TIDMMBT
RNS Number : 0363U
Mobile Tornado Group PLC
31 March 2021
31 March 2021
Mobile Tornado Group plc
("Mobile Tornado", the "Company" or the "Group")
2020 Final results
Mobile Tornado Group plc, the leading provider of instant
communication mobile applications to the enterprise market,
announces its audited results for the year ended 31 December
2020.
Financial Highlights
2020 2019
GBP'000 GBP'000
Recurring revenue 2,042 2,063
Non-recurring revenue* 490 1,391
------------------------- -------- --------
Total revenue 2,532 3,454
Gross profit 2,351 3,174
Administrative expenses (2,722) (3,164)
Adjusted EBITDA** (371) 10
-------- --------
Group operating loss (784) (324)
Loss before tax (1,390) (1,028)
-- Total revenue decreased by 27% to GBP2.53m (2019: GBP3.45m)
o Recurring revenues remained largely unchanged at GBP2.04m
(2019: GBP2.06m)
o Non-recurring revenues* decreased by 65% to GBP0.49m (2019:
GBP1.39m)
-- Gross profit decreased by 26% to GBP2.35m (2019: GBP3.17m)
-- Operating expenses before depreciation, amortisation,
exceptional items and exchange differences decreased by 14% to
GBP2.72m (2019: GBP3.16m)
-- Adjusted EBITDA** loss of GBP0.37m (2019: profit of GBP0.01m)
-- Group operating loss for the year increased to GBP0.78m (2019: GBP0.32m)
-- Loss after tax of GBP1.14m (2019: GBP0.82m)
-- Basic loss per share of 0.30p (2019: 0.23p)
-- Cash at bank of GBP0.19m (2019: GBP0.26m) with net debt of GBP9.10m (2019: GBP8.62m)
* Non-recurring revenues comprise installation fees, hardware,
professional services and capex license fees
**Earnings before interest, tax, depreciation, amortisation,
exceptional items and excluding exchange rate differences
Operating highlights
-- Recurring revenue stream remained stable despite the highly
uncertain global economic environment, demonstrating strength of
business model
-- Deployment of a "track and trace" application with the
Government of Bahamas to assist management of quarantine in the
fight against COVID-19
-- Partnership Agreement with global LTE telecoms solutions
provider, Telrad Networks to offer an integrated, end-to-end
solution for Push-to-Talk communication over broadband
-- Partner network expanded with new agreements established
covering Peru, Spain, Portugal, Andorra and the UK
-- Renewal of Agreement with a major Mobile Network Operator
("MNO") in North America for a further 12 months
Jeremy Fenn, Chairman of Mobile Tornado, said: " Notwithstanding
the unique challenges that 2020 presented, I am pleased with the
resilience the business has exhibited, and the financial results
that were delivered. More importantly, we retained and expanded our
global network of partners, and have entered 2021 with a strong
pipeline of potential new customers.
"We will continue to innovate around the platform, but our core
focus now is to scale the recurring revenue base, to drive the
business to sustained profitability. There are clear signs that
activity levels within our key markets are picking up and we look
forward to the business getting back on track and delivering a
positive outcome for the current year."
Enquiries :
Mobile Tornado Group plc www.mobiletornado.com
Jeremy Fenn, Chairman +44 (0)7734 475 888
Allenby Capital Limited (Nominated
Adviser & Broker) +44 (0)20 3328 5656
James Reeve (Corporate Finance)
David Johnson (Sales and Corporate
Broking)
Walbrook PR Ltd +44(0)207933 8780 or mobiletornado@walbrookpr.com
Paul Vann / Nick Rome
Financial results and key performance indicators
Total revenue for the year ended 31 December 2020 decreased by
27% to GBP2.53m (2019: GBP3.45m). Recurring revenues remained
largely unchanged at GBP2.04m (2019: GBP2.06m). Non-recurring
revenues, comprising installation fees, hardware, professional
services and capex license fees were impacted adversely by the
Covid-19 pandemic and decreased to GBP0.49m (2019: GBP1.39m). As a
result, gross profit decreased by 26% to GBP2.35m (2019:
GBP3.17m).
