REG - Mobile Tornado Group - 2022 Final Results
27/04/2023 07:00
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RNS Number : 5942X Mobile Tornado Group PLC 27 April 2023
27 April 2023
Mobile Tornado Group plc
("Mobile Tornado", the "Company" or the "Group")
2022 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 2022.
Financial Highlights
2022 2021
£'000 £'000
Recurring revenue 1,969 2,112
Non-recurring revenue* 310 479
Total revenue 2,279 2,591
Gross profit 2,223 2,491
Administrative expenses** (2,507) (2,525)
Adjusted EBITDA*** (284) (34)
Group operating loss (723) (253)
Loss before tax (1,419) (861)
· Total revenue decreased by 12% to £2.28m (2021: £2.59m)
o Recurring revenues decreased by 7% to £1.97m (2021: £2.11m)
o Non-recurring revenues* decreased by 35% to £0.31m (2021: £0.48m)
· Gross profit decreased by 11% to £2.22m (2021: £2.49m)
· Administrative expenses before depreciation, amortisation,
exceptional items and exchange differences decreased by 1% to £2.51m (2021:
£2.53m)
· Adjusted EBITDA** loss of £0.28m (2021: loss of £0.03m)
· Group operating loss for the year increased to £0.72m (2021:
£0.25m)
· Loss after tax of £1.38m (2021: loss of £0.63m)
· Basic loss per share of 0.36p (2021: loss of 0.17p)
· Cash at bank at 31 December 2022 of £0.15m (31 December 2021:
£0.07m) with net debt of £10.44m (2021: £9.63m)
* Non-recurring revenues comprise installation fees, hardware, professional
services and capex license fees
** Administrative expenses excludes depreciation, amortisation and exchange
differences
***Earnings before interest, tax, depreciation, amortisation, exceptional
items and excluding exchange rate differences
Operating highlights
· Successful trials completed with several public sector
organisations across South & Central America and commercial discussions
now in progress
· Deal closed in Caribbean with leading mobile network operator
("MNO")
· Landmark push-to-talk over cellular ("PoC") deal concluded with
Leeds Bradford Airport post year-end, having run extensive trials during 2022
· Post year end fundraise to support the scale up of our sales,
marketing and business development activities
Jeremy Fenn, Chairman of Mobile Tornado, said: "The business has successfully
established itself as a key player in the PoC market, with a presence in
Africa, South America and Europe. We deliver a high-quality, reliable PoC
solution that meets the mission-critical communication needs of our customers.
Our platform boasts several key differentiators, such as seamless transition,
market-leading group sizes, a unique dispatcher console, and highly efficient
data utilization, which set us apart from our competitors and contribute to
our platform's reputation for superior performance.
"The Board is fully committed to maintaining the technical advantages that
have been established, at the same time driving a much deeper and wider
business development operation. The outreach campaign that has been running
since the start of the year has already generated a good flow of new partner
and customer opportunities, many of them in new geographic markets. We believe
that this momentum can be accelerated significantly if we can successfully
deploy our solution into a public safety organisation. Our teams worked hard
on multiple trials during the last 15 months and we are hopeful that we will
very shortly see a successful conclusion with full platform deployment. This
would represent a significant commercial breakthrough, and we are confident
will lead to a material uplift in financial performance as we push towards
profitability in 2023."
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 / Piers Shimwell (Corporate Finance)
David Johnson (Sales and Corporate Broking)
Financial results and key performance indicators
Total revenue for the year ended 31 December 2022 decreased by 12% to £2.28m
(2021: £2.59m). Recurring revenues decreased by 7% to £1.97m (2021:
£2.11m). Non-recurring revenues, comprising installation fees, hardware,
professional services and capex license fees decreased to £0.31m (2021:
£0.48m). As a result, gross profit decreased by 11% to £2.22m (2021:
£2.49m).
Our former customer located in Canada, which the Group lost at the end of 2021
as previously reported, accounted for 20% of total revenue and 10% 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.
