22 Jun 2009 07:00
Embargoed Release: 07:00hrs, Monday 22nd June 2009
Toumaz Holdings Limited (`Toumaz Holdings' the `Group' or the `Company') Final Results for the Year Ended 31 December 2008
Toumaz Holdings, 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 preliminary results for the year ended 31 December 2008 (the `period').
Highlights:
- 2008 Revenues rose to £2.754 million from £174,000 in 2007 and
pre-tax losses were reduced by 65 percent to £2.675 million (2007: £7.726
million)
- Licensing agreement with Texas Instruments Inc for Sensiumâ„¢
Generation 1 chip in healthcare sector
- Licensing agreement with Infineon Technologies AG for non-medical
market use of AMxâ„¢ platform
- Collaboration in diabetes monitoring consortium awarded €7.1
million EU Grant
- Sensiumâ„¢ Generation 1 chip reaches production in December 2008
- Qualification and formal acceptance of Sensiumâ„¢ by Cardinal
Health Inc. in Q2 2008; wireless digital plaster monitoring system development
project commences
- ISO13485 medical quality system certification received in Jan
2008 - a key step in the transition to a healthcare business rather than a
chip supplier
- Group's name changed to Toumaz Holdings to better reflect the
direction and focus of the Group
Post-period Highlights:
- Major Board changes; Sir Richard Sykes FRS is appointed executive
chairman, Professor Christofer Toumazou FRS becomes chief executive officer
and Patrick Stephansen is chief financial officer
- Acquisition of remaining shares in Future Waves (UK) Limited
(`Future Waves') by way of a share swap
- Consolidation of Toumaz Technology Limited (`Toumaz Technology')
and Future Waves commences
- Equity Fundraising of £2.9 million to fund the early working
capital requirements of the enlarged Group
- Licensing deal with Imagination Technologies Ltd to create next
generation multimedia integrated System-on-Chip (`SoC') solution
- Sale of majority of Sentinel Healthcare Solutions Limited, Toumaz
Holdings retains five percent of the company
Sir Richard Sykes FRS, chairman of Toumaz Holdings, commented:
"Toumaz Holdings is building a compelling business that is reinforced with the completion of the acquisition of Future Waves and the consolidation of the company with Toumaz Technology. Resources will be better utilised and new market opportunities are emerging.
"The key partnerships we have nurtured have strengthened as development programmes continue and technical milestones are reached on schedule. Both Toumaz Technology and Future Waves have reached the commercialisation stage with their first generation products and remain on course to deliver their end-to-end solutions to the healthcare and consumer product markets."
Professor Christofer Toumazou FRS, chief executive officer of Toumaz Holdings, commented:
"The key objectives for the businesses over the next period are to deliver to the milestones in support of key lead customers. For Toumaz Technology this includes delivering the Sensiumâ„¢'s solution for digital plaster system clinical trials in Imperial College's hospitals later this year and for Future Waves the first key milestone is the timely delivery of samples of its next generation and highly integrated SoC solution to key customers including PURE Digital before the end of 2009."
A copy of the 2008 Report and Accounts will be available for download at the Group's website: www.toumazholdings.com
For Further Enquiries:
Patrick Toumaz Holdings Tel: +44 (0) 207 3550036Stephansen Limited Charles FinnCap Tel: +44 (0) 207 6001658Cunningham Vikki Krause Hansard Group Tel: +44 (0) 7515 922906 CHAIRMAN'S STATEMENT
I am pleased to report the period was one of significant progress for Toumaz's main investments; its wholly-owned subsidiary Toumaz Technology and its previously partly owned, now fully owned Future Waves business.
During the period, the Group recorded a large increase in revenue to £2.754 million in comparison to £174,000 in the previous year. In addition, pre-tax losses significantly reduced to £2.765 million (2007: £7.726 million). The increased revenue derived from development income from Toumaz Holdings' key partners. The substantial improvements in our financial results is a confirmation of our technological and commercial progress being validated and adopted by market leaders in their respective industries.
