REG - Mobile Tornado Group - Half-year Report <Origin Href="QuoteRef">MBLT.L</Origin>
RNS Number : 0310SMobile Tornado Group PLC28 September 2017Mobile Tornado Group plc
("Mobile Tornado", the "Company" or the "Group")
Half Yearly Report
Mobile Tornado (AIM: MBT), the instant communications services provider for mobile devices, announces its unaudited results for the 6 month period to 30 June 2017.
Financial Highlights
Total revenue increased by 21% to 1.11m (H1 2016: 0.92m)
o Recurring revenue increased by 24% to 1.04m (H1 2016: 0.84m)
Operating expenses increased by 14% to 2.09m (H1 2016: 1.83m)
o adversely impacted by the depreciation of sterling
Adjusted EBITDA* loss of 1.04m (H1 2016: 0.96m)
Group operating loss of 1.12m (H1 2016: 1.53m)
Loss after tax of 1.06m (H1 2016: 1.56m)
Basic loss per share of 0.42p (H1 2016: 0.63p)
Cash and cash equivalents of 0.25m (H1 2016: 0.17m)
o Completed a placing to raise a total of 1.19m before expenses in April 2017
*excluding exchange differences and exceptional items
Operating highlights
Full commercial launches with two Mobile Network Operator ("MNO") customers in South Africa
Established trading relationships with two independent Push to Talk ("PTT") operators in South America
Completed the development of new Instant Communication platform, with significantly higher capacity and additional user features
Software Development Kit ("SDK") upgraded and released to market
Development of the new Dispatch Console (MDC200) completed and released to market
Jeremy Fenn, Chairman of Mobile Tornado, commented: "The improvements we have made to our platform over the last 12 months have been borne out by the recent wins in the Middle East and the increasing number of tenders we have been asked to participate in. Further evidence that adoption of PoC is accelerating was provided by the recent acquisition of Kodiak Networks, one of our principle competitors, by Motorola Solutions.
"I am confident that our experienced management team led by Avi Tooba, our recently appointed CEO, place the Company in a strong position as the market develops. We look forward to the balance of this year and the Company's prospects in 2018 and beyond. "
Enquiries:
Mobile Tornado Group plc
Jeremy Fenn, Chairman
+44 (0)7734 475 888
Investec Bank plc (Nominated Adviser & Broker)
+44 (0)20 7597 5970
Andrew Pinder / Carlton Nelson/ Sebastian Lawrence
Walbrook PR Ltd
+44 (0)20 7933 8780 or
Paul Cornelius / Helen Cresswell
Chairman's report
Financial results
Total reported turnover in the six-month period to 30 June 2017 increased by 21% to 1.11m (H1 2016: 0.92m). This increase was aided by the depreciation of Sterling during the period and at a constant currency level was an increase of 11% on the comparative period. Recurring revenues, a key performance indicator for the business, continued its upwards trajectory and increased 24% to 1.04m (H1 2016: 0.84m) as reported, and by 13% at a constant currency level. Non-recurring revenues, comprising installation fees and professional services, decreased slightly to 0.07m (H1 2016: 0.08m). As a result, gross profit increased 20% to 1.05m (H1 2016: 0.87m).
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 14% to 2.09m (H1 2016: 1.83m) due primarily to the depreciation of Sterling during the period.
The Group reported an unrealised foreign exchange gain of 0.07m (H1 2016: 0.42m loss) and recorded a net income tax credit in respect of our qualifying investment in R&D activities during the period of 0.38m (H1 2016: 0.28m).
As a result of all the above, the loss after tax for the period decreased to 1.06m (H1 2016: Loss 1.56m).
The net cash outflow from operating activities during the period increased to 1.42m (H1 2016: 0.82m) resulting in cash and cash equivalents as at 30 June 2017 of 0.25m (H1 2016: 0.17m). As at 30 June 2017, the Group had net debt of 9.71m (30 June 2016: 7.75m). Of this net debt figure, 7.87m is in respect of preference shares and associated unpaid accrued interest, held by Intechnology plc, our majority shareholder. The preference shares are redeemable at par value on 31 December 2018, or, at the Company's discretion, at any earlier date.
Review of operations
I'm pleased to report a period of solid operational progress across the business.
We have seen full commercial launches from our two Mobile Network Operator ('MNO') customers in South Africa having successfully commissioned and deployed dedicated server platforms for both customers. Discussions have also commenced with one of the MNOs to explore the roll out of services across other African countries.
In South America we continue to work with one of the major MNOs operating in that territory and have now established trading relationships with two other independent Push to Talk ("PTT") operators. There is a huge market for PTT in LATAM and we are continuing to strengthen our position to ensure we can take full advantage of the opportunity as it develops.
In the Middle East we have concluded a deal with an MNO that had previously deployed the iDEN platform. As reported previously, this technology is being closed down over the next couple of years, and we hope to work with this MNO to enable them to replace their legacy MNO systems with our own platform. We are in discussions with several other MNOs in LATAM, Middle East and Europe.
