TIDMMBT
RNS Number : 6262D
Mobile Tornado Group PLC
28 April 2017
Mobile Tornado Group plc
("Mobile Tornado", the "Company" or the "Group")
Final results
Mobile Tornado Group plc, the leading provider of instant
communication mobile applications to the enterprise market,
announces its results for the year ended 31 December 2016.
Financial Highlights
-- Revenue decreased by 10% to GBP2.02m (2015: GBP2.26m)
-- Recurring revenues increased by 10% to GBP1.84m (2015: GBP1.68m)
-- Professional service sales decreased to GBP0.16m (2015: GBP0.50m)
-- Hardware and 3(rd) party software sales decreased to GBP0.02m (2015: GBP0.08m)
-- Gross profit decreased by 9% to GBP1.92m (2015: GBP2.12m)
-- Operating expenses increased by 15% to GBP3.89m (2015:
GBP3.38m) - adversely impacted by the depreciation of sterling
during the year
-- Adjusted EBITDA* loss of GBP1.96m (2015: GBP1.26m)
-- Group operating loss for the year increased to GBP3.09m
(2015: GBP1.45m) - impacted by further exchange differences of
GBP0.64m (2015: GBP0.07m) and exceptional items of GBP0.28m (2015:
GBPnil) comprising property costs arising from our joint lease and
salary and redundancy costs arising from the transition of our
R&D team during the year
-- Loss after tax of GBP3.45m (2015: GBP1.66m)
-- Basic loss per share of 1.39p (2015: 0.69p)
-- Cash at bank of GBP0.17m (2015: GBP0.11m) with net debt of GBP9.06m (2015: GBP6.81m)
*Earnings before interest, tax, depreciation, amortisation,
exceptional items and excluding exchange differences
Operating highlights
-- Appointment of Avi Tooba as Chief Executive, formerly a
senior director with Motorola for 30 years
-- Recruitment of a new senior management team with significant sector experience
-- New R&D centre opened in Ukraine to support development
of new functionality and feature sets
-- Enhanced technical platform delivering strong positive
feedback from customers and increasing commercial engagement
-- Applications roadmap developed featuring SDK and Dispatcher
applications - development well advanced with launches anticipated
this financial year
-- Growing pipeline of high quality customer engagements driven
by enhanced technical platform and applications
Jeremy Fenn, Chairman of Mobile Tornado, said: "The appointment
of Avi Tooba as our Chief Executive and his subsequent recruitment
of an experienced senior management team has put the business in a
strong position to capitalise on the huge opportunities that exist
within the instant communication market. With the emergence of 3G
and now 4G, there is universal acceptance across both public and
private sectors that PTT over Cellular is now a genuine alternative
to traditional radio platforms."
Enquiries:
Mobile Tornado Group plc www.mobiletornado.com
Jeremy Fenn, Chairman +44 (0)7734 475 888
Investec Bank plc (Nominated
Adviser & Broker) +44 (0)20 7597 4000
Dominic Emery / Carlton
Nelson
Walbrook PR Ltd +44 (0)20 7933 8780 or mobiletornado@walbrookpr.com
Paul Cornelius
Helen Cresswell
Financial results and key performance indicators
Total revenue for the year ended 31 December 2016 reduced by 10%
to GBP2.02m (2015: GBP2.26m). Encouragingly, recurring revenue, a
key performance indicator for the business, continued to increase
and was up by 10% to GBP1.84m (2015: GBP1.68m). Non-recurring
revenue, comprising installation fees, hardware and professional
services, reduced to GBP0.19m (2015: GBP0.58m) due to the smaller
number and size of new installations during the period.
Gross profit decreased to GBP1.92m (2015: GBP2.12m) as a result
of the growth in higher margin recurring revenues being countered
by lower professional services revenues in the year. Operating
expenses increased by 15% in the year to GBP3.89m (2015: GBP3.38m)
resulting from the enhancements made to our research and
development staffing over the year.
Due to the annual revaluation of certain financial liabilities
on the balance sheet, the Group also reported a translational loss
of GBP0.64m (2015: GBP0.07m) due to the depreciation of sterling
during the year. The Group received an income tax credit in respect
of our qualifying investment in R&D activities of GBP0.28m
(2015: GBP0.37m).
