REG - Mobile Tornado Group - 2021 Final Results
31/03/2022 07:00
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RNS Number : 6730G Mobile Tornado Group PLC 31 March 2022
31 March 2022
Mobile Tornado Group plc
("Mobile Tornado", the "Company" or the "Group")
2021 Final results
Mobile Tornado Group plc, a leading provider of resource management mobile
solutions to the enterprise market, announces its audited results for the year
ended 31 December 2021.
Financial Highlights
2021 2020
£'000 £'000
Recurring revenue 2,112 2,042
Non-recurring revenue* 479 490
Total revenue 2,591 2,532
Gross profit 2,491 2,351
Administrative expenses (2,525) (2,722)
Adjusted EBITDA** (34) (371)
Group operating loss (253) (784)
Loss before tax (861) (1,390)
· Total revenue increased by 2% to £2.59m (2020: £2.53m)
o Recurring revenues increased by 3% to £2.11m (2020: £2.04m)
o Non-recurring revenues* decreased by 2% to £0.48m (2020: £0.49m)
· Gross profit increased by 6% to £2.49m (2020: £2.35m)
· Operating expenses before depreciation, amortisation, exceptional
items and exchange differences decreased by 7% to £2.53m (2020: £2.72m)
· Adjusted EBITDA** loss of £0.03m (2020: loss of £0.37m)
· Group operating loss for the year decreased to £0.25m (2020:
£0.78m)
· Loss after tax of £0.63m (2020: loss of £1.14m)
· Basic loss per share of 0.17p (2020: loss of 0.30p)
· Cash at bank of £0.07m (2020: £0.19m) with net debt of £9.73m
(2020: £9.10m)
* Non-recurring revenues comprise installation fees, hardware, professional
services and capex license fees
**Earnings before interest, tax, depreciation, amortisation, exceptional items
and excluding exchange rate differences
Operating highlights
· Revenues remained stable despite the highly uncertain global economic
environment, demonstrating strength of business model
· Further operational efficiencies delivered a reduction in operating
expenses before depreciation, amortisation, exceptional items and exchange
differences from £2.72m to £2.53m
· Resource Management Platform developed during the period, combining
workforce management functionality with existing Push to Talk ('PTT')
proposition
Jeremy Fenn, Chairman of Mobile Tornado, said: "It has been an extremely
difficult two years for the business. The principal markets we operate in have
been badly hit by the pandemic, dramatically constraining our business
development activities. We have managed to maintain our revenue levels through
this period, and executed significant improvements to our operational
efficiency, such that we have reduced our operating expense from £3.16m in
2019 to £2.53m in 2021. This has allowed the business to trade through the
period with modest losses, funded by a small working capital facility provided
by our principal shareholder, and no further recourse to shareholders.
"We are now focused on growth, and I am pleased to report that business
activity during the first quarter of 2022 has been promising. The new Resource
Management Platform has been showcased to all our partners, and trials are
running across numerous customer sites in key markets. This provides us with
incremental and potentially more lucrative recurring revenue streams, given
the higher value proposition that we are now able to offer customers.
"I would like to thank the whole of our team for their incredible efforts
across the last 24 months. It's been a challenge, but we emerge leaner, and
with a much more compelling proposition to take to market. There is still much
to be done, but we are encouraged by the early signs in 2022. I look forward
to updating shareholders as the year develops."
Enquiries:
Mobile Tornado Group plc www.mobiletornado.com (http://www.mobiletornado.com)
Jeremy Fenn, Chairman +44 (0)7734 475 888
Allenby Capital Limited (Nominated Adviser & Broker) +44 (0)20 3328 5656
James Reeve (Corporate Finance)
David Johnson (Sales and Corporate Broking)
Walbrook PR Ltd +44(0)207933 8780
or mobiletornado@walbrookpr.com
Paul Vann / Nick Rome (mailto:mobiletornado@walbrookpr.com)
Financial results and key performance indicators
Total revenue for the year ended 31 December 2021 increased by 2% to £2.59m
(2020: £2.53m). Recurring revenues increased by 3% to £2.11m (2020:
£2.04m). Non-recurring revenues, comprising installation fees, hardware,
professional services and capex license fees remained largely unchanged at
£0.48m (2020: £0.49m). As a result, gross profit increased by 6% to £2.49m
(2020: £2.35m).