AMx Platform
Toumaz Technology and Future Waves have always been synergistic in the AMx technology platform, a flexible multi-standard RF CMOS radio, they utilise. AMx is essentially an ultra low power platform that can be, and has been, applied to a number of verticals; Toumaz Technology focuses on the healthcare sector while Future Waves targets consumer products incorporating multi-standard broadcast and receiver solutions. Using the AMx platform as an enabling mechanism, both companies have added application layers with key partners to create an end-to-end solution to sell to their chosen markets. Toumaz Technology's Sensiumâ„¢ has a complete solution using sensors to monitor human vital signs while Future Waves will produce its AMx-complementary next generation SoC; a multi-standard multimedia solution for numerous emerging broadcast and internet devices such as digital radios and TVs. While the verticals for the two businesses differ, their business models are highly synergistic deploying the same underlying technologies in delivering more complete solutions with enhanced revenue and profit opportunities rather than focusing on lower value partial offerings.
Toumaz Technology
In 2008, Toumaz Technology's revenues increased significantly to £2.75 million (2007: £174,000) and pre-tax losses were reduced to £2.2 million (2007: £3.4 million). Revenues were predominantly derived from development income from the company's agreements with Texas Instruments Inc. (`TI'), Cardinal Health Inc. (`Cardinal Health') and Infineon Technologies AG (`Infineon').
Toumaz Technology's key strategic relationship with global healthcare product and service provider Cardinal Health developed further through its qualification and formal acceptance of Toumaz Technology's Sensiumâ„¢ at the end of Q2 2008. A development project based around Sensiumâ„¢'s technology has since commenced, including the design and manufacture of wireless disposable body monitoring `digital plasters'.
In March 2008, Toumaz Technology signed a strategic licensing and distribution agreement with TI, a global leader in semiconductor technology, providing Toumaz Technology access to TI's design, process and manufacturing capabilities, and equally importantly, TI's substantial marketing and sales channels for the Sensiumâ„¢ in the healthcare sector.
Toumaz Technology, in addition, signed an agreement with global semiconductor and system solutions provider Infineon to produce the `ELRAN' chip, the first chip using licensed wireless AMxâ„¢ technology in the non-healthcare sector. In the period, Toumaz Technology also received ISO 13485-2003 certification for its patented AMxâ„¢ platform, the regulatory standard for the international medical industry and a requirement for medical device manufacture.
We are also pleased to add that in May 2008, the Group's founder and CEO Professor Toumazou was elected as Fellow of the Royal Society in recognition of his academic work on which much of the AMxâ„¢ technology is based.
Future Waves
At end-2007, Future Waves secured its first major design win for its FENIX 1 chip with PURE Digital (`PURE'), a division of Imagination Technologies Limited (`Imagination') and the UK's number one digital radio manufacturer. PURE has integrated FENIX 1 into its `Highway' product, an easy to fit in-car DAB digital radio with iPod/MP3 connection. Future Waves started volume shipments of FENIX 1 during 2008.
Further optimisation of FENIX 1 has allowed its introduction into a larger range of PURE products. Several hundred thousand FENIX 1-based devices have been sold so far. With FENIX 1 achieving full mass production, Future Waves is confident that it will experience a steady growth in revenues, as the digital and internet radio sector expands as widely forecast.
As announced earlier in 2009, the Group signed an IP licensing deal with Imagination to further extend its existing relationship; Toumaz Holdings gains access to Imagination's market-leading next generation communication and digital radio multimedia IP platform, benefiting both Future Waves and Toumaz Technology. Imagination is currently a major shareholder in Toumaz, holding an 8.4 percent interest.
SAW
SAW (surface acoustic wave) is a five percent Toumaz Holdings' owned project being developed at the Institute of Biomedical Engineering, Imperial College London. Developing a wireless SAW-based pressure transducer that can be permanently implanted in the heart to allow continuous blood pressure monitoring, the project has undergone preliminary clinical trials, with positive results. Development and testing will continue this year. To date, the project has been funded through grants, avoiding any ownership dilution. In 2008, SAW received a £1.6 million grant from the Wellcome Trust and is fully funded for 2009.
Name Change/Strengthening of Board
Following a strategic review in mid-2008 and recognising its previous proposition and positioning lacked clarity, the Board has chosen a more focused business model based on the core AMxâ„¢ technology and delivery of complete solutions to customers. The Toumaz brand is well recognised therefore the change of name to Toumaz Holdings was appropriate. Post-period, Toumaz Holdings has strengthened its Board. I have been appointed the new executive chairman, Professor Christofer Toumazou FRS, co-founder of both Toumaz Technology and Future Waves, is chief executive officer, and Patrick Stephansen, previously a director of Future Waves and Toumaz Technology becomes chief financial officer. Further prominent and relevant non-executive director appointments are Dr. Hossein Yassaie, chief executive officer of Imagination; Dr. Martin Knight, the chief operating officer of Imperial College London and chairman of Imperial Innovations Group plc; Dr. Winston Wong, chief executive officer of Grace T.H.W. Group and Dr. Ian McWalter, currently president and chief executive officer of CMC Microsystems.
