RNS Number : 9098A
Mobile Tornado Group PLC
28 September 2022
 

28 September 2022

Mobile Tornado Group plc

("Mobile Tornado", the "Company" or the "Group")

 

Half Yearly Report

 

Mobile Tornado (AIM: MBT), a leading provider of resource management mobile solutions to the enterprise market, announces its unaudited results for the six-month period to 30 June 2022.

Financial highlights

 







Six months

 


Six months


ended

 


ended


30 June

 


30 June


2022

 


2021


Unaudited

 


Unaudited


£'000

 


£'000


 

 



Recurring revenue

932

 


1,066

Non-recurring revenue*

172



203

Total revenue

1,104

 


1,269


 

 


Gross profit

1,066

 


1,232


 

 


Administrative expenses

(1,275)

 


(1,219)


 

 



Adjusted EBITDA**

(209)

 


13


 

 


Group operating loss

(454)

 


(76)


 

 



Loss before tax

(775)

 


(378)






 

·              Total revenue decreased by 13% to £1.10m (H1 2021: £1.27m)

Recurring revenues decreased by 13% to £0.93m (H1 2021: £1.07m)

Non-recurring revenues* decreased by 15% to £0.17m (H1 2021: £0.20m)

·              Operating expenses increased by 5% to £1.28m (H1 2021: £1.22m) - adversely impacted by the depreciation of sterling comparative to the previous period

·              Adjusted EBITDA** loss of £0.21m (H1 2021 £0.01m profit)

·              Group operating loss for the period increased to £0.45m (H1 2021: £0.08m) - impacted by further exchange differences of £0.15m loss (H1 2021: £0.08m gain)

·              Loss before tax of £0.78m (H1 2021: £0.38m)

·              Basic loss per share of 0.20p (H1 2021: 0.09p)

·            Net cash inflow from operating activities of £0.02m (H1 2021: £0.11m)                  

·              Net debt at 30 June 2022 of £10.03m (H1 2021: £9.09m)

·              Cash and cash equivalents of £0.12m (30 June 2021: £0.16m)

 

*Non-recurring revenues comprising installation fees, hardware, professional services and capex license fees

**Earnings before interest, tax, depreciation, amortisation, exceptional items and excluding exchange differences

 

 

 

 

 

Operating Highlights

 

·              Commercial discussions in progress with organisation in South America requiring mission critical capabilities, after successful trials concluded

·              Deal closed in Caribbean with leading mobile network operator ('MNO')

·              Further platform operating efficiencies achieved, creating additional costs savings effective from the second half  

·              Development of further functionality across our resource management solution

 

 

Jeremy Fenn, Chairman of Mobile Tornado, said: "Having delivered a solid set of numbers for the first half, we have also progressed a number of strategically important engagements in our key markets, with major trials concluding successfully. The quality of our communication platform has been validated by significant and credible organisations, and we are now working to ensure the deals are concluded this year.

 

"Alongside our existing target markets, we are encouraged by the progress that has been made in the UK during the first half and are now carefully exploring how we can develop a wider European opportunity.

 

"I'm confident that the business is emerging from a difficult two years and there are some high-quality prospects developing across all of our markets. We are focused on moving the business back to operating profitability by the end of this financial year."

 

Enquiries:

Mobile Tornado Group plc

+44 (0)7734 475 888

Jeremy Fenn, Chairman

 

www.mobiletornado.com

Allenby Capital Limited (Nominated Adviser & Broker)

+44 (0)20 3328 5656

James Reeve/Piers Shimwell (Corporate Finance)

David Johnson (Sales and Corporate Broking)

 


 

Financial results

 

Total turnover in the six-month period to 30 June 2022 decreased by 13% to £1.10m (H1 2021: £1.27m). Recurring revenues decreased by 13% to £0.93m (H1 2021: £1.07m). Our customer in Canada which ceased at the end of 2021 as previously reported, accounted for 22% of total revenue and 18% of recurring revenues in the prior year comparative figures. It is pleasing to report therefore, that outside of this, we recorded a modest increase in both our total and recurring revenues across the remainder of our customer base.