Operating expenses before depreciation, amortisation,
exceptional items and exchange differences in the year decreased by
14 % to GBP2.72m (2019: GBP3.16m), 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 retranslation of certain financial liabilities
on the balance sheet, the Group reported a translation loss of
GBP0.07m (2019: gain of GBP0.08m) arising from the depreciation of
Sterling relative to the Euro as at 31 December 2020 versus the
previous year end. The Group recorded a net income tax credit of
GBP0.25m (2019: GBP0.21m).
The loss after tax for the year increased to GBP1.14m (2019:
loss of GBP0.82m) equating to an increased basic loss per share of
0.30p (2019: 0.23p).
The net cash outflow from operating activities reduced by 86% to
GBP0.1m (2019: GBP0.71m). At 31 December 2020, the Group had
GBP0.19m cash at bank (2019: GBP0.26m) and net debt of GBP9.10m (31
December 2019: GBP8.62m).
The balance sheet continues to reflect the cumulative loss
position of the Group, and those net liabilities that have resulted
from this. We continue to hold levels of debt in the Group which
have funded these historical losses.
Results and dividends
The Directors do not recommend the payment of a dividend in
respect of the year ended 31 December 2020 (year ended 31 December
2019: nil). The Company currently intends to reinvest future
earnings to finance the growth of the business over the near
term.
Review of Operations
Despite the enormous impact that the COVID 19 pandemic has had
on the global economy, I am pleased to report that our business has
weathered the storm and is emerging in good shape. Our recurring
revenue streams, generated across 21 customers operating in 19
countries, remained largely unchanged at GBP2.04m, illustrating the
robustness and quality of our proposition and customer base.
Many of the new business opportunities that we were working
towards when the pandemic took hold in March 2020, were in South
America and South Africa. Unfortunately, these two markets were hit
particularly hard, and we were unable to complete the normal sales
cycle with prospective customers. Furthermore, a number of these
opportunities were with Government departments, agencies and
utilities, which became subject to budget cuts and freezes as
resources were redeployed to manage the response to the crisis. As
a result, our new business non-recurring revenues, comprising
installation fees, hardware, professional services and capex
licenses declined by 65% to GBP0.49m.
To mitigate the impact of this shortfall, we worked hard to
drive further efficiencies across our operations and were able to
take out approximately GBP0.44m of cost-base during the year. This
enabled us to limit cash used in operations during the year to a
very modest GBP0.10m (2019: GBP0.71m), maintaining our operation
with no further funding requirement from shareholders.
There were some notable successes during the year, including the
sale of a "track and trace" system to the Bahamas Government to
protect its residents and manage those individuals placed into
quarantine. It was a relatively small deployment, but it
illustrated the flexibility of our solution in handling
mission-critical requirements.
We have put a lot of energy into supporting our business
activities in South America and are now beginning to see signs that
these economies are emerging from the worst of the pandemic. Our
intention is to establish a strong business platform in Mexico and
Colombia and to use that as the base to move into other countries
within the region. Our solution is being used by approximately 400
organisations across these two markets, and the pipeline is very
strong for 2021. It is a market that I hope will drive the growth
in our recurring revenues during the current financial year.
Our engagements with various Government departments and
utilities in South Africa have been severely impacted during the
last 12 months, driven by the redirection of budgets towards
managing the impact of COVID-19. We have, however, maintained a
good dialogue with our MNO partner and are hopeful that
Governmental budget constraints will be eased during this year, and
that we can conclude some of the deals we have been working
towards.
In Israel we have continued to progress our business with the
leading MNO in the country and are encouraged that their early
emergence from lockdown as a result of a successful vaccine rollout
should result in renewed deal activity in the first half of 2021.
Towards the end of 2020, we closed out a partnership agreement with
Telrad Networks, the leading global LTE telecoms solution provider.
