ANNUAL REPORT
AND FINANCIAL STATEMENTS
for the year ended 31 December 2015
www.mobiletornado.com
Mobile Tornado Group PLC
Company Registration Number: 5136300
Contents
Strategic report
Directors’ report
Independent auditors’ report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated statement of financial position
Consolidated statement of cash flows
Accounting policies
Notes to the financial statements
Company balance sheet – prepared under FRS 102
Company statement of changes in equity
Notes to the Company financial statements
Notice of Annual General Meeting
Corporate information
Page
2
6
11
14
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15
16
17
18
25
38
39
40
47
51
Page 1
Strategic report
Introduction
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 2015.
Financial Highlights
• Revenue up by 29% to £2.26m (2014: £1.75m)
• Recurring revenues up by 33% to £1.68m (2014: £1.26m)
• Professional service sales up by 74% to £0.5m (2014: £0.29m)
• Hardware and 3rd party software sales reduced to £0.08m (2014: £0.20m)
• Group operating loss of £1.45m (2014: £2.66m)
• Adjusted EBITDA* loss of £1.26m (2014: £2.50m)
• Adjusted operating loss* of £1.38m (2014: £2.65m)
• Loss after tax of £1.66m (2014: £2.95m)
• Basic loss per share of 0.69p (2014: 1.31p)
• Cash at bank of £0.11m (2014: £0.04m) with net debt of £6.81m (2014: £6.56m)
*Earnings before interest, tax, depreciation, amortization and excluding exchange
differences
Operating highlights
• Strong recurring revenue growth of 33% reflecting increased momentum within Mobile
Network Operator customers across the Americas
• Restructure of business to focus on key markets and customers resulted in operating
expenses saving of £0.59m compared to 2014
• New commercial contract agreed with an independent communications service provider
in Israel for commercial launch of services
• Commercial partnership agreed with independent communications service provider
within the global oil and gas sector
• “PTT” deployment completed with a transportation customer in Brazil
• 3GPP committee engagement
• R&D tax credit of £0.37m in 2015 (2014:£0.22m) reduced operating expenses further to
£3.01m (2014:£3.75m)
Financial results and key performance indicators
Total revenue for the year ended 31 December 2015 increased by 29% to £2.26m (2014:
£1.75m). Encouragingly, recurring revenue, a key performance indicator for the business, was
up by 33% to £1.68m (2014: £1.27m). Non-recurring revenue, comprising installation fees,
hardware and professional services, increased slightly to £0.58m (2014: £0.48m).
Gross profit increased to £2.12m (2014: £1.47m) as a result of the growth in higher margin
recurring revenue. Operating expenses declined by 15% to £3.38m (2014: £3.97m) during
the year, primarily due to the lower staffing levels following the restructure during 2014. The
Group received an income tax credit in respect of our qualifying investment in R&D activities
of £0.37m (2014: £0.22m) further reducing our net operating expenses. As a result, the loss
after tax for the year reduced significantly to £1.66m (2014: Loss £2.95m). This resulted in
a reduced basic loss per share of 0.69p (2014: 1.31p).
The net cash outflow from operating activities was £1.23m (2014: £2.75m). At 31 December
2015, the Group had £0.11m cash at bank (2014: £0.04m) and net debt of £6.81m (2014:
£6.56m).
Page 2
Strategic report
Results and dividends
The Directors are unable to recommend the payment of a dividend in respect of the year
ended 31 December 2015 (year ended 31 December 2014: nil). The Company currently
intends to reinvest future earnings to finance the growth of the business over the near term.
Review of operations
Mobile network operators (MNOs)
Our engagement with Tier 1 MNOs across the world continues, with commercial contracts now
in place with ten customers. The growth in recurring revenues was driven principally by the
commercial roll out of services by our customers in the Americas. This territory, particularly
South America, represents the principal target for growth in the business over the coming
years. As the iDEN technology platform reaches the end of its life, we expect many of these
customers will look to switch their instant communication requirements to PTT. Our business
development team has worked hard during the period to engage with new partners in these
territories as we look to widen our commercial reach in these markets.
During the period our Tier 1 customer in mainland Europe extended its contract for a further
three years. Our technical team continues to work to optimise the platform prior to full
commercial launch.
As previously reported, our partner in South Africa has secured agreement to provide PTT
services to the three domestic Tier 1 MNOs. Commercial deployment by the operators has
been delayed as a result of technical integration issues, principally around location of server
hosting, although it appears that these are now close to being resolved. We anticipate
resolution and launch of services in the second half of this financial year.
During 2015, we reviewed the various options open to us for launching services in Israel, an
established PTT market. We concluded an agreement with a company focused on the
deployment of value added services to the corporate market. Our exclusive agreement was
successfully launched in January 2016 and we are pleased to report it has already secured
some important customers in the commercial market: leading enterprises in the Israeli
banking, logistics and security sectors have already committed to the service and we
anticipate increasing sales momentum through the rest of this financial year.
Independent Solution Vendors (ISVs)
Whilst MNOs represent a valuable channel to market given their ability to forward sell our
services to a wide customer base, the inherent uncertainty arising from our inability to exert
full control over the sales and marketing strategies make it very difficult to predict with any
certainty how our customer base will grow, and with it, expand our recurring revenue base.
We have continued to seek out partners keen to integrate our communication solution to an
existing software application. Our partner in the transportation sector successfully concluded
the installation of its solution, incorporating our communication platform, with a transportation
company in Brazil. As a result we are now engaged in a number of other tenders with this
partner.
We have also established a partnership with an ISV serving the global oil and gas sector and
are currently participating in a number of tenders. We are also seeking a similar engagement
in the mining sector.
The workforce management sector offers numerous opportunities to deploy our service across
applications that have already been sold into significant customer bases. Our technical team
is working towards delivering a more sophisticated and usable interface to allow wider
adoption of our technology by other software application providers.
Page 3
Strategic report
Hardware manufacturers
We have worked extensively with all of the major rugged handset and accessory
manufacturers during the period. As a result, we are cooperating with these partners on
tenders to both mobile operators and enterprises.
Public sector
Whilst our focus across 2015 has been to develop our recurring revenue streams with our
Tier 1 MNOs, we continue to be invited to tender for significant projects within the public
sector. We are currently engaged on trials with potential customers in India, Africa and Asia.
The nature of the deals is such that we give the customer the right to use our platform for a
fixed period of time in return for an upfront capital sum. Whilst the profitability and cash-flow
impact of these deals can be significant, the trials and negotiations can take place over an
extended period of time, and predicting with any certainty when they might close is extremely
difficult. Nevertheless, we continue to develop these opportunities since successful closure of
any of them would bring material financial upside.
Management
We have been looking to strengthen the management team and we are delighted to confirm
the appointment of Avi Tooba as Chief Operating Officer with immediate effect. Avi was
previously the senior director of engineering at Motorola Solutions overseeing engineering
operations and some 500 engineers at the Israel Design Centre. He managed the Public Safety
LTE subscriber devices, TETRA subscribers (European Standards) and P25 devices and
infrastructure (US Standards). Before that he managed the development of Radio Access
Network products which was later sold to Nokia.
Avi will lead our technical and operations teams and bring huge experience to our business as
we continue to engage Tier 1 MNOs, major global enterprises and public sector bodies. Having
worked across all major radio platforms, his inputs as we develop our strategy for next
generation critical communication platforms will be invaluable.
Technical development
We continue to invest in our technical platform to ensure services can be deployed more
effectively to customers across the world. At the same time we are monitoring closely the
development of Mission Critical PTT, where the industry is seeking to leverage the strengths
of LTE through the addition of a comprehensive set of features needed for public safety
communications. We are participating members of the 3GPP committee tasked with setting
these standards and will ensure that our future strategy is developed in line with the market.
We believe the recruitment of Avi Tooba to our team will be invaluable in this respect.
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.
Page 4
Strategic report
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
On 15 April 2015, the Company completed a placing of 22.5m million shares at 6p to raise a
total of £1.35m. InTechnology plc and the Directors subscribed for 18,581,907 shares
comprising 82.6% of the issue. The placing was used to fund the working capital requirements
of the Company.
The Directors believe the Group has sufficient working capital for the foreseeable future given
its contracted revenues, anticipated contracts and continuing support from its principal
shareholder, InTechnology plc. They have therefore concluded that the financial statements
are appropriately prepared on a going concern basis.
Outlook
We were satisfied with the performance of the business in 2015 with the financial results
showing a marked improvement over the prior year. At the adjusted EBITDA level, losses were
halved from £2.50m in 2014 to £1.26m in 2015, the improvement being delivered through a
combination of reduced cost-base and increased recurring license revenues.
However, as we have moved into 2016 we see that recurring revenues from our Tier 1 MNO
customers continue to grow more slowly, as we highlighted in the half-year statement. Given
the relative sizes of these businesses it is a more difficult area for us to control and influence.
The continued flat performance of this part of our business remains below market
expectations although we anticipate that the strengthening of our management team will help
to improve this in the coming months.
The Group continues to see a range of opportunities in the homeland security markets.
However, contracts in these markets are typically capital expenditure in nature for our clients
and their impact is difficult to predict with any certainty.
The Board therefore currently anticipates that the Company’s revenue performance will be at
least in line with 2015, with the opportunity to surpass this dependent on securing homeland
security opportunities.
We would like to record our appreciation for the exceptional contribution made by our team
during 2015. The business has made good progress and whilst we are frustrated that the
momentum is not quite at the levels we would have liked, there are grounds for optimism
given the customers we are working with and the opportunities currently presented. We look
forward to the rest of the year with cautious optimism.
Approved by the Board of Directors and signed on behalf of the Board
Peter Wilkinson
Chairman
6 May 2016
Page 5
Directors’ report
The Directors present their annual report and audited financial statements of the Company
and the Group for the year ended 31 December 2015.
Share issues
The Company completed on 15 April 2015 a placing of 22.5 million shares at 6p per share to
raise a total of £1.35m to support the working capital requirements of the Company.
InTechnology plc and the Directors subscribed for 18,581,907 shares comprising 82.6% of the
issue.
Directors
The Directors of the Company who were in office during the year and up to the date of signing
the financial statements were:
• Peter Robert Wilkinson was appointed Non-Executive Chairman on 24 November
2006. Peter is currently Chief Executive of InTechnology plc. Peter was formerly
Chairman of Sports Internet Group plc which was sold to BSkyB plc for £301 million in
May 2000. He also founded the free ISP model Freeserve, the internet access service
which was launched by Dixons Group plc.
