Mobile Tornado Regulatory News (MBT)

Mobile Tornado Group plc

("Mobile Tornado" or the "Company")

Final Results

Chairman's report

Introduction

Mobile Tornado Group plc, the leading provider of instant communication mobile applications to the enterprise market, announces its results for the twelve month period to 31 December 2010.

Highlights

·; Major deal closed with mobile operator in India for 200,000 licenses

·; Partnership deal contracted with Pocket Mobile and G4S signed as first customer

·; Exclusive partnership signed in South Africa with NECO

·; Contract agreed with IVU Transport Technologies AG to integrate PTT with their transport communication platform

·; Technical resources redeployed across centres in Israel, UK and India for maximum efficiency

·; Deal announced today with Israeli mobile operator for initial 10,000 licenses

Financial results

I am pleased to report another year of progress. Through a combination of increased sales activity and reduced overheads we have recorded a loss for the year of £1,569,000 compared to £2,675,000 in the previous year. Although revenues at £1,432,000 were less than the £2,340,000 recorded in 2009, last year's figures were boosted by the £1.9 million sale of BB3G phones to InTechnology plc, our exclusive UK partner. If this deal is excluded, then sales are up by over 300%. Gross profits more than doubled to £1,082,000 (2009: £504,000).

Operational review

I set out in last year's Chairman's statement the work we had done to refine our sales proposition. It is pleasing to see the progress we have made in addressing each of these target segments during the period.

There is increasing interest in Push to Talk (PTT) as a communication platform, particularly in developing countries, and we have been approached by a number of potential partners who are well placed to address significant market opportunities. Our discussions with these partners have focussed on their ability to deliver the proposition into their market, and in particular, the resources they are able to deploy. Following the model we adopted for the UK, where we secured an exclusive agreement with InTechnology plc in return for a significant financial commitment, we have approached other territories in the same way.

We were therefore delighted to announce in January of this year an exclusive agreement with NECO, a supplier of emergency, safety and security products, to deliver Push to Talk mobile communication services into the South African market. Demonstrating their commitment to the partnership, NECO have created a new division called INSTACOM and have established a network of 28 resellers across South Africa. Early engagement with potential customers, including the emergency services and security companies suggest the partnership will fulfil its ambitious plans.

Along with Africa, the other key territory where we have been seeking out potential partnerships is in South America. There is great interest in our instant communications platform in these countries and I hope to report progress in the near future.

We concluded our first deal in the rapidly developing Indian market with a sale to one of the major Indian mobile operators. Under the terms of the deal we have supplied our technology platform and have provided professional services to install and configure the system into the operator's own network. I am pleased to say that delivery of the first phase, a 200,000 user system, is now complete. Delivering our platform into one of the world's largest mobile operators is a testament to the quality of our technology and our team of engineers, and we are hopeful that the credibility we have created will lead to further deals in this territory.

Whilst our preferred deal structure in all target markets is to secure a monthly license fee, there are certain situations where we will sacrifice our ambition to build higher quality revenue streams, for the benefits that the perpetual license fee model brings to cashflow. The Indian deal was one example, and we have also announced a similar deal today with one of the leading Israeli mobile operators. Israel is one of the few countries in the world to have embraced PTT with around 500,000 users As a new entrant to the PTT market I am pleased to say that this mobile operator has chosen Mobile Tornado's PTT solution to challenge the incumbents. The initial order is for 10,000 licenses but there is an ambition to grow this significantly over the next two years.

One of the most exciting developments over the period has been the creation of our relationship with Pocket Mobile, the leading provider of mobile workforce management software applications in the Nordic region. Although this deal was announced in March 2011, much of the commercial discussions and technical development was completed in 2010. Pocket Mobile sells its platform into any customer with a requirement to manage remote workers. Delivery drivers, security guards, service technicians, home health carers and other professionals all currently use products and services based on Pocket Mobile's platform, to easily and efficiently carry out administrative tasks and to receive different types of order information via their mobile unit. We have joined forces with Pocket Mobile to integrate Push to Talk functionality into their mobile platform. This will enable their customers to communicate with their employees more efficiently and cost effectively than when using more conventional mobile services and private radio solutions.

To demonstrate the attraction of this combined solution, we have already contracted with G4S Denmark and Sweden and I am pleased to say that Finland has now also been added. We are in the process of installing servers into G4S premises in each of these countries to allow G4S to not only offer the service more efficiently to their employees, but to also offer it to their own customers. We are hopeful that successful deployment in these initial G4S countries will result in further penetration within G4S globally and engagement with other Pocket Mobile customers.

During 2010 we have also integrated our PTT proposition with IVU Traffic Technologies AG, a leading German software company engaged in the delivery of customised IT solutions for public passenger and goods transport and transport logistics. This platform has already been delivered into a customer operating in three German cities and we understand the roll out will be accelerated during 2011. This deal was introduced by our German partner and we completed bespoke technical development to deliver the solution they required. In essence, the platform allows the controller to speak direct to the driver of the vehicle through push to talk, and if required, talk directly to the passengers and people outside the vehicle as well.

