20 Mar 2008 07:00
Embargoed Release: 07:00hrs Thursday 20 March 2008
Nanoscience Inc. ('Nanoscience' or 'the Group') Preliminary Results
Nanoscience, the specialist niche investor in emerging technologies with strong commercial propositions for the healthcare and electronic sectors, is pleased to announce its preliminary results for the year ended 31 December 2007 ('the period'). During the period, the Group channelled its resources on accelerating the technical and commercial activities of its three main investee companies; its wholly owned subsidiary Toumaz Technology Limited ('Toumaz'), Future Waves Pte. Limited ('Future Waves') in which it holds a 28.9 per cent. interest and Sentinel Healthcare Solutions Limited ('Sentinel') where it holds a 50 per cent. interest.
Highlights:
Toumaz signed an agreement with Texas Instruments Incorporated and a strategic partnership with Cardinal Health, which will establish clear routes to market in the global healthcare sector as well as delivering its first generation Sensium¢â€ž¢ enabled products for clinical evaluation trials to key customers worldwide. Development continues on complete products based on the Sensium¢â€ž¢ platform, and substantial progress will continue through 2008
Future Waves secured order commitments for its AMx (advanced mixed signal) chip from market leaders in the DAB Radio market. Inroads are also being made into the mobile TV market, as Future Waves technology is in several products being trialled at Beijing for the 2008 Summer Olympics.
Sentinel Healthcare completed a trial in a care home and expects to launch its'myAmego'¢â€ž¢ product commercially at the Naidex conference in Birmingham inApril.Further Information:Richard Rose Nanoscience Inc. 07836 250 474 Guy Spelman Nanoscience Inc. 07767 338 967 Vikki Krause Hansard Group 020 7245 1100 CHAIRMAN'S STATEMENT
I am pleased to report on a year of significant technological progress during which we have built important partnerships.
During the year ended 31 December 2007 the Group recorded a loss after taxation of ‚£7,334,000 (‚£4,158,000: 2006) on revenues of ‚£174,000 (‚£364,000: 2006). The results reflect the early stages of the commercialisation of technologies being developed and the costs of continued research and development, particularly at our 100% owned subsidiary Toumaz Technology Limited, and the impact of a revaluation of our other investments.
Toumaz's key AMx technology continues to advance and is now embedded in products undergoing market testing and FDA approval processes.
Earlier in the year under review we signed, through Toumaz, a 'Strategic Partnership' agreement with Cardinal Health, a major US based healthcare product business ranked 19 in the Fortune 100, with market presence in 90% of the US hospitals.
Cardinal has the resource to develop and market the end to end solutions, utilising our AMx technology, that will enable Toumaz to achieve commercial success with minimum investment on our part. We are delighted with progress being made with Cardinal investing much resource to maximise the joint opportunity.
Through Toumaz, another important relationship has just been signed with Texas Instruments Incorporated. They have identified AMx as being a key component in the next generation of medical and related markets and wish to incorporate it into their product range. This development is particularly exciting as it will fast track the commercial opportunities available to Toumaz, again with minimal investment from Nanoscience Inc. Indeed, the investment Texas Instruments themselves are making demonstrates their commitment to both our technology and the commercial opportunity going forward.
Future Waves has commenced shipping product to OEM customers, mainly in Asia. Whilst developing slightly behind our initial expectation we expect their markets to continue to develop and that break-even will be reached within twelve months.
The Chief Executive's report provides further details of other areas and products, specifically Sentinel where we expect to launch the service to the Care Home market in the second quarter and the Sports product market where good progress is being made towards revenue generation.
I believe that the progress achieved during 2007 has greatly enhanced the value of our AMx technology and I am confident that continued progress will be made during the current year as we seek to explore all avenues available in maximising shareholder value including the consideration of a Nasdaq quote for Toumaz.
Richard RoseChairman20 March 2008
CHIEF EXECUTIVE OFFICER'S REPORT
I am pleased to present my second operational report as CEO for the Group.
