Unaudited Interim Results for the six month period ended 30 June 2009
Embargoed Release: 07:00hrs, Monday 28th September 2009
Toumaz Holdings Limited
(‘Toumaz Holdings’ or the ‘Group’)
Unaudited Interim Results
for the six month period ended 30 June 2009
Toumaz Holdings (AIM:TMZ), the niche investor specialising in ultra-low power wireless infrastructure technologies with strong commercial propositions for the healthcare and electronic sectors, is pleased to present its unaudited interim results for the six month period ended 30 June 2009 (the ‘period’).
Highlights:
- The Group made a pre-tax loss of £939,000 (2008:£1,751,000) reflecting the increased net revenue from Toumaz Technology Limited and its contracts with various partners and reduced operating costs
- The loss per share was 0.32 pence (2008:0.81 pence)
- Toumaz Technology Limited Successfully Delivers Technology Platform for collaborative EU-funded DIAdvisor™ Clinical Trial
- Major Board changes
- Acquisition of remaining shares in Future Waves (UK) Limited by way of a share swap
- Consolidation of Toumaz Technology Limited and Future Waves commences
- Two equity fundraisings totalling £3.5 million to fund the working capital requirements of the Group
- Licensing deal with Imagination Technologies Ltd. to create next generation multimedia integrated System-on-Chip solution
Post-period Highlights:
- Timely delivery of Sensium™ digital plasters and system software for vital sign monitoring for first clinical trials in London
- Relationship with CareFusion (the Cardinal Health Inc. spin-out) remains strong with technology and regulatory programme on track
- New Xenif chip based on latest ENSIGMA and META IP cores from Imagination Technologies Ltd. First samples are expected in Q1, 2010
- Improved, lower cost Fenix 1 chip taped out
- New ultra-low power, Sensium™ compatible wireless chip, Telran, introduced by Toumaz Technology Limited
- Significant cost savings and efficiencies from consolidation of Toumaz Technology Limited and Future Waves
- CEO Professor Christofer Toumazou FRS wins prestigious World Technology Award
- Placing of £3 million, funds to be used for working capital purposes
Professor Christofer Toumazou FRS, chief executive officer of Toumaz Holdings, commented:
“I am delighted with the progress made by the Group during the period. For instance, the Sensium™ digital plasters that could transform future vital sign monitoring are about to enter clinical trials. Future Waves is also rapidly developing new chips including an improved, lower cost Fenix 1 and our new Xenif chip, now under prototype manufacturing, is expected to play a pivotal role in the new generation of PURE’s internet connected radio products.
The Group continues to strengthen following the consolidation of Toumaz Technology and Future Waves, and we remain confident that as a result of the many accomplishments this year, the commercialisation pipeline remains firmly on track as the Group continues to move towards profitability.”
For Further Enquiries:
Patrick Stephansen |
Toumaz Holdings Limited |
Tel: +44 (0) 207 355 0036 |
Charles Cunningham |
FinnCap |
Tel: +44 (0) 207 600 1658 |
Vikki Krause / |
Hansard Group |
Tel: +44 (0) 207 245 1100 |
CHAIRMAN'S STATEMENT
During the first six months of 2009, the Group underwent many changes to its structure, designed to strengthen its commercial proposition going forward. Over the period, and as referred to in the 2008 Preliminary Results (announced 22 June 2009), Toumaz Holdings announced a number of new Board appointments: Sir Richard Sykes FRS became executive chairman, with Professor Christofer Toumazou FRS as chief executive officer and Patrick Stephansen as chief financial officer. The Board was completed by non-executive directors Dr. Hossein Yassaie, Dr. Martin Knight, Dr. Winston Wong, Dr. Ian McWalter and Serge Grisard.
In addition, Toumaz Holdings acquired the remaining shares of Future Waves (UK) Limited (‘FW’) by way of a share swap and commenced its consolidation into the Group. Technical achievements included the successful delivery of the technology platform for the €7.1 million EU-funded collaborative DIAdvisor™ Clinical Trial.
