved balance sheet.

Board changes

On 24 April 2020, Kevin Everett stepped down from the Board as Interim Non-Executive Chairman and was replaced by Brian Thompson as Non-Executive Chairman. John Farthing, the Company's Chief Financial Officer, also joined the Board on 24 April 2020. Guy Meyer was appointed Chief Executive Officer on a permanent basis on 20 July 2020.

Financial overview

The Company made a net loss for the year of £769,186 (2019: £825,230). Revenues for the year were £14,948¹ (2019: £102,549).

The Company has a statement of financial position at the year-end showing net assets of £502,427 (2019 net liabilities: £727,077).

On 26 March 2020, the Company announced it had agreed a loan facility of £150,000 from Brian Thompson, which was fully repaid on 6 July 2020.

Working capital and fund raisings  

During the year, the Company issued 188,855,491 new ordinary shares for a total gross consideration of £2,061,690 of which £1,497,455 was received in cash and £564,235 to settle liabilities.

COVID-19

At the end of January 2020, the Company ceased to rent offices, with all employees working remotely. Business meetings were successfully held using video conferencing platforms and Catenae's technical solutions were used effectively with customers and partners.

Brian Thompson

Chairman

¹ Following the audit the Board became aware of an error in the unaudited half year report for the 6 month period to 31 March 2020, notified on 30 June 2020, turnover was misstated as £19,892, the correct figure was £4,521.

Statement of comprehensive income for the year ended 30 September 2020

Statement of financial position at 30 September 2020

Statement of cash flows for the year ended 30 September 2020

During the year £564,235 of trade and other payables and loans were converted into equity in non-cash transactions.

Statement of changes in equity for the year ended 30 September 2020

The other reserves relate to the merger reserve, share reserve and the capital redemption reserve.

The principal activity of Catenae Innovation Plc is the provision of multimedia and technology solutions.

Catenae Innovation Plc is incorporated in the United Kingdom with registration number 04689130. Catenae Innovation Plc is domiciled in the United Kingdom and has its registered office at 27 Old Gloucester Street, London WC1N 2AX. The principal place of business for the Company is 26-27 Lansdowne Terrace, Gosforth, Newcastle Upon Tyne, NE3 1HP.

Catenae Innovation Plc is a public limited company, limited by shares and its shares are quoted on the AIM market of the London Stock Exchange.

Catenae Innovation Plc's financial statements are presented in Pounds Sterling.

1)    Principal accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the period presented unless otherwise stated.               

Statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs) and International Financial Reporting Interpretations Committee (IFRIC) interpretations (collectively 'IFRSs') as adopted for use in the European Union and as issued by the International Accounting Standards Board and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

Going concern

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement and below. The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the financial statements. In addition, note 16 to the financial statements includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and exposures to credit risk and liquidity risk.

The net asset position as at 30 September 2020, being the Company's financial year-end, was £502,427. Subsequent to the reporting date, the Board has been able to agree additional funding in the form of further share issues raising £1.0m in cash.

The Directors note that the World Health Organisation declared a pandemic relating to COVID-19 on 11 March 2020, and social distancing measures were introduced in the UK during March 2020. The Directors have assessed the impact of incorporating additional COVID-19 risk factors in the Going Concern assessment over a period of 18 months after the signing of these financial statements.

Key assumptions considered by management when assessing going concern include adjusting management best estimate of forecasted performance for factors including the length and extent of current lockdown restrictions ease and utilisation of relevant government support schemes. These have been estimated for their respective impacts on the Company's revenues, fixed and variable cost and resultant expected cash flow requirements.

The Company's forecasts and projections, taking into account reasonable estimate of a possible downturn in trading performance arising from the COVID-19 outbreak, show that the Company has sufficient financial resources for the going concern period. The Company does not believe that the COVID-19 outbreak represents a material uncertainty about the entity's ability to continue as a going concern. Accordingly, the Directors have adopted the going concern basis in preparing these consolidated financial statements.

Revenue recognition

The Company provides software licencing and support services.

The weighting of these and pricing of these services (which drives the revenue recognition) depends on the service level required by the client, and on the commercial imperatives and pricing sensitivities of the client.

The contractual performance obligations will typically be embedded in an agreement with the client.

Where that agreement is detailed, the revenue recognition will follow the allocation of fees and revenues against the completion of the agreed performance milestones in the accounting period.

Where the agreement is not specific, the revenue recognition will be in proportion to the completion of performance milestones in the relevant accounting period against the internal costings prepared in advance for each project.

(i) Software licencing contracts

Revenue from software licencing contracts is recognised when the customer takes possession of and accepts the software licence products which is the point in time when the customer has the ability to direct the use of the product and obtain substantially all of the benefits of the products.

(ii) Ongoing support and maintenance contracts

Revenue from ongoing support and maintenance contracts is recognised over the contractual term when the customer simultaneously receives and consumes the benefits provided by the Company's performance, as the Company performs. The Company recognises contract liabilities for any revenue not yet provided to the customer as of the year end.

Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated intangible asset arising from the Company's development activity is recognised only if all the following conditions are met:

•     an asset is created that can be identified (such as a website);

•     it is probable that the asset created will generate future economic benefits: and,

•     the development cost of the asset can be measured reliably.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

Intangible assets

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their estimated useful economic lives. The amortisation expense is included within the other administrative expenses line of the statement of comprehensive income.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights.

Impairment of non-current assets

For the purposes of assessing impairment, assets are grouped into separately identifiable cash-generating units. At the end of each reporting period, the Company reviews the carrying amounts of its non-current assets, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

An impairment loss is recognised for the amount by which the assets or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use based on an internal discounted cash flow evaluation.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and on demand deposits.

Equity

Equity comprises the following:

·    Share capital represents the nominal value of issued ordinary shares and deferred shares.

·    Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

·    Shares to be issued reserve represents cash received for the purchase of shares yet to be issued at the period end and for creditors who have agreed to convert their debt to shares yet to be issued at the period end.

·    Merger reserve represents the excess over nominal value of the fair value of consideration received for equity shares issued on acquisition of subsidiaries, net of expenses of the share issue.

·    Share reserve represents shares held in treasury at nominal value following the conclusion of the defaulting shares from October 2016.

·    Capital redemption reserve represents the nominal value of shares repurchased by the Company.

·    Retained earnings represent retained profits and losses.

Deferred taxation

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

Financial assets

On initial recognition, financial assets are classified as either financial assets at fair value through the statement of profit or loss, held-to-maturity investments, loans and receivables financial assets, or available-for-sale financial assets, as appropriate.

Loans and receivables

The Company classifies all its financial assets as trade and other receivables. The classification depends on the purpose for which the financial assets were acquired.

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

For trade receivables and other receivables due in less than 12 months, the Company applies the simplified approach in calculating Expected Credit Losses ("ECL's"), as permitted by IFRS 9. Therefore, the Company does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date. For any other financial assets carried at amortised cost (which are due in more than 12 months), the ECL is based on the 12-month ECL. The 12-month ECL is the proportion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company's historical experience and informed credit assessment including forward-looking information.

Financial liabilities

Financial liabilities are recognised when, and only when, the Company becomes a party to the contracts which give rise to them and are classified as financial liabilities at fair value through the profit and loss or loans and payables as appropriate.  The Company's loans and payable comprise trade and other payables.

When financial liabilities are recognised initially, they are measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through income statement. 

Fair value through the income statement category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges. There were no financial liabilities classified under this category.

The Company determines the classification of its financial liabilities at initial recognition and re-evaluate the designation at each financial year end.

A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires.

When an existing financial liability is replaced by another from the same party on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.  

Equity instruments

Equity instruments issued by the Company are recorded as the proceeds received, net of direct costs.

Share-based payments

When share options and warrants are awarded, the fair value of the options and warrants at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market conditions are taken into account by adjusting the number of equity instruments expected to vest at each end of reporting period, so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options and warrants that eventually vest.

Market conditions are factored into the fair value of the options and warrants granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options and warrants are modified before they vest,  the increase in fair value of the options and warrants, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the full cost of services provided is  recognised  as  a  current  liability  and  as  a  charge  in  the  statement of comprehensive income. When shares are issued to settle the obligation, the liability is extinguished and the share issue is reflected in equity as an issue of share capital.

Upon exercise of share options and warrants, the proceeds received net of attributable transaction costs are credited to share capital, and where appropriate share premium.

New and amended Standards and Interpretations adopted by the Company

There were no new standards and interpretations to published standards adopted during the year which have had a significant impact on the company's accounting policies.

New and amended Standards and Interpretations issued but not effective for the financial year beginning 1 October 2019

At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective:

IFRS 17 "Insurance Contracts", effective date 1 January 2023 applies a model that combines a current balance sheet measurement of insurance contracts with recognition of profit over the period that services are provided.

The impact of the above standards on the financial statements is expected to be insignificant. The effect of all other new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material. The Directors will continue to monitor the effect of this and should the effect become material, more detailed notes will be provided.

2)    Loss per share

The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. 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 1,621,911 share options and 46,154,769 share warrants outstanding at the year-end (2019: 1,621,911 and 10,277,647). However, the figures for 2020 and 2019 have not been adjusted to reflect conversion of these share options, as the effects would be anti- dilutive. The 2019 comparatives have been adjusted for the subdivision of shares in the current period, as disclosed in Note 17.

3)    Posting of Accounts

The Reports and Accounts of Catenae Innovation Plc have been posted to shareholders.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation. The person who arranged for release of this announcement on behalf of the Company was Guy Meyer, Chief Executive Officer of the Company and the Directors of the Company are responsible for the release of this announcement.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

-Ends-