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RNS Number : 2762H
Mobile Tornado Group PLC
31 July 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
31 July 2019
Mobile Tornado Group plc
("Mobile Tornado", the "Company" and, together with its
subsidiary undertakings, the "Group")
Subscription to raise GBP750,000 and trading update
Mobile Tornado (AIM: MBT) today announces a subscription for
15,000,000 new ordinary shares of 2 pence each ("Ordinary Shares"),
representing approximately 4.3 per cent. of the existing issued
ordinary share capital of the Company (the "Subscription Shares")
at a price of 5.00 pence per Subscription Share (the "Subscription
Price") to raise approximately GBP750,000 (before expenses) (the
"Subscription"). The Company also announces the capitalisation of
GBP775,234 of indebtedness owed by the Company to InTechnology plc
into 15,504,687 new Ordinary Shares.
Jeremy Fenn, Chairman of Mobile Tornado, commented: "I'm pleased
to report further trading momentum during the first half and some
positive developments in our key trading markets. To provide us
with a little more flexibility when negotiating contracts with new
customers, and to facilitate an increase in handset stock levels
following an exclusive agreement we have recently signed, we have
chosen to raise GBP750,000 of additional working capital. The
fundraise has been completed at a small premium to the current
share price and I'm grateful to our shareholders for their
continued support. I look forward to further updating the market
with our half year results during the week commencing 16
September."
Background to and reasons for the Subscription
Mobile Tornado plc is a mobile technology business offering an
enterprise-grade Instant Communications platform. It sells its
workforce management applications such as Push to Talk ("PTT") to
Tier 1 Mobile Network Operators ("MNO") and large multinational
corporate clients through a range of market sales channels.
As announced in the Company's annual report and accounts for the
year ended 31 December 2018 ("2018 Accounts"), the Company has seen
a significant increase in demand for its Bundled PTT sales solution
that combines a perpetual software licence, handset and dispatch
console. From the Group's perspective, a Bundled PTT solution has
multiple commercial benefits; it reduces the sales cycle
considerably allowing for large numbers of the same PTT configured
handsets to be sold into large enterprises without significant
intervention from the Company's MNO partner. It also allows the
Company to capture additional sales margin on the handset itself,
an entirely new revenue stream, and which is highly cash-flow
generative as both handset sales and license revenue are received
upfront.
The Company has recently concluded an exclusive deal with a
major rugged handset manufacturer to enhance the bundled solution
offered in Israel. To maintain its exclusivity, the Company is
required to commit to the purchase of a minimum of 5,000 handsets
across the first 12 months which will necessitate a commensurate
increase in stock levels.
The Directors consider it appropriate to undertake the
Subscription at the current time in order to provide the Company
with the resources to increase its handset stock levels, provide
the Group with increased flexibility when negotiating Bundled PTT
contracts with potential new customers and for general working
capital purposes.
Trading update
The Company expects to announce its unaudited interim results
for the six-month ended 30 June 2019 in the week commencing 16
September 2019. Revenue for the period is expected to be
approximately GBP1.46 million, compared to GBP1.23 million in H1
2018, an increase of 18%. Gross margin is expected to be
approximately GBP1.37m (H1 2018: GBP1.14 million), an increase of
20%. EBITDAE loss is expected to be around GBP300,000, a
significant improvement on the first half loss of GBP636,000 for H1
2018.
The Company's first half performance has been driven by solid
performance across its three main markets, namely Israel, South
Africa and South America.
-- In Israel, the Company's bundled solution has sold well
during the first half, with notable deals concluded with public
utilities, local authorities and government agencies. With the IDEN
switch-off scheduled for the end of 2019, the Board anticipates
activity levels to accelerate in the second half.
-- In South America, the Company sold and commissioned a new
server platform for a major MNO in Colombia, and this will be
deployed during the second half of the year, initially for a major
transportation group.
-- In South Africa, the Company has been working with its MNO
customer on the submission of a tender for the deployment of
services across a major government agency.
The 2018 Accounts highlighted a significant outstanding
receivable with one of Mobile Tornado's partners. This amount stood
at GBP638,000 as at 31 December 2018 and GBP796,000 as at 30 June
2019. The 2018 Accounts noted that the Company was hoping to
collect the outstanding debt in the short term following an equity
investment into said partner. The equity investment was not
completed as anticipated and the Company has now entered into
discussions with the partner to determine a way forward. A further
update will be provided in due course.
Details of the Subscription
The Subscription will result in the issue of 15,000,000
Subscription Shares representing, in aggregate, 4.3 per cent. of
the existing issued ordinary share capital of the Company and have
been subscribed for by certain existing shareholders of the
Company. The Subscription Shares have been issued utilising the
Company's existing share authorities.
The Subscription Shares, when issued, will be fully paid and
will rank pari passu in all respects with the existing Ordinary
Shares, including the right to receive all dividends and other
distributions declared, made or paid after the date of issue.
Settlement for the Subscription Shares is expected to take place
at 8.00 a.m. on 28 August 2019.
Capital Reorganisation
The Company announces the capitalisation of GBP775,234.35 of
short term indebtedness owed by the Company to InTechnology plc
("InTechnology") at the Subscription Price, resulting in the issue
of 15,504,687 new Ordinary Shares (the "Capitalisation Shares") to
InTechnology (the "Capital Reorganisation"). The indebtedness
comprises accrued interest over preference shares held by
InTechnology. The Directors believe that it is in the best
interests of the Company to take this opportunity to strengthen its
balance sheet by undertaking the Capital Reorganisation.
The Capitalisation Shares, when issued, will be fully paid and
will rank pari passu in all respects with the existing Ordinary
Shares, including the right to receive all dividends and other
distributions declared, made or paid after the date of issue.
The Capital Reorganisation is a related party transaction under
Rule 13 of the AIM Rules.
Jeremy Fenn, Avi Tooba and Jonathan Freeland, being Independent
Directors in relation to the Capital Reorganisation, consider,
having consulted with Allenby Capital Limited, that the terms of
the Capital Reorganisation are fair and reasonable insofar as the
Company's shareholders are concerned.
Admission to trading and total voting rights
Application has been made for the Subscription Shares and
Capitalisation Shares to be admitted to trading on the AIM
("Admission"). It is anticipated that Admission will occur and
dealings will commence in the Subscription Shares and
Capitalisation Shares at 8:00 a.m. on 28 August 2019.
Following Admission, and for the purposes of the the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules, the
Company's total issued share capital will consist of 379,744,923
Ordinary Shares.
The above figure may be used by shareholders as the denominator
for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest
in, the Company, under the Disclosure Guidance and Transparency
Rules.
InTechnology shareholding
Following Admission, InTechnology will hold a total of
193,013,822 Ordinary Shares in the Company, equivalent to 50.8% of
the total issued ordinary share capital of the Company as enlarged
by Admission. In addition, Peter Wilkinson holds a further
38,146,141 Ordinary Shares, equivalent to 10.0% of the total issued
ordinary share capital of the Company on Admission. InTechnology
also holds 71,276,735 Preference Shares.
Enquiries:
Mobile Tornado Group plc www.mobiletornado.com
Jeremy Fenn, Chairman +44 (0)7734 475 888
Allenby Capital Limited (Nominated
Adviser & Broker) +44 (0)20 3328 5656
James Reeve / Nicholas Chambers
Walbrook PR Ltd +44(0)2079338780 or
Paul Cornelius mobiletornado@walbrookpr.com
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END
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