Mobile Tornado Group Plc : Interim Results

("Mobile Tornado" or the "Company")

Introduction

Mobile Tornado Group plc, the leading provider of mobile applications to the enterprise market, announces its unaudited results for the six month period to 30 June 2011.

Financial Results

Turnover in the six month period to 30 June 2011 amounted to £885,000 (30 June 2010: £618,000). Group operating loss reduced significantly to £499,000 (30 June 2010: £1,044,000 loss). After finance costs of £189,000 (30 June 2010: £157,000) and a tax credit of £122,000 (30 June 2010: £nil) the net loss for the period was £566,000 (30 June 2010: £1,201,000). The net cash outflow from operating activities at £172,000 was broadly similar to the previous year at £176,000.

The Group consolidated balance sheet shows net liabilities at 30 June 2011 of £10,823,000 compared to net liabilities of £9,905,000 at 30 June 2010. Cash at bank was £14,000 at 30 June 2011 compared to £39,000 at 30 June 2010. The Directors believe that the Group has sufficient working capital for the foreseeable future given its contracted revenue, anticipated contracts and continued support from its principal shareholder, InTechnology plc.

Review of operations

It is very pleasing to report another 6 months of solid progress across the business. This has been reflected in the financial results for the period, with sales increasing by 43% on the same period last year, and operating losses more than halving. As I have reported in previous statements, we are seeing an increasing interest in our proposition from businesses around the world, but it is extremely gratifying to see this interest converting to sales and cashflow.

The deals we concluded during the period demonstrate the strength of our proposition in the global market and the multiple channels through which it is being deployed.

During the first half, we announced a distribution agreement with Pocket Mobile, a major supplier of B2B mobile enterprise solutions in the Nordic region, where we provide instant voice services to Pocket Mobile's existing PreCom platform. By integrating our instant communication application onto Pocket Mobile's own workforce management solution, they are able to offer their customers an enhanced proposition, greatly enhancing their platform's functionality and value to the end user. G4S, a major global security company has started to equip its own workers with the solution, with engagement in Denmark, Sweden and Finland. Having now installed local servers in each of these countries, we now look forward to increased penetration of G4S, and their own customers.

One of our principal strategic objectives is to engage with companies similar to Pocket Mobile, and integrate our Instant Communications platform with their own workforce management solution. The merits of this type of deal are compelling; our partner gets the opportunity to sell an integrated communication platform to their customer base, whilst we get access to a ready supply of customers receptive to solutions that deliver them even greater efficiency. The Crimson Tide deal we signed in July fits these criteria, and they are now selling their solution with our Instant Communications application as an option. Further evidence that the efforts we are making in this area are bearing fruit, comes with our deal with Honeywell Scanning and Mobility, which was completed recently.

Honeywell is one of the major global suppliers of handheld devices and works closely with workforce management solution providers who use Honeywell hardware to deploy their software into the market. The deal we have completed puts us at the heart of their software vendor community as we have agreed to offer our proposition through their ISV Store (www.isvstore.com). This is a multi-vendor site dedicated to helping end users identify the software applications that best fit their business needs. Our solution is being promoted as one that allows the removal of multiple communication devices such as two-way radios and panic alert devices, as all field worker requirements are converged into one Honeywell device. To secure this deal is not only a testimony to the quality of our solution, but also to the trends we are seeing in the marketplace. As enterprises deploy ever more sophisticated software solutions to enhance the efficiency of their workforces, they will demand a more appropriate communication solution to work alongside. We are already engaged with a number of Honeywell's ISVs and I look forward to converting these discussions into further commercial deals in coming months.

The developing economies are another area where we have been focusing sales resources. We were pleased to agree an exclusive relationship with Neco in South Africa, who have set up a separate business to exploit our solution in their rapidly developing market. We also announced in July, a partnership agreement with Investro Group to provide our instant communication applications to the enterprise and mobile operator market in Guatemala. The service will be launched on Claro, the leading provider of telecommunication services in Central America. This deal has raised our profile in this market and further discussions are in progress with potential partners in Mexico and Brazil.

We concluded a deal with one of the major mobile operators in Israel, for an initial 10,000 licenses. This deal also included the delivery of our Android client, and I am pleased to report that this service will be launched in Israel during the final quarter. We anticipate, based on marketing analysis that there will be additional orders for licenses once the initial batch has been deployed.

Current trading and future prospects

The trends that I highlighted in our full year announcement in May are still the main drivers for our business. The rapid penetration of smartphones in the consumer market has now shifted to the enterprise space with the likes of Motorola, Intermec and Honeywell delivering more compact, smarter devices into the market. Advanced features such as GPS functionality have enabled more feature rich services and allowed software companies to develop ever more sophisticated applications to enhance productivity in the workforce. The one feature that an increasing number of enterprises are now demanding is a more effective way to communicate than the traditional phone. Alongside a desire to converge all applications onto one device, we are therefore seeing increasing demand for the Instant Talk application that sits at the core of our proposition.

