Annual Report and Financial Statements
for the year ended 31 December 2023
Mobile Tornado Group plc
Company registration number: 5136300
Contents
Page 1
Strategic report2Directors’ report10Independent auditors' report20Consolidated income statement27Consolidated statement of comprehensive income27Consolidated statement of financial position28Consolidated statement of changes in equity29Consolidated statement of cash flows30Notes to the financial statements31Company balance sheet - prepared under FRS10259Company statement of changes in equity60Notes to the Company financial statements - prepared under FRS10261Corporate information71
Strategic report
Introduction
Mobile Tornado Group plc, a leading provider of resource management mobile solutions to
the enterprise market, announces its results for the year ended 31 December 2023.
Financial Highlights
•
Total revenue decreased by 1% to £2.27m (2022: £2.28m)
o Recurring revenues decreased by 6% to £1.85m (2022: £1.97m)
o Non-recurring revenues* increased by 34% to £0.41m (2022: £0.31m)
• Gross profit decreased by 6% to £2.08m (2022: £2.22m)
• Administrative expenses before depreciation, amortisation, exceptional items and
exchange differences decreased by 7% to £2.33m (2022: £2.51m)
• Adjusted EBITDA** loss of £0.25m (2022: loss of £0.28m)
• Group operating loss for the year decreased to £0.29m (2022: £0.72m)
Loss after tax of £0.99m (2022: loss of £1.38m)
•
• Basic loss per share of 0.24p (2022: loss of 0.36p)
• Cash at bank at 31 December 2023 of £0.19m (31 December 2022: £0.15m) with
net debt of £10.67m (2022: £10.44m)
* Non-recurring revenues comprise installation fees, hardware, professional services and
capex license fees
** Administrative expenses excludes depreciation, amortisation and exchange differences
***Earnings before interest, tax, depreciation, amortisation, exceptional items and
excluding exchange rate differences
Operating highlights
• Business development strategy launched in early 2023 delivers wider partner
network and significantly enhanced market presence through trade show
programme and outreach campaign
• Deal closed in Middle East with leading mobile network operator (“MNO”)
•
Partner deals agreed with major industry players including Ericsson, Radiocomms
and Barcode Warehouse
• £500k equity fundraise concluded in March 2023 to support the scale up of sales,
•
marketing and business development activities
End customer deals concluded with Leeds Bradford airport, major electricity utility
company in Mexico, national security company in South Africa, international hotel
group in the Caribbean and Northern Trains in the UK
Page 2
20232022£'000£'000Recurring revenue1,8521,969Non-recurring revenue*414310Total revenue2,2662,279Gross profit2,0802,223Administrative expenses**(2,328)(2,507)Adjusted EBITDA***(248)(284)Group operating loss(293)(723)Loss before tax(1,072)(1,419)
Strategic report
Financial results and key performance indicators
Total revenue for the year ended 31 December 2023 decreased by 1% to £2.27m (2022:
£2.28m). Recurring revenues decreased by 6% to £1.85m (2022: £1.97m). This was the
result of a renegotiated exclusive contract with our partner in South Africa in order that
they can provide a more competitively priced proposition with a view to generating higher
sales volumes in due course.
Non-recurring revenues, comprising installation fees, hardware, professional services and
capex license fees increased to £0.41m (2022: £0.31m). As a result, gross profit
decreased by 6% to £2.08m (2022: £2.22m).
Administrative expenses before depreciation, amortisation, exceptional
items and
exchange differences in the year decreased by 7% to £2.33m (2022: £2.51m), reflecting
the continued positive impact that further investment in the development and operating
efficiencies of our enhanced technical platform have delivered.
Due to the annual retranslation of certain financial liabilities on the balance sheet, the
Group reported a translation gain of £0.08m (2022: loss of £0.23m) arising from the
appreciation of Sterling relative to both the Euro and the US Dollar as at 31 December
2023 versus the previous year end. The Group recorded a net income tax credit of £0.08m
(2022: credit of £0.04m).
The loss after tax for the year decreased to £0.99m (2022: loss of £1.38m) equating to a
basic loss per share of 0.24p (2022: 0.36p).
The net cash used in operations increased to £0.19m (2022: £0.17m). At 31 December
2023, the Group had £0.19m cash at bank (2022: £0.15m) and net debt of £10.67m (31
December 2022: £10.44m).
The balance sheet continues to reflect the cumulative loss position of the Group, and those
net liabilities that have resulted from this. We continue to hold levels of debt in the Group
which have funded these historical losses.
Results and dividends
The Directors do not recommend the payment of a dividend in respect of the year ended
31 December 2023 (year ended 31 December 2022: nil). The Company currently intends
to reinvest future earnings to finance the growth of the business over the near term.
Review of operations
Results review
During the year the business has made excellent progress in laying the foundations to
drive future growth. Whilst the financial results were broadly in line with the prior year,
there has been significant investment into our business development activities across the
period, that will deliver improving top line sales growth this year and beyond.
A small decrease in the recurring revenue stream was driven by a renegotiated exclusive
contract with our partner in South Africa. As a result of economic pressures in that
territory, we adjusted the commercial terms with our partner in order that they can
provide a more competitively priced proposition with a view to generating higher sales
volumes in due course.
The 34% uplift in non-recurring revenues reflects the renewals on existing capex-based
license deals.
Page 3
Strategic report
Business development focus
As previously reported, we made some changes to the management team in the early part
of 2023, with a view to delivering greater focus and resourcing of our business
development activities. This has been driven by an investment in a number of trade shows
supported by an extensive marketing outreach programme. During the last 18 months we
attended the key critical communication trade shows in Dubai, Helsinki, Orlando, Cologne,
Barcelona, Johannesburg and Belize. Investment in this programme of events has been
supported by further efficiencies across the operation driven by a further shift in resource
to our lower cost research and development centres.
The Board now feels the right balance has been established between driving continued
technical excellence in the platform, with a more commercial approach to presenting that
proposition to the market.
New partners
The success of the programme has been illustrated by the signing of agreements with new
partners in the USA, UK, Germany, Iraq, KSA, Colombia, Kenya, Morocco and UAE.
Although we operate a capital efficient model of partnering with regional specialists, we
have expanded our in-house team of account managers and pre-sale technical teams to
manage the uplift in activity.
Alongside the expansion of our network of global partners, we also executed an agreement
to participate in the Ericsson Software Enterprise Partner Program, which is focused on
helping their customers to improve business critical communications, safety and
productivity.
A reseller agreement was also signed with The Barcode Warehouse, the UK's leading
specialist provider of barcode technology, RFID (radio frequency identification) and
enterprise mobility solutions, allowing the Company's solution to be made available to a
wide range of sectors including education, healthcare, logistics, manufacturing, retail and
utilities.
Radiocoms Systems, the UK’s leading independent communications supplier specializing in
the design, commissioning, deployment and maintenance of wireless, video and data
networks, were also signed up as a reseller.
Mobile Network Operator (‘MNO’) deal
During the period we worked closely with one of our new partners in the Middle East on a
deal with one of the territory’s principal MNOs. In May 2024, we announced that the
Company had secured a contract through this regional partner to supply our solution to
this MNO, which serves over 50 million active individual and business customers. This deal
followed a competitive procurement process involving globally recognised telecoms
companies, with our platform selected to deliver PTToC, lone worker and live video
communications services.
Having identified the Middle East as a key market for business development, this deal
provides us with a platform for expansion across multiple territories. Winning this deal
against global OEMs is a testament to the quality of our solutions and provides us with a
high quality and credible reference point for other MNO opportunities.
Current partners
Our partner in South and Central America has continued to focus on the deployment of the
solution to public safety organisations. Progress has been frustratingly slow, but we
understand that final confirmation around the hardware that will be deployed alongside our
platform is being processed and this should facilitate full commercial roll out during this
financial year.
Page 4
Strategic report
We are working with partners on a number of other public safety organisations and have
recently deployed a solution to a small police force in the Caribbean. Once again, the
quality of our solution and the relative cost compared to traditional radio platforms is
attracting a lot of interest across the developing world.
In Mexico, we have worked with our partner on several major tenders and were delighted
to recently secure a deal to supply one of the country’s national electricity companies with
our solution. The deal provides for the deployment of 2,800 licenses initially, with an
expectation that this will grow over time.
Our UK partner signed a deal with Leeds Bradford airport ('LBA'), to provide their ground
operations staff with our full PTToC solution. The solution has performed well with further
expansion planned for airside operations during 2024. In addition, they have also recently
signed a partnership agreement with Amulet, a specialist intelligence-led security
company. Amulet work with a number of train companies and have initially deployed the
solution to security officers at Northern Trains. Unlike legacy two-way radio systems, our
technology uses cellular networks, enabling reliable coverage, through the seamless
switching between 2G, 3G, 4G and 5G mobile and WIFI. In addition to improved
communication, our solution also provides a suite of lone worker capabilities, including
emergency alerts, activity monitoring, impact detection and keep-alive check-in. These
functions will be deployed in phase 2 alongside the dispatch console into the control room
at Manchester Victoria station.
As detailed above, we amended the commercial terms with our exclusive partner in South
Africa, to ensure we can compete in a market that has been impacted by the economic
challenges within the country. The expectation is that we will be better placed to secure a
significantly higher volume of licenses moving forward. We have started to see this come
through with a major security company recently signing a deal for several thousand
licenses. The revised agreement also provides for us to act as the exclusive UK reseller for
their PTX personnel management platform, which allows the simple and effective
management of employees, helping to improve operational efficiencies and productivity as
well as reducing costs. This deal has allowed the Company to reduce the resources
currently allocated to the development of our own workforce management platform.
In the Caribbean, our partner has developed positive sales momentum, concluding deals
with major hotel groups, security companies and airports.
Research and Development
We have continued to invest significant resources into our technical platform. There is a
continuing focus on ensuring all development work is delivered efficiently, and with this in
mind, we continue to develop and expand our R&D centre in India.
As we have developed our business development activity, we have been involved in many
more commercial opportunities, which are starting to convert into completed deals. It’s
clear, and worth repeating, that the quality of our platform continues to be the primary
driver for this success.
Our PoC platform provides a carrier class mission-critical communications solution,
distinguished by the following key attributes:
Seamless transition - our platform ensures uninterrupted communication
between different networks or coverage zones allowing users to maintain constant
connectivity, enabling efficient collaboration across teams, regardless of location or
network conditions.
Market-leading group sizes - our platform supports larger group sizes compared
to competing solutions, making it ideal for organizations with extensive teams or
complex communication requirements. The solution can manage group sizes of
5,000+ compared to competing products that are limited to several hundred.
Dispatcher console - the dispatcher console is a centralized, user-friendly
Page 5
Strategic report
interface that allows for efficient coordination and management of communication
channels. It enables dispatchers to monitor and control conversations, prioritize
messages, and allocate resources, ensuring smooth communication flow and rapid
response times during critical situations. Our console can manage 64 groups
simultaneously, which we believe puts us ahead of all competing platforms.
Data utilization - our platform optimizes data usage by employing advanced
compression techniques and minimizing bandwidth consumption. This results in
cost savings for customers while maintaining high-quality voice and data
transmission. Additionally, the platform's efficient data management allows for
seamless integration with other systems, further enhancing its versatility and
adaptability to various organizational needs.
During 2023, the development team added sophisticated lone worker functionality to the
platform and provided the capability for live video streaming. Both features were key
requirements for securing the recently announced MNO deal in the Middle East, illustrating
our focus on developing new functionality to meet clear commercial and customer needs.
Board Appointments
The Board is pleased to confirm the appointment of Luke Wilkinson as Chief Operating
Officer and Marcus Emptage as Finance Director.
Luke joined the business in January 2023 as Head of Business Development. He has
significantly widened the Company’s partner network and developed a sophisticated
outreach programme to promote the company’s solutions to the global critical
communications market. The success of the strategy has been borne out with the recent
signing of a major MNO in one of the Company’s key target markets.
Marcus has been Financial Controller for the business since 2006. He is a qualified
chartered accountant.
Funding
In March 2023, we concluded a subscription for 25.0m new ordinary shares of 2 pence
each representing approximately 6.6 per cent. of the existing issued ordinary share capital
of the Company at a price of 2 pence per share to raise £500,000. The Company also
announced the capitalisation of £259,490 of indebtedness owed by the Company to
InTechnology plc into 12,974,492 new Ordinary Shares, also at 2 pence per share.
The £500k equity funding was directed towards enhancing our business development
activities, including the participation in major industry trade shows and the recruitment of
additional sales professionals to manage the increasing portfolio of partners.
As announced on 22 September 2023, we agreed a 12-month extension of our revolving
loan facility with our principal shareholder, InTechnology plc. This facility has a term
ending on 26 September 2024 with a maximum principal amount of £500,000. The
balance drawn down at 31 December 2023 and at today’s date is £150,000.
