Interim Results

Source: RNS
RNS Number : 0162U
Catena Group PLC
31 March 2021
 

31 March 2021

Catena Group PLC

("Catena" or the "Company")

 

Interim Results

 

Catena Group plc ("Catena" or the "Company"), the AIM listed holding company, is pleased to announce its interim results for the 12 months ended 31 December 2020.

 

Chairman's Statement and Chief Executive's Review

We are pleased to provide these interim results and update for the 12 month-period ended 31 December 2020. These results are being released in an interim format due to the Company's decision to change its accounting reference date from 31 December to 31 March. The Company will release audited results for the 15 months ending 31 March 2021 by 30 September 2021.

 

In January 2020, the Company announced its new strategic focus on artificial intelligence and machine learning. In the last year, significant progress has been made to implement this strategy, with an initial investment in Insight Capital Partners Limited ("Insight") in March 2020 and extensive progress toward the announced potential acquisition of Insight in the past months.

 

Also in this time, and as an indication of the investor support for the new strategy, Catena has completed two successful fundraises, raising £2.3 million to support its initial investment in Insight and for general working capital purposes.

 

As a result of the Covid-19 pandemic and the closure of schools for much of the year, trading has been severely  impacted at the Group's school sport coaching subsidiary, Sport in Schools Limited ("SSL"). This has had an adverse impact on profitability and cash flow. However, SSL has taken aggressive action to reduce costs and utilise the various Government support schemes. Due to these efforts and that of a committed and industrious SSL team, the business is well positioned to recover as schools have re-opened and restrictions continue to be lifted. The directors would like to thank the SSL staff for their extraordinary work during these challenging times.  

 

For the 12 months ended 31 December 2020 we are reporting a total comprehensive loss of £0.5 million (31 December 2019: loss £0.2 million).  The directors are not recommending the payment of a dividend.

 

Balance Sheet and Fundraising

Despite operational challenges at the Group's Sport In Schools business, a combination of taking advantage of various Government Covid-19 initiatives together with two successful fundraises, has left the Group with a relatively strong balance sheet as at the period end.  The Group had net current assets of £0.9 million (2019: £0.5 million) and cash of £1.0 million (2019: £0.6 million).

 

During the twelve-month period, Catena successfully conducted two fundraises.  More recently in September 2020, Catena conducted an equity subscription raising gross proceeds of £0.8 million (priced at 50 pence per ordinary share), the proceeds being used for ongoing working capital purposes of the Group.  Earlier in the year in March 2020,  Catena raised £1.5 million comprising equity subscription raising gross proceeds of £1.0 million (priced at 25 pence per share) and £0.5 million of convertible loan notes, the proceeds being used to fund Catena's £1.5 million initial investment in Insight Capital Partners Limited ("Insight").

 

Post period end, in March 2021, a total of 1.5 million warrants, previously issued in 2018, were exercised resulting in additional proceeds to the Company of approximately £0.3 million and the issue of 1,500,000 new ordinary shares in the Company.

 

On 8 March 2021, the Company entered into a short-term shareholder loan with Insight to support the ongoing product development as work on the proposed acquisition of Insight continues (the "Loan"). The Loan provides a facility to Insight for up to £400,000, is unsecured and is repayable on demand at any time. The Loan may be drawn down by Insight in part or in full and attracts an interest rate of 3% above the Bank of England's Bank Rate. Interest is accrued daily and payable on the repayment date.

 

Insight Capital Partners Limited ("Insight")

In March 2020, Catena acquired a 9.1 per cent. interest in the issued share capital of Insight for £1.5 million cash.  At the time of the investment, Catena was also granted an option to increase its shareholding in Insight to 30.9 per cent. of Insight's fully diluted ordinary share capital. This investment is recognised as a non-current investment measured at cost in the balance sheet.

 

In September 2020, the Company announced that it had begun discussions with respect to Catena potentially acquiring the balance of the issued share capital of Insight

 

Pantheon Leisure Plc ("Pantheon")

Catena holds 85.87% of the issued share capital of Pantheon which in turn owns 100% of The Elms Sport in Schools ("SSL"). Pantheon as a group made a small profit of £3k for the 12- month period ended 31 December 2020 (31 December 2019: loss £36k).  Pantheon's results are consolidated into the group accounts of Catena.

