Half year results

21 September 2011

Toumaz Limited

Half year results

Toumaz Limited (AIM: TMZ, 'Toumaz','the Group'), a pioneer in low cost, ultra-low power wireless communications technology, announces its half results for the six months ended 30 June 2011.

Highlights

·; Establishment of joint venture with California Capital Equity ("CCE") to commercialise Sensium disposable digital plaster ('Sensium Plaster') in hospitals worldwide 

·; FDA approval of complete Sensium Plaster

- Initial launch in US hospitals planned for Q1 2012

·; Telran and Xenif chips continue to gain traction in consumer electronics market

·; Cash position of £3.4m at 30 June 2011

Professor Chris Toumazou, Chief Executive of Toumaz, commented,

"We have achieved a number of key milestones over the last six months, including the approval of the Sensium plaster and the successful launch and growing customer interest in our newest ultra-low power radio chips, Xenif and Telran.

"The establishment of the JV with Patrick Soon-Shiong's CCE is a great endorsement of our technology and provides us with considerable opportunities in the wireless healthcare market, including the upcoming launch of the Sensium plaster in the US."

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.

Toumaz US

Toumaz US is a JV with Dr Patrick Soon-Shiong's company, CCE, to continue development, commercialisation and distribution of the Sensium disposable digital plaster in North America and worldwide.

Dr Patrick Soon-Shiong is a proactive healthcare investor, surgeon, scientist and inventor. He founded American Pharmaceutical Partners and Abraxis BioScience which he sold in 2010. He has invested in excess of $400m in acquiring and developing numerous digital technologies, particularly in the healthcare space.

Overview

Toumaz's development of innovative, high-margin, leading solutions based on its ultra-low power 'AMx' technology continues to be the key driver of competitive advantage. The Group continues to develop innovative hardware, software and systems to enable connected freedom in the healthcare and consumer markets.

Toumaz is pursuing a business model based on technology licensing and partnering with companies who have access to its target customer base, generating long term revenues from royalties and product sales, as well as the supply of innovative semiconductor devices and system modules.

Important milestones have been achieved during the first half of 2011. The FDA approved the Sensium Plaster. The Group also launched an ultra-low power radio receiver and transmitter, Telran, which is now gaining traction along with its Xenif multimedia and internet connectivity chip.

Operational review

Healthcare

Toumaz's core technology offering in the healthcare space, the Sensium, focuses on "body area networks" for end-to-end healthcare systems. The Sensium is an ultra-low power technology platform that provides unobtrusive, continuous, wireless monitoring of vital signs that enables the analysis and interpretation of physiological data.

In June 2011, the Sensium Plaster received 510(k) approval by the US Food and Drug Administration, approving it for use in US hospitals, which was a key milestone for the Group.

Following this approval, Toumaz has established a joint venture with CCE to commercialise the Sensium Plaster to hospitals worldwide. The joint venture, Toumaz US LLC, is owned 80% by CCE and 20% by Toumaz.

Toumaz's previous Strategic Partner in North America has agreed to license its IP relating to the Sensium Plaster to Toumaz, in exchange for a royalty interest in the Sensium Plaster.

Funding will be provided by CCE to complete development and logistics for volume production and launch of the product. An initial launch will be made in selected US hospitals in early Q1 2012. This is expected to be followed by a wider launch in H2 2012.

Toumaz will license its Sensium technology and IP to Toumaz US for a royalty of 10% of sales of Sensium Plasters. Toumaz will also supply the Sensium chips and board components for the Sensium Plaster separately.

The Group is working with strategic partners to expand its Sensium product range to applications outside of hospitals. This will mainly be non-disposable, rechargable devices for continuous, wireless monitoring of the body in the home or on the move.

In the US, Toumaz continues to work with CCE on a separate project to take advantage of the opportunities that exist for the deployment of wireless monitoring in sport within the North American market. Initial trials of the prototype product for basketball are due to start in Q4 2011.

In Asia, Quanta Computer has developed a non-disposable consumer ECG and activity monitor for Type II diabetics using Toumaz's Sensium solution. These are currently in behavioural trials and a pilot launch is on schedule for Q1 2012.

Consumer

Following the launch of the Xenif multimedia chip in Q4 2010 and the Telran wireless radio receiver and transmitter chip, in Q1 2011, initial sales are being made to customers for design-in and testing in new products.

Xenif is an all-in-one DAB, Wi-Fi, baseband and application processor capable of delivering internet connected digital radio. Toumaz is delivering increasing volumes to its strategic customer who deploys the Xenif in an increasing number of radio models. Sales volumes to this customer are expected to increase strongly during 2012. Testing and development work is progressing with other customers for use in digital radios, wireless speakers and other applications.

Telran is the wireless radio receiver and transmitter chip used in the Sensium Plaster and is the lowest power sub-1GHz radio available. Target applications include remote controls for consumer electronic devices and toys, wireless sensor networks for environment monitoring, room temperature control and smart metering.