To target some of the most important emerging markets and further develop its existing relationship with Imagination Technologies Group PLC (‘Imagination’), Toumaz Holdings also signed a further intellectual property (‘IP’) licensing deal. Under the agreement Toumaz Holdings has gained access to Imagination’s market-leading next generation communication and digital radio multimedia technologies, including META Series2 and ENSIGMA UCC Series3 IP cores, allowing the Group to fully exploit the synergy between Imagination’s communication and multimedia IP and Toumaz Holding’s unique AMX RF (radio frequency) platform technology in System-on-Chips (‘SoC’), targeting important and fast-developing consumer connected-device markets.
In the period, Toumaz Holdings raised a total of £3.5 million before expenses, to fund the Group’s development and commercial programmes. Since the period-end, the Group has raised a further £3 million.
The Group made a pre-tax loss of £939,000 (2008:£1,751,000) reflecting the increased net revenue from Toumaz Technology and its contracts with various partners and reduced operating costs. The loss per share was 0.32 pence (2008:0.81 pence)
Toumaz Technology – Healthcare
Sensium™ Digital Plaster
One of Toumaz Technology’s key objectives for 2009 has been to deliver its digital plaster system, based on its core Sensium™ technology, for clinical trials. At end-August 2009, Toumaz Technology completed the development and pilot batch manufacture of the first digital plasters. Together with associated system software the plasters were ready as scheduled for the commencement of Stage 1 clinical trials at the Imperial College Hospitals in London. The trials are sponsored by CareFusion Corporation (‘CareFusion’), the former Clinical Technologies and Services division of Cardinal Health Inc. which was spun out and listed on the NYSE on 1 September 2009. The timely delivery of the plasters represents a significant achievement by our committed staff. The relationship with CareFusion remains strong; Toumaz Technology: in conjunction with CareFusion, is currently working with US regulatory advisors to determine the most effective way to reduce the time to full commercial release of the digital plaster systems in US hospitals.
DiAdvisor™
The DiAdvisor™ European collaborative diabetes project continues to make good progress. The successful delivery by Toumaz Technology of the technology platform has enabled the first clinical trials (in France, Italy and Czech Republic) to be completed and the data is now being analysed. Toumaz Technology is now working on the new mobile data acquisition platforms for the next clinical trials. The initial results of the first trials indicate that DiAdvisor™ can deliver its objective of developing a method and prediction-based tool that can vastly improve the lives of millions of insulin dependent diabetics throughout Europe and the rest of the world.
Telran
Toumaz Technology has introduced a new ultra-low power wireless chip product, “Telran”. The chip is a simplified version of the Sensium™ chip; in essence it comprises the radio transceiver, and whilst arguably the world’s lowest power general purpose radio transceiver chip, it also offers low cost connectivity to Sensium™ devices. In this capacity it is expected to play an important role in Sensium™ enabled consumer devices that connect individuals in the home to health and wellness service providers. Prototype samples and evaluation kits are now being supplied to customers.
Life Pebble System
The Toumaz Life Pebble body worn monitor has now been CE marked and is now approved for sale throughout Europe as a medical device without further approvals from national regulators.
Future Waves – Consumer Applications
The acquisition of FW and the alignment of strategies across the Group have allowed FW’s management to focus on key customer engagements, higher margin opportunities and cost reductions. Accordingly, a product roadmap review has led to a cost reduction and improvement programme for Fenix 1, which has brought immediate benefits by extending the lifetime of this already successful product and improving its production yields and sales margins. Fenix 1 sales remain focused on current customers, in particular PURE (a division of Imagination). A new programme introducing complete modules from FW, based on Fenix 1, is underway, building on FW’s earlier development work. The module business offers higher margins, greater customer loyalty and importantly an internal “socket” for Xenif, FW’s next generation System-on-Chip (‘SoC’), as it becomes available as a full production part in Q3 next year.
The design for the latest Xenif device has now been released for prototype manufacturing, and preliminary work has commenced by the (now combined) Toumaz/FW semiconductor development team to take delivery of the new chip in Q1 next year. Discussions with PURE, and other potential customers, indicate that Xenif will play a key role in a new generation of internet connected radios. Other customers and applications for this exciting new chip are being identified.