Telrad will market a solution that allows customers with
traditional land mobile radio (LMR) and digital mobile radio (DMR)
to migrate to an integrated end-to-end solution for Push to Talk
communication over broadband. This solution offers all modes of
communication including voice, messaging, alerts and SOS, and
marketing has commenced during the current quarter, with early
interest from a number of prospects within the Oil and Gas
sector.
In addition to establishing relationships with new partners in
Peru, Spain, Portugal, Andorra and the UK, we were delighted to
renew our deal with a major MNO in North America for a further 12
months. We have now provided services to its customers for seven
years, a further illustration of the quality of the solution and
business model.
Research and Development
With the pause in sales activity during the year, we took the
opportunity to accelerate the development of our technical
platform, adding further features and functions. As well as
facilitating the sharing of image and video files on the dispatch
console, we integrated with a number of new devices including
body-cams and scanners. We also developed a new mobile device
manager (MDM) application that will allow customers to generate
significant efficiencies through the utilisation of our platform.
Our team have also managed to increase the size of groups that the
server and dispatch console can handle to 3,500 users, which we
believe makes us the market leader for large group
communications.
We are also working with a number of existing and potential
customers to develop additional workforce management functionality
within our platform that would allow them to consolidate their
activities into one single solution, thereby facilitating
significant cost savings. Our focus initially is the security
sector, and we hope to be running field trials with a number of
prospective customers towards the end of the first half.
As highlighted above, we have been able to take out further
costs during the year, as the robustness of our technical platform
steadily improves. We currently operate R&D centres in both
Israel and India, and we have been able to flex the mix of skills
and location to drive additional efficiencies.
Funding
Despite the challenging business environment, I am pleased to
report that we have been able to trade through the last 12 months
within our existing cash resources. We extended our GBP0.3m
revolving loan facility with our principal shareholder,
Intechnology plc, for a further 12 months in September 2020, and I
can confirm that as at today's date the balance drawn down is
GBPnil. (31 December 2019: GBPnil)
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 Group's current
research and development strategy and are confident that the Group
is able to react effectively to 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
The Financial Statements are prepared on a going concern
basis.
When determining the adoption of this approach, the Directors
have considered a wide range of information relating to present and
future conditions, including the current state of the Balance
Sheet, together with that continued support offered by our
principal shareholder Intechnology plc, who, as in previous years,
has agreed not to call on existing loans and borrowings and to
extend our working capital facility (as announced on 23 September
2020). Further consideration has been given to future projections,
cash flow forecasts, access to funding, ability to successfully
secure additional investment, available mitigating actions and the
medium-term strategy of the business.
In common with many businesses at this stage of development, the
Group is dependent on its ability to meet its cash flow forecasts.
Within those forecasts the Group has included a number of
significant payments and receipts based on its best estimate but,
as with all forecasts, there does exist some uncertainty as to the
timing and size of those payments and receipts. In particular, the
forecasts assume the ongoing deferral and phased payment of some of
the Group's creditors (as disclosed in note 14 to the financial
statements of the annual report and accounts), and the continuation
at the current level of recurring revenue and a significant
increase in the level of non-recurring revenues. In the event that
some or all of these receipts are delayed, deferred or reduced, or
payments not deferred, management has considered the actions that
it would need to take to conserve cash. These actions would include
significant cost savings (principally payroll based) and/or seeking
additional funding from its shareholders, for which there is
currently no shareholder commitment requested. These conditions,
together with the other matters explained in note 1 to the
financial statements of the annual report and accounts, indicate
the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern. The
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
The Directors, whilst noting the existence of a material
uncertainty and having considered the possible management actions
as noted above, are of the view that the Group is a going concern
and will be able to meet its debts as and when they fall due for a
period of at least 12 months from the date of signing these
accounts.
Outlook
Notwithstanding the unique challenges that 2020 presented, I am
pleased with the resilience the business has exhibited, and the
financial results that were delivered. More importantly, we
retained and expanded our global network of partners, and have
entered 2021 with a strong pipeline of potential new customers.