• Jeremy Mark Fenn is Chief Executive Officer and acting Finance Director and was
appointed to the Board on 24 November 2006. Jeremy is a qualified chartered accountant
and was formerly Chief Executive of Sports Internet Group plc. Following the sale of that
business he remained as a Director of Skysports.com until December 2003. Prior to this
he was Managing Director of Leeds United Football Club from 1996 to 1999.
• Richard Mark James was appointed as Director and Company Secretary on
24 November 2006. Richard qualified as a solicitor with Allen & Overy in 1986 and was
a Partner at Pinsent Curtis in 1991 before moving to Hammond Suddards as a Partner in
1996. Richard is also a Director and Company Secretary of InTechnology plc.
The Directors and their families have the following beneficial interests in the ordinary share
capital of the Company:
31 December 31 December
2015 2014
number % number %
Peter Wilkinson 28,146,141 11.4 24,837,725 11.0
Jeremy Fenn 8,434,752 3.4 7,670,396 3.4
Richard James 2,959,870 1.2 2,959,870 1.3
Jorge Pinievsky (resigned 3 October 2014) 9,168,624 3.7 9,168,624 4.1
Third party indemnity insurance is in place for the three Directors above. This was in force
during the period and at the date of this report.
Details of related party transactions involving Directors of the Company are given in note 21
to the Group financial statements.
Page 6
Directors’ report
Directors’ emoluments
The remuneration of the Directors of the Company was as follows:
Benefits 2014
Salary Fees in kind Total Total
£’000 £’000 £’000 £’000 £’000
Peter Wilkinson – 60 – 60 58
Jeremy Fenn 6 120 1 127 127
Richard James – 18 – 18 18
Jorge Pinievsky
(resigned 3 October 2014) – – – – 128
Aggregate emoluments 6 198 1 205 331
Interests in share options
Set out below are details of share options that have been granted to Directors:
No. of share Exercise Earliest Expiry No. of share
options price exercise date options
2015 pence date 2014
Jeremy Fenn 3,000,000 7.5 03/01/15 03/01/22 3,000,000
Substantial shareholdings
At 31 December 2015, InTechnology plc held 126,709,135 shares (31 December 2014:
112,200,200) in the Company representing 51.2% of the issued ordinary share capital and
71,276,735 non-convertible cumulative redeemable preference shares with aggregate
nominal value of £5.7m.
Corporate governance
The Company does not comply with the UK Corporate Governance Code. However, the Board
recognizes the value of the Code and has regard to its requirements as far as it considers
practicable and appropriate for a Group of this size.
Audit Committee
The Audit Committee is chaired by Peter Wilkinson and its other member is Chief Executive
Officer, Jeremy Fenn. Meetings are also attended, by invitation, by the other Executive
Director. This committee normally meets twice during the financial year, around the time of
the preparation of the Group’s interim and final results.
The committee assists the Board in ensuring that appropriate accounting policies, internal
financial controls and compliance procedures are in place.
Internal control
The Directors acknowledge their responsibility for the Group’s systems of internal control. The
Group maintains systems of internal controls, including suitable monitoring procedures, in
order to provide reasonable, but not absolute, assurance of the maintenance of adequate
accounting records and the consequent reliability of the financial information used within the
business to identify and deal with any problems on a timely basis. The monitoring and control
procedures include the specification of defined lines of responsibility and authorisation limits,
the delegation of authority, the identification of risks and the continual process of the
preparation of, and reporting against, annual budgets, forecasts and strategic plans.
Page 7
Directors’ report
Financial risk management
The Group’s financial instruments comprise, principally, cash and short-term deposits and
preference shares from its principal shareholder – InTechnology plc, and various items, such
as trade receivables and trade payables, arising directly from its operations. The main purpose
of these financial instruments is to raise finance for the Group’s operations. The main risks
arising from the Group’s financial instruments are currency risk, interest risk, liquidity risk and
credit risk. The Board’s policies for managing these risks are summarised as follows:
Currency risk – the Group has no borrowings in foreign currency, and foreign currency
liabilities are matched wherever possible by corresponding foreign currency assets, however,
no formal hedging is performed. Foreign currency bank accounts are utilised where
appropriate. No foreign currency transactions of a speculative nature are undertaken.
Interest risk – the Group is exposed to interest rate risk as it has loans outstanding on variable
rate terms. Borrowing costs are minimised by ongoing review of the Group’s cashflow
requirements.
Liquidity risk – the Group seeks to ensure sufficient liquidity is available to meet its
foreseeable needs. The Board regularly reviews cash flow projections and the headroom
position to ensure the Group is adequately funded.
Credit risk – the Group’s exposure to credit risk is limited to the carrying amount of its
financial assets at 31 December. In respect of trade and other receivables, the Group is not
exposed to any significant credit risk exposure to any single counterparty or group of
counterparties having similar characteristics. The Group’s customers are generally companies
with whom the Group has strong trading relationships with no recent history of default. The
Group continually monitors its trade receivables and incorporates this information into its
credit risk controls.
Going concern
The Directors have reviewed the available cash reserves, confirmed financial support in the
form of short-term working capital loans available from InTechnology plc and cash projections
for the foreseeable future and in particular for the next twelve months from the date of signing
these financial statements. The review modelled a range of sensitivities concerning both the
size and timing of projected revenues from both current as well as new customers. On the
basis of this review, they have reasonable expectation that the Group will be able to meet its
liabilities as they fall due and continue to trade for the foreseeable future. They therefore have
concluded that the financial statements are appropriately prepared on a going concern basis.
Results, dividends & future outlook
Detailed commentary of the Group’s results, dividends and future outlook are provided in the
Strategic report on pages 2 to 5.
Employees
The Group places considerable value on the involvement of its employees and has continued
its practice of keeping them informed of matters affecting them as employees and the various
factors affecting the performance of the Group.
The Directors recognise that continued and sustained improvement in the performance of the
Group depends on its ability to attract, motivate and retain employees of the highest calibre.
Furthermore, the Directors believe that the Group’s ability to sustain a competitive advantage
over the long-term depends in a large part on ensuring that all employees contribute to the
maximum of their potential. The Group is committed to improving the performance of all
employees through development and training.
Page 8
Directors’ report
The Group is an equal opportunity employer. The Group’s policies seek to promote an
environment free from discrimination, harassment and victimisation and to ensure that no
employee or applicant is treated less favourably on the grounds of gender, marital status, age,
race, colour, nationality or national origin, disability or sexual orientation or is disadvantaged
by conditions or requirements which cannot objectively be justified. Entry into, and
progression within the Group, is solely determined on the basis of work criteria and individual
merit.
The Group continues to give full and fair consideration to applications for employment made
by disabled persons, having regard to their respective aptitudes and abilities. The policy
includes, where practicable, the continued employment of those who may become disabled
during their employment and the provision of training and career development and promotion,
where appropriate.
Share schemes
Share ownership is at the heart of the Group’s remuneration philosophy and the Directors
believe that the key to the Group’s future success lies in a motivated workforce holding a stake
in the Company. Details of share options granted are set out in note 16 to the financial
statements.
Pension costs
The Group does not operate a pension scheme but makes contributions to the personal
pension schemes of some of its employees. These contributions are charged against profits.
No pension contribution payments have been made to Directors during the year.
Research and development
The Group continues to undertake research and development of new products with the
objective of increasing future profitability. During the year, the Group undertook a defined
development project which met the criteria for capitalisation under IAS 38 and therefore an
amount of £107,000 has been capitalised. The remaining cost to the Group of £661,000
(2014: £1,286,000) is charged to the income statement as incurred after consideration of the
criteria for capitalisation under IAS 38.
Environment
The Group recognises the importance of environmental responsibility. The nature of its
activities has a minimal effect on the environment but where it does, the Group acts
responsibly and is aware of its obligations at all times.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Directors’ Report and the Group and Parent
Company financial statements (the “financial statements”) in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial statements for each financial year.
Under that law the Directors have prepared the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union, and
the Parent Company financial statements in accordance with United Kingdom Accounting
Standards, comprising Financial Reporting Standard 102 “The Financial Reporting Standard
Applicable in the UK and Republic of Ireland”, and applicable law (United Kingdom Generally
Accepted Accounting Practice).
Page 9
Directors’ report
Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group and Company for that period. In preparing
these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• notify its shareholders in writing about the use of disclosure exemptions, if any, of FRS
102 used in the preparation of financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the Company’s transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Annual General Meeting
The next AGM of the Company will be held on 6 July 2016. Details of the business to be
proposed at the AGM are contained within the Notice of Meeting, which is set out on pages 47
to 50.
Independent auditor
PricewaterhouseCoopers LLP have indicated their willingness to continue in office and a
resolution proposing that they be reappointed as independent auditor and authorising the
Directors to fix their remuneration will be proposed at the Annual General Meeting.
By order of the Board
Jeremy Fenn
Chief Executive Officer
6 May 2016
Page 10
Independent auditors’ report to the
members of Mobile Tornado Group plc
For the year ended 31 December 2015
Report on the financial statements
Our opinion
In our opinion:
• Mobile Tornado Group plc’s Group financial statements and Company financial statements
(the “financial statements”) give a true and fair view of the state of the Group’s and of
the Company’s affairs as at 31 December 2015 and of the Group’s loss and cash flows
for the year then ended;
• the Group financial statements have been properly prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union;
• the Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
What we have audited
The financial statements, included within the Financial Statements and Annual Report (the
“Annual Report”), comprise:
• the consolidated statement of financial position as at 31 December 2015;
• the Company balance sheet as at 31 December 2015;
• the consolidated income statement and consolidated statement of comprehensive income
for the year then ended;
• the consolidated statement of cash flows for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the Company statement of changes in equity for the year then ended;
• the accounting policies; and
• the notes to the financial statements, which include other explanatory information.
The financial reporting framework that has been applied in the preparation of the
Group financial statements is IFRSs as adopted by the European Union, and applicable law.
The financial reporting framework that has been applied in the preparation of the Company
financial statements is United Kingdom Accounting Standards, comprising FRS 102 “The
Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law
(United Kingdom Generally Accepted Accounting Practice).