By acquiring FW and consolidating the business with Toumaz Technology, significant cost reductions in FW’s operating budget have already been achieved. FW’s Hong Kong and Korean offices have been closed, the main office in Taipei has been downsized and further savings have been created by the integration of various activities across Toumaz Holdings. In addition, further cost efficiencies are being produced by the implementation of changes to material supply; silicon manufacturing (foundry) costs are expected to reduce.
Consolidation of Toumaz Technology and Future Waves
The consolidation and rationalisation across the Group have provided immediate benefits. Semiconductor design for both healthcare (Toumaz Technology) and consumer (FW) products have been combined in an expanded team in the UK. Building on existing expertise and experience, the consolidated team now has sufficient depth and critical mass to rapidly produce new products. As an indication of the maturing of the business and the power of the core AMx technology, a number of the new products under development are improvements and variants on existing devices. Importantly this allows product families that address broader customer needs and higher margin products to be produced at significantly lower, incremental costs. Telran and the improved Fenix 1 are examples of this trend.
Concurrently, additional applications engineering for the healthcare and consumer markets is underway in Taiwan. We are utilising the skill and experience of the Taiwan team and taking advantage of the proximity to local subcontractor and supplier bases that are generally cheap, fast and of a very high quality. The new FW modules and the Telran evaluation kits (for Toumaz Technology) illustrate our success in adopting this strategy.
At the strategic level, the consolidation has led to a new product roadmap that demonstrates; the incremental development of current product lines such as Sensium™, Fenix 1 and Xenif; the development of product families; and the production of innovative integrated products offering seamless convergence of healthcare and consumer applications through the relationship with Imagination.
World Technology Awards
The Board is delighted to report that on 16 July 2009 Toumaz Holding’s co-founder and chief executive officer Professor Christofer Toumazou FRS won the 2009 World Technology Award (‘WTA’) in the Health and Medicine category. The prestigious WTA are given in recognition of those individuals and companies doing innovative work of "the greatest likely long-term significance" in their respective fields. It is worth noting that World Technology Network founder and chairman, James P. Clark, said of Professor Toumazou: “Professor Chris Toumazou is a great example of an extraordinary individual working tirelessly on technologies and businesses that are actively creating the future, as exemplified by the pioneering digital band-aid healthcare product now entering the market through Toumaz Technology”. Other winners included ‘Face-book’ and YouTube.
Outlook
As previously stated in our 2008 Report and Accounts, 2009 is a year of continuing development and progress with the further strengthening of our existing partner relationships by timely delivery of milestones and by generating opportunities to develop new relationships with key players in our target markets. Significant increases in volume and revenue for product from both Toumaz Technology and FW are expected in Q4 2010. The Group expects to reach profitability in 2011; Toumaz Technology revenues are projected to come from its existing products - Sensium™ chips and digital plasters based on Sensium™ technology; while FW anticipates building sales from its current product Fenix 1 and its new Xenif chip, which will go into production in Q3 2010. Both businesses have key partners in place to underpin sales growth (CareFusion and PURE).
The technology programmes remain on track and we are already realising the benefits of the consolidation. For the remainder of 2009, our focus will continue to be on our core customers, CareFusion and PURE, for the healthcare and consumer markets. Furthermore, we will continue with our planned programme of investment in product development and generating new commercial opportunities.
