23 Sep 2013 07:00
23 September 2013
Toumaz Limited
Half year results
Toumaz Limited (AIM: TMZ, 'Toumaz', or 'the Group'), a pioneer in low-power wireless semiconductor and software technologies, has published its results for the six months ended 30 June 2013.
Overall, trading to date is in line with the Board's expectations and the Group's key strategic market development and new product development programmes are running to plan. As a result, the business is expected to see considerable growth in its financial metrics in the medium term.
Highlights
· Group revenues of £8.2m (H1 2012: £10.1m)
o First half 2012 atypically high due to Olympics
· EBITDA loss of £5.6m (H1 2012: loss £6.0m)
· Cash positionof £8.0m at 30 June, 2013 (£7.2m at 31 August, 2013)
· Stable chip sales despite soft consumer electronics market
· New chip development programmes making good progress
· Successful SensiumVitals® pilot and health economics study results - moving towards commercial agreements
o Relationship with Group's US partner, NantHealth, is developing and being refined in preparation for the commercialisation of SensiumVitals®. NantHealth's acquisition of iSirona has strengthened the channel to market.
o In addition to the General Ward, the Accident and Emergency department is emerging as a significant and early opportunity for SensiumVitals®
· Connected Audio market traction increasing - following new agreements with Spotify and Imagination Technologies for their music streaming services
o Also well positioned to exploit the emerging Internet of Things
· Digital Radio market progressing - with the key German market growing 66%, and increasing prospects of a positive switchover decision in the UK
· Opening of software development centre of excellence in Timisoara, Romania
· Appointment of Richard Steeves, founder and CEO of Synergy Healthcare, as non-executive Chairman.
Comparatives in the text are on a pro-forma basis assuming Frontier Silicon was consolidated from 1 January 2012. Comparatives in the Financial Results section are on a statutory basis.
Anthony Sethill, Chief Executive of Toumaz, commented,
"I'm pleased to report that the progress in the year to date, in both trading and our key strategic programmes, is running to plan. We are on track to see considerable growth in the financial metrics of the business during the next 24 months.
"The growth of digital radio in Germany is very promising and we will see several other European markets launch DAB+ during the next two years.
"The consumer audio market is undergoing a digital revolution moving to streaming content from the cloud and smart devices. This means new classes of connected home audio products are required, based on complex wireless chips and software solutions, an area in which our Frontier Silicon division excels. Our connected audio platforms are showing considerable traction in the market with multiple design wins.
"In Healthcare, our SensiumVitals® wireless monitoring system continues to show great promise as we move ever closer to a significant commercial roll out.
"I'm delighted that Richard Steeves has joined the board as non-executive Chairman. His wealth of experience and proven success in the healthcare sector will be invaluable to us, as will his experience in the capital markets.
"I would like to thank our outgoing Chairman Professor Chris Toumazou, who will continue as a non-executive director, for his help and support to date. Chris will continue to contribute to the Group's development in his new capacity."
Enquiries:
Toumaz Limited | +44 (0) 207 391 0630 |
Anthony Sethill, Chief Executive Officer | |
Jonathan Apps, Chief Financial Officer | |
Peel Hunt LLP (Nominated Adviser and Broker) | |
Richard Kauffer/Daniel Harris | +44 (0) 207 418 8900 |
College Hill | +44 (0) 207 457 2056 |
Adrian Duffield/Rozi Morris |
About Toumaz (www.toumaz.com)
Toumaz Limited is a pioneer in low-power wireless semiconductor and software technologies for wireless healthcare and consumer audio. The company has two divisions, Toumaz Healthcare and Frontier Silicon. Toumaz Healthcare develops wireless solutions for patient monitoring. Frontier Silicon provides chip, modules and software for digital radio and connected audio devices - with a mid-term goal to develop solutions for the Internet of Things.
Overview
The first half of 2013 saw a consolidation of the foundations for the Group's future growth. The integration of the Toumaz and Frontier Silicon businesses was completed, which included the rationalisation of product roadmaps, the integration of teams and systems, and the opening of a new software development centre in Romania.
Toumaz continued to make good progress on its three main chip developments for Digital Radio, Connected Audio and Wireless Healthcare.
In April 2013, the results of the SensiumVitals® pilot in St John's Health Center, Los Angeles, were published, providing clear validation of the system's clinical and economic benefits.