As a result of the above, the loss after tax for the year
increased to GBP3.45m (2015: Loss GBP1.66m) and an increased basic
loss per share of 1.39p (2015: 0.69p).
The net cash outflow from operating activities was GBP1.72m
(2015: GBP1.23m). At 31 December 2016, the Group had GBP0.17m cash
at bank (2015: GBP0.11m) and net debt of GBP9.06m (2015:
GBP6.81m).
Results and dividends
The Directors do not recommend the payment of a dividend in
respect of the year ended 31 December 2016 (year ended 31 December
2015: nil). The Company currently intends to reinvest future
earnings to finance the growth of the business over the near
term.
Review of operations
The appointment of Avi Tooba during the period as Chief
Executive has resulted in a significant acceleration in the
development of our technical platform. Having held senior positions
at Motorola Solutions for over 30 years, he brings enormous
experience to our business. He has moved fast to strengthen our
engineering teams, opening up a technical centre in Ukraine to
capitalise on established talent pools that have deep experience of
instant communications. At the same time, we have recruited a
highly experienced technical leadership team to drive the
development of the various projects.
Although operating expenses have increased to accommodate this
investment in resources, we have been prudent in our approach, and
by rebalancing the teams across our different geographical
locations, have managed to restrict the cost increase compared to
the prior year to 15%. Of this, in excess of 50% was caused by the
decline in the value of sterling over the year since the majority
of our overheads are denominated in foreign currency.
The primary focus of the technical team has been to ensure that
our services can be deployed more effectively to customers across
the world. The server platform has been enhanced to deliver more
capacity for customers, creating a far better return on investment.
A further development has enabled customers to install our software
onto virtual servers, eliminating the need for expensive hardware
investment within their own data centres. These improvements have
been well received by our existing customers.
The next cycle of development is to introduce certain new
products to the market. During the year, we commenced work on a new
Software Development Kit (SDK), an application that allows
customers to integrate our instant communication solutions into
their own products quickly and easily. Given the huge industry that
has developed around workforce management, the market opportunity
for our SDK is substantial. We have commenced trials with a number
of businesses that are interested to introduce instant
communication functionality to their existing workforce management
applications.
We also committed to the development of a new Dispatch Console
towards the end of last year, and are expecting to make a full
commercial launch in July 2017. This console will be a significant
step forward with major advances in functionality and feature sets,
allowing companies with large workforces to manage their operations
more effectively. A number of customers are currently running beta
trials prior to a full commercial launch in the third quarter of
this financial year. We are confident that this product will open
up new potential markets and generate incremental revenue
streams.
Mobile network operators ('MNOs')
Although revenues overall were down year on year, it was
pleasing to see recurring revenues increase by 10% compared to the
previous year. This increase was driven by our MNO customers in the
Americas, offset in part by a decline in South Africa caused by the
renegotiation of our exclusive agreement in the first half of the
year. The exclusivity payments have been reduced to facilitate
investment in the launch of services with the three leading MNOs in
the territory. Whilst there have been some delays in the roll out
of services, I'm pleased to report that the two largest MNOs are in
the process of launching full services during the second quarter of
this year.
South America continues to be the primary opportunity for growth
over the coming years. Our engagement with MNOs in Mexico, Brazil,
Equador and Colombia has continued. Many of the technical
developments outlined above have been tailored to requirements in
these markets, and it is encouraging that we are beginning to see
early signs that the market opportunity we have been aware of for
some time may be starting to gather momentum.
As we have previously highlighted, the iDEN Push To Talk (PTT)
platform, which was widely deployed in South America, has reached
the end of its life. It's anticipated that many of these customers
will look to switch their instant communication requirements to PTT
over cellular. We are working hard with our existing customers to
ensure they are well placed to capitalise on the opportunity. I am
hopeful that as our solution gains traction in the market,
providing evidence that it represents a robust and high quality
alternative to iDEN, then new customers will also be attracted to
our solution.