 

Sports in Schools Limited ("SSL")

SSL turnover fell by 48% in the 12-month period to £0.9 million (2019: £1.7 million). The decrease is attributable to school closures in March 2020 brought on by the Covid-19 pandemic. As a result, the profit recognised in this 12- month period was £53k compared with £120k for the prior year.

 

As previously set out in our 30 June 2020 Interim Results and 2019 Annual Report, SSL has taken aggressive action to reduce costs, claim under the Government job support schemes and secured further funds under the Coronavirus Business Interruption Loan Scheme (CBILS). These actions enabled the business to resume operations as schools re-opened in the autumn. As a result, revenue recovered at the end of 2020, although some activities, such as after-school clubs, were slow to resume, thus preventing a full return to pre-Covid-19 revenue levels. The renewed school closures from the start of 2021 have continued to negatively affect revenue. However, the various government support schemes and earlier corporate actions have mitigated the financial exposure to the business.

 

With schools now re-opened and many activities continuing to return, albeit slowly, to pre-pandemic levels, the directors are hopeful that SSL revenue will soon recover.

 

Corporate governance code

In accordance with the AIM Rules regarding corporate governance our Interim Report and Company website reflect compliance with (and any departures from) the guidance set out in the QCA Corporate Governance Code.

 

Prospects and investment opportunities

As announced on 8 March 2021, Catena is at an advanced stage in the proposed acquisition of Insight Capital Partners Ltd ("Insight"), the data science and machine learning solutions company. The directors expect to publish an admission document shortly, which will include a circular to shareholders and notice of a general meeting to approve, among other things, the proposed acquisition of Insight. The directors are pleased with the progress made both on the acquisition as well as business and product development at Insight in preparation for the enlarged company following acquisition. Upon completion of the acquisition of Insight, and pending shareholder approval, the Company intends to change its name to Insig AI Plc in order to better represent the new operational focus of the enlarged group.

 

 

M Farnum- Schneider

Chief Executive and Interim Chairman                                                                                                           31 March 2021


Consolidated statement of comprehensive income for the 12 months ended 31 December 2020




 

 

Unaudited 6 months -1 July to 31 December 2019

Audited

Year ended 31 December 2019







£

£

£

£






Revenues from trading activity

433,603

883,133

739,839

1,683,272

Cost of revenues

(329,889)

(630,254)

(366,111)

(818,158)







103,714

252,879

373,728

865,114






Administrative expenses

(551,399)

(1,186,620)

(557,237)

(1,051,971)






Other operating income





Coronavirus Job Retention Scheme and local government grants

227,274

443,763

-












Operating loss from continuing activities

(220,411)

(489,978)

(183,509)

(186,857)











Finance income

112

540

690

1,273

Finance costs

(1,283)

  (2,193)

(2,566)

(2,566)











Loss before taxation from continuing activities

(221,582)

(491,631)

(185,385)

(188,150)

Taxation

-

-

-

-

Loss after taxation from continuing activities

(221,582)

(491,631)

(185,385)

(188,150)






Loss for the year from discontinued activities

(749)

(2,904)

(17,565)

(30,058)






Total comprehensive loss  

(222,331)

  (494,535)

(202,950)

(218,208)

 

Attributable to:





Owners of the company

(225,849)

           (494,942)

(189,106)

(213,197)

Non- controlling interests

3,518

                    407

(13,844)

(5,011)


(222,331)

          (494,535)

(202,950)

(218,208)






 

Loss per share (basic and diluted)





Loss from continuing activities per share

            (0.0055)p

             (0.0125)p

           (0.0050)p

(0.0053)p

Loss from discontinued activities per share

(0.0001)p

             (0.0001)p

(0.0004)p

(0.0010)p

Total loss per share

(0.0056)p

             (0.0126)p

(0.0054)p

(0.0063)p


Statement of financial position as at 31 December 2020

 

 

         Unaudited

As at 31 December

Audited

As at 31 December


2020

2019





£

    £

Non- current assets



Unlisted investments (note 5)

1,500,000

-

Goodwill and patents

59,954

59,954

Property, plant and equipment

56,404

72,104

Total non-current assets

1,616,358

132,058




Current assets



Trade and other receivables

117,292

109,635

Cash and cash equivalents

1,032,065

636,779

Total current assets

1,149,357

746,414




Total assets

2,765,715

878,472




Current liabilities



Trade and other payables

223,615

267,162

Bank loan - (unsecured)