In November 2023, InTechnology plc transferred its entire holding of Mobile Tornado's
ordinary shares of 2p each to Holf Investments Ltd ("Holf"). Holf is 100% owned by Peter
Wilkinson and his family. Following this transfer, Peter Wilkinson has a total direct and
indirect beneficial interest in 58.44% of Mobile Tornado's issued share capital.
On the same date, InTechnology plc also transferred a significant amount of Mobile
Tornado’s total indebtedness to Holf. This indebtedness comprises: £5.7 million of
redeemable preference shares; £2.7 million of accrued Preference Share coupon and
interest; and £2.8m of loan indebtedness, comprising historic short-term borrowings and
rent and services incurred under the services agreement. Following this transfer, all
interest accruing under the Preference Shares will accrue or be payable to Holf in
accordance with their existing terms. All other terms of the Preference Shares agreement
remain the same and as previously announced.
Page 6
Strategic report
We remain confident that our available cash resources together with our long-established
recurring revenue customer base and anticipated future contracts will provide us with
adequate financial resources for the foreseeable future.
Principal risks and uncertainties
The management of the business and the nature of the Group’s strategy are subject to a
number of risks. The Directors have set out below the principal risks facing the business.
The Directors are of the opinion that a thorough risk management process is adopted,
which involves the formal review of all the risks identified below. Where possible,
processes are in place to monitor and mitigate such risks.
Product obsolescence
Due to the nature of the market in which the Group operates, products are subject to
technological advances and as a result, obsolescence. The Directors are committed to the
Group’s current research and development strategy and are confident that the Group can
react effectively to developments within the market.
Indirect route to market
As described above, one of the Group’s primary channels to market are MNOs reselling our
services to their enterprise customers. Whilst MNOs are ideally positioned to forward sell
our services and are likely to possess material resources for doing so, there remains an
inherent uncertainty arising from the Group’s inability to exert full control over the sales
and marketing strategies of these customers.
Going concern
The Financial Statements are prepared on a going concern basis.
When determining the adoption of this approach, the Directors have considered a wide
range of information relating to present and future conditions, including the current state
of the Balance Sheet, that support offered by our principal shareholder Holf Investments
Ltd, who have agreed not to call on existing loans and borrowings totaling £10,640,000,
together with the existing £500,000 working capital facility with Intechnology plc. Further
consideration has been given to future projections, cash flow forecasts, access to funding,
ability to successfully secure additional investment, available mitigating actions and the
medium-term strategy of the business.
The Group is dependent on its ability to meet its cash flow forecasts. Within those
forecasts the Group has included a number of significant payments and receipts based on
its best estimate but, as with all forecasts, there does exist some uncertainty as to the
timing and size of those payments and receipts. In particular, the forecasts assume the
ongoing deferral and phased payment of some of the Group’s creditors, including a
contingent consideration balance of £2,675,000, (as disclosed in note 12 to the financial
statements), and the continuation at the current level of recurring and non-recurring
revenues. In the event that some or all of these receipts are delayed, deferred or reduced,
or payments not deferred, management has considered the actions that it would need to
take to conserve cash. These actions would include significant cost savings (principally
payroll based) and/or seeking additional funding from its shareholders, for which there is
currently no shareholder commitment requested. These conditions, together with the other
matters explained in note 1 to the financial statements, indicate the existence of a material
uncertainty which may cast significant doubt about the Group’s ability to continue as a
going concern. The financial statements do not include the adjustments that would result if
the Group was unable to continue as a going concern.
The Directors, whilst noting the existence of a material uncertainty and having considered
the possible management actions as noted above, are of the view that the Group is a
going concern and will be able to meet its debts as and when they fall due for a period of
at least 12 months from the date of signing these accounts.
Page 7
Strategic report
Section 172 statement – our stakeholders
The Board recognises its duty to consider the needs and concerns of the Group’s key
stakeholders during its discussions and decision-making. The Board has had regard to the
importance of fostering relationships with its stakeholders as set out below, and also
detailed in the Corporate Governance section of this Annual Report.
Colleagues
We have an experienced, and dedicated workforce which we recognise as the key asset of
our business. It is vital to the success of the Group to continue to create the right
environment to encourage and create opportunities for individuals and teams to realise
their full potential. The Board and management team pay close attention to employee
feedback and seek to respond constructively to any suggestions or concerns raised.
Regular colleague briefing sessions are held with the Executive Chairman to enable
colleagues to ask questions and raise issues and for colleagues to be provided with
updates on the business. Key performance information such as trading updates and
financial results are always promptly communicated to colleagues. The Group has in place
a share option scheme to enable colleagues to become personally invested as shareholders
of the Group.
Customers
Regular communication takes place with the Group’s partners and customers to discuss
operational updates, product roadmap developments and gain key customer feedback.
This enables increased engagement with customers at a strategic level and a greater
understanding of both customer pain points and future requirements from strategic to end-
user level.
Strategy
The Group continues to invest in an R&D strategy, current details of which are provided in
paragraph six of the review of operations.
Suppliers
The Board is committed to building trusted partnerships with the Group’s suppliers.
Through these partnerships, we deliver value and quality to our other stakeholders.
Shareholders
The Executive Chairman holds analyst and investor roadshow meetings during the year,
particularly following the release of the Group’s interim and full year results and feedback
from those meetings is shared with the Board. The AGM is a key opportunity for
engagement between the Board and shareholders, particularly private shareholders. The
Group’s annual report and accounts is made available to all shareholders both online and
in hard copy where requested. All presentations and announcements and other key
shareholder information is available on the investor section of the Group’s website.
Outlook
The strategy we launched in early 2023 to widen our network of industry partners,
strengthen existing partner relationships, and establish a presence in new international
markets has been successful. We have significantly expanded our addressable market over
the last 18 months and the plan is to continue investing in this strategy as we move
through this year and into 2025.
Page 8
Strategic report
The market in which we operate continues to gather momentum as network coverage and
connectivity improve, making PTToC a genuine alternative to traditional radio systems for
those customers seeking real time communications for their remote teams. We will
continue evolving our platform to ensure it maintains its technical advantages and meets
the requirements of customers.
The Board is focused on growing the Company’s recurring revenues as this will be the
primary driver for delivering increased shareholder value. We are now engaged with
significantly more partners and end customers than we were 18 months ago, and I am
hopeful that these relationships will begin to deliver material uplifts in revenue as we move
forward.
I would like to welcome Luke and Marcus to the Board and thank them and our whole team
for their contribution across the last financial year. There is a new dynamic and energy
within the Company which I am hopeful will shortly convert into tangible and improving
financial results. I look forward to updating shareholders as the year develops.
Approved by the Board of Directors and signed on behalf of the Board
Jeremy Fenn
Chairman
19 June 2024
Page 9
Directors’ report
The Directors present their annual report and audited financial statements of the Company
and the Group for the year ended 31 December 2023.
Share issues
The Company completed on 6 March 2023 a placing of 25.0m ordinary shares at 2p per
share to raise £0.50m to further support the growth of the Company’s business
development activities.
On the same date, the Company issued 12,974,492 new ordinary shares to InTechnology
plc at 2p per share as capitalisation of £0.26m of indebtedness owed by the Company to
InTechnology plc.
Directors
The Directors of the Company who were in office during the year were:
• Peter Wilkinson became Non-Executive Director on 30 September 2016, having
previously served as Non-Executive Chairman since his appointment to the Board
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 Fenn became Executive Chairman on 30 September 2016, having
previously served as Chief Executive Officer and acting Finance Director since his
appointment 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.
• Avi Tooba was appointed as Chief Executive Officer on 30 September 2016. Avi
was previously the senior Director of engineering at Motorola Solutions overseeing
engineering 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). Prior to that, he was Director of
engineering at Motorola Networks which was later sold to Nokia for an estimated
US$1 billion.
•
Jonathan Freeland was appointed to the Board as an independent non-executive
Director on 9 February 2018. Jonathan has 20 years' experience in financial
services across wealth and investment banking, private equity and commercial
lending. He was a Partner at Venn Partners LLP, the specialist private credit
investment manager, from 2011-2015. He is currently CEO of Waveney Capital
Management Ltd a credit focussed investment business he founded in 2016.
Avi Tooba resigned as a Director of the Company on 9 January 2023. Jeremy Fenn
assumed the role of acting Chief Executive Officer on 9 January 2023.
The Board recognises the importance of ensuring our Board has the required skill set and
that it conforms with the QCA code and today’s appointment of Luke and Marcus to the
Board reflect this.
Page 10
Directors’ report
The Directors and their families had the following beneficial interests in the ordinary share
capital of the Company:
Third party indemnity insurance is in place for all Directors above. This was in force during
the year and at the date of this report.
Details of related party transactions involving Directors of the Company are given in note
18 to the Group financial statements.
Directors’ emoluments
The remuneration of the Directors of the Company was as follows:
Interests in share options
Set out below are details of share options granted to Directors as 31 December 2023:
Substantial shareholdings
On 10 November 2023 InTechnology plc transferred its entire holding of Mobile Tornado's
ordinary shares of 2p each to Holf Investments Ltd ("Holf"). Holf is 100% owned by Peter
Wilkinson and his family. In total, 205,988,314 Ordinary Shares have been transferred
from InTechnology to Holf for a total consideration of £5 million, equivalent to 2.43p per
Ordinary Share. Following this transfer, Peter Wilkinson has a total direct and indirect
beneficial interest in 244,134,455 Ordinary Shares, representing 58.44% of Mobile
Tornado's issued share capital.
Page 11
31 December31 Decembernumber%number%Peter Wilkinson38,146,141 9.138,146,141 10.0Jeremy Fenn12,184,752 2.912,184,752 3.2Avi Tooba4,000,000 1.04,000,000 1.1Jonathan Freeland3,381,014 0.83,381,014 0.920222023Benefits20232022in kindTotalTotal£'000£'000£'000£'000£'000Peter Wilkinson- - - - - Jeremy Fenn6 120 4 130 130 Avi Tooba35 - 11 46 176 Jonathan Freeland- 18 - 18 18 Aggregate emoluments41 138 15 194 324 SalaryFeesNo. of shareExerciseGrantEarliestExpiryNo. of share optionspricedateexercisedate options2023pencedate2022Jeremy Fenn3,000,000 5.008/08/2308/08/2608/08/33- Jeremy Fenn3,000,000 6.515/06/1715/06/2015/06/273,000,000 Total6,000,000 3,000,000
Directors’ report
On the same date, InTechnology plc also transferred a significant amount of Mobile
Tornado’s total indebtedness to Holf. This indebtedness comprises: £5.7 million of
redeemable preference shares; £2.7 million of accrued Preference Share coupon and
interest; and £2.8m of loan indebtedness, comprising historic short-term borrowings and
rent and services incurred under the services agreement. Following this transfer, all
interest accruing under the Preference Shares will accrue or be payable to Holf in
accordance with their existing terms. All other terms of the Preference Shares agreement
remain the same and as previously announced.
Corporate governance
Since September 2018 all AIM Companies have been required to comply with a recognised
corporate governance code. Mobile Tornado Group plc has chosen the Quoted Companies
Alliance (QCA) Corporate Governance Code published in April 2018 for this purpose. High
standards of corporate governance are a priority for the Board and details of how Mobile
Tornado addresses key governance principles defined in the QCA code are set out below.
1. Establish a strategy and business model which promote long-term value for
shareholders
The strategy and business operations of the Group are set out in the Strategic Report on
pages 2 to 9.
The Group’s strategy and business model and amendments thereto, are developed by the
Chief Executive Officer and his senior management team and approved by the Board. The
management team, led by the Chief Executive Officer, is responsible for implementing the
strategy and managing the business at an operational level.
The Group operates in an inherently high risk sector and this is reflected in the principal
risks and uncertainties set out on pages 7 and 16. In executing the Group’s strategy and
operational plans, management will typically confront a range of day-to-day challenges
associated with these key risks and uncertainties and will seek to deploy the identified
mitigation steps to manage these risks as they manifest themselves.
2. Seek to understand and meet shareholder needs and expectations
The Group seeks to maintain a regular dialogue with both existing and potential new
shareholders in order to communicate the Group’s strategy and progress and to
understand the needs and expectations of shareholders.
Beyond the Annual General Meeting, the Chief Executive Officer and, where appropriate,
other members of the Board meet regularly with investors and analysts to provide them
with updates on the Group’s business and to obtain feedback regarding the market’s
expectations of the Group.
The Group’s investor relations activities encompass dialogue with both institutional and
private investors and which the Board considers have proved beneficial. The Company’s
AGM provides an opportunity for all shareholders to address their needs and expectations
to the Board so we encourage our shareholders to attend the AGM.
3. Take into account wider stakeholder and social responsibilities and their
implications for long-term success
The Group is aware of its corporate social responsibilities and the need to maintain
effective working relationships across a range of stakeholder groups. These include the
Group’s: investors, employees, partners, suppliers and regulatory authorities. The Group’s
operations and working methodologies take account of the requirement to balance the
needs of all these stakeholder groups while maintaining focus on the Board’s primary
Page 12
Directors’ report
responsibility to promote the success of the Group for the benefit of its members as a
whole. The Group endeavours to take account of feedback received from stakeholders,
making amendments to working arrangements and operational plans where appropriate
and where such amendments are consistent with the Group’s longer term strategy.
