Interim Results
Mobile Tornado Group PLC
28 September 2007
Mobile Tornado Group plc
('Mobile Tornado' or 'the Company')
Interim results for the 6 months to 30 June 2007
Mobile Tornado, one of the leading providers of convergent, presence-based
instant communications announces its results for the six month period to 30 June
2007.
Highlights
• £2.3m funding announced to support further investment in technology
platform and European roll out of managed service proposition
• Trials with two operators in United States for 'Push to Video'
• New operator deal announced in Argentina
• Managed service proposition launched in UK with InTechnology plc
Financial Results
Turnover in the six month period to 30 June 2007 amounted to £234k (2006:
£191k). Operating losses increased to £1,895k (2006: £1,589k). After net
interest receivable of £38k (2005: net interest payable - £165k) the loss on
ordinary activities before taxation was £1,857k (2006: £1,754k). Net cash
outflow from operating activities increased in the period to £1,663k (2006:
£1,244k).
The Group consolidated balance sheet shows a net deficit at 30 June 2007 of
£984k compared to a net deficit of £1,622k at 30 June 2006. Cash at bank was
£1,195k at 30 June 2007 compared to £2,826k at 31 December 2006.
The accounts have been prepared in accordance with UK Generally Accepted
Accounting Practice. The Board continues to consider the implications and
timetable for implementing International Financial Reporting Standards (IFRS).
As an AIM listed Group the Board recognises that IFRS is expected to apply to
the Group from the first accounting period commencing after 1 January 2007. The
Directors have elected to change the accounting period of the Group to 31
December period end date in light of the period end date of other Group
companies. Consequently, the next annual accounting period of the Group will be
1 July 2006 to 31 December 2007.
The Board recognises that the first set of accounts of the Group that will be
prepared under IFRS are those for the period 1 January 2008 to 31 December 2008
and that this will require the Group to develop a corporate reporting structure
and policies to meet this requirement.
Review of operations
Although there is some disappointment with the level of sales recorded during
the period, I am confident that the progress we have made in a number of areas
has put the Group in a strong position as it enters its next phase of
development.
To ensure that we are able to fully exploit the current opportunities it has
been announced that further financing of £2.3million has been secured through a
combination of the issue of the 12,251,333 shares held in treasury and the issue
of £1.5million of cumulative redeemable preference shares. InTechnology plc have
shown continued support for the Company's plans by subscribing for the majority
of the treasury shares, thereby taking their shareholding to 49.9% and taking up
the full issue of preference shares.
I have stated in the past that the injection of cash last year allowed the
business to continue investing in its technology platform whilst at the same
time strengthening the sales team and focussing on the key market opportunities
for our technology. Following on from the deal we announced earlier this year
with Revol Wireless, an operator in Ohio, United States, I am pleased to
announce our first deal in South America with TecnoVoz, an operator in
Argentina. The full details of this deal have been dealt with in a separate
announcement. I am hopeful that this deal will be the precursor to increasing
levels of activity in other South American countries. We are in trials with many
other operators throughout the world and I anticipate there being further deal
closures in the coming months.
During the period under review, we have established an indirect sales model and
distribution network to sell enterprise solutions to businesses, utilising the
Group's core technology platform. InTechnology plc, our principal shareholder
and managed services partner, has launched a managed service proposition in the
UK where we receive a monthly royalty stream for each subscriber that utilises
our technology platform. The initial offering will be 'Push to Talk', although
it is intended that as the subscriber base becomes established further 'Push to
X' services will be added, including 'Push to Video' and 'Instant Messaging'.
Initial sales efforts have been focussed on several key industry sectors,
including security, distribution and local government. The early feedback has
been very positive and I anticipate that by the end of this year InTechnology
plc will have made their first sales and we will begin to receive royalties.
We strongly believe that the managed service model is one that enterprises
throughout the world will embrace. Utilising the managed service proposition, it
is our intention to extend this service throughout Europe. We have an existing
channel partner in Germany and are in the process of putting in place similar
arrangements in Portugal and Greece. Our objective over the next 9 months is to
establish partners in every major European territory.
We continue to invest in our core technology platform and the 'Push to X' suite
of services. Having showcased our 'Push to Video' technology at the CTIA show
earlier this year I can now confirm that through our partnership with Nortel
Networks in the United States, we are currently in the middle of trials with two
'tier one' (greater than 2 million subscribers) operators for our 'Push to
Video' application. The trials have progressed well and I hope to be in a
position to give a further update before the end of the year.
Current trading and future prospects
The Company has made good progress during the period under review. Although this
has not yet been translated into sales I am confident that we are now
penetrating a number of significant markets with our technology. We have
significant levels of activity in the United States and South America and I am
confident further tangible sales progress will be made in coming months.
I anticipate that sales generation within Europe will be delivered through the
Company's new managed services proposition and our objective over the next
financial period is to increase the number of partners in key European
territories to ensure that as many enterprises as possible are exposed to the
benefits of instant communications.