24,000

-

Lease commitments

8,333

8,333

Total current liabilities

255,948

275,495




Non-current liabilities



Bank loan (unsecured)

216,000

-

Borrowings (convertible unsecured loan notes)

500,000

-

Leasing obligations

40,619

49,294

Total non-current liabilities

756,619

49,294







Total liabilities

1,012,567

324,789




NET ASSETS

1,753,148

553,683

 

 

Equity






Share capital

2,464,664

2,408,664

Share premium

2,666,031

1,048,031

Merger reserve

325,584

325,584

Retained earnings

(3,639,664)

(3,164.722)




Equity attributable to owners of the company

1,816,615

617,557




Non-controlling interest

(63,467)

(63,874)







Total Equity

1,753,148

553,683

 

 


 

Consolidated statement of changes in equity for the 12 months ended 31 December 2020

 






Unaudited

Year ended

31 December 2020


Audited

Year ended

31 December

2019


£


£

 

Total equity at the beginning of year

 

553,683


 

458,300





Adjustment for the adoption of IFRS 16 in relation to leased assets

-


8,591





Issue of shares

1,800,000


290,000





Share issue costs

(126,000)


(4,000)





Share based payments

20,000


19,000





Loss for the period/year

(494,535)


(218,208)





At end of year

1,753,148


553,683

 

 

 

 


Consolidated statement of cash flows for the 12 months ended 31 December 2020





Unaudited

12 months ended 31 December

2020

Audited

Year ended 31 December

2019


£

£

Operating cash flow



Profit from continuing activities

(491,631)

(188,150)

Profit from discontinued activities

(2,904)

(30,058)


(494,535)

(218,208)

Adjustments for:



Depreciation and amortisation

16,215

18,764

Finance income

(540)

(1,273)

Finance costs

2,193

2,566

Share based payments

20,000

19,000




Operating cash flow before working capital movements

(456,667)

(179,151)




Increase in receivables

(7,657)

(19,875)

(Decrease)/Increase in payables

(43,547)

27,251

Net cash absorbed by operations

(507,871)

(171,775)




Cash flow from Investing activities



Purchase of investments

(1,500,000)

-

Property, plant and equipment acquired

(515)

(3,180)

Finance income

540

1,273




Net cash used in investing activities

(1,499,975)

(1,907)




Financing activities



Proceeds from share issues

1,674,000

286,000

Loan notes issued

500,000

-

Bank loan advanced

240,000

-

Finance costs

(2,193)

(2,566)

Repayment of leasing liabilities and borrowings

(8,675)

(8,302)

Net cash from financing activities

2,403,132

275,132







Net increase in cash and cash equivalents

395,286

101,450




Cash and cash equivalents and bank overdraft at the beginning of the year

636,779

535,329




Cash and cash equivalents at the end of the year

1,032,065

636,779

 

 

 

 


Notes to the financial statements for the 12 months ended 31 December 2020

 

General information

 

Catena Group plc (the "Company") is a company domiciled in England and its registered office address is 30 City Road, London EC1Y 2AB.  The condensed consolidated interim financial statements of the Company for the 12 months ended 31 December 2020 comprise the Company and its subsidiaries (together referred to as the "Group").

 

The condensed consolidated interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

 

The financial information for the year ended 31 December 2019 has been extracted from the statutory accounts. Although the auditors' report on those statutory accounts was unqualified, the accounts included a material uncertainty paragraph relating to Going Concern without qualifying their report which did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.  A copy of those accounts has been filed with the Registrar of Companies.

 

The Group has presented its results in accordance with the measurement principles set out in International Financial Reporting Standards as adopted by the EU ("IFRS") using the same accounting policies and methods of computation as were used in the annual financial statements for the year ended 31 December 2019 with exception of the application of new accounting standards. As permitted, the interim report has been prepared in accordance with the AIM rules for companies but is not compliant in all respects with IAS34 'Interim Financial Statements'.

 

The condensed consolidated interim financial statements do not include all the information required for full annual financial statements and therefore cannot be construed to be in full compliance with IFRS.

 

The condensed consolidated interim financial statements were approved by the board and authorised for issue on 31 March 2021.

 

2.            Impact of the Covid-19 pandemic

 

As indicated in our Interim Results for the six months ended 30 June 2020 and 2019 Annual Report, the school closures resulting from the Covid-19 pandemic have negatively impacted revenues and profitability at its trading subsidiary, SSL. Prior to the pandemic, forecast levels of turnover for 2020 were expected to result in increased profits in the current year.