Following on from my initial report in July 2007, we continue to see some significant progress in our investments. What has been pleasing is the adoption of our technologies by world leading global companies at the cutting edge of their markets. In addition our chosen markets of Healthcare and Consumer Electronics are maturing fast, and our technologies are in phase with the digital revolutions occurring in both fields.
It remains our priority to commit resources into the development and commercial exploitation of core IP, AMx, into markets where we believe there is major change and growth so that the technology when deployed will make a significant impact. Furthermore it has become a consequence of this strategy that we focus our efforts on seeking out Partners who have identified channels to market in order to fully leverage our technology.
I will cover the implications of this in more detail in each of my reviews focusing on 4 key sections;
1. The Markets we focus on
2. The role of our technology in these markets
3. Our Business models, to capture optimum value from our position
4. Our Progress to date
Following the raising of some additional capital in July 2007 we have delivered on our pledges to seek to underpin our commercial progress with key clients and leading channels to markets. 2008 is important to continue to build on this established momentum.
I specifically wish to recognise the dedication and commitment of the management and the teams across the Group in delivering such critical relationships.
TOUMAZ TECHNOLOGY
Toumaz Technology's innovation in intelligent wireless body monitoring is placing it firmly at the heart of the emerging digital healthcare revolution. The technology convergence which led to the advent of digital communications and the birth of the mobile phone and internet industries has already transformed the way people live, work, communicate and interact. Now, groundbreaking semiconductor technology is harnessing a new wave of convergent trends and creating a nexus for monumental changes in high-priority areas of treatment, diagnostics, and healthcare delivery.
Toumaz provides the solution platform for healthcare providers to continuously monitor patients, wirelessly, unobtrusively and at low cost. By delivering the enabling wireless infrastructure for continuous body monitoring, Toumaz is creating a unique opportunity for the development of end-to-end telemedicine and health information systems, based on electronic medical records, which meet the rapidly growing clinical and financial requirement for analysis and decision-making based on real-time physiological data.
Toumaz's ultra low power system-on-chip technology platform - Sensium¢â€ž¢ - enables an innovative way of managing the patient based on a new generation of intelligent wireless monitors capable of continuously monitoring multiple vital signs in real-time, allowing earlier detection and prediction of adverse events such as heart attack, falls or hypoglycemia. For healthcare professionals, this continuous wireless body monitoring transforms the possibilities for pro-active therapies and improved quality of care. For patients, it delivers new opportunities for lifestyle-compatible, personalised healthcare, as well as better therapeutic outcomes.
1. The market opportunity
The business case for the exponentially projected growth in personalised healthcare and body monitoring is clear, presenting opportunities to deliver Sensium-based solutions across multiple global healthcare settings, including in hospital and outpatient treatment programmes, within care home and cognitive impairment environments, and as part of clinical drug trials.
In each of these segments, the market drivers are powerful. Global demographics are changing. An ageing population together with an increasingly sedentary western lifestyle is leading to a huge increase in resources required for long-term care of patients with chronic diseases. Estimates of the cost of healthcare related to chronic disease are already typically around 70% of total healthcare budgets. With the double digit increases predicted, the current model of treatment is unsustainable for both public and private healthcare institutions. Better and more cost-effective ways of looking after patients are needed, as governments actively explore ways to move care from the hospital to home. Sensium ushers in a new era of solutions to address these global healthcare challenges by providing a viable cost model for long-term, preventative care that is also compatible with patient lifestyles.
Similarly, in cost-pressured hospital and general ward environments, the ability to automate the continuous acquisition of physiological readings at the bedside with minimal impact on the patient will allow precious staff resources to be re-deployed, deliver better quality of data, and facilitate higher levels of patient care and individualised treatment. The breakthrough facility - uniquely enabled by Sensium - to remotely and unobtrusively acquire auditable, real-time vital sign data also offers clear benefits in the care home sector. By supporting service providers that need to demonstrate the highest duty of care, safety and compliance, Sensium unlocks new revenue opportunities from the development of specialist monitoring and alarm services to manage patient well-being.