Richard Rose, formerly non-executive chairman, Guy Spelman, formerly chief executive officer, and Philippe Tischhauser, non-executive director stepped down from their positions. I would like to thank them once again for their valuable contributions in the development of the Group.
Disposal of Sentinel Healthcare Solutions Limited (`Sentinel')
The Group's strategic review also recognised that Sentinel as a service business sat uneasily in Toumaz Holdings; it has sold the majority of its holdings in Sentinel however retains a five percent stake as part of a deal in which future royalties would be paid to Toumaz Holdings.
Outlook
The Future Waves acquisition and its subsequent consolidation with Toumaz Technology will allow better use of resources and existing synergies will lead to new market opportunities.
Toumaz Technology's development programmes continue apace. In May 2009, Cardinal Health signed a Memorandum of Understanding with Imperial College to run the first clinical trials of the Sensiumâ„¢-based digital plaster system in Imperial's London hospitals. In the same month, TI's extensive Release-to-Market programme for Sensiumâ„¢ Generation 1 chip began. The Sensiumâ„¢ is sold under the TI brand and logo while Toumaz Technology is contractually acknowledged as the licensor of the Sensiumâ„¢ trademark. Phase I trials in the DiAdvisor EU funded project (discussed in the chief executive's report) are nearing completion. The ongoing development projects with Cardinal and TI have significantly reduced Group funding for Toumaz Technology and the trend towards self-sustainability should be maintained, ahead of expected operational profitability in the second half of 2010.
Future Waves' new business model has moved from a component (chips) only supplier to a solutions and subsystem provider in order for Future Waves to obtain satisfactory prices and margins. The Imagination licensing deal will assist in providing a next generation baseband multimedia chip to complement Future Waves' proprietary multi-standard wireless tuner technology, reducing risk and time to market. Additionally it will offer access to PURE and its rapidly expanding global DAB product sales. Future Waves sales to system equipment manufacturers including PURE are expected to grow substantially from mid-2010.
Both Toumaz Technology and Future Waves expect significant product sales to be achieved in the second half of 2010 targeting Group profitability in 2011. 2009 will be 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.
We are grateful to our shareholders for their support throughout the past year and appreciate their continued commitment as the Company invests in increased turnover and future profitability.
Sir Richard Sykes FRSChairman22 June 2009CHIEF EXECUTIVE'S REPORT
I am pleased to present a report on Toumaz Holdings's investments' operations during 2008.
Toumaz Technology
Targeting the Healthcare market
Cardinal Health
Following the signing of the Strategic Alliance Agreement with Cardinal Health in November 2007, Toumaz Technology and Cardinal Health are developing a medical system that will work with the nursing staff to enhance patient care and provide immediate and automatic data capture for real-time feedback and inclusion in an electronic health record. Importantly, the system will provide an auditable log that offers hospitals and clinicians the necessary data to qualify for incentives under the Obama "Recovery Act 2009" that will provide $19 billion to promote the adoption and use of health information technology and electronic health records.
The ultra-low power consumption, small size and low cost of the Toumaz Sensiumâ„¢ (incorporating AMxâ„¢ technology) has led to the realisation of the "digital plaster" or smart patch. This disposable, non-intrusive, simple to use, stick-on device continuously checks patients' vital signs such as heart rate, respiration rate and temperature. Since the Sensiumâ„¢ technology is effectively the key enabler for the wireless monitoring system, Toumaz Technology has been able to negotiate an attractive royalty position related to a share of the gross margin of each disposable digital plaster that will be used. The total market for the digital plasters in the hospital context could be considered to the total number of hospital admissions. In the US this is more than 30 million per year and in the UK it is in excess of 13 million per year.
As an indication of the strength of the relationship between Cardinal Health and Toumaz Technology and the importance of the relationship with Imperial College, the first clinical trials for the digital plaster and wireless monitoring system are planned to commence in the Imperial College hospitals in London in August 2009. These trials will be funded by Cardinal Health but set up and managed by Toumaz Technology.