In applying the financial reporting framework, the Directors have made a number of subjective
judgements, for example in respect of significant accounting estimates. In making such
estimates, they have made assumptions and considered future events.
Page 11
Independent auditors’ report to the
members of Mobile Tornado Group plc
For the year ended 31 December 2015
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, the information given in the Strategic Report and the Directors’ Report for the
financial year for which the financial statements are prepared is consistent with the financial
statements.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate
for our audit have not been received from branches not visited by us; or
• the Company financial statements are not in agreement with the accounting records and
returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain
disclosures of Directors’ remuneration specified by law are not made. We have no exceptions
to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of the Directors’ Responsibilities set out on page 9,
the Directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland) (ISAs UK &
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s
members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and
for no other purpose. We do not, in giving these opinions, accept or assume responsibility for
any other purpose or to any other person to whom this report is shown or into whose hands
it may come, save where expressly agreed by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining
evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to the Group’s and the Company’s
circumstances and have been consistently applied and adequately disclosed;
Page 12
Independent auditors’ report to the
members of Mobile Tornado Group plc
For the year ended 31 December 2015
• the reasonableness of significant accounting estimates made by the Directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the Directors’ judgements against
available evidence, forming our own judgements, and evaluating the disclosures in the
financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent
we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain
audit evidence through testing the effectiveness of controls, substantive procedures or a
combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to
identify material inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially inconsistent with,
the knowledge acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider the implications for our
report.
Arif Ahmad (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Leeds
6 May 2016
Page 13
Consolidated income statement
For the year ended 31 December 2015
2015 2014
Note £’000 £’000
Continuing operations
Revenue 2 2,259 1,746
Cost of sales (137) (280)
Gross profit 2,122 1,466
Operating expenses
Administrative expenses (3,384) (3,969)
Group operating loss before exchange
differences & depreciation expense (1,262) (2,503)
Exchange differences (68) (13)
Depreciation expense (115) (146)
Total operating expenses (3,567) (4,128)
Group operating loss 3 (1,445) (2,662)
Finance costs 4 (586) (513)
Finance income 5 – 7
Loss before tax (2,031) (3,168)
Income tax credit 6 371 220
Loss for the year (1,660) (2,948)
Loss per share (pence)
Basic and diluted 7 (0.69) (1.31)
Consolidated statement of comprehensive income
For the year ended 31 December 2015
2015 2014
£’000 £’000
Loss for the year (1,660) (2,948)
Other comprehensive loss
Item that will subsequently be reclassified
to profit or loss:
Exchange differences on translation
of foreign operations (19) (18)
Total comprehensive loss for the period (1,679) (2,966)
Attributable to:
Equity holders of the parent (1,679) (2,966)
The accompanying accounting policies and notes form an integral part of these financial
statements.
Page 14
Consolidated statement of changes in equity
For the year ended 31 December 2015
Foreign
Reverse currency
Share Share acquisition Merger translation Accumulated Total
capital premium reserve reserve reserve Loss equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 January 2014 4,499 11,225 (7,620) 10,938 (2,146) (24,634) (7,738)
Equity settled share-based payments – – – – – (10) (10)
Issue of share capital on exercise of options 2 – – – – – 2
Transactions with owners 2 – – – – (10) (8)
Loss for the year – – – – – (2,948) (2,948)
Exchange differences on translation
of foreign operations – – – – (18) – (18)
Total comprehensive loss for the year – – – – (18) (2,948) (2,966)
Balance at 31 December 2014 4,501 11,225 (7,620) 10,938 (2,164) (27,592) (10,712)
Foreign
Reverse currency
Share Share acquisition Merger translation Accumulated Total
capital premium reserve reserve reserve Loss equity
£’000 £’000 £’000 £’000 £’000 £’000 £’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)
Page 15
Consolidated statement of financial position
As at 31 December 2015
2015 2014
Note £’000 £’000
Assets
Non-current assets
Property, plant and equipment 8 315 213
Intangible assets 9 107 –
422 213
Current assets
Trade and other receivables 10 1,268 1,472
Inventories 11 28 109
Cash and cash equivalents 12 107 41
1,403 1,622
Liabilities
Current liabilities
Trade and other payables 13 (3,535) (3,303)
Borrowings 14 (1,380) (1,047)
Net current liabilities (3,512) (2,728)
Non-current liabilities
Trade and other payables 13 (2,514) (2,643)
Borrowings 14 (5,537) (5,554)
(8,051) (8,197)
Net liabilities (11,141) (10,712)
Equity attributable to the owners of the parent
Share capital 15 4,951 4,501
Share premium 15 12,012 11,225
Reverse acquisition reserve (7,620) (7,620)
Merger reserve 10,938 10,938
Foreign currency translation reserve (2,183) (2,164)
Accumulated loss (29,239) (27,592)
Total equity (11,141) (10,712)
The financial statements on pages 14 to 37 were approved by the Board of Directors on 6 May
2016 and were signed on its behalf by:
Jeremy Fenn
Chief Executive Officer
6 May 2016
Company Number: 5136300
Page 16
Consolidated statement of cash flows
For the year ended 31 December 2015
2015 2014
Note £’000 £’000
Operating activities
Cash used in operations 17 (1,233) (2,751)
Tax received 371 220
Interest received – 7
Net cash used in operating activities (862) (2,524)
Investing activities
Purchase of property, plant & equipment (206) (148)
Purchase of intangible assets (107) –
Net cash used in investing activities (313) (148)
Financing
Issue of ordinary share capital 1,350 2
Share issue costs (113) –
Proceeds from borrowings 14 – 270
Net cash inflow from financing 1,237 272
Effects of exchange rates on cash
and cash equivalents 4 4
Net increase/(decrease) in cash and
cash equivalents in the period 66 (2,396)
Cash and cash equivalents at beginning of period 41 2,437
Cash and cash equivalents at end of period 107 41
Page 17
Accounting policies
1 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
1.1 Nature of operations
The principal activity of the Group is the provision of instant communication mobile
applications which serve the market of mobile data services in the mobile
communication industry. The Company is a Public Limited Company which is listed on
the Alternative Investment Market and incorporated and domiciled in the UK. The
address of the registered office is Cardale House, Cardale Court, Beckwith Head Road,
Harrogate, HG3 1RY.
1.2 Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), International Financial Reporting
Interpretations Committee (IFRS IC) interpretations endorsed by the European Union
and those parts of the Companies Act 2006 that remain applicable to companies
reporting under IFRS. The financial statements have been prepared on the historical
cost basis with the exception of certain items which are measured at fair value as
disclosed in the principal accounting policies set out below. These policies have been
consistently applied to both years presented unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on
management’s best knowledge of the amount, event or actions, actual results
ultimately may differ from these estimates.
Going concern
The Directors have reviewed the available cash reserves, confirmed financial support in
the form of short-term working capital loans available from InTechnology plc and cash
projections for the foreseeable future and in particular for the next twelve months from
the date of signing these financial statements. The review modelled a range of
sensitivities concerning both the size and timing of projected revenues from both
current as well as new customers. On the basis of this review, they have reasonable
expectation that the Group will be able to meet its liabilities as they fall due and
continue to trade for the foreseeable future. They therefore have concluded that the
financial statements are appropriately prepared on a going concern basis.
Significant accounting estimates and judgements
The preparation of these financial statements requires management to make estimates
and judgements that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue during the reporting
period. Actual results could differ from these estimates. The key sources of estimation
and judgement are:
Share options – share-based payments are dependent on estimates of the number of
shares which are expected to vest (note 16).
Contingent consideration – payments are dependent on estimates of future license sales
revenues (note 13).
Page 18
Accounting policies
Trade and other receivables – recognition of any impairment provisions in respect of
amounts recorded as trade and other receivables is dependent on judgements made on
the recoverability of such items (note 10)
Research and development – distinguishing the research and development phases of
the Group’s research and development expenditure and determining whether the
recognition requirements for the capitalisation of development costs are met requires
judgement.
1.3 Basis of consolidation
The Group financial statements consolidate those of the Company and its subsidiary
undertakings at 31 December 2015. A subsidiary is an entity controlled by the Group.
Control is achieved where the Group has the power over the investee; exposure, or
rights, to variable returns from its involvement with the investee; and the ability to use
its power over the investee to affect the amount of the investor’s returns. All
subsidiaries have a reporting date of 31 December. All transactions and balances
between Group companies are eliminated on consolidation including unrealised gains
and losses on transactions between Group companies.
Business combinations
Acquisitions of subsidiaries are dealt with using the acquisition method of accounting.
The acquisition method of accounting involves the recognition at fair value of all
identifiable assets and liabilities, including contingent liabilities, of the subsidiary at the
acquisition date regardless of whether or not they were recorded in the financial
statements of the subsidiary prior to acquisition. On initial recognition, the assets and
liabilities of the subsidiary are included in the consolidated statement of financial
position at their fair values, which are also used as the bases for subsequent
measurement in accordance with the Group’s accounting policies. Goodwill is stated
after separating out identifiable intangible assets. Any difference between the fair value
of assets acquired and the consideration paid is treated as goodwill in the consolidated
statement of financial position. The results of subsidiaries are included from the date
that control commences to the date that control ceases. Business combinations that
preceded the Group’s transition to IFRS on 1 July 2006 have not been restated.
1.4 Revenue recognition
Revenue comprises the fair value of consideration receivable for the sale of licenses,
services and goods, excluding inter-company sales and value-added taxes, and
represents net invoice value less estimated rebates, returns and settlement discounts.
License and service revenues are recognised on a straight line basis over the period to
which the license and services relate. Unrecognised license and service revenues are
included as deferred income in the statement of financial position.
The Group recognises revenue on perpetual license fees where the Group has no
remaining obligations to perform and hardware sales when the risks and rewards have
been transferred to the customer, this is when goods have been received and accepted
by the customer.
1.5 Interest
Interest is recognised on an accruals basis using the effective interest method.
Page 19
Accounting policies
1.6 Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or as
incurred.
1.7 Employee benefits
Pension obligations
The Group does not operate a pension scheme but makes contributions to the personal
schemes of some of its employees. These contributions are charged to the income
statement in the period to which the contributions relate.
Share-based payments
The Group operates equity-settled share-based remuneration plans for its employees.