A key objective over the next few months is to establish strong and productive
partnerships in China and India, two of the fastest growing economies in the
world. There has already been great interest shown in our technology in these
territories and we hope to secure relationships that will ensure that our
potential in these markets is maximised.
We continue to rely on the skill and commitment of our employees around the
world and I would like to thank them for their contribution this year and look
forward to these efforts producing increased tangible results over coming
months.
Peter Wilkinson
Non executive Chairman
28 September 2007
For further details please contact:
Mobile Tornado Group plc
Jeremy Fenn, Chief Financial Officer Tel: +44 (0) 7734 475888
Blue Oar Securities Plc
Romil Patel / Rhod Cruwys Tel: +44 (0)20 7448 4400
Buchanan Communications
Charles Ryland / James Strong Tel: +44 (0)20 7466 5000
Consolidated profit and loss account
For the 6 months ended 30 June 2007
Consolidated profit and loss account
for the 6 months ended 30 June 2007
6 months to 6 months to 12 months to 12 months to
30 June 30 June 30 June 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
Note £'000 £'000 £'000 £'000
Turnover
Continuing operations 234 191 287 289
234 191 287 289
Cost of sales
Continuing operations (61) (18) (61) (68)
Gross profit 173 173 226 221
Net operating expenses before
depreciation
and amortisation (1,766) (1,421) (2,938) (2,955)
Depreciation (7) (40) (41) (77)
Amortisation (295) (301) (590) (602)
Administrative expenses (2,068) (1,762) (3,569) (3,634)
Group operating loss (1,895) (1,589) (3,344) (3,413)
Interest receivable/(payable) 38 (165) 66 (469)
Loss on ordinary activities before tax (1,857) (1,754) (3,278) (3,882)
Taxation 2 - - - -
Loss sustained for the financial year (1,857) (1,754) (3,278) (3,882)
EBITDA (1,593) (1,248) (2,713) (2,734)
Loss per share (pence)
Basic and diluted 3 (1.08) (2.13) (2.23) (4.83)
Consolidated balance sheet
As at 30 June 2007
30 June 30 June 31 December
2007 2006 2006
(Unaudited) (Audited) (Unaudited)
(Restated)
£'000 £'000 £'000
Fixed assets
Intangible assets 958 1,580 1,253
Tangible assets 33 67 36
991 1,647 1,289
Current assets
Debtors 403 336 233
Cash at bank and in hand 1,195 192 2,826
1,598 528 3,059
Creditors - amounts falling
due within one year (1,256) (1,334) (1,188)
Net current assets 342 (806) 1,871
Total assets less current liabilities 1,333 841 3,160
Creditors - amounts falling
due after more than one year (2,317) (2,463) (2,317)
Net assets (984) (1,622) 843
Capital and reserves
Share capital 3,444 1,844 3,444
Share premium 3,845 1,624 3,845
Reverse acquisition reserve (7,620) (7,620) (7,620)
Merger reserve 10,938 10,938 10,938
Share option reserve 50 32 37
Profit and loss account (11,641) (8,440) (9,801)
(984) (1,622) 843
Consolidated cash flow statement
For the 6 months ended 30 June 2007
6 months to 6 months to 12 months to 12 months to
30 June 30 June 30 June 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
Note £'000 £'000 £'000 £'000
Net cash outflow from operating 4 (1,663) (1,244) (2,862) (1,649)
activities
Returns on investments and servicing of finance
Interest received 47 4 74 4
Interest paid (9) (169) (9) (473)
Net cash inflow/(outflow) from returns
on
investments and servicing of finance 38 (165) 65 (469)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (4) (8) (12) (37)
Net cash outflow from capital
expenditure
financial investment (4) (8) (12) (37)
Acquisitions
Net cash at bank acquired with purchase
of subsidiary undertakings - 584 - 584
Net cash inflow from acquisitions - 584 - 584
Net cash outflow before financing (1,629) (833) (2,809) (1,571)
Financing
Issue of ordinary share capital - 1,298 4,000 1,298
Share Issue costs - (391) (179) (391)
Net cash inflow from financing - 907 3,821 907
Increase/(decrease) in cash in the 5 (1,629) 74 1,012 (664)
period
Consolidated statement of total recognised gains and losses
For the 6 months ended 30 June 2007
6 months to 6 months to 12 months to 12 months to
30 June 30 June 30 June 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
£'000 £'000 £'000 £'000
Loss sustained for the financial period (1,857) (1,754) (3,278) (3,882)
Exchange gain on translation of overseas 17 77
subsidiaries - -
Total recognised gains and losses relating (1,840) (1,754) (3,201) (3,882)
to the period
Notes to the interim financial Information
For the 6 months ended 30 June 2007
1 Basis of preparation
The financial information included in this interim statement for the 6 months
ended 30 June 2007 does not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985 and is not audited or reviewed. In
preparing this interim statement, management have adopted FRS 20 'share-based
payment'.
