Half-year Report

Mobile Tornado Group PLC
28 September 2023
 

28 September 2023

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 2023.

Financial highlights

 







Six months

 


Six months


ended

 


ended


30 June

 


30 June


2023

 


2022


Unaudited

 


Unaudited


£'000

 


£'000


 

 



Recurring revenue

964

 


932

Non-recurring revenue*

293



172

Total revenue

1,257

 


1,104


 

 



Gross profit

1,129

 


1,066


 

 



Administrative expenses

(1,284)

 


(1,275)


 

 



Adjusted EBITDA**

(155)

 


(209)


 

 



Group operating loss

(144)

 


(454)


 

 



Loss before tax

(527)

 


(775)

 

 

·              Total revenue increased by 14% to £1.26m (H1 2022: £1.10m)

Recurring revenues increased by 3% to £0.96m (H1 2022: £0.93m)

Non-recurring revenues* increased by 70% to £0.29m (H1 2022: £0.17m)

·              Operating expenses increased by 1% to £1.28m (H1 2022: £1.28m)

·              Adjusted EBITDA** loss of £0.16m (H1 2022: £0.21m)

·              Group operating loss for the period decreased to £0.14m (H1 2022: £0.45m) - impacted by exchange differences of £0.10m gain (H1 2022: £0.15m loss)

·              Loss before tax of £0.53m (H1 2022: £0.78m)

·              Basic loss per share of 0.14p (H1 2022: 0.20p)

·              Net cash outflow from operating activities of £0.28m (H1 2022: £0.02m inflow)                   

·              Net debt at 30 June 2023 of £10.43m (H1 2022: £10.03m)

·              Cash and cash equivalents of £0.05m (30 June 2022: £0.12m)

 

*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

 

·              Increased investment in business development activities to capitalize on strength of our technical solution. Post 2022 year end fundraise was completed to support this scale up

·              Landmark push-to-talk over cellular ("PoC") deal concluded with Leeds Bradford Airport

·              Extension to agreement with our existing partner in South Africa which will see us become an exclusive reseller of their personnel management platform

 

Jeremy Fenn, Chairman and acting CEO of Mobile Tornado, said: "The Company has for some time been a key player in the PTToC market, with a presence in Africa, South America and Europe. Our solution meets the mission-critical communication needs of our customers, and is characterised by a number of key differentiators, such as seamless transition, market-leading group sizes, a unique dispatcher console, and highly efficient data utilization. These features continue to set us apart from our competitors and allow us to deliver market leading performance to our partners and customers.

"The process of building a much deeper and wider business development operation commenced during the first half of the year and has made great progress. As a result, we have begun to open up new markets in the USA, parts of Asia and the Middle East. Physical attendance at trade shows and a more sophisticated PR strategy is generating significant inbound interest across many international markets. As previously mentioned, we have strengthened our sales teams to handle this increased activity and are now in the process of building much deeper and better quality sales pipelines.

"Despite a challenging economic environment, the Board are confident that our solution offers quality and good value, particularly when compared to the traditional radio platforms. We are building a much wider partner network and are confident that the developing sales pipeline will convert into new customers in due course. At the same time, we are working with our partners to develop bespoke solutions for key verticals which will provide further opportunity as we look to push those solutions into the wider partner network."

 

Enquiries:

Mobile Tornado Group plc

+44 (0)7734 475 888

Jeremy Fenn, Chairman and acting CEO

 

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 2023 increased by 14% to £1.26m (H1 2022: £1.10m). Recurring revenues increased by 3% to £0.96m (H1 2022: £0.93m).

 

Non-recurring revenues, comprising installation fees, hardware, professional services and capex license fees increased by 70% to £0.29m (H1 2022: £0.17m). Gross profit increased by 6% to £1.13m (H1 2022: £1.07m).

 

Our underlying total operating cost-base remained largely unchanged over the comparative period, increasing by 1% to £1.28m (H1 2022: £1.28m). Due to the annual revaluation of certain financial liabilities on the balance sheet, the Group reported a currency translational gain of £0.10m (H1 2022: £0.15m loss) 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 decreased to £0.56m (H1 2022: Loss of £0.76m).