Since the period end, there has been particularly positive progress in Healthcare and Connected Audio. In Healthcare, positive discussions are being held with a number of North American and UK private and NHS hospitals for the take-up of the SensiumVitals® wireless monitoring system.
In Connected Audio, the Group, through its Frontier Silicon division, has entered into agreements with Imagination Technologies and Spotify to support the streaming of their online music services direct to audio devices containing the Group's connected audio modules.
Prospects for the Digital Radio business remain promising, as more European markets continue to adopt DAB / DAB+ standards.
Key chip developments
The Group is currently making good progress with its investments in three major chip developments:
· Digital Radio: Chorus 4 is an integrated digital radio chip - designed to drive market growth by offering lower power consumption and easier system integration. A multi-standard chip, Chorus 4 will address digital radio markets in North America (HD) and India (DRM), in addition to the DAB/DAB+ markets of Europe and Asia Pacific.
· Connected Audio: Symphony will be a wireless chip delivering high quality mass market audio via Wi-Fi and Bluetooth; longer term, it will act as a platform to address the Internet of Things.
· Wireless healthcare: BodySense™ is an ultra-low power wireless chip based on the IEEE 802.15.6 dedicated healthcare standard for Medical Body Area Networks (MBAN). This chip aims to remove the need for cables to connect medical sensors to device boxes, replacing them with highly reliable, secure wireless connections. BodySense™ will also enable professional healthcare technologies to enter the home health market, safe from interference from other wireless devices commonly found in the home.
In July 2013, the Group opened a new development centre of excellence in Timisoara, Romania, which is focused on providing software for consumer audio solutions and wireless healthcare products.
Healthcare
Toumaz Healthcare develops wireless solutions for healthcare markets. Currently, the Group has two key product lines:
· SensiumVitals® - the Group's FDA-cleared system for the wireless monitoring of patient vital signs in general wards and A&E departments
· BodySense™ - a wireless healthcare chip, in development, based on the IEEE 802.15.6 (MBAN) standard.
SensiumVitals®
In April 2013, Toumaz Healthcare reached the key milestone of publishing the results of the SensiumVitals® pilot at St John's Health Center, Los Angeles. The pilot was a significant success with patient and medical staff feedback clearly demonstrating both clinical and health economic benefits.
Independent analysis of the cost benefits of the pilot conducted by the Analysis Group of Boston and Université du Québec à Montréal, found that, where patients benefited from the early warnings provided by SensiumVitals®, the length of their stay was reduced on average by several days and their total healthcare costs were significantly lower than for patients in a matched comparison group.
Since the period end, a number of important steps have been taken towards the commercialisation of the SensiumVitals® system. In the first half of 2013, NantHealth (the Group's US partner), acquired iSirona, a provider of simplified solutions for medical device integration. This has significant benefits for Toumaz, as iSirona has direct sales relationships with 300 US hospitals and has already shown a strong appetite for taking SensiumVitals® to market. Following the success of the St John's Health Center pilot, there has been a good level of interest in SensiumVitals® both on general wards and also in accident and emergency departments.
BodySense™
BodySense™ is the Group's next generation wireless healthcare chip, based on the IEEE 802.15.6 standard for wireless Medical Body Area Network (MBAN) devices.
This global standard sets demanding, medical-grade, performance levels for data streaming, robustness and security that are not required of consumer wireless devices.
A key factor in determining the commercial potential of this standard is the allocation of dedicated frequencies for wireless healthcare (allowing wireless monitoring devices in hospitals to operate reliably and free from interference). The US Federal Communications Committee (FCC) has already confirmed that such allocations would be made in the US and similar recommendations have now been made by European authorities.
The development of the BodySense™ chip has been progressing to plan. In August 2013, Toumaz Healthcare became the first company to tape out an IEEE 802.15.6 standard chip.
Digital Radio
Performance in the first half of the year has been in line with expectations. Sales volumes are slightly down year on year, against an unusually strong first half in 2012. An improved performance since June 2013 and a strong order book suggest a more typical seasonal sales pattern for the year is likely.
Market development
Sales volumes in the UK, the largest digital radio market, have seen a slight decline in the first six months of the year. This reflects a broader decline in the overall consumer electronics market and also reflects comparison with 2012 which saw a pre-Olympics boost in sales of digital radios. Prospects for the UK remain positive, but could be significantly enhanced by the Government's decision on Digital Switchover, a decision it has committed to make before the end of 2013.