Sir Richard Sykes FRS
Chairman
25th September 2009
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2009
|
Note |
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
Continuing operations |
|
|
|
|
Revenue |
|
2,641 |
713 |
2,754 |
|
|
|
|
|
Cost of sales |
|
(1,063) |
(106) |
(736) |
|
|
|
|
|
Gross profit |
|
1,578 |
607 |
2,018 |
|
|
|
|
|
Administrative expenses - amortisation of intellectual property |
|
(267) |
(374) |
(534) |
Administrative expenses - other |
|
(2,046) |
(2,268) |
(4,599) |
Total administrative expenses |
|
(2,313) |
(2,642) |
(5,133) |
|
|
|
|
|
Loss from operations |
|
(735) |
(2,035) |
(3,115) |
|
|
|
|
|
Result from equity accounted joint venture |
|
- |
- |
(162) |
Impairment of equity accounted joint venture |
|
(2) |
- |
(204) |
Result from equity accounted associate |
|
- |
- |
(576) |
Reversal of impairment of equity accounted associate |
|
|
- |
1,249 |
Loss on disposal of interest in joint venture |
|
(172) |
- |
- |
Finance income |
|
1 |
22 |
133 |
Finance expense |
|
(31) |
- |
- |
|
|
|
|
|
Loss before taxation |
|
(939) |
(2,013) |
(2,675) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
- |
262 |
440 |
|
|
|
|
|
Loss for the period |
|
(939) |
(1,751) |
(2,235) |
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Currency translation |
|
38 |
- |
- |
Reversal of losses from associate |
|
172 |
- |
- |
Reversal of losses from joint venture |
|
2,801 |
- |
- |
other comprehensive income |
|
3,011 |
- |
- |
Total comprehensive income for the period |
|
2,072 |
(1,751) |
(2,235) |
|
|
|
|
|
Basic and diluted loss per ordinary share |
4 |
(0.32p) |
(0.81)p |
(1.01)p |
The reversal of losses from associate and joint venture relate to the losses previously recognised in the income statement relating to the associate and joint venture which became subsidiaries during the period ended 30 June 2009. This reversal is required under IFRS 3 Business Combinations
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2009
|
Note |
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
ASSETS |
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
5 |
28,042 |
13,169 |
12,901 |
Property, plant and equipment |
|
338 |
189 |
171 |
Interests in joint venture |
|
- |
276 |
28 |
Interests in associates |
|
- |
- |
1,407 |
|
|
28,380 |
13,634 |
14,507 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
|
232 |
- |
120 |
Tax receivable |
|
440 |
262 |
439 |
Trade and other receivables |
6 |
1,186 |
815 |
888 |
Cash and cash equivalents |
|
645 |
724 |
296 |
Total current assets |
|
2,503 |
1,801 |
1,743 |
|
|
|
|
|
Total assets |
|
30,883 |
15,435 |
16,250 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
7 |
3,980 |
1,671 |
1,628 |
Total current liabilities |
|
3,980 |
1,671 |
1,628 |
|
|
|
|
|
Non-current liabilities |
|
- |
609 |
500 |
|
|
|
|
|
Total liabilities |
|
3,980 |
2,280 |
2,128 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
8 |
1,046 |
544 |
602 |
Share premium |
|
37,351 |
25,933 |
27,237 |
Share based payment reserve |
|
902 |
662 |
751 |
Profit and loss account |
|
(12,396) |
(13,984) |
(14,468) |
Equity shareholders’ funds |
|
26,903 |
13,155 |
14,122 |
|
|
|
|
|
Total equity and liabilities |
|
30,883 |
15,435 |
16,250 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
SIX MONTHS ENDED 30 JUNE 2009
|
Share |
Share |
Share |
Retained |
Total equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 1 January 2009 |
602 |
27,237 |
751 |
(14,468) |
14,122 |
Share options issued in share-based payments |
- |
- |
151 |
- |
151 |
Issue of share capital |
444 |
10,217 |
- |
- |
10,661 |
Costs of share issue |
- |
(103) |
- |
- |
(103) |
Transactions with owners |
444 |
10,114 |
151 |
- |
10,709 |
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
(939) |
(939) |
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
Exchange differences on translation of foreign operations |
- |
- |
- |
38 |
38 |
Reversal of losses from joint venture |
|
|
|
172 |
172 |
Reversal of losses from associate |
- |
- |
- |
2,801 |
2,801 |
Total comprehensive income for the period |
- |
- |
- |
3,011 |
3,011 |
Balance at 30 June 2009 |
1,046 |
37,351 |
902 |
(12,396) |
26,903 |
|
|
|
|
|
|
|
Share |
Share |
Share based |
Retained |
Total equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 1 January 2008 |
