Mobile Tornado Regulatory News (MBT)

Mobile Tornado Group plc

("Mobile Tornado" or the "Company")

Half Yearly Report

Mobile Tornado (AIM: MBT), the Instant Communications services provider for mobile devices, announces its unaudited results for the six month period to 30 June 2013. Trading remains in line with the Board's expectations for the full year.

Financial highlights

· Revenue up 40% to £1.41m (H1 2012: £1.00m)

- Recurring license fees up 30% to £0.38m (H1 2012: £0.30m)

· Adjusted EBITDA* loss of £0.79m (H1 2012: £0.51m loss)

· Adjusted operating loss* of £0.85m (H1 2012: £0.56m loss)

· Loss after tax of £1.26m (H1 2012: £0.58m)

· Basic loss per share of 0.68p (H1 2012: 0.31p)

· Cash at bank of £52,000 (H1 2012: £21,000) with net debt of £3.63m (H1 2012: £2.43m)

· Post period end Placing raised £4.0m gross alongside capital reorganisation

*excluding exchange differences

Operating highlights

· Increase in sales momentum with installation and set-up of new and potential customers

· Platform installation for a North American Mobile Network Operator

· Set-up of two homeland security trials in Asia

· 30,000 licenses at the end of June (H1 2012: 19,000)

· Commercial launch with first America Movil Group companies anticipated in H2

· France based Tier 1 Mobile Network Operator anticipated to launch in H2

· Further negotiations with Mobile Network Operators and additional trials underway

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

"The strong revenue growth in the first half demonstrates the increasing traction our instant communication platform has with mobile operators around the world, as well as the potential for our secure product for the homeland security market. We expect our recurring subscription revenues to continue to grow and the second half and beyond will see a number of key contracts move to commercial launch."

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

The first half has seen strong revenue growth as Mobile Network Operators (MNOs) continue to look to create new revenue streams around additional services and applications. There is an increasing recognition among MNOs that Mobile Tornado's Push to Talk (PTT) application suite is the leading communication tool for remote workforces. Having increased our installed base during the period and made good progress on a number of trials, we are confident that we will continue to build sustainable recurring licence fee revenues.

Financial Results

Turnover in the six month period to 30 June 2013 increased 40% to £1.41m (H1 2012: £1.00m). Recurring licence fee revenues were up by 30% to £0.38m (H1 2012: £0.30m) and monthly recurring licence fees as at 30 June 2013 were £71,000, a 34% improvement on the previous year end (as at 31 December 2012: £53,000).

Gross profit decreased to £0.61m (H1 2012: £0.77m), reflecting a higher level of hardware revenue within the revenue mix for the period. We expect gross margins to improve as licence revenues from new larger deals with MNOs and homeland security customers as they move out of installation and trial phases.

Operating expenses increased by £0.13m 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 £0.79m (H1 2012: £0.51m loss). Reported Group operating losses were £1.14m (H1 2012: £0.46m). The loss before tax for the period was £1.40m (H1 2012: £0.68m).

The net cash outflow from operating activities reduced to £0.27m (H1 2012: £0.47m). The Company saw a net decrease in cash and cash equivalents in the period of £48,000 (H1 2012: £56,000 decrease). As at 30 June 2013, the Company had net debt of £3.63m (30 June 2012: £2.43m). Cash at bank as at 30 June 2013 increased to £52,000 compared to £21,000 at 30 June 2012.

Following the period end, the Company strengthened its balance sheet by raising gross proceeds of £4.00m from a placing of 20,000,000 new ordinary shares at 20 pence per share. We also announced a capital reorganisation which saw £4.0m of debt capitalised into shares and £2.7m of debt capitalised into non-convertible preference shares. As a result, the Company currently has approximately £3.20m cash at bank and net debt of approximately £2.50m.

Review of Operations

I am very pleased to report that the first half has seen a considerable increase in our sales momentum and the installation and set-up of new and potential customers which should lead to an uplift in licence fee revenues in the second half and beyond.