We will continue to innovate around the platform, but our core
focus now is to scale the recurring revenue base, to drive the
business to sustained profitability. There are clear signs that
activity levels within our key markets are picking up and we look
forward to the business getting back on track and delivering a
positive outcome for the current year.
Approved by the Board of Directors and signed on behalf of the
Board
Jeremy Fenn
Chairman
31 March 2021
Consolidated income statement
For the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
Continuing operations
Revenue 2,532 3,454
--------------------------------------------------- --------------- -----------------
Cost of sales (181) (280)
--------------------------------------------------- --------------- -----------------
Gross profit 2,351 3,174
Operating expenses
Administrative expenses (2,722) (3,164)
Exchange differences (69) 83
Depreciation and amortisation expense (344) (417)
--------------------------------------------------- --------------- -----------------
Total operating expenses (3,135) (3,498)
Group operating loss before exchange differences,
exceptional items & depreciation and amortisation
expense (371) 10
--------------------------------------------------- --------------- -----------------
Group operating loss (784) (324)
Finance costs (606) (704)
Loss before tax (1,390) (1,028)
Income tax credit 248 211
Loss for the year (1,142) (817)
--------------------------------------------------- --------------- -----------------
Loss per share (pence)
Basic and diluted (0.30) (0.23)
--------------------------------------------------- --------------- -----------------
Consolidated statement of comprehensive income
For the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
Loss for the year (1,142) (817)
Other comprehensive gain/(loss)
Item that will subsequently be reclassified
to profit or loss:
Exchange differences on translation
of foreign operations 16 21
Total comprehensive loss for the year (1,126) (796)
---------------------------------------------- -------- --------
Attributable to:
Equity holders of the parent (1,126) (796)
---------------------------------------------- -------- --------
Consolidated statement of financial position
As at 31 December 2020
2020 2019
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 148 213
Intangible assets 12 50
Right-of-use assets 316 558
476 821
-------------------------------------- --------- --------------------
Current assets
Trade and other receivables 1,906 1,976
Inventories 56 108
Cash and cash equivalents 187 264
-------------------------------------- --------- --------------------
2,149 2,348
-------------------------------------- --------- --------------------
Liabilities
Current liabilities
Trade and other payables (4,968) (4,482)
Borrowings (8,902) (8,311)
Lease liabilities (252) (275)
Net current liabilities (11,973) (10,720)
-------------------------------------- --------- --------------------
Non-current liabilities
Trade and other payables (1,451) (1,776)
Borrowings (46) -
Lease liabilities (83) (301)
(1,580) (2,077)
-------------------------------------- --------- --------------------
Net liabilities (13,077) (11,976)
-------------------------------------- --------- --------------------
Equity attributable to the owners of the
parent
Share capital 7,595 7,595
Share premium 15,797 15,797
Reverse acquisition reserve (7,620) (7,620)
Merger reserve 10,938 10,938
Foreign currency translation reserve (2,204) (2,220)
Accumulated losses (37,583) (36,466)
Total equity (13,077) (11,976)
-------------------------------------- --------- --------------------
Consolidated statement of changes in equity
For the year ended 31 December 2020
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 2019 6,985 14,924 (7,620) 10,938 (2,241) (35,701) (12,715)
Equity settled
share-based
payments - - - - - 52 52
Issue of share
capital 610 873 - - - - 1,483
Transactions
with owners 610 873 - - - 52 1,535
Loss for the
year - - - - - (817) (817)
Exchange
differences on
translation
of foreign
operations - - - - 21 - 21
Total
comprehensive
loss for
the year - - - - 21 (817) (796)
Balance at 31
December 2019 7,595 15,797 (7,620) 10,938 (2,220) (36,466) (11,976)
--------------- -------------- ---------------- ------------------ ---------------- ------------------- --------------------- ----------------
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 2020 7,595 15,797 (7,620) 10,938 (2,220) (36,466) (11,976)
