15 Sep 2008 07:00
Embargoed Release: 07:00hrs Monday 15th September 2008
Nanoscience Inc. (`Nanoscience' or the `Group') Unaudited Interim Results for the six month period ended 30 June 2008
Nanoscience Inc., the specialist niche investor in emerging technologies with strong commercial propositions for the healthcare and electronic sectors, is pleased to present its unaudited interim results for the six month period ended 30 June 2008 (the `period'). During the period, the Group made significant progress in the development and commercialisation of its three main investee companies; its wholly owned subsidiary Toumaz Technology Limited ('Toumaz'), Future Waves Pte. Limited ('Future Waves') in which it holds an 18% interest, and Sentinel Healthcare Solutions Limited ('Sentinel') where it holds a 50% interest.
Highlights:
* Pre-tax losses were reduced from ‚£2.68 million to ‚£1.75 million on a like-for-like basis, as development and licence revenues continue to build. * Toumaz signs strategic licensing and distribution agreement with Texas Instruments Inc. (`TI'). * Toumaz progressed its product development partnership with Cardinal Health Inc. (`Cardinal Health'), successfully achieving all pre-designated milestones during the period. * Toumaz, as part of a consortium, wins ¢â€š¬7.1 million European Community grant to research and develop a portable blood glucose predictor system for diabetes patients. * Sentinel launches its first product MyAmego¢â€ž¢ at the Naidex Conference at the Birmingham NEC and secures the 2008 Best New Technology prize. * Future Waves completes a $4.75 million fundraising to assist in the further development and commercial activities of its Fenix2 and Orion2 chips.
Post-period Highlights:
* Proposed change of name to Toumaz Holdings Limited and reorganisation of the Group to better reflect the commercial priorities of the Group's principal investment, and also to assist with tax planning and licensing on a global basis. * Toumaz signs a licensing agreement, worth a potential ‚£1.5 million, with a Far East-based sports-focused business to develop its Sensium¢â€ž¢ technology platform in sport, with the aim to initially target the football and horse racing markets. * Toumaz signs licensing agreement with Infineon Technologies AG (`Infineon') for the development, manufacture, marketing and sales of its Sensium¢â€ž¢ technology in non-healthcare markets. * Sentinel's MyAmego¢â€ž¢ wins its first commercial contract in a new purpose built local authority care home in Scotland. Installation of MyAmego¢â€ž¢ was completed in July 2008 and discussions to expand the product into further care homes are underway. * MyAmego¢â€ž¢ signs two distributorship agreements: for the public healthcare sector and for the larger private healthcare sector.
CHAIRMAN'S STATEMENT
I am pleased to report that the period was one of many notable achievements for Nanoscience's primary investments.
Overall, the reduction in pre-tax losses to ‚£1.75 million from ‚£2.68 million over the period compared to the same period last year reflects the growing support for Toumaz's Sensium¢â€ž¢ platform as we progress through our roadmap to commercial success. Our partners TI, Infineon and Cardinal Health continue to actively fund Sensium¢â€ž¢'s development and commercial programme and this funding will be maintained throughout 2009. We anticipate the strength of these relationships will further impact the Group's balance sheets in a very positive manner; supporting further reductions in pre-tax losses during the second half of the year and assisting in the Group's target of achieving a break-even position by end 2009. Revenue will be driven by specific product releases based on Sensium¢â€ž¢'s technology, as our partners concentrate on their targeted sectors and Toumaz continues to deliver against its contractual milestones.
In the healthcare sector, the Sensium¢â€ž¢ has been developed to monitor multiple vital signs such as ECG, heart rate, body temperature, respiration and physical activity. The miniature body monitoring products are both disposable and non-disposable and link wirelessly to a data management system. The commercial success of Toumaz's Sensium¢â€ž¢ platform has also gained momentum by receiving ISO 13485:2003 certification, the regulatory standard for the international medical industry, for its quality management system. This technical milestone is a regulatory requirement in a number of international markets for the manufacture of medical devices, and forms the cornerstone for the CE certification of medical products in the EU.