Vesting conditions are non-market based.
The fair value of options granted is recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and spread
over the period during which the employees become unconditionally entitled to the
options. The fair value of the options granted is measured using the Black-Scholes
pricing model, which takes into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to reflect the
actual number of share options that vest.
1.8 Foreign currency translation
The consolidated financial statements are presented in UK Sterling (GBP £000). Sterling
is also the functional currency of the Parent Company.
Foreign currency transactions are translated into the functional currency of the
respective Group entity, using the exchange rates prevailing at the dates of
the transactions (spot exchange rate). Foreign exchange gains and losses resulting from
the settlement of such transactions and from the remeasurement of monetary items at
year-end exchange rates are recognised in profit or loss.
Non-monetary items measured at historical cost are translated using the exchange
rates at the date of the transaction (not retranslated).
Foreign operations
In the Group’s financial statements, all assets, liabilities and transactions of Group
entities with a functional currency other than sterling (the Group’s presentation
currency) are translated into sterling upon consolidation. The functional currency of the
entities in the Group have remained unchanged during the reporting period.
On consolidation, assets and liabilities of foreign operations have been translated into
sterling at the closing rate at the reporting date. Income and expenses have been
translated into the Group’s presentation currency at the average rate over the reporting
period given that these rates do not fluctuate significantly over the year. Exchange
differences are charged/credited to other comprehensive income and recognised in the
currency translation reserve in equity. On disposal of a foreign operation, the cumulative
translation differences recognised in equity are reclassified to profit or loss and
recognised as part of the gain or loss on disposal.
Page 20
Accounting policies
1.9 Segmental reporting
The Group presents its results in accordance with internal management reporting
information to the chief operating decision maker (Board of Directors). The Group has
only one operating segment. At 31 December, the Board continue to monitor operating
results by category of revenue.
1.10 Taxation
Current tax
Current tax is provided at amounts expected to be paid (or recovered) using tax rates
and laws that have been enacted or substantively enacted at the statement of financial
position date. The tax currently payable is based on taxable profit for the year. Taxable
profit/(loss) differs from net profit/(loss) as reported in income statement because it
excludes items of income that are taxable or deductible in other years and it further
excludes items that are never tax deductible.
Deferred tax
The charge for taxation is based on the profits for the year and takes into account
taxation deferred because of temporary differences between the treatment of certain
items for taxation and for accounting purposes.
Temporary differences arise from the inclusion of profits and losses in the accounts in
different periods from which they are recognised in tax assessments and primarily arise
as a result of the difference between tax allowances on property, plant & equipment and
the corresponding depreciation charge. Full provision is made for the tax effects of these
differences using tax rates and laws enacted or substantively enacted at the balance
sheet date.
No provision is made for unremitted earnings of foreign subsidiaries where there is no
commitment to remit such earnings. Similarly, no provision is made for temporary
differences relating to investments in subsidiaries since realisation of such differences
can be controlled and is not probable in the foreseeable future. Deferred tax assets are
recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
1.11 Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. The Group’s
policy is to write off the difference between the cost of all property, plant and equipment
and their residual value on a straight line basis over their estimated useful lives as
follows:
Office equipment
3 years
Computer equipment
3 years
Leasehold improvement
10 years
Reviews are made annually of the estimated remaining lives and residual values of
individual productive assets, taking account of commercial and technological
obsolescence as well as normal wear and tear, and adjustments are made where
appropriate. All individual assets are reviewed for impairment when there are
indications that the carrying value may not be recoverable.
Page 21
Accounting policies
1.12 Operating leases
Where the Group is a lessee, payments on operating lease agreements are recognised
as an expense on a straight-line basis over the lease term. Associated costs, such as
maintenance and insurance, are expensed as incurred.
1.13 Inventories
Inventories are stated at the lower of historical cost and net realisable amount. Net
realisable amount is the estimated selling price in the ordinary course of business less
any applicable variable selling costs. Provision is made for obsolete, slow moving and
defective inventory where appropriate.
1.14 Intangible assets – research and development
Research expenditure, undertaken with the prospect of gaining new scientific or
technical knowledge and understanding, is charged to income in the year in which it is
incurred. Internal development expenditure, whereby research findings are applied to a
plan for the production of new or substantially improved products or processes, is
charged to income in the year in which it is incurred unless it meets the recognition
criteria of IAS 38 ‘Intangible Assets’ which are;
• the development costs can be measured reliably
• the project is technically and commercially feasible
• the Group intends to and has sufficient resources to complete the project
• the Group has the ability to use or sell the resulting technology
• the resulting technology will generate probable future economic benefits.
Measurement uncertainties over economic benefits generally mean that such criteria are
not met. Where, however, the recognition criteria are met, intangible assets are
capitalised and amortised over their useful economic lives from product launch.
Intangible assets relating to products in development are subject to impairment testing
at each balance sheet date or earlier upon indication of impairment. Any impairment
losses are written off immediately to income.
1.15 Equity
Equity comprises the following:
• “Share capital” represents the nominal value of equity shares.
• “Share premium” represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
• “Reverse acquisition reserve” represents the difference between the required total
of the Group’s equity instruments and the reported equity of the legal parent.
• “Merger reserve” represents the difference between the nominal value of the share
capital issued by the Company and their fair value at 7 March 2006, the date of
the acquisition of Mobile Tornado International Ltd.
• “Foreign currency translation reserve” represents the differences arising from
translation of investments in overseas subsidiaries into Sterling.
• “Retained earnings” represents retained losses.
Page 22
Accounting policies
All transactions with owners of the Parent are recorded separately within equity.
Reverse acquisition and merger reserves were frozen at their previous GAAP values
from 1 July 2006, the date of transition to IFRS. The foreign currency translation reserve
was reset to zero at this date.
1.16 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with
other short-term, highly liquid investments that are readily convertible into known
amounts of cash with maturites of three months or less from inception and which are
subject to an insignificant risk of changes in value.
1.17 Financial assets – loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market.
Financial assets comprise trade and other receivables and cash and cash equivalents
which are classified as loans and receivables. Financial assets are recognised in the
Group’s consolidated statement of financial position when the Group becomes a party
to the contractual provisions of the instrument. Loans and receivables are measured at
initial recognition at fair value and are subsequently recorded at amortised cost using
the effective interest method. Appropriate allowances for estimated irrecoverable
amounts are recognised in the income statement when there is objective evidence that
the asset is impaired.
Financial assets are derecognised when the contractual rights to the cash flows from the
financial assets expire, or when all substantial risks and rewards are transferred.
1.18 Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and comprise
trade and other payables and borrowings. Financial liabilities are recognised in the
Group’s consolidated balance sheet when the Group becomes a party to the contractual
provisions of the instrument. Trade payables, accruals and other creditors are measured
at initial recognition at fair value plus translation cost and subsequently measured at
amortised cost using the effective interest rate method.
Borrowings are initially recorded at fair value and then subsequently recorded at
amortised cost using the effective interest method.
Instruments such as preference shares, are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangement. At the date of
issue, the fair value of the liability component is estimated. This amount is recorded as
a liability on an amortised cost basis using the effective interest method until
extinguished upon conversion or at the instrument’s maturity date.
1.19 Contingent consideration
Contingent consideration arising on the acquisition of a business is held as a creditor in
the balance sheet until such time as those amounts are paid. Amounts arising on
business combinations before 1 July 2006, the date of transition to IFRS, were not
restated at this date.
Page 23
Accounting policies
1.20 Standards in issue not yet effective
At the date of authorisation of these financial statements, the following standards and
interpretations which have not been applied in these financial statements were in issue
but not yet effective:
• Amendment to IAS 19 regarding defined benefit plans;
• Amendment to IFRS 11, ‘Joint arrangements’ on acquisition of an interest in a joint
operation;
• Amendment to IAS 16, ‘Property, plant and equipment’ and IAS 38, ‘Intangible
assets’, on depreciation and amortisation;
• Amendments to IAS 16, ‘Property, plant and equipment’, and IAS 41, ‘Agriculture’,
regarding bearer plants;
• IFRS 14, ‘Regulatory deferral accounts’;
• Amendments to IAS 27, ‘Separate financial statements’ on the equity method;
• Amendments to IFRS 10, ‘Consolidated financial statements’ and IAS 28,
‘Investments in associates and joint ventures’;
• Amendment to IAS 1, ‘Presentation of financial statements’ on the disclosure
initiative;
• Amendment to IFRS 10 and IAS 28 on investment entities applying the
consolidation exception;
• IFRS 15 ‘Revenue from contracts with customers’; and
• IFRS 9 ‘Financial instruments’.
Page 24
Notes to the financial statements
For the year ended 31 December 2015
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 2015 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
£13,000 (year ended 31 December 2014: £10,000 credit).
Revenue by category
Licenses
Hardware & software
Professional services
Other
Total
2015
£’000
1,279
81
499
400
2,259
2014
£’000
981
196
287
282
1,746
Revenue is reported by geographical location of customers. Non-current assets are reported
by geographical location of assets.
UK
Europe
North America
South America
Israel
Africa
Asia/Pacific
Total
2015
Revenue
£’000
2015
Non-current
assets
£’000
2014
Revenue
£’000
2014
Non-current
assets
£’000
125
476
764
271
105
483
35
2,259
11
–
15
–
396
–
–
422
169
546
440
112
48
379
52
1,746
19
–
46
–
148
–
–
213
Our mobile network operator customer in Canada represents £729,000 (2014: £418,000) of
the total revenue of the Group.