Looking further forward, Federal Drugs Agency (`FDA') device compliance will commence early in 2010 and is reasonably expected to be completed before the end of the year. Full deployments in US hospitals are planned to be rolled out around the end of 2010 following FDA approval. Product and royalty revenues from the Cardinal Health business are expected to commence in the second half of 2010. There are also substantial opportunities for digital plasters in applications outside of hospitals. These include emergency and first response services, defence, professional sports et cetera that will be investigated.
Texas Instruments (`TI')
Toumaz Technology and TI signed a Licensing, Development and Supply Agreement in March 2008. Under this agreement TI gained access to certain technologies from Toumaz Technology and Toumaz Technology gained an unequalled supply channel for its silicon chip products. TI is the largest supplier of silicon chips for healthcare devices with the largest established customer base in the healthcare industry. To gain access to these customers and to leverage the general reach of the TI sales channel, Toumaz granted an exclusive distribution license for Sensiumâ„¢ Generation 1 to TI. As this chip has been fully funded and developed by Toumaz, the commercial arrangement is based on an equal share of the gross margin on each sale.
After production engineering and qualification was finalised on Sensiumâ„¢ Generation 1, the first production chips were produced in December 2008 by Toumaz Technology's foundry partner Infineon in Germany. Further qualification work was carried out by TI leading to full acceptance of the chip as a TI part - complete with TI logo - and release to market of Sensiumâ„¢ Generation 1 in May this year.
TI are positioning Sensiumâ„¢ not only as a new platform for body area networking devices but also as an upgrade that offers cost reduction and wireless capability for customers producing millions of medical devices such as handheld blood glucose meters. We expect sales to move slowly at first as customers take the chip through a standard design-in cycle into their own products and systems. Experience of other chip products indicates a design-in cycle time of 12 to 18 months hence volumes are expected to ramp up as sales by TI commence.
TI and Toumaz Technology have agreed the specification for a Sensiumâ„¢ Generation 2 and under the terms of the agreement between the parties by which TI will fund the work, Toumaz Technology engineers began design activities on this new chip in Q4, 2008. Since the chip is still based on Toumaz Technology IP, the agreement provides royalty payments to Toumaz Technology on future sales. To date, the Toumaz Technology team have met all milestones on plan and two test chips have been produced.
Life Pebble System
The Life Pebble is a small, ultra-low power vital sign monitoring device developed as an early stage example of the Sensiumâ„¢'s potential as an end-to-end solution. The device continuously monitors common vital signs such as ECG, heart rate, temperature, and physical activity - and streams the data over a short range wireless link to a Sensiumâ„¢ USB Network Adapter or Sensiumâ„¢ Data Logger. Predominantly the Pebble serves as a demonstration platform and is currently used in clinical trials; some revenue is expected to be achieved from sales of the device.
DIAdvisor
DIAdvisorTM is a collaborative large-scale integrating project, funded by a €7.1 million European Community Grant, aiming to develop a prediction-based tool for type I and developed type II diabetes. DIAdvisor™ will allow patients to actively and accurately predict their short-term blood glucose outlook at any time by analysing data retrieved from glucose measurements, insulin delivery data and specific patient parameters. The key data, captured by non-intrusive body-worn wireless monitors including those based on Toumaz Technology's Sensium™ platform, will be used to create physiological mathematical modelling, control and prediction algorithms. The resulting analysis and prediction information will be wirelessly transmitted to a healthcare provider advisory service, with recommended action and treatment advice presented to the patient via a handheld mobile device such as a Personal Digital Assistant (PDA).
The four year project, coordinated by Novo Nordisk A/S, a world leader in diabetes care and including 13 medical, industrial and academic partners, including the European Division of the International Diabetes Federation, commenced in April 2008. It has implemented a large-scale data-acquisition clinical trial involving 90 patients across three sites in Europe; France, Italy and Czech Republic. Toumaz Technology is receiving approximately €700,000 to develop the device platform including hardware, software and sensors. To date, the device platform has been delivered on schedule for the first year of the project.
Future Waves
Targeting the Consumer Product Market
FENIX 1
Future Waves' FENIX 1 chip was the first multi-standard all-CMOS tuner to be offered to the market in 2007. Since then the chip has gone into mass production and is designed into PURE radios as well as several personal multimedia products and DAB radio devices from other manufacturers.