In March 2008, Toumaz signed a strategic licensing and distribution agreement with TI, a global leader in the the development, manufacture and commercialisation of semiconductor and computer technology, offering Toumaz access to TI's design, process, and manufacturing capabilities as well as providing the opportunity to use TI's sales channel to sell and market the Sensium¢â€ž¢ to TI's established customer base. The agreement with TI, which follows the strategic partnership formed with global healthcare product and service provider Cardinal Health, has progressed rapidly and the Board anticipates the launch of a first Sensium¢â€ž¢ product, Sensium¢â€ž¢ 1, before the end of 2008.
As the development of the Sensium¢â€ž¢ has advanced Toumaz recognises it also has universal applicability in a wide range of non-medical applications that seek low power wireless connectivity solutions using substantially less power than currently available technology. To position Sensium¢â€ž¢'s technology to its best advantage in additional addressable markets and to further build the commercial proposition that its IP offers by expanding its product catalogue, Toumaz has signed two significant licensing agreements, the first of which will establish the Sensium¢â€ž¢ brand globally in the sports industry; initially targeting the football and horse racing fields.
The recently announced agreement with Infineon further extends the relationship established between Toumaz and Infineon in 2005. Infineon, the global semiconductor and system solutions provider, will develop, manufacture and market wireless silicon chips, branded ELRAN, that are based on Sensium¢â€ž¢'s technology for use in non-medical applications. Royalty income from ELRAN is expected to commence in 2009.
In line with Toumaz's ambitions to strengthen its portfolio, in particular in relation to its Sensium¢â€ž¢ technology, and to fully exploit the many opportunities that have emerged, the resolutions to change the name of the Group to Toumaz Holdings Limited and reorganise the structure of the Group is viewed by the Board as essential change in preparation for Toumaz's widely anticipated commercial success. The cost incurred for this work will be less than ‚£60,000.
Sentinel
Sentinel completed a busy period achieving its key objective; the launch of its first product MyAmego¢â€ž¢. The service intelligently analyses the user's environment in relation to the user's needs and enables care home operators specialising in caring for people with dementia and other disabilities to deliver a better quality of care by monitoring residents' mobility and managing patient risk. Having successfully completed trials covering numerous conditions in both private and local authority care homes across the UK, MyAmego¢â€ž¢ was launched at the Naidex Exhibition at the Birmingham NEC in May 2008, where it also secured the 2008 Best New Technology prize on the last day of the exhibition.
On launch, Sentinel signed an initial distributor agreement to market and sell MyAmego¢â€ž¢ to local UK health authorities. This led to its first commercial contract from a local authority in a new purpose built 25-bed care home in Scotland. The completion of the successful installation of MyAmego¢â€ž¢ has led the Board to expect, with some confidence, that the provider in question will adopt MyAmego¢â€ž¢ in its remaining seven care homes.
Post-period, Sentinel also signed a second distributorship agreement for MyAmego¢â€ž¢ with Healthantec Ltd. (`Healthantec'), specialising in the marketing and distribution of healthcare devices, for the UK private care home market. Healthantec believe the top five largest UK care home providers own some 1,700 homes with approximately 90,000 beds, while the mid-tier market has approximately 2,900 homes with 130,000 beds. Healthantec has targeted, and is in negotiations with a number of the largest private care home operators to adopt and install the MyAmego¢â€ž¢ system in their care units.
Future Waves
In the period, Future Waves, a fabless manufacturer of specialist chips for digital broadcasting markets, continued to focus on the development of its products for the mobile digital TV market.
Future Waves has developed single receiver chipset solutions that eliminate cost and technology issues faced by device manufacturers who previously had to source and combine individual chip designs to function in their appliances. The strength of Future Waves' technology lies in radio frequency (`RF') and the multi-standard functionality based on its core AMx IP helps to drive ultra low power solutions which can be deployed worldwide. Futures Waves brings to the markets a single chip receiver solution configurable to all modalities and standards. By concentrating on digital manufacturing processes (RF CMOS) the business is able to provide all the features required by the device manufacturers in a complete system-on-chip solution.