 

Non-recurring revenues, comprising installation fees, hardware, professional services and capex license fees decreased by 15% to £0.17m (H1 2021: £0.20m). Gross profit decreased by 13% to £1.07m (H1 2021: £1.23m).

 

The majority of our operating expenses are denominated in New Israeli Shekels and whilst our underlying operating cost-base remained largely unchanged over the comparative period on a like-for-like basis, our reported operating expenses increased by 5% to £1.28m (H1 2021: £1.22m) due primarily to the depreciation of Sterling comparative to the first half of the previous period.

 

Due to the annual revaluation of certain financial liabilities on the balance sheet, the Group reported a currency translational loss of £0.15m (H1 2021: £0.08m gain) arising principally from the depreciation of Sterling against the US Dollar comparative to the start of the period. As a result of the above, the loss after tax for the period increased to £0.76m (H1 2021: Loss of £0.36m).

 

The Group reported a net cash inflow from operating activities during the period of £0.02m (H1 2021: £0.11m) reflecting the continued strong focus on cash management. At 30 June 2022, the Group had £0.12m cash at bank (30 June 2021: £0.16m) and net debt of £10.03m (30 June 2021: £9.09m).

 

 

Review of operations

 

Whilst the financial performance of the business during the first half was fairly steady, we made some excellent progress across all our key markets.

 

Significant trials were concluded with major customers across South and Central America. In certain of these trials, our platform was being tested for its mission critical capabilities. This has been driven by the success we have seen over the last two years in Colombia, where the platform has performed at 100% availability. For this reason, our territory partner has been keen to showcase the solution to customers that require mission critical credentials, and we have worked hard to support these extensive trials. We are now engaged on commercial discussions with a view to first deployments during the final quarter of 2022.

 

Our partner in the Caribbean signed a deal with a leading mobile network operator ('MNO') and discussions and trials are now being conducted with multiple customers across a number of countries. A healthy sales pipeline has developed, and we are now exploring expansion into Central America with the same MNO.

 

Activity levels with our partner in South Africa have been subdued given the economic and political difficulties in the country, but we remain engaged with the public utilities and agencies that continue to discuss the deployment of our platform. We are hopeful that budgets and decision making will materialise in the second half of the year and provide the catalyst for wider engagement in this territory.

 

As previously reported, our workforce management solution was launched into our partner network and I'm pleased to report that our first customer, based in the UK, was loaded onto the system. Following positive feedback from our partner network, further enhancements are currently being made to the offering which we are hopeful will accelerate uptake.

 

We have seen some strong sales activity across the UK following the appointment of a new partner last year. As a result, we are looking carefully at the possibility of extending our business development footprint into the wider European market. We have been necessarily constrained in recent years through the impact of the pandemic and the consequent resourcing constraints. Given the feedback we are getting from our partner and customers in the UK, we are confident that now is the right time to open up activities in Europe alongside our current focus in Africa and South America.

 

We continue to drive efficiencies within the business and through a continued improvement in the technical platform, we have further shifted resource into our lower cost technical centre in India, allowing us to reduce the office and ancillary costs in Israel. These savings will materialise during the second half.

 

 

Research and development

 

Our resource management solution, which combines the current Push to Talk ('PTT') application with workforce management functionality ('WFM') and mobile device management ('MDM'), was launched to our partner network during the period. As detailed above, we deployed with our first customer in the UK, but have run many more trials. These have generated positive feedback and driven the development of further functionality and feature sets across the platform. These include -

 

·      a 'Dual Recorder' function for high availability system wide recording - this feature is specifically required for public safety customers such as Police forces

·      full multimedia messaging allowing the transmission of large, compressed video files to users and dispatchers

·      Google maps integration allowing the sharing of location data to all devices for users in distress

·      the enhancement of the 'Man Down' feature to a full 'Lone Worker' solution allowing better monitoring of users operating in remote or hazardous areas - this solution is required by law across the UK and Europe and constitutes a very large addressable market

 

The technical team have also successfully completed tests to operate all our applications across the public cloud. This will provide us with additional sales opportunities around the world, regardless of customer location, and significantly reduce the cost of ownership for all customers.