544 |
25,933 |
575 |
(12,233) |
14,819 |
|
|
|
|
|
|
Share options issued in share-based payments |
- |
- |
87 |
- |
87 |
Transactions with owners |
- |
- |
87 |
- |
87 |
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
(1,751) |
(1,751) |
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
- |
- |
- |
(1,751) |
(1,751) |
Balance at 30 June 2008 |
544 |
25,933 |
662 |
(13,984) |
13,155 |
|
|
|
|
|
|
|
Share |
Share |
Share |
Retained |
Total equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Balance at 1 January 2008 |
544 |
25,933 |
575 |
(12,233) |
14,819 |
|
|
|
|
|
|
Share options issued in share-based payments |
- |
- |
176 |
- |
176 |
Issue of share capital |
58 |
1,337 |
- |
- |
1,395 |
Costs of share issue |
- |
(33) |
- |
- |
(33) |
Transactions with owners |
58 |
1,304 |
176 |
- |
1,538 |
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
(2,235) |
(2,235) |
|
|
|
|
|
|
Total comprehensive income for the period |
- |
- |
- |
(2,235) |
(2,235) |
Balance at 31 December 2008 |
602 |
27,237 |
751 |
(14,468) |
14,122 |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD 30 JUNE 2009
|
|
Unaudited |
Unaudited |
Audited |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Loss before taxation |
|
(939) |
(2,013) |
(2,675) |
Amortisation |
|
267 |
266 |
534 |
Depreciation |
|
50 |
26 |
63 |
Share of loss of associates |
|
- |
108 |
576 |
Impairment of equity accounted associate |
|
|
- |
(1,249) |
Loss on disposal of joint venture |
|
172 |
- |
- |
Share of loss of joint venture |
|
- |
- |
162 |
Provision against loan from joint venture |
|
- |
- |
204 |
Share based payments |
|
151 |
87 |
176 |
Interest received |
|
(1) |
(22) |
(133) |
Interest paid |
|
31 |
- |
- |
Increase in inventories |
|
(44) |
15 |
(105) |
Decrease/(increase) in trade and other receivables |
|
20 |
(438) |
(511) |
(Decrease)/increase in trade and other payables |
|
(1,221) |
1,077 |
925 |
Foreign exchange reserve movement |
|
39 |
- |
- |
Tax refund |
|
- |
392 |
393 |
Net cash outflow from operating activities |
|
(1,475) |
(502) |
(1,640) |
Cash flows from investing activities |
|
|
|
|
Purchase of and loans to investments and associates |
|
(907) |
(176) |
(822) |
Payments to acquire intangible fixed assets |
|
(731) |
- |
- |
Purchase of subsidiary undertaking |
|
(49) |
- |
- |
Net cash acquired with subsidiary undertaking |
|
162 |
- |
- |
Sale of investment in other activities |
|
25 |
- |
- |
Purchase of other non-current assets |
|
(5) |
(155) |
(175) |
Interest paid |
|
(31) |
- |
- |
Interest received |
|
1 |
22 |
36 |
Net cash used in investing activities |
|
(1,535) |
(309) |
(961) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of share capital |
|
3,462 |
- |
1,395 |
Share issue costs |
|
(103) |
- |
(33) |
Net cash inflow from financing activities |
|
3,359 |
- |
1,362 |
|
|
|
|
|
Net change in cash and cash equivalents |
|
349 |
(811) |
(1,239) |
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
296 |
1,535 |
1,535 |
|
|
|
|
|
Cash and cash equivalents at end of period |
|
645 |
724 |
296 |
|
|
|
|
|
NOTES TO THE INTERIM REPORT
FOR THE PERIOD ENDED 30 JUNE 2009
1 GENERAL INFORMATION
The information for the period ended 30 June 2009 does not constitute statutory accounts as defined in the Companies Act 2006. The figures for the year ended 31 December 2008 have been extracted from the 2008 statutory financial statements prepared under International Financial Reporting Standards (IFRS). The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985, however readers should note that the report of the independent auditors included an emphasis of matter paragraph as follows:
"Emphasis of matter - going concern
In forming our opinion, which is not qualified, we have considered the adequacy of the disclosure made in the principal accounting policies of the financial statements for the year ended 31 December 2008 concerning the Group's ability to continue as a going concern. The Group incurred a net loss of £2,235,000 during the year ended 31 December 2008. This condition, along with the other matters explained in the principal accounting policies, in particular the requirement to raise further funding from existing and new shareholders, 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."