Share Based Payments
The adoption of this standard represents a change in accounting policy and the
prior year comparatives have been restated accordingly. The effects of the
change on administrative expenses for the period ended 31 December 2005 and the
year ended 30 June 2006 and Group reserves at those dates are summarised as
follows:
The Group operates a number of equity-settled, share-based compensation plans.
The fair value of the employee services received in exchange for the grant of
the options is recognised as an expense. The total amount to be expensed over
the vesting period is determined by reference to the fair value of the options
granted, excluding the impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting conditions are
included in assumptions about the number of options that are expected to vest.
At each balance sheet date, the group revises its estimates of the number of
options that are expected to vest. It recognises the impact of the revision to
original estimates, if any, in the profit and loss account, with a corresponding
adjustment to equity. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Administrative Share option Profit
expenses reserve and loss
£'000 £'000 £'000
Period ended 31 December 2005
As previously stated 1,751 - (6,674)
Restated 1,762 11 (6,686)
Year ended 30 June 2006
As previously stated 3,602 - (8,408)
Restated 3,634 32 (8,440)
There have been no other changes to the accounting policies as set out in the
2006 Report and Accounts. The financial information relating to the year ended
30 June 2006 has been extracted from the statutory accounts for that year, with
the exception of the prior period adjustment described above, which have been
filed with the Registrar of Companies and on which the auditors gave an
unqualified opinion.
2 Tax on loss on ordinary activities
No charge to UK corporation tax arose in the period (31 December 2005: nil, 30
June 2006: nil) due to group trading losses incurred.
3 Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders of £1,857,000 (six months to 30 June 2006: £1,754,000, twelve
months to 30 June 2007: £3,278,000, twelve months to 30 June 2006: £3,882,000)
by the weighted average number of ordinary shares in issue during the period of
172,180,096 000 (six months to 30 June 2006: 82,513,180, twelve months to 30
June 2007:147,193,795, twelve months to 30 June 2006: 80,339,651)
The adjusted basic earnings per share has been calculated to provide a better
understanding of the underlying performance of the Group as follows:
6 months to 6 months to 12 months to 12 months to
30 June 2007 30 June 2006 30 June 2007 30 June 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
Basic and diluted Basic and diluted Basic and diluted Basic and diluted
(Loss)/ (Loss)/ (Loss)/ (Loss)/ (Loss)/ (Loss)/ (Loss)/ (Loss)/
earnings earnings earnings earnings earnings earnings earnings earnings
per share per share per share per share
(Restated) (Restated) (Restated) (Restated)
£'000 pence £'000 pence £'000 pence £'000 pence
Loss attributable
to
ordinary (1,857) (1.08) (1,754) (2.13) (3,278) (2.23) (3,882) (4.83)
shareholders
FRS 20 share
option charge 13 0.01 11 0.01 18 0.01 32 0.04
Amortisation of
goodwill 295 0.17 301 0.36 590 0.40 602 0.75
Adjusted basic
loss per share (1,549) (0.90) (1,442) (1.76) (2,669) (1.81) (3,248) (4.04)
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 share options are anti-dilutive under the terms of
FRS 22 'Earnings per share'.
4 Reconciliation of operating loss to net cash (outflow)/ inflow from operating
activities
6 months to 6 months to 12 months to 12 months to
30 June 30 June 30 June 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
£'000 £'000 £'000 £'000
Operating loss (1,895) (1,589) (3,344) (3,413)
Depreciation of tangible fixed assets 7 39 41 77
Amortisation of intangibles 295 301 590 602
Loss on disposal of tangible fixed assets - 12 - 12
Share option non cash charge 13 21 18 32
(Increase)/Decrease in debtors (301) 276 (222) 126
Increase/(Decrease) in creditors and
provisions 218 (304) 55 915
Net cash outflow from operating activities (1,663) (1,244) (2,862) (1,649)
5 Reconciliation of movement in net funds
6 months to 6 months to 12 months to 12 months to
30 June 30 June 30 June 30 June
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000 £'000
Increase/(decrease) in cash in the
period (1,629) 74 1,012 (664)
Net cash inflow from issue of
convertible loan notes - - - -
Change in net debt resulting from (1,629) 74 1,012 (664)
cash flows
Non-cash changes:
Exchange movements (2) - (9) -
Conversion of Convertible Loan Notes - 2,213 - 2,213
Movement in net funds in the year (1,631) 2,287 1,003 1,549
Net debt at start of year 2,826 (2,095) 192 (1,357)
Net funds at end of year 1,195 192 1,195 192
6 Shareholder information
The interim announcement will be posted to shareholders on 26 September 2007.
Further copies are available on request from the Company at Central House,
Beckwith Knowle, Harrogate HG3 1UG
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