Toumaz Limited. Half year results

Transcription

1 25 September 2014 Toumaz Limited Half year results Toumaz Limited (AIM: TMZ, Toumaz, or the Group ), a pioneer in ultra-low power wireless semiconductor technology, has published its results for the six months ended 30 June Highlights Group revenues up 32% to 10.8m (H1 : 8.2m) o o o Digital Radio revenues up 27% to 7.4m (H1 : 5.8m) Connected Audio revenues up 18% to 2.8m (H1 : 2.4m) Healthcare revenues of 0.5m (H1 : Nil) EBITDA loss 5.6m unchanged (H1 : loss 5.6m) Cash 13.2m at 30 June 2014 Healthcare First NHS pilot started in September Healthy pipeline of private and NHS hospitals in the UK and around the world First two deployments of SensiumVitals in UK and US went live in May Distributors appointed in key territories evaluations have started in Australia and Portugal Grant funding awarded by the UK s Technology Strategy Board to support development of next generation system Consumer Audio Strong growth in Digital Radio driven by international expansion of DAB Next generation Digital Radio solution launched in September first revenues due Q Connected Audio benefiting from sector growth and relationship with Spotify - Philips launch new multi-room speakers based on Group s solutions Anthony Sethill, CEO of Toumaz said: We have made encouraging progress in the first six months of the year. We have seen our first material Healthcare revenues from SensiumVitals. Our Digital Radio and Connected Audio businesses also saw good growth - up 27% and 18% respectively. In Healthcare, we are developing a strong international pipeline and customer feedback from our first deployments has been positive. In the last month, we have started the first NHS pilot of SensiumVitals and our first deployments in Australia and Portugal. Digital Radio is benefitting from international market growth and our next generation solution will enhance revenues and margins. Our Connected Audio solutions, enhanced by our relationship with Spotify, are driving design wins and growth.

2 Enquiries: Toumaz Limited +44 (0) Anthony Sethill, Chief Executive Officer Jonathan Apps, Chief Financial Officer Peel Hunt LLP (Nominated Adviser and Broker) Richard Kauffer/Daniel Harris +44 (0) Instinctif Partners +44 (0) Adrian Duffield/Kay Larsen About Toumaz ( Toumaz Limited is a pioneer in low-power, wireless semiconductor and software technologies for Healthcare and Consumer Audio. The company has two divisions, Sensium Healthcare and Frontier Silicon. Sensium Healthcare develops wireless solutions for patient monitoring. Frontier Silicon provides chips, modules and software for Digital Radio and Connected Audio devices. Overview The first half of 2014 has seen the Group make significant progress, both in trading performance and investing for medium term growth. In May, Healthcare saw the first live deployments of SensiumVitals in Spire Healthcare s Montefiore Hospital in Brighton and Hurley Medical Center in Flint, Michigan. These deployments helped generate this unit s first notable revenues. The first NHS pilot began in September. The Group has established sales and distribution networks in 19 territories. The system is being evaluated in hospitals in Australia and Portugal, with evaluations in further territories expected before the end of In July, the Group was awarded funding by the UK s Technology Strategy Board to support development of its next generation system. In Consumer Audio, both lines of business (Digital Radio and Connected Audio), have achieved healthy revenue growth up 27% and 18% respectively. Digital Radio has benefited from the development of international markets. Connected Audio is seeing the benefits of its relationship with Spotify. The Group s next generation chips are expected to provide the basis for strong market positions in Digital Radio and Connected Audio. The Group s new Digital Radio chip was launched this month and is expected to generate first revenues before the end of the year. The Group has continued to invest in its next generation Connected Audio chip, which is well positioned to deliver significant market impact - first revenues from this development are now expected in the second half of Current trading and outlook The Board expects the Group s trading for the rest of the year to be broadly in line with its expectations. In Consumer Audio, Toumaz expects to ship c.4.3m units this year, representing 23% increase on last year s 3.5m units. In September 2014, the Group shipped a record 602,000 units.

