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 Euro7.1 million European Community grant
to research and develop a portable blood glucose predictor system for
diabetes patients.
* Sentinel launches its first product MyAmego(tm) 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(tm) 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(tm)
technology in non-healthcare markets.
* Sentinel's MyAmego(tm) wins its first commercial contract in a new purpose
built local authority care home in Scotland. Installation of MyAmego(tm) was
completed in July 2008 and discussions to expand the product into further
care homes are underway.
* MyAmego(tm) 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(tm) platform as we progress through our roadmap to
commercial success. Our partners TI, Infineon and Cardinal Health continue to
actively fund Sensium(tm)'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(tm)'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(tm) 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(tm) 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(tm) 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(tm) product, Sensium(tm) 1, before the end
of 2008.
As the development of the Sensium(tm) 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(tm)'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(tm) 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(tm)'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(tm) 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(tm). 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(tm) 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(tm) 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(tm) has led the
Board to expect, with some confidence, that the provider in question will adopt
MyAmego(tm) in its remaining seven care homes.
Post-period, Sentinel also signed a second distributorship agreement for
MyAmego(tm) 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(tm) 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 in
light of the considerable progress made across its investments and it
anticipates the second half of 2008 will produce continued growth in the
commercial value that is being developed. Our intention to increase our focus
on Toumaz as the primary and initial source of commercial success and income
generation will enable the Group to advance the completion of product
development and launch, and to further improve our financial performance in
2009.
Richard Rose
Chairman
12 September 2008
Further 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 SHEET
AS 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 1,547
ventures
Impairment of equity accounted - - 1,643
associate
Impairment of available for sale - - 391
investments
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) 160
other
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 3,178
activities
Net change in cash and cash (811) (1,657) (756)
equivalents
Cash and cash equivalents at 1,535 2,291 2,291
beginning of period
Cash and cash equivalents at end of 724 634 1,535
period
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 attributable
to ordinary shareholders divided by the weighted average number of shares in
issue during the period. The impact of the warrant on the loss per share is
anti-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-Sch�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 and
13 January 2003 2005 and 50% 3.6p 16.25p 2,016,224 13.12p
after 13 January 2006
50% after 26 September 12.92p and
26 September 2005 and 3.6p 16.25p 288,032 13.08p
2003 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 and
3 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 9.54p
2005
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 and
20 November 50% after 19 November 8.5p 8.5p 1,000,000 3.28p
2006 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).
END
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