3 Group operating loss
Group operating loss before taxation is stated after
charging:
Staff costs (note 18)
Depreciation of owned property, plant and equipment (note 8)
Research and development expenditure
Other operating lease rentals
Net exchange loss
2015
£’000
2,060
115
661
261
68
2014
£’000
2,314
146
1,286
288
13
Page 25
Notes to the financial statements
For the year ended 31 December 2015
Auditors’ remuneration
During the year the Group obtained the following services from the Group’s auditors as
detailed below:
Fees payable to the Company’s auditors for the audit
of the Company’s annual accounts
Fees payable to the Company’s auditors and its associates
for other services:
Tax compliance services
Other services pursuant to legislation
Total
4 Finance costs
Finance charge on preference shares
Total finance costs
5 Finance income
2015
£’000
2014
£’000
23
–
–
23
22
5
3
30
2015
£’000
(586)
(586)
2014
£’000
(513)
(513)
2015 2014
£’000 £’000
Bank interest receivable – 7
Total finance income – 7
6 Income tax credit
(a) Analysis of credit for the year
2015 2014
£’000 £’000
United Kingdom current tax
Adjustment in respect of prior years (371) (220)
Total credit for the year (371) (220)
(b) Factors affecting the tax credit for the year
2015 2014
£’000 £’000
Loss before tax (2,031) (3,168)
At standard rate of corporation tax of 20.25% (2014: 21.5%) (411) (665)
Effects of:
Expenses not deductible for tax purposes 123 108
Un-utilised tax losses 288 557
Prior year research & development tax credit claimed (371) (220)
Total credit for the year (371) (220)
Page 26
Notes to the financial statements
For the year ended 31 December 2015
Deferred tax:
At 31 December 2015 the Group had accumulated tax losses of £29,226,000 (31 December
2014: £26,774,000) which are available for offset against future trading profits of certain
Group operations, subject to agreement with the relevant tax authorities. No deferred tax
asset has been recognised in respect of these losses given the level of uncertainty over their
recoverability.
7 Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of
£1,660,000 (2014: £2,948,000) by the weighted average number of ordinary shares in issue
during the year of 240,710,723 (2014: 224,990,775).
Loss attributable to
ordinary shareholders
Adjusted basic loss per share
2015
Basic and diluted
Loss
Loss
per share
pence
£’000
2014
Basic and diluted
Loss
Loss
per share
pence
£’000
(1,660)
(1,660)
(0.69)
(0.69)
(2,948)
(2,948)
(1.31)
(1.31)
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.
8 Property, plant and equipment
Office Computer Leasehold
equipment equipment improvement Total
£’000 £’000 £’000 £’000
Cost
At 1 January 2014 19 730 15 764
Additions 39 70 43 152
Exchange adjustments 1 26 1 28
At 31 December 2014 59 826 59 944
Additions 2 169 43 214
Exchange adjustments 2 26 4 32
At 31 December 2015 63 1,021 106 1,190
Accumulated depreciation
At 1 January 2014 12 534 14 560
Charge for the year 7 137 3 147
Exchange adjustments 2 21 1 24
At 31 December 2014 21 692 18 731
Charge for the year 10 100 5 115
Exchange adjustments 3 23 3 29
At 31 December 2015 34 815 26 875
Net book amount at 31 December 2015 29 206 80 315
Net book amount at 31 December 2014 38 134 41 213
Page 27
Notes to the financial statements
For the year ended 31 December 2015
9 Intangible assets
Total
£’000
At 1 January 2015 –
Additions 107
Amortisation for the year –
At 31 December 2015 107
10 Trade and other receivables
2015 2014
£’000 £’000
Trade receivables 986 1,159
Less: provision for impairment of trade receivables (260) (177)
Trade receivables – net 726 982
Other receivables 233 254
Prepayments and accrued income 309 236
1,268 1,472
Current portion 1,268 1,472
The age of the Group’s year end overdue receivables is as follows:
2015 2014
£’000 £’000
Impaired
Three to six months – 177
Over six months 260 –
260 177
Not impaired
Less than three months 272 179
Three to six months 202 140
Over six months 126 502
600 821
Of the overdue receivables against which no provision has been made, £418,000
(2014: £628,000) relates to one particular customer. The Directors have maintained an open
dialogue with this customer throughout the year and since the year end as to their financial
position and a repayment plan has been agreed to clear this overdue debt. In parallel, an
assessment of this customer’s ability to pay has been made by reference to both its current
and projected operating cash flows as well as the level of cash payments received during the
year, post year-end from the customer and, on the basis of this, no provision has been made.
The carrying amounts of the Group’s receivables are denominated in US dollar, Canadian dollar
and Euros.
The maximum exposure to credit risk at the reporting date is the carrying value of each class
of receivable mentioned above. The Group does not hold any collateral as security.
Page 28
Notes to the financial statements
For the year ended 31 December 2015
Movement on the Group’s provision for impairment of receivables is as follows:
2015 2014
£’000 £’000
At 1 January 177 –
Provision for receivables impairment 83 177
Receivables written off during the year
as uncollectable – –
260 177
11 Inventories
2015 2014
£’000 £’000
Hardware 28 109
The cost of inventories recognised as an expense and included within cost of sales amounted
to £nil (2014: £24,000). Inventories put to internal use during the year and therefore
transferred to property, plant and equipment amounted to £81,000 (2014: £nil).
12 Cash and cash equivalents
2015 2014
£’000 £’000
Cash at bank and in hand:
Sterling 8 11
US Dollar 24 17
Canadian dollar 1 –
Euro 1 –
Israel Shekel 73 13
107 41
13 Trade and other payables
2015 2014
£’000 £’000
Trade payables 787 667
Accruals 382 360
Social security and other taxes 47 47
Other creditors 36 98
Deferred income 1,924 2,003
Contingent consideration 2,873 2,771
6,049 5,946
Less non-current portion: contingent consideration (2,514) (2,643)
Current portion 3,535 3,303
Page 29
Notes to the financial statements
For the year ended 31 December 2015
The contingent consideration arose on the purchase of intellectual property from Tersync
Limited in 2004 and represents a royalty payable on future sales of Push to Talk related
products by Mobile Tornado, payable in part consideration for the acquisition of the rights to
the technology underlying such product. The royalty is payable quarterly on any relevant sales
(on a cash receipts basis) as follows:
(i) 50% of the first US$200,000 relevant sales.
(ii) 15% of any additional relevant sales, subject to any related cumulative royalty payments
being capped at a maximum of US$5.3 million. Direct reseller and other third party costs
may be deducted in arriving at these royalty payments, subject to such costs not
exceeding 10% of the relevant sales. The deferred consideration is secured by a charge
over the intellectual property of the Mobile Tornado Group.
The deferred income balance includes an amount of £1,751,000 (2014: £1,843,000) received
from InTechnology plc in respect of 12 month licenses that had not been brought into use at
the balance sheet date. The Group will recognise related income from the date of activation
of each licence, or the expiration of its obligations if sooner.
14 Borrowings, other financial liabilities and other financial assets
2015 2014
£’000 £’000
Preference shares 6,917 6,331
Loans – 270
Total borrowings 6,917 6,601
Maturity analysis
2015 2014
£’000 £’000
In one year or less 1,380 1,047
Between two and five years 5,537 5,554
Total 6,917 6,601
As at 31 December 2015, the Group’s non-derivative financial liabilities have contractual
maturities (including interest payments where applicable) as summarised below:
2015
2014
Current Non-current Current Non-current
within 6 6 to 12 1 to 5 within 6 6 to 12 1 to 5
months months years months months years
£’000 £’000 £’000 £’000 £’000 £’000
Other loans – – – 270 – –
Preference shares 1,380 309 7,330 777 299 7,943
Trade and other
payables 1,251 163 4,635 1,145 86 2,643
Total 2,631 472 11,964 2,192 385 10,586
InTechnology plc has agreed not to demand immediate repayment of the unpaid accrued
interest on the 10% preference shares amounting to £1,380,000 (2014: £777,000)
The group do not have any derivative financial liabilities at 31 December 2015 or 31 December
2014.
Page 30
Notes to the financial statements
For the year ended 31 December 2015
Financial risks
The main financial risks faced by the Group include interest rate risk, liquidity risk, credit risk
and foreign currency risk. The Board reviews and agrees policies for managing each of these
risks.
The Group’s financial instruments comprise cash, liquid resources and various items, such as
receivables and payables that arise directly from its operations. It is, and has been throughout
the year under review, the Group’s policy that no trading in financial instruments shall be
undertaken. The year end position reflects these policies and there have been no changes in
policies or risks since the year end.
Financial asset returns are maximised by ongoing review of the Group’s cash flow
requirements. Any funds surplus to short-term working capital requirements are placed on
interest bearing deposit.
Interest rate risk profile of financial assets
The interest rate risk profile of the financial assets of the Group comprise cash of £107,000
(2014: £41,000) as follows:
Floating rate
2015 2014
£’000 £’000
Currency
Sterling 8 11
US dollar 24 17
Canadian dollar 1 –
Euro 1 –
Israel shekel 73 13
Total 107 41
The Sterling, US dollar and Euro financial assets relate to cash at bank and bear interest based
on GBP LIBOR, US dollar LIBOR and EURIBOR respectively. There are no fixed rate financial
assets (2014: £nil).
Interest rate risk profile of financial liabilities
The interest rate profile of the financial liabilities of the Group is as follows:
Fixed
2015 2014
£’000 £’000
Fixed rate 10% preference shares classified as debt 6,917 6,331
Total 6,917 6,331
Floating
2015 2014
£’000 £’000
Loans – 270
Total – 270
Page 31
Notes to the financial statements
For the year ended 31 December 2015
Currency risk
The table below shows the extent to which the Company held monetary assets and liabilities
in currencies other than their local currency.
2015 2014
£’000 £’000
Functional currency of operation: Sterling
US Dollar (net liabilities) (2,329) (2,039)
Euro (net liabilities) (1,596) (1,768)
Canadian Dollar (net liabilities)/net assets (50) 19
Total (3,975) (3,788)
Sensitivity analysis
Financial assets and liabilities are sensitive to movements in interest rates and foreign
exchange rates.
A 10% movement in both sterling to US dollar and Euro exchange rates would result in a
charge or credit to profit and equity of £351,000 (2014: £421,000).
A 1% movement in interest rates would result in a charge or credit to profit and equity of
£14,000 (2014: £6,000).
Capital management
Managed capital is cash to meet working capital needs.
The Group’s capital management objectives are:
• To ensure the Group’s ability to continue as a going concern; and
• To provide an adequate return to shareholders.
These objectives are maintained by pricing products and services commensurately with the
level of risk.
The Group’s goal in capital management is to maintain adequate cash balances with the
minimum necessary borrowing. There are no externally imposed capital requirements during
the period covered by the financial statements.