3 As both the Healthcare and Digital Radio businesses build revenue momentum and Toumaz continues to invest in Connected Audio, the Board believes that the prospects for strong medium term growth across the Group are increasingly encouraging. Healthcare The Group now has direct sales teams in the UK, France and Germany and distribution networks in a further 16 territories: the USA, Canada, Mexico, Australia, New Zealand, Italy, Portugal, Norway, Denmark, Sweden, South Africa and five countries in the Middle East. The business is investing significantly in sales and engineering resource. The first deployments of SensiumVitals went live in May, in Spire s Montefiore Hospital in Brighton and Hurley Medical Center in Flint, Michigan. The start dates of these deployments were a little later than initially anticipated, as in both cases the set-up process required optimisation of the system s software. Despite these initial delays, feedback from clinicians has been encouraging. Over time, the scale of customisation required for future installations is expected to reduce. The Spire deployment was the focus of a BBC News feature This has generated a high degree of interest from other media, policy makers and potential customers. The film, which ran on BBC Breakfast TV, demonstrated how the system works and included interviews with nursing staff and patients. In July, the Group was awarded grant funding from the UK s innovation agency, the Technology Strategy Board, to support development of its next generation system. This development will be a partnership with the University of Leicester, which should help facilitate uptake of the technology within the NHS in particular, for patients in emergency care. The first NHS pilot of SensiumVitals started in September in an acute surgery ward. Further details will be provided when the pilot is completed. In the meantime, a healthy pipeline of private and NHS hospitals is being developed. In the Rest of the World, progress has been good. Distributors have been appointed in key territories and evaluations in several markets are expected to start before the end of the year. In 2015, the aim will be to convert these evaluations into long term contracts. Consumer Audio Digital Radio Results for H have been encouraging, with year on year revenue growth of 27%. Key drivers have been strong market growth in Germany, where volumes are up 35%, and Norway, the first country to commit to Digital Switchover. The Group has been successful in maintaining market share in its core consumer DAB / DAB+ markets. Continued market growth is expected as established territories such as Germany and Norway continue to grow, and newer or potential markets such as Netherlands and Italy start to build momentum. In addition, the UK is introducing a Digital Tick campaign to promote future ready devices which will function effectively in a potential post-digital Switchover environment. The Group s Frontier Silicon business was the first technology provider to have its solution approved as Digital Tick mark compliant. The Group is well positioned to exploit this overall growth in the market and protect its market share as it introduces new solutions based on its next generation chip. The first of these, the Verona 2

4 module, was launched in September at the IFA consumer electronics show in Berlin. These new solutions offer 50% lower power consumption, coupled with enhanced performance and functionality. By using a single, integrated chip instead of four separate chips, significant scope exists for margin improvements. Initial customer reaction to Verona 2 has been positive. First revenues are expected before the end of 2014 with volumes increasing in Connected Audio and Internet of Things Growth in Connected Audio revenues has also been encouraging, up 18% year on year. Further increases are expected in the second half of 2014 following the successful launch of the Philips Spotify Connect solutions. Key drivers of this growth have been increasing customer demand for the Group s new software development kits which are enabled for Spotify Connect, coupled with a number of high volume retailer promotions for Internet radios. In September, at IFA in Berlin, Philips became the first major brand to launch a range of multi-room speakers using the latest iteration of the Group s Spotify-supported technology - an important endorsement of the Group s capabilities in Connected Audio. The Group has also secured several other design-wins, due to be announced early next year, which are expected to support continued revenue growth in Development of the Group s next generation Connected Audio solution is at an advanced stage with first revenues expected in the second half of 2015 and volumes ramping in The next generation solution has attracted global Tier 1 brands as launch partners. This gives the company confidence that medium term prospects for the Connected Audio business are strong. The Group is assessing a number of concepts and opportunities in the Internet of Things. Focus is likely to be on areas where the Group can exploit both its existing market positions and its technology expertise, such as in low power RF. Financial Review Group revenue was up 32% to 10.8m ( 8.2m) with Digital Radio, up 27% to 7.4m (: 5.8m), making the largest contribution. Digital Radio revenue growth was primarily due to growth in the German and Scandinavian markets. Connected Audio revenues increased by 18% to 2.8m (H1 : 2.4m) primarily due to the uptake of its solutions for Spotify Connect and Internet Radio. Healthcare revenues of 0.5m (H1 : nil) derive from patch and bridge sales as well as maintenance fees in the US. EBITDA loss can be calculated as: Six months to 30 June 2014 Six months to 30 June Revenue , ,234 Cost of sales 6,244 4,587 Gross profit 4,544 3,647 Research and development 5,133 5,349 Sales and admin expenses 4,962 3,889 EBITDA (loss) (5,551) (5,591) Overall gross margins are 42.1% (: 44.3%), and gross profit has increased by 0.9m.

