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Toumaz Limited(formerly Toumaz Holdings Limited)

Annual Report & AccountsFor the year ended 31 December 2010

Toumaz Cover 2010 11/04/2011 21:03 Page 2

Annual Report and Financial Statementsfor the year ended 31 December 2010

ContentsPage

2 Directors and Advisers

3 Chairman’s statement

4 Chief Executive Officer’s Report

7 Report of the Directors

12 Corporate Governance

14 Report on Remuneration

16 Report of the Independent Auditor

17 Principal Accounting Policies

26 Consolidated Statement of Comprehensive Income

27 Consolidated Statement of Changes in Equity

28 Consolidated Statement of Financial Position

29 Consolidated Cash Flow Statement

30 Notes to the Financial Statements

47 Notice of Annual General Meeting

Toumaz LimitedREPORT AND ACCOUNTS 2010

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Directors and Advisersfor the year ended 31 December 2006

Registered office Walkers Corporate Services LimitedWalker HouseMary StreetPO Box 908 GT George TownGrand CaymanCayman Islands

Directors Sir Richard Sykes FRS (Executive Chairman)Professor Christofer Toumazou FRS (Chief Executive Officer)P Stephansen (Chief Financial Officer)S Grisard (Non-executive Director)M Knight (Non-executive Director)I McWalter (Non-executive Director)W Wong (Non-executive Director)H Yossaie (Non-executive Director)

Secretary Walkers SPV Limited

Assistant secretary Kitwell Consultants LimitedKitwell HouseThe WarrenRadlettHertfordshire WD7 7DU

Nominated adviser and broker FinnCap60 New Broad StreetLondon EC2M 1JJ

Registrars Capita Registrars (Jersey) Limited12 Castle StreetSt HelierJersey JE2 3RTChannel Islands

Depository Capita IRG Trustees LimitedThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU

Solicitors Fladgate LLP16 Great Queen Street London WC2B 5DG

Auditors Grant Thornton UK LLPRegistered Auditor3140 Rowan PlaceOxford Business Park SouthOxfordOxfordshire OX4 2WB


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Chairman’s Statementfor the year ended 31 December 2010

This has been a very exciting time for the business with early revenues from healthcare, increased commercialmomentum in the consumer sector and new strategic investments from our partners. Toumaz is now moving from anR&D business to a commercial operation.

In the healthcare sector, I am pleased to report that during 2010 we were very successful in delivering core productsto our strategic industry partners. Throughout the year we have been working with our strategic healthcare partner oncompleting the “digital plaster” product. All clinical trials required for medical approval have been successfullycompleted and we now await first commercial revenues from initial product sales for a soft launch. We are now fullyengaged with Quanta Computer Inc, the largest laptop manufacturer in the world, for deployment of our technologyin diabetes management, particularly in Asia. A strategic investment was recently made by Quanta emphasising theimportance of the partnership with Toumaz. Prototypes of the working product are being manufactured with ananticipated launch before the end of the year. We are also very pleased to have entered into a strategic relationshipwith California Capital Equity LLC owned by Dr Patrick Soon-Shiong who was until recently the owner of AbraxisBioscience Inc (sold for $2.9bn in 2010) and who is chairman of the public – private National Coalition for HealthIntegration in the USA. Branding for early revenues from our technology will initially be done through elite sport suchas basketball in the USA. It is an endorsement of the low power Sensium platform that Dr Patrick Soon-Shiong has alsomade a strategic investment into the company.

Within our consumer activities the relationship with Imagination Technology has led to the successful launch of ourmultimedia connectivity chip, Xenif. Toumaz is already engaged with tier one customers in Asia and Europe includingglobal brands such as Pure. We also launched last month our ultra-low power Telran radio. It has more than 10 timeslower power consumption than Bluetooth. As with Bluetooth, the Telran chip can be used for multiple applicationswith the added advantage of longer battery life.

The future challenge for Toumaz is to develop these activities and relationships to create increased value for ourshareholders.

Sir Richard Sykes FRSChairman

28 March 2011


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Chief Executive Officer’s Reportfor the year ended 31 December 2010

OverviewThe Group has made good progress with its ultra-low power Sensium™ healthcare platform and is nearing completionof technology deliveries to its medical industry partner. Clinical trials of the digital plaster wireless monitoring systemwere successfully completed at St. Mary’s Hospital in London and the strategic partner successfully completed end-usertrials in the US.

The Group also established strategic agreements with Quanta and CCE over the last 12 months. The former is workingwith Toumaz to develop low power wireless healthcare and wellness technology for use outside of the hospitalenvironment mainly for the Asian markets, and the latter is collaborating with Toumaz to develop its Sensium platformfor use in sport, addressing the US markets.

Toumaz also launched the Xenif all-in-one DAB, FM, Wi-Fi baseband processor chip in September 2010. It has startedvolume deliveries to its tier one customer. The Telran chip was launched in January 2011 and has been well received bycustomers.

The delivery of the Wi-Fi enabled Xenif alongside the Telran and Sensium body area network solutions is an importantenabler allowing Toumaz to efficiently link local consumer and healthcare monitoring networks to Internet basedproducts and services in a cost effective way.

Operational reviewHealthcareThe development and delivery of Toumaz’s core Sensium™ ‘body area network’ technology has progressedsuccessfully. The Sensium™ is an ultra low power technology platform that provides unobtrusive, continuous, wirelessmonitoring of activity and vital signs that enables the analysis and interpretation of physiological data in real time.

The Group has now almost completed its project delivery of the system to its medical industry partner, allowing thecreation of an end-to-end wireless monitoring solution for hospitals. The complete system has been successfully testedincluding user tests by nurses, paving the way for the Group’s strategic partner to obtain regulatory approvals. Productroll-out is expected at the end of 2011.

Separately, the cooperation with Quanta has been strengthened during the year with an R&D license agreement signedin July 2010. This was followed by a strategic investment by Quanta in Toumaz shares of $2m in March 2011.


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Sensium-enabled devices monitor patients at home; continually, wirelessly and

unobtrusively.

Clinicians receive and analyse data remotely, enabling convenient monitoring and/or

diagnosis

Patient data is automatically merged into existing IT systems

From the Hospital to the HomeBroadband or cellular connection to

Sensium server

Toumaz RA 2010 12/04/2011 10:43 Page 4

Chief Executive Officer’s Reportcontinued

The cooperation will initially result in the production of a prototype body-worn ECG and activity monitoring device,particularly targeting Type II diabetes sufferers. It is expected to be completed in Q2 2011 and will be progressed tomarket launch thereafter. The device is based on the Group’s existing Sensium™ chip technology platform. Quanta willmanufacture the device and be responsible for product deployment in the greater China area. Revenues are expectedto come through in 2012.

In February 2010, the Group agreed a strategic partnership with CCE to take advantage of the substantial opportunitiesthat exist for the deployment of wireless health and wellbeing monitoring outside of hospitals and particularly in sport,in the North American market.

ConsumerThe Xenif multimedia chip, developed in collaboration with Imagination Technologies, was launched in September2010. Xenif will enable Toumaz to