Telran will be sold mainly through distributors and the Group has entered into agreements with leading distributors and sales agents. The sale of a number of test kits is expected to lead to a number of volume orders for customers' next product cycles.

Financial review

For the six months to June 2011 revenues were £0.7m (H1 2010: £1.2m). Of this revenue, development fees accounted for £0.5m, as the initial development contract for the Sensium Plaster successfully completed, in line with expectations.

The second half of 2011 should see an increase in development revenue from Toumaz US in preparation for the initial launch of the Sensium Plaster in the US. Revenues from radio chip sales consisted of initial deliveries of Xenif chips to its strategic customer and sales of test kits.

R&D costs reduced by £0.6m to £1.3m (H1 2010: £1.9m). This was due to H1 2010 figures including foundry costs for Xenif, Sensium 1,5 and Telran which were not repeated in 2011. Resources continue to be employed in R&D as new opportunities are explored and updating of existing technology continues.

Overheads have been tightly controlled, although overall staffs costs marginally increased by £0.1m to £2m (H1 2010: £1.9m). As end user products are developed, additional resources are being allocated to sales and marketing.

The Group's reported loss is £3.3m (H1 2010: loss £3.6m) with a loss per share of 0.53p (H1 2010: 0.61p).

In February and March 2011, a total of £2.9m net of expenses was raised from strategic and other investors including CCE and Quanta Computer. Following cash receipts from revenue of £0.5m, expenditure of £3.6m and with R&D tax credit receipts of £0.7m, the Group has a cash balance of £3.4m at the end of June 2011.

Outlook

Preparation for initial launch of the Sensium Plaster in the US in Q1 2012 is progressing on schedule. Toumaz US will be focused on plaster manufacturing, logistics and preparation for hospital installation and support. Further development income is expected from Toumaz US until the full product launch.

Revenues from sales of Xenif will steadily increase during second half of 2011 and 2012 as the product matures and gains further market share.

With most of the R&D work for the existing generation of products now complete, the Group will ensure that the operation remains streamlined and costs continue to be kept under tight control.

Consolidated Statement of Comprehensive Incomefor the period ended 30 June 2011

Consolidated Statement of Financial Positionat 30 June 2011

Consolidated Statement of Changes in Equityfor the period ended 30 June 2010

Consolidated Cash Flow Statement

For the period ended 30 June 2011

Notes to the Interim Report

For the period ended 30 June 2011

1. Nature of operations and general information

Toumaz Limited and subsidiaries' ('the Group') principal activity is that of commercial exploitation of ultra-low power wireless infrastructure technologies with commercial propositions for the healthcare and electronic sectors.

Toumaz Limited is the Group's ultimate parent company. It is incorporated the Cayman Islands. The address of Toumaz Limited's registered office is Walker House, Mary Street, PO Box 908 GT 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 2010 are available from the Group's website. The auditor's report on those financial statements was unqualified

2. Accounting Policies

Basis of Preperation

These interim condensed consolidated financial statements are for the six months ended 30 June 2011. 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 2010.

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 2010.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

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.

4. Goodwill

Toumaz UK

The goodwill on consolidation relating to Toumaz Technology Limited results from its acquisition on 3 November 2005.

Toumaz Asia

The goodwill on consolidation relating to Toumaz Asia results from its acquisition on 20 May 2009.

5. Other intangible assets

Intellectual property

Intellectual property at 1 January 2010 relates to the valuation of beneficial licence agreements, chip technology, trade names and customer relationships in Toumaz UK and Toumaz Asia at the date of their original acquisitions. The remaining life of these assets is between three 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.

6. Trade and other receivables

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

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

The movement in the number of shares is as follows:

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

Allotments

On 16 January 2010 and 29 January 2010 employee share options were exercised resulting in the issue of 729,900 and 485,000 ordinary shares of 0.25p each at a price of 3.7p per share. The difference between the total consideration received of £44,951 and the total nominal value of shares issued of £3,307 has been transferred to the share premium account. The costs associated with this issue were £2,000.

On 13 July 2010 and 26 July 2010 employees share options were exercised resulting in the issue of 182,475 and 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 £48,821 and the total nominal value of shares issued of £3,029 has been transferred to the share premium account. The costs associated with this issue were £35.

On 14 February 2011 14,563,142 ordinary shares of 0.25p each were issued at a price of 8.83p.The difference between the total consideration received of £1,285,925 and the total nominal value of shares issued of £36,408 has been transferred to the share premium account. Costs associated with this transaction were £123,541.

On 4 March 2011 21,250,000 ordinary shares of 0.25p each were issued at a price of 8.83p.The difference between the total consideration received of £1,876,375 and the total nominal value of shares issued of £53,125 has been transferred to the share premium account. Costs associated with this transaction were £149,158.