Page 32
Notes to the financial statements
For the year ended 31 December 2015
Summary of the Group’s financial assets and liabilities as defined in IAS 39
‘financial instruments: recognition and measurement’
2015 2014
£’000 £’000
Current assets – loans and receivables
Trade and other receivables 959 1,236
Cash and cash equivalents 107 41
1,066 1,277
Current liabilities – held at amortised cost
Trade and other payables (1,565) (1,254)
Preference shares (1,380) (777)
Loans – (270)
(2,945) (2,301)
Non-current liabilities – held at amortised cost
Trade and other payables (2,514) (2,643)
Preference shares (5,537) (5,554)
(8,051) (8,197)
Net financial assets and liabilities (9,930) (9,221)
The Directors consider that the fair value of financial assets and liabilities approximates to the
carrying value for both 2015 and 2014.
15 Share capital and share premium
Number of
issued and
fully paid Share Share
shares capital premium Total
’000 £’000 £’000 £’000
At 1 January 2015 225,053 4,501 11,225 15,726
Issue of shares 22,500 450 787 1,237
As at 31 December 2015 247,553 4,951 12,012 16,963
The total authorised number of ordinary shares is 475 million (2014: 475 million) with a
par value of 2p per share (2014: 2p per share).
Non-voting preference shares – included in financial liabilities
Number of Nominal
shares Value
’000 £’000
As at 31 December 2014 and 2015 71,277 5,702
All preference shares are non-voting, non-convertible cumulative redeemable preference
shares. They are redeemable at par value on 31 December 2018, or, at the Company’s
discretion, at any earlier date and will accrue interest at a fixed rate of 10 per cent. per
annum. Unpaid dividends accrue interest at 3% above Bank of England base rate until settled.
Page 33
Notes to the financial statements
For the year ended 31 December 2015
16 Share-based payments
The Group has a share option scheme for certain employees and Directors. Options are
exercisable at a price equal to the average market price of the Company’s shares on the date
of grant. The options are settled in equity.
The number of shares subject to options, the periods in which they were granted and the
dates on which they may be exercised are as follows:
Number of shares Exercise Earliest
2015 2014 price exercise Vesting Expiry
Name of scheme ’000 ’000 pence date condition date
Israel scheme 1,169 1,169 2.0 02/02/09 – 31/12/19
Israel scheme 1,250 1,600 5.0 02/02/09 100,000 31/12/19
subscribers
UK scheme 200 200 5.0 03/12/11 100,000 03/12/18
subscribers
UK scheme 100 100 5.0 07/07/13 100,000 07/07/20
subscribers
Israel scheme 400 450 7.5 03/01/15 – 31/12/19
UK scheme 3,500 3,500 7.5 03/01/15 – 03/01/22
UK scheme 450 – 6.0 18/06/18 – 18/06/25
Israel scheme 9,400 – 6.0 07/09/18 – 31/12/23
Total 16,469 7,019
Options were valued using the Black-Scholes option-pricing model.
Grant date 18/06/15 07/09/15
Shares under option (’000) 450 9,400
Share price at grant date (pence) 6.0 6.8
Exercise price (pence) 6.0 6.0
Vesting period (years) 3.0 3.0
Expected volatility 50% 41%
Expected life 3.0 3.0
Risk-free rate 0.2% 0.2%
Fair value per option (pence) 2.00 2.20
The expected volatility is based on historical volatility over the last year. The expected life is
assumed as being equal to the earliest exercise date. The risk-free rate of return is taken as
the Bank of England base-rate at the date of grant. A reconciliation of option movements over
the year to 31 December 2015 is as follows:
Page 34
Notes to the financial statements
For the year ended 31 December 2015
2015
2014
Weighted Weighted
average average
exercise exercise
Number price Number price
’000 pence ’000 pence
Outstanding at 1 January 2015/2014 7,019 4.0 11,569 4.2
Granted 9,850 6.0 – –
Forfeited (400) 5.3 (4,451) 7.5
Exercised – – (99) 2.0
Outstanding at 31 December 16,469 6.0 7,019 4.0
Exercisable at 31 December 2,169 3.4 1,268 2.0
The closing mid-market share price on 2 May 2016 was 2.0 pence.
The weighted average remaining contractual life of the share options outstanding at
31 December 2015 was 6.8 years at exercise prices ranging from 2.0 pence to 7.5 pence.
Those options exercisable at 31 December 2015 are at exercise prices of 2.0 pence and
5.0 pence.
The total charge for the year relating to employee share-based payment plans was £13,000
(2014: credit of £10,000), all of which related to equity-settled share-based payment
transactions.
17 Cash used in operations
2015 2014
£’000 £’000
Loss before taxation (2,031) (3,168)
Adjustments for:
Depreciation 115 146
Share-based payment charge/(credit) 13 (10)
Interest income – (7)
Interest expense 586 513
Changes in working capital:
Decrease in inventories 84 30
Decrease/(Increase) in trade and other receivables 217 (394)
(Decrease)/Increase in trade and other payables (217) 139
Net cash used in operations (1,233) (2,751)
18 Employee information
The average monthly number of persons (including Executive Directors) employed by the
Group during the year was:
2015 2014
Number Number
Sales 5 8
Product development & operations 33 37
Finance & administration 5 5
Total 43 50
Page 35
Notes to the financial statements
For the year ended 31 December 2015
Included in the table above are 16 persons that are contractors (2014: 19). These are included
as employees on the basis of their providing services to the company on a material time basis
over the year.
Staff costs for the persons above were:
2015 2014
£’000 £’000
Wages and salaries 1,847 2,226
Social security costs 81 90
Other pension costs 49 52
Share-based payment charge/(credit) 13 (10)
Other benefits 70 (44)
Total 2,060 2,314
Director’s costs included within the above are as separately detailed in the Directors report
under the heading Director’s emoluments.
19 Capital commitments
The Group had no capital commitments at 31 December 2015 (2014: £nil)
20 Operating leases
Details of operating lease arrangements for the Group are as follows:
2015 2014
£’000 £’000
Lease payments under operating leases charged to
operating costs in the year 261 288
At the balance sheet date the Group had outstanding commitments for future minimum lease
payments under non-cancellable operating leases as follows:
2015 2014
£’000 £’000
Within one year 174 207
One to five years 565 196
Total 739 403
Operating lease payments represent rentals payable by the Group for vehicles and certain
properties.
Page 36
Notes to the financial statements
For the year ended 31 December 2015
21 Related party transactions
For the purposes of IAS 24, key management of the Group are the same as those of the Board
of Directors. There were no share options issued to key management personnel during the
year. Key management personnel remuneration includes the following expenses:
2015 2014
£’000 £’000
Salaries including bonuses 6 111
Other benefits 1 24
Total remuneration 7 135
Sums paid to third parties for services 198 196
Total short-term employee benefits 205 331
Directors remuneration and the remuneration of each Director is presented in the Directors’
Report on page 7.
Peter Wilkinson is a shareholder and Director of InTechnology plc. The Company completed on
15 April 2015 a placing of 22.5 million shares at 6p per share to raise a total of £1.35m to
support the working capital requirements of the Company. InTechnology plc subscribed for
18,581,907 shares comprising 82.6% of the issue.
Mobile Tornado Group plc has bought goods and services totalling £278,000 (year ended
31 December 2014; £417,000) from InTechnology plc in the year to 31 December 2015. As at
31 December 2015, Mobile Tornado Group plc owed InTechnology plc £361,000 (31 December
2014; £333,000).
InTechnology plc has provided loan finance of £601,000 to Mobile Tornado Group plc in the
year ended 31 December 2015 (year ended 31 December 2014; £270,000). As at
31 December 2015, Mobile Tornado Group plc owed InTechnology plc £nil (31 December 2014;
£270,000).
Peter Wilkinson is a shareholder and Director of Alvarion Telecom UK Ltd – a 100% parent
company of Alvarion Technologies Ltd. MT Labs Ltd has sold services totalling £129,000 (year
ended 31 December 2014; £421,000) to Alvarion Technologies Ltd in the year to 31 December
2015. MT Labs Ltd has bought services totalling £194,000 (year ended 31 December 2014;
£127,000) from Alvarion Technologies Ltd in the year to 31 December 2015. As at
31 December 2015, MT Labs Ltd owed Alvarion Technologies Ltd £80,000 (31 December 2014;
Alvarion Technologies Ltd owed MT Labs Ltd £29,000).
Payments to a third party, Stonerings Ltd, are made in respect of the services provided by
Jeremy Fenn, Chief Executive Officer. As at 31 December 2015, Mobile Tornado Group plc
owed £5,000 (31 December 2014: £5,000) to Jeremy Fenn.
The Group is controlled by InTechnology plc (incorporated in the UK), which owns 51.2% of
the Company’s ordinary shares. The Group’s ultimate parent and controlling party is Peter
Wilkinson.
22 Investments
Details of the principal investments at 31 December 2015 in which the Company holds more
than 20% of the nominal value of ordinary share capital are as follows:
Country of Group Company
incorporation Nature of proportion proportion
or registration business held held
M.T. Labs Limited Israel Sale of instant 100% 100%
communication services
Page 37
Company balance sheet –
prepared under FRS 102
As at 31 December 2015
2015 2014
Note £’000 £’000
Fixed assets
Tangible assets 4 55 115
Intangible assets 6 8,022 11,953
8,077 12,068
Current assets
Debtors 7 1,364 1,626
Cash at bank and in hand 10 12
1,374 1,638
Creditors – amounts falling due within one year 8 (4,270) (3,937)
Net current liabilities (2,896) (2,299)
Total assets less current liabilities 5,181 9,769
Creditors – amounts falling due after more than one year 8 (8,216) (8,345)
Net (liabilities)/assets (3,035) 1,424
Capital and reserves
Called up share capital 9 4,951 4,501
Share premium 12,012 11,225
Merger reserve 10,938 10,938
Share option reserve 103 90
Retained earnings (31,039) (25,330)
Shareholders’ funds (3,035) 1,424
The financial statements on pages 38 to 46 were approved by the Board of Directors on 6 May
2016 and were signed on its behalf by:
Jeremy Fenn
Chief Executive Officer
6 May 2016
Company Number: 5136300
The accompanying notes form an integral part of these financial statements.