We continued to invest heavily in our research and development activities. A significant proportion of our cost-base is devoted to our engineering teams based at our development centres in Israel, Ukraine and India. Our new leadership team has been focused on recruiting the engineers needed to move the business forward across a number of areas and we are delighted with the advances that have been made.
During the period we also completed the development of our new Instant Communication platform, with significantly higher capacity and additional user features. We intend during the second half of the year to release a new line of lower cost server platforms for small and medium organisations. These systems will facilitate the replacement of legacy radio systems, saving initial installation costs and significantly reduce annual operating costs.
Our Software Development Kit ('SDK') was upgraded and released to the market during the first half. The SDK is currently being used by several partners, who are working to integrate our PTT solution with existing workforce management applications. The partners operate across a number of sectors including security, logistics and transportation. I am hopeful that we will see positive results soon, and begin to access significant deployed customer bases quickly and effectively.
The development of the new Dispatch Console (MDC200) was completed and released to the market. It is being tested by a number of customers around the world and the initial feedback has been excellent.
With regard to hardware, we introduced several new low cost ruggedised devices, manufactured by our partners, and sold through our customers in developing countries, primarily South America and Africa. As cost is a primary issue in these territories, it is encouraging to see the price levels falling significantly, making our proposition even more compelling to prospective customers. Later this year, we plan to introduce screen-less 3G and 4G devices to compete with low cost radio devices. The initial response from our partners to the early prototypes has been very encouraging.
Funding & going concern
The Company completed a placing on 27 April 2017 of 23.8 million shares at 5p per share to raise a total of 1.19m before expenses. The Directors subscribed for 12,000,000 shares comprising 50.4% of the issue. The Directors believe that the Group has sufficient working capital for the foreseeable future, which also takes into consideration its currently contracted revenues, anticipated contracts and the continued support of Intechnology plc, our majority shareholder.
Outlook
The macro outlook for our business continues to strengthen. With the global roll out of 3G/4G networks worldwide, users now have the option to use PoC for their instant communication requirements, instead of traditional radio platforms such as LMR, DMR and iDEN. The transition will intensify as the last iDEN systems shut down around the world and MNOs extend their LTE coverage.
At the same time, an increasing number of device manufacturers are adding PoC devices to their portfolio, which is bringing the prices down and allowing for greater penetration in developing countries. We are well placed, with customers and partners in each of the key territories, to take advantage of this emerging trend.
The improvements we have made to our platform over the last 12 months have been borne out by the recent wins in the Middle East and the increasing number of tenders we have been asked to participate in. Further evidence that adoption of PoC is accelerating was provided by the recent acquisition of Kodiak Networks, one of our principle competitors, by Motorola Solutions.
I am confident that our experienced management team led by Avi Tooba, our recently appointed CEO, place the Company in a strong position as the market develops. We look forward to the balance of this year and the Company's prospects in 2018 and beyond.
Jeremy Fenn
Chairman
28 September 2017
Consolidated income statement
For the six months ended 30 June 2017
Six months
Six months
Year
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Continuing Operations
Revenue
1,106
915
2,024
Cost of sales
(57)
(41)
(103)
Gross profit
1,049
874
1,921
Other operating expenses
(2,085)
(1,833)
(3,885)
Group operating loss before exchange differences,
exceptional items, depreciation and amortisation expense
(1,036)
(959)
(1,964)
Exchange differences
66
(421)
(642)
Exceptional items
(88)
(86)
(276)
Depreciation and amortisation expense
(65)
(66)
(203)
Total operating expenses
(2,172)
(2,406)
(5,006)
Group operating loss
(1,123)
(1,532)
(3,085)
Finance costs
(315)
(307)
(640)
Loss before tax
(1,438)
(1,839)
(3,725)
Income tax credit
375
277
277
Loss for the period
(1,063)
(1,562)
(3,448)
Loss per share (pence)
Basic and diluted
(0.42)
(0.63)
(1.39)
Consolidated statement of comprehensive income
For the six months ended 30 June 2017
Six months
Six months
Year ended
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Loss for the period
(1,063)
(1,562)
(3,448)
Other comprehensive income
Exchange differences on translation
of foreign operations
25
(37)
(71)
Total comprehensive loss for the period
(1,038)
(1,599)
(3,519)
Consolidated statement of changes in equity
For the six months ended 30 June 2017
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 2016
4,951
12,012