5 Research and development costs are expensed where possible and mainly reflect the ongoing development in the current financial year of the next generation Connected Audio silicon. Sales and admin expenses have increased as planned due to the increase in SensiumVitals sales and marketing heads ( 0.4m). The Group was also adversely affected by foreign exchange movements ( 0.3m). EBITDA has remained unchanged. Other non-trading costs primarily comprise the non-cash employee share based payments and amortisation and depreciation. Group pre-tax loss was 7.6m (: loss 7.6m) with a loss per share of 0.46p (: loss 0.65p). Cash and cash equivalents of 13.2m at 30 June 2014 (31 Dec : 21.5m) and the balance at 31 August 2014 was 12.8m. Toumaz Limited Interim Results for the six month period ended 30 June 2014 Statement of Comprehensive Income for the period ended 30 June 2014 Audited Six months Six months Year ended Note Ended 30 June 2014 Ended 30 June 31 December '000 '000 '000 Revenue 10,788 8,234 21,948 Cost of sales (6,244) (4,587) (12,201) Gross profit 4,544 3,647 9,747 Amortisation of intangible assets (1,269) (1,314) (2,531) Impairment - - (63) Depreciation (210) (230) (454) Share based payment (375) (344) (792) Research & development (5,133) (5,349) (9,148) Sales & administrative expenses - other (4,962) (3,889) (9,959) Total administrative expenses (11,949) (11,126) (22,947) Loss from continuing operations (7,405) (7,479) (13,200) Finance income Finance charges (118) (106) (106) Loss before taxation (7,474) (7,556) (13.267) Taxation (95) (30) 2,473 Other comprehensive (expense)/income (7,569) (7,586) (10,794) Exchange differences on translating foreign (18) Other comprehensive income/(expense) (18) Total comprehensive loss for the period (7,587) (7,524) (10,754) Basic and diluted loss per share 4 (0.46)p (0.65)p (0.88)p

6 Consolidated Statement of Financial Position at 30 June 2014 Audited Note 30 June June 31 December Assets '000 '000 '000 Non-current assets Goodwill 5 19,118 19,118 19,118 Other intangible assets 6 18,011 18,209 17,725 Property, plant and equipment ,741 37,972 37,480 Other non-current assets Current assets Inventories 3,045 2,786 1,475 Tax receivable 1,709 1,076 2,721 Trade and other receivables 7 3,657 2,668 4,161 Cash and cash equivalents 13,173 7,984 21,549 Total current assets 21,584 14,514 29,906 Total assets 59,325 52,535 67,386 Liabilities Current liabilities Trade and other payables 8 7,330 7,771 8,259 Total liabilities 7,330 7,771 8,259 Equity Share capital 9 4,189 2,964 4,101 Contingent consideration Share premium 115,082 98, ,881 Share based payment reserve 2,942 2,136 2,567 Foreign exchange reserve (134) (94) (116) Retained earnings (70,193) (59,416) (62,624) Total equity 51,995 44,764 59,127 Total equity and liabilities 59,325 52,535 67,386