Page 38
Company statement of changes in equity
For the year ended 31 December 2015
Share
Share Share Merger option Retained Total
capital premium reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
Balance at
1 January 2014 4,499 11,225 10,938 100 (21,536) 5,226
Equity settled share-
based payments – – – (10) – (10)
Issue of share capital
on exercise of options 2 – – – – 2
Loss for the year – – – – (3,794) (3,794)
Balance at
31 December 2014 4,501 11,225 10,938 90 (25,330) 1,424
Share
Share Share Merger option Retained Total
capital premium reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
Balance at
1 January 2015 4,501 11,225 10,938 90 (25,330) 1,424
Equity settled share-
based payments – – – 13 – 13
Issue of share capital
on exercise of options 450 787 – – – 1,237
Loss for the year – – – – (5,709) (5,709)
Balance at
31 December 2015 4,951 12,012 10,938 103 (31,039) (3,035)
Page 39
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
1. General information
The principal activity of the Company is the provision of instant communication mobile
applications which serve the market of mobile data services in the mobile communication
industry. The Company is a public limited company which is listed on the Alternative
Investment Market and incorporated and domiciled in the UK. The address of the registered
office is Cardale House, Cardale Court, Beckwith Head Road, Harrogate, HG3 1RY.
2. Statement of compliance
The individual financial statements of Mobile Tornado Group plc have been prepared in
compliance with United Kingdom Accounting Standards, including Financial Reporting
Standard 102 “The Financial Reporting Standard applicable in the United Kingdom and the
Republic of Ireland” (“FRS 102”) and the Companies Act 2006.
3. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are
set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
These are the first financial statements of the Company prepared in accordance with FRS 102.
The Company’s date of transition to FRS 102 is 1 January 2014. This amendment to the
Company’s previously adopted accounting policies in accordance with UK GAAP (excluding
FRS 102) has had no impact on those figures presented previously.
3.1 Basis of preparation
The financial statements are presented in sterling, rounded to the nearest thousand. They are
prepared on a going concern basis and under the historical cost convention. The preparation
of financial statements in conformity with FRS 102 requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process
of applying the company’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 3.3.
3.2 Going concern
The Directors have reviewed the available cash reserves, confirmed financial support in the
form of short-term working capital loans available from InTechnology plc and cash projections
for the foreseeable future and in particular for the next twelve months from the date of signing
these financial statements. The review modelled a range of sensitivities concerning both the
size and timing of projected revenues from both current as well as new customers. On the
basis of this review, they have reasonable expectation that the Group will be able to meet its
liabilities as they fall due and continue to trade for the foreseeable future. They therefore have
concluded that the financial statements are appropriately prepared on a going concern basis.
3.3 Critical accounting estimates and judgements
The company makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below:
Contingent consideration – payments are dependent on estimates of future license sales
revenues
Page 40
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
Trade and other receivables – recognition of any impairment provisions in respect of amounts
recorded as trade and other receivables is dependent on judgements made on the
recoverability of such items
Research and development – distinguishing the research and development phases of the
Group’s research and development expenditure and determining whether the recognition
requirements for the capitalisation of development costs are met requires judgement.
3.4 Share options
The Company grants share options to employees and Directors on a discretionary basis.
The fair value of options granted is recognised as an employee expense with a corresponding
increase in equity. The fair value is measured at grant date and spread over the period during
which the employees become unconditionally entitled to the options. The fair value of the
options granted is measured using the Black-Scholes pricing model, which takes into account
the terms and conditions upon which the options were granted. The amount recognised as an
expense is adjusted to reflect the actual number of share options that vest.
3.5 Foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated to sterling at the exchange rates ruling at the balance sheet date.
All exchange differences are taken to the profit and loss account.
3.6 Tangible fixed assets
The cost of tangible fixed assets is their purchase cost. Depreciation is calculated so as to
write-off the cost of an asset, less its estimated residual value, over the useful economic life
of that asset as follows:
Computer & other equipment
Vehicles
3 years
3 years
The Directors review tangible fixed assets for impairment if events or changes in
circumstances indicate that the carrying value may not be recoverable.
3.7 Goodwill
In previous periods the Directors departed from the specific requirement of Companies
legislation to amortise goodwill over a finite period for the purpose of giving a true and fair
view. In the current year the Directors have reviewed this assessment and believe that the
goodwill has a finite life of 20 years and therefore will amortise the goodwill over this period.
This is a change in management estimate and is based on a consideration of the level of
uncertainty involved in predicting general market conditions beyond a period of 20 years.
Page 41
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
3.8 Intangible assets
Research expenditure, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is charged to income in the year in which it is incurred. Internal
development expenditure, whereby research findings are applied to a plan for the production
of new or substantially improved products or processes, is charged to income in the year in
which it is incurred unless it meets the recognition criteria of IAS 38 ‘Intangible Assets’ which
are;
• the development costs can be measured reliably
• the project is technically and commercially feasible
• the Group intends to and has sufficient resources to complete the project
• the Group has the ability to use or sell the resulting technology
• the resulting technology will generate probable future economic benefits.
Measurement uncertainties over economic benefits generally mean that such criteria are not
met. Where, however, the recognition criteria are met, intangible assets are capitalised and
amortised over their useful economic lives from product launch. Intangible assets relating to
products in development are subject to impairment testing at each balance sheet date or
earlier upon indication of impairment. Any impairment losses are written off immediately to
income.
3.9 Investments
Investments are stated at cost less provision for any permanent impairment in value. The
carrying value of investments is reviewed annually to determine the need for any provision for
impairment. The investment has been fully impaired in previous periods.
3.10 Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all of its financial liabilities.
Where the contractual obligation of the financial instruments (including share capital) are
equivalent to a similar debt instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and
gains and losses relating to financial liabilities are included in the profit and loss account.
Finance costs are calculated so as to produce a constant rate of return on the outstanding
liability.
Where the contractual terms of share capital do not have any terms meeting the definition of
a financial liability then this is classed as an equity instrument. Dividend and distributions
relating to equity instruments are debited direct to equity.
Page 42
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
4 Tangible assets
Computer
equipment Vehicles Total
£’000 £’000 £’000
Cost
At 1 January 2015 363 24 387
Additions – – –
At 31 December 2015 363 24 387
Accumulated depreciation
At 1 January 2015 267 5 272
Charge for the year 52 8 60
At 31 December 2015 319 13 332
Net book amount at 31 December 2015 44 11 55
Net book amount at 31 December 2014 96 19 115
5 Fixed asset investments
Details of the principal investments at 31 December 2015 in which the Company holds more
than 20% of the nominal value of ordinary share capital are as follows:
Country of Group Company
incorporation Nature of proportion proportion
or registration business held held
M.T. Labs Limited Israel Sale of instant 100% 100%
communication services
On 31 October 2009 the trade and net assets of Mobile Tornado International Ltd were
transferred to Mobile Tornado Group plc at book value, following which the net investment held
by Mobile Tornado Group plc in Mobile Tornado International Ltd was £12,758,000.
Consequently, the value of the investment held in Mobile Tornado International Ltd is not
supported by any net assets or future cash flows. As the transfer did not impair the future
profitability of the Company, £12,758,000 was transferred from investments to goodwill in the
Company balance sheet.
Mobile Tornado International Ltd was subsequently dissolved.
6 Intangible assets
Intangible
Goodwill assets Total
£’000 £’000 £’000
At 1 January 2015 11,953 – 11,953
Additions – 107 107
Amortisation for the year (805) – (805)
Impairment (3,233) – (3,233)
At 31 December 2015 7,915 107 8,022
The impairment arises as a result of a more cautious set of future discounted cashflows being
used in the impairment calculation.
Page 43
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
7 Debtors
2015 2014
£’000 £’000
Trade receivables – net 727 958
Prepayments and accrued income 188 222
Other debtors 9 8
Amounts owed by Group undertakings 440 438
1,364 1,626
Amounts due from group undertakings are unsecured, interest free and repayable on demand.
8 Creditors – amounts falling due within one year
2015 2014
£’000 £’000
Trade creditors and accruals 583 725
Other taxation and social security 18 19
10% cumulative preference shares 7,082 6,479
Other creditors 6 15
Deferred income 1,924 2,003
Loans – 270
Contingent consideration 2,873 2,771
12,486 12,282
Less non-current portion:
Deferred consideration (2,514) (2,643)
10% cumulative preference shares (5,702) (5,702)
Amounts due within 1 year 4,270 3,937
9 Share capital
2015 2014
£’000 £’000
Allotted, called up and fully paid
247,553,189 (2014: 225,053,189) Ordinary shares of 2p each 4,951 4,501
Total 4,951 4,501
Non-voting preference shares – classified as liability
Number of Nominal
shares Value
’000 £’000
As at 31 December 2014 and 2015 71,277 5,702
All preference shares are non-voting, non-convertible cumulative redeemable preference
shares. They are redeemable at par value on 31 December 2018, or, at the Company’s
discretion, at any earlier date and will accrue interest at a fixed rate of 10 per cent.
per annum. Unpaid dividends accrue interest at 3% above Bank of England base rate until
settled.
Page 44
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
10 Capital and other commitments
At the balance sheet date the Group had outstanding commitments for future minimum lease
payments under non-cancellable operating leases as follows:
2015 2014
£’000 £’000
Within one year 12 57
Total 12 57
Operating lease payments represent rentals payable by the Company for certain properties.
11 Related party transactions
The Company has taken advantage of the exemption available under FRS 102 ‘Related Party
Disclosures’ from disclosing transactions between the Company and its wholly owned
subsidiary undertaking as these have been eliminated on consolidation of these financial
statements.
Peter Wilkinson is a shareholder and Director of InTechnology plc. The Company completed on
15 April 2015 a placing of 22.5 million shares at 6p per share to raise a total of £1.35m to
support the working capital requirements of the Company. InTechnology plc subscribed for
18,581,907 shares comprising 82.6% of the issue.
Mobile Tornado Group plc has bought goods and services totalling £278,000 (year ended
31 December 2014; £417,000) from InTechnology plc in the year to 31 December 2015. As
at 31 December 2015, Mobile Tornado Group plc owed InTechnology plc £361,000
(31 December 2014; £333,000).
InTechnology plc has provided loan finance of £601,000 to Mobile Tornado Group plc in the
year ended 31 December 2015 (year ended 31 December 2014; £270,000). As at
31 December 2015, Mobile Tornado Group plc owed InTechnology plc £nil (31 December 2014;
£270,000).
