REG - Mobile Tornado Group - Half-year Report
26/09/2024 07:00
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RNS Number : 6963F Mobile Tornado Group PLC 26 September 2024
26 September 2024
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 2024.
Financial highlights
Six months Six months
ended ended
30 June 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Recurring revenue 859 964
Non-recurring revenue* 203 293
Total revenue 1,062 1,257
Gross profit 1,031 1,129
Administrative expenses (1,180) (1,284)
Adjusted EBITDA** (149) (155)
Group operating loss (191) (144)
Loss before tax (604) (527)
· Total revenue decreased by 16% to £1.06m (H1 2023: £1.26m)
o Recurring revenues decreased by 11% to £0.86m (H1 2023: £0.96m)
o Non-recurring revenues* decreased by 31% to £0.20m (H1 2023: £0.29m)
· Operating expenses decreased by 8% to £1.18m (H1 2023: £1.28m)
· Adjusted EBITDA** loss of £0.15m (H1 2023: £0.16m)
· Group operating loss for the period increased to £0.19m (H1
2023: £0.14m) - impacted by exchange differences of £0.04m gain (H1 2023:
£0.10m gain)
· Loss before tax of £0.60m (H1 2023: £0.53m)
· Basic loss per share of 0.15p (H1 2023: 0.14p)
· Net cash inflow from operating activities of £0.04m (H1 2023:
£0.28m outflow)
· Net debt at 30 June 2024 of £11.10m (H1 2023: £10.43m)
· Cash and cash equivalents of £0.13m (30 June 2023: £0.05m)
*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
· Multiple new partner deals signed, a result of our wider business
development strategy launched in 2023
· Deal closed with Zain Iraq, part of Zain Group, a leading mobile
network operator ("MNO") in the Middle East and Africa through our in-country
partner
· Partner deals agreed with major systems integrators including
Wiconnect, 3GCOM and CAYES
· Development and launch of a new live video streaming service and
software radio bridge, further enhancing our offering to the market
Jeremy Fenn, Chairman and acting CEO of Mobile Tornado, said: "The strategy we
launched in early 2023 to widen our network of industry partners and establish
a presence in new international markets has continued. During 2024, we have
secured deals with multiple new partners covering the Nordics, Gulf States,
USA, UK and North Africa. We have significantly expanded our addressable
market over the last 18 months and the plan is to continue investing in this
strategy as we move through this year and into 2025.
"In one of our most significant deals in recent years, we announced on 8 May
2024 that we had been chosen to supply a range of cutting-edge technologies to
a prominent MNO and provider of innovative technologies in the Middle East and
Africa. We are now pleased to be able to confirm that this MNO is Zain Iraq,
part of Zain Group ("Zain"). Zain serves over 50 million active individual and
business customers, offering a comprehensive selection of mobile voice and
data services. Zain was in search of a range of solutions to enhance its
services for enterprise customers managing diverse workforces across various
industries. After a competitive procurement process involving globally
recognised telecoms companies, Guardia Systems, an IT systems integrator, was
selected to deliver our push-to-talk over cellular and live video
communication services. I am delighted to see this new commercial partnership
being formally launched this week at the ITEX Expo being held in Iraq, with
members of our team in attendance.
"The Board is focused on growing the Company's recurring revenues as this will
be the primary driver for delivering increased shareholder value. We are now
engaged with significantly more partners and end customers than we were 18
months ago, and I am hopeful that these relationships will begin to deliver
material uplifts in sales activity as we move forward. We will also continue
to explore initiatives where we can improve the efficiency of the business to
ensure that our operational gearing is maximized when the revenue streams
start to grow."
Enquiries:
Mobile Tornado Group plc +44 (0)7734 475 888
Jeremy Fenn, Chairman and acting CEO 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 2024 decreased by 16% to
£1.06m (H1 2023: £1.26m). Recurring revenues decreased by 11% to £0.86m (H1
2023: £0.96m).
Non-recurring revenues, comprising installation fees, hardware, professional
services and capex license fees decreased by 31% to £0.20m (H1 2023:
£0.29m). Gross profit decreased by 9% to £1.03m (H1 2023: £1.13m).
Administrative expenses before depreciation, amortisation, exceptional items
and exchange differences in the year decreased by 8% to £1.18m (2023:
£1.28m), 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 revaluation of certain financial liabilities on the balance
sheet, the Group reported a currency translational gain of £0.04m (H1 2023:
£0.10m gain) arising principally from the appreciation of Sterling against
the US Dollar compared to the start of the period. As a result of the above,
the loss after tax for the period increased to £0.63m (H1 2023: Loss of
£0.56m).