7 Consolidated Statement of Changes in Equity for the period ended 30 June 2014 Sharecapital Contingent Share Share Based payment Retained Foreign exchange consideration premium reserve earnings reserve Total equity ' '000 '000 ' '000 At 1 January , ,881 2,567 (62,624) (116) 59,127 Share-based payments Contingent shares issued 8 (209) Issue of share capital Transactions with owners 88 (209) Loss for the period (7,569) - (7,569) Other comprehensive losses Exchange differences on translating foreign operations (18) (18) Total comprehensive loss (7,569) (18) (7,587) At 30 June , ,082 2,942 (70,193) (134) 51,995 Share capital Contingent Share Share Based payment Retained Foreign exchange consideration premium reserve earnings reserve Total equity ' '000 '000 ' '000 At 1 January 2,839 1,081 98,033 1,916 (51,830) (156) 51,883 Share-based payments Contingent shares issued 18 (581) Issue of share capital Retention shares issued (124) - - (124) Transactions with owners 125 (581) Loss for the period (7,586) - (7,586) Other comprehensive losses

8 Exchange differences on translating foreign operations Total comprehensive loss (7,586) 62 (7,524) At 30 June 2, ,674 2,136 (59,416) (94) 44,764 Share Share Contingent Based Share payment Retained Foreign exchange capital consideration premium reserve earnings reserve Total equity ' '000 '000 ' '000 At 1 January 2,838 1,081 98,034 1,916 (51,830) (156) 51,883 Share-based payments Issue of share capital 1,239-16, ,896 Cost of share issue - - (549) (549) Deferred consideration retention element (141) - - (141) Contingent shares issued 24 (763) Transactions with owners 1,263 (763) 16, ,998 Loss for the period (10,794) - (10,794) Other comprehensive losses Exchange differences on translating foreign operations Total comprehensive loss (10,794) 40 (10,754) At 31 December 4, ,881 2,567 (62,624) (116) 59,127

9 Consolidated Cash Flow Statement For the period ended 30 June 2014 Six months Ended 30 June 2014 Six months ended 30 June Audited Year ended 31 December '000 '000 '000 Cash flows from operating activities Loss before taxation (7,474) (7,556) (13,267) Amortisation 1,269 1,314 2,531 Depreciation Impairment of prepayments Share based payments Net interest (received)/ paid (Increase)/ decrease in inventories (1,570) (982) 329 Decrease/(increase) in trade and other receivables 582 1,104 (519) Decrease in non-current debtors (Decrease)/ increase in trade and other payables (929) (1,840) 479 Foreign exchange movements (18) Tax (paid)/ refund 916 (30) 900 Net cash outflow from operating activities (6,570) (7,105) (7,910) Cash flow from investing activities Purchase of property, plant and equipment (185) (203) (431) Purchase on intangible assets (1,555) (1,781) (2,514) Interest (paid)/ received (69) (77) (67) Acquisition of subsidiaries, net of cash - 1,849 - Net cash used in investing activities (1,809) (212) (3,012) Cash flow from financing activities Proceeds from issue of share capital ,755 Share issue costs - - (549) Net cash inflow from financing activities ,206 Net change in cash and cash equivalents (8,376) (7,281) 6,284 Cash and cash equivalents at beginning of period 21,549 15,265 15,265 Cash and cash equivalents at end of period 13,173 7,984 21,549 Notes to the Interim Report For the period ended 30 June 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 in 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.

10 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 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 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. 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. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. 3. Revenue by sector 30 June June Audited 31 December '000 '000 '000 Digital Radio 7,444 5,841 15,401 Connected Audio 2,835 2,393 6,490 Healthcare Revenue 10,788 8,234 21, 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.

