28th Apr 2006 07:00
Embargoed Release: 07:00hrs Friday 28th April 2006 Nanoscience Inc. (`Nanoscience' or `the Group') Maiden Preliminary Results and Update Nanoscience, the specialist nanotechnology investment holding company announcesits maiden preliminary results for the period ended 31 December 2005. Thecompany was created to gain exposure for investors to the rapidly emergingglobal nanotechnology sector, as well as to provide a route to investment fornear-revenue SME nanotechnology companies.During the period * Nanoscience shares admitted to AIM on 30 March 2005 through an initial placing of 10 million ordinary shares raising ‚£385,000 net of expenses for the company. * First investment made in June 2005 in AppliedSensor Sweden AB (3 per cent stake for approximately ‚£215,000), a Swedish/German group involved in the development and production of sensors for the detection of gases to be used in the areas of air quality control, exhaust control and leak detection and safety. * In June 2005, a further subscription of 2,500,000 shares raised ‚£500,000 (gross), * Second investment completed in August 2005 of ‚£100,000 in XRT Limited, a company based in Australia whose principal activity is the practical application of x-ray phase contrast imaging. * Acquisition of Toumaz Technology Limited ('Toumaz') completed in November 2005 for a total consideration of 96,337,210 new ordinary shares, valuing Toumaz at approximately ‚£17.7 million (based on the average closing middle market price of an ordinary share on the five business days immediately prior to the announcement of the acquisition of 18.4p). Toumaz is a spin out company from Imperial College in London and designs and develops low power and ultra-low power integrated circuits and silicon chips, for use in wireless and signal processing applications. Targeting, inter alia, the healthcare market - the Toumaz AMx¢â€ž¢ ultra-low power technology is ideally placed to offer solutions which meet the needs of healthcare providers. * Associated placing raised proceeds of ‚£6.4 million (net of expenses) to provide additional funding for the ongoing working capital requirements of the enlarged Group and, potentially, to permit Nanoscience to exploit further investment opportunities. Since the Period End * Continued development by Toumaz to add a range of added value functionality around its existing technology that will potentially lead to products such as miniature remote temperature and heart rate monitors. * In March 2006, Nanoscience invested US$500,000 (approximately GBP286,000) for 132,276 ordinary shares in the specialist semiconductor designer and supplier, Future Waves Pte. Limited, a fabless manufacturer of specialist chips for digital broadcasting (DAB and DMB) markets. Including Toumaz's existing shareholding in the joint venture, the Group increased its overall shareholding in Future Waves to approximately 28%. * In April 2006, Future Waves secured initial commercial purchase orders from a number of significant industry participants in the Asian region for its Digital Audio Broadcasting (DAB) front-end radio chip. Commenting on the preliminary results, Richard Rose, Non-Executive Chairman ofNanoscience, said:"The aim for our largest investment, Toumaz, is to become the leader inultra-low power silicon chips to achieve advanced connectivity in the wirelessenvironment and it has already shown that it can develop innovative commercialsolutions. Toumaz's sales revenues to date have principally been derived fromdevelopment agreements. Royalties from these agreements are anticipated goingforward as the company's technology is utilised in commercial products.Feedback from various partners working with us in the medical sphere is mostencouraging and gives us much confidence for the long term potential ofToumaz's technology.Toumaz continues to undertake R&D to develop and improve its AMx¢â€ž¢ technologywith the production of System-on-Chip ultra-low power devices expected early in2007.In its first year since listing on AIM, Nanoscience has made significantprogress in building exposure for investors to the rapidly emerging globalnanotechnology sector. The board feels confident that it will continue to growits commercial base bringing some exciting new products to market as well asidentifying new investments which can be added to the company's growingportfolio."Further Information:Serge Grisard Nanoscience +44 7795 563 297 Andrew Tan Hansard Communications +44 20 7245 1100 James