In addition to PURE Digital, Future Waves secured a number of smaller contracts with Korean, Taiwanese and Chinese manufacturers of digital radios and Personal Multimedia Players. New shipments are expected in 2009 to end user countries where digital audio broadcasting is being launched. Detailed discussions with alpha customers and distribution channels in the Far-East are ongoing and ensure that our platform will find a fast route to the end user market in multiple geographies.
Xenif - Future Waves' next generation System-on-Chip
The full ownership of Future Waves by Toumaz Holdings and the new relationship with Imagination Technologies present a new and very exciting route forward for Future Waves. As a result of the important licensing deal with Imagination, Future Waves is developing and will produce a state-of-the-art baseband+application processor chip - codenamed Xenif - with broadcast and Wi-FI / internet functionalities. This chip represents a major step forward in technology and offers customers a significantly enhanced solution for universal digital receiver platforms at a reduced system cost. Xenif will be manufactured on an advanced semiconductor technology node thus reducing silicon area and hence manufacturing costs as well as power consumption. We expect this solution to lead to significantly increased revenues and higher margins for Future Waves. The key advantage of Xenif is a higher level of integration (that is, more functions on the chip) resulting in fewer `off-chip' components for device manufacturers. Xenif-based circuit boards and devices will be smaller and less power hungry, leading to smaller, lower cost batteries and power management systems.
Xenif will be ready for the forthcoming revolution in listeners' habits and use of broadcast and streamed audio in the home and on the move. This revolution is based on 'internet radio', the early signs of which are beginning to be apparent in services such as BBC iplayer, Napster, Pandora, and portal services such as Spinner. Additionally, there are a host of do-it-yourself `radio stations' on the web that are usually part of various on-line communities. First deliveries of Xenif are expected to be in 2010 in time to meet manufacturers' demand for the Christmas season in that year.
Xenif, however, is not simply an internet interface. It is also a multi-standard processor for all current digital broadcast standards. New services that use a combination of internet and broadcast features can be developed around products that use Xenif. When other devices that are broadcast and internet enabled are taken into account, the total market size could reach tens of millions of units by 2011.
Xenif's target markets are primarily the new European DAB and global internet radio sectors. The DAB market alone is currently growing by approximately three million units per year and is expected to grow to circa 10 million units by 2011, as other countries including France and Germany are adopting this family of standards. Furthermore, by 2015, Xenif's market could be in excess of 70 million units for Wi-Fi and Internet radio.
System-On-Chip Integration continues
Leveraging on the technology in FENIX 1 (which itself has roots in the Toumaz AMxâ„¢ technology) and the enhanced capabilities of the integrated design team and making use of the extended scope of the Imagination license, in the medium-term a radically new product combining Toumaz AMx technology and the Xenif platform becomes possible. This super-integrated SoC device will be a major lead ahead of competition and could play a key role in the drive from analogue to digital broadcast services (which now needs to include internet capability) being pushed by governments in Europe, Australia and elsewhere in the on-going quest for bandwidth. This multi-standard functionality, offered in a single chip that will reduce system materials cost and require less power is a very attractive proposition for manufacturers of any device that will benefit from broadcast and network connectivity including radios, TV's, personal multimedia players, netbooks, laptops, cell phones.
The release date for mass production of this new SoC is not yet fixed but prototypes are planned for late 2010 to early 2011. In the meantime, the lifetime of FENIX1 is being extended through a combination of design improvements and manufacturing efficiencies.
A significant opportunity has been created through the acquisition of Future Waves and integrating the research & development efforts of Future Waves and Toumaz Technology. Firstly, the integration will lead to efficiency gains and cost savings as well as the formation of an exceptional and, we believe, unique team of integrated circuit designers that are now able to leverage the IP and experience of the formerly separate design and development efforts.
In addition, and of great importance, there is a strong synergy in product lines across Toumaz Technology's and Future Waves' businesses as the marriage of the Sensiumâ„¢ and Xenif technologies will ultimately bring a very low power monitoring network, relevant for home medical and control / automation applications and a Wi-Fi / internet-connected infrastructure that will enable revolutionary and much needed services in health, automation and security. This will form a strong foundation for the Group as a whole.