Our activities in mainland Europe remained stable during the
period, with flat revenues compared to the previous year. The
technical developments and new product initiatives have started to
generate interest from MNOs in a number of countries and in
response we are seeking to strengthen our business development
resource across this region during the current year.
Activity in Israel accelerated during the period with our
exclusive partner launching services with one of the leading MNOs.
A number of major corporate customers have been trialling the
service and I am pleased to see that these trials are turning into
full commercial contracts. We anticipate good momentum in this
market during the current financial year.
Independent Solution Vendors (ISVs)
As detailed above, we have significantly enhanced our SDK,
allowing ISVs and their customers to incorporate PTT functionality
into their applications. We are very confident that this channel to
market will become more important to the business as it allows us
to deploy our solution to the market with little or no incremental
cost. The feedback from early trials of the SDK are very promising
and I look forward to developing this channel over the coming
year.
Hardware manufacturers
It is essential that our solution operates across a wide
selection of rugged handset and accessories. We have certified a
number of new 3G and 4G devices for operation on our systems,
enhancing our proposition to our partners and customers.
Public sector
We have continued to work on a number of significant projects
within the public sector. As we have highlighted in the past, the
commercial nature of these deals is such that, rather than payment
of a regular monthly license fee, the customer pays an upfront
capital sum for the right to use our platform for a fixed period of
time. Given that the size of these deals can be significant, the
trials and negotiations can take place over an extended period of
time. This process can obviously take some time given the value and
complexities of the opportunities, but given the technical advances
we have made over the last 12 months, and the increasing number of
tenders we are being asked to participate in, we hope to win our
first public sector deal in the short-medium term.
Principal risks and uncertainties
The management of the business and the nature of the Group's
strategy are subject to a number of risks.
The Directors have set out below the principal risks facing the
business. The Directors are of the opinion that a thorough risk
management process is adopted, which involves the formal review of
all the risks identified below. Where possible, processes are in
place to monitor and mitigate such risks.
Product obsolescence
Due to the nature of the market in which the Group operates,
products are subject to technological advances and as a result,
obsolescence. The Directors are committed to the research and
development strategy in place, and are confident that the Group is
able to react effectively to the developments within the
market.
Indirect route to market
As described above, one of the Group's primary channels to
market are MNOs reselling our services to their enterprise
customers. Whilst MNOs are ideally positioned to forward sell our
services and are likely to possess material resources for doing so,
there remains an inherent uncertainty arising from the Group's
inability to exert full control over the sales and marketing
strategies of these customers.
Going concern and funding
The Company announced today the launch of a placing of up to
24.5m million shares at 5.0p to raise a total of approximately
GBP1.2m. The Directors are subscribing for 12,000,000 shares. The
net proceeds of the placing will be used to fund the working
capital requirements of the Company.
The Directors are therefore satisfied that the Group and Company
have adequate resources to enable them to continue in business for
the foreseeable future, which also takes into consideration its
contracted revenues, anticipated contracts as well as a written
undertaking from the Directors to meet any shortfall in those funds
to be raised in the above placing.
Outlook
The appointment of Avi Tooba as our Chief Executive and his
subsequent recruitment of an experienced senior management team has
put the business in a strong position to capitalise on the huge
opportunities that exist within the instant communication market.
With the emergence of 3G and now 4G, there is universal acceptance
across both public and private sectors that PTT over Cellular is
now a genuine alternative to traditional radio platforms. Our new
executive management team, with their experience and background,
are able to engage at the highest levels with these organisations
and bring unique perspective on the technical requirements of
customers as they transition to the new platforms.
With a renewed sense of confidence around the quality of our
platform and software applications, it is our intention to deliver
the fastest and most robust PTT over Cellular proposition in the
marketplace. Given our heritage, we are one of the only providers
that is able to provide a seamless interface across 2G, 3G and 4G.
As the market for PTT over LTE increases in coming years, we
believe our ability to offer MNOs with legacy customers on the old
platforms a seamless service and transition to the new, will place
us in a unique position. The introduction of new products and
services over coming months will further demonstrate the strength
we now have across the business.