Maxwell Teather & Greenwood +44 20 7426 9000 Limited Chairman's StatementI am pleased to present the maiden preliminary results of Nanoscience coveringthe period from its incorporation on 14 February 2005 to 30 December 2005. Thecompany was admitted to AIM on 30 March 2005 through an initial placing of 10million ordinary shares that generated net funds for the company of ‚£385,000.AIM Listing and Initial InvestmentsSince listing on AIM in March of last year it has been the intention of theBoard to create a vehicle capable of gaining exposure for investors to therapidly emerging global nanotechnology sector, as well as becoming a de factoroute to investment for near-revenue SME nanotechnology companies.Our first investment was made in AppliedSensor Sweden AB, where in June 2005 weinvested ‚£215,000 for three per cent of the company's issued share capital.AppliedSensor is a Swedish/German group involved in the development andproduction of advanced gas sensing solutions to OEMs. AppliedSensor hasdeveloped sensors for the detection of gases to be used in the areas of airquality control, exhaust control and leak detection and safety. In June 2005,in accordance with the terms of the initial placing, the original placees madea further subscription for 2,500,000 shares, raising ‚£500,000 (gross), prior tobut conditional on the completion by the company of its first investment.In August 2005, we invested ‚£100,000 in XRT Limited, a company based inAustralia whose principal activity is the practical application of x-ray phasecontrast imaging.Acquisition of Toumaz Technology LimitedIn November 2005, we made our most significant investment to date, acquiringToumaz Technology Limited ('Toumaz') for a total consideration of approximately‚£17.7 million satisfied through the issue of 96,337,210 new ordinary shares.Toumaz is a spin out company from Imperial College in London and designs anddevelops low power and ultra-low power integrated circuits and silicon chipsfor use in wireless and signal processing applications. At the same time, thecompany raised approximately ‚£7.1 million gross (approximately ‚£6.4 million netof expenses) through the issue of another 47,333,333 new ordinary shares at 15pence per share (approximately 25.76 per cent of Nanoscience's enlarged issuedshare capital). The new funds were raised to provide additional funding for theongoing working capital requirements of the enlarged Group and, potentially, topermit Nanoscience to exploit further investment opportunities.The acquisition of Toumaz marked a progressive step for Nanoscience, bringingto the Group two key elements: the first being a world-leading technology witha number of established and identified target markets ranging from healthcareto consumer electronics; and the second being a significant base of industryand academic contacts that will be key to the procurement of furthertechnologies and the establishment of collaborative product developmentprojects.Central to these two elements is Professor Chris Toumazou, a leading figure inhis field of research, whose technical know-how has already attractedcollaborative development agreements with global blue chips, including Oracle,in the development of his ultra-low power integrated circuits and siliconchips. Professor Toumazou's long and established relationship with ImperialCollege, where he is the Director of the recently founded Institute ofBiomedical Engineering, will be an invaluable source for potential furthertechnology investments, collaborative research projects and consolidationopportunities.Commercial Solutions - wireless and signal processing marketToumaz's principal activity is the design and development of low power andultra-low power integrated circuits or silicon chips for use in wireless andsignal processing applications. The company has developed a patented hybridsemiconductor architecture AMx¢â€ž¢ that uses digital elements to control, monitorand calibrate functional analogue processing blocks which provide substantialpower and cost savings for a wide range of devices.The resulting circuits and system-on-chip devices have power consumptions ofaround one billionth the power of a common light bulb, allowing very longoperating times from low cost and small batteries such as zinc-air batteries(used in hearing aids) and planar batteries such as 'Power Paper'.Principal Product applicationsHealthcareThroughout the world, demands on healthcare provision are increasingly drivenby a number of factors, including