International progress has been good. In the key German market, sales of DAB+ radios have grown 66% in the first half of the year. This has been reinforced by developments in a number of other markets, such as the Netherlands which launched nationwide DAB+ services in September 2013. France is also expected to launch in Paris, Nice and Marseille in Q1 2014. Italian public broadcaster RAI has announced that it will roll out DAB+ and the Swedish government is seeking parliamentary approval next year to launch DAB+.
Frontier Silicon position
As a leader in the digital radio chip market, a key focus for Frontier Silicon ('Frontier') is to retain market share. In the last six months, Frontier's market share has been stable - with little immediate prospect of this position weakening. Longer term, the Group's investment in its next generation chip, Chorus 4, is designed to meet any competitive challenge.
The first half of 2013 saw the development of two new products which address emerging opportunities in digital radio. The first is Tuscany, a module which combines DAB/DAB+ radio with Bluetooth connectivity, allowing users to stream music from their smartphone to their radio device. The second is AUTODAB 2.0, second generation automotive software which enhances the performance of aftermarket adaptors and DAB car radios. Initial market feedback to both products has been positive.
Connected Audio
The first half performance in Connected Audio has been encouraging. In particular, sales of the Xenif Wi-Fi chip saw strong growth in the second quarter, following the US launch of Pure's Jongo wireless speakers.
Market development
The Connected Audio market has made significant advances in the last six months, with industry estimates forecasting global volume growth of 40% in 2013 and 30% in 2014 (source: Parks Associates, Jul 2013). Currently, this growth is being driven mainly by Bluetooth devices offering point-to-point connectivity. However, from 2014, Wi-Fi connected devices offering multi-room capability and a richer audio experience are expected to become the faster growing sector.
Frontier Silicon position
In addition to the Group's investment in Symphony, three further products will be brought to market in 2013.
The first is Roma, a Wi-Fi and Bluetooth solution based on the Xenif chip, which supports a wide range of audio products, from portable speakers to hi-fi adaptors, offering synchronised multi-room connectivity. The solution has been developed in close collaboration with Imagination Technologies, from whom Frontier licensed the Caskeid audio synchronisation technology and FlowAudio content platform. Roma was launched in September 2013, with products expected to be in stores before the end of the year.
The second is the latest version of the Group's Venice 6.5 audio solution. In September 2013, the Group announced an agreement with Spotify whereby Frontier Silicon will provide solutions to device manufacturers to support Spotify Connect, a new service which integrates Spotify's mobile music service with connected devices within the home. Several brands have already committed to this service, among them Argon in Scandinavia, Hama in Germany and Revo in the UK.
The third new product is the Tuscany Bluetooth module, which addresses growing demand for the integration of Bluetooth into a wide range of consumer audio products. This is now in the final stages of development and the first customer orders have been received.
Current trading and outlook
Trading for the year has been in line with expectations, with revenues of £8.2m, mainly from digital radio. Excluding non-recurring revenues of £0.3m in 2012, underlying revenues are down by £1.9m. This year on year movement is due to accelerated sales in the first half of 2012 due to the London Olympics. The remainder of 2013 is expected to follow normal seasonal trends and should compensate for the atypical seasonality in 2012.
The Board believes that whilst the Group has sufficient cash on hand for its immediate requirements, further sources of finance are likely to be required to continue the development of its products and to bring those products to market. The Board is considering a number of potential sources for those funds.
Overall, trading to date is in line with the Board's expectations and the Group as a whole is on track to see considerable growth in the financial metrics of the business during the next 24 months.
Financial Review
The primary statements disclosed in the results section have been prepared on a statutory basis and reflect the performance of the combined Toumaz and Frontier Silicon entities for the six months to June 2013 and the results of just Toumaz for the period to 30 June 2012. As such, it is difficult to make a meaningful comparison between the periods.
Set out below is a summarised income statement prepared on a pro-forma basis for the six months to June 2012 and 2013 prepared as if the two companies had been combined from 1 January and excluding £0.3m of non-recurring, consultancy revenue and £0.5m of bad debt relating to an IP licence reported by Toumaz in 2012.