Approved by the Board of Directors and signed on behalf of the
Board
Jeremy Fenn
Chairman
28 April 2017
Consolidated income statement
For the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Continuing operations
Revenue 2,024 2,259
----------------------------------- ------------- ------------------
Cost of sales (103) (137)
----------------------------------- ------------- ------------------
Gross profit 1,921 2,122
Operating expenses
Administrative expenses (3,885) (3,384)
Group operating loss before
exchange differences,
exceptional items & depreciation
and amortisation expense (1,964) (1,262)
----------------------------------- ------------- ------------------
Exchange differences (642) (68)
Exceptional items (276) -
Depreciation and amortisation
expense (203) (115)
----------------------------------- ------------- ------------------
Total operating expenses (5,006) (3,567)
Group operating loss (3,085) (1,445)
Finance costs (640) (586)
Loss before tax (3,725) (2,031)
Income tax credit 277 371
Loss for the year (3,448) (1,660)
----------------------------------- ------------- ------------------
Loss per share (pence)
Basic and diluted (1.39) (0.69)
----------------------------------- ------------- ------------------
Consolidated statement of comprehensive income
For the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Loss for the year (3,448) (1,660)
Other comprehensive loss
Item that will subsequently
be reclassified
to profit or loss:
Exchange differences on
translation
of foreign operations (71) (19)
Total comprehensive loss
for the year (3,519) (1,679)
------------------------------- -------- --------
Attributable to:
Equity holders of the parent (3,519) (1,679)
------------------------------- -------- --------
Consolidated statement of changes in equity
For the year ended 31 December 2016
Foreign
Reverse currency
Share Share acquisition Merger translation Accumulated Total
capital premium reserve reserve reserve Losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January
2015 4,501 11,225 (7,620) 10,938 (2,164) (27,592) (10,712)
Equity settled
share-based
payments - - - - - 13 13
Issue of share
capital 450 787 - - - - 1,237
Transactions
with owners 450 787 - - - 13 1,250
Loss for the
year - - - - - (1,660) (1,660)
Exchange
differences
on translation
of foreign
operations - - - - (19) - (19)
Total
comprehensive
loss for the
year - - - - (19) (1,660) (1,679)
Balance at 31
December
2015 4,951 12,012 (7,620) 10,938 (2,183) (29,239) (11,141)
--------------- ------------- --------------- ----------------- --------------- ------------------ -------------------- ---------------
Foreign
Reverse currency
Share Share acquisition Merger translation Accumulated Total
capital premium reserve reserve reserve Losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 - - - - - 23 23
Transactions
with owners - - - - - 23 23
Loss for the
year - - - - - (3,448) (3,448)
Exchange
differences
on translation
of foreign
operations - - - - (71) - (71)
Total
comprehensive
loss for the
year - - - - (71) (3,448) (3,519)
Balance at 31
December
2016 4,951 12,012 (7,620) 10,938 (2,254) (32,664) (14,637)
--------------- ------------- --------------- ----------------- --------------- ------------------ -------------------- ---------------
Consolidated statement of financial position
As at 31 December 2016
2016 2015
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 294 315
Intangible assets 162 107
456 422
------------------------------- ------------------- ---------
Current assets
Trade and other receivables 1,313 1,268
Inventories - 28
Cash and cash equivalents 165 107
-------------------------------- ------------------- ---------
1,478 1,403
------------------------------- ------------------- ---------
Liabilities
Current liabilities
Trade and other payables (4,719) (3,535)
Borrowings (3,667) (1,380)
Net current liabilities (6,908) (3,512)
-------------------------------- ------------------- ---------
Non-current liabilities
Trade and other payables (2,625) (2,514)
Borrowings (5,560) (5,537)
(8,185) (8,051)
------------------------------- ------------------- ---------
Net liabilities (14,637) (11,141)
-------------------------------- ------------------- ---------
Equity attributable to
the owners of the parent
Share capital 4,951 4,951
Share premium 12,012 12,012
Reverse acquisition reserve (7,620) (7,620)
Merger reserve 10,938 10,938
Foreign currency translation
reserve (2,254) (2,183)
Accumulated losses (32,664) (29,239)
Total equity (14,637) (11,141)