Mobile Network Operators

The major installation activity in the first half focused around the platform installation for a North American MNO and the set-up of two homeland security trials in Asia. This has seen installation and set-up revenues increase to £1.02m (H1 2012: £0.71m) and should drive an increase in recurring revenues.

The number of billing licenses at 30 June 2013 increased 58% to 30,000, against 19,000 at 31 December 2012. We expect this to rise further in the second half as a number of MNO installations move into commercial launch in the second half.

The installation of our platform with America Movil continued to progress well during the first half and, whilst this has taken longer than we initially expected, full commercial launch of our Push to Talk (PTT) service to both consumer and enterprise customers with Telcel (Mexico) and Claro (Brazil) is anticipated in the second half. These will be the first MNOs within the American Movil network to launch the service to their subscribers. Following further installation work during the first half, our Tier 1 MNO customer based in France is also expected to move to full commercial launch of services in the second half of 2013. We have also advanced negotiations with a number of other Tier 1 MNOs and will update shareholders as these progress. Additional trials are currently underway with MNOs in Africa, Australia and Turkey.

Homeland security

We are also very pleased with the interest that has been created during the half in our Secure PTT over Cellular (SPOC) platform which provides an attractive lower cost solution to existing communication platforms used in homeland security. We have been engaged with a number of opportunities within Asia, Africa and South America in the period under review and we have installed our platform in two Asian countries to set up SPOC services to provide encrypted communications for homeland security agencies. Testing in these two geographies is currently underway and we hope that this will progress to full commercial arrangements in due course. We hope to make further announcements in the coming months.

The development of our own handset, the T930 with enhanced encryption, has progressed well and is close to its initial commercial deployment. The T930 meets the required security standards for homeland security use and has opened up multiple opportunities which we are currently exploring.

Summary

Our progress in the first half reflects the attraction of our Instant Communications platform which can be installed and integrated at a relatively low cost. Increasingly MNOs are embracing Push to Talk applications as a route to both revenue generation and protection. Our managed service model suits the requirements of MNOs as demonstrated by the large scale contracts already signed with Tier 1 MNOs.

We have a good pipeline of installed platforms that should move towards commercial launch in the second half, and we are encouraged by the increasing opportunities with new Tier 1 MNOs, as well as Government agencies that are attracted to our Secure PTT over Cellular platform for homeland security. Our recurring licence fee revenues increased by 30% and we expect this rate of growth to accelerate as MNOs roll-out the applications to their own customers.

The Company continues to trade in line with the Board's expectation for the full year and we believe that a number of opportunities that will come to fruition in the second half and beyond will deliver significant shareholder value.

Peter Wilkinson

Chairman

26 September 2013

Consolidated statement of changes in equity

for the six months ended 30 June 2013

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 2012 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 2013. 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 2012. 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 £1,264,000 (30 June 2012: £578,000, 31 December 2012: £1,688,000) by the weighted average number of ordinary shares in issue during the period of 184,953,708 (30 June 2012: 184,953,708, 31 December 2012: 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.

Following the change of rights attaching to the preference shares on 31 December 2010, the shares are deemed to be compound financial instruments, with the debt component calculated to be £610,000 (£343,000 due after more than one year) and the £2,390,000 balance reclassified as equity. The 10% annual preference share dividend of £300,000 (2012: £300,000) has been accrued within current liabilities.

6 Post balance sheet event

On 28 August 2013, following approval at a General Meeting of Shareholders, the Company announced the placing of 20,000,000 new ordinary shares at 20 pence per ordinary share to raise gross proceeds of £4.0million. Also announced on that date was a reorganisation of certain of its capital under which, in aggregate, £4.0million of funds payable to InTechnology Plc were capitalised into 20,000,000 new ordinary shares and a further amount of approximately £2.7million of funds payable to InTechnology Plc were capitalised into capital reorganisation preference shares. In addition, the existing preference shares had their rights amended in line with these capital reorganisation preference shares.

Further details of this transaction are contained within the Circular announcement which can be found on the company's website www.mobiletornado.com

7 Shareholder information

The interim announcement will be published on the company's website www.mobiletornado.com on 26 September 2013.