2 ACCOUNTING POLICIES
BASIS OF PREPARATION
The Company was incorporated in the Cayman Islands which do not prescribe the adoption of any particular accounting framework. The Board have resolved that the Company will follow IFRS and apply the Companies Act 2006 when preparing its annual financial statements.
The principal accounting policies of the Group remain unchanged from those set out in the Group's 2008 annual report except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007) and IFRS 8 Operating Segments.
The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income, for example translation differences. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'.
The adoption of IFRS8 has not changed the segments that are disclosed in the interim financial statements
critical accounting estimates and judgements
The Group 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 accounting year are detailed below;
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting 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 accounting period are discussed below:
Going concern
The interim report has been prepared on the going concern basis. As detailed in the section above headed 'Going concern' the preparation of the interim report on the going concern basis is initially dependent [on fund raising which is not completed nor committed.] Therefore, there is some uncertainty over the appropriateness of preparing the financial statements on a going concern basis.
Impairment of assets
The Group conducts impairment reviews of assets when events or changes in circumstances indicate that their carrying amounts may not be recoverable annually, or in accordance with the relevant accounting standards. An impairment loss is recognised when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assesses the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgments are applied in determining these future cash flows and the discount rate.
Valuations of share options granted
The fair value of share options granted was calculated using a standard methodology, called the Binomial option pricing model, which requires the input of highly subjective assumptions, including the volatility of share price. Because changes in subjective input assumptions can materially affect the fair value estimate, in the opinion of Directors of the Company, the existing model will not always necessarily provide a reliable single measure of the fair value of the share options.
CRITICAL JUDGEMENTS IN APPLYING THE GROUP'S ACCOUNTING POLICIES
Management in applying the accounting policies, consider that the most significant judgements they have had to make are whether any impairment provision is required against the intellectual property and goodwill on consolidation and interests in associates.
The accounting for the acquisition of Future Waves (UK) Limited as of the fill acquisition was completed during the period ended 30 June 2009. Management have accounted for the acquisition of Future Waves (UK) Limited in one step. At the date of acquisition, however Toumaz Holdings Limited owned 23.2% of Future Waves (UK) Limited. This, therefore, constitutes a stepped acquisition and in accordance with IFRS 3 Business Combinations goodwill should be revised at each stage of the acquisition. The difference in the value of the goodwill associated with the acquisition if it had been accounted for as a stepped acquisition is not significant and therefore management have accounted for this as the Company had been acquired in one stage.
3 SEGMENTAL REPORTING
a) Primary reporting format - business segment
As defined under International Accounting Standard 14 "Segment Reporting" (IAS 14), the only material business segment the Group has is that of the commercial exploitation of nano technologies.
b) Secondary reporting format - geographical segment
Under the definitions contained in IAS 14 the only material geographic segment that the Group operates in is the UK.
4 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The impact of the share options and share warrant on the loss per share is anti-dilutive.