Operating expenses before depreciation, amortisation, exceptional items and
exchange differences in the year decreased by 7% to £2.53m (2020: £2.72m),
reflecting the continued positive impact that further investment in the
development and operating efficiencies of our enhanced technical platform have
delivered.
Due to the annual retranslation of certain financial liabilities on the
balance sheet, the Group reported a translation gain of £0.08m (2020: loss of
£0.07m) arising from the appreciation of Sterling relative to the Euro as at
31 December 2021 versus the previous year end. The Group recorded a net income
tax credit of £0.23m (2020: £0.25m).
The loss after tax for the year decreased to £0.63m (2020: loss of £1.14m)
equating to a reduced basic loss per share of 0.17p (2020: 0.30p).
The net cash used in operations increased to £0.25m (2020: £0.10m). At 31
December 2021, the Group had £0.07m cash at bank (2020: £0.19m) and net
debt of £9.73m (31 December 2020: £9.10m).
The balance sheet continues to reflect the cumulative loss position of the
Group, and those net liabilities that have resulted from this. We continue to
hold levels of debt in the Group which have funded these historical losses.
Results and dividends
The Directors do not recommend the payment of a dividend in respect of the
year ended 31 December 2021 (year ended 31 December 2020: nil). The Company
currently intends to reinvest future earnings to finance the growth of the
business over the near term.
Review of operations
Despite the continuing impact of COVID-19 across all the Group's main markets
during 2021, I'm pleased to report that the Group has delivered a reduced
EBITDA loss of £0.03m, a material improvement on the £0.37m loss recorded in
2020. At a difficult time, it was pleasing to see our recurring revenues hold
steady at £2.11m, with the benefits of our business model and recurring
revenue base delivering again. Full year performance also benefited from our
relentless focus on the cost base and delivery of operating efficiencies. As
the robustness of our technical platform steadily improves, we have been able
to continue the transition of more R&D activities to our lower cost
facility in India to drive additional efficiencies.
When we reported a year ago, I had hoped that the worst of the pandemic was
behind us, but sadly, the key markets that we operate across, namely South
America and Africa, continued to be impacted through 2021. Many of the
opportunities we were developing when the pandemic emerged in March 2020, were
in South America and South Africa, and normal sales cycles were severely
disrupted. These problems continued through 2021. Government budgets were also
constrained leading to spending freezes on numerous projects that we had
engaged on with Government departments, agencies and utilities.
Notwithstanding this difficulty, we maintained a close dialogue with our
partners through the period, and I'm encouraged that engagement levels have
intensified during the first quarter of this financial year. I'm cautiously
optimistic that we will finally see some of these larger opportunities convert
into real deals.
We continued to develop our presence in South America and have improved the
dedicated technical platforms located in Mexico and Colombia. This will
benefit our partners and customers, and in due course we believe, will enable
us to move into other key territories in the region, namely Brazil, Chile and
Peru.
Activity levels with our partner in Israel were maintained, and we developed
several new opportunities and successfully renewed deals with certain
important Government utilities and agencies. We made solid progress with our
partners in Ireland, UK and the Caribbean, and hope to see the results of this
work begin to emerge in 2022.
Despite the business development challenges during the year, we ensured that
our commitment to R&D remained robust and made a significant commitment to
the development of our comprehensive Resource Management Platform ('RMP').
This combines the current PTT application with workforce management
functionality ('WFM') and mobile device management ('MDM'). We believe that
this represents a unique proposition, providing businesses that operate remote
workforces the opportunity to consolidate their applications onto one
platform.
The Board is pleased to report that the RMP has been launched to our partner
network and a number of customers and the feedback received to date has been
very positive. The Company's website has been relaunched to better capture the
broader service offering and the Board look forward to making further advances
with new partners and customers during the 2022 financial year.
We were clearly disappointed to lose our key customer in Canada towards the
end of 2021. This mobile operator had been using our platform for more than 7
years and decided during the year that they would no longer provide PTT
services to their customers directly. The loss of this contract has inevitably
created a shortfall as the Company moved into the new financial year and we
have been focused on closing this gap quickly, through further operational
efficiencies, and increased deal flow across all of the Group's key markets.