£m | Six months to 30 June 2013 | Six months to 30 June 2012 |
Revenue | 8.2 | 10.1 |
Cost of sales | (4.6) | (6.0) |
Gross margin | 3.6 | 4.1 |
Research and development costs | (5.3) | (4.9) |
Sales and administrative costs | (3.9) | (5.2) |
EBITDA | (5.6) | (6.0) |
Depreciation and amortisation | (1.5) | (1.0) |
Other non-trading costs | (0.5) | (0.0) |
Loss for the period | (7.6) | (7.0) |
Revenues have declined year on year as a result of lower shipments which is a direct result of the London Olympics where sales were atypically skewed into the first half of 2012 compared to a more usual second half bias. In 2013 the Group is experiencing the more normal seasonal trading pattern.
Gross margins have increased from 40.6% in 2012 to 43.9% in 2013.
Research and development costs are expensed where possible and reflect the ongoing development in the three major programmes currently under way.
EBITDA loss has narrowed by £0.4m year on year to £5.6m (2012: loss £6.0m).
Other non-trading costs are primarily comprised of the non-cash employee share based payments.
The Group pretax loss was £7.6m (2012: loss £7.0m) and a loss per share of 0.65p (2012: loss 0.59p).
As with the income statement, the balance sheet is not comparable year on year as 2012 excludes any balances in respect of Frontier. On an aggregated basis the key working capital balances would be:
£m | As at 30 June 2013 | As at 30 June 2012 |
Inventory | 2.8 | 2.9 |
Receivables | 3.7 | 3.0 |
Cash | 8.0 | 20.2 |
Current liabilities | (7.8) | (11.1) |
The movement in cash in 2012 was materially affected by the acquisition of Frontier in August of that year. Cash at 30 June 2013 was £8.0m and at 31 August 2013 was £7.2m.
Financial results
Toumaz LimitedUnaudited Interim Results for the six month period ended 30 June 2013
Statement of Comprehensive Income
for the period ended 30 June 2013
| UnauditedSix monthsended30 June 2013 | UnauditedSix monthsended30 June 2012 | AuditedYear ended31 December 2012 | |
£'000 | £'000 | £'000 | ||
Revenue | 8,234 | 846 | 8,767 | |
Cost of sales | (4,587) | (608) | (4,766) | |
Gross profit | 3,647 | 238 | 4,001 | |
Amortisation of intangible assets | (1,314) | (710) | (2,083) | |
Impairment | - | - | (10,151) | |
Depreciation | (230) | (51) | (239) | |
Share based payment | (344) | (25) | (51) | |
Research & development | (5,349) | (2,136) | (6,448) | |
Professional fees on acquisition | - | - | (569) | |
Sales & administrative expenses - other | (3,889) | (2,285) | (6,211) | |
Total administrative expenses | (11,126) | (5,207) | (25,752) | |
Loss from continuing operations | (7,479) | (4,969) | (21,751) | |
Finance income | 29 | 29 | 115 | |
Finance charges | (106) | - | - | |
Loss before taxation | (7,556) | (4,940) | (21,636) | |
Taxation | (30) | - | 1,317 | |
(7,586) | (4,940) | (20,319) | ||
Other comprehensive (expense)/income
Items that will be reclassified subsequently to profit or loss | ||||
Exchange differences on translating foreign operations | 62 | (7) | (37) | |
Other comprehensive income/(expense) for the period | 62 | (7) | (37) | |
Total comprehensive loss for the period | (7,524) | (4,947) | (20,356) | |
Basic and diluted loss per share attributable to owners of the parent | 3 | (0.65)p | (0.59)p | (2.19)p |
| UnauditedSix monthsended30 June 2013 | UnauditedSix monthsended30 June 2012 | AuditedYear ended31 December 2012 | |
£'000 | £'000 | £'000 | ||
Loss for year attributable to : | ||||
Non-controlling interest Owners of the parent | - (7,586) | (461) (4,479) | - (20,319) | |
(7,586) | (4,940) | (20,319) | ||
UnauditedSix monthsended30 June 2013 | UnauditedSix monthsended30 June 2012 | AuditedYear ended31 December 2012 | ||
£'000 | £'000 | £'000 | ||
Total comprehensive loss for the year attributable to : | ||||
Non-controlling interest Owners of the parent | - (7,524) | (461) (4,486) | - (20,356) | |
(7,524) | (4,947) | (20,356) | ||
Consolidated Statement of Financial Positionat 30 June 2013
Note | Unaudited30 June 2013 | Unaudited30 June 2012 | Audited31 December 2012 | |
Assets | £'000 | £'000 | £'000 | |