|
Basic loss per share |
||
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
Loss on ordinary activities after tax |
£939,000 |
£1,751,000 |
£2,235,000 |
|
|
|
|
Weighted average number of 0.25p ordinary shares |
289,293,906 |
217,459,138 |
220,674,233 |
|
|
|
|
(Loss) per share - basic and diluted |
(0.32)p |
(0.81)p |
(1.01)p |
5 INTANGIBLE ASSETS
|
|
Intellectual |
Goodwill on |
Total |
|
|
£'000 |
£'000 |
£'000 |
Cost |
|
|
|
|
At 1 January 2008, 30 June 2008 and 31 December 2008 |
|
4,016 |
10,582 |
14,598 |
|
|
|
|
|
Additions |
|
4,227 |
11,181 |
15,408 |
At 30 June 2009 |
|
8,243 |
21,763 |
30,006 |
Amortisation |
|
|
|
|
At 1 January 2008 |
|
1,163 |
- |
1,163 |
Charge in the period |
|
534 |
- |
534 |
At 31 December 2008 |
|
1,697 |
- |
1,697 |
Charge in the period |
|
267 |
- |
267 |
At 30 June 2009 |
|
1,964 |
- |
1,964 |
|
|
|
|
|
Net book value at 30 June 2009 |
|
6,279 |
21,763 |
28,042 |
|
|
|
|
|
Net book value at 31 December 2008 |
|
2,319 |
10,582 |
12,901 |
The goodwill on consolidation relates to the acquisition of Toumaz Technology Limited on 3 November 2005 and the acquisition of Future Waves (UK) Limited on 20 May 2009.
The other intangible asset relates to the option to exploit certain intellectual property rights and intellectual property relating to the core technology acquired on the acquisition of Toumaz Technology Limited and the license agreement with Imagination Technologies. The consideration for the license agreement with Imagination Technologies consists of a number of payments scheduled over the duration of the Group's development projects. The first of these payments, amounting to US$2.5 million, was settled through the issue off 28,153,153 new ordinary shares in Toumaz holdings Limited on 14 May 2009. The remainder of the payments have been or will be settled in cash.
The goodwill arising on the acquisition of Future Waves (UK) Limited is provisional as a full review and valuation of the fair values of the tangible and intangible assets acquired has yet to be undertaken. This will be undertaken prior to the finalisation of the financial statements for the year ending 31 December 2009.
6 TRADE AND OTHER RECEIVABLES
|
Unaudited |
Unaudited |
Audited |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Trade receivables |
764 |
565 |
477 |
Other debtors |
180 |
25 |
126 |
Prepayments and accrued income |
242 |
225 |
285 |
Trade and other receivables, net |
1,186 |
815 |
888 |
Trade and other receivables are usually due within 30 - 60 days and do not bear any effective interest rate.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.
7 TRADE AND OTHER PAYABLES
|
Unaudited |
Unaudited |
Audited |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Trade and other payables |
572 |
372 |
840 |
Other creditors |
1,988 |
53 |
142 |
Accruals and deferred income |
1,420 |
1,246 |
646 |
|
|
|
|
Trade and other payables |
3,980 |
1,671 |
1,628 |
|
|
|
|
Due after one year |
|
|
|
Accruals and deferred income |
- |
609 |
500 |
The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.
8 SHARE CAPITAL
|
Unaudited |
Unaudited |
Audited |
|
£'000 |
£'000 |
£'000 |
Authorised |
|
|
|
4,000,000,000 ordinary shares of 0.25p |
10,000 |
10,000 |
10,000 |
|
|
|
|
Allotted, issued and fully paid |
|
|
|
418,401,272 (30 June 2008: 217,459,138, 31 December 2008: 240,717,469) ordinary shares of 0.25p |
1,046 |
544 |
602 |
Allotments during the period
On 26 January 2009 Toumaz Holdings Limited raised £562,000 by way of a placing of 9,360,538 new ordinary shares of 0.25p each ('Placing Shares') in the Company at a price of 6p. The placing completed the three-stage fundraising that was previously announced on 16 October 2008 and 26 November 2008 where the shares were also placed at 6p.
In addition, on 15 May 2009, Toumaz Holdings Limited placed 48,333,333 new Ordinary Shares of 0.25p each at a price of 6p, with certain existing and new shareholders to raise £2,900,000 before expenses. On the same date 28,153,153 shares were issued in part settlement of a US $2.6 million licence fee payable to Imagination Technologies. On 20 May 2009, 91,836,779 shares were issued to the vendors of Future Waves (UK) Limited as acquisition consideration for that company.