 

The Group reported a net cash outflow from operating activities during the period of £0.28m (H1 2022: £0.02m inflow). At 30 June 2023, the Group had £0.05m cash at bank (30 June 2022: £0.12m) and net debt of £10.43m (30 June 2022: £10.03m).

 

Review of operations

 

The Board are pleased to report a robust set of financial results for the first six months of the year. A small increase in the recurring revenue stream illustrates the high-quality customer base we have established, and the 70% uplift in non-recurring revenues reflects the renewals on existing capex based license deals. As highlighted earlier in the year, the Board is now focused on delivering a significantly enhanced business development operation to build out a much wider partner base, and ultimately generate a material uplift in customers. We are confident that the investment we have made in the technical platform over recent years has delivered superior performance against competing solutions. It's now essential that we capitalise on this and expose the platform to many more partners across all international markets and industry sectors.

 

To facilitate this, there has been an increase in business development activity during the period. A sophisticated outreach campaign has been developed, supported by our attendance at the major critical communication trade shows. We have recruited into the sales team to manage the increasing levels of new partner and customer engagement. As a result of this activity, new partners have been contracted in the UK, USA, Chile, Germany and UAE with expansion into further new territories anticipated.

 

Our existing partners have continued to make progress during the year. In South and Central America, we continued to focus on the deployment of the solution to public safety organisations and progress has been made here. We are now awaiting final confirmation around the hardware that will be utilised alongside our platform, and this should be the catalyst for a significant roll out. A number of other public safety organisations are now using our solution across the Caribbean, and we are in discussions with others across multiple territories. The quality of our solution and the relative cost compared to traditional radio platforms is attracting a lot of interest across the public safety sector, and we hope for a breakthrough before the end of the year.

 

In the UK we closed out a deal at Leeds Bradford airport ('LBA'), to provide their ground operations staff with our full PTToC solution. We understand that LBA is one of the first airports in Europe to upgrade its radio system to PTToC, and the publicity that was generated from this deal has resulted in a significant amount of interest from other airports.

 

A partnership agreement has also been reached with a UK security services business to deploy our solution into water utility businesses. This represents an interesting development, whereby our solution is adapted to meet the specific requirement of a particular industry sector. On a similar note, we are working with another UK partner to develop the solution specifically for the retail supermarket sector, to address opportunities both in the UK and Ireland. If these bespoke applications meet with success, we will look to roll them out to our global partner network and work with them to address their own local markets. 

 

In Africa, we recently extended our partnership with Instacom, a leading provider of critical communication solutions to government agencies and private companies. As part of the agreement, we will also act as exclusive UK reseller for Instacom's PTX personnel management platform. The platform enables the simple and effective management of employees, helping to improve operational efficiencies and productivity as well as reducing costs. We have been working with Instacom since 2010 and the continued growth of mobile network coverage across Africa is creating big opportunities for government agencies and private enterprises to increase safety, reduce costs, boost productivity and improve efficiency among their remote workforces. Completing this deal, and integrating the PTX platform into our own, will allow the Company to reduce R&D operating costs, as we can reduce the resources currently allocated to the development of our own workforce management platform.

 

In the Caribbean, our partner has built up strong sales momentum with Digicel, one of the main mobile network operators in the region. Deals have been closed within multiple sectors including public safety, security, hotels and logistics.

 

 

 

Funding

 

As announced on 22 September 2023, we agreed a 12-month extension of our revolving loan facility with our principal shareholder, InTechnology plc. This facility has a term ending on 26 September 2024 with a maximum principal amount of £500,000. The balance drawn down at 30 June 2023 was £150,000 and as at today's date, the balance drawn down is £190,000.

 

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.

 

 

Outlook

 

The Company has for some time been a key player in the PTToC market, with a presence in Africa, South America and Europe. Our solution meets the mission-critical communication needs of our customers, and is characterised by a number of key differentiators, such as seamless transition, market-leading group sizes, a unique dispatcher console, and highly efficient data utilization. These features continue to set us apart from our competitors and allow us to deliver market leading performance to our partners and customers.

The process of building a much deeper and wider business development operation commenced during the first half of the year and has made great progress. As a result, we have begun to open up new markets in the USA, parts of Asia and the Middle East. Physical attendance at trade shows and a more sophisticated PR strategy is generating significant inbound interest across many international markets. As previously mentioned, we have strengthened our sales teams to handle this increased activity and are now in the process of building much deeper and better quality sales pipelines.