 

Funding

 

As announced on 24 March 2022, we agreed a 12-month extension of our revolving loan facility with our principal shareholder Intechnology plc, as well as an increase to the maximum principal amount that may be drawn. This facility now has a term ending on 26 September 2023 with a maximum principal amount of £500,000 (previously £300,000). The balance drawn down at 30 June 2022 was £300,000 and as at today's date, the balance drawn down is £350,000.

 

We remain confident that our available cash resources together with our long-established recurring revenue customer base and anticipated future contracts will provide us with adequate financial resources for the foreseeable future.

  

 

Outlook

 

Having delivered a solid set of numbers for the first half, we have also progressed a number of strategically important engagements in our key markets, with major trials concluding successfully. The quality of our communication platform has been validated by significant and credible organisations, and we are now working to ensure the deals are concluded this year.

 

Alongside our existing target markets, we are encouraged by the progress that has been made in the UK during the first half and are now carefully exploring how we can develop a wider European opportunity.

 

I'm confident that the business is emerging from a difficult two years and there are some high-quality prospects developing across all of our markets. We are focused on moving the business back to operating profitability by the end of this financial year.

 

 

 

 

Jeremy Fenn

Chairman

28 September 2022

 


Consolidated income statement

For the six months ended 30 June 2022

 

 



Six months

 

Six months


Year



ended

 

ended


ended



30 June

 

30 June


31 December



2022

 

2021


2021



Unaudited

 

Unaudited


Audited


Note

£'000

 

£'000


£'000

Continuing Operations

 






Revenue


1,104


1,269


2,591















Cost of sales


(38)


(37)


(100)

Gross profit

 

1,066

 

1,232


2,491








Other operating expenses


(1,275)

 

(1,219)


(2,525)

Group operating profit/(loss) before exchange


 





differences, exceptional items, depreciation

 






and amortisation expense


(209)


13


(34)

Exchange differences


(148)

 

78


78

Depreciation and amortisation expense


(97)

 

(167)


(297)



 





Total operating expenses


(1,520)

 

(1,307)


(2,744)















Group operating loss

 

(454)

 

(76)


(253)








Finance costs


(321)

 

(302)


(608)








Loss before tax

 

(775)

 

(378)


(861)

Income tax credit


12

 

22


231

Loss for the period


(763)


(356)


(630)








Loss per share (pence)

 






Basic and diluted

3

         (0.20)

 

          (0.09)


             (0.17)



 

Consolidated statement of comprehensive income

For the six months ended 30 June 2022

 

 



Six months

 

Six months


Year



ended

 

ended


ended



30 June

 

30 June


31 December



2022

 

2021


2021



Unaudited

 

Unaudited


Audited



£'000

 

£'000


£'000








Loss for the period

 

(763)

 

(356)


(630)








Other comprehensive income

 













Exchange differences on translation







of foreign operations


(58)

 

7


(5)








Total comprehensive loss for the period


(821)


(349)


(635)

 

 

 



Consolidated balance sheet

As at 30 June 2022

                                                                                           

 



30 June

 

30 June


31 December



2022

 

2021


2021



Unaudited

 

Unaudited


Audited


Note

£'000

 

£'000


£'000

Assets

 






Non-current assets

 






Property, plant & equipment


139

 

116


122

Right-of-use assets


                  -

 

200


83

 

 

139

 

316

 

205








Current assets

 






Trade and other receivables


1,701

 

1,620


1,632

Inventories


34

 

43


67

Cash and cash equivalents


122


159


65



1,857


1,822


1,764








Liabilities

 






Current liabilities

 