Equity settled
share-based
payments - - - - - 25 25
Transactions
with owners - - - - - 25 25
Loss for the
year - - - - - (1,142) (1,142)
Exchange
differences on
translation
of foreign
operations - - - - 16 - 16
Total
comprehensive
loss for
the year - - - - 16 (1,142) (1,126)
Balance at 31
December 2020 7,595 15,797 (7,620) 10,938 (2,204) (37,583) (13,077)
--------------- -------------- ---------------- ------------------ ---------------- ------------------- --------------------- ----------------
Consolidated statement of cash flows
For the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
Operating activities
Cash used in operations (101) (705)
Tax received 238 313
Interest paid - (12)
-----------------------------------------
Net cash from/(used in) operating
activities 137 (404)
----------------------------------------- ------------------- ------------------
Investing activities
Purchase of property, plant & equipment (3) (100)
Purchase of right-of-use assets - (836)
Net cash used in investing activities (3) (936)
----------------------------------------- ------------------- ------------------
Financing activities
Issue of ordinary share capital - 1,525
Share issue costs - (42)
Increase/(decrease) in borrowings 50 (775)
IFRS 16 leases (259) 549
------------------- ------------------
Net cash from/(used in) financing
activities (209) 1,257
------------------- ------------------
Effects of exchange rates on cash
and cash equivalents (2) (7)
----------------------------------------- ------------------- ------------------
Net decrease in cash and
cash equivalents in the year (77) (90)
Cash and cash equivalents at beginning
of year 264 354
------------------- ------------------
Cash and cash equivalents at end
of year 187 264
----------------------------------------- ------------------- ------------------
Notes to the financial statements
1 Financial information
The financial information set out in this final results
announcement does not constitute statutory accounts within the
meaning of s434 of the Companies Act 2006. Statutory accounts for
the year ended 31 December 2020 will be made available to
shareholders for approval at the next Annual General Meeting. 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 2019 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 2020 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 GBP25,000 (year ended 31 December
2019: GBP52,000).
Revenue by category
2020 2019
GBP'000 GBP'000
License fees 1,843 2,185
Hardware & software 267 451
Professional services 218 609
Support & Maintenance 204 209
Total 2,532 3,454
-------------------------- -------- --------
2020 2019
GBP'000 GBP'000
Recurring 2,042 2,063
Non-recurring 490 1,391
Total 2,532 3,454
-------------------------- -------- --------
Revenue is reported by geographical location of customers.
Non-current assets are reported by geographical location of
assets.
2020 2020 2019 2019
Non-current Non-current
Revenue assets Revenue assets
GBP'000 GBP'000 GBP'000 GBP'000
UK 24 - 36 5
Europe 213 - 153 -
North America 755 - 985 -
South America 805 - 1,047 1
Israel 365 476 731 815
Africa 367 - 502 -
Asia/Pacific 3 - - -
Total 2,532 476 3,454 821
--------------- -------- ----------------------- ---------------------- -----------------------
Of the total revenue of the Group, four customers each
represented revenue greater than 10% of this total - these being
27% or GBP684,000 (2019: 23% or GBP912,000), 16% or GBP414,000
(2019: 20% or GBP676,000), 15% or 367,000 (2019: 15% or GBP525,000)
and 15% or GBP391,000 (2019: 11% or GBP369,000) respectively.
3 Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders of GBP1,142,000 (2019:
GBP817,000) by the weighted average number of ordinary shares in
issue during the year of 379,744,923 (2019: 359,770,621).
2020 2019
Basic and diluted Basic and diluted
Loss Loss Loss Loss
per share per share
GBP'000 pence GBP'000 pence
Loss attributable to
ordinary shareholders (1,142) (0.30) (817) (0.23)
Adjusted basic loss per
share (1,142) (0.30) (817) (0.23)
------------------------- ----------- ------------ -------------- ---------------
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 announced
separately in due course. The audited results for the year ended 31
December 2020 will be made available to shareholders shortly and
will be available on the Company's website at www.mobiletornado.com
at the same time.
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