Despite a challenging economic environment, the Board are confident that our solution offers quality and good value, particularly when compared to the traditional radio platforms. We are building a much wider partner network and are confident that the developing sales pipeline will convert into new customers in due course. At the same time, we are working with our partners to develop bespoke solutions for key verticals which will provide further opportunity as we look to push those solutions into the wider partner network.

 

 

 

 

Jeremy Fenn

Chairman

28 September 2023

Consolidated income statement

For the six months ended 30 June 2023

 

 



Six months

 

Six months


Year



ended

 

ended


ended



30 June

 

30 June


31 December



2023

 

2022


2022



Unaudited

 

Unaudited


Audited


Note

£'000

 

£'000


£'000

Continuing operations

 






Revenue


1,257


1,104


2,279















Cost of sales


(128)


(38)


(56)

Gross profit

 

1,129

 

1,066


2,223








Operating expenses

 






Administrative expenses


(1,284)

 

(1,275)


(2,507)

Exchange differences


101

 

(148)


(227)

Depreciation and amortisation expense


(90)


(97)


(212)

Total operating expenses


(1,273)

 

(1,520)


(2,946)








Group operating loss before exchange differences,


 





depreciation and amortisation expense


(155)


(209)


(284)








Group operating loss

 

(144)

 

(454)


(723)








Finance costs


(383)

 

(321)


(696)








Loss before tax

 

(527)

 

(775)


(1,419)








Income tax (expense)/credit


(29)

 

12


37

Loss for the period


(556)


(763)


(1,382)















Loss per share (pence)

 






Basic and diluted

3

         (0.14)

 

           (0.20)


           (0.36)



 

Consolidated statement of comprehensive income

For the six months ended 30 June 2023

 

 



Six months

 

Six months


Year



ended

 

ended


ended



30 June

 

30 June


31 December



2023

 

2022


2022



Unaudited

 

Unaudited


Audited



£'000

 

£'000


£'000








Loss for the period

 

(556)

 

(763)


(1,382)








Other comprehensive income

 













Exchange differences on translation







of foreign operations


23

 

(58)


(61)








Total comprehensive loss for the period


(533)


(821)


(1,443)

 

 



Consolidated statement of financial position

As at 30 June 2023

                                                                                           

 



30 June

 

30 June


31 December



2023

 

2022


2022



Unaudited

 

Unaudited


Audited


Note

£'000

 

£'000


£'000

Assets

 






Non-current assets

 






Property, plant and equipment


130

 

139


155

Right-of-use assets


300

 

                   -


350

 

 

430

 

139

 

505








Current assets

 






Trade and other receivables


1,472

 

1,701


1,414

Inventories


35

 

34


25

Cash and cash equivalents


45


122


145



1,552


1,857


1,584








Liabilities

 






Current liabilities

 






Trade and other payables


(5,244)

 

(5,139)


(5,191)

Borrowings


(4,748)

 

(4,414)


(10,558)

Lease liabilities


(105)

 

                   -


(105)








Net current liabilities

 

(8,545)

 

(7,696)

 

(14,270)















Non-current liabilities

 






Trade and other payables


(861)

 

(1,219)


(1,076)

Borrowings


(5,723)

 

(5,734)


(27)

Lease liabilities


(209)

 

                   -


(258)



(6,793)


(6,953)


(1,361)








Net liabilities


(14,908)


(14,510)


(15,126)








Equity attributable to the owners of the parent

 





Share capital

4

8,354

 

7,595


7,595

Share premium

4

15,787

 

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


(2,247)

 

(2,267)


(2,270)

Accumulated losses


(40,120)

 

(38,953)


(39,566)

Total equity


(14,908)


(14,510)


(15,126)

 

 

 

 

Consolidated statement of changes in equity

For the six months ended 30 June 2023


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 period

             -

               -

                 -

               -

                  -

              (763)

           (763)

Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

              (58)

                    -

             (58)









Total comprehensive loss for the year

             -

              -

                -

              -

            (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)


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 2022

    7,595

    15,797

     (7,620)

    10,938

       (2,267)

       (38,953)

   (14,510)