the rise in the number of older people,unprecedented numbers of individuals suffering from one or more chronicconditions and higher standards being demanded by an expanding and betterinformed community of healthcare consumers. By 2025, the numbers of people over65 will increase by a factor of 60 to 70 per cent over current levels. Thesefactors lead to pressures on healthcare budgets, regardless of whether theprovision is through the public or private sector or some mixture of the two.To control costs while increasing, or at least maintaining, the levels of carenow being demanded, healthcare providers everywhere are looking to newtechnologies, particularly the smarter use of IT, to move more care out of thehospital environment and into the home or GP's office, and to implementpreventative regimes for `at risk' individuals such as those in the earlystages of type 2 diabetes.Toumaz has chosen to target the healthcare market for several reasons:(a) The Toumaz AMx¢â€ž¢ ultra-low power technology is ideally placed to offersolutions which meet the needs of healthcare providers in the three areasindicated. The unique Toumaz combination of ultra-low power wireless and signalprocessing enables the Sensium¢â€ž¢ system of wireless connectivity to the remoteor mobile patient.(b) The demographics, patient demands and legislative measures are leading torapid growth in the healthcare market.(c) Gross margins for healthcare products are good.(d) Through Professor Toumazou and the Institute of Biomedical Engineering atImperial College, Toumaz is able to establish and maintain links with globalpharmaceutical and medical companies and government organisations.Toumaz is also developing a range of added value functionality around itstechnology that will potentially lead to products such as miniature remotetemperature and heart rate monitors. These will not only measure continuouslyin real time, but the processing power inherent enables constant monitoringagainst preset algorithms to warn against various medical conditions oremergency situations.Digital broadcast receivers (audio and video)The Toumaz AMx¢â€ž¢ technology also has applications outside the area ofhealthcare. One such field is digital broadcasting where the AMx¢â€ž¢ technologyhas been used to develop a low power, low cost integrated tuner for audio DAB(Digital Audio Broadcasting) which is widely employed in Europe and many othercountries, or video DMB (Digital Multimedia Broadcasting), a standard closelyrelated to DAB and used in Korea and now being implemented in China. Largegrowth in hand-held devices such as cell phones and MP3 players is forecast fordevices capable of receiving broadcast digital audio or video.This market is primarily a consumer market and therefore not the core focus ofToumaz. Additionally, as most component and device manufacturers are located inthe Asia-Pacific region, Toumaz decided to set up a joint venture, FutureWaves, in Taiwan to exploit Toumaz's technology in this market which isreferred to in more detail below.Since the acquisition of ToumazSince joining the Group, Toumaz has signed an agreement with Infineon to usethe global manufacturer's advanced 130 nanometre RF CMOS process to produceToumaz's Generation 1 and Generation 2 Sensium chips. Toumaz is the first thirdparty to be offered the use of Infineon's process and is planning to deliverthe first prototype chip during the first quarter 2007. As part of theagreement, Infineon will license certain intellectual property, predominantlydigital blocks and cores, to Toumaz for integration into the Sensium devices.Toumaz has also announced a licencing agreement for the delivery ofintellectual property to Roke Manor Research Limited (`Roke Manor'). Roke Manoris a wholly owned subsidiary of Siemens AG and works in a range of marketsacross the civil and defence arenas. It employs a number of leading engineersand scientists developing novel solutions to customer problems and producescommunications and electronic sensor technology. Toumaz has also signed alicence agreement to deliver intellectual property for the design of certainsub-systems (or circuit blocks) for low power radio chips being developed byRoke Manor.In the healthcare market, Toumaz is working closely with a Fortune 100healthcare company in the US to demonstrate wireless temperature measurementmodules. The modules will be delivered in early May and will provide Sensium¢â€ž¢like functionality for early stage trials in advance of the fully