Funding
Despite the challenging business environment, I am pleased to report that we
have been able to trade through the last 12 months within our existing cash
resources. We increased our £0.3m revolving loan facility to £0.5m on 24
March 2022 with our principal shareholder, Intechnology plc, and extended the
term for a further 12 months. I can confirm that as at today's date the
balance drawn down is £370,000. (31 December 2020: £nil)
Principal risks and uncertainties
The management of the business and the nature of the Group's strategy are
subject to a number of risks.
The Directors have set out below the principal risks facing the business. The
Directors are of the opinion that a thorough risk management process is
adopted, which involves the formal review of all the risks identified below.
Where possible, processes are in place to monitor and mitigate such risks.
Product obsolescence
Due to the nature of the market in which the Group operates, products are
subject to technological advances and as a result, obsolescence. The Directors
are committed to the Group's current research and development strategy and are
confident that the Group is able to react effectively to developments within
the market.
Indirect route to market
As described above, one of the Group's primary channels to market are MNOs
reselling our services to their enterprise customers. Whilst MNOs are ideally
positioned to forward sell our services and are likely to possess material
resources for doing so, there remains an inherent uncertainty arising from the
Group's inability to exert full control over the sales and marketing
strategies of these customers.
Going concern
The Financial Statements are prepared on a going concern basis.
When determining the adoption of this approach, the Directors have considered
a wide range of information relating to present and future conditions,
including the current state of the Balance Sheet, together with that continued
support offered by our principal shareholder, Intechnology plc, who, as in
previous years, has agreed not to call on existing loans and borrowings and to
extend and increase our working capital facility (as announced on 24 March
2022). Further consideration has been given to future projections, cash flow
forecasts, access to funding, ability to successfully secure additional
investment, available mitigating actions and the medium-term strategy of the
business.
In common with many businesses at this stage of development, the Group is
dependent on its ability to meet its cash flow forecasts. Within those
forecasts the Group has included a number of significant payments and receipts
based on its best estimate but, as with all forecasts, there does exist some
uncertainty as to the timing and size of those payments and receipts. In
particular, the forecasts assume the ongoing deferral and phased payment of
some of the Group's creditors (as disclosed in note 14 to the financial
statements), and the continuation at the current level of recurring revenue
and a significant increase in the level of non-recurring revenues. In the
event that some or all of these receipts are delayed, deferred or reduced, or
payments not deferred, management has considered the actions that it would
need to take to conserve cash. These actions would include significant cost
savings (principally payroll based) and/or seeking additional funding from its
shareholders, for which there is currently no shareholder commitment
requested. These conditions, together with the other matters explained in note
1 to the financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about the Group's ability to
continue as a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going
concern.
The Directors, whilst noting the existence of a material uncertainty and
having considered the possible management actions as noted above, are of the
view that the Group is a going concern and will be able to meet its debts as
and when they fall due for a period of at least 12 months from the date of
signing these accounts.
Section 172 statement - our stakeholders
The Board recognises its duty to consider the needs and concerns of the
Group's key stakeholders during its discussions and decision-making. The Board
has had regard to the importance of fostering relationships with its
stakeholders as set out below, and also detailed in the Corporate Governance
section of this Annual Report.
Colleagues
We have an experienced, and dedicated workforce which we recognise as the key
asset of our business. It is vital to the success of the Group to continue to
create the right environment to encourage and create opportunities for
individuals and teams to realise their full potential. The Board and
management team pay close attention to employee feedback and seek to respond
constructively to any suggestions or concerns raised.
Regular colleague briefing sessions are held with the Chief Executive Officer
to enable colleagues to ask questions and raise issues and for colleagues to
be provided with updates on the business. Key performance information such as
trading updates and financial results are always promptly communicated to
colleagues. The Group has in place a share option scheme to enable colleagues
to become personally invested as shareholders of the Group.
Customers
Regular communication is with the Group's core customers to discuss
operational updates, product roadmap developments and gain key customer
feedback. This enables increased engagement with customers at a strategic
level and a greater understanding of both customer pain points and future
requirements from strategic to end-user level.
Strategy
The Group continues to invest in an R&D strategy, current details of which
are provided in paragraph six of the review of operations.
Suppliers
The Board is committed to building trusted partnerships with the Group's
suppliers. Through these partnerships, we deliver value and quality to our
other stakeholders.