11 Six months Ended 30 June 2014 Basic loss per share Six months Ended 30 June Audited Year ended 31 December Loss for the period attributable to equity shareholders 7,569,000 7,586,000 10,794,000 Weighted average number of 0.25p ordinary shares 1,642,838,694 1,169,915,080 1,225,760,858 (Loss) per share - basic and diluted (0.46)p (0.65)p (0.88)p 5. Goodwill Frontier Silicon Toumaz Healthcare Toumaz Microsyste ms Total 000 '000 '000 '000 Cost At 1 January 8,536 10,582 5,951 25,069 Additions At 30 June 8,536 10,582 5,951 25,069 Additions At 31 December 8,536 10,582 5,951 25,069 Additions At 30 June ,536 10,582 5,951 25,069 Impairment At 1 January - - 5,951 5,951 Charge in period At 30 June - - 5,951 5,951 Charge in period At 31 December - - 5,951 5,951 Charge in period At 30 June ,951 5,951 Net book amount at 30 8,536 June ,582-19,118 Net book amount at 30 8,536 June 10,582-19,118 Net book amount at 31 8,536 December 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 Toumaz Microsystems Goodwill relating to Toumaz Microsystems results from the acquisition of Future Waves UK Limited and Toumaz Asia on 20 May Frontier Silicon Goodwill relating to Frontier Silicon results from the acquisition of Frontier Silicon Ltd on 20 August 2012.

12 6. Other intangible assets Cost At 1 January Additions At 30 June Additions Disposals Marketing intellectual property Customer intellectual property Intellectual property Licence & developm ent fees Total '000 '000 '000 4,000 1,690 17,009 14,478 37, ,781 1,781 4,000 1,690 17,009 16,259 38, (2,421) (2,421) At 31 December 4,000 1,690 17,009 14,571 37,270 Additions ,555 1,555 At 30 June ,000 1,690 17,009 16,126 38,825 Amortisation At 1 January Charge in period At 30 June Charge period Disposals At 31 December Charge period At 30 June ,983 12,272 19, , ,856 12,443 20, , (2,421) (2,421) ,559 10,265 19, , ,193 10,630 20,814 Net book amount at 30 June 2014 Net Book amount at 30 June Net book amount at 31 December 3,267 1,432 7,816 5,496 18,011 3,667 1,573 9,153 3,816 18,209 3,467 1,502 8,450 4,306 17,725 Intellectual property Intellectual property relates to the valuation of beneficial licence agreements, trade names and customer relationships in Sensium Healthcare and Frontier Silicon at the date of their original acquisition. Licence & development fees The licences 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

13 developed relationships with both consumer electronic brands and manufacturers. The customer relationship valuation captures the economic benefits of having these trading relationships. 7. Trade and other receivables 30 June June Audited 31 December '000 '000 '000 Trade receivables 2,037 1,128 1,405 Other debtors ,734 Prepayments and accrued income ,022 Trade and other receivables, net 3,657 2,668 4,161 Trade and other receivables are usually due within 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. 8. Trade and other payables 30 June June Audited 31 December '000 '000 '000 Trade payables 4,096 4,053 3,255 Other payables 263 1,067 1,405 Accruals and deferred income 2,971 2,651 3,599 Trade and other payables 7,330 7,771 8,259 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.

14 9. Share capital 30 June June Audited 31 December Authorised 4,000,000,000 ordinary shares of 0.25p 10,000,000 10,000,000 10,000,000 Allotted, issued and fully paid 1,675,547,064 1,185,776,014 1,640,553,901 4,188,868 2,964,440 4,101,385 The movement in the number of shares is as follows: Number of ordinary shares At 1 January 1,135,651,456 Shares issued 50,124,558 At 30 June 1,185,776,014 Shares issued 454,777,887 At 31 December 1,640,553,901 Shares issued 34,993,163 At 30 June ,675,547,064 All shares are equally eligible to receive dividends and the repayment of capital and represent equal votes at meetings of shareholders. Allotments 27 January 2014, 1,000,000 ordinary shares 0f 0.25p were issued in relation to the exercise of share options by employees. 29 April 2014, 2,631,920 ordinary shares of 0.25p were issued in settlement of deferred consideration under the acquisition agreement of Frontier Silicon (Holdings) Limited ("Frontier") in respect of Frontier's acquisition by Toumaz. 27 June 2014, 31,361,243 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").