Finally, recent FDA guidelines centering on the requirement for continuous monitoring of patients during all phases of clinical drug trials highlights the growing need for a cost-effective, scalable solution to meet increasing trial safety standards. Pharmaceutical and drug testing companies are now actively looking for a solution to this challenge. By enabling accurate, auditable, and time synchronised data to be acquired from trial patients outside of the laboratory environment, Sensium provides a platform to deliver entirely new levels of knowledge and faster routes to market for the global pharmaceutical industry.
2. Sensium¢â€ž¢ - platform for a healthcare revolution
Sensium integrates the complete wireless infrastructure, intelligent signal processing and interfacing to a wide range of body-worn sensors, replacing existing bulky monitoring solutions.
In addition to hospital or care home applications, the Sensium platform allows healthcare providers to remotely monitor vital signs from mobile individuals in real-time, via standard handheld devices such as PDAs and cellphones. Powered by low-cost low profile batteries, one or more Sensium-enabled disposable 'digital plasters' can continuously monitor multiple key physiological parameters. Today, ECG heart rate, body temperature, respiration and activity level are all easily measured. Tomorrow, emerging sensors will enable bio-chemical markers such as blood glucose and blood oxygen to be continuously measured in the near future
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The body-worn Sensium collects, processes and extracts the key features of the data and intelligently reports to a base station Sensium plugged into a PDA, smart phone, or fixed room unit via an ultra low-power, short-range radio telemetry link. From there, the data can be further filtered and processed by application software and integrated into existing medical information systems, such as those employing the worldwide Oracle based HL7 standard, to provide a complete end-to-end system and the foundation for a total patient care package. Toumaz has had an established Partnership with Oracle for over eighteen months.
Toumaz's disruptive AMx¢â€ž¢ technology - the core technology behind the Sensium - is protected by granted US and international patents. In addition the company has patents in other areas of ultra-low power circuits and systems. The Sensium is protected by six patent applications on the silicon device and other patents and filings at both system and user levels.
3. Toumaz's business model
From the outset, Toumaz has focused the initial commercialisation of its proprietary AMx technology on the healthcare sector, having recognised that new ultra low power silicon devices will enable an explosion of product opportunities in this key market.
The first generation Sensium - the deployment of the AMx platform in the healthcare market - is currently entering into mass production.
The Sensium has been specifically conceived as an enabling technology platform for the development of revolutionary products for healthcare and lifestyle management applications. By delivering to the healthcare market for the first time the key requirements of unobtrusiveness, simplicity and low cost (ie. disposability) in a set of body-worn intelligent wireless sensors (for example, digital plasters or band-aids) plus associated wireless networking, Toumaz is providing the complete solution platform for commercially viable products with the potential to revolutionise healthcare for millions of people.
Toumaz's strategy is to seek to capitalise upon its central role in the end-to-end system and capture value beyond that of a component supplier. Toumaz has forged two major strategic partnerships that will significantly help in accelerating the routes to market for Sensium. The Strategic Alliance with Cardinal Health will be key in the execution of the strategy of leveraging the technology within the hospital market, as the companies will continue to investigate opportunities to incorporate Toumaz's AMx technology into Cardinal Health's clinical products. Cardinal will leverage its position in the market as a leading healthcare services provider to create a solution that matches the needs of healthcare delivery institutions, ensuring integration into standard care environments. Working together, the joint technical teams of Toumaz and Cardinal Health intend to develop end-user solutions through the integration of the Toumaz platform into future clinical products from Cardinal Health. Through this partnership, Toumaz will benefit not only from Cardinal Health's extensive engineering and systems knowledge, but will also align the company with a global market leader, helping to assure a smooth transition for Toumaz from an early adopter market into the mainstream market.