SAW
SAW (surface acoustic wave) is a project to develop and commercialise a power-free implantable SAW wireless device that will initially focus on chronic blood pressure monitoring. SAW's remote monitoring will enable medical professionals to be alerted to the possibility of cardiac events in patients. While the device is implanted in patients, the technology, which underwent clinical trials in 2008, is far less intrusive than the current solutions available in the market. SAW is a passive device that uses radio frequency to send a signal, which receives a return signal proportional to blood pressure (deflects frequency). Development and testing work continues in 2009; it is envisaged that once SAW has full regulatory approval the technology will be licensed to large medical device companies, a number of which have been identified.
Consolidation of Business Model
The business models of Toumaz Technology (focussed on healthcare markets) and Future Waves (focussed on consumer markets) will now be consolidated, strengthening the Group through efficiency gains and new synergies and capabilities that in turn will lead to new market opportunities.
Benefits of consolidation:
- Both businesses are solution providers - currently in the healthcare and consumer markets
- Both businesses' solutions are built on the bedrock core proprietary AMxâ„¢ technology layer
- The value for both businesses are in the AMxâ„¢ Platform and the application layers that are configured for multiple verticals and total solutions
- Relationships with global partners in targeted verticals have been established and will be further developed
- In the medium-term the synergy between Wi-Fi / internet-ready Xenif platform and Sensiumâ„¢ low power wireless monitoring system will drive a strong and consistent strategy in line with some of the most important and exciting emerging trends in the marketplace
Outlook
I am confident of the positive outlook for Toumaz Holdings. The consolidation of the business model and consequent technological synergies and efficiency gains in our operating businesses; Toumaz Technology and Future Waves, will allow management to better focus on the key market requirements, strategic goals and customer needs.
The key objectives for the businesses over the next period are to deliver to the milestones agreed with, or required by, lead customers. This includes the timely delivery of Sensiumâ„¢'s devices and software for the digital plaster system's clinical trials later this year and following these trials, making the necessary upgrades and changes to begin FDA compliance trials early next year. This is a very challenging and exciting project and to date remains on plan. Future Waves' first key milestone is to deliver the highly integrated Xenif SoC to key customers around the globe including PURE. The goal is to deliver the solution during 2010 followed by the delivery of the follow-on super integrated single-chip multi-standard receiver / connectivity system, which is to combine tuner, baseband and application processing. Achieving these milestones is expected to lead to profitable operations for Future Waves in the foreseeable future.
Toumaz Technology and Future Waves have continued product development and I believe when the various products are released to the market in 2010 Toumaz Holdings should be positioned as the leading force in silicon-based solutions in digital healthcare and radio/audio broadcast markets.
Professor Christofer Toumazou FRS
Chief Executive Officer22 June 2009
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2008
2008 2007 Note £'000 £'000 Revenue 2,754 174 Cost of sales (736) (209) Gross profit / (loss) 2,018 (35) Administrative expenses -amortisationof intellectual property (534) (534) Administrative expenses - impairmentof available for sale investments - (391)Administrative expenses - other (4,599) (3,658)Total administrative expenses (5,133) (4,583) Loss from operations (3,115) (4,618)
Result from equity accounted joint (162) (10) venture Impairment of equity accounted joint (204)
-
venture
Result from equity accounted (576) (1,537)
associate
Reversal of impairment/ (impairment)of equity accounted associate 1,249 (1,643)Finance income 133 82 Loss before taxation (2,675) (7,726) Taxation 2 440 392 Loss after taxation and retainedlossattributable to the equity holders (2,235) (7,334)of the company Loss per ordinary share (pence)Basic and diluted 3 (1.01)p (3.67)p
All operations are continuing.