The Group takes due account of any impact that its activities may have on the
environment and seeks to minimise this impact wherever possible. Through the various
procedures and systems it operates, the Group ensures full compliance with health and
safety and environmental legislation relevant to its activities.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
The Board is responsible for the systems of risk management and internal control and for
reviewing their effectiveness. The internal controls are designed to manage rather than
eliminate risk and provide reasonable but not absolute assurance against material
misstatement or loss. The Audit Committee evaluates the effectiveness of these internal
controls on an annual basis or as required.
A summary of the principal risks and uncertainties facing the Group, as well as mitigating
actions, are set out on pages 7 and 16. A comprehensive budgeting process is completed
by the Finance Director once a year and is reviewed and approved by the Board. The
Group’s results, compared with the budget, are reported to the Board on a monthly basis.
The Group maintains appropriate insurance cover in respect of actions taken against the
Directors because of their roles, as well as against material loss or claims against the
Group. The insured values and type of cover are comprehensively reviewed by the Board
on a periodic basis.
The senior management team meet at least twice monthly to consider new risks and
opportunities presented to the Group, making recommendations to the Board and/or the
Audit Committee as appropriate.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
Following today’s appointment of Luke and Marcus, Mobile Tornado’s Board currently
comprises two Non-executive Directors and three Executive Director. All of the Directors
are subject to election by shareholders at the first Annual General Meeting after their
appointment to the Board and, from next year, all Director’s will continue to seek re-
election each year. Directors’ biographies are set out on page 10.
The Board recognises the importance of ensuring our Board has the required skill set and
that it conforms with the QCA code and today’s appointment of Luke and Marcus to the
Board reflect this.
The Board is responsible to the shareholders for the proper management of the Group and
meets at least six times a year to set the overall direction and strategy of the Group, to
review operational and financial performance and to advise on management appointments.
All key operational and investment decisions are subject to Board approval.
The Board considers itself to be sufficiently independent. Whilst Jonathan Freeland is the
only one of the two Non-executive Directors who sit on the Board of the Company
regarded as independent under the Code’s guidance for determining such independence,
the Board considers this to be appropriate for the Group’s current size. The Board will
regularly review the value to the Group and its stakeholders of making further
appointments to the Board.
Non-Executive Directors receive their fees in the form of a basic cash fee. No equity-based
fee arrangements are currently in place. The current remuneration structure for the
Page 13
Directors’ report
Board’s Non-Executive Directors is deemed to be proportionate to the time they are
required to commit to their roles.
During the year, and since the year end, there was a full attendance at all Board meetings.
6. Ensure that between them, the Directors have the necessary up-to-date
experience, skills and capabilities
The Board considers that all of the Non-Executive Directors are of sufficient competence
and calibre to add strength and objectivity to its activities and bring considerable
experience in operational and financial development of mobile applications services.
Directors’ biographies are set out on page 10.
The Board regularly reviews the composition of the Board to ensure that it has the
necessary breadth and depth of skills to support the ongoing development of the Group.
The Chairman ensures that the Directors’ knowledge is kept up to date on key issues and
developments pertaining to the Group, its operational environment and to the Directors’
responsibilities as members of the Board. The Board also receives regular guidance from
its legal advisers and nominated adviser on key regulatory developments.
Directors’ service contracts or appointment letters make provision for a Director to seek
personal advice in furtherance of his or her duties and responsibilities. No external
advisers have been appointed to assist the board of any of its committees in the past 12
months.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
Evaluation of the performance of the Board is implemented in an informal manner. On an
ongoing basis, Board members maintain a watching brief to identify relevant internal and
external candidates who may be suitable additions to, backup for or succession planning
for current Board members. Given the size of the business, the primary evaluation metric
utilised by the board is the financial performance of the Company.
The Board does not consider that the Company requires a nominations committee, given
the size and nature of the business. As the Company progresses, the Board will consider
the implementation of a nominations committee and more formal internal and external
board appraisal procedures.
8. Promote a corporate culture that is based on ethical values and behaviours
The Board seeks to maintain the highest standards of integrity and probity in the conduct
of the Group’s operations. These values are enshrined in the written policies and working
practices adopted by all employees in the Group. An open culture is encouraged within the
Group, with regular communications to staff regarding progress and staff feedback
regularly sought. The management team regularly monitors the Group’s cultural
environment and seeks to address any concerns than may arise, escalating these to Board
level as necessary.
9. Maintain governance structures and processes that are fit for purpose and
support good decision-making by the Board
The Board has overall responsibility for promoting the success of the Group. The Executive
Director has day-to-day responsibility for the operational management of the Group’s
activities. The Non-Executive Directors are responsible for bringing independent and
objective judgement to Board decisions.
The Chairman is responsible for overseeing the running of the Board, ensuring that no
individual or group dominates the Board’s decision-making and ensuring the Non-Executive
Page 14
Directors’ report
Directors are properly briefed on matters. The Chairman has overall responsibility for
corporate governance matters in the Group and chairs the Corporate Governance
Committee. The Chief Executive Officer has the responsibility for implementing the
strategy of the Board and managing the day-to-day business activities of the Group.
The Board has established an Audit Committee and Remuneration Committee with formally
delegated duties and responsibilities.
The Audit Committee is chaired by Peter Wilkinson and its other member is Executive
Chairman, Jeremy Fenn and normally meets twice a year and has responsibility for,
amongst other things, planning and reviewing the annual report and accounts and interim
statements involving, where appropriate, the external auditors. The Committee also
approves external auditors’ fees and ensures the auditors’ independence as well as
focusing on compliance with legal requirements and accounting standards. It is also
responsible for ensuring that an effective system of internal control is maintained. The
ultimate responsibility for reviewing and approving the annual financial statements and
interim statements remains with the Board.
The Remuneration Committee is chaired by Peter Wilkinson and its other member is
Executive Chairman, Jeremy Fenn and meets as required, but at least once a year, has
responsibility for making recommendations to the Board on the compensation of senior
executives and determining, within agreed terms of reference, the specific remuneration
packages for each of the Executive Directors. It also supervises the Company’s share
incentive schemes and sets performance conditions for share options granted under the
schemes.
10. Communicate how the Group is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Group places a high priority on regular communications with its various stakeholder
groups and aims to ensure that all communications concerning the Group’s activities are
clear, fair and accurate. The Group’s website is regularly updated with announcements or
details of presentations and events as well as the Group’s financial reports.
At the Company’s last AGM, all votes were passed by a significant majority. The Company
will provide details of any resolutions at the Company’s AGMs which receive significant
votes against and seek to understand from shareholders the reasons behind that vote
result. All of the Company’s AGM notices and annual reports and accounts for the past five
years are available to view in the Report and Accounts section of the website.
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 15
Directors’ report
Financial risk management
The Group’s financial instruments comprise, principally, cash and short-term deposits and
preference shares from its principal shareholder – Holf Investments Ltd, 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
currently exposed to credit risk in respect of a significant overdue receivable from one
particular customer. The Group has a strong trading relationship with this customer, and
the Directors maintain an open dialogue with them as to their financial position. During the
current year, the Group re-entered into a formal repayment plan with this customer and as
at today’s date, this plan has been adhered to.
The Group continually monitors its trade receivables and incorporates this information into
its credit risk controls.
Going concern
In preparing the consolidated financial statements the Directors must satisfy themselves
that it is reasonable to adopt the going concern basis.
When determining the adoption of this approach, the Directors have considered a wide
range of information relating to present and future conditions, including the current state
of the Balance Sheet, that support offered by our principal shareholder Holf Investments
Ltd, who have agreed not to call on existing loans and borrowings totaling £10,640,000,
together with the existing £500,000 working capital facility with Intechnology plc. Further
consideration has been given to future projections, cash flow forecasts, access to funding,
ability to successfully secure additional investment, available mitigating actions and the
medium-term strategy of the business.
The Group is dependent on its ability to meet its cash flow forecasts. Within those
forecasts the Group has included a number of significant payments and receipts based on
its best estimate but, as with all forecasts, there does exist some uncertainty as to the
timing and size of those payments and receipts. In particular, the forecasts assume the
ongoing deferral and phased payment of some of the Group’s creditors, including a
contingent consideration balance of £2,675,000, (as disclosed in note 12 to the financial
statements), and the continuation at the current level of recurring revenue and a
significant increase in the level of non-recurring revenues. In the event that some or all of
these receipts are delayed, deferred or reduced, or payments not deferred, management
has considered the actions that it would need to take to conserve cash. These actions
Page 16
Directors’ report
would include significant cost savings (principally payroll based) and/or seeking additional
funding from its shareholders, for which there is currently no shareholder commitment
requested. These conditions, together with the other matters explained in note 1 to the
financial statements, indicate the existence of a material uncertainty which may cast
significant doubt about the Group’s ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group was unable to
continue as a going concern.
The Directors, whilst noting the existence of a material uncertainty and having considered
the possible management actions as noted above, are of the view that the Group is a
going concern and will be able to meet its debts as and when they fall due for a period of
at least 12 months from the date of signing these accounts.
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 9.
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.
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 15 to the
financial statements.
Pension costs
The Group operates a defined contribution pension scheme and makes contributions to its
employees in adherence with its auto-enrolment obligations. These contributions are
Page 17
Directors’ report
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. The cost to the Group of £894,000 (2022:
£1,107,000) is charged to the income statement as incurred after consideration of the
criteria for capitalisation under UK-adopted International Accounting Standards.
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 in respect of the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements
in accordance with applicable law and regulation. 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 UK-adopted International
Accounting Standards and Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland”, and applicable law). 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 company and of the profit or loss of the group and
company for that period. In preparing the financial statements, the directors are required
to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
state whether applicable IFRSs as adopted by the United Kingdom have been
followed for the group financial statements and United Kingdom Accounting
Standards, comprising FRS 102, have been followed for the company financial
statements, subject to any material departures disclosed and explained in the
financial statements;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the group and company will continue in business.
The Directors are also responsible for safeguarding the assets of the group and company
and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the group and company's transactions and disclose with reasonable
accuracy at any time the financial position of the group and company and enable them to
ensure that the financial statements comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Page 18
Directors’ report
Directors' confirmations
In the case of each Director in office at the date the Directors’ Report is approved:
•
•
so far as the director is aware, there is no relevant audit information of which the
group and company’s auditors are unaware; and
they have taken all the steps that they ought to have taken as a director in order to
make themselves aware of any relevant audit information and to establish that the
group and company’s auditors are aware of that information.
Annual General Meeting
The date for the next AGM of the Company will be announced in due course.
Independent auditors
Saffery LLP, have indicated their willingness to continue in office and a resolution
proposing that they be reappointed as independent auditors and authorising the Directors
to fix their remuneration will be proposed at the Annual General Meeting.
On behalf of the Board
Jeremy Fenn
Chairman
19 June 2024
Page 19
Independent auditors’ report to the
members of Mobile Tornado Group plc
Opinion
We have audited the financial statements of Mobile Tornado Group Plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which
comprise Consolidated income statement, Consolidated statement of comprehensive
income, Consolidated statement of financial position and Company balance sheet,
Consolidated and Company statement of changes in equity, Consolidated statement of
cash flows, and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards. The financial reporting framework
that has been applied in the preparation of the Parent Company financial statements is
applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial
Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice).
In our opinion the financial statements:
•
•
•
•
give a true and fair view of the state of affairs of the group and of the parent
company as at 31 December 2023 and of the group’s loss for the year then
ended;
the group financial statements have been properly prepared in accordance with
UK-adopted International Accounting Standards,
the
requirements of the Companies Act 2006;
in conformity with
the parent 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We are independent of the group and the parent company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty relating to going concern – Group and Company
As described in note 1.2 to the Group financial statements and note 3.2 to the Company
financial statements, the Group and Company have a loan of £2,090,000 which is
repayable on demand, and redeemable preference shares of £8,550,000 due on 31
December 2024. Both are due to the majority shareholder, Holf Investments Limited. The
going concern assumption depends upon the repayment of these balances being deferred
for at least 12 months from the date of signing the financial statements.
Holf Investments Limited has confirmed its willingness to extend the redemption date of
the preference shares and not to demand repayment of the loan for at least 12 months
from the date of signing the financial statements. We do not believe this confirmation is
legally binding but it indicates the majority shareholder’s intention. The majority
shareholder has in prior years provided similar support.
Page 20
Independent auditors’ report to the
members of Mobile Tornado Group plc
There is also £2,675,000 of deferred consideration payable at 31 December 2023, of which
£1,906,000 is disclosed as due within one year. An agreed amount is payable each month
relating to this payable, and is included in the group’s forecast, but the going concern
assumption depends on £2,675,000 of the balance being deferred for at least the next 12
months consistent with historic arrangements.