The Group reported a net cash inflow from operating activities during the
period of £0.04m (H1 2023: £0.28m outflow). At 30 June 2024, the Group had
£0.13m cash at bank (30 June 2023: £0.05m) and net debt of £11.10m (30 June
2023: £10.43m).
Review of operations
Recurring revenues were down slightly because of the renegotiated exclusive
contract with our partner in South Africa, where we adjusted the commercial
terms to provide a more competitively priced proposition. We are focussed on
developing a significant uplift in recurring revenues over the next few years
and embarked, in early 2023, on a broad-based business development strategy to
materially enhance our commercial footprint across all key global markets.
Attendance at key trade shows, marketing outreach into key industry verticals,
and investment in sales and business development personnel have been the key
drivers, and as a result, we have increased the number of our contracted
partners significantly since early 2023.
During the first half a new partnership was entered into with Wiconnect to
make our platform available across The Cooperation Council for the Arab States
of the Gulf (GCC) region. Wiconnect was established in 2005 and has grown into
one of the leading system integrators for carrier grade wireless
communications technologies and services in The GCC region.
We formally re-entered the Canadian market in signing a new partner agreement
with Prairie Mobile Communications, a leading Canadian telecommunications
provider based in the Prairie provinces. They have grown into a significant
regional player, offering a wide range of services including wireless
communications, two-way radios, and satellite systems and specialize in
serving industries like agriculture, oil and gas, and emergency services.
A new partnership agreement was signed with One Choice Technology, a
U.S.-based company that provides comprehensive IT and telecommunications
services to businesses across various industries. Specializing in managed IT
solutions, the company offers services like cloud computing, network security,
VoIP (Voice over IP) communications, and data backup solutions.
A further partner agreement was signed with Excelerate, a leading UK-based
provider of mobile communications and connectivity solutions, specializing in
critical and emergency response sectors. Their solutions are widely used by
emergency services, government agencies, and organizations that require
resilient communication networks during disasters, crisis management, or field
operations. They are thus well positioned to offer our mission-critical
communications across the UK and internationally.
We also expanded our presence in the continent of Africa through a reseller
partnership with 3GCOM one of the leading global system integrators for IT and
telecom solutions in North Africa. 3GCOM is based in Morocco and spearheads
the promotion of innovative proven technology across a range of government,
public and private organisations.
In recent weeks we entered into the Nordics market through a new reseller
agreement with CAYES, an enterprise security solutions provider. CAYES have
worked with industry leaders in security and mobile markets for over 20 years
and offer secure scalable solutions for businesses and public customers of all
sizes in the Nordic region.
As well as partners that sell our solution directly into their own customer
bases, we are also collaborating with other solution providers where there is
strong compatibility between the two offerings. For example, we recently
announced a new partnership with Flic, which allows users of our application
to access PTToC and trigger the SOS alert feature with a simple push of the
discreet smart Flic button, rather than via the device itself. The Flic button
is in demand across a range of industry sectors where efficiency, instant
communication and safety are priorities. It is ideal for users who want or
need to operate discreetly and for users who cannot readily access their
device. We are also in discussions with one of the leading bodycam
manufacturers to integrate our solution with their hardware and hope to launch
this proposition to the market before the end of the year.
Notwithstanding the greater focus on business development and sales, we
continue to invest significant sums into our R&D activity to ensure our
solution remains at the forefront of critical communications. Most development
work is driven by existing or prospective customer requirements and during the
period we launched two exciting new products.
Our new live video streaming service allows users to make one-to-one video
calls with other PTToC users, either directly from their device or from the PC
dispatcher application. Video calls can also be made with groups of up to 35
PTToC users per call. In critical situations, push-to-video at the scene of an
incident allows command centres to get a clear, real-time understanding of
what is unfolding. For example, footage from an officer's body camera can
provide invaluable visual context, allowing a workforce to make more informed
decisions and coordinate an effective response plan.
We also launched a new software radio bridge which acts as a central hub and
integrates seamlessly with an existing LMR and DMR network. It provides
unparalleled flexibility and reach, without the need for a physical gateway
and donor devices.
As well as continually developing our software platform, we must also ensure
that the service can be deployed on multiple handsets covering all key price
points. During the period, we have successfully introduced new devices from
Motorola, Inrico, Nokia, Lynknex, Estalky and Ruggear into our ecosystem.
