Mobile Tornado Regulatory News (MBT)

Mobile Tornado Group plc

("Mobile Tornado" or the "Company")

Financial results for the 6 month period to 30 June 2014

Mobile Tornado (AIM: MBT), the instant communications services provider for mobile devices, announces its unaudited results for the 6 month period to 30 June 2014, which are in line with management's expectations.

Financial highlights

· Revenue £1.0m (H1 2013: £1.4m)

- Recurring license fees up 40% to £0.54m (H1 2013: £0.38m)

· Adjusted EBITDA* loss of £1.0m (H1 2013: £0.8m loss)

- Reflecting continued investment in the business to provide scale for future growth

· Loss after tax of £1.1m (H1 2013: £1.3m)

· Basic loss per share of 0.5p (H1 2013: 0.7p)

· Cash at bank of £0.8m (H1 2013: £0.1m; FY13: £2.4m)

*excluding exchange differences

Operating highlights

· Subscriber numbers increased to 45,000 (31 December 2013: 29,000) through Mobile Network Operator deployments.

· Instacom, our partner in South Africa, has become the dominant provider of instant communication services in this market, through engagement with the top three Mobile Network Operators.

· The new division in Israel has commenced several trials with enterprise customers across the region

· Our first reference site for our Homeland Security offering has approved our encryption technology

Post Balance Sheet Event

· Signed exclusive strategic agreement with Alvarion Technologies ("Alvarion") to integrate its proprietary instant communication services into the Alvarion WiFi platform

Jeremy Fenn, Chief Executive Officer of Mobile Tornado, said:

"I am delighted that we are achieving increased engagement with customers across all parts of our business. We are focussed on converting this momentum into an improved financial performance. I look forward to bringing shareholders further updates as we move into the second half. Current trading since the period end has remained in line with the Board's expectations for the full year."

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About Mobile Tornado Group Plc (www.mobiletornado.com)

Mobile Tornado Group PLC (AIM: MBT) specialises in the provision of Instant Communications services for mobile devices, with a focus on enterprise workforce management. The Company's main applications comprise Instant Talk, Instant Locate, Instant Alert & Instant Message and are geared towards improving a business's productivity and performance by enabling organisations and workers to connect one-to-one or one-to-many at the touch of a button.

By equipping their workforce with conventional mobile handsets and Mobile Tornado's Instant Communication services, a company can communicate with one or many employees simultaneously, monitor employee locations, and immediately be alerted of major issues. At the touch of a button, they can communicate with employees more efficiently and cost-effectively than would be possible with traditional mobile services or other Private Mobile Radio (PMR) solutions.

Mobile Tornado's patented Internet Protocol Radio Service (IPRS™) technology has been successfully deployed on networks around the world. The suite of IP-based, OMA standards-compliant services provide instantaneous, 'always-on', bandwidth-efficient communications across a range of mobile networks and devices, including compatibility with forthcoming LTE (Long Term Evolution) 4G mobile networks. Both technical and cost performance is superior to many competing services and technologies, with proven success in the current marketplace.

Chairman's Statement

I am pleased to report that the Group has delivered progress across all of our key markets during the period. Our subscriber numbers have increased as a result of our existing Mobile Network Operators ('MNOs') customers commencing the commercial rollout of services. We have also increased the number of MNO's evaluating our Instant communication technology platform, and further validated our platform in the homeland security market. I look forward to seeing this momentum translate into increasing revenue as our technology is adopted more widely.

Financial Results

Recurring license fee revenues were up by 40% to £0.54m (H1 2013: £0.38m) and monthly recurring license fee revenue as at 30 June 2014 was £99,000, a 25% improvement on the previous year end (as at 31 December 2013: £79,000). Total turnover in the six month period to 30 June 2014 decreased 29% to £1.00m (H1 2013: £1.41m) reflecting lengthening sales cycles with major customers and a lower level of installation fees as customers move out of this phase.

Gross profit increased 39% to £0.86m (H1 2013: £0.61m), reflecting the higher level of recurring license revenues.

Operating expenses increased by £0.50m reflecting the increase in headcount within the technical and operations team in anticipation of the increasing requirements from our global customer base. As a result, Group operating losses before exchange differences, depreciation and amortisation expense showed an increased loss of £1.05m (H1 2013: £0.79m loss). Reported Group operating losses were £1.07m (H1 2013: £1.14m). The loss before tax for the period was £1.35m (H1 2013: £1.40m).

The net cash outflow from operating activities increased to £1.50m (H1 2013: £0.27m). The Group saw a net decrease in cash and cash equivalents in the period of £1.61m (H1 2013: £0.05m decrease). As at 30 June 2014, the Group had net debt of £4.80m (30 June 2013: £3.63m). Cash at bank as at 30 June 2014 was £824,000 compared to £52,000 at 30 June 2013.

Review of Operations

Mobile Network Operators (MNOs)

We have made progress with each of our major Tier 1 MNO customers in France, South America and Canada during the period. The growth in subscriber numbers has been driven by the commercial launch of services in Canada, and whilst progress in the other territories has been slower, I am pleased to see that a programme of engagement has commenced with enterprise customers in France, Mexico and Brazil.