Further, the trading position of the group is such that the ongoing costs are currently not
covered by recurring revenue. The cash flow forecasts include assumptions regarding non-
recurring revenue which is needed to meet the current cost base. In the event that these
revenues do not materialise the group has the ability to make significant cost savings
and/or could request additional support from the majority shareholder.
These conditions indicate the existence of a material uncertainty, which may cast
significant doubt on the Group’s and Company’s ability to continue as a going concern. Our
opinion is not modified in respect of the matter.
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the group and company’s ability to continue
to adopt the going concern basis of accounting included:
•
•
•
•
•
•
obtaining and reviewing the cashflow forecasts prepared by management;
testing the mathematical accuracy of those forecasts and agreeing to current cash
balances;
considering the outcome of previous forecasts to assess management’s ability to
accurately assess the timing and extent of the significant cash flows;
reviewing the assumptions in the cash flow forecasts and sensitising projected
revenues and operating expenses under a range of scenarios taking into account
the possibility of mitigating actions where revenues are less than those forecast;
discussing post balance sheet events with the Directors to assess their impact on
the going concern assumption including reviewing the post year end cash balances
compared to forecast positions;
considering the level of headroom that exists on the Group’s currently available
facilities.
• We also obtained and reviewed the confirmation that the Group has received from
its majority shareholder, and assessed the ability of the shareholder to provide
that support.
Our responsibilities and the responsibilities of the directors with respect to going concern
are described in the relevant sections of this report.
Our approach to the audit
We conducted our audit in accordance with International Standards on Auditing (ISAs) (UK
and Ireland). Our responsibilities under those standards are further described in the
‘Auditor’s Responsibilities for the audit of the financial statements’ section of our report.
We tailored the scope of our audit to ensure that we obtained sufficient evidence to
support our opinion on the financial statements as a whole, taking into account the
structure of the Group and the Company, the accounting processes and controls, and the
industry in which they operate. As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the Directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain.
Page 21
Independent auditors’ report to the
members of Mobile Tornado Group plc
The Group consists of the Company, incorporated and operating within the UK, and its
subsidiary, located in Israel. A full scope audit of the UK Company has been performed by
the Group engagement team. The subsidiary company is not considered a significant
component of the Group as it contributes no revenue and less than 1% of the Group’s
losses before tax. Analytical procedures and substantive procedures were performed over
this subsidiary by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect on the overall audit strategy, the
allocation of resources in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Key Audit Matter
How our scope addressed this matter
Revenue recognition (Group and
Company)
The Group has various revenue streams
and bespoke contracts with customers. Due
to the varying nature of the contracts there
is a risk that revenue has not been
recognised correctly in accordance with the
requirements of IFRS 15 Revenue from
Contracts with Customers.
Due to the significance of the revenue
streams to the financial statements this has
been identified as a key audit matter.
Our audit procedures included the following:
• We have gained a
the
thorough
understanding
revenue
of
streams and associated performance
obligations including obtaining and
reviewing contractual terms;
• We have substantively tested all
revenue streams on a sample basis
by reference to contracts, license
usage statements, bank statements,
and third-party stock movement
reports;
• We have reviewed the revenue
policies
recognition
adopted for each revenue stream
against the requirements of IFRS
15;
accounting
• We have reviewed the revenue
financial
in
the
disclosures
statements
requirements of IFRS.
the
against
Based on the work performed, we believe
that the Group and Company financial
statements are not materially misstated in
relation to the recognition of revenue.
Carrying value of goodwill (Company)
Our audit procedures included the following:
Goodwill was recognised in the Company on
31 October 2009 when the trade and assets
of a wholly owned subsidiary were
transferred to Mobile Tornado Group Plc.
Given that the Company continues to be
loss making there is a risk that goodwill is
• We
reviewed
the
prepared
impairment
assessment
by
management, including value in use
the
calculations
for
goodwill.
We
to
mathematical accuracy and
in support of
checked
Page 22
Independent auditors’ report to the
members of Mobile Tornado Group plc
impaired.
Due to the significance of the goodwill
balance to the company financial
statements and the high level of estimation
uncertainty attached to management’s
assessment of the recoverable amount this
is considered to be a key audit matter.
Recoverability of trade receivables
(Group and company)
As referred to in note 10, the Group has an
overdue receivable of £694,000 which
relates to one customer, against which a
provision of £51,000 has been made. A
repayment plan is in place and has been
adhered to during the year, however there
remains estimation uncertainty in the level
of provision required.
Due to the significance of the receivable to
the financial statements and the high
degree of estimation uncertainty this has
been identified as a key audit matter.
ensure the methodology applied by
management was consistent with
the requirements of IAS 36;
• We challenged
considered
the assumptions
made in the impairment model, in
particular the revenue growth rates,
and
historical
accuracy of management’s forecasts
and we also performed sensitivity
analysis on the key assumptions
used in management’s model;
the
• We reviewed substantive evidence
to support the forecast and the
assumptions used and considered
whether the information gathered
was consistent with findings from
other areas of our audit.
• We assessed
the discount rate
applied in the model; and
• We assessed whether an impairment
would be required if reasonably
possible changes in the discount
rate and other key assumptions
occurred.
Based on the work performed, we believe it
is reasonable that there is no impairment of
goodwill in the Company financial
statements.
Our audit procedures included the following:
• We have reviewed current financial
the
available
information
overdue trade receivable;
for
• We have considered post year end
receipts compared to the repayment
plan; and
• We have reviewed the impairment
model prepared by management
the
considered whether
and
assumptions are reasonable and in
accordance with IFRS 9.
Based on the work performed, we believe
the level of provision against trade
receivables in the Group and Company
financial statements is reasonable.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We apply the
concept of materiality in planning and performing our audit, in evaluating the effect of any
Page 23
Independent auditors’ report to the
members of Mobile Tornado Group plc
identified misstatements and in forming our opinion. Our overall objective as auditor is to
obtain reasonable assurance that the financial statements as a whole are free from
material misstatement, whether due to fraud or error. We consider a misstatement to be
material where it could reasonably be expected to influence the economic decisions of the
users of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for
materiality, including the overall group materiality for the consolidated financial statements
as a whole as set out below. These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements, if any, both individually and in aggregate on
the financial statements as a whole.
Overall Group and Company materiality was set at £45,000 (2022: £45,000) based on 2%
of the expected level of turnover for the year. We have applied this benchmark based on
our analysis of the information needs of the stakeholders and other users of the group
financial statements. Performance materiality for the Group and Company was set at 75%
of materiality. Our triviality level was set at £2,000 (2022: £2,000), which is 5% of
planning materiality, and any uncorrected audit differences below this level were not
reported to management, unless warranted under qualitative grounds.
Other information
The other information comprises the information included in the annual report, other than
the financial statements and our auditor’s report thereon. The directors are responsible for
the other information. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the
audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material misstatement of this
other information we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
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; and
the Strategic Report and the Directors’ Report have been prepared in accordance
with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and
their environment obtained in the course of the audit, we have not identified material
misstatements in the Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
Page 24
Independent auditors’ report to the
members of Mobile Tornado Group plc
•
•
•
•
adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not visited
by us; or
the parent company financial statements are not in agreement with the accounting
records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on [page x],
the directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the group and parent
company financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The specific procedures for this
engagement and the extent to which these are capable of detecting irregularities, including
fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to
material misstatement and how fraud might occur, including through discussions with the
directors, discussions within our audit team planning meeting, updating our record of
internal controls and ensuring these controls operated as intended. We evaluated possible
incentives and opportunities for fraudulent manipulation of the financial statements. We
identified laws and regulations that are of significance in the context of the group and
parent company by discussions with directors and by updating our understanding of the
sector in which the group and parent company operate.
Laws and regulations of direct significance in the context of the group and parent company
include The Companies Act 2006, the AIM Rules for Companies and UK Tax legislation.
Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our
audit procedures on the related financial statement items including a review of group and
Page 25
page 18
Independent auditors’ report to the
members of Mobile Tornado Group plc
parent company financial statement disclosures. We reviewed the parent company’s
records of breaches of laws and regulations, minutes of meetings and correspondence with
relevant authorities to identify potential material misstatements arising. We discussed the
parent company’s policies and procedures for compliance with laws and regulations with
members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention
to the key areas which might involve non-compliance with laws and regulations or fraud.
We enquired of management whether they were aware of any instances of non-compliance
with laws and regulations or knowledge of any actual, suspected or alleged fraud. We
addressed the risk of fraud through management override of controls by testing the
appropriateness of journal entries and identifying any significant transactions that were
unusual or outside the normal course of business. We assessed whether judgements made
in making accounting estimates gave rise to a possible indication of management bias. At
the completion stage of the audit, the engagement partner’s review included ensuring that
the team had approached their work with appropriate professional scepticism and thus the
capacity to identify non-compliance with laws and regulations and fraud.
There are inherent limitations in the audit procedures described above and the further
removed non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely we would become aware of it. Also, the
risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the parent company’s members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken
so that we might state to the parent company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the
parent company and the parent company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Jonathan Davis (Senior Statutory Auditor)
for and on behalf of Saffery LLP
Chartered Accountants
Statutory Auditors
Mitre House
North Park Road
Harrogate
HG1 5RX
19 June 2024
Page 26
Consolidated income statement
For the year ended 31 December 2023
Consolidated statement of comprehensive income
For the year ended 31 December 2023
The accompanying accounting policies and notes form an integral part of these financial
statements.
Page 27
20232022Note£'000£'000Continuing operationsRevenue22,2662,279Cost of sales(186)(56)Gross profit2,0802,223Operating expensesAdministrative expenses(2,328)(2,507)Exchange differences75(227)Depreciation and amortisation expense(120)(212)Total operating expenses(2,373)(2,946)Group operating loss before exchange differences,depreciation and amortisation expense(248)(284)Group operating loss3(293)(723)Finance costs4(779)(696)Loss before tax(1,072)(1,419)Income tax credit58037Loss for the year(992)(1,382)Loss per share (pence)Basic and diluted6(0.24) (0.36) 20232022£'000£'000Loss for the year(992)(1,382)Other comprehensive gain/(loss)Item that will subsequently be reclassifiedto profit or loss:Exchange differences on translationof foreign operations28(61)Total comprehensive loss for the year(964)(1,443)Attributable to:Equity holders of the parent(964)(1,443)
Consolidated statement of financial position
As at 31 December 2023
The financial statements on pages 27 to 58 were approved by the Board of Directors on 19
June 2024 and were signed on its behalf by:
Jeremy Fenn
Chairman
19 June 2024
Company Number: 5136300
Page 28
20232022Note£'000£'000AssetsNon-current assetsProperty, plant and equipment7135155Right-of-use assets8250350385505Current assetsTrade and other receivables91,3451,414Inventories101325Cash and cash equivalents111861451,5441,584LiabilitiesCurrent liabilitiesTrade and other payables12(5,376)(5,191)Borrowings13(10,840)(10,558)Lease liabilities13(110)(105)Net current liabilities(14,782)(14,270)Non-current liabilitiesTrade and other payables12(769)(1,076)Borrowings13(18)(27)Lease liabilities13(155)(258)(942)(1,361)Net liabilities(15,339)(15,126)Equity attributable to the owners of the parentShare capital148,3547,595Share premium1415,79715,797Reverse acquisition reserve(7,620)(7,620)Merger reserve10,93810,938Foreign currency translation reserve(2,242)(2,270)Accumulated losses(40,566)(39,566)Total equity(15,339)(15,126)
Consolidated statement of changes in equity
For the year ended 31 December 2023
The accompanying accounting policies and notes form an integral part of these financial
statements.
Page 29
ShareShareReverse acquisitionMergerForeign currency translationAccumulatedTotalcapitalpremiumreservereservereserveLossesequity£'000£'000£'000£'000£'000£'000£'000Balance at 1 January 20227,595 15,797 (7,620) 10,938 (2,209) (38,196) (13,695) Loss for the year- - - - - (1,382)(1,382) Exchange differences on translationof foreign operations- - - - (61) - (61) Total comprehensive loss for the year- - - - (61) (1,382) (1,443) Equity settled share-based payments- - - - - 12 12 Balance at 31 December 20227,595 15,797 (7,620) 10,938 (2,270) (39,566) (15,126) ShareShareReverse acquisitionMergerForeign currency translationAccumulatedTotalcapitalpremiumreservereservereserveLossesequity£'000£'000£'000£'000£'000£'000£'000Balance at 1 January 20237,595 15,797 (7,620) 10,938 (2,270) (39,566) (15,126) Loss for the year- - - - - (992)(992) Exchange differences on translationof foreign operations- - - - 28 - 28 Total comprehensive loss for the year- - - - 28 (992) (964) Issue of share capital759 - - - - (10) 749 Equity settled share-based payments- - - - - 2 2 Balance at 31 December 20238,354 15,797 (7,620) 10,938 (2,242) (40,566) (15,339)
Consolidated statement of cash flows
For the year ended 31 December 2023
The accompanying accounting policies and notes form an integral part of these financial
statements.