Board Changes
The Board announced on 20 June the appointment of Luke Wilkinson as Chief
Operating Officer and Marcus Emptage as Finance Director.
On 6 September, the Company announced that Peter Wilkinson, Non-Executive
Director, had resigned and stepped down with immediate effect. Having joined
the Board in November 2006 Peter has made a huge contribution to the business
with significant provision of both debt and equity finance. Peter informed the
Company that he was looking to reduce his business commitments but would
continue to support the business through the provision of the revolving credit
facility. A search is currently underway for a new Non-executive Director.
Funding
As announced on 30 August 2024, our revolving loan facility with InTechnology
plc was assigned by them to Holf Investments Ltd. In addition to the
assignment, the term of the loan facility was extended by 12 months to 26
September 2025. This facility has a maximum principal amount of £500,000. The
balance drawn down at 30 June 2024 and also at today's date is £150,000.
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
The strategy we launched in early 2023 to widen our network of industry
partners and establish a presence in new international markets has continued.
During 2024 we have secured deals with multiple new partners covering the
Nordics, Gulf States, USA, UK and North Africa. We have significantly expanded
our addressable market over the last 18 months and the plan is to continue
investing in this strategy as we move through this year and into 2025.
At the same time, we will continue to invest in the technical platform to
ensure we evolve feature sets and functionality to meet developing market
demands. The recent launch of our Push to Video service and our software
switching functionality were driven by clear requirements from existing and
prospective customers.
In one of our most significant deals in recent years, we announced on 8 May
2024 that we had been chosen to supply a range of cutting-edge technologies to
a prominent MNO and provider of innovative technologies in the Middle East and
Africa. We are now pleased to be able to confirm that this MNO is Zain Iraq,
part of Zain Group ("Zain"). Zain serves over 50 million active individual and
business customers, offering a comprehensive selection of mobile voice and
data services. Zain was in search of a range of solutions to enhance its
services for enterprise customers managing diverse workforces across various
industries. After a competitive procurement process involving globally
recognised telecoms companies, Guardia Systems, an IT systems integrator, was
selected to deliver our push-to-talk over cellular and live video
communication services. I am delighted to see this new commercial partnership
being formally launched this week at the ITEX Expo being held in Iraq, with
members of our team in attendance.
We will continue seeking these types of quality partner in the markets where
we can see significant growth opportunity and these efforts will continue over
the coming months with attendance at multiple trade exhibitions and expos. The
partners we have signed up are being provisioned and trained to deploy our
technology to their end user customers, and as this base expands, we hope to
see our revenue streams building as we finish this year and move into 2025.
The Board is focused on growing the Company's recurring revenues as this will
be the primary driver for delivering increased shareholder value. We are now
engaged with significantly more partners and end customers than we were 18
months ago, and I am hopeful that these relationships will begin to deliver
material uplifts in sales activity as we move forward. We will also continue
to explore initiatives where we can improve the efficiency of the business to
ensure that our operational gearing is maximized when the revenue streams
start to grow.
Once again, I would like to thank our whole team for their contribution across
the last few months, and Peter for the 17 years of service and support he has
given the Company.
Jeremy Fenn
Chairman
26 September 2024
Consolidated income statement
For the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Continuing operations
Revenue 1,062 1,257 2,266
Cost of sales (31) (128) (186)
Gross profit 1,031 1,129 2,080
Operating expenses
Administrative expenses (1,180) (1,284) (2,328)
Exchange differences 39 101 75
Depreciation and amortisation expense (81) (90) (120)
Total operating expenses (1,222) (1,273) (2,373)
Group operating loss before exchange differences,
depreciation and amortisation expense (149) (155) (248)
Group operating loss (191) (144) (293)
Finance costs (413) (383) (779)
Loss before tax (604) (527) (1,072)
Income tax (expense)/credit (23) (29) 80
Loss for the period (627) (556) (992)
Loss per share (pence)
Basic and diluted 3 (0.15) (0.14) (0.24)
Consolidated statement of comprehensive income
For the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss for the period (627) (556) (992)
Other comprehensive income
Exchange differences on translation
of foreign operations (6) 23 28