Toumaz's sales and manufacturing agreement with Texas Instruments will provide valuable access to TI's design, process and manufacturing capabilities, its key logistics management expertise and, further, the opportunity to leverage a world-class sales channel and access to TI's significant medical customer base.
Toumaz will license the basic Sensium operating system known as NSP (Nanopower Sensor Protocol) to all end customers, regardless of the channel through which the Sensium chips were purchased, and from there will provide added-value infrastructure and application products and services to provide a recurring revenue stream at the system level.
Partnering with global leaders: Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. is an $87 billion, global company serving the healthcare industry with products and services that help hospitals, physician offices and pharmacies reduce costs, improve safety, productivity and profitability, and deliver better care to patients. With a focus on making supply chains more efficient, reducing hospital-acquired infections and breaking the cycle of harmful medication errors, Cardinal Health develops market-leading technologies, including IV pumps, automated dispensing systems, electronic infection surveillance service, respiratory care products and patient identification systems. The company also manufactures medical and surgical products and is one of the largest distributors of pharmaceuticals and medical supplies worldwide. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 40,000 people on five continents and delivers more than 40,000 products daily. Cardinal Health is present in 90% of the US hospitals.
As a result of the strategic partnerships established with Cardinal Health and TI, Toumaz has secured a clear, proven route to market and will be closely connected to its end customer needs as the Sensium solution rolls out globally
4. Progress to date
In 2007, Toumaz began shipment of its Sensium development kit (SPIDER) based upon the working silicon achieved in 2006. The kits, which are being delivered to key customers worldwide, enable the rapid creation and testing of end-to-end Sensium-based solutions. This is the first step in the familiar "design-in" cycle for semiconductor devices and paves the way for the delivery of further Sensium chips or Sensium enabled products.
Towards the end of 2007, Toumaz began the development of complete products based on the Sensium chip in order to meet the needs of many customers with good market reach but little or no technical capability. These products will accelerate the regulatory approval process for Sensium enabled devices, and thus reduce the time to market and to first product revenues. They will begin shipping in production volumes in July 2008.
5. Key achievements
Two strong commercial partners, establishing a clear routes to market
- Major industry recognition and awards during 2007
- Key commercial member, along with Novo Nordisk, of consortium awarded 7.6 million Euros under an EU Framework 7 Project "DiAdvisor" to develop new tools for the treatment of diabetes
- Delivery of Toumaz developed Sensium enabled products in for clinical evaluation trials at St Mary's Hospital, London, Southampton Hospital, Singapore Institute of Health and the Hong Kong Sports Medicine Academy
Nanoscience is represented on the Board of Toumaz through Chris Toumazou, Guy Spelman and Serge Grisard.
FUTURE WAVES1. The markets we focus on
The business has always focused on the Mobile TV market which is viewed as the next major growth market driven out of the Far East. The 'pick up' of this growth has not been as aggressive as previously expected, but remains a 2009 focus. The Olympics remains a real catalyst and Future Waves (FW) is in several products being trialled at Beijing. Internet radio is a second sector we have targeted and the potential market size could be as high as 10 million units through 2009.
2008 is about current markets and committed customers. DAB Radio and Digital Terrestrial TV (DVBT) are the key sectors. The existing market for DAB is 4 million units and Pure Digital is the market leader and FW has already secured order commitments for the current year. The Digital Terrestrial TV (DVBT) offering is new capability and should be ready Q3 or Q4 2008 and help to position the company for mobile TV in 2009
The role of our technology in these markets
Device Manufacturers want one platform that can be configured for all modalities and standards. FW strength is in RF and our differentiator is multi-standard with the reuse of RF blocks and leveraging the core AMx IP* which helps to drive ultra low power solutions. The challenge is one receiver solution applicable to all applications and standards.
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FW's strength is in multi-standard CMOS RF solutions combined with a strong technical performance and Radio IP.
Due to FW's superior performance we believe significant order flow will be generated in 2008.