Non-current assets | ||||
Goodwill | 4 | 19,118 | 16,533 | 19,118 |
Other intangible assets | 5 | 18,209 | 5,927 | 17,742 |
Property, plant and equipment | 645 | 148 | 665 | |
Interest in associates | - | 11 | - | |
37,972 | 22,619 | 37,525 | ||
Other non-current assets | 49 | 1,318 | 221 | |
Current assets | ||||
Inventories | 2,786 | 493 | 1,804 | |
Tax receivable | 1,076 | 618 | 1,598 | |
Trade and other receivables | 6 | 2,668 | 860 | 3,250 |
Cash and cash equivalents | 7,984 | 9,365 | 15,265 | |
Total current assets | 14,514 | 11,336 | 21,917 | |
Total assets | 52,535 | 35,273 | 59,663 | |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 7 | 7,771 | 944 | 7,780 |
Total liabilities | 7,771 | 944 | 7,780 | |
Equity | ||||
Share capital | 8 | 2,964 | 2,039 | 2,839 |
Contingent consideration | 500 | - | 1,081 | |
Share premium | 98,674 | 66,985 | 98,033 | |
Share based payment reserve | 2,136 | 1,882 | 1,916 | |
Foreign exchange reserve | (94) | (126) | (156) | |
Retained earnings | (59,416) | (36,451) | (51,830) | |
Reserves attributable to owners of the parent Non-controlling interest |
44,764 |
34,329 |
51,883 | |
Total equity | 44,764 | 34,329 | 51,883 | |
Total equity and liabilities | 52,535 | 35,273 | 59,663 | |
Consolidated Statement of Changes in Equityfor the period ended 30 June 2013
Share capital |
Contingent consideration | Share premium | Share based payment reserve | Retained earnings | Foreign exchange reserve | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2013 | 2,839 | 1,081 | 98,033 | 1,916 | (51,830) | (156) | 51,883 |
Share-based payments | - | - | - | 344 | - | - | 344 |
Contingent shares issued | 18 | (581) | 563 | - | - | - | - |
Issue of share capital | 107 | 78 | - | - | - | 185 | |
Retention shares issued | - | - | - | (124) | - | - | (124) |
Transactions with owners | 125 | (581) | 641 | 220 | - | - | 405 |
Loss for the period | - | - | - | - | (7,586) | - | (7,586) |
Other comprehensive losses | |||||||
Exchange differences on translating foreign operations |
- |
- |
- |
- |
- |
62 |
62 |
Total comprehensive loss | - | - | - | - | (7,586) | 62 | (7,524) |
At 30 June 2013 | 2,964 | 500 | 98,674 | 2,136 | (59,416) | (94) | 44,764 |
Consolidated Statement of Changes in Equityfor the period ended 30 June 2012
Share capital |
Contingent consideration | Share premium | Share based payment reserve | Retained earnings | Foreign exchange reserve | Non-controlling interest | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2012 | 1,574 | - | 51,263 | 1,857 | (31,386) | (119) | 4,875 | 28,064 |
Share-based payments | - | - | - | 59 | - | - | - | 59 |
Issue of share capital | 1,122 | - | 42,212 | - | - | - | - | 43,334 |
Non-controlling interest - acquisition of non-controlling interest through issue of equity in parent |
143 |
- | 4,857 | - | (586) |
- | (4,414) | - |
Cost of share issue | - | - | (299) | - | - | - | - | (299) |
Contingent consideration | - | 1,081 | - | - | - | - | - | 1,081 |
Transactions with owners | 1,265 | 1,081 | 46,770 | 59 | (586) | - | (4,414) | 44,175 |
Loss for the period | - | - | - | - | (19,858) | - | (461) | (20,319) |
Other comprehensive losses | ||||||||
Exchange differences on translating foreign operations |
- |
- |
- |
- |
- |
(37) |
- |
(37) |
Total comprehensive loss | - | - | - | - | (19,858) | (37) | (461) | (19,858) |
At 31 December 2012 | 2,839 | 1,081 | 98,033 | 1,916 | (51,830) | (156) | - | 51,883 |
Consolidated Cash Flow Statement
For the period ended 30 June 2013
UnauditedSix monthsended30 June 2013 | UnauditedSix monthsended30 June 2012 | AuditedYear ended31 December2012 | |
£'000 | £'000 | £'000 | |
Cash flows from operating activities | |||
Loss before taxation | (7,556) | (4,940) | (21,636) |
Amortisation | 1,314 | 710 | 2,083 |
Depreciation | 230 | 51 | 239 |
Goodwill impairment | - | - | 5,951 |
Impairment of other intangible assets | - | - | 3,299 |
Impairment of prepayments | - | - | 901 |
Share based payments | 344 | 25 | 59 |
Net interest (received)/ paid | 77 | (29) | (115) |
Increase in inventories | (982) | (158) | 925 |