Loss for the period

             -

               -

                 -

               -

                  -

              (619)

           (619)

Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

                (3)

                    -

              (3)

Total comprehensive loss for the year

             -

              -

                -

              -

               (3)

            (619)

         (622)

 








Equity settled share-based payments

             -

               -

                 -

               -

                  -

                   6

                6

Balance at 31 December 2022

    7,595

    15,797

     (7,620)

    10,938

       (2,270)

       (39,566)

   (15,126)


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

         (11)

                -

              -

                  -

                   -

           749

Loss for the period

             -

               -

                 -

               -

                  -

              (556)

           (556)

Exchange differences on translation








of foreign operations

             -

               -

                 -

               -

                23

                    -

              23









Total comprehensive loss for the year

             -

              -

                -

              -

               23

            (556)

         (532)

 








Equity settled share-based payments

             -

               -

                 -

               -

                  -

                   2

                2

Balance at 30 June 2023

    8,354

    15,786

     (7,620)

    10,938

       (2,247)

       (40,120)

   (14,908)

 

Consolidated statement of cash flows

For the six months ended 30 June 2023

 



 

Six months


Year



 

ended


ended



 

30 June


31 December



 

2022


2022



 

Unaudited


Audited


Note

 

£'000


£'000







Operating activities

 





Cash used in operations

5

        (247)

 

          (265)


             (173)

Tax (paid)/received


 

            281


               238

Interest paid


 

                -


                   9

Net cash (outflow)/inflow from operating activities

        (276)

 

              16

 

                 74







Investing activities

 





Purchase of property, plant & equipment


             (1)

 

            (20)


               (60)

Net cash used in investing activities

 

             (1)

 

            (20)

 

               (60)













Financing

 





Issue of ordinary share capital


 

                -


                 -  

Share issue costs


 

                -


                 -  

(Repayment of)/Increase in borrowings


        (514)

 

            145


               240

IFRS 16 leases


           (55)

 

            (89)


             (180)

Net cash (outflow)/inflow from financing

 

           179

 

              56

 

                 60

 

 

 





Effects of exchange rates on cash

 






and cash equivalents


             (2)

 

                5

 

                   6







Net (decrease)/increase in cash and

 





cash equivalents in the period

 

        (100)

 

              57


                 80

Cash and cash equivalents at beginning of period


           145

 

              65


                 65

Cash and cash equivalents at end of period


             45

 

            122


               145

 

 

 

Notes to the interim report

For the six months ended 30 June 2023

 

 

1          General information

 

 

 

2          Basis of preparation

 

 

 

3          Loss per share

 

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of £556,000 (30 June 2022: £763,000, 31 December 2022: £1,382,000) by the weighted average number of ordinary shares in issue during the period of 406,390,009 (30 June 2022: 379,744,923, 31 December 2022: 379,744,923).

 

 


Six months ended

 

Six months ended


Year ended


30 June 2023

 

30 June 2022


31 December 2022


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

      (556)

     (0.14)

 

      (763)

       (0.20)


     (1,382)

      (0.36)

 



 

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 2022, 30 June 2022 & 31 December 2022

          379,745

      7,595

    15,797

     23,392

Issue of shares

            37,974

         759

         (11)

          749

As at 30 June 2023

        417,719

    8,354

  15,786

   24,141

 

 

Non-voting preference shares

 




Number of

Nominal

 



shares

Value

 



'000

£'000

 





As at 30 June 2022, 31 December 2022 and 30 June 2023

 

  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 2023, 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


2023

2022

2022


Unaudited

Unaudited

Audited


£'000

£'000

£'000





Loss before taxation

           (527)

             (775)

             (1,419)





Adjustments for:




Depreciation and amortisation

                90

                 97

                  212

Share based payment charge

                  2

                   6

                    12

Interest expense

             383

               321

                  696





Changes in working capital:








(Increase)/decrease in inventories

             (17)

                 41

                    49

(Increase)/decrease in trade and other receivables

             (59)

             (264)

                    41

(Decrease)/increase in trade and other payables

           (119)

               309

                  236

Net cash used in operations

           (247)

             (265)

                (173)

 

 

6          Shareholder information

 

The interim announcement will be published on the company's website www.mobiletornado.com on 28 September 2023.

 

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