(7,620)
10,938
(2,183)
(29,239)
(11,141)
Equity settled share-based payments
-
-
-
-
-
16
16
Transactions with owners
-
-
-
-
-
16
16
Loss for the period
-
-
-
-
-
(1,562)
(1,562)
Exchange differences on translation
of foreign operations
-
-
-
-
(37)
-
(37)
Total comprehensive loss
for the period
-
-
-
-
(37)
(1,562)
(1,599)
Balance at 30 June 2016
4,951
12,012
(7,620)
10,938
(2,220)
(30,785)
(12,724)
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 2016
4,951
12,012
(7,620)
10,938
(2,220)
(30,785)
(12,724)
Equity settled share-based payments
-
-
-
-
-
7
7
Transactions with owners
-
-
-
-
-
7
7
Loss for the period
-
-
-
-
-
(1,886)
(1,886)
Exchange differences on translation
of foreign operations
-
-
-
-
(34)
-
(34)
Total comprehensive loss
for the period
-
-
-
-
(34)
(1,886)
(1,920)
Balance at 31 December 2016
4,951
12,012
(7,620)
10,938
(2,254)
(32,664)
(14,637)
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 2017
4,951
12,012
(7,620)
10,938
(2,254)
(32,664)
(14,637)
Equity settled share-based payments
-
-
-
-
-
18
18
Issue of share capital
476
660
-
-
-
-
1,136
Transactions with owners
476
660
-
-
-
18
1,154
Loss for the period
-
-
-
-
-
(1,063)
(1,063)
Exchange differences on translation
of foreign operations
-
-
-
-
25
-
25
Total comprehensive loss
for the period
-
-
-
-
25
(1,063)
(1,038)
Balance at 30 June 2017
5,427
12,672
(7,620)
10,938
(2,229)
(33,709)
(14,521)
Consolidated balance sheet
As at 30 June 2017
30 June
30 June
31 December
2017
2016
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Assets
Non-current assets
Property, plant & equipment
281
297
294
Intangible assets
144
187
162
425
484
456
Current assets
Trade and other receivables
1,338
1,266
1,313
Inventories
1
32
-
Tax debtor
431
-
-
Cash and cash equivalents
248
168
165
2,018
1,466
1,478
Liabilities
Current liabilities
Trade and other payables
(4,526)
(4,248)
(4,719)
Borrowings
(4,402)
(2,377)
(3,667)
Net current liabilities
(6,910)
(5,159)
(6,908)
Non-current liabilities
Trade and other payables
(2,476)
(2,512)
(2,625)
Borrowings
(5,560)
(5,537)
(5,560)
(8,036)
(8,049)
(8,185)
Net liabilities
(14,521)
(12,724)
(14,637)
Shareholders' equity
Share capital
5,427
4,951
4,951
Share premium
12,672
12,012
12,012
Reverse acquisition reserve
(7,620)
(7,620)
(7,620)
Merger reserve
10,938
10,938
10,938
Foreign currency translation reserve
(2,229)
(2,220)
(2,254)
Retained earnings
(33,709)
(30,785)
(32,664)
Total equity
(14,521)
(12,724)
(14,637)
Consolidated cash flow statement
For the six months ended 30 June 2017
Six months
Six months
Year
ended
ended
ended
30 June
30 June
31 December
2017
2016
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Operating activities
Cash used in operations
(1,419)
(815)
(1,721)
Tax credit received
-
277
277
Net cash used in operating activities
(1,419)
(538)
(1,444)
Investing activities
Purchase of property, plant & equipment
(48)
(20)
(108)
Purchase of intangible assets
-
(80)
(81)
Net cash used in investing activities
(48)
(100)
(189)
Financing
Issue of ordinary share capital
1,190
-
-
Share issue costs
(54)
-
-
Proceeds from borrowings
420
690
1,670
Net cash inflow from financing
1,556
690
1,670
Effects of exchange rates on cash
and cash equivalents
(6)
9
21
Net increase in cash and
cash equivalents in the period
83
61
58
Cash and cash equivalents at beginning of period
165
107
107
Cash and cash equivalents at end of period
248
168
165
Notes to the interim report
For the six months ended 30 June 2017
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 2016 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 2017. 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 2016. 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 1,063,000 (30 June 2016: 1,562,000, 31 December 2016: 3,448,000) by the weighted average number of ordinary shares in issue during the period of 255,311,200 (30 June 2016: 247,553,189, 31 December 2016: 247,553,189).
Six months ended
Six months ended
Year ended
30 June 2017
30 June 2016
31 December 2016
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
(1,063)
(0.42)
(1,562)
(0.63)
(3,448)
(1.39)
4 Share capital and share premium
Number of
Share
Share
Total
shares
capital
premium
'000
'000
'000
'000
At 1 January 2016, 30 June 2016
& 31 December 2016
247,553
4,951
12,012
16,963
Issue of shares
23,800
476
660
1,136
At 30 June 2017
271,353
5,427
12,672
18,099
Non-voting preference shares
Number of
Nominal
shares
Value
'000
'000
At 30 June 2016, 31 December 2016 and 30 June 2017
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 redeemable at par value on 31 December 2018, 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
2017
2016
2016
Unaudited
Unaudited
Audited
'000
'000
'000
Loss before taxation
(1,438)
(1,839)
(3,725)
Adjustments for:
Depreciation
65
66
203
Share based payment charge
18
16
23
Interest expense
315
307
640
Changes in working capital:
(Increase)/Decrease in inventories
(1)
(1)
31
(Increase)/Decrease in trade and other receivables
(108)
18
38
(Decrease)/Increase in trade and other payables
(270)
618
1,069
Net cash used in operations
(1,419)
(815)
(1,721)
6 Shareholder information
The interim announcement will be published on the company's website www.mobiletornado.com on 28 September 2017.
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR BCGDCUSDBGRR
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