Decrease/(increase) in trade and other receivables | 1,104 | 1,273 | 2,041 |
Decrease in non-current debtors | 172 | - | 313 |
Increase in trade and other payables | (1,840) | (903) | (2,231) |
Foreign exchange movements | 62 | (7) | 211 |
Tax (paid)/ refund | (30) | - | 386 |
Non cash flow movement in respect of associates | - | - | 11 |
Net cash outflow from operating activities | (7,105) | (3,978) | (7,563) |
Cash flow from investing activities | |||
Purchase of property, plant and equipment | (203) | (47) | (237) |
Purchase on intangible assets | (1,781) | - | (71) |
Interest (paid)/ received | (77) | 29 | 115 |
Acquisition of subsidiaries, net of cash | 1,849 | - | (14,026) |
Net cash used in investing activities | (212) | (18) | (14,219) |
Cash flow from financing activities | |||
Proceeds from issue of share capital | 36 | 11,241 | 40,421 |
Share issue costs | - | (54) | (299) |
Loan notes repaid | - | - | (5,249) |
Net cash inflow from financing activities | 36 | 11,187 | 34,873 |
Net change in cash and cash equivalents | (7,281) | 7,191 | 13,091 |
Cash and cash equivalents at beginning of period | 15,265 | 2,174 | 2,174 |
Cash and cash equivalents at end of period | 7,984 | 9,365 | 15,265 |
Notes to the Interim ReportFor the period ended 30 June 2013
1. Nature of operations and general information
The principal activity of the Group is that of commercial exploitation of ultra-low power wireless infrastructure technologies with commercial propositions within the Toumaz Healthcare and Frontier Digital Audio (Digital Radio and Connected Audio) divisions.
Toumaz Limited is the Group's ultimate parent company. It is incorporated the Cayman Islands. The address of Toumaz Limited's registered office is Elgin House, 119 Elgin Avenue, George Town, Grand Cayman, Cayman Islands. Toumaz Limited's shares are listed on the Alternative Investment Market of the London Stock Exchange.
Toumaz Limited's consolidated interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company.
The financial information set out in this interim report does not constitute statutory accounts. The Group's statutory financial statements for the year ended 31 December 2012 are available from the Group's website. The auditor's report on those financial statements was unqualified
2. Accounting Policies
Basis of Preparation
These interim condensed consolidated financial statements are for the six months ended 30 June 2013. They have been prepared following the recognition and measurement principles of IFRS. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2012.
These financial statements have been prepared on the going concern basis and under the historical cost convention.
These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2012.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidatedinterim financial statements.
Fair Value Measurement
IFRS13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair-valued. IFRS13 applies prospectively for annual periods beginning on or after 1 January 2013
Estimates
When preparing the interim financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.
The judgements, estimates and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group's last financial statements for the year ended 31 December 2012.
Significant events and transactions
The Group has traded in line with management's expectations for the period to 30 June 2013.
In preparing the half year statements, management has applied the going concern basis of valuation for assets and liabilities. The Board believes that whilst the Group has sufficient cash on hand for its immediate requirements, further sources of finance are likely to be required to continue the development of its products and to bring those products to market. The Board is considering a number of potential sources for those funds and is confident that as and when they are required, such funds can be brought into the business.
3. Loss per share
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The impact of the share options and share warrant on the loss per share is anti-dilutive.