The technical challenge of deploying our platform into Tier 1 MNO's is considerable, and predicting with any certainty when services will be launched, and then rolled out, is very difficult. For this reason, we must focus on broadening our customer base, such that our reliance on one or two large customers is reduced. .We are therefore pleased to confirm that during the first half we commenced the provisioning of a new platform in Turkey with NIMIS, our partner in that territory. Our technical team is currently completing testing of this platform after which we will be in a position to conclude negotiations with one of the leading Turkish MNOs, already an established PTT provider, to transition their existing significant customer base to our platform.

Our partner in South Africa, Instacom, made strong progress during the first half of the year, to become the dominant provider of instant communication services in that territory. It has concluded a deal with one of the leading Mobile Network Operators in the region and is now in advanced discussions with two more. We are in discussions with the owners of Instacom, to determine the best approach to developing the wider African market. We are seeing great interest in our platform and services, and believe that these markets represent a huge opportunity for the Company over coming years. It is incumbent on the Board to ensure that we are resourced and structured in the right way to fully capitalise on these markets.

In Israel, our newly established division has commenced trials with a number of enterprise customers and whilst it is too early to announce contracts at this point, the early signs are very encouraging and momentum continues to build. Our announcement of this initiative earlier in the year attracted significant interest from the main MNOs in Israel. We continue to examine closely the options for building our offering and establishing a significant and effective presence in this established PTT market.

Homeland Security

Our first reference customer within the homeland security sector has recently officially approved our secure encrypted client functionality within our PTT platform. The Ministry of Public Safety in this Asian country has now successfully deployed the service into six provinces and we are advised that this will now be extended into many more However, we have been informed that Government budget constraints has pushed any further installations into the first half of 2015.

We have successfully concluded our first Homeland Security contract in Mexico. As part of a smart city WiFi deployment by Alvarion Technologies ("Alvarion"), our instant communications platform will be used to provide communication services to municipal workers in a city with a population of approximately 650,000 The service will be provided from one of our existing server platforms, and will be structured as a perpetual license deal whereby a one off payment is made to utilise a certain number of allocated licenses for an agreed period of time. There are a number of similar deals under discussion with other municipal authorities within the region.

We were very encouraged by our engagement with Alvarion and the opportunity it provides to deploy our solution into the global homeland security markets, through its integration with their established Wifi platform The Company has therefore announced separately today that it has signed a partnership agreement with Alvarion Technologies , to integrate our proprietary instant communication services into the Alvarion WiFi platform solution.

Alvarion is a global provider of optimized wireless broadband solutions addressing the connectivity, coverage and capacity challenges of public and private networks that overcome the growing challenges of connectivity and coverage requirements in a digital world where data volumes are increasing exponentially. Alvarion's 'umbrella' solutions allow its customers to provide additional services and applications to the end customers, outside of the 3G/4G mobile telecommunications infrastructure. It is therefore of particular interest to Mobile Tornado as it can provide a direct sales channel to several target enterprise customers around the world, particularly within the homeland security markets. Alvarion has already sold products into many of Mobile Tornado's target customers.

Outlook

We continue to widen our customer base across global MNOs and national and local government agencies. The nature and size of these organisations can create long sales cycles which can introduce uncertainty and lumpiness to our revenues, but as we continue to increase the breadth of engagement, we create a more robust platform for the delivery of improving financial performance from a more diversified revenue base. Current trading since the period end has remained in line with the Board's expectations for the full year.

Consolidated income statement

For the six months ended 30 June 2014

Consolidated statement of comprehensive income

For the six months ended 30 June 2014

Consolidated statement of changes in equity

For the six months ended 30 June 2014

Consolidated balance sheet

As at 30 June 2014

Consolidated cash flow statement

for the 6 months ended 30 June 2014

1 General information

The financial information set out on pages 4 to 10 is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The comparative numbers for the year ended 31 December 2013 have been extracted from the audited accounts which have been filed at Companies House and which carried an unqualified audit report with no statement under section 498 (2) or (3) of the Companies Act 2006.

2 Basis of preparation

These interim financial statements are for the six months ended 30 June 2014. They have been prepared using the recognition and measurement principles of IFRS.

The interim financial statements have been prepared under the historical cost convention.

The interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2013. The accounting policies have been applied consistently throughout the Group for the purpose of preparation of the interim financial statements.

3 Loss per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of £1,129,000 (30 June 2013: £1,264,000, 31 December 2013: £2,335,000) by the weighted average number of ordinary shares in issue during the period of 224,953,708 (30 June 2013: 184,953,708, 31 December 2013: 198,036,027).

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 Share capital and share premium

Liabilities and preference shares totalling £5,702k were converted into 71,277k 8p preference shares on 28 August 2013. The preference shares are non-voting, non-convertible redeemable preference shares redeemable at par value on 31 December 2018, or, at the Company's discretion, at any earlier date. The preference shares accrue interest at a fixed rate of 10% per annum.

5 Cash used in operations

6 Shareholder information

The interim announcement will be published on the company's website www.mobiletornado.com on 19 September 2014.