There were no recognised gains or losses other than the loss for the financial year.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2008
Share based Share Share payment Retained Total capital premium reserve earnings equity £'000 £'000 £'000 £'000 £'000 At 1 January 2007 462 22,837 405 (4,907) 18,797Loss for the year - - - (7,334) (7,334)Total recognised incomeandexpense for the year - - - (7,334) (7,334)Issue of share capital 82 3,182 - - 3,264Cost of share issue - (86) - - (86)Share based payments - - 178 - 178Transfer on exercise of -options - (8) 8 -At 31 December 2007 544 25,933 575 (12,233) 14,819 Loss for the year - - - (2,235) (2,235) Total recognised incomeand expense for the year - - - (2,235) (2,235)Issue of share capital 58 1,337 - - 1,395Cost of share issue - (33) - - (33)Share based payments - - 176 - 176At 31 December 2008 602 27,237 751 (14,468) 14,122CONSOLIDATED BALANCE SHEETAt 31 December 2008 2008 2007 £000 £000ASSETS Non-current assetsIntangible assets 12,901 13,435Property, plant and equipment 171 60Interests in joint venture 28 208Interests in associate 1,407 - 14,507 13,703 Current assetsInventories 120 15Tax receivable 439 392Trade and other receivables 888 377Cash and cash equivalents 296 1,535Total current assets 1,743 2,319 Total assets 16,250 16,022 LIABILITIES Current liabilitiesTrade and other payables 1,628 594Total current liabilities 1,628 594 Non-current liabilities 500 609 Total liabilities 2,128 1,203 EQUITYShare capital 602 544Share premium 27,237 25,933Share based payment reserve 751 575Retained earnings (14,468) (12,233)Total equity attributable to equityholders of the Company 14,122 14,819Total equity and liabilities 16,250 16,022
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 December 2008
2008 2007 £000 £000 Cash flows from operating activitiesLoss before taxation (2,675) (7,726)Amortisation 534 534Depreciation 63 50Share of loss of associates 576 1,537Reversal of impairment /(impairment)of equity accounted associate (1,249) 1,643Impairment of available for saleinvestments - 391Share of loss of joint venture 162 10Provision against loan from jointventure 204 -Share based payments 176 178Interest receivable (133) (82) Increase in inventories (105) (15)Increase in trade and otherreceivables (511) (48)Increase in trade and other payables 925 160Tax refund 393 414Net cash outflow from operatingactivities (1,640) (2,954) Cash flows from investing activitiesPurchase of and loans to jointventuresand associates (822) (1,030)Purchase of property, plant andequipment (175) (32)Interest received 36 82Net cash used in investingactivities (961) (980) Cash flows from financing activitiesProceeds from issue of share capital 1,395 3,264Share issue costs (33) (86)Net cash inflow from financingactivities 1,362 3,178 Net change in cash and cashequivalents (1,239) (756) Cash and cash equivalents atbeginningof period 1,535 2,291 Cash and cash equivalents at end ofperiod 296 1,535
NOTES TO THE FINANCIAL INFORMATION
1. BASIS OF PREPARATION
The Company was incorporated in the Cayman Islands which do not prescribe the adoption of any particular accounting framework. The Board has therefore adopted and complied with International Financial Reporting Standards (IFRS) as adopted by the European Union. The Company's shares are listed on the AIM market of the London Stock Exchange.
GOING CONCERN
The Directors have prepared profit and cashflow forecasts through to 30 June 2010 which incorporate the Group and its subsidiary undertakings as at 31 December 2008, together with Future Waves UK Limited which became a 100% subsidiary on 20 May 2009.
The key assumptions in preparing the forecasts are as follows:
- the costs for Toumaz Holding Limited reflect the changes to the Board structure since 31 December 2008;
- the development income from the strategic partnership between Toumaz Technology Limited and Cardinal Health will continue at the current levels;
- no further income will be generated by Toumaz Technology Limited from Texas Instruments beyond that contracted at the date of these financial statements;
- initial income will start to be generated by Toumaz Technology Limited from product sales in the second half of 2009 and throughout 2010;
- Future Waves UK Limited generates sales of its Fenix 1 chip and settles the amounts due to Imagination Technologies Limited under the agreement with that company, as detailed in note 4; and
- the Group raises the following funds:
- the net proceeds of £2.4 million raised on 15 May 2009
- further funding from existing and new shareholders.
The Directors are confident, that the fund raising will be successful but at the date of the financial statements it is not completed nor committed.
The forecasts, underpinned by the assumption that the fund raising will be successful, demonstrate that the Group is able to continue in business for a period of at least twelve months from the date of approval of the financial statements. Accordingly the financial statements have been prepared on a going concern basis. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
The principal accounting polices of the Group have remained unchanged from those set out in the Group's 2007 annual report and financial statements.