The closest competing technology for our solution is Private Mobile Radio ('PMR') solutions with TETRA being the best known. PMR is a heavy duty, costly network designed for near universal coverage and availability, with very quick call set up and group communications. A mobile data based solution such as ours is unlikely to displace PMR for the emergency services and other critical users. However, given the pressures on public sector budgets throughout the world, we are seeing an increasing interest in our solution as a complement to existing platforms, given the need to make significant cuts in spending. In addition, there are certain countries that have not yet deployed PMR platforms in country, and who are now actively considering the alternatives, given the relative cost benefits. We hope to capitalise on these emerging trends and will update shareholders as they progress. 

I have always believed that the Company has developed an outstanding communication platform. We have had to be extremely patient but it would now appear that market trends are moving in our direction, evidenced by the improving financial performance and by the quality of customers and partners that we are now engaged with. Our team will continue to work hard to deliver this potential for our shareholders and I look to the future with confidence.

Peter Wilkinson

Chairman

28 September 2011

For further details please contact:

Mobile Tornado Group plc
Jeremy Fenn, Chief Executive	[phone]
Northland Capital Partners Limited	[phone]
Shane Gallwey / Gavin Burnell

Consolidated income statement                                                       

		Six months		Six months		Year
		ended		ended		ended
		30 June		30 June		31  December
		2011		2010		2010
		Unaudited		Unaudited		Audited
	Note	£'000		£'000		£'000
Continuing Operations
Revenue		885		618		1,432
Cost of sales		(234)		(176)		(350)
Gross profit		651		442		1,082
Operating expenses		(1,090)		(838)		(1,866)
Exchange differences		(51)		(246)		(32)
Depreciation and amortisation expense		(9)		(16)		(35)
Exceptional costs of Israeli subsidiary		-		(386)		(446)
Group operating loss		(499)		(1,044)		(1,297)
Finance costs		(189)		(157)		(335)
Loss before tax		(688)		(1,201)		(1,632)
Income tax credit		122		-		63
Loss for the period		(566)		(1,201)		(1,569)
Attributable to:
Equity holders of the parent		(566)		(1,201)		(1,569)
Loss per share (pence)
Basic and diluted	3	(0.31)		(0.65)		(0.85)

Consolidated statement of comprehensive income                           

		Six months		Six months		Year
		ended		ended		ended
		30 June		30 June		31 December
		2011		2010		2010
		Unaudited		Unaudited		Audited
		£'000		£'000		£'000
Loss for the period		(566)		(1,201)		(1,569)
Other comprehensive income
Exchange differences on translation
of foreign operations		6		(18)		(7)
Total comprehensive income for the period		(560)		(1,219)		(1,576)

Consolidated statement of changes in equity                                     

	Share	Share	Reverse acquisition	Merger	Translation	Retained	Total
	capital	premium	reserve	reserve	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2010	3,699	4,449	(7,620)	10,938	(2,153)	(18,004)	(8,691)
Equity settled share-based payments	-	-	-	-	-	5	5
Transactions with owners	-	-	-	-	-	5	5
Loss for the period	-	-	-	-	-	(1,201)	(1,201)
Exchange differences on translation
of foreign operations	-	-	-	-	(18)	-	(18)
Total comprehensive income
for the period	-	-	-	-	(18)	(1,201)	(1,219)
Balance at 30 June 2010	3,699	4,449	(7,620)	10,938	(2,171)	(19,200)	(9,905)
	Share	Share	Reverse acquisition	Merger	Translation	Retained	Total
	capital	premium	reserve	reserve	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2010	3,699	4,449	(7,620)	10,938	(2,171)	(19,200)	(9,905)
Equity settled share-based payments	-	-	-	-	-	(2)	(2)
Transactions with owners	-	-	-	-	-	(2)	(2)
Loss for the period	-	-	-	-	-	(368)	(368)
Exchange differences on translation
of foreign operations	-	-	-	-	11	-	11
Total comprehensive income
for the period	-	-	-	-	11	(368)	(357)
Balance at 31 December 2010	3,699	4,449	(7,620)	10,938	(2,160)	(19,570)	(10,264)
	Share	Share	Reverse acquisition	Merger	Translation	Retained	Total
	capital	premium	reserve	reserve	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2011	3,699	4,449	(7,620)	10,938	(2,160)	(19,570)	(10,264)
Equity settled share-based payments	-	-	-	-	-	1	1
Transactions with owners	-	-	-	-	-	1	1
Loss for the period	-	-	-	-	-	(566)	(566)
Exchange differences on translation
of foreign operations	-	-	-	-	6	-	6
Total comprehensive income
for the period	-	-	-	-	6	(566)	(560)
Balance at 30 June 2011	3,699	4,449	(7,620)	10,938	(2,154)	(20,135)	(10,823)