Shareholders
The Chief Executive Officer and Executive Chairman hold analyst and investor
roadshow meetings during the year, particularly following the release of the
Group's interim and full year results and feedback from those meetings is
shared with the Board. The AGM is a key opportunity for engagement between the
Board and shareholders, particularly private shareholders. The Group's annual
report and accounts is made available to all shareholders both online and in
hard copy where requested. All presentations and announcements and other key
shareholder information is available on the investor section of the Group's
website.
Outlook
It has been an extremely difficult two years for the business. The principal
markets we operate in have been badly hit by the pandemic, dramatically
constraining our business development activities. We have managed to maintain
our revenue levels through this period, and executed significant improvements
to our operational efficiency, such that we have reduced our operating expense
from £3.16m in 2019 to £2.53m in 2021. This has allowed the business to
trade through the period with modest losses, funded by a small working capital
facility provided by our principal shareholder, and no further recourse to
shareholders.
We are now focused on growth, and I am pleased to report that business
activity during the first quarter of 2022 has been promising. The new Resource
Management Platform has been showcased to all our partners, and trials are
running across numerous customer sites in key markets. This provides us with
incremental and potentially more lucrative recurring revenue streams, given
the higher value proposition that we are now able to offer customers.
I would like to thank the whole of our team for their incredible efforts
across the last 24 months. It's been a challenge, but we emerge leaner, and
with a much more compelling proposition to take to market. There is still much
to be done, but we are encouraged by the early signs in 2022. I look forward
to updating shareholders as the year develops.
Approved by the Board of Directors and signed on behalf of the Board
Jeremy Fenn
Chairman
31 March 2022
Consolidated income statement
For the year ended 31 December 2021
2021 2020
£'000 £'000
Continuing operations
Revenue 2,591 2,532
Cost of sales (100) (181)
Gross profit 2,491 2,351
Operating expenses
Administrative expenses (2,525) (2,722)
Exchange differences 78 (69)
Depreciation and amortisation expense (297) (344)
Total operating expenses (2,744) (3,135)
Group operating loss before exchange differences,
exceptional items & depreciation and amortisation expense (34) (371)
Group operating loss (253) (784)
Finance costs (608) (606)
Loss before tax (861) (1,390)
Income tax credit 231 248
Loss for the year (630) (1,142)
Loss per share (pence)
Basic and diluted (0.17) (0.30)
Consolidated statement of comprehensive income
For the year ended 31 December 2021
2021 2020
£'000 £'000
Loss for the year (630) (1,142)
Other comprehensive gain/(loss)
Item that will subsequently be reclassified
to profit or loss:
Exchange differences on translation
of foreign operations (5) 16
Total comprehensive loss for the year (635) (1,126)
Attributable to:
Equity holders of the parent (635) (1,126)
Consolidated statement of financial
position
As at 31 December 2021
2021 2020
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 122 148
Intangible assets - 12
Right-of-use assets 83 316
205 476
Current assets
Trade and other receivables 1,632 1,906
Inventories 67 56
Cash and cash equivalents 65 187
1,764 2,149
Liabilities
Current liabilities
Trade and other payables (4,661) (4,968)
Borrowings (9,662) (8,902)
Lease liabilities (91) (252)
Net current liabilities (12,650) (11,973)
Non-current liabilities
Trade and other payables (1,213) (1,451)
Borrowings (37) (46)
Lease liabilities - (83)
(1,250) (1,580)
Net liabilities (13,695) (13,077)
Equity attributable to the owners of the parent
Share capital 7,595 7,595
Share premium 15,797 15,797
Reverse acquisition reserve (7,620) (7,620)
Merger reserve 10,938 10,938
Foreign currency translation reserve (2,209) (2,204)
Accumulated losses (38,196) (37,583)
Total equity (13,695) (13,077)
Consolidated statement of changes in
equity
For the year ended 31 December 2021
Share Share Reverse acquisition Merger Foreign currency translation Accumulated Total
capital premium reserve reserve reserve Losses equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 7,595 15,797 (7,620) 10,938 (2,220) (36,466) (11,976)
Loss for the year - - - - - (1,142) (1,142)
Exchange differences on translation
of foreign operations - - - - 16 - 16
Total comprehensive loss for the year - - - - 16 (1,142) (1,126)