Trade and other payables


(5,139)

 

(4,318)


(4,661)

Borrowings


(4,414)

 

(3,504)


(9,662)

Lease liabilities


                  -

 

(213)


(91)








Net current liabilities

 

(7,696)

 

(6,213)

 

(12,650)















Non-current liabilities

 






Trade and other payables


(1,219)

 

(1,776)


(1,213)

Borrowings


(5,734)

 

(5,743)


(37)



(6,953)


(7,519)


(1,250)








Net liabilities


(14,510)


(13,416)


(13,695)















Shareholders' equity

 






Share capital

4

7,595

 

7,595


7,595

Share premium

4

15,797

 

15,797


15,797

Reverse acquisition reserve


(7,620)

 

(7,620)


(7,620)

Merger reserve


10,938

 

10,938


10,938

Foreign currency translation reserve


(2,267)

 

(2,197)


(2,209)

Retained earnings


(38,953)

 

(37,929)


(38,196)

Total equity


(14,510)


(13,416)


(13,695)

 

 


Consolidated statement of changes in equity

For the six months ended 30 June 2022

 


Share

Share

Reverse acquisition

Merger

Translation

Retained

Total

 

capital

premium

reserve

reserve

reserve

earnings

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 








Balance at 1 January 2021

    7,595

    15,797

     (7,620)

    10,938

      (2,204)

    (37,583)

    (13,077)

 








Loss for the period

             -

               -

                 -

               -

                  -

           (356)

           (356)









Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

                 7

                 -

                 7









Total comprehensive income

 







for the period

             -

              -

                -

              -

                7

         (356)

         (349)

 








Equity settled share-based payments

             -

               -

                 -

               -

                  -

               10

               10









Balance at 30 June 2021

    7,595

    15,797

     (7,620)

    10,938

      (2,197)

    (37,929)

    (13,416)

 









Share

Share

Reverse acquisition

Merger

Translation

Retained

Total

 

capital

premium

reserve

reserve

reserve

earnings

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 








Balance at 1 July 2021

    7,595

    15,797

     (7,620)

    10,938

      (2,197)

    (37,929)

    (13,416)

 








Loss for the period

             -

               -

                 -

               -

                  -

           (274)

           (274)









Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

              (12)

                 -

             (12)









Total comprehensive income

 







for the period

             -

              -

                -

              -

            (12)

         (274)

         (286)

 








Equity settled share-based payments

             -

               -

                 -

               -

                  -

                 7

                 7









Balance at 31 December 2021

    7,595

    15,797

     (7,620)

    10,938

      (2,209)

    (38,196)

    (13,695)

 









Share

Share

Reverse acquisition

Merger

Translation

Retained

Total

 

capital

premium

reserve

reserve

reserve

earnings

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 








Balance at 1 January 2022

    7,595

    15,797

     (7,620)

    10,938

      (2,209)

    (38,196)

    (13,695)

 








Loss for the period

             -

               -

                 -

               -

                  -

           (763)

           (763)









Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

              (58)

                 -

             (58)









Total comprehensive income

 







for the period

             -

              -

                -

              -

            (58)

         (763)

         (821)

 








Equity settled share-based payments

             -

               -

                 -

               -

                  -

                 6

                 6









Balance at 30 June 2022

    7,595

    15,797

     (7,620)

    10,938

      (2,267)

    (38,953)

    (14,510)

 


Consolidated cash flow statement

For the six months ended 30 June 2022

 

 


Six months

 

Six months


Year


ended

 

ended


ended


30 June

 

30 June


31 December


2022

 

2021


2021


Unaudited

 

Unaudited


Audited


£'000

 

£'000


£'000







Operating activities






Cash (used in)/from operations

5

        (265)

 

          (187)


             (247)

Tax credit received


           281

 

            293


               238

Net cash inflow from operating activities

 

             16

 

            106

 

                 (9)







Investing activities






Purchase of property, plant & equipment


           (20)

 

              (9)


               (19)