Basic loss per share | |||
UnauditedSix monthsended30 June 2013 | UnauditedSix monthsended30 June 2012 | AuditedYear ended31 December2012 | |
Loss for the period attributable to equity shareholders | £7,586,000 | £4,479,000 | £20,319,000 |
Weighted average number of 0.25p ordinary shares | 1,169,915,080 | 756,252,005 |
927,984,462 |
(Loss) per share - basic and diluted | (0.65)p | (0.59)p | (2.19)p |
4. Goodwill
Frontier Silicon | Toumaz Healthcare | Toumaz Microsystems | Total | |
£'000 | £'000 | £'000 | £'000 | |
Cost | ||||
At 1 January 2012 | - | 10,582 | 5,951 | 16,533 |
Additions | - | - | - | - |
At 30 June 2012 | - | 10,582 | 5,951 | 16,533 |
Additions | 8,536 | - | - | 8,536 |
At 31 December 2012 | 8,536 | 10,582 | 5,951 | 25,069 |
Additions | - | - | - | - |
At 30 June 2013 | 8,536 | 10,582 | 5,951 | 25,069 |
Impairment | ||||
At 1 January 2012 | - | - | - | - |
Charge in period | - | - | - | - |
At 30 June 2012 | - | - | - | - |
Charge in period | - | - | 5,951 | 5,951 |
At 31 December 2012 | - | - | 5,951 | 5,951 |
Charge in period | - | - | - | - |
At 30 June 2013 | - | - | 5,951 | 5,951 |
Net book amount at 30 June 2013 | 8,536 | 10,582 | - | 19,118 |
Net book amount at 30 June 2012 | - | 10,582 | 5,951 | 16,533 |
Net book amount at 31 December 2012 | 8,536 | 10,582 | - | 19,118 |
Toumaz Healthcare
Goodwill relating to Toumaz Healthcare results from the acquisition of Toumaz Healthcare Limited (formerly Toumaz UK Limited ) on 3 November 2005.
Toumaz Microsystems
Goodwill relating to Toumaz Microsystems results from the acquisition of Future Waves UK Limited and Toumaz Asia on 20 May 2009.
Frontier Silicon
Goodwill relating to Frontier Silicon results from the acquisition of Frontier Silicon Ltd on 20 August 2012.
5. Other intangible assets
Marketing intellectual property | Customer intellectual property | Intellectual property | Licence & development fees | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Cost | |||||
At 1 January 2012 | - | - | 6,806 | 5,495 | 12,301 |
Additions | - | - | - | - | - |
At 30 June 2012 | - | - | 6,806 | 5,495 | 12,301 |
Additions | - | - | - | 71 | 71 |
Recognised on acquisition | 4,000 | 1,690 | 10,203 | 8,912 | 24,805 |
At 31 December 2012 | 4,000 | 1,690 | 17,009 | 14,478 | 37,177 |
Additions | - | - | - | 1,781 | 1,781 |
At 30 June 2013 | 4,000 | 1,690 | 17,009 | 16,259 | 38,958 |
Amortisation | |||||
At 1 January 2012 | - | - | 4,294 | 1,370 | 5,664 |
Charge in period | - | - | 445 | 265 | 710 |
At 30 June 2012 | - | - | 4,739 | 1,635 | 6,374 |
Charge in period | 133 | 47 | 932 | 261 | 1,373 |
Recognised on acquisition | - | - | - | 8,389 | 8,389 |
Impairment | - | - | 1,312 | 1,987 | 3,299 |
At 31 December 2012 | 133 | 47 | 6,983 | 12,272 | 19,435 |
Charge in period | 200 | 70 | 873 | 171 | 1,314 |
At 30 June 2013 | 333 | 117 | 7,856 | 12,443 | 20,749 |
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|
| - |
| |
Net book amount at 30 June 2013 | 3,667 | 1,573 | 9,153 | 3,816 | 18,209 |
Net Book amount at 30 June 2012 | - | - | 2,067 | 3,860 | 5,927 |
Net book amount at 31 December 2012 | 3,867 | 1,643 | 10,026 | 2,206 | 17,742 |
Intellectual property
Intellectual property at 1 January 2012 relates to the valuation of beneficial licence agreements, trade names and customer relationships in Toumaz Healthcare and Toumaz Microsystems at the date of their original acquisition. The remaining life of the Toumaz Healthcare asset is approximately 2 months and for Toumaz Microsystems this has been written down to zero following a review of the likely cash flows generated by this chip. The addition during 2012 relates to the technology fair value associated with the Frontier Silicon acquisition.
Licence & development fees
At 1 January 2012 licence & development fees related to an agreement, dated 14 May 2009, with Imagination Technologies Group plc to licence a next generation communication and digital radio multimedia IP platform. The consideration for the licence deal consisted of a number of payments scheduled over the duration of the Group's development projects. The remaining life of this asset is five years. The additions in the year relate to technology on new projects essential to the future development of the new generation digital chips. The licences will be amortised in accordance with the Group accounting policy and will be subject to an annual impairment review.