Equity settled share-based payments - - - - - 25 25
Balance at 31 December 2020 7,595 15,797 (7,620) 10,938 (2,204) (37,583) (13,077)
Share Share Reverse acquisition Merger Foreign currency translation Accumulated Total
capital premium reserve reserve reserve Losses 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 year - - - - - (630) (630)
Exchange differences on translation
of foreign operations - - - - (5) - (5)
Total comprehensive loss for the year - - - - (5) (630) (635)
Equity settled share-based payments - - - - - 17 17
Balance at 31 December 2021 7,595 15,797 (7,620) 10,938 (2,209) (38,196) (13,695)
Consolidated statement of cash
flows
For the year ended 31 December 2021
2021 2020
£'000 £'000
Operating activities
Cash used in operations (247) (101)
Tax received 238 238
Interest paid - -
Net cash (used in)/from operating activities (9) 137
Investing activities
Purchase of property, plant & equipment (19) (3)
Disposal of property, plant & equipment 7 -
Purchase of right-of-use assets - -
Net cash used in investing activities (12) (3)
Financing activities
Issue of ordinary share capital - -
Share issue costs - -
Increase in borrowings 147 50
IFRS 16 leases (248) (259)
Net cash used in financing activities (101) (209)
Effects of exchange rates on cash
and cash equivalents - (2)
Net decrease in cash and
cash equivalents in the year (122) (77)
Cash and cash equivalents at beginning of year 187 264
Cash and cash equivalents at end of year 65 187
Notes to the financial statements
1 Financial information
The financial information set out in this final results announcement does not
constitute statutory accounts within the meaning of s434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2021 will be made
available to shareholders for approval at the next Annual General Meeting. The
statutory accounts contain an unqualified audit report, which did not include
a statement under s498(2) or s498(3) of the Companies Act 2006, and will be
delivered to the Registrar of Companies.
The statutory accounts for the year ended 31 December 2020 which have been
delivered to the Registrar of Companies, contained an unqualified audit report
and did not include a statement under s498(2) or s498(3) of the Companies Act
2006.
2 Segmental analysis
The Group presents its results in accordance with internal management
reporting information to the chief operating decision maker (Board of
Directors). At 31 December 2021 the Board continued to monitor operating
results by category of revenue within a single operating segment, the
provision of instant communication solutions. Under IFRS 8 the Group has only
one operating segment.
Revenue by category
2021 2020
£'000 £'000
License fees 2,003 1,843
Hardware & software 164 267
Professional services 201 218
Support & Maintenance 223 204
Total 2,591 2,532
2021 2020
£'000 £'000
Recurring 2,112 2,042
Non-recurring 479 490
Total 2,591 2,532
Revenue is reported by geographical location of customers. Non-current assets
are reported by geographical location of assets.
2021 2021 2020 2020
Non-current Non-current
Revenue assets Revenue assets
£'000 £'000 £'000 £'000
UK 19 23 24 -
Europe 188 - 213 -
North America 581 - 755 -
South America 1,118 - 805 -
Israel 329 182 365 476
Africa 348 - 367 -
Asia/Pacific 8 - 3 -
Total 2,591 205 2,532 476
Of the total revenue of the Group, four customers each represented revenue
greater than 10% of this total - these being 20% or £518,000 (2020: 27% or
£684,000), 22% or £567,000 (2020: 16% or £414,000), 13% or £348,000 (2020:
15% or £367,000) and 21% or £551,000 (2020: 15% or £391,000) respectively.
3 Loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders of £630,000 (2020: £1,142,000) by the weighted average
number of ordinary shares in issue during the year of 379,744,923 (2020:
379,744,923).
2021 2020
Basic and diluted Basic and diluted
Loss Loss Loss Loss
per share per share
£'000 pence £'000 pence
Loss attributable to
ordinary shareholders (630) (0.17) (1,142) (0.30)
The loss attributable to ordinary shareholders and the weighted average number
of ordinary shares for the purpose of calculating the diluted earnings per
ordinary share are identical to those used for basic earnings per ordinary
share. This is because the exercise of share options are anti-dilutive under
the terms of IAS 33.
4 Annual General Meeting
The Annual General Meeting of the Company will be announced separately in due
course. The audited results for the year ended 31 December 2021 will be made
available to shareholders shortly and will be available on the Company's
website at www.mobiletornado.com (http://www.mobiletornado.com) at the same
time.
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