-------------------------------- ------------------- ---------
Consolidated statement of cash flows
For the year ended 31 December 2016
2016 2015
GBP'000 GBP'000
Operating activities
Cash used in operations (1,721) (1,233)
Tax received 277 371
Net cash used in operating
activities (1,444) (862)
--------------------------------- ------------------ -------------------
Investing activities
Purchase of property, plant
& equipment (108) (206)
Purchase of intangible
assets (81) (107)
Net cash used in investing
activities (189) (313)
--------------------------------- ------------------ -------------------
Financing activities
Issue of ordinary share
capital - 1,350
Share issue costs - (113)
Proceeds from borrowings 1,670 -
Net cash inflow from financing
activities 1,670 1,237
------------------ -------------------
Effects of exchange rates
on cash
and cash equivalents 21 4
--------------------------------- ------------------ -------------------
Net increase in cash and
cash equivalents in the
year 58 66
Cash and cash equivalents
at beginning of year 107 41
------------------ -------------------
Cash and cash equivalents
at end of year 165 107
--------------------------------- ------------------ -------------------
1 Financial information
The financial information set out in this final results
announcement does not constitute statutory accounts within the
meaning of s495(2) or s495(3) of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2016 will be dispatched to
shareholders for approval at the Annual General Meeting to be held
on 6 June 2017. The statutory accounts contain an unqualified audit
report, which did not include a statement under s498(2) or s498(3)
of the Companies Act 2006, and will be delivered to the Registrar
of Companies.
The statutory accounts for the year ended 31 December 2015 which
have been delivered to the Registrar of Companies, contained an
unqualified audit report and did not include a statement under
s498(2) or s498(3) of the Companies Act 2006.
2 Segmental analysis
The Group presents its results in accordance with internal
management reporting information to the chief operating decision
maker (Board of Directors). At 31 December 2016 the Board continued
to monitor operating results by category of revenue within a single
operating segment, the provision of instant communication
solutions. Under IFRS 8 the Group has only one operating segment.
Therefore the results presented in the income statement are the
same as those required under IFRS 8, save for the year end entry of
IFRS 2 share option charge of GBP23,000 (year ended 31 December
2015: GBP13,000).
Revenue by category
2016 2015
GBP'000 GBP'000
License fees 1,679 1,279
Hardware &
software 22 81
Professional
services 163 499
Other 160 400
Total 2,024 2,259
----------------- -------- --------
Revenue is reported by geographical location of customers.
Non-current assets are reported by geographical location of
assets.
2016 2016 2015 2015
Non-current Non-current
Revenue assets Revenue assets
GBP'000 GBP'000 GBP'000 GBP'000
UK 62 11 125 11
Europe 418 - 476 -
North America 895 - 764 15
South America 261 - 271 -
Israel 76 445 105 396
Africa 312 - 483 -
Asia/Pacific - - 35 -
---------------
Total 2,024 456 2,259 422
--------------- ----------------- --------------------- -------- ----------------------
Our mobile network operator customer in Canada represents
GBP852,000 (2015: GBP729,000) of the total revenue of the
Group.
3 Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders of GBP3,448,000 (2015:
GBP1,660,000) by the weighted average number of ordinary shares in
issue during the year of 247,553,189 (2015: 240,710,723).
2016 2015
Basic and Basic and
diluted diluted
Loss Loss Loss Loss
per per
share share
GBP'000 pence GBP'000 pence
Loss attributable
to
ordinary shareholders (3,448) (1.39) (1,660) (0.69)
Adjusted basic loss
per share (3,448) (1.39) (1,660) (0.69)
----------------------- ---------- ----------- ----------- --------------
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 exercise
of share options are anti-dilutive under the terms of IAS 33.
4 Annual General Meeting
The Annual General Meeting of the Company will be held at
Cardale House, Cardale Court, Beckwith Head Road, Harrogate, HG3
1RY on 6 June 2017 at 9.00 a.m. The audited results for the year
ended 31 December 2016 will be posted to shareholders shortly and
will be available on the Company's website at www.mobiletornado.com
at the same time.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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