FST.L Regulatory News (FST)

29 March 2011

Toumaz Limited

Full year results

Toumaz Limited (AIM: TMZ, 'Toumaz'), a pioneer in low cost, ultra-low power wireless communications technology, announces its full year results for the year ended 31 December 2010.

Highlights

·; Development of the ultra-low power Sensium™ 'digital plaster' wireless monitoring system; on schedule for completion in H1 2011 and clinical trials successfully completed in US and UK

·; Key strategic investment from and partnership with Quanta Computing Inc ('Quanta') to develop low power wireless healthcare and wellness technology for outside the hospital environment

·; Successful launch of Xenif all-in-one DAB, FM, Wi-Fi baseband processor chip

·; Year-end cash position £2.9m

·; Successful launch of Telran in January 2011 - the world's lowest power radio chip

·; Strategic investment by and partnership with California Capital Equity (CCE), a company owned by Dr. Patrick Soon-Shiong, to develop the Sensium for use in North American sports markets, in February 2011

Professor Chris Toumazou, Chief Executive of Toumaz, commented,

"This is an exciting time for Toumaz as we now have completed products and are entering a commercial launch period. In particular the Sensium 'digital plaster' has been submitted for medical approval and will be launched later this year.

"Other key highlights are the new relationship with Dr Patrick Soon-Shiong, who has recognised the potential for distribution of the Sensium for consumer health into the US markets and the widening relationship with Quanta, who will be launching a Sensium-based diabetes monitor for Asian markets later this year. Both have also taken a stake in Toumaz.

"Our Xenif all-in-one DAB, FM and Wi-Fi based processor chip and Telran, the world's lowest power radio chip have also made good progress with the former already securing a tier one customer."

Enquiries:

About Toumaz (www.toumazltd.com)

Toumaz is pioneering low cost, ultra-low power wireless technologies for a wide range of markets including medical monitoring and internet-connected consumer devices.

Targeting the healthcare market, Toumaz's ultra low power sensor platform, Sensium™, is a leader in real-time wireless monitoring of the body's vital signs. Sensium™ has the potential to transform medical monitoring and reduce the cost of healthcare by wirelessly connecting individuals to healthcare providers - simply, affordably and unobtrusively. For healthcare professionals, this creates new opportunities for pro-active monitoring and improved quality of care. For patients, it delivers new opportunities for lifestyle-compatible personalised healthcare.

Toumaz also uses its expertise to design devices for wireless connectivity and internet-connected consumer products. Toumaz currently supplies multimedia/FM/DAB chips and complete modules to leaders in the digital radio market, such as PURE.

Toumaz is an AIM listed company (AIM: TMZ) with development centres in Oxford, UK and Taipei City, Taiwan.

Overview

The Group has made good progress with its ultra-low power Sensium™ healthcare platform and is nearing completion of technology deliveries to its medical industry strategic partner. Clinical trials of the digital plaster wireless monitoring system were successfully completed at St. Mary's Hospital in London and the strategic partner successfully completed end-user trials in the US.

The Group also established strategic agreements with Quanta and CCE over the last 12 months. Quanta is working with Toumaz to develop low power wireless healthcare and wellness technology for use outside of the hospital environment mainly for the Asian markets, and CCE is collaborating with Toumaz to develop its Sensium platform for use in sport, addressing the US markets.

Toumaz also launched the Xenif all-in-one DAB, FM, Wi-Fi baseband processor chip in September 2010. It has started volume deliveries to its tier one customer. The Telran chip was launched in January 2011 and has been well received by customers.

The delivery of the Wi-Fi enabled Xenif alongside the Telran and Sensium body area network solutions is an important enabler allowing Toumaz to efficiently link local consumer and healthcare monitoring networks to Internet based products and services in a cost effective way.

Operational review

Healthcare

The development and delivery of Toumaz's core Sensium™ 'body area network' technology has progressed successfully. The Sensium™ is an ultra low power technology platform that provides unobtrusive, continuous, wireless monitoring of activity and vital signs that enables the analysis and interpretation of physiological data in real time.

The Group has now almost completed its project delivery of the system to its medical industry strategic partner, allowing the creation of an end-to-end wireless monitoring solution for hospitals. The complete system has been successfully tested including user tests by nurses, paving the way for the Group's strategic partner to obtain regulatory approvals. Product roll-out is expected at the end of 2011.

Separately, the cooperation with Quantahas been strengthened during the year with an R&D license agreement signed in July 2010. This was followed by a strategic investment by Quanta in Toumaz shares of $2m in March 2011.