Administrative expenses before depreciation, amortisation, exceptional items
and exchange differences in the year decreased by 1% to £2.51m (2021:
£2.53m), 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 loss of £0.23m (2021: gain of
£0.08m) arising from the depreciation of Sterling relative to both the Euro
and the US Dollar as at 31 December 2022 versus the previous year end. The
Group recorded a net income tax credit of £0.04m (2021: £0.23m).
The loss after tax for the year increased to £1.38m (2021: loss of £0.63m)
equating to a basic loss per share of 0.36p (2021: 0.17p).
The net cash used in operations decreased to £0.17m (2021: £0.25m). At 31
December 2022, the Group had £0.15m cash at bank (2021: £0.07m) and net debt
of £10.44m (31 December 2021: £9.63m).
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 2022 (year ended 31 December 2021: nil). The Company
currently intends to reinvest future earnings to finance the growth of the
business over the near term.
Review of operations
We have delivered a year of steady progress, managing the exit of one of our
biggest customers and maintaining and securing modest growth across the
balance of the customer base.
Much of our efforts in 2022 were directed towards public safety organisations
in South and Central America, where we have witnessed growing interest in our
solution having delivered 100% service reliability to our customer base in
Colombia over the last 2 years. Our technical team worked hard during the year
to introduce new features and functionality to meet the requirements of these
organisations and we are pleased to report that all trials concluded
successfully. As is always the case with public sector organisations, we are
in a commercial process which always runs longer than expected and so it is
difficult to know when service deployment will commence. We anticipate initial
deployments in El Salvador and Guatemala, and providing these run
successfully, further engagements in Costa Rica, Nicaragua and Honduras.
We are increasingly confident that our PoC technology platform has the
potential to greatly enhance communication and coordination among first
responders, law enforcement, and emergency services. By providing real-time,
reliable, and secure communication channels, PoC can significantly improve
response times and operational efficiency, and this has been borne out by the
results of the trials that ran during the year. Encouragingly, we are now
seeing public safety organisations in other territories express interest in
running trials and we hope to achieve significant commercial breakthroughs
during 2023.
As previously reported, our Caribbean partner signed a contract with a
prominent mobile network operator (MNO) in 2022, initiating trials and
discussions with numerous customers across various countries. A robust sales
pipeline has developed, and we are now seeing the first commercial deployments
across hotel groups, transportation companies and airports. At the same time,
trials have commenced with several public safety organisations.
Activity levels across South Africa have been low due to economic and
political challenges, but we maintain engagement with public utilities and
agencies interested in deploying our platform. We are hopeful that commercial
success with public safety organisations in South and Central America will
stimulate broader engagement in the region.
Our UK partner recently finalised a landmark deal with Leeds Bradford Airport
having run extensive trials during 2022. We understand this is one of the
first airports in Europe to replace a legacy analogue radio system with PoC
and anticipate that this will open engagement and discussions with many
others.
Since we announced the Board changes on 9 January 2023, we are pleased to
report that the business has moved quickly to scale up its sales and business
development operation and is now actively engaged with several potential new
partners and customers. We are in the process of finalising agreements with
new partners across several markets, including Brazil, USA, Philippines and
the Middle East.
Having navigated through the COVID period without any external funding (the
last equity raise was in July 2019), we raised £500k through a strategic
funding round in March 2023 to support marketing and business development
activities. This will be directed towards enhanced PR activity, participation
in major industry trade shows and the recruitment of additional sales
professionals to manage the increasing portfolio of partners.
Research and Development
We are confident that our PoC platform provides a top-tier mission-critical
communications solution, which is distinguished by the following key
differentiators:
Seamless transition - our platform ensures uninterrupted communication during
shifts between different networks or coverage zones. This allows users to
maintain constant connectivity and enables efficient collaboration across
teams, regardless of their location or network conditions.
Market-leading group sizes - our platform supports larger group sizes compared
to competing solutions, making it ideal for organizations with extensive teams
or complex communication requirements. The solution can manage group sizes of
5,000 compared to competing products that are limited to several hundred.