Low cost and high levels of integration will open up further opportunities as the fragmented standardisation of digital broadcasting necessitates multi standard chipset solutions operating a range of frequency bands. The IP portfolio is targeted towards multi band and multi standard RF solutions which can be deployed globally.
2. Our Business Model
It has been a clear focus of the business to provide a complete market proven offering and not just subsets due to the opportunities that arise from such a model. More compact silicon, low cost structures, higher margin offering makes FW's more than just a chip play.
The geographical focus of the business remains the Far East as the potential for early adoption in the mobile TV space is in that region, although the DAB radio and Terrestial TV will have more European involvement. However, China, Taiwan and Korea are three serious markets where customers have been won and further traction is sought.
"As part of the underlying technology development strategy, FW has developed a strong working relationship with Imagination Technologies. FW sees Imagination as a key strategic technology partner, providing FW with market leading baseband receiver technology that complements FW's CMOS RF technology, while allowing FW to focus its engineering resources on development of its core RF technologies as well as customer support and supply logistics. As part of FW's relationship with Imagination, FW has also secured a key customer, PURE Digital (a wholly owned Division of Imagination) which is the number one digital radio supplier in UK with plans for extensive market growth in Europe and Australasia."
We continue to seek key Partners to work with that will provide early stage support in design, engineering, production and finance.
3. Our progress to date and roadmap
FW has made considerable progress in the past six months and remains focused on delivering a break even position within the next 12 months. Its key milestones over the rest of the year can be summarized as follows:
- Secure DAB Markets and Revenues in 2008
- Secure Digital TV Markets and Revenues in 2008
- Continue to build the Product portfolio so that we are ready for Mobile TV in 2009 and Internet radio in 2009.
- Secure Strategic customers and partners
- Secure sufficient funding to deliver the strategy
A total of U$12.5m has been raised through 2007 for FW of which Nanoscience has contributed $2.3 million. A further round of fund raising is being actively pursued which we anticipate will position the company as a strong player in its targeted sectors.
Nanoscience supports the Board and Management in the raising of funds and will continue to be active in the business going forward and help to position FW to take full advantage of emerging markets.
Nanoscience is represented on the Board of Future Waves by Chris Toumazou and Guy Spelman.
SENTINEL HEALTH CARE SOLUTIONS
1. The markets we focus on
Social Care in the UK has come under considerable scrutiny over the past few years and in certain areas has been subject to growing criticism. This is despite the fact that the Care Agencies and experts have been working to improve the nature and delivery of care, to be more responsive to the individual's needs and to improve health and wellbeing.
More recently, the UK Government has made the care of people with dementia a social and political priority. This has been reinforced by social and health providers in local government, the National Health Service and the media. Legislation has followed with the Mental Capacity Act.
There is also a general acknowledgement that residential care should not be seen as the only means for providing care and with the ever-increasing numbers requiring care, not enough places will be available.
Telecare is an important part of the support provision for the new care model (s) that are evolving and significant sums have been allocated to local authority budgets going forward. Telecare describes any service that brings health and social care directly to a user supported by information and communication technology. It covers social alarms, lifestyle monitoring and telehealth (remote monitoring of vital signs for diagnosis, assessment and prevention)
Globally, social care constitutes a similar issue of increasing priority, including in countries with advanced healthcare models, because of the sheer number of people that will be requiring care in conditions such as dementia:
- UK: 700,000 in 2007; increasing by 39,400 per year
- France: 850,000 in 2007
- USA: 4.5 million in 2005
- Australia: 220,000 in 2007; increasing by 56,000 per year
- Asia Pacific: 14 million in 2006; increasing by 4 million per year
All Governments are developing strategies to deal with what is being viewed as an epidemic. Telecare is acknowledged as a critical part of their strategies.
The role of our technology in these market
'We share the vision of care services in promoting the choice of the individual. It enables the person to work with their carer to support their health and wellbeing whilst reducing their risks and protecting their rights.'