Warrants
On 21 February 2005 a warrant was issued to Strand Partners Limited, the Company's Nominated Advisor, in connection with their role in the admission of the Company to the AIM market. The warrant entitles Strand Partners Limited to subscribe, at a price of 10p per share, for such number of ordinary shares as are equivalent (on a fully diluted basis) to one per cent. of the issued ordinary share capital of the Company at that time. The issued warrant may be exercised at any time during the period from 8 March 2005 to 8 March 2010.
The fair value of the warrants granted was determined using the Black-Schöles valuation model and £20,000 of share based expense has been included in the share premium account as a cost of the admission to AIM which gave rise to a share based payment reserve. No liabilities were recognised due to share based payment transactions.
11 ACQUISITIONS AND DISPOSALS
Sentinel Healthcare Limited ("Sentinel")
On 15 January 2009 Toumaz Holdings Limited increased its total interest in Sentinel from 50.5% to 81.25% having acquired the additional 31.25% shareholding from Continum Group Limited for £1 in cash. However, following a review of its activities the decision was taken by the Board to dispose of the majority of this interest in Sentinel to reflect the Group's increased focus on its two primary investments Future Waves UK Limited and the wholly-owned subsidiary undertaking, Toumaz Technology Limited. Accordingly, on 14 April 2009 Toumaz Holdings Limited disposed of 76.75 per cent. of its shareholding of Sentinel for a consideration of £25,000 to Neil Bryant, a director of Sentinel. Toumaz Holdings Limited retained a five per cent, shareholding in Sentinel. For the year to 31 December 2008, Sentinel made a loss of £323,000.
Acquisition of Future Waves UK Limited ("Future Waves")
On 20 May 2009, Toumaz Holdings Limited acquired the remaining share capital of Future Waves UK Limited ('Future Waves'), in which it already held a 23.2 per cent. interest, on the basis of a share swap on a two for one relative valuation. Under the proposals, Future Waves shareholders received 16.22 new ordinary shares in Toumaz Holdings Limited for each ordinary Future Waves share resulting in the issue of an additional 91,836,779 new ordinary shares in the Company. Toumaz Holdings Limited intends to consolidate Future Waves with Toumaz Technology Limited ("Toumaz Technology") to benefit from technology and cost synergies.
The book values under IFRS and the provisional fair values of the assets and liabilities of the acquired entity as at the date of acquisition were as follows:
|
|
Book value |
Fair value |
Fair value to |
|
|
$'000 |
$'000 |
$'000 |
|
|
|
|
|
Non- current assets |
|
|
|
|
Property, plant and equipment |
|
343 |
- |
343 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventory |
|
206 |
- |
206 |
Trade and other receivables |
|
418 |
- |
418 |
Cash and cash equivalents |
|
262 |
- |
262 |
Total assets |
|
1,229 |
- |
1,229 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
(2,856) |
- |
(2,856) |
Total liabilities |
|
(2,856) |
- |
(2,856) |
Net liabilities |
|
(1,627) |
- |
(1,627) |
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
Sterling equivalent of net liabilities (at US$1.618: £1) |
|
(1,005) |
- |
(1,005) |
|
|
|
|
|
Goodwill arising on acquisition |
|
11,181 |
- |
11,181 |
Consideration |
|
10,176 |
- |
10,176 |
|
|
|
|
|
|
|
£'000 |
|
|
Consideration is represented by: |
|
|
|
|
Fair value of shares issued (91,836,779 at 6p, being the market value of the shares at the date of acquisition) |
|
5,510 |
|
|
Cost associated with the acquisition, settled in cash |
|
51 |
|
|
Cost of acquisition of Future Waves in respect of 23.2% previously held |
|
4,615 |
|
|
|
|
|
|
|
|
|
10,176 |
|
|
|
|
|
|
|
The intangible assets of Future Waves will be independently valued and any remaining difference between the fair value of net liabilities acquired and the fair value of the consideration will be treated as goodwill.
In addition, Future Waves employee share options were transferred and converted into Toumaz holdings Limited share options representing a total of 8,507,390 options. A fair value adjustment in respect of the cancellation of the old share options and new share based payment charge will be made and the goodwill will be reduced accordingly.