The cooperation will initially result in the production of a prototype body-worn ECG and activity monitoring device, particularly targeting Type II diabetes sufferers. It is expected to be completed in Q2 2011 and will be progressed to market launch thereafter. The device is based on the Group's existing Sensium™ technology platform. Quanta will manufacture the device and be responsible for product deployment in the greater China area. Revenues are expected to come through in 2012.

In February 2011, the Group agreed a strategic partnership with CCE to take advantage of the substantial opportunities that exist for the deployment of wireless health and wellbeing monitoring outside of hospitals and particularly in sport, in the North American market.

Consumer

The Xenif multimedia chip, developed in collaboration with Imagination Technologies, was launched in September 2010. Xenif will enable Toumaz to expand its market from DAB/FM radio into the growing internet and Wi-Fi connected audio markets such as internet radio, iPod Docking systems and wireless speakers. During 2010 Toumaz joined the Apple MFi (Made for ipod/iPhone) programme to allow the Group to address the Apple iPod/iPhone accessory market.

Volume deliveries of Xenif to PURE started at the end of 2010 and are expected to grow during 2011 and 2012. The Group is also progressing discussions with several Asian-based manufacturers over the use of Xenif in a variety of internet audio devices. The continued emergence of internet enabled consumer products is exciting, in particular the Wi-Fi speaker market, driven by Apple's Airplay and the industry standard DLNA technologies. Xenif is very well positioned to take advantage of these new markets and the Group expects revenues from Xenif to increase throughout the year and become significant in 2012.

The ultra low power Telran radio chip was launched in January 2011. Telran technology is embedded in the Sensium™ and is the world's lowest power radio. It is currently being marketed for a wide range of applications from wireless meter monitoring to remote control devices, toys and home automation.. Market distribution is arranged through contracts with distributors covering the North American, European and Asian markets. Development kits have been shipped to customers and volume deliveries are expected during the second half of the year.

Financial review

Group revenues were £2.7m (2009: £4.0m), which was mostly development income from Toumaz's strategic medical industry partner and from the DiAdvisor EU-grant based development project. Revenues in 2009 were positively affected by a one-off payment of £1.3m from Texas Instruments.

Since the period end the Group has started to generate increasing revenues from product sales, whilst development income will come to an end during the first half of 2011, with the final delivery of the Sensium™ plaster technology.

Personnel costs were £3.8m (2009: £3.2m). The increase partly reflects the inclusion of Toumaz Asia (ex. Future Waves) for the whole year, as well as the increased resources required to complete the development of the Sensium 'digital plaster' project.

R&D costs increased to £3.5m (2009: £2.3m) mainly due to costs related to the completion of the Xenif, Telran and Sensium™ 1.5 chips. Each has now been launched to early customers.

Amortisation of intangible assets increased to £1.5m (2009: £1.1m).

The Group reported a loss after tax of £5.9m (2009: loss £4.4m). Tax losses carried forward are £15.0m. The loss per share was 0.99p (2009: loss 1.16p).

Cash inflow included £2.7m of revenues and £786,000 in R&D tax credits, while other cash outflows from operations were £7.9m and net reduction of creditors amounted to £1.7m. The cash balance at the end of the year was £2.9m.

Current trading and outlook

The Group is approaching the end of the transition from generating development fee revenues and moving to extensive product sales revenue. The Group expects development fees to decrease through 2011. However, product sales revenue will start to increase during the year and into 2012. This transition represents a major milestone in the Group's development.

The first application of the collaboration with CCE, creating a Sensium™ 'sport monitoring device' for basketball, is expected later this year. The technology will measure key physiological information during matches and for training purposes. Revenues from this collaboration are expected in 2012.

Work with Quanta on prototype development for a monitoring system for type II diabetes is progressing as planned with first version available in April 2011. The product launch is expected in late 2011 or early 2012 leading to revenues in 2012.

Overall, the Board is looking forward to exploiting the key partnership agreements, which are now in place, and will enable the Group to roll out its leading IP around the world in a number of markets.

Consolidated statement of comprehensive income for the year ended 31 December 2010

Consolidated statement of changes in equity for the year ended 31 December 2010

Consolidated statement of financial position for the year ended 31 December 2010

Consolidated Cash Flow Statement for the year ended 31 December 2010

Notes to the financial statements for the year ended 31 December 2010

1. Basis of Preparation

The Group 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 Group's shares are listed on the AIM market of the London Stock Exchange.

2. Going Concern

The directors have prepared profit and cashflow forecasts through to 31 December 2012 which incorporates the Group and its subsidiary undertakings as at 31 December 2010.