integratedSensium¢â€ž¢ chips. At the same time, Toumaz is in negotiations with the company toagree the future commercial relationship to be captured in a Letter of Intentor similar document.Oracle Corp, by way of sponsoring clinical trials, has agreed to purchase fromToumaz a number of wireless ECG modules and base-station units for use with ahand-held PDA, that, similar to the temperature monitors, will provide Sensium¢â€ž¢like functionality in order to help create the market pull-through for thefully integrated Sensium¢â€ž¢ chips. Oracle Corp and Toumaz are working together toproduce the end-to-end infra-structure that connects the mobile patient to thecentralised electronic patient record. The ECG modules and base stations to bedelivered through June and July, provide the essential infra-structure forconnecting across the "last metre" to the remote or mobile patient. Thisconnection to the patient is the key enabler for an end-to-end system and isthe crucial requirement for healthcare providers to move more care out of thehospital and into the home.The Sensium¢â€ž¢ chip development programme is running well and to plan. Followingthe announcement of the strategic manufacturing relationship with InfineonTechnologies AG in December 2005, a test chip has been manufactured and isunder initial test at Toumaz. The complete chip is expected to be ready fortesting in November. The Sensium¢â€ž¢ represents a major investment for Toumaz andto the best belief of management is the first of its kind, thus giving Toumaz asignificant technical lead in the development of such low power intelligent,wireless, sensor platforms.The Falcon ultra-low power wireless transceiver chip, developed in conjunctionwith Gennum Corporation, is now entering the market in two ways. Firstly,Gennum are offering three new products based on the Falcon chip to theirhearing aid customers and secondly, Toumaz is offering the chip as the "Zoum""plug and play" ultra-low power wireless transceiver module. The "Zoum" moduleis also the enabling low power wireless technology used in the temperature andECG modules being delivered in the next three months.Since the Period EndIn March of this year, the company announced that it had completed its fourthstrategic technology investment since listing on AIM, investing US$500,000(approximately GBP286,000) for 5 per cent of the ordinary shares in thespecialist semiconductor designer and supplier, Future Waves Pte. Limited(`Future Waves'). Including Toumaz's shareholding Nanoscience's overallshareholding of 25 per cent in Future Waves.Future Waves is a fabless manufacturer of specialist chips for digitalbroadcasting including Digital Audio Broadcasting (DAB) and Digital MultimediaBroadcasting (DMB) markets. Future Waves was incorporated in January 2005 as ajoint venture between Toumaz and certain strategic Taiwanese investors. Thecompany has already successfully developed an ultra low power DAB chip forhandheld mobile devices.Future Waves will seek to exploit the exponentially growing digital broadcastmarkets. Current estimates for the digital broadcast markets predict mobiledigital video subscriptions to grow to 125 million users by 2010 and thedigital radio market to grow to 130 million users by 2010.In April, we were delighted to confirm that Future Waves had secured initialcommercial purchase orders from a number of significant industry participantsin the Asian region for its Digital Audio Broadcasting (DAB) front-end radiochip. The Fenix 14701 chip is Future Waves first commercial product and is ahighly integrated RF CMOS front-end chip for DAB and DMB (Digital MultimediaBroadcasting). We believe that the Fenix 14701 is one of the industry'ssmallest chips with the lowest power consumption and lowest costs.These first commercial orders not only marked an important milestone for FutureWaves but also Toumaz, demonstrating the commercial potential of the patentedtechnology which is owned by Toumaz and licensed to Future Waves. With thisfirst product successfully to market and the early commitment from keycustomers within the DAB and DMB markets, we believe that the joint venture isnow at the beginning of a profitable revenue stream.OutlookThe aim for our largest investment, Toumaz, is for it to become the leader inultra-low power silicon chips to achieve advanced connectivity in the wirelesshealthcare environment and it has already shown that it can develop innovativecommercial solutions. Toumaz's sales revenues to date have