During the period we established a platform in the USA to sit alongside those we already manage in the UK, Israel and Spain. This new platform has provided us with an excellent resource for trials with customers and partners throughout the USA, Canada and South America. It was set up principally to meet the requirements of Psion Telelogix who we concluded a deal with during the year to provide our applications on their rugged devices. Although we have provisioned a number of trials the progress of the relationship has been slower than we would have hoped. Notwithstanding this, it did highlight the opportunity to integrate our software with other rugged handheld devices, and as a result we are now engaged in discussions with a number of the major companies in this market. As the market for applications explodes, so does the interest from the hardware manufacturers to participate, so enhancing their value proposition. I hope to announce further collaborations in this space over coming months.

We executed a major reorganisation in Israel during the period which resulted in an exceptional charge of £446,000 to deal with salary and redundancy costs of the R&D personnel that were released. We continue to seek operating efficiency and now have our technical operation based across the UK, India and Israel to achieve maximum output for resources deployed. The technical team have continued to develop the platform with additional functionalities being added to our proposition. I am pleased to report that we have also completed the development of our ANDROID client which we are seeing great demand for across the market.

Board change

I am pleased to announce the appointment of Jorge Pinievsky to the board as Chief Operating Officer. Jorge is one of the founders of the company and has worked tirelessly over the years to establish the business around the world. He is passionate about our technology and will enhance the composition of our board.

At the same time, John Swingewood has decided to resign as a director to pursue his other business interests. I wish John well in the future and thank him for his contribution to the business in recent years.

Outlook

There are a number of trends developing in the markets in which we operate;

·; The global roll out of 3G mobile data networks continues and with this the reduction in data tariffs that helps to support the competitive price structure of our solution in the market.

·; The rapid growth in the adoption of smartphones in the personal arena paves the way for an extended use of mobile technology for business. Technology advances mean that a single personal mobile or in-vehicle device can now fulfil a range of different functions, not just the communication of instructions or the recording of data or visual images.

·; Advanced mobile features such as GPS functionality have enabled more feature rich services which can also locate and track the remote worker for more effective job scheduling and to monitor their wellbeing.

·; The mobile technology sector is growing fast and, with it, the size of the field and mobile workforce. As the devices get smaller and easier to use, the benefits of this way of working are being realised by user groups not traditionally viewed as field or mobile.

·; There is an acceptance amongst both mobile operators and enterprises that the managed services model is attractive, as in these difficult economic conditions capital expenditure budgets are being reduced or eliminated.

·; The developing markets, particularly Africa and Latin America, are rapidly developing their mobile telecommunications infrastructure and are seeking out applications to suit the needs of their mobile workforces.

These market developments have presented us with an increasing number of opportunities with potential customers and partners around the world. Our biggest challenge is to ensure we deploy our limited resources with those that can give us the best returns. This is our focus and I look forward to reporting continued progress in coming months.

Peter Wilkinson

Chairman

25 May 2011

Consolidated income statement

For the year ended 31 December 2010

The accompanying accounting policies and notes form an integral part of these financial statements.

Consolidated statement of comprehensive income

For the year ended 31 December 2010

Consolidated statement of changes in equity

For the year ended 31 December 2010

Consolidated statement of financial position

As at 31 December 2010

Consolidated statement of cash flows

For the year ended 31 December 2010

1 Financial information

The financial information set out in this preliminary announcement does not constitute statutory accounts within the meaning of s495(2) or s495(3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2010 will be dispatched to shareholders for approval at the Annual General Meeting to be held on 28 June 2011. The statutory accounts contain an unqualified audit report, which did not include a statement under s498(2) or s498(3) of the Companies Act 2006, and will be delivered to the Registrar of Companies.

The statutory accounts for the year ended 31 December 2009 have been delivered to the Registrar of Companies, contained an unqualified audit report and did not include a statement under s495(2) or (3) of the Companies Act 2006.

2 Segmental analysis

The Group presents its results in accordance with internal management reporting information. Under IFRS 8, the Group has only one operating segment. Therefore the results presented in the income statement are the same as those required under IFRS 8, save for the year end entry of IFRS 2 share option charge of £3,000 (year ended 31 December 2009: £12,000).

Revenue is reported by geographical location of customers. Non-current assets are reported by geographical location of assets.

Total revenue comprises £327,000 relating to the sale of goods (2009: £2,047,000) and £1,104,000 relating to the sale of services (2009 £293,000). Details of sales made to InTechnology plc, a large customer in the period, are detailed in the related party note.

3 Loss per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of £1,569,000 (2009: £2,675,000) by the weighted average number of ordinary shares in issue during the year of 184,953,708 (2009: 184,953,708).

The adjusted basic loss per share has been calculated to provide a better understanding of the underlying performance of the Group as follows:

The loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options are anti-dilutive under the terms of IAS 33.

 4 Annual General Meeting

The Annual General Meeting of the Company will be held at Central House, Beckwith Knowle, Harrogate, HG3 1UG on 28 June 2011 at 10.00 a.m. The audited results for the year ended 31 December 2010 will be posted to shareholders shortly and can be obtained from the Company's website at www.mobiletornado.com.