Peter Wilkinson is a shareholder and Director of Alvarion Telecom UK Ltd – a 100% parent
company of Alvarion Technologies Ltd. MT Labs Ltd has sold services totalling £129,000 (year
ended 31 December 2014; £421,000) to Alvarion Technologies Ltd in the year to 31 December
2015. MT Labs Ltd has bought services totalling £194,000 (year ended 31 December 2014;
£127,000) from Alvarion Technologies Ltd in the year to 31 December 2015. As at
31 December 2015, MT Labs Ltd owed Alvarion Technologies Ltd £80,000 (31 December 2014;
Alvarion Technologies Ltd owed MT Labs Ltd £29,000).
Payments to a third party, Stonerings Ltd, are made in respect of the services provided by
Jeremy Fenn, Chief Executive Officer. As at 31 December 2015, Mobile Tornado Group plc
owed £5,000 (31 December 2014: £5,000) to Jeremy Fenn.
The Group is controlled by InTechnology plc (incorporated in the UK), which owns 51.2% of
the Company’s ordinary shares. The Group’s ultimate parent and controlling party is Peter
Wilkinson.
Page 45
Notes to the Company financial statements
prepared under FRS 102
For the year ended 31 December 2015
12 Loss for the financial year
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not
included its own profit and loss account in these financial statements. The Parent Company’s
loss for the year ended 31 December 2015 was £5,709,000 (year ended 31 December 2014:
£3,794,000 loss).
13 Transition to FRS 102
The policies applied under the Group and Company’s previous accounting framework are not
materially different to those applied under FRS 102 and have not impacted on the equity or
profit or loss.
Page 46
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that an Annual General Meeting of the Company will be held at
Cardale House, Cardale Court, Beckwith Head Road, Harrogate, HG3 1RY on 6 July 2016 at
09:00 am to transact the following business:
As ordinary business:
1. to receive and adopt the report of the Directors and the audited accounts of the Company
and its subsidiaries for the financial year ended 31 December 2015 together with the
report of the auditors thereon;
2. to re-appoint PricewaterhouseCoopers LLP as auditors of the Company to hold office until
the conclusion of the next general meeting at which accounts are laid before the
Company;
3. to authorise the Directors to determine the auditors’ remuneration;
4. to re-appoint Jeremy Fenn, who retires in accordance with Article 38 of the Company’s
articles of association and who, being eligible, offers himself for re-appointment as a
Director;
As special business:
To consider and, if thought fit, pass the following resolutions, with resolution 5 being proposed
as an ordinary resolution and resolution 6 being proposed as a special resolution:
5. THAT, in substitution for all existing and unexercised authorities, pursuant to section 551
of the Companies Act 2006 (the “Act”), as amended, the Directors of the Company be
and are hereby generally and unconditionally authorised to exercise all or any of the
powers of the Company to allot and grant equity securities (within the meaning of section
560 of the Act) in the capital of the Company up to a maximum nominal amount of
£1,650,354 (being approximately 33 per cent of the Company’s issued share capital),
provided that this authority shall, unless previously revoked or varied by the Company in
general meeting, expire at the conclusion of the next annual general meeting of the
Company after the passing of this resolution, save that the Company may before the
expiry make an offer or agreement which would or might require equity securities to be
allotted or granted after such expiry and the Directors of the Company may allot or grant
equity securities in pursuance of such an offer or agreement as if the authority conferred
hereby had not expired.
6. THAT, subject to the passing of resolution 5, the Directors of the Company be and are
hereby empowered pursuant to section 570 and 573 of the Act to allot equity securities
(as defined in section 560 of the Act) for cash or otherwise pursuant to the authority
given by resolution 5 and/or to allot equity securities where such allotment constitutes
an allotment of securities by way of section 560(2)(b) of the Act, as if section 561(1) of
the Act did not apply to any such allotment, provided that this power shall be limited to
the allotment of equity securities:
(i) in connection with the grant of options under any share option scheme of the
Company;
(ii) in connection with or the subject of an offer or invitation, including a rights issue or
open or equivalent offer to holders of ordinary shares and such other equity
securities of the Company as the Directors may determine on the register on a fixed
record date, in proportion (as near as may be) to the respective holdings of such
shares, but subject to such exclusions or other arrangements as the Directors may
deem necessary or expedient in relation to fractional entitlements or any legal or
practical problems under the laws of, or the requirements of, any recognised
regulatory body or any stock exchange in any territory; and
Page 47
Notice of Annual General Meeting
(iii) otherwise than pursuant to sub-paragraphs (a) and (b) above, up to an aggregate
nominal amount of £495,106 (being approximately 10 per cent of the Company’s
issued share capital);
provided that this authority shall expire on the conclusion of the next annual general
meeting of the Company or 15 months from the date of this resolution, whichever is
earlier and save that the Company may before such expiry make an offer, agreement
or other arrangement which would or might require equity securities to be allotted after
such expiry and the Directors of the Company may allot equity securities pursuant to
any such offer, agreement or other arrangement as if the authority hereby conferred
had not so expired.
By Order of the Board
Richard James
Company Secretary
6 May 2016
Registered office:
Cardale House
Cardale Court
Beckwith Head Road
Harrogate
HG3 1RY
Page 48
Notice of Annual General Meeting
Notes:
Appointment of proxies
1 As a member of the Company, you are entitled to appoint a proxy to exercise all or any of your rights to attend,
speak and vote at the Meeting and you should have received a proxy form with this notice of Meeting. You can
only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
2 A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of
how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in
the notes to the proxy form.
3 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more
than one proxy, please contact Capita Asset Services at PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU or
you may photocopy the enclosed proxy form.
4 If you do not give your proxy an indication of how to vote on any resolution, your proxy will vote or abstain from
voting at his or her discretion. Your proxy will vote or abstain from voting as he or she thinks fit in relation to any
other matter which is put before the Meeting.
Appointment of proxy using hard copy proxy form
5 The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their
vote.
To appoint a proxy using the proxy form, the form must be:
• completed and signed;
• sent or delivered to Capita Asset Services at PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; and
• received by Capita Asset Services by no later than 9.00 a.m. on 4 July 2016.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed
on its behalf by an officer of the company or an attorney for the company stating their capacity (e.g. director,
secretary).
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of
such power or authority) must be included with the proxy form.
Appointment of proxy by CREST
6 If you are a CREST member and wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service you may do so by using the procedures described in the CREST Manual (available via
www.euroclear.com/CREST). CREST personal members or other CREST sponsored members, and those CREST
members who have appointed a service provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland
Limited’s specifications, and must contain the information required for such instruction, as described in the CREST
Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the
instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received
by Capita Registrars (ID: RA10) by the latest time for receipt of proxy appointments specified in this notice of
meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp
applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the
message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to
proxies appointed through CREST should be communicated to the appointee through other means.
If you are a CREST member or, where applicable, a CREST sponsor, or voting service provider, you should note
that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular
message. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time. In this connection, you and, where applicable,
your CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001.
Appointment of proxy by joint members
7 In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which
the names of the joint holders appear in the Company’s register of members in respect of the joint holding (the
first-named being the most senior).
Page 49
Notice of Annual General Meeting
Changing proxy instructions
8 To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note
that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions;
any amended proxy appointment received after the relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using
another hard-copy proxy form, please contact Capita Asset Services at PXS, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the
receipt of proxies will take precedence.
Termination of proxy appointments
9 In order to revoke a proxy instruction you will need to inform Capita Registrars by sending a signed hard copy
notice clearly stating your intention to revoke your proxy appointment to Capita Registrars at PXS, The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4TU. In the case of a member which is a company, the revocation
notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney
for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a
duly certified copy of such power or authority) must be included with the revocation notice.
In either case, the revocation notice must be received by Capita Asset Services by no later than 9.00 a.m. on
4 July 2016.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then,
subject to the paragraph directly below, your proxy appointment will remain valid.
The return of a completed proxy form, other such instrument or any CREST Proxy Instruction will not prevent you
from attending the Meeting and voting in person if you wish to do so. If you have appointed a proxy and attend
the Meeting in person, your proxy appointment will automatically be terminated.
Communication
10 Except as provided above, members who wish to communicate with the Company in relation to the Meeting should
write to the Company Secretary, Mobile Tornado Group plc, Cardale House, Cardale Court, Beckwith Head Road,
Harrogate, HG3 1RY.
No other methods of communication will be accepted.
Corporate representatives
11 If a corporation is a member of the Company, it may by resolution of its directors or other governing body
authorise one or more persons to act as its representative or representatives at the Meeting and any such
representative or representatives shall be entitled to exercise on behalf of the corporation all the powers that the
corporation could exercise if it were an individual member of the Company, provided that they do not do so in
relation to the same shares.
Corporate representatives should bring with them either an original or certified copy of the appropriate board
resolution or an original letter confirming the appointment, provided it is on the corporation’s letterhead and is
signed by an authorised signatory and accompanied by evidence of the signatory’s authority.
Uncertificated Securities Regulations
12 Pursuant to regulation 41(1) of the Uncertificated Securities Regulations 2001 (2001 No. 3755), the Company has
specified that only those members registered on the register of members of the Company at close of business on
4 July 2016 (or if the Meeting is adjourned, close of business on the day two days prior to the date of the adjourned
Meeting) shall be entitled to attend and vote at the Meeting in respect of the number of shares registered in their
name at that time. Changes to the register of members after that date shall be disregarded in determining the
rights of any person to attend and vote at the Meeting.
Page 50
Corporate information
Company Registration Number:
5136300
Registered Office:
Cardale House
Cardale Court
Beckwith Head Road
Harrogate
HG3 1RY
Directors:
P R Wilkinson
J M Fenn
R M James
(Non-Executive Chairman)
(Chief Executive Officer)
(Director & Company Secretary)
Nominated Advisor and Broker:
Bankers:
Solicitors:
Registrars:
Auditors:
Investec Bank Plc
2 Gresham Street
London
EC2V 7QP
Barclays Bank Plc
Hanover Square
50 Pall Mall
London
SW1Y 5AX
Walker Morris LLP
Kings Court
12 King Street
Leeds
LS1 2HL
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
PricewaterhouseCoopers LLP
33 Wellington Street
Leeds
LS1 4JP
Internet address:
www.mobiletornado.com
Page 51
sterling 167556
ANNUAL REPORT
AND FINANCIAL STATEMENTS
for the year ended 31 December 2015
www.mobiletornado.com
Mobile Tornado Group PLC
Company Registration Number: 5136300