Future Waves has achieved early market penetration with its proprietary Fenix chip; its strategic partnership with Imagination Technologies Group plc, the leading semiconductor IP developer for multimedia and communications applications, has led the number one digital radio supplier in the UK to place Future Waves chips in its commercial applications.
Further innovation by year end is anticipated in the launch of Fenix2 and Orion2 chips; this coupled with ongoing efforts to secure further strategic relationships should substantially propel the business' commercial progression.
Outlook
The Board remains confident about the prospects of the Group, especially inlight of the considerable progress made across its investments and itanticipates the second half of 2008 will produce continued growth in thecommercial value that is being developed. Our intention to increase our focuson Toumaz as the primary and initial source of commercial success and incomegeneration will enable the Group to advance the completion of productdevelopment and launch, and to further improve our financial performance in2009.Richard RoseChairman12 September 2008Further information:Guy Spelman Nanoscience Inc. 07767 338 967 Charles Cunningham/Rose FinnCap 020 7600 1658 Herbert Vikki Krause Hansard Group 020 7245 1100 www.hansardgroup.co.uk CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2008
Unaudited Unaudited Audited Six months Six months Year ended ended ended 31 December Note 30 June 2008 30 June 2007 2007 ‚£'000 ‚£'000 ‚£'000 Revenue 713 122 174 Cost of sales (106) (139) (209) Gross (loss)/profit 607 (17) (35) Amortisation and impairment (374) (266) (925) Administrative expenses (2,268) (1,651) (3,658) Loss from operations (2,035) (1,934) (4,618) Result from equity accounted - (781) (1,547)investments Impairment of equity accounted - - (1,643)investment Finance income 22 31 82 Loss before taxation (2,013) (2,684) (7,726) Taxation 262 - 392 Loss for the period (1,751) (2,684) (7,334)
Basic and diluted loss per ordinary 4 (0.81)p (1.45)p (3.67)p share
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD 30 JUNE 2008 Share Profit based and Share Share payment loss Total capital premium reserve account equity ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 At 1 January 2007 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 - - (8) 8 -options At 31 December 2007 544 25,933 575 (12,233) 14,819(Audited) Loss for the period - - - (1,751) (1,751) Share based payments - - 87 - 87 At 30 June 2008 544 25,933 662 (13,984) 13,155(Unaudited) CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2008 Unaudited Unaudited Audited 30 June 30 June 31 December Note 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 ASSETS Non-current assets Intangible assets 13,169 13,703 13,435 Property, plant and equipment 189 62 60 Interests in joint venture 276 - 208 Interests in associates - 1,659 - Available for sale investments - 391 - 13,634 15,815 13,703 Current assets Inventories - - 15 Tax receivable 262 414 392 Trade and other receivables 5 815 323 377 Cash and cash equivalents 724 634 1,535 Total current assets 1,801 1,371 2,319 Total assets 15,435 17,186 16,022 EQUITY AND LIABILITIES Current liabilities Trade and other payables 6 1,671 375 594 Total current liabilities 1,671 375 594 Non-current liabilities 6 609 609 609 Total liabilities 2,280 984 1,203 Equity Share capital 7 544 462 544 Share premium 25,933 22,847 25,933 Share based payment reserve 662 483 575 Profit and loss account (13,984) (7,590) (12,233) Equity shareholders' funds 13,155 16,202 14,819 Total equity and liabilities 15,435 17,186 16,022
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 30 JUNE 2008 Unaudited Unaudited Six months Six months Audited ended ended Year ended 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Cash flows from operating activities Loss before taxation (2,013) (2,684) (7,726) Amortisation 266 266 534 Depreciation 26 23 50 Share of loss of associates and joint 108 781 1,547ventures Impairment of equity accounted - - 1,643associate Impairment of available for sale - - 391investments Share based payments 87 79 178 Interest received (22) (31) (82) Increase in inventories 15 - (15) /(Increase)/decrease in trade and (438) 6 (48)other receivables Increase/(decrease) in trade