principally beenderived from development agreements. While royalties from these agreements areanticipated going forward as the company's technology is utilised in commercialproducts, the major long term goal is for it to grow profitably by developing,marketing and selling its own SensiumTM product line.Feedback from our various partners in the medical sphere is most encouragingand gives us much confidence in the long term potential of our technology.Toumaz continues to invest in R&D to develop and improve its AMx¢â€ž¢ technologywith the delivery of ultra-low power prototype System-on-Chip devices expectedlate in 2006, with production in 2007. Successive generations are in theplanning phase.In its first year since listing on AIM, Nanoscience has made significantprogress in building exposure for investors to the rapidly emerging globalnanotechnology sector. The board feels confident that it will continue to growits commercial base bringing some exciting new products to market as well asidentifying new investments which can be added to the company's growingportfolio.Consolidated PROFIT & LOSS ACCOUNT (UNAUDITED)FOR THE PERIOD ENDED 31 december 2005 Note Continuing activities Acquisitions Total ‚£'0000 ‚£'000 ‚£'000 Turnover - 72 72 Cost of sales - (283) (283) Gross loss - (211) (211) Administrative expenses - goodwill - (138) amortisation (138) Administrative expenses - other (140) (209) (349) Operating loss (140) (558) (698) Share of losses of associated (53)undertaking Net interest receivable 50 Loss on ordinary activities before (701)taxation Taxation 2 - Loss on ordinary activities after (701)taxation and retained loss Loss per ordinary share (pence) - Basic 3 (1.15p)There were no recognised gains or losses other than the loss for the financialperiod.ConsolidateD balance sheet (unaudited)at 31 december 2005 Note 31.12.2005 ‚£'000 Fixed assets Intangible assets 4 14,451 Tangible assets 87 Investments 2,652 17,190 Current assets Debtors 322 Cash at bank 6,087 6,409 Creditors: Amounts falling due within one year (404) Net current assets 6,005 Total assets less current liabilities 23,195 Creditors: amounts falling due after more than one year (609) Net assets 22,586 Capital and reserves Called up share capital 5 459 Share premium account 22,828 Profit and loss account (701) Shareholders' funds 22,586 CoNSOLIDATED CASH FLOW STATEMENT (unaudited)for the period ended 31 december 2005 Note Period ended 31.12.2005 ‚£'000 Net cash outflow from operating 6 (825)activities Returns on investments and servicing of finance Interest received 50 Net cash inflow from returns on 50investments and service of finance Capital expenditure and financial investment Purchase of other investments (323) Net cash outflow from capital expenditure (323)and financial investment Acquisitions and disposals Purchase of subsidiary undertaking (443) Bank overdraft acquired in subsidiary (4) Net cash outflow from acquisitions and (447)disposals Management of liquid resources Increase in short term deposits with bank (5,715) Net cash outflow before financing (7,260) Financing Issue of shares 8,187 Expenses paid in connection with share (555)issues Net cash inflow from financing 7,632 Increase in cash 372notes to the UNAUDITED preliminary statement of results * 1 basis of preparation The financial information set out in the preliminary statement does notcomprise the company's statutory accounts within the meaning of section 240(5)of the Companies Act 1985. The company is registered in the Cayman Islands.The preliminary statement is prepared on the basis of the accounting policiesadopted in the company's financial statements for the period ended 31 December2005.The financial information set out above has been extracted from the draftstatutory accounts of the company for the period ended 31 December 2005, inrespect of which the auditors have not yet signed their audit report. Theaudited statutory accounts for the period ended 31 December 2005 will be sentto shareholders and made available. * 2 taxation on ordinary activities There is no tax charge for the period. The company does not operate within theUK and there is no tax arising on its operations. The company's wholly owned UKsubsidiary has incurred losses during the period.The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: Period ended 31.12.2005 ‚£'000 Loss on ordinary activities before tax (701) Loss on ordinary activities multiplied by (133)standard rate of corporation tax in the UK of 19% Effect of: Disallowable expenses 9 Deprecation in excess of capital 5allowances Research and development credit (13) Losses not utilised 132 Current tax charge for period -The group has tax losses, subject to Her Majesty's Revenue and Customsapproval, of approximately ‚£3,405,000 available for offset against futureoperating profits. The group has not recognised any deferred tax asset inrespect of these losses due to there being insufficient certainty regarding itsrecovery. * 3 LOSS PER SHARE The calculation of the basic loss per share is based on the loss on ordinaryactivities after tax of ‚£701,000 divided by the weighted average number ofordinary shares in issue during the period of 61,206,224. * 4 intangible fixed assets The group Other Goodwill on intangibles consolidation ‚£'000 ‚£'000 Cost Additions in period and at 31 December 2005 278 14,320 Amortisation Charged in the period and at 31 December 2005 (9) (138) Net book value at 31 December 2005 269 14,182The goodwill on consolidation relates to the acquisition of Toumaz TechnologyLimited on 3 November 2005. The other intangible asset relates to an optiongranted to the Group to exploit certain intellectual property rights. * 5 share capital * 31.12.2005 ‚£'000 Authorised 4,000,000,000 ordinary shares of 0.25p 10,000 Allotted, issued and fully paid 183,770,543 ordinary shares of 0.25p 459The Company was incorporated on 14 February 2005 with an authorised sharecapital of ‚£10,000,000 divided into 4,000,000,000 ordinary shares of 0.25 penceeach. One ordinary share was issued at par.On 15 March 2005, a further 27,199,999 ordinary shares of 0.25p each wereissued at par for ‚£68,000 cash.On 30 March 2005, 10,400,000 ordinary shares of 0.25p each were issued at 5pper share. The total value of the issue was ‚£520,000 (including 400,000ordinary shares issued to the Nominated Advisor as part of their advisory fee).The total premium on the issue of ‚£494,000 was credited to the share premiumaccount.On 27 June 2005, 2,500,000 ordinary shares of 0.25p each were issued at 20p pershare. The total value of the issue was ‚£500,000. The total premium on theissue of ‚£493,750 was credited to the share premium account.On 3 November 2005 96,337,210 ordinary shares of 0.25p each were issued asconsideration shares to the vendors of Toumaz Technology Limited at a valuationof 16.25p per share. The difference between the total value of the sharesissued of ‚£15,654,797 and the nominal value of the shares issued of ‚£240,843has been credited to share premium (‚£15,413,954). On the same day a further47,333,333 ordinary shares of 0.25p each were issued at 15p per share through aplacing in conjunction with the acquisition of Toumaz Technology Limited. Thedifference between the total value of the consideration received of ‚£7,100,000and the nominal value of the shares issued of ‚£118,333 has been credited toshare premium (‚£6,981,667). * 6 reconciliation of operating LOSS TO net cash outflow from operating activities * Period ended 31.12.2005 ‚£'000 Operating loss (698) Amortisation 138 Depreciation 3 Decrease in debtors 17 Decrease in creditors (294) Net cash outflow from operating activities (825) * 7 acquisitions On 3 November 2005 the Group acquired 334,467 ordinary shares issued of ‚£0.01each in Toumaz Technology Limited ("Toumaz"), being 100% of its nominal sharecapital for consideration of ‚£15,654,797 settled in full by the issue ofshares. Goodwill arising on the acquisition of Toumaz has been capitalised. Thepurchase has been accounted for by the acquisition method of accounting.The assets and liabilities of Toumaz Technology Limited acquired were asfollows: Book Value Fair value adjustments Fair Value ‚£'000 ‚£'000 ‚£'000 Fixed assets: Intangible assets 278 - 278 Tangible assets 90 - 90 Investments 38 2,344 2,382 406 2,344 2,750 Current assets: Debtors 339 - 339 Creditors (702) - (702) Net current liabilities (363) - (363) Total assets less current 43 2,344 2,387 liabilities Creditors: amounts falling (609) - (609) due after more than one year (566) 2,344 1,778 Consideration (16,098) Purchased goodwill 14,320 capitalised Consideration satisfied by: Issue of shares 15,655 Capitalisation of legal fees 443 and other costs 16,098 Analysis of net outflow of cash in respect of the purchase of the subsidiaryundertaking: 31.12.2005 ‚£'000 Bank overdraft in subsidiary acquired (4) Cash consideration (443) (447) Nanoscience Inc.ENDNANOSCIENCE INCRelated Shares:
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