Page 30
20232022Note£'000£'000Operating activitiesCash used in operations16(129) (173) Tax received60 238 Interest paid- 9 Net cash (used in)/from operating activities(69) 74 Investing activitiesPurchase of property, plant & equipment(7) (60) Net cash used in investing activities(7) (60) Financing activitiesIssue of ordinary share capital500- Share issue costs(10)- Receipt of borrowings13- 250Repayment of borrowings13(260)(10)IFRS 16 leases (110)(180) Net cash generated from financing activities12060Effects of exchange rates on cashand cash equivalents(3)6Net increase in cash andcash equivalents in the year4180Cash and cash equivalents at beginning of year14565Cash and cash equivalents at end of year186145
Notes to the financial statements
For the year ended 31 December 2023
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 limited by shares which is listed on the
Alternative Investment Market and incorporated and domiciled in England within 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 UK-adopted
International Accounting Standards. 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.
Going concern
In preparing the consolidated financial statements the Directors must satisfy themselves
that it is reasonable to adopt the going concern basis.
When determining the adoption of this approach, the Directors have considered a wide
range of information relating to present and future conditions, including the current state
of the Balance Sheet, that support offered by our principal shareholder Holf Investments
Ltd, who have agreed not to call on existing loans and borrowings totaling £10,640,000,
together with the existing £500,000 working capital facility with Intechnology plc. Further
consideration has been given to future projections, cash flow forecasts, access to funding,
ability to successfully secure
additional investment, available mitigating actions and the medium-term strategy of the
business.
The Group is dependent on its ability to meet its cash flow forecasts. Within those
forecasts the Group has included a number of significant payments and receipts based on
its best estimate but, as with all forecasts, there does exist some uncertainty as to the
timing and size of those payments and receipts. In particular, the forecasts assume the
ongoing deferral and phased payment of some of the Group’s creditors, including a
contingent consideration balance of £2,675,000, (as disclosed in note 12 to the financial
statements), and the continuation at the current level of recurring revenue and a
significant increase in the level of non-recurring revenues. In the event that some or all of
these receipts are delayed, deferred or reduced, or payments not deferred, management
has considered the actions that it would need to take to conserve cash. These actions
would include significant cost savings (principally payroll based) and/or seeking additional
funding from its shareholders, for which there is currently no shareholder commitment
requested. These conditions, together with the other matters explained in note 1 to the
financial statements, indicate the existence of a material uncertainty which may cast
significant doubt about the Group’s ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group was unable to
continue as a going concern.
Page 31
Notes to the financial statements
For the year ended 31 December 2023
The Directors, whilst noting the existence of a material uncertainty and having considered
the possible management actions as noted above, are of the view that the Group is a
going concern and will be able to meet its debts as and when they fall due for a period of
at least 12 months from the date of signing these accounts.
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:
Contingent consideration – payments are dependent on estimates of future license sales
revenues (note 13).
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.
Details of these judgements made are provided in accounting policy 1.15.
Satisfaction of performance obligations - The Group is required to assess each of its
contracts with customers to determine whether performance obligations are satisfied over
time or at a point in time in order to determine the appropriate method for recognising
revenue.
1.3
Basis of consolidation
The Group financial statements consolidate those of the Company and its subsidiary
undertakings at 31 December 2023. 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.
1.4
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.
Page 32
Notes to the financial statements
For the year ended 31 December 2023
1.5
Revenue recognition
The Group recognises revenue from contracts with customers based on a five-step model
as set out in IFRS 15:
Step 1. Identify contract(s) with a customer: A contract is defined as an
agreement between two or more parties that creates enforceable
rights and obligations and sets out the criteria for every contract
that must be met.
Step 2. Identify performance obligations in the contract: A performance
obligation is a promise in a contract with a customer to transfer a good
or service to the customer.
Step 3. Determine the transaction price: The transaction price is the amount of
consideration to which the Group expects to be entitled in exchange for
transferring promised goods or services to a customer, excluding amounts
collected on behalf of third parties.
Step 4.Allocate the transaction price to the performance obligations in the contract:
For a contract that has more than one performance obligation, the Group
allocates the transaction price to each performance obligation in an amount
that depicts the amount of consideration to which the Group expects to be
entitled in exchange for satisfying each performance obligation.
Step 5. Recognise revenue when (or as) the Group satisfies a performance obligation.
The Group recognises revenue from the following sources: sale of licences, services and
goods, excluding inter-company sales and value-added taxes. Revenue is measured based
on the consideration to which the Group expects to be entitled in a contract with a
customer and excludes amounts collected on behalf of third parties. The Group recognises
revenue when it transfers control of a product or service to a customer.
Payment for service fees is not due from the customer until the services are complete and
therefore a contract asset is recognised over the period in which the services are
performed representing the entity’s right to consideration for the services performed to
date.
The Group provides certain warranties on goods sold. In the event that goods supplied
have a defect within the warranty terms offered, the Group has an obligation to make good
such defect.
License fees
License fees comprise:
Recurring monthly license fee – represents a license fee with a duration of one month and
is recognised at the time the license is sold and delivered to the customer, when at such
point our performance obligations have been materially fulfilled.
Capex license fee – represents a license fee for a period greater than one month.
Contracted fees of this nature are recognised in full when the license is sold and delivered
to the customer, when at such point, our performance obligations have been materially
fulfilled. If performance obligations are not fulfilled, a contract liability is recognised at the
time of the initial sales transaction.
Page 33
Notes to the financial statements
For the year ended 31 December 2023
Service fees
Service fees comprise:
Support & Maintenance - recognised on a straight-line basis over the contractual service
period. The directors have assessed that the stage of completion determined as the
proportion of the total time of the service contract that has elapsed at the end of the
reporting period is an appropriate measure of progress towards complete satisfaction of
these performance obligations under IFRS15 Revenue from Contracts with Customers.
Installation and other professional services - recognised when these have been provided to
customer per our contractual deliverables. Where a service contract is delivered over a
timeframe, the service fee will be part recognised based on a stage-of-completion
assessment.
Hardware sales
Revenue is recognised when control of the goods has transferred, being when the goods
have been shipped to the customer’s specific location (delivery).
1.6
Interest
Interest is recognised on an accruals basis using the effective interest method.
1.7
Operating expenses
Operating expenses are recognised in the income statement upon utilisation of the service
or as incurred.
1.8
Employee benefits
Pension obligations
The Group operates a defined contribution pension scheme and makes contributions to its
employees in adherence with its auto-enrolment obligations. 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.
1.9
Foreign currency translation
The consolidated financial statements are presented in UK Sterling (GBP £000). Sterling is
also the functional currency of the Company.
Page 34
Notes to the financial statements
For the year ended 31 December 2023
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 re-measurement 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.
1.10 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.
1.11 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 loss
differs from net 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. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or the asset is realised based
on tax laws and rates that have been enacted or substantively enacted at the reporting
Date
Page 35
Notes to the financial statements
For the year ended 31 December 2023
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.
1.12 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
Computer equipment
Leasehold improvement
3-15 years
3-5 years
3-15 years
Reviews are made annually of the estimated remaining lives and residual values of all
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.
In respect of leasehold improvements and estimating their expected useful lives,
consideration is given to the length of existing lease term remaining, together with an
assessment of the suitability of the current property continuing to serve the Company’s
needs beyond this current term and therefore the likelihood of a renewal.
1.13
IFRS 16 Leases
The right-of-use assets comprise the initial measurement of the corresponding lease
liability, lease payments made at or before the commencement day and any initial direct
costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of
the underlying asset. If a lease transfers ownerhship of the underlying asset or the cost of
the right-of-use asset reflects that the Group expects to exercise a purchase option, the
related right-of-use asset is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement of the lease.
The right-of-use assets are included in the ‘right-of-use asset’ line of the Consolidated
Statement of Financial position.
The Group applies IAS36 to determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss as per note 1.12.
1.14
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.
Page 36
Notes to the financial statements
For the year ended 31 December 2023
1.15
Intangible assets
Research and development
Research expenditure, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is charged to the income statement 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 the income statement 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; and
▪ 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. The useful
economic life of assets is assessed by reference to both previous product launches of the
Group and also comparable launches within similar industries. 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 the income statement in operating expenses.
1.16 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.
▪ “Accumulated losses” represents retained losses.
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.
1.17 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 maturities of three months or less from inception and which are
subject to an insignificant risk of changes in value.
Page 37
Notes to the financial statements
For the year ended 31 December 2023
1.18 Financial assets
Initial recognition and measurement
In accordance with IFRS9, ‘Financial Instruments’ the Group has classified its financial
assets as ‘Financial assets at amortised cost’. The Group determines the classification of its
financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of assets not at fair
value through profit or loss, transaction costs that are attributable to the acquisition of the
financial asset.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as
described below:
a. Financial assets carried at amortised cost
This category applies to trade and other receivables due from customers in the normal
course of business. These assets are held at amortised cost.
The group classifies its financial assets as at amortised cost only if both of the following
criteria are met:
(i)
the asset is held within a business model with the objective of collecting the
contractual cash flows; and
(ii) the contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal outstanding.
Financial assets at amortised cost comprise current trade and other receivables due from
customers in the normal course of business and cash and cash equivalents.
The Group does not hold any material financial assets at fair value through other
comprehensive income or at fair value through profit or loss.
The Group does not hold any derivatives and does not undertake any hedging activities.
Trade receivables are initially recognised at their transaction price. The group does not
expect to have any contracts where the period between the transfer of the promised goods
or services to the customer and payment by the customer exceeds one year. As a
consequence, the group does not adjust any of the transaction prices for the time value of
money. Other financial assets are recognised initially at fair value plus transaction costs
that are directly attributable to the acquisition of the financial asset.
Trade and other receivables are measured at amortised cost less provision for expected
credit losses.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses associated with
its financial assets measured at amortised cost. The Group applies the simplified approach
to providing for expected credit losses prescribed by IFRS 9, which permits the use of the
lifetime expected loss provision for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due.
For other financial assets at amortised cost, the Group determines whether there has been
a significant increase in credit risk since initial recognition. The Group recognises twelve
month expected credit losses if there has not been a significant increase in credit risk and
lifetime expected credit losses if there has been a significant increase in credit risk.
Page 38
Notes to the financial statements
For the year ended 31 December 2023
Expected credit losses incorporate forward looking information such as general economic
conditions, take into account the time value of money when there is a significant financing
component and are based on days past due; the external credit ratings of its customers;
and significant changes in the expected performance and behaviour of the borrower.
Financial assets are written off when there is no reasonable expectation of recovery.
Where receivables have been written off, the Group continues to engage in enforcement
activity to attempt to recover the receivable due. Where recoveries are made, these are
recognised in the Statement of Comprehensive Income.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of
similar financial assets) is derecognised when:
•
•
The rights to receive cash flows from the asset have expired, or
The Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material delay
to a third party under a ‘pass-through’ arrangement, and either (a) the Group has
transferred substantially all the risks and rewards of the asset, or (b) the Group
has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the assets.
1.19 Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables and previously included
loans and other borrowings including Directors loans.
Subsequent measurement
After initial recognition, interest bearing loans and borrowings are subsequently measured
at amortised cost using the effective interest rate method (EIR). Gains and losses are
recognised in the Statement of Comprehensive Income when the liabilities are
derecognised as well as through the (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortisation is included in
finance costs in the Statement of Comprehensive Income.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the Statement of Comprehensive Income.
Page 39
Notes to the financial statements
For the year ended 31 December 2023
1.20 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.
1.21 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:
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
•
• Classification of Liabilities as Current or Non-Current, Non-current Liabilities with
Covenants: amendments to IAS 1
• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
The Directors are evaluating the impact that these standards will have on the financial
statements of Group.
At the date of authorisation of these financial statements, the following standards and
interpretations relevant to the Group and which have not been applied in these financial
statements, have not been endorsed for use in the UK and will not be adopted until such
time as endorsement is confirmed:
Standard
Lack of Exchangeability (Amendments to IAS 21)
IFRS 18 – Presentation and Disclosure in Financial
Statements
IFRS 19 – Subsidiaries without Public Accountability:
Disclosures
Effective date, annual
period beginning on or
after
1 January 2025
1 January 2027
1 January 2027
1.22 New standards and amendments
During the financial year, the Group has adopted the following new IFRSs (including
amendments thereto) and IFRIC interpretations, that became effective for the first time.
IFRS 17 - Insurance Contracts
•
• Amendments to IFRS 17 - Insurance Contracts; and Extension of the Temporary
Exemption from Applying IFRS 9 (Amendments to IFRS 4 Insurance Contracts)
• Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial
Statements and IFRS Practice Statement 2 Making Materiality Judgements)
• Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies,
Changes in Accounting Estimates and Errors)
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12 Income Taxes)
International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)
•
Their adoption has not had any material impact on the disclosures or amounts reported in
the financial statements.
Page 40
Notes to the financial statements
For the year ended 31 December 2023
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
2023 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.