Dispatcher console - the dispatcher console is a centralized and user-friendly
interface that allows for efficient coordination and management of
communication channels. It enables dispatchers to monitor and control
conversations, prioritize messages, and allocate resources, ensuring smooth
communication flow and rapid response times during critical situations. Our
console is capable of managing 64 groups simultaneously, which we believe puts
us ahead of all competing platforms.
Data utilization - our platform optimizes data usage by employing advanced
compression techniques and minimizing bandwidth consumption. This results in
cost savings for customers while maintaining high-quality voice and data
transmission. Additionally, the platform's efficient data management allows
for seamless integration with other systems, further enhancing its versatility
and adaptability to various organizational needs.
Our development teams in Israel and India will continue to enhance the
platform, in line with the demands from our customers, to ensure we maintain
our current competitive advantage.
Funding
We increased our £0.3m revolving loan facility to £500,000 on 24 March 2022
with our principal shareholder InTechnology plc and extended the term for a
further 12 months. This facility now has a term ending on 26 September 2023
with a maximum principal amount of £500,000 (previously £300,000). As at 31
December 2022, the balance drawn down was £400,000 (31 December 2021:
£150,000).
In March 2023, we concluded a subscription for 25.0m new ordinary shares of 2
pence each representing approximately 6.6 per cent. of the existing issued
ordinary share capital of the Company at a price of 2 pence per share to raise
£500,000. The Company also announced the capitalisation of £259,490 of
indebtedness owed by the Company to InTechnology plc into 12,974,492 new
Ordinary Shares, also at 2 pence per share.
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.
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 can 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 totaling £10,148,000 and to
extend the duration of our £500,000 working capital facility if requested to
do so. 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.
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, including a contingent consideration
balance of £2,815,000, (as disclosed in note 12 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 Executive Chairman holds 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
The business has successfully established itself as a key player in the PoC
market, with a presence in Africa, South America and Europe. We deliver a
high-quality, reliable PoC solution that meets the mission-critical
communication needs of our customers. Our platform boasts several key
differentiators, such as seamless transition, market-leading group sizes, a
unique dispatcher console, and highly efficient data utilization, which set us
apart from our competitors and contribute to our platform's reputation for
superior performance.
The Board is fully committed to maintaining the technical advantages that have
been established, at the same time driving a much deeper and wider business
development operation. The outreach campaign that has been running since the
start of the year has already generated a good flow of new partner and
customer opportunities, many of them in new geographic markets. We believe
that this momentum can be accelerated significantly if we can successfully
deploy our solution into a public safety organisation. Our teams worked hard
on multiple trials during the last 15 months and we are hopeful that we will
very shortly see a successful conclusion with full platform deployment. This
would represent a significant commercial breakthrough, and we are confident
will lead to a material uplift in financial performance as we push for
profitability in 2023.
As always, we would like to thank our team for their outstanding efforts
across the last financial year. We have started the new year with renewed
energy, and we are encouraged by the early results. We look forward to
updating shareholders as the year develops, and sincerely believe that we are
very close to realizing the potential we have seen now for some years.