2. TAXATION
The tax credit for the period is as follows:
2008 2007 £'000 £'000Current taxUK corporation tax at 19% - -UK research and development tax (440) (392)
credit
(440) (392) The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: 2008 2007 £'000 £'000 Loss before tax (2,675) (7,726)Loss multiplied by standard rate ofcorporation tax in the UK of 28%(2007:30%) (749) (2,318) Effect of:Disallowable expenses 170 156Research and development tax credit 28 98adjustmentLosses not utilised 111 1,672Tax credit for year (440) (392)
The Group has tax losses in the UK, of approximately £5.7 million (2007: £5.6 million) available for offset against future operating profits. The Group has not recognised any deferred tax asset in respect of these losses, which would amount to £1,596,000 (2007: £1,680,000) due to there being insufficient certainty regarding its recovery.
3. LOSS PER SHARE
The calculation of the basic loss per share is based on the loss after tax of £2,235,000 (2007: £7,334,000) divided by the weighted average number of ordinary shares in issue during the year of 220,674,233 (2007: 199,783,178).
The impact of the share options and share warrant is anti dilutive.
4. POST BALANCE SHEET EVENTS
Sentinel Healthcare Limited ("Sentinel")
On 15 January 2009 Toumaz Holdings Limited increased its total interest in Sentinel from 50.0% to 81.25% having acquired the additional 31.25% shareholding from Continum Group Limited for £1 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 76.25 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.
Placing of shares
On 26 January 2009 Toumaz Holdings Limited raised £561,631.28 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, as part of wider arrangements referred to below, 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 £2.9 million before expenses.
Acquisition of Future Waves UK Limited ("Future Waves")
On 20 May 2009, Toumaz Holdings Limited acquired the remaining share capital of 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 andliabilities of the acquired entity as at the date of acquisition were asfollows: Book value Fair before Fair value to acquisition value Toumaz under IFRS adjustments Holdings $000 $000 $000Non-current assetsProperty, plant and equipment 352 - 352 Current assetsInventory 122 - 122Trade and other receivables 296 - 296Cash and cash equivalents 39 - 39 Total assets 809 - 809 Current liabilitiesTrade and other payables (2,674) - (2,674) Total liabilities (2,674) - (2,674) Net liabilities (1,865) - (1,865) £'000 £'000 £'000Sterling equivalent (at US$1.523:£1) (1,225) - (1,225)Proportion acquired (76.8%) (940) - (940)Goodwill arising on acquisition 6,510 - 6,510Consideration 5,570 - 5,570
Consideration is represented by:
Fair value of shares issued (91,836,779shares at 6p, being the market value ofthe shares at the date of acquisition) 5,510Cost associated with the acquisition, 60
settled in cash
5,570
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.
License agreement with Imagination Technologies Limited (`Imagination')
On 14 May 2009 Toumaz Holdings Limited entered into an agreement with Imagination, a leading provider of System-on-Chip (SoC) silicon IP, to license a next generation communication and digital radio multimedia IP platform. The agreement is applicable to both Future Waves and Toumaz Technology. The intention of the agreement is to further develop the existing co-operation between Toumaz Holdings and Imagination and also expand collaboration into new areas.
The consideration for the license deal will consist 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 of 28,153,153 new ordinary shares in Toumaz Holdings Limited on 14 May 2009. The remainder of the payments will be settled in cash.
The proposals to acquire Future Waves and to enter into the agreement with Imagination Technologies were approved in a general meeting of shareholders on 14 May 2009.
The impact of the above events on the issued share capital of the Company maybe summarised as follows: Value of Number of Share Share shares shares Capital Premium issued No. £000 £000 £000 At 31 December 2008 240,717,469 602 27,237 1
28 January 2009 Placing for cash 9,360,538 23 538 56114 May 2009 Placing for cash 48,333,333 121 2,779 2,90014 May 2009 Imagination Technologies 28,153,153 70 1,619 1,68920 May 2009 Future Waves acquisition shares 91,836,779 230 5,281 5,511 At 19 June 2009 418,401,272 1,046 37,4545. PUBLICATION
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.
The consolidated balance sheet at 31 December 2008 and the consolidated income statement, the consolidated statement of changes in equity, the consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2008 statutory financial statements upon which the auditors opinion is unqualified although readers should note that an emphasis of matter was raised by the auditors, 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 on page 22 of the financial statements 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 on page 22 of the financial statements, 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.
The annual report for the year ended 31 December 2008 will be sent to shareholders shortly.
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