Revenue by category
Revenue is reported by geographical location of customers. Non-current assets are
reported by geographical location of assets.
Of the total revenue of the Group, three customers each represented revenue greater than
10% of this total – these being 31% or £702,000 (2022: 30% or £685,000), 26% or
£580,000 (2022: 29% or £656,000) and 11% or £242,000 (2022: 17% or £382,000)
respectively.
Page 41
20232022£'000£'000License fees1,9432,014Hardware & software273178Professional services- 26Support & Maintenance5061Total2,2662,27920232022£'000£'000Recurring1,8521,969Non-recurring414310Total2,2662,2792023202320222022Non-currentNon-currentRevenueassetsRevenueassets£'000£'000£'000£'000UK27- 31- Europe165- 99- North America58- 65- South America1,283- 1,341- Israel483385351505Africa242- 382- Asia/Pacific8- 10- Total2,2663852,279505
Notes to the financial statements
For the year ended 31 December 2023
3
Group operating loss
Auditors’ remuneration
During the year the Group obtained the following services from the Group’s auditors as
detailed below:
4
Finance costs
5
Income tax credit
(a) Analysis of credit for the year
Page 42
20232022£'000£'000Group operating loss before taxation is stated aftercharging/(crediting):Staff costs (note 17)1,789 2,008 Depreciation of owned property, plant and equipment (note 7)20 42 Depreciation of leased right-of-use assets (note 8)100 169 Research and development expenditure894 1,107 Net exchange (gain)/loss(75) 227 20232022£'000£'000Fees payable to the Group's auditors for the auditof the Company's financial statements393720232022£'000£'000Finance charge on preference shares(750) (646) Finance charge on loans(16) (35) Finance charge on leases(13) (15) Total finance costs(779)(696)20232022£'000£'000United Kingdom current taxCurrent year research & development tax credit claimed(138) (60) Prior year research & development tax credit claimed- (42) Withholding tax on overseas sales receipts58 66 Total credit for the year(80) (37)
Notes to the financial statements
For the year ended 31 December 2023
(b) Factors affecting the tax credit for the year
Deferred tax:
At 31 December 2023 the Group had accumulated tax losses of £30,355,000 (31
December 2022: £30,355,000) 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.
6
Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders
of £992,000 (2022: £1,382,000) by the weighted average number of ordinary shares in
issue during the year of 412,101,271 (2022: 379,744,923).
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.
Page 43
20232022£'000£'000Loss before tax(1,072) (1,419) At standard rate of corporation tax of 19.00% (2022: 19.00%)(204) (270) Effects of:Expenses not deductible for tax purposes148 132 Withholding tax on overseas sales receipts58 66 Paye tax credit cap- 100Other permanent differences56 37 Current year research & development tax credit claimed(138) (60) Prior year research & development tax credit claimed- (42) Total credit for the year(80) (37) LossLossLossLossper shareper share£'000pence£'000penceLoss attributable toordinary shareholders(992) (0.24) (1,382) (0.36) Basic and diluted20232022Basic and diluted
Notes to the financial statements
For the year ended 31 December 2023
7
Property, plant and equipment
Page 44
OfficeComputerLeaseholdequipmentequipmentimprovementTotal£'000£'000£'000£'000CostAt 1 January 2022748191221,015Additions- 164662Reclassification18(20)97Exchange adjustments3671558At 31 December 20221298221911,142Additions- - 77Exchange adjustments(4)(18)(9)(31)At 31 December 20231268041881,118Accumulated depreciationAt 1 January 20223781244893Charge for the year- 43- 43Reclassification52(49)04Exchange adjustments346747At 31 December 202212481250987Charge for the year- - 2020Exchange adjustments(3)(17)(3)(23)At 31 December 202312179567983Net book amount at 31 December 202359121135Net book amount at 31 December 202259141155
Notes to the financial statements
For the year ended 31 December 2023
8
Right-of-use assets
The above asset relates to a property lease. This lease agreement commenced on 1 July
2022 and has a four-year term, with a break clause after two years. The above asset is
calculated on the assumption that the Group does not trigger the break clause available to
it.
9
Trade and other receivables
The Group had contract assets within Prepayments and contract assets of £157,000
(2022: £156,000)
Included within other receivables is a tax credit due of £138,000 (2022: £60,000)
Page 45
LeaseholdPropertyVehiclesTotal£'000£'000£'000CostAt 1 January 2022659137796Additions436- 436At 31 December 2022 & 31 December 20231,0951371,232Accumulated depreciationAt 1 January 2022594119713Charge for the year15118169At 31 December 2022745137882Charge for the year100- 100At 31 December 2023845137982Net book amount at 31 December 20232500250Net book amount at 31 December 2022350035020232022£'000£'000Trade receivables986 1,120 Less: provision for impairment of trade receivables(73) (70) Trade receivables - net913 1,050 Other receivables180 103 Prepayments and contract assets252 261 1,345 1,414 Current portion1,345 1,414
Notes to the financial statements
For the year ended 31 December 2023
The age of the Group’s year end overdue receivables is as follows:
Of the overdue receivables, £694,000 (2022: £921,000) relates to one particular customer
against which a provision of £51,000 (2022: £51,000) has been made and which reflects
the Directors estimate of what amount the Company may forsake in return for accelerated
repayments against the remaining debt balance.
A formal repayment plan was agreed during the year and repayments per this agreement
are fully up to-date as of the date of signing these accounts. In parallel, an assessment of
this customer’s ability to pay has been made by reference to 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 further provision has been made.
The carrying amounts of the Group’s receivables are denominated in US 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.
Movement on the Group’s provision for impairment of receivables is as follows:
Page 46
20232022£'000£'000ImpairedLess than three months- - Three to six months- - Over six months73 70 73 70 Not impairedLess than three months53 99 Three to six months37 35 Over six months644 810 733 944 20232022£'000£'000At 1 January70 65 Provision for receivables impairment3 5 Receivables written off during the yearas uncollectable- - 73 70
Notes to the financial statements
For the year ended 31 December 2023
10
Inventories
The cost of inventories recognised as an expense and included within cost of sales
amounted to £177,000 (2022: £58,000).
11
Cash and cash equivalents
12
Trade and other payables
The contingent consideration arose on the purchase of intellectual property from Tersync
Limited in 2001 and represents a royalty payable on future sales of Push to Talk related
products by Mobile Tornado, payable in part as 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.
Page 47
20232022£'000£'000Hardware132520232022£'000£'000Cash at bank and in hand:-Sterling23 4 -US Dollar106 55 -Euro1 3 -New israel shekel56 83 186 145 20232022£'000£'000Trade payables943 878 Accruals299 340 Social security and other taxes89 86 Contract liabilities2,139 2,148 Contingent consideration2,675 2,815 6,145 6,267 Less non-current portion: contingent consideration(769) (1,076) Current portion5,376 5,191
Notes to the financial statements
For the year ended 31 December 2023
The split between current and non-current reflects the Group’s estimate of future sales and
the amount of royalty payment that would fall due within the next 12 months based on the
above terms.
The deferred income balance includes an amount of £2,061,000 (2022: £2,116,000)
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.
13
Borrowings, other financial liabilities and other financial assets
Maturity analysis
Other financial liabilities include Trade and Other payables, all of which have a maturity
profile of being due within 30 days
All preference shares are non-voting, non-convertible cumulative redeemable preference
shares. They are currently redeemable at par value on 31 December 2024, or, at the
Company’s discretion, at any earlier date and will accrue interest at a fixed rate of 10 per
cent. per annum. All preferences shares and accrued interest thereon are thus classified as
repayable in one year or less.
The nominal value of preference share indebtedness is £5,702,000 (31 December 2022:
£5,702,000) with the balance of £2,848,000 (31 December 2022: £2,356,000) comprising
unpaid coupon and accrued interest thereon.
Of the total loan balance of £2,090,000 provided by Holf Investments Ltd, £2,090,000 is
repayable on demand and thus classified as repayable in one year or less.
Page 48
20232022£'000£'000Preference shares8,550 8,058 Loans from related party undertakings2,281 2,490 Bank loans26 37 Lease liabilities265 363 Total borrowings11,122 10,948 Preference shares and loans20232022£'000£'000In one year or less10,840 10,558 Between one and two years10 10 Between two and five years7 17 Total10,857 10,585 Lease liabilities20232022£'000£'000In one year or less110 105 Between two and five years155 258 Total265 363
Notes to the financial statements
For the year ended 31 December 2023
Holf Investments Ltd has agreed not to demand repayment of all amounts due for
payment in one year or less, for a period of at least 12 months from the date of signing of
the financial statements. Further, Holf Investments Ltd has confirmed its willingness,
should the Group request, to extend the redemption date on these preference shares until
31 December 2025.
InTechnology plc provided the Group with a £500,000 loan facility (2022: £500,000). As at
31 December 2023, the balance on this facility was £150,000 (31 December 2022:
£400,000). On 24 March 2022, the terms of this facility were amended, increasing the
facility amount to £500,000 and extending the term by a further 12 months to 26
September 2023. On 22 September 2023, the term was extended to 26 September 2024.
Further details of the terms of this facility are provided within the related party note on
page 54.
The Group availed of a £50,000 bounce-back loan offered in 2020. This loan accrues
interest at a fixed rate of 2.5%. The balance of this loan at 31 December 2023 was
£26,000 (31 December 2022: £37,000).
The Group do not have any derivative financial liabilities at 31 December 2023 or 31
December 2022.
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 £186,000
(2022: £145,000) as follows:
The Sterling, US dollar and Euro financial assets relate to cash at bank. There are no fixed
rate financial assets (2022: £nil).
Page 49
20232022£'000£'000CurrencySterling23 4 US dollar106 55 Euro1 3 Israel shekel56 83 Total186 145 Floating rate
Notes to the financial statements
For the year ended 31 December 2023
Interest rate risk profile of financial liabilities
The interest rate profile of the financial liabilities of the Group is as follows:
Of the Loans from related party undertakings, £2,090,000 (31 December 2022:
£2,090,000) does not bear any interest. Further details of which can be found in note 20.
The unpaid coupon on preference share debt accrues interest at a rate of 3% above Bank
of England base rate.
Currency risk
The table below shows the extent to which the Group held monetary assets and liabilities
in currencies other than their local currency.
Foreign currency assets comprise cash, contract assets and trade receivables. Liabilities
comprise contract liabilities and trade payables.
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 £359,000 (2022: £341,000).
A 1% movement in interest rates would result in a charge or credit to profit and equity of
£28,000 (2022: £24,000).
Page 50
20232022£'000£'00010% preference shares classified as debt5,702 5,702 Loans from related party undertakings2,281 2,490 2.5% bank loan26 37 Total8,009 8,229 20232022£'000£'000Unpaid coupon on preference shares classified as debt2,848 2,356 Total2,848 2,356 Floating Fixed20232022£'000£'000Functional currency of operation: SterlingUS Dollar (net liabilities)(1,892) (1,648) Euro (net liabilities)(2,054) (2,102) Canadian Dollar net assets/(net liabilities)0 0 Total(3,946) (3,750)
Notes to the financial statements
For the year ended 31 December 2023
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. The Group has a £500,000 working capital facility available to
it and which supports the Group’s liquidity position. The provider of this facility has also
confirmed its willingness to extend the current period of the facility for a further period of
12 months if requested by the Group.
The Group undertakes significant discretionary expenditures under it’s control and which
could be tapered back on relatively short notice and therefore act as a support to the
management of liquidity within the Group.
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 year covered by the financial statements.
Page 51
Notes to the financial statements
For the year ended 31 December 2023
Summary of the Group’s financial assets and liabilities
The Directors consider that the fair value of financial assets and liabilities approximates to
the carrying value for both 2023 and 2022.
14
Share capital and share premium
The total authorised number of ordinary shares is 475 million (2022: 475 million) with a
par value of 2p per share (2022: 2p per share).
Non-voting preference shares – included in financial liabilities
All preference shares are non-voting, non-convertible cumulative redeemable preference
shares. They are currently redeemable at par value on 31 December 2024, or, at the
Company’s discretion, at any earlier date and will accrue interest at a fixed rate of 10 per
Page 52
20232022£'000£'000Current assets - financial assets at amortised costTrade and other receivables1,093 1,153 Cash and cash equivalents186 145 1,279 1,298 Current liabilities - held at amortised costTrade and other payables(3,149) (2,958) Preference shares(8,550) (8,058) Loans(2,290) (2,500) (13,989) (13,516) Non-current liabilities - held at amortised costTrade and other payables(769) (1,076) Loans(17) (27) (786) (1,103) Net financial assets and liabilities(13,496) (13,321) Number ofissued and fully paidShareSharesharescapitalpremiumTotal'000£'000£'000£'000At 1 January 2023379,745 7,595 15,797 23,392 Issue of shares37,974 759 - 759 As at 31 December 2023417,719 8,354 15,797 24,151 Number ofNominalsharesValue'000£'000As at 31 December 2022 and 202371,277 5,702
Notes to the financial statements
For the year ended 31 December 2023
cent. per annum. Unpaid dividends accrue interest at 3% above Bank of England base rate
until settled. Holf Investments Ltd has confirmed its willingness, should the Group request,
to extend the redemption date on these preference shares until 31 December 2025.