and 1,077 (59) 160other payables Tax refund 392 - 414 Net cash outflow from operating (502) (1,619) (2,954)activities Cash flows from investing activities Purchase of and loans to investments (176) (72) (1,030)and associates Purchase of other non-current assets (155) (7) (32) Interest received 22 31 82 Net cash used in investing activities (309) (48) (980) Cash flows from financing activities Proceeds from issue of share capital - 10 3,178(net) Net cash inflow from financing - 10 3,178activities Net change in cash and cash (811) (1,657) (756)equivalents Cash and cash equivalents at 1,535 2,291 2,291beginning of period Cash and cash equivalents at end of 724 634 1,535period NOTES TO THE INTERIM REPORT
FOR THE PERIOD ENDED 30 JUNE 2008
1 GENERAL INFORMATION
The information for the period ended 30 June 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The figures for the year ended 31 December 2007 have been extracted from the 2007 statutory financial statements prepared under International Financial Reporting Standards (IFRS). The auditors' report on those accounts was unqualified and did not contain a statement under section 237(2) of the Companies Act 1985.
2 ACCOUNTING POLICIES
BASIS OF PREPARATION
The Company was incorporated in the Cayman Islands which do not prescribe the adoption of any particular accounting framework. The Board have resolved that the Company will follow IFRS and apply the Companies Act 1985 when preparing its annual financial statements. The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for this reason they continue to adopt the going concern basis in preparing the financial statements.
The principal accounting policies of the Group remain unchanged from those set out in the Group's 2007 annual report
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are discussed below:
Impairment of assets
The Group conducts impairment reviews of assets when events or changes in circumstances indicate that their carrying amounts may not be recoverable annually, or in accordance with the relevant accounting standards. An impairment loss is recognised when the carrying amount of an asset is lower than the greater of its net selling price or the value in use. In determining the value in use, management assesses the present value of the estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Estimates and judgments are applied in determining these future cash flows and the discount rate.
Valuations of share options granted
The fair value of share options granted was calculated using the Binomial option pricing model which requires the input of highly subjective assumptions, including the volatility of share price. Because changes in subjective input assumptions can materially affect the fair value estimate, in the opinion of Directors of the Company, the existing model will not always necessarily provide a reliable single measure of the fair value of the share options. Details of the inputs are set out in Note 7 to the interim financial information.
3 SEGMENTAL REPORTING
a) Primary reporting format - business segment
As defined under International Accounting Standard 14 "Segment Reporting" (IAS 14), the only material business segment the Group has is that of the commercial exploitation of nano technologies.
b) Secondary reporting format - geographical segment
Under the definitions contained in IAS 14 the only material geographic segment that the Group operates in is the UK.
4 LOSS PER SHARE
The calculation of the basic loss per share is based on the loss attributableto ordinary shareholders divided by the weighted average number of shares inissue during the period. The impact of the warrant on the loss per share isanti-dilutive.Basic loss per share Unaudited Unaudited Six months Six months Audited ended ended Year ended 30 June 30 June 31 December 2008 2007 2007 Loss on ordinary activities after tax ‚£(1,751,000) ‚£(2,684,000) ‚£ (7,334,000)
Weighted average number of 0.25p ordinary 217,459,138 184,870,157 199,783,178 shares
Loss per share - basic (0.81)p (1.45)p (3.67)p
5 TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Trade receivables 565 29 195 Other debtors 25 231 101 Prepayments and accrued income 225 63 81 Trade and other receivables, net 815 323 377
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.