The key assumptions in preparing the forecasts are as follows:

·; the development income from the strategic partnership between Toumaz UK Limited and CareFusion will taper off during the first half of 2011 and will be replaced by royalty revenue from the commercialisation of the digital plaster project from the early part of 2012. No significant revenues are expected during the first 4 to 6 months after launch in Q4 2011;

·; other revenue streams are forecast for Toumaz UK Limited in the form of margins from sales of its Sensium™ chip and Telran chips. Telran was officially launched in January 2011 and development kits are shipped to several customers. Volume sales are expected during the second half of 2011;

·; Toumaz Asia launched the Xenif chip in October 2010 and started deliveries to PURE. Shipments to its strategic customer are expected to increase in 2011 and 2012. Volume sales to other customers are expected to increase from the second half of 2011;

·; Toumaz has entered into strategic relationships with Quanta Computer in Taiwan and the organization of Patrick Soon Shiong in the USA. These are expected to lead to new products and services for health and activity monitoring outside of hospital with revenues from 2012;

·; During 2010 most of the research and development work on the SensiumTM plaster, Xenif and Telran chips have been completed. Costs associated with production of the chips will be charged in 2011 and 2012 as well as development costs for further healthcare applications;

In February and March 2011 the Group raised £3m to fund its development programme and provide working capital.

These forecasts are underpinned by the assumption that the further funds which are required will be obtained by additional fund raising. These forecasts 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.

3. Taxation

The tax credit for the period is as follows:

The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:

The Group has tax losses in the UK of approximately £15.0 million (2009: £13.4 million) available for offset against future operating profits. Of these approximately £7.1million relate to the pre-acquisition losses of Future Waves UK Limited and as a consequence their utilisation against overall Group profits may be restricted. The Group has not recognised any deferred tax asset in respect of these losses, which would amount to £4.2m (2009: £3.75m) due to there being insufficient certainty regarding their recovery.

4. Loss per share

The calculation of the basic loss per share is based on the loss after tax of £5.9m (2009: £4.4m) divided by the weighted average number of ordinary shares in issue during the year of 592,898,479 (2009: 380,996,526).

The impact of the share options and share warrant is anti dilutive.

5. Goodwill

6. Other Intangible Assets

Intellectual property

Intellectual property at 1 January 2010 relates to the valuation of beneficial licence agreements, trade names and customer relationships in Toumaz UK and Toumaz Asia at the date of their original acquisition. The remaining life of the Toumaz UK asset is approximately three years and for Toumaz Asia between five and nine years.

Licence & development fees

On 14 May 2009 Toumaz Limited entered into an agreement with Imagination Technologies Group plc to license a next generation communication and digital radio multimedia IP platform. The consideration for the license deal consisted of a number of payments scheduled over the duration of the Group's development projects.  The remaining life of this asset is six years.

The Directors have tested both Intellectual property and Licence & development fees for impairment in conjunction with their testing for Goodwill in accordance with the Group's accounting policy. It is their view that no impairment of either category of Intangible asset is required.

7. Trade and other receivables

Trade and other receivables are usually due within 30 to 60 days and do not bear any effective interest.

8. Trade and other payables

All of the above are due within one year.

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.

9. Share capital

All shares are equally eligible to receive dividends and the repayment of capital and represent equal votes at meetings of shareholders.

Allotments during the year

On 16 January, 29 January, 13 July and 26 July three former employees exercised their rights to purchase 729,900, 485,000, 182,475, 1,137,000 ordinary shares of 0.25p each at a price of 3.7p per share. The difference between the total consideration received of £93,772 and the total nominal value of shares issued of £6,336 has been transferred to share premium account. Cost associated with this transaction were £2,035.

Options and warrants

At 31 December 2010, options over 24,197,935 (2009:21,197,935) ordinary shares were in issue to directors serving at that date as disclosed in the Report on Remuneration. In addition, at that date the Group has in issue 21,570,601 (2009: 17,491,127) further options. Details of the fair value of all options in existence is provided in Note 19.

On 21 February 2005, a warrant was issued to Strand Partners Limited, the Group's nominated adviser, in connection with their role in the admission of the Group to the AIM market to subscribe at a price of 10.0p per share for such number of Ordinary Shares as are equivalent (on a fully-diluted basis) to the lower of 1% of the issued ordinary share capital of the Group at the time of exercise or a maximum of 1,000,000 Ordinary Shares. The warrant was exercisable at any time during the period from 8 March 2005 to 8 March 2010. This warrant lapses as it was not exercised on or by 8 March 2010.

10. Publication

The financial information in this announcement does not constitute statutory accounts. The auditors have given an unqualified report on the statutory accounts for the year ended 31 December 2010. The information contained in the announcement has been extracted from audited information.

ENDS

The annual report for the year ended 31 December 2010 will be sent to shareholders shortly and will also be available at www.toumazltd.com.