Approved by the Board of Directors and signed on behalf of the Board
Jeremy Fenn
Chairman
27 April 2023
Consolidated income statement
For the year ended 31 December 2022
2022 2021
£'000 £'000
Continuing operations
Revenue 2,279 2,591
Cost of sales (56) (100)
Gross profit 2,223 2,491
Operating expenses
Administrative expenses (2,507) (2,525)
Exchange differences (227) 78
Depreciation and amortisation expense (212) (297)
Total operating expenses (2,946) (2,744)
Group operating loss before exchange differences,
depreciation and amortisation expense (284) (34)
Group operating loss (723) (253)
Finance costs (696) (608)
Loss before tax (1,419) (861)
Income tax credit 37 231
Loss for the year (1,382) (630)
Loss per share (pence)
Basic and diluted (0.36) (0.17)
Consolidated statement of comprehensive income
For the year ended 31 December 2022
2022 2021
£'000 £'000
Loss for the year (1,382) (630)
Other comprehensive gain/(loss)
Item that will subsequently be reclassified
to profit or loss:
Exchange differences on translation
of foreign operations (61) (5)
Total comprehensive loss for the year (1,443) (635)
Attributable to:
Equity holders of the parent (1,443) (635)
Consolidated statement of financial
position
As at 31 December 2022
2022 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 155 122
Right-of-use assets 350 83
505 205
Current assets
Trade and other receivables 1,414 1,632
Inventories 25 67
Cash and cash equivalents 145 65
1,584 1,764
Liabilities
Current liabilities
Trade and other payables (5,191) (4,661)
Borrowings (10,558) (9,662)
Lease liabilities (105) (91)
Net current liabilities (14,270) (12,650)
Non-current liabilities
Trade and other payables (1,076) (1,213)
Borrowings (27) (37)
Lease liabilities (258) -
(1,361) (1,250)
Net liabilities (15,126) (13,695)
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 (2,270) (2,209)
Accumulated losses (39,566) (38,196)
Total equity (15,126) (13,695)
Consolidated statement of changes in
equity
For the year ended 31 December 2022
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)
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 2022 7,595 15,797 (7,620) 10,938 (2,209) (38,196) (13,695)
Loss for the year - - - - - (1,382) (1,382)
Exchange differences on translation
of foreign operations - - - - (61) - (61)
Total comprehensive loss for the year - - - - (61) (1,382) (1,443)
Equity settled share-based payments - - - - - 12 12
Balance at 31 December 2022 7,595 15,797 (7,620) 10,938 (2,270) (39,566) (15,126)
Consolidated statement of cash
flows
For the year ended 31 December 2022
2022 2021
£'000 £'000
Operating activities
Cash used in operations (173) (247)
Tax received 238 238
Interest paid 9 -
Net cash (used in)/from operating activities 74 (9)
Investing activities
Purchase of property, plant & equipment (60) (19)
Disposal of property, plant & equipment - 7
Net cash used in investing activities (60) (12)
Financing activities
Receipt of borrowings 250 150
Repayment of borrowings (10) (3)
IFRS 16 leases (180) (248)
Net cash generated from/(used) in financing activities 60 (101)
Effects of exchange rates on cash
and cash equivalents 6 -
Net increase/(decrease) in cash and
cash equivalents in the year 80 (122)
Cash and cash equivalents at beginning of year 65 187
Cash and cash equivalents at end of year 145 65
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 2022 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 2021 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 2022 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
2022 2021
£'000 £'000
License fees 2,014 2,003
Hardware & software 178 164
Professional services 26 201
Support & Maintenance 61 223
Total 2,279 2,591
2022 2021
£'000 £'000
Recurring 1,969 2,112
Non-recurring 310 479
Total 2,279 2,591
Revenue is reported by geographical location of customers. Non-current assets
are reported by geographical location of assets.
2022 2022 2021 2021
Non-current Non-current
Revenue assets Revenue assets
£'000 £'000 £'000 £'000
UK 31 - 19 23
Europe 99 - 188 -
North America 65 - 581 -
South America 1,341 - 1,118 -
Israel 351 505 329 182
Africa 382 - 348 -
Asia/Pacific 10 - 8 -
Total 2,279 505 2,591 205
Of the total revenue of the Group, three customers each represented revenue
greater than 10% of this total - these being 30% or £685,000 (2021: 21% or
£551,000), 29% or £656,000 (2021: 22% or £567,000) and 17% or £382,000
(2021: 13% or £348,000) respectively.
3 Loss per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders of £1,382,000 (2021: £630,000) by the weighted average
number of ordinary shares in issue during the year of 379,744,923 (2021:
379,744,923).
2022 2021
Basic and diluted Basic and diluted
Loss Loss Loss Loss
per share per share
£'000 pence £'000 pence
Loss attributable to
ordinary shareholders (1,382) (0.36) (630) (0.17)
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 2022 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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