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Catenae Innovation – interims not good… but it’s management and strategic change that matters - BUY

By HotStockRockets | Wednesday 4 July 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Catenae Innovation (CTEA) has announced its results for the six months ended 31st March 2018 showing a loss on limited revenue, though also emphasising “the group has been through a transformation both in terms of the group's management and also in its strategic focus... 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”

Strategically, we have recently seen a first agreement for a social media analytics, digital asset registration, transaction and payment tracking joint venture (Trust in Media) delivered ahead of schedule, followed by proof-of-concept agreements for Trust in Media and Catenae’s ‘OnSide Pro’ solution (to manage a number of coaching sessions and community engagements”). The company emphasising “revenues received from both new and legacy product areas”.

In terms of management, the latter announcement also included Tony Sanders becoming permanent CEO and experienced technologist (including being the Technical Delivery Manager for BBC’s iPlayer project), Alan Simpson, joining as Chief Technology Officer. It is emphasised “greatly reduced costs through streamlining and restructuring of the business”.

The loss was reduced to £0.55 million, from a comparative £1.1 million – though period-end cash was only £0.13 million, with £0.17 million of total assets comparing to £0.99 million of liabilities. As such, “the company continues to carefully manage its working capital position and is currently considering a number of funding opportunities”.

However, we continue to consider there exciting potential from, with the shares at 0.12p, a current sub £2.5 million market cap – both on the profit potential from the restructured businesses and more speculatively (e.g. the shares have previously touched 0.7p+ on a blockchain spike). We have confidence in Sanders and, although there are funding issues we expect them to be resolved soon. At up to 0.15p BUY.

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