Total comprehensive loss for the period (633) (533) (964)
Consolidated statement of financial position
As at 30 June 2024
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 110 130 135
Right-of-use assets 200 300 250
310 430 385
Current assets
Trade and other receivables 1,169 1,472 1,345
Inventories 17 35 13
Cash and cash equivalents 128 45 186
1,314 1,552 1,544
Liabilities
Current liabilities
Trade and other payables (5,576) (5,244) (5,376)
Borrowings (5,516) (4,748) (10,840)
Lease liabilities (110) (105) (110)
Net current liabilities (9,888) (8,545) (14,782)
Non-current liabilities
Trade and other payables (577) (861) (769)
Borrowings (5,713) (5,723) (18)
Lease liabilities (104) (209) (155)
(6,394) (6,793) (942)
Net liabilities (15,972) (14,908) (15,339)
Equity attributable to the owners of the parent
Share capital 4 8,354 8,354 8,354
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 (2,248) (2,247) (2,242)
Accumulated losses (41,193) (40,130) (40,566)
Total equity (15,972) (14,908) (15,339)
Consolidated statement of changes in equity
For the six months ended 30 June 2024
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 2023 7,595 15,797 (7,620) 10,938 (2,270) (39,566) (15,126)
Issue of share capital 759 - - - - (11) 749
Transactions with owners 759 - - - - - 749
Loss for the period - - - - - (556) (556)
Exchange differences on translation
of foreign operations - - - - 23 - 23
Total comprehensive loss for the period - - - - 23 (567) (532)
Equity settled share-based payments - - - - - 2 2
Balance at 30 June 2023 8,354 15,797 (7,620) 10,938 (2,247) (40,130) (14,908)
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 July 2023 8,354 15,797 (7,620) 10,938 (2,247) (40,130) (14,908)
Loss for the period - - - - - (436) (436)
Exchange differences on translation
of foreign operations - - - - 5 - 5
Total comprehensive loss for the period - - - - 5 (436) (430)
Balance at 31 December 2023 8,354 15,797 (7,620) 10,938 (2,242) (40,566) (15,339)
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 2024 8,354 15,797 (7,620) 10,938 (2,242) (40,566) (15,339)
Loss for the period - - - - - (627) (627)
Exchange differences on translation
of foreign operations - - - - (6) - (6)
Total comprehensive loss for the period - - - - (6) (627) (633)
Balance at 30 June 2024 8,354 15,797 (7,620) 10,938 (2,248) (41,193) (15,972)
Consolidated statement of cash flows
For the six months ended 30 June 2024
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Operating activities
Cash from/(used in) operations 5 60 (247) (129)
Tax (paid)/received (23) (29) 60
Net cash (outflow)/inflow from operating activities 37 (276) (69)
Investing activities
Purchase of property, plant & equipment (4) (1) (7)
Net cash used in investing activities (4) (1) (7)
Financing
Issue of ordinary share capital - 500 500
Share issue costs - (11) (10)
(Repayment of)/Increase in borrowings (36) (255) (260)
IFRS 16 leases (55) (55) (110)
Net cash (outflow)/inflow from financing (91) 179 120
Effects of exchange rates on cash
and cash equivalents - (2) (3)
Net (decrease)/increase in cash and
cash equivalents in the period (58) (100) 41
Cash and cash equivalents at beginning of period 186 145 145
Cash and cash equivalents at end of period 128 45 186
Notes to the interim report
For the six months ended 30 June 2024
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 2023 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 2024.
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 2023. 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 £627,000 (30 June 2023: £556,000, 31 December 2023:
£992,000) by the weighted average number of ordinary shares in issue during
the period of 417,719,415 (30 June 2023: 406,390,009, 31 December 2023:
412,101,271).
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
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 (627) (0.15) (556) (0.14) (992) (0.24)
4 Share capital and share premium
Number of
issued and fully paid Share Share
shares capital premium Total
'000 £'000 £'000 £'000
At 1 January 2023 379,745 7,595 15,797 23,392
Issue of shares 37,974 759 - 759
As at 30 June 2023, 31 December 2023 & 30 June 2024 417,719 8,354 15,797 24,151
Non-voting preference shares
Number of Nominal
shares Value
'000 £'000
As at 30 June 2023, 31 December 2023 and 30 June 2024 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 2025, 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
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss before taxation (604) (527) (1,072)
Adjustments for:
Depreciation and amortisation 81 90 120
Share based payment charge - 2 2
Debt conversion to equity - - 259
Interest expense 413 383 779
Changes in working capital:
(Increase)/decrease in inventories (4) (17) 11
(Increase)/decrease in trade and other receivables 180 (59) 87
(Decrease)/increase in trade and other payables (6) (119) (315)
Net cash from/(used in) operations 60 (247) (129)
6 Shareholder information
The interim announcement will be published on the company's website
www.mobiletornado.com (http://www.mobiletornado.com) on 26 September 2024.
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