Overview
Catenae Innovation Plc (LON: CTEA) is a media company providing solutions related to Distributed Ledger Technology (blockchain). The solutions provided by the company helps in solving commercial challenges and creates new prospects for its clients.

Trading Update
On 11^th September 2019, Catenae Innovation announced its trading update. The company announced that following the announcement made by the company as on July 18, 2019, despite an investment and sales initiatives, revenue in the second half of its financial year would be below its management expectations. It also reported that ongoing challenging market condition, due to Brexit related uncertainties, businesses are reluctant to commit to an investment, within the sector in which the company operates. It also reported that the ongoing challenging situation would lead to a heavy loss for the year, much higher than expected. The ongoing corporate restructuring will help the group to lower its overheads.

Financial Highlights – H1 Financial Year 2019 (31^st March 2019, GBP)

(Source: Interim Report, Company Website)
 
In the first half of the financial year 2019, the company’s revenue and gross profit stood at GBP 68,857 versus revenue and gross profit of GBP 10,372 in the first half of the financial year 2018. Due to an increase in the administrative expenses for the period, the company reported an operating loss of GBP 572,134 in the first half of the financial year 2019 versus an operating loss of GBP 562,451 in the first half of the financial year 2018. The company’s LBT & LAT (loss before and after tax) was at GBP 503,233 in the first half of the financial year 2019 versus an LBT & LAT (loss before and after tax) of GBP 552,068 in the first half of the financial year 2018. The company’s basic and diluted loss per share was at 0.04 pence in H1 FY2019 versus a basic and diluted loss per share of 0.05 pence in the first half of the financial year 2018.

Share Price Performance

Daily Chart as at5^th December 2019, before the market close (Source: Thomson Reuters)

On 5^th December 2019, Catenae Innovation Plc shares were trading at GBX 0.01425 at the time of writing before the market close (at 2:18 PM GMT), down by 10.94 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 0.13/GBX 0.0094.The shares of the company have delivered a negative return of 48.18 per cent in the last quarter. The company’s stock has given investors 18.57 per cent of a negative return in the last month.

Conclusion
The company has shown a decline in the first half of the financial year 2019. Although the revenue has increased, while the profitability remained in the negative zone for the period. The company need to manage its operating costs effectively for better performance.

The group's performance in the recent trading update was lacklustre, and situations are going to be more challenging going forward. Also, the group's losses are going to exceed the estimates made by the group for the full-year FY19. The company’s operations are negatively impacted due to ongoing uncertainty created by Brexit.

Therefore, considering the ongoing challenging condition for the group and prevailing sharp downtrend in its share price, we recommend the investors to “Avoid” taking fresh positions at the current price of GBX 0.016 (as on 5^th December 2019, before the market closed at 8:05 AM GMT).

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