Disposal of property, plant & equipment

                -

 

                -


7

Net cash used in investing activities

 

           (20)

 

              (9)

 

               (12)













Financing






Increase in borrowings


           145

 

                -


               147

IFRS 16 leases


           (89)

 

          (124)


             (248)

Net cash (outflow)/inflow from financing

 

             56

 

          (124)

 

             (101)

 

 

 





Effects of exchange rates on cash

 






and cash equivalents


               5

 

              (1)

 

                   -







Net increase/(decrease) in cash and






cash equivalents in the period

 

             57

 

            (28)


             (122)

Cash and cash equivalents at beginning of period


             65

 

            187


               187

Cash and cash equivalents at end of period


           122

 

            159


                 65

 

 


Notes to the interim report

For the six months ended 30 June 2022

 

 

1          General information

 

The financial information in the interim report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and has not been audited or reviewed. The financial information relating to the year ended 31 December 2021 is an extract from the latest published financial statements on which the auditor gave an unmodified report that did not contain statements under section 498 (2) or (3) of the Companies Act 2006 and which have been filed with the Registrar of Companies.

 

 

2          Basis of preparation

 

These interim financial statements are for the six months ended 30 June 2022. They have been prepared using the recognition and measurement principles of IFRS.

 

The interim financial statements have been prepared under the historical cost convention.

 

The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2021. The accounting policies have been applied consistently throughout the Group for the purpose of preparation of the interim financial statements.

 

 

3          Loss per share

 

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of £763,000 (30 June 2021: £356,000, 31 December 2021: £630,000) by the weighted average number of ordinary shares in issue during the period of 379,744,923 (30 June 2021: 379,744,923, 31 December 2021: 379,744,923).

 

 


Six months ended

 

Six months ended


Year ended


30 June 2022

 

30 June 2021


31 December 2021


Unaudited

 

Unaudited


Audited


Basic and diluted

 

Basic and diluted


Basic and diluted


Loss

Loss

 

Loss

Loss


Loss

Loss



per share

 


per share



per share




















£'000

pence

 

£'000

pence


£'000

pence


 

 

 



 



Loss attributable to

 








ordinary shareholders

      (763)

     (0.20)

 

      (356)

       (0.09)


        (630)

      (0.17)

 



 

4          Share capital and share premium

 


Number of

Share

Share

Total

 

shares

capital

premium

 


'000

£'000

£'000

£'000

 





At 30 June 2021, 31 December 2021 & 30 June 2022

  379,745

  7,595

  15,797

   23,392

 

 

Non-voting preference shares

 




Number of

Nominal

 



shares

Value

 



'000

£'000

 





At 30 June 2021, 31 December 2021 and 30 June 2022


  71,277

     5,702

 

 

Liabilities and preference shares totalling £5,702k were converted into 71,277k 8p preference shares on 28 August 2013. The preference shares are non-voting, non-convertible redeemable preference shares currently redeemable at par value on 31 December 2022, or, at the Company's discretion, at any earlier date. The Preference Shares accrue interest at a fixed rate of 10% per annum.

 

 

5          Cash used in operations

 


Six months

Six months

Year


ended

ended

ended


30 June

30 June

31 December


2022

2021

2021


Unaudited

Unaudited

Audited


£'000

£'000

£'000





Loss before taxation

           (775)

             (378)

                (861)





Adjustments for:




Depreciation and amortisation

                97

               167

                  297

Share based payment charge

                  6

                 10

                    -  

Interest expense

             321

               302

                  608





Changes in working capital:








Decrease/(Increase) in inventories

                41

                 13

                  (10)

(Increase)/Decrease in trade and other receivables

           (264)

                 12

                  192

Increase/(Decrease) in trade and other payables

             309

             (313)

                (473)

Net cash used in operations

           (265)

             (187)

                (247)

 

 

6          Shareholder information

 

The interim announcement will be published on the company's website www.mobiletornado.com on 28 September 2022.

 

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