Our technology enables providers to deliver market-leading telecare service specifically for the care of people with cognitive impairment, supported by an innovative and intelligent solution.
Working with Melton Health Care, and adopting the vision of care through technology, Sentinel Health Care Solutions ('Sentinel') developed a unique information management, decision engine and notification engine platform (called "Sentinel:Monitor") relying on generic sensor and meshed wireless technologies. Sentinel:Monitor's unique ability is to identify an individual wearers device and relate it to the user's environment and activity/at risk profile -others solution are usually unable to identify the individual user in the context of their environment. The data collected in the process can be seamlessly shared with other standard databases. Combining the power of this approach with algorithms and user interfaces specific to medical conditions or care needs, often developed by or with care sector insiders, the company is able to provide new approaches to delivering leading care services that suit the service users and their families to live as independent lives as possible. My Amego, the first of Sentinel's technology services, targeted at dementia, allows carers to provide effective care and support while reducing risks to service users and protecting their independence and privacy.
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2. Our business model
Keen to focus on its core skills of end-user solution design and technology deployment, Sentinel's commercial activities will rely on a network of installers and distributors to reach the final users. Distributors are allocated territories and market segments according to potential and performance. The service of data collection, gathering, analysis and notification management is controlled centrally by the company as a fully hosted service. Sold on a subscription basis, this service generates a monthly stream of recurrent revenues.
"Sentinel:Monitor" is a highly flexible platform, easy to customize for specific conditions or sensors, and provides for scalability of the business, with the simple addition of new functionalities or new application areas. Today's care providers often cope with residents with a variety of care needs in the same facilities. This environment is favorable to cross-selling.
The flexibility of the platform and opportunity for growth are illustrated below
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3. Progress to date and roadmap
We have a branded service called My Amego¢â€ž¢ fully tested in a Care Home.
A signed licensing deal and distributor agreement in the Local Authority market.
A UK public launch planned to coincide with the Naidex Conference in April.
We currently have more than 12 interested care provider organisations looking to explore the benefits of such a service.
Key to the Business model is the product map and the addition of functionality, through an open environment to facilitate integration with existing devices and enable further application developments to meet new customer requirements.
The key areas for development are:
- a domestic version for individual homes and the consumer market,
- the integration of Toumaz's Sensium to extend the application areas of the system,
- the expansion into a wider range of care needs or medical condition applications
We have built a strong network of advisors in the Industry, and believe the business is well positioned to exploit the market opportunities. Nanoscience Inc retains its 50% shareholding and Guy Spelman and Serge Grisard act as Chairman and Commercial Director.
THE IMPACT ON NANOSCIENCE
The progress made at Toumaz and our investee companies is clear from the analysis above, and now I would like to highlight the impact this will have on Nanoscience.
Nanoscience was established in mid 2005 as an Investment vehicle for emerging technologies. The primary focus has been concentrated around the AMx IP, exploited through Toumaz and FW, with further additional opportunities through Sentinel.
The small investments made in XRT and Applied Sensor, have been slower and less compelling although we remain positive to both, and we remain confident that a positive return will be achieved in the longer term.
In less than three years, we have taken technologies, and created commercially focused businesses all beginning to, or near to generating revenue through clients in industries that have a growth profile. In addition, we have pulled together sustainable business models that provide robustness to the business and position each one with sound opportunities to progress.
In looking at the impact on each, let me summarise our view for the next year:
Toumaz Technology
As 100% owner since November 2005, we have provided over ‚£7 million of additional cash for working capital to the business. We have decided to explore a range of options that maximise values including a potential NASDAQ floatation for the company. It is currently the Board's opinion that greater value can be gained from this option in Europe, but this will be one of a number of exploratory actions. Our goal in progressing the business to the next stage of maturity and revenue generation requires a closeness to key markets additional top management with high profile industry experts. We hope to make an announcement within three months of a further strengthening to the Board, and access to further capital markets and resources for promotion and commercialisation of the technology.