15
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:
Options were valued using the Black-Scholes option-pricing model.
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.
Page 53
ExerciseEarliestVestingExpiry date20232022price penceexerciseconditionName of scheme'000'000dateUK scheme200 200 6.018/06/18- 18/06/25Israel scheme500 2,500 2.016/05/19- 31/12/26Israel scheme1,350 3,350 4.004/11/19- 31/12/26Israel scheme1,450 4,450 6.515/06/20Group reports positive15/06/27annual EBITDAUK scheme3,200 3,200 6.515/06/20Group reports positive15/06/27annual EBITDAIsrael scheme1,100 1,250 5.009/01/22- 09/01/29UK scheme450 450 5.009/01/22- 09/01/29Israel scheme- 1,000 5.028/02/22- 28/02/29Israel scheme2,600 5,000 6.022/06/23- 22/06/30UK scheme500 500 6.022/06/23- 22/06/30Israel scheme6,100 - 2.008/08/26- 08/08/33UK scheme5,150 - 2.008/08/26- 08/08/33UK scheme3,000 - 5.008/08/26- 08/08/33Total25,600 21,900 Number of shares
Notes to the financial statements
For the year ended 31 December 2023
A reconciliation of option movements over the year to 31 December 2023 is shown below:
The closing mid-market share price on 7 June 2024 was 1.63 pence.
The weighted average remaining contractual life of the share options outstanding at 31
December 2023 was 7.4 years (31 December 2022: 5.5 years) at exercise prices ranging
from 2.0 pence to 6.0 pence. (31 December 2022: 2.0 pence to 7.5 pence).
Those options exercisable at 31 December 2023 are at exercise prices ranging from 2.0
pence to 6.0 pence. (31 December 2022: 2.0 pence to 7.5 pence)
The total charge for the year relating to employee share-based payment plans was £2,000
(2022: £12,000), all of which related to equity-settled share-based payment transactions.
16
Cash used in operations
Page 54
WeightedWeightedaverageaverageexerciseexerciseNumberpriceNumberprice'000pence'000penceOutstanding at 1 January21,900 5.327,950 5.6Granted14,250 2.8- 0.0Forfeited(10,550) 4.9(2,750) 5.9Expired- - (3,300) 7.5Outstanding at 31 December25,600 4.021,900 5.3Exercisable at 31 December11,350 5.716,400 5.12023202220232022£'000£'000Loss before taxation(1,072) (1,419) Adjustments for:Depreciation and amortisation120 212 Share-based payment charge2 12 Debt conversion to equity259 - Interest expense779 696 Changes in working capital:Decrease in inventories11 49 Decrease/(Increase) in trade and other receivables87 41 Increase/(Decrease) in trade and other payables(315) 236 Net cash used in operations(129) (173)
Notes to the financial statements
For the year ended 31 December 2023
Changes in liabilities arising from financing activities
For the year ended 31 December 2022
For the year ended 31 December 2023
Page 55
CashNewFinanceconversion2021flowsleaseschargeto equity2022£'000£'000£'000£'000£'000£'000Preference shares7,413 - - 646 - 8,059 Loans from related party undertakings2,240 250 - - - 2,490 Bank loans47 (10) - - - 37 Lease liabilities90 (180) 453 - - 363 Total liabilities from financing activities9,790 60 453 646 - 10,949 Cash and cash equivalents(65) (80) - - - (145) Net debt9,725 (19) 453 646 - 10,804 Non-cash changesCashNewFinanceconversion2022flowsleaseschargeto equity2023£'000£'000£'000£'000£'000£'000Preference shares8,059 - - 750 (259) 8,550 Loans from related party undertakings2,490 (250) - 41 - 2,281 Bank loans37 (11) - - - 26 Lease liabilities363 (98) - - - 265 Total liabilities from financing activities10,949 (359) - 791 (259) 11,122 Cash and cash equivalents(145) (41) - - - (186) Net debt10,804 (400) - 791 (259) 10,936 Non-cash changes
Notes to the financial statements
For the year ended 31 December 2023
17
Employee information
The average monthly number of persons (including Executive Directors) employed by the
Group during the year was:
Included in the table above are 26 persons that are contractors (2022: 33). 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:
Directors’ costs included within the above were:
18
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:
Peter Wilkinson is a shareholder and Director of Intechnology plc. In previous years,
Intechnology plc bought right of use licenses totalling €2,400,000 from Mobile Tornado
Group plc. During the year to 31 December 2023 the value of licenses brought into use
was €nil (year ended 31 December 2022; €nil). The balance of unused licenses as at 31
Page 56
20232022NumberNumberSales6 5 Product development & operations32 41 Finance & administration5 5 Total43 51 20232022£'000£'000Wages and salaries1,514 1,699 Social security costs86 82 Other pension costs102 117 Share-based payment charge2 12 Other benefits85 98 Total1,789 2,008 Benefits20232022in kindTotalTotal£'000£'000£'000£'000£'000Peter Wilkinson- - - - - Jeremy Fenn6 120 4 130 130 Avi Tooba35 - 11 46 176 Jonathan Freeland- 18 - 18 18 Aggregate emoluments41 138 15 194 324 SalaryFees
Notes to the financial statements
For the year ended 31 December 2023
December 2023 was €2,376,000 (31 December 2022; €2,376,000). This balance is
included in contract liabilities in the accounts.
On 10 November 2023 InTechnology plc transferred its entire holding of Mobile Tornado's
ordinary shares of 2p each to Holf Investments Ltd ("Holf"). Holf is 100% owned by Peter
Wilkinson and his family. In total, 205,988,314 Ordinary Shares have been transferred
from InTechnology to Holf for a total consideration of £5 million, equivalent to 2.43p per
Ordinary Share. Following this transfer, Peter Wilkinson has a total direct and indirect
beneficial interest in 244,134,455 Ordinary Shares, representing 58.44% of Mobile
Tornado's issued share capital.
On the same date, InTechnology plc also transferred a significant amount of Mobile
Tornado’s total indebtedness to Holf. This indebtedness comprises: £5.7 million of
redeemable preference shares; £2.7 million of accrued Preference Share coupon and
interest; and £2.8m of loan indebtedness, comprising historic short-term borrowings and
rent and services incurred under the services agreement. Following this transfer, all
interest accruing under the Preference Shares will accrue or be payable to Holf in
accordance with their existing terms. All other terms of the Preference Shares agreement
remain the same and as previously announced.
Mobile Tornado Group plc has bought goods and services totalling £nil from Holf
Investments Ltd in the year to 31 December 2023 (year ended 31 December 2022; £nil).
As at 31 December 2023, Mobile Tornado Group plc owed Holf Investments Ltd £719,000
(31 December 2021; £nil).
Holf Investments Ltd has provided loan finance to Mobile Tornado Group plc in the year
ended 31 December 2023 (year ended 31 December 2022; £nil). As at 31 December 2023,
Mobile Tornado Group plc owed Holf Investments Ltd £2,090,000 (31 December 2022;
£nil).
Holf Investments Ltd has provided preference share finance of £nil to Mobile Tornado
Group plc in the year ended 31 December 2023 (year ended 31 December 2022; £nil). As
at 31 December 2023, Mobile Tornado Group plc had total preference share indebtedness
to Holf Investments Ltd of £8,550,000 (31 December 2022; £nil).
On 26 September 2018, the Company entered into a revolving loan facility agreement with
InTechnology Plc which was for a period of two years from date entered into.
Subsequently on 23 September 2020, this was extended by a year and then on 24
September 2021 by a further year. On 24 March 2022, the terms of the facility were
amended, increasing the facility amount to £500,000 and extending the term by a further
12 months to 26 September 2023. On 22 September 2023, the term was extended to 26
September 2024.
Under the terms of the agreement, any new amounts drawn down by the Company
pursuant to the facility agreement will be subject to a 2% facility fee and will bear interest
at a rate of 10% per annum. The facility agreement allows for monies to be drawn down,
repaid and redrawn again in any manner and any number of times by the Company until
the agreement expires, however, any monies repaid and subsequently redrawn will not
incur a further facility fee. At the expiration date of the facility agreement, all monies shall
be repayable by the Company to InTechnology together with any facility fee and accrued
interest thereon.
During the year £250,000 was repaid (2022: £250,000 drawn down). As at 31 December
2023, Mobile Tornado Group plc owed InTechnology plc £150,000 (31 December 2022;
£400,000). Interest and facilities fees for the year amounted to £16,000 (year ended 31
December 2022; £34,000), of which £nil (year ended 31 December 2022; £9,000), was
paid during the year.
Page 57
Notes to the financial statements
For the year ended 31 December 2023
Payments to a third party, Mainstream Capital Partners LLP, are made in respect of the
services provided by Jeremy Fenn, Executive Chairman. As at 31 December 2023, Mobile
Tornado Group Plc owed £12,000 (31 December 2022: £3,000) to Mainstream Capital
Partners LLP.
The Group is controlled by Holf Investments Ltd (incorporated in the UK) which, as of
today’s date, owns 49.3% of the Company’s ordinary shares. The Group’s ultimate parent
and controlling party is Peter Wilkinson who has a total direct and indirect beneficial
interest in 58.44% of Mobile Tornado's issued share capital.
19
Investments
Details of the principal investments at 31 December 2023 in which the Company holds
more than 20% of the nominal value of ordinary share capital are as follows:
Country of
incorporation or
registration
Nature of
business
Group
proportion
held
Company
proportion
held
M.T. Labs
Limited
Israel
Sale of instant
communication
services
100%
100%
With registered address: 13 Amal street, Afek Industrial Park, Rosh Ha’ayin 4809249,
Israel
Page 58
Company balance sheet
As at 31 December 2023
The Company’s loss for the financial year was £1,557,000 (2022: £1,959,000 loss).
The financial statements on pages 59 to 70 were approved by the Board of Directors on 19
June 2024 and were signed on its behalf by:
Jeremy Fenn
Chairman
19 June 2024
Company Number: 5136300
The accompanying notes form an integral part of these financial statements.
Page 59
20232022Note£'000£'000Fixed assetsIntangible assets43,3073,883Tangible assets5- - 3,3073,883Current assetsDebtors71,8021,883Cash at bank and in hand130611,9321,944Creditors - amounts falling due within one year8(15,930)(15,396)Net current liabilities(13,998)(13,452)Total assets less current liabilities(10,691)(9,569)Creditors - amounts falling due after more than one year8(786)(1,103)Net liabilities(11,477)(10,672)Capital and reservesCalled up share capital98,3547,595Share premium account15,79715,797Merger reserve10,93810,938Accumulated losses(46,566)(45,002)Total shareholders' deficit(11,477)(10,672)
Company statement of changes in equity
For the year ended 31 December 2023
Page 60
Called up shareShare premiumMergerShare optionAccumulatedShareholders'capitalaccountreservereservelossesdeficit£'000£'000£'000£'000£'000£'000Balance at 1 January 20227,595 15,797 10,938 319 (43,375) (8,726) Equity settled share-based payments- - - 12 - 12 Issue of share capital- - - - - - Loss for the financial year- - - - (1,959)(1,959) Balance at 31 December 20227,595 15,797 10,938 331 (45,334) (10,671) Called up shareShare premiumMergerShare optionAccumulatedShareholders'capitalaccountreservereservelossesdeficit£'000£'000£'000£'000£'000£'000Balance at 1 January 20237,595 15,797 10,938 331 (45,334) (10,671) Equity settled share-based payments- - - 2 - 2 Issue of share capital759 - - - (10) 749 Loss for the financial year- - - - (1,557)(1,557) Balance at 31 December 20238,354 15,797 10,938 333 (46,901) (11,477)
Notes to the Company financial statements
For the year ended 31 December 2023
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 limited by shares which is listed on the
Alternative Investment Market and incorporated and domiciled in England within 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.
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.
The Company has taken advantage of the following exemptions in its individual financial
statements:
•
From preparing a statement of cashflows;
• Disclosure of related party transactions with and between wholly-owned
subsidiaries;
• Disclosures relating to financial instruments;
• Share based payment disclosure.
A description of each type of share-based payment arrangement that existed at any time
during the period, including the general terms and conditions of each arrangement, such
as vesting requirements, the maximum term of options granted, and the method of
settlement (e.g. whether in cash or equity) is provided in note 15 to the Group accounts.
3.2
Going concern
The Financial Statements are prepared on a going concern basis.
When determining the adoption of this approach, the Directors have considered a wide
range of information relating to present and future conditions, including the current state
Page 61
Notes to the Company financial statements
For the year ended 31 December 2023
of the Balance Sheet, that support offered by our principal shareholder Holf Investments
Ltd, who have agreed not to call on existing loans and borrowings totaling £10,640,000,
together with the existing £500,000 working capital facility with Intechnology plc. Further
consideration has been given to future projections, cash flow forecasts, access to funding,
ability to successfully secure additional investment, available mitigating actions and the
medium-term strategy of the business.
