REG - Mobile Tornado Group - Half-year Report
28/09/2022 07:00
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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)
o Recurring revenues decreased by 13% to £0.93m (H1 2021: £1.07m)
o 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 (http://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
Note £'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 (http://www.mobiletornado.com) on 28 September 2022.
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