Nanoscience's commitment to the commercial success of Toumaz will remain our priority and we will continue working hard to open up further sales channels for Toumaz in key geographies as well as considering additional avenues of commercialisation for AMx.
However the step we have taken as a result of the strategic partnerships established with Cardinal Health and TI, has secured a clear, proven route to market for Toumaz and will be closely connected to its end customer needs as the Sensium solution rolls out globally.
In the short term as we position Toumaz for the future, we look forward to maintaining momentum and introducing additional institutions and investors to our technology.
Future Waves
This business which spun out of Toumaz in January 2005, has significant funding from key institutions in the Far East and the UK.
Generally businesses in this sector would require sums greater than $30 million to have achieved what FW has achieved; with chips in mass production. A lot of credit must go to management for the progress so far. To secure key Partnerships in 2008 will position the business firmly in the targeted sectors.
Nanoscience's involvement has been considerable and we remain focused on three specifics fronts: driving hard into contracted revenue, leveraging the one platform for multi standards through AMx and positioning the business for sale within a year.
If we are successful in achieving these goals we believe this will represent a significant return to shareholders and the provision made in the accounts against the carrying value is driven by prudence and does not alter the prospects of the future value of the business.
Sentinel Health Care Solutions
We have invested ‚£200,000 in equity for a 50% interest in the business, making us the biggest of four shareholders. A further ‚£200,000 has been allocated in the form of repayable loans.. We believe the opportunity to develop this business is substantial, both as an outlet for Toumaz product and for Sentinel's own technology in other geographies. There is no intention of selling any part of the business and, in fact, we remain open to further investment aimed at the expansion of specific commercial expansion opportunities.
Sports
It remains the view that the Sports market is a serious opportunity for the Group. With less regulation required we continue to work on the delivery of prototype modules that provide Vital Sign data on a real time basis and believe by Q3 2008 three working samples will be available to our targeted Partners. This allows us to show the technology at work.
Summary
We believe Nanoscience has the opportunity to create considerable value from the current asset base and foresee opportunities to convert some into liquidity with carefully crafted exits over the next year. Simultaneously we continue to explore alternative avenues to maximise the areas of application for AMx and continue to build sustainable value. We believe the prospects remain very positive.
Guy SpelmanChief Executive Officer20 March 2008
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
2007 2006 Note ‚£'000 ‚£'000 Revenue 174 364 Cost of sales (209) (352) Gross (loss)/profit (35) 12 Administrative expenses - amortisation of intellectual property (534) (534) Administrative expenses - impairment of available for sale investments (391) - Administrative expenses - other (3,658) (3,594) Total administrative expenses (4,583) (4,128) Loss from operations (4,618) (4,116) Result from equity accounted joint venture (10) - Result from equity accounted associate (1,537) (635) Impairment of equity accounted associate (1,643) - Finance income 82 157 Loss before taxation (7,726) (4,594) Taxation 3 392 436 Loss after taxation and retained loss attributable to the equity holders of the company (7,334) (4,158) Loss per ordinary share (pence) Basic and diluted 2 (3.67)p (2.26)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 2007