The Group is dependent on its ability to meet its cash flow forecasts. Within those
forecasts the Group has included a number of significant payments and receipts based on
its best estimate but, as with all forecasts, there does exist some uncertainty as to the
timing and size of those payments and receipts. In particular, the forecasts assume the
ongoing deferral and phased payment of some of the Group’s creditors, including a
contingent consideration balance of £2,675,000, (as disclosed in note 12 to the financial
statements), and the continuation at the current level of recurring revenue and a
significant increase in the level of non-recurring revenues. In the event that some or all of
these receipts are delayed, deferred or reduced, or payments not deferred, management
has considered the actions that it would need to take to conserve cash. These actions
would include significant cost savings (principally payroll based) and/or seeking additional
funding from its shareholders, for which there is currently no shareholder commitment
requested. These conditions, together with the other matters explained in note 1 to the
financial statements, indicate the existence of a material uncertainty which may cast
significant doubt about the Group’s ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the Group was unable to
continue as a going concern.
The Directors, whilst noting the existence of a material uncertainty and having considered
the possible management actions as noted above, are of the view that the Group is a
going concern and will be able to meet its debts as and when they fall due for a period of
at least 12 months from the date of signing these accounts.
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.
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.
Valuation of goodwill – the carrying value of goodwill is reviewed for impairment at least
annually. In determining whether goodwill is impaired an estimation of the fair value
and/or the value in use of the cash generating unit (CGU) to which the goodwill has been
allocated is required. This calculation of value in use requires estimates to be made
relating to the timing and amount of future cash flows expected from the CGU, and
suitable discount rates based on the Company’s weighted average cost of capital adjusted
to reflect the specific economic environment of the relevant CGU. The calculation of fair
Page 62
Notes to the Company financial statements
For the year ended 31 December 2023
value requires estimates of the market value of the Company by reference to existing
market data for the Company or for similar entities.
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
3 years
The Directors review tangible fixed assets for impairment if events or changes in
circumstances indicate that the carrying value of may not be recoverable.
3.7
Goodwill
The Directors continue to assess that the goodwill has a finite life of 20 years and therefore
will continue to amortise the goodwill over the remaining years of this period.
After initial recognition, goodwill is measured at cost less amortisation and accumulated
impairment losses. At each year end date goodwill is reviewed for impairment using a
discounted cash flow method applied to business forecasts. If this review demonstrates
that impairment has occurred, this is expensed to the Company’s income statement.
Goodwill is allocated to cash generating units for the purpose of impairment testing.
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
Page 63
Notes to the Company financial statements
For the year ended 31 December 2023
the year in which it is incurred unless it meets the recognition criteria of FRS102 Section
18 ‘Intangible Assets which, other than for goodwill’, are;
▪ The technical feasibility of completing the intangible asset so that it will be available for
use or sale.
▪ Its intention to complete the intangible asset and use or sell it.
▪ Its ability to use or sell the intangible asset
▪ How the intangible asset will generate probable future economic benefits. Among other
things, the entity can demonstrate the existence of a market for the output of the
intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness
of the intangible asset.
▪ The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset.
▪ Its ability to measure reliably the expenditure attributable to the intangible asset during
its development.
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 64
Notes to the Company financial statements
For the year ended 31 December 2023
4 Intangible assets
The Directors have considered the underlying cash generating assets to which the goodwill
relates and the future cashflows it will generate, and on the basis of this do not consider
the asset to be impaired. They key assumptions within this consideration were:
1. an increase in the current level of recurring revenues, sourced from a
combination of existing as well as forecast new Partners.
2. a continuation of non-recurring revenues at the same levels as those actually
achieved in FY23
3. a modest increase in the underlying operating costbase
5 Tangible assets
Page 65
GoodwillSoftwareTotal£'000£'000£'000CostAt 1 January 202312,758- 12,758Additions- - - At 31 December 202312,758- 12,758Accumulated amortisationAt 1 January 20238,875- 8,875Charge for the year576- 576At 31 December 20239,451- 9,451Net book amount at 31 December 20233,307- 3,307Net book amount at 31 December 20223,883- 3,883ComputerequipmentVehiclesTotal£'000£'000£'000CostAt 1 January 202349824522Additions- - - Disposals- - - At 31 December 202349824522Accumulated depreciationAt 1 January 202349824522Charge for the year- - - Disposals- - - At 31 December 202349824522Net book amount at 31 December 2023- - - Net book amount at 31 December 2022- - -
Notes to the Company financial statements
For the year ended 31 December 2023
6 Investment in subsidiary
Details of the investments at 31 December 2023 in which the Company holds more than
20% of the nominal value of ordinary share capital are as follows:
Country of
incorporation
or registration
Nature of
business
Group
proportion
held
Company
proportion
held
M.T. Labs Limited
Israel
Sale of instant
communication
services
100%
100%
With registered address:13 Amal street, Afek Industrial Park, Rosh Ha’ayin 4809249, Israel
On 31 October 2009 the trade and net assets of Mobile Tornado International Limited 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 Limited was
£12,758,000. Consequently, the value of the investment held in Mobile Tornado
International Limited 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 Limited was subsequently dissolved.
7 Debtors
Trade receivables includes £nil (2022: £nil) falling due after more than one year. Trade
receivables are stated after provisions for impairment of £73,000 (2022: £70,000).
Amounts due from group undertakings are unsecured, interest free and repayable on
demand.
Page 66
20232022£'000£'000Trade receivables796 1,032 Prepayments26 26 Accrued income157 156 Other debtors154 63 Amounts owed by Group undertakings669 606 1,802 1,883
Notes to the Company financial statements
For the year ended 31 December 2023
8 Creditors
The contingent consideration arose on the purchase of intellectual property from Tersync
Limited in 2001 and represents a royalty payable on future sales of Push to Talk related
products by Mobile Tornado, payable in part as 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 split between current and non-current reflects the Group’s estimate of future sales and
the amount of royalty payment that would fall due within the next 12 months based on the
above terms.
The deferred income balance includes an amount of £2,139,000 (2022: £2,116,000)
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.
9 Called up share capital
There is a single class of ordinary shares. There are no restrictions on the distributions.
Page 67
20232022£'000£'000Trade creditors874 793 Accruals136 146 Other taxation and social security35 12 10% cumulative preference shares8,550 8,058 Bank loans26 37 Deferred income2,139 2,148 Loans owed to related party undertakings2,281 2,490 Contingent consideration2,675 2,815 16,716 16,499 Less non-current portion:Deferred consideration(769) (1,076) Bank loans(17) (27) Amounts due within 1 year15,930 15,396 20232022£'000£'000Allotted, called up and fully paid417,719,415 (2022: 379,744,923) Ordinary shares of 2p each8,3547,595Total8,3547,595
Notes to the Company financial statements
For the year ended 31 December 2023
Non-voting preference shares – classified as liability
All preference shares are non-voting, non-convertible cumulative redeemable preference
shares. They are redeemable at par value on 31 December 2024, 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.
Holf Investments Ltd has confirmed its willingness, should the Group request, to extend
the redemption date on these preference shares until 31 December 2025.
10 Capital and other commitments
At the balance sheet date, the Company had outstanding commitments for future
minimum lease payments under non-cancellable operating leases as follows:
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. In previous years,
Intechnology plc bought right of use licenses totalling €2,400,000 from Mobile Tornado
Group plc. During the year to 31 December 2023 the value of licenses brought into use
was €nil (year ended 31 December 2022; €nil). The balance of unused licenses as at 31
December 2023 was €2,376,000 (31 December 2022; €2,376,000). This balance is
included in contract liabilities in the accounts.
On 10 November 2023 InTechnology plc transferred its entire holding of Mobile Tornado's
ordinary shares of 2p each to Holf Investments Ltd ("Holf"). Holf is 100% owned by Peter
Wilkinson and his family. In total, 205,988,314 Ordinary Shares have been transferred
from InTechnology to Holf for a total consideration of £5 million, equivalent to 2.43p per
Ordinary Share. Following this transfer, Peter Wilkinson has a total direct and indirect
beneficial interest in 244,134,455 Ordinary Shares, representing 58.44% of Mobile
Tornado's issued share capital.
Page 68
Number ofNominalsharesValue'000£'000As at 31 December 2022 and 202371,277 5,702 20232022£'000£'000One to five years355Total355
Notes to the Company financial statements
For the year ended 31 December 2023
On the same date, InTechnology plc also transferred a significant amount of Mobile
Tornado’s total indebtedness to Holf. This indebtedness comprises: £5.7 million of
redeemable preference shares; £2.7 million of accrued Preference Share coupon and
interest; and £2.8m of loan indebtedness, comprising historic short-term borrowings and
rent and services incurred under the services agreement. Following this transfer, all
interest accruing under the Preference Shares will accrue or be payable to Holf in
accordance with their existing terms. All other terms of the Preference Shares agreement
remain the same and as previously announced.
Mobile Tornado Group plc has bought goods and services totalling £nil from Holf
Investments Ltd in the year to 31 December 2023 (year ended 31 December 2022; £nil).
As at 31 December 2023, Mobile Tornado Group plc owed Holf Investments Ltd £719,000
(31 December 2021; £nil).
Holf Investments Ltd has provided loan finance to Mobile Tornado Group plc in the year
ended 31 December 2023 (year ended 31 December 2022; £nil). As at 31 December 2023,
Mobile Tornado Group plc owed Holf Investments Ltd £2,090,000 (31 December 2022;
£nil).
Holf Investments Ltd has provided preference share finance of £nil to Mobile Tornado
Group plc in the year ended 31 December 2023 (year ended 31 December 2022; £nil). As
at 31 December 2023, Mobile Tornado Group plc had total preference share indebtedness
to Holf Investments Ltd of £8,550,000 (31 December 2022; £nil).
On 26 September 2018, the Company entered into a revolving loan facility agreement with
InTechnology Plc which was for a period of two years from date entered into.
Subsequently on 23 September 2020, this was extended by a year and then on 24
September 2021 by a further year. On 24 March 2022, the terms of the facility were
amended, increasing the facility amount to £500,000 and extending the term by a further
12 months to 26 September 2023. On 22 September 2023, the term was extended to 26
September 2024.
Under the terms of the agreement, any new amounts drawn down by the Company
pursuant to the facility agreement will be subject to a 2% facility fee and will bear interest
at a rate of 10% per annum. The facility agreement allows for monies to be drawn down,
repaid and redrawn again in any manner and any number of times by the Company until
the agreement expires, however, any monies repaid and subsequently redrawn will not
incur a further facility fee. At the expiration date of the facility agreement, all monies shall
be repayable by the Company to InTechnology together with any facility fee and accrued
interest thereon.
During the year £250,000 was repaid (2022: £250,000 drawn down). As at 31 December
2023, Mobile Tornado Group plc owed InTechnology plc £150,000 (31 December 2022;
£400,000). Interest and facilities fees for the year amounted to £16,000 (year ended 31
December 2022; £34,000), of which £nil (year ended 31 December 2022; £9,000), was
paid during the year.
Payments to a third party, Mainstream Capital Partners LLP, are made in respect of the
services provided by Jeremy Fenn, Executive Chairman. As at 31 December 2023, Mobile
Tornado Group Plc owed £12,000 (31 December 2022: £3,000) to Mainstream Capital
Partners LLP.
The Group is controlled by Holf Investments Ltd (incorporated in the UK) which, as of
today’s date, owns 49.3% of the Company’s ordinary shares. The Group’s ultimate parent
and controlling party is Peter Wilkinson who has a total direct and indirect beneficial
interest in 58.44% of Mobile Tornado's issued share capital.
Page 69
Notes to the Company financial statements
For the year ended 31 December 2023
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 2023 was £1,557,000 (year ended 31
December 2022: £1,959,000 loss).
13 Employee information
The average monthly number of persons (including Executive Directors) employed by the
Company during the year was 5 (2022: 2)
Page 70
Corporate information
Company Registration Number:
5136300
Registered Office:
Directors:
Nominated Adviser and Broker:
Bankers:
Solicitors:
Registrars:
Auditors:
Internet address:
HTUwww.mobiletornado.com UTH
Cardale House
Cardale Court
Beckwith Head Road
Harrogate
North Yorkshire
HG3 1RY
Peter Wilkinson
Jeremy Fenn
Luke Wilkinson
Marcus Emptage
Jonathan Freeland
(Non-Executive Director)
(Executive Chairman)
(Chief Operating Officer)
(Finance Director)
(Non-Executive Director)
Allenby Capital Ltd
5 St Helen’s Place
London
EC3A 6AB
Barclays Bank Plc
Hanover Square
50 Pall Mall
London
SW1Y 5AX
Schofield Sweeney LLP
76 Wellington Street
Leeds
LS1 2AY
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Saffery LLP
Mitre House
North Park Road
Harrogate
HG1 5RX
Page 71