6 TRADE AND OTHER PAYABLES Unaudited Unaudited Audited 30 June 30 June 31 December 2008 2007 2007 ‚£'000 ‚£'000 ‚£'000 Trade and other payables 372 235 165 Other creditors 53 42 62 Accruals and deferred income 1,246 98 367 Trade and other payables 1,671 375 594 Due after one year Accruals and deferred income 609 609 609
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.
7 SHARE CAPITAL Unaudited Unaudited Audited 30 June 30 June 31 2008 2007 December 2007 ‚£'000 ‚£'000 ‚£'000 Authorised 4,000,000,000 ordinary shares of 0.25p 10,000 10,000 10,000 Allotted, issued and fully paid 217,459,138 (30 June 2007: 184,922,671, 31
December 2007: 217,459,138) ordinary shares 544 462 544 of 0.25p
Allotments during the period
There were no allotments during the period.
Warrants
On 21 February 2005 a warrant was issued to Strand Partners Limited, the Company's Nominated Advisor, in connection with their role in the admission of the Company to the AIM market. The warrant entitles Strand Partners Limited to subscribe, at a price of 10p per share, for such number of ordinary shares as are equivalent (on a fully diluted basis) to one per cent. of the issued ordinary share capital of the Company at that time. The issued warrant may be exercised at any time during the period from 8 March 2005 to 8 March 2010.
The fair value of the warrants granted was determined using the Black-Schƒ¶les valuation model and ‚£20,000 of share based expense has been included in the share premium account as a cost of the admission to AIM which gave rise to share based payment reserve. No liabilities were recognised due to share based payment transactions.
Share options
The Company has adopted an employee Share Option Scheme (the "Employee Share Option Scheme") in order to incentivise key management and staff. Pursuant to the Employee Share Option Scheme, a duly authorised committee of the Board of Directors of the Company may, at its discretion, grant options to eligible employees, including Directors, of the Company or any of its subsidiaries to subscribe for shares in the Company at a price not less than the higher of (i) the closing price of the shares of the Company on the Stock Exchange on the date of grant of the particular option or (ii) the average of the closing prices of the shares of the Company for the five trading days immediately preceding the date of the grant of the options or (iii) the nominal value of the shares. Options which lapse or are cancelled prior to their exercise date are deleted from the register of outstanding options and are available for re-use. The fair value of options granted was determined using the Black-Scholes valuation model. Significant inputs into the calculation's were as follows:
50% volatility based on expected share price (ascertained by reference to historic share prices of both the Company and comparable listed companies)
a risk free interest rate of between 3.5% and 5.25%
At 30 June 2008, the Group had the following options outstanding:
Market price at Grant date of
Date of Dates exercisable price issue Number Fair value original grant
50% after 13 January 12.95p and13 January 2003 2005 and 50% 3.6p 16.25p 2,016,224 13.12p after 13 January 2006 50% after 26 September 12.92p and26 September 2005 and 3.6p 16.25p 288,032 13.08p2003 50% after 26 September 2006 50% after 3 March 2007 3 March 2005 and 50% 5.2p 16.25p 3,744,416 12.58p after 3 March 2008 50% after 1 May 2007 10p and 1.85p and3 May 2005 and 50% 25p 8p 1,000,000 0.28p after 2 May 2008 30 September After 31 May 2006 6.94p 16.25p 2,880,320 9.54p2005 50% after 23 October 2008 and 50% 2.72p and
24 October 2006 after 23 October 2008 8.75p 8.75p 2,000,000 3.35p
subject to a share price of 25p 50% after 19 November 2008 and 2.66p and20 November 50% after 19 November 8.5p 8.5p 1,000,000 3.28p2006 2008 subject to a share price of 25p 50% after 12 March 2009 and 50% 13 March 2007 after 12 March 2010, 9.75p 9.75p 2,500,000 3.99p subject to the certain revenue targets 15,428,992
In total ‚£87,000 of share based expense has been included in the income statement in the interim period ended 30 June 2008 (period ended 30 June 2007:‚£ 79,000, year ended 31 December 2007: ‚£178,000).
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