Share based Share Share payment Retained Total capital premium reserve earnings equity ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 At 1 January 2006 459 22,808 126 (755) 22,638 Loss for the year - - - (4,158) (4,158) Issue of share capital 3 29 - - 32 Share based payments - - 285 - 285 Transfer on exercise - of options - (6) 6 - At 31 December 2006 462 22,837 405 (4,907) 18,797 Loss for the year - - - (7,334) (7,334) Issue of share capital 82 3,182 - - 3,264 Cost of share issue - (86) - - (86) Share based payments - - 178 - 178 Transfer on exercise - of options - (8) 8 - At 31 December 2007 544 25,933 575 (12,233) 14,819 CONSOLIDATED BALANCE SHEETAt 31 December 2007 2007 2006 ‚£000 ‚£000 ASSETS Non-current assets Intangible assets 13,435 13,969 Property, plant and equipment 60 78 Interests in joint venture 208 - Interests in associate - 2,368 Available for sale investments - 391 13,703 16,806 Current assets Inventories 15 - Tax receivable 392 414 Trade and other receivables 377 329 Cash and cash equivalents 1,535 2,291 Total current assets 2,319 3,034 Total assets 16,022 19,840 LIABILITIES Current liabilities Trade and other payables 594 434 Total current liabilities 594 434 Non-current liabilities 609 609 Total liabilities 1,203 1,043 EQUITY Share capital 544 462 Share premium 25,933 22,837 Share based payment reserve 575 405 Retained earnings (12,233) (4,907) Total equity attributable to equity holders of the Company 14,819 18,797 Total equity and liabilities 16,022 19,840
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 December 2007
2007 2006 ‚£000 ‚£000 Cash flows from operating activities Loss before taxation (7,726) (4,594) Amortisation 534 534 Depreciation 50 66 Share of loss of associates 1,537 635 Impairment of equity accounted associate 1,643 - Impairment of available for sale investments 391 - Share of loss of joint venture 10 - Loss on disposal of non current assets - 1 Share based payments 178 285 Interest received (82) (157) Increase in stocks (15) - Increase in trade and other receivables (48) (7) Increase in trade and other payables 160 30 Tax refund 414 22 Net cash outflow from operating activities (2,954) (3,185) Cash flows from investing activities
Purchase of and loans to joint ventures and associates (1,030) (742)
Purchase of other non current assets (32) (58) Interest received 82 157 Net cash used in investing activities (980) (643) Cash flows from financing activities Proceeds from issue of share capital 3,264 32 Share issue costs (86) - Net cash inflow from financing activities 3,178 32 Net change in cash and cash equivalents (756) (3,796) Cash and cash equivalents at beginning of period 2,291 6,087 Cash and cash equivalents at end of period 1,535 2,291
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2007
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 as adopted by the EU (IFRS). The Company's shares are listed on the AIM market of the London Stock Exchange. . The principal accounting polices of the Group have remained unchanged from those set out in the Group's 2006 annual report and financial statements.
GOING CONCERN
The Director have prepared cashflow forecasts through to 31 March 2009 which assume that Toumaz Technology Limited receives funding in accordance with the various contracts entered into since 31 December 2007 and continues to incur costs at the current rate. The forecasts also assume no further financial support is provided to the associated undertaking, Future Waves UK Limited. The Directors have also secured a finance facility of ‚£1 million from a major shareholder. On this basis the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
2 TAXATION
The tax credit for the period is as follows:
2007 2006 ‚£'000 ‚£'000 Current tax UK corporation tax at 19% - (22) UK research and development tax credit (392) (414) (392) (436) The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: 2007 2006 ‚£'000 ‚£'000 Loss before tax ` (7,726) (4,594) Loss multiplied by standard rate of corporation tax in the UK of 30% (2,318) (1,378) Effect of: Disallowable expenses 156 130 Depreciation in excess of capital allowances 15 20 Research and development tax credit adjustment 98 103 Prior year adjustment - (22) Losses not utilised 1,657 711 Current tax credit for year (392) (436)
The Group has tax losses in the UK, of approximately ‚£5.6 million (2006: ‚£4.4 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 ‚£1,680,000 (2006: ‚£1,320,000) 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 ‚£ 7,334,000 (2006: ‚£4,158,000) divided by the weighted average number of ordinary shares in issue during the year of 199,783,178 (2006: 183,891,674).
The impact of the share options and share warrant is anti dilutive.
4 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 2007 and the consolidated income statement, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Group's 2007 statutory financial statements upon which the auditors opinion is unqualified.
The annual report for the year ended 31 December 2007 will be sent to shareholders shortly.
NANOSCIENCE INC