Marketing
Marketing-related intangible assets are defined as those assets that are primarily used in the marketing or promotion of products and services. The Frontier solutions are well known and preferred by a majority of the consumer electronic brands who specifically instruct their manufacturers to use Frontier modules and solutions in their audio systems.
Customer relationships
Customer-related intangible assets may consist of customer lists, order or production backlogs, customer contracts and relationships, and non-contractual customer relationships. Frontier has developed relationships with both consumer electronic brands and manufacturers. The customer relationship valuation captures the economic benefits of having these trading relationships.
6. Trade and other receivables
Unaudited30 June 2013 | Unaudited30 June 2012 | Audited31 December 2012 | |
£'000 | £'000 | £'000 | |
Trade receivables | 1,128 | 246 | 1,107 |
Other debtors | 559 | 93 | 1,146 |
Prepayments and accrued income | 981 | 521 | 997 |
Trade and other receivables, net | 2,668 | 860 | 3,250 |
Trade and other receivables are usually due within 30 - 60 days and do not bear any effective interest rate.
The fair value of these short term financial assets is not individually determined as the carrying amount is a reasonable approximation of fair value.
7. Trade and other payables
Unaudited30 June 2013 | Unaudited30 June 2012 | Audited31 December 2012 | |
£'000 | £'000 | £'000 | |
Trade payables | 4,053 | 489 | 1,571 |
Other payables | 1,067 | 109 | 3,219 |
Accruals and deferred income | 2,651 | 346 | 2,990 |
Trade and other payables | 7,771 | 944 | 7,780 |
The fair value of trade and other payables has not been disclosed as, due to their short duration, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.
8. Share capital
Unaudited30 June 2013 | Unaudited30 June 2012 | Audited31 December 2012 | ||||
£'000 | £'000 | £'000 | ||||
Authorised | ||||||
4,000,000,000 ordinary shares of 0.25p | 10,000 | 10,000 | 10,000 | |||
Allotted, issued and fully paid | 1,185,776,014 | 815,460,846 | 1,135,651,456 | |||
£'000 | 2,964 | 2,039 | 2,839 | |||
The movement in the number of shares is as follows: | ||||||
Number of ordinary shares | ||||||
At 1 January 2012 | 629,437,868 | |||||
Shares issued | 186,022,978 | |||||
At 30 June 2012 | 815,460,846 | |||||
Shares issued | 320,190,610 | |||||
At 31 December 2012 | 1,135,651,456 | |||||
Shares issued | 50,124,558 | |||||
At 30 June 2013 | 1,185,776,014 | |||||
All shares are equally eligible to receive dividends and the repayment of capital and represent equal votes at meetings of shareholders.
Allotments
11 January 2013, 1,728,192 ordinary shares 0f 0.25p were issued in relation to the exercise of share options by employees.
25 January 2013, 33,504,887 ordinary shares of 0.25p were issued ("JSOP Shares") pursuant to the implementation by the Company of the joint share ownership schedule to the LTIP ("JSOP").
30 April 2013, 1,195,122 ordinary shares of 0.25p were issued in settlement of deferred consideration due to a former employee of Frontier Silicon (Holdings) Limited ("Frontier") in respect of Frontier's acquisition by Toumaz.
8 May 2013, 2,718,894 ordinary shares of 0.25p were issued in settlement of deferred consideration due to a former employee of Frontier Silicon (Holdings) Limited ("Frontier") in respect of Frontier's acquisition by Toumaz.
21 May 2013, 6,446,914 ordinary shares of 0.25p were issued ("JSOP Shares") pursuant to the implementation by the Company of the joint share ownership schedule to the LTIP ("JSOP").
23 May 2013, 2,302,676 ordinary shares of 0.25p were issued in relation to in settlement of deferred consideration due under the Acquisition Agreement.
23 May 2013, 2,083,857 ordinary shares of 0.25p were issued in relation to in settlement of deferred consideration due under the Acquisition Agreement.
24 May 2013, 144,016 ordinary shares of 0.25p were issued in relation to the exercise of share options by employees.
9. The Company announces that in accordance with Rule 26 of the AIM rules, the Half Year Report for the half year ended 30 June 2013 will be available for download from the Company's website http://toumaz.com/ by no later than 23rd September 2013.