 

Throughout the pandemic, SSL has taken aggressive action to mitigate the financial impact of the pandemic by utilising the Government's Covid-19 financial assistance schemes. While revenue recovered at the end of 2020 due to the re-opening of schools, some activities, including after-school clubs, have been slow to resume, thus preventing a full return to budgeted revenue levels. However, SSL continued to take full advantage of the Government's extended Covid-19 business support schemes and benefited from the actions taken earlier in the year to protect the business against school disruptions or closures.

 

The renewed school closures from the start of 2021 have continued to negatively affect revenue. However, the government support schemes and earlier corporate actions have continued to protect the business. With schools now re-opened and many activities continuing to return, albeit slowly, to pre-pandemic levels the directors are hopeful that SSL revenue and profitability will soon recover.  However, as we have seen previously. the ongoing impacts of the global pandemic continues to evolve and it is difficult for the directors to predict with certainty whether there will be further restrictions to school operations and sporting activities that would once again affect SSL operations.

 

3.            Basic and diluted loss per share

 

Comprehensive loss per share for the six months ended 31 December 2020 has been calculated on the comprehensive loss attributable to owners of the Company of £225,849 and on the weighted average number of shares in issue during the period of 40,488,414.

 

Comprehensive loss per share for the 12 months ended 31 December 2020 has been calculated on the comprehensive loss attributable to owners of the Company of £494,942 and on the weighted average number of shares in issue during the period of 39,317,150.

 

 

Comprehensive loss per share for the six months to 31 December 2019 has been calculated on the comprehensive loss attributable to owners of the company of £189,106 and on the weighted average number of shares in issue during the period of 35,222,841.

 

Comprehensive loss per share for the year ended 31 December 2019 has been calculated on the comprehensive loss attributable to owners of the company of £213,197 and on the weighted average number of shares in issue during the year of 34,438,352.

 

In view of group losses for all periods, share options and warrants to subscribe for ordinary shares in the Company are anti-dilutive and therefore diluted earnings per share information is not presented.

 

 

4.            Business segment analysis







Unaudited 6 months -1 July to 31 December 2020

Unaudited

12 months ended 31 December 2020

Unaudited 6 months -1 July to 31 December 2019

Audited

Year ended 31 December 2019






Turnover





Sports and Leisure

           433,603

          883,133

           739,839

       1,683,272

Social media - discontinued activity

         -

        -

                    30

                    71


            433,603

            883,133

            739,869

        1,683,343






Segmental operating profit/(loss)





Sports and Leisure

51,750

53,109

(92,915)

20,215

Social media - discontinued activity

(749)

(2,904)

(17,565)

(30,058)


51,001)

50,205

(110,480)

(9,843)

Group operating expenses

(272,161)

(543,087)

(90,594)

(207,072)






Operating loss

(221,160)

(492,882)

(201,074)

(216,915)






Finance income

112

540

690

1,273

Finance costs

(1,283)

(2,193)

(2,566)

(2,566)






Loss before tax from all activities

(222,331)

(494,535)

(202,950)

(218,208)

Taxation

        -

        -

         -

      -






Loss after tax from all activities

(222,331)

(494,535)

(202,950)

(218,208)

 

 

5.            Investments

 

 

In March 2020, the company acquired a 9.1% interest in the ordinary share capital of Insight for £1,500,000 in line with the strategy to focus on investing in quality fast growing companies. In 2020, the Company began discussions with respect to Catena acquiring the balance of issued share capital of Insight, the announcement of which on 3 September 2020 resulted in the Company's ordinary shares being suspended from trading on AIM. Good progress continues to be made on the proposed acquisition.  Further details will be provided in the Company's admission document in respect of the proposed acquisition, which the directors expect to publish in due course.

* ENDS *

 

For further information, please visit www.catenagroup.co.uk or contact:

 

Catena Group PLC

Matthew Farnum-Schneider, Chief Executive

 

+44 (0)20 3744 0900

Zeus Capital Limited (Nominated Adviser & Broker)

David Foreman / Daniel Harris / Rishi Majithia

 

+44 (0) 203 829 5000

SEC Newgate (Financial PR)

Robin Tozer

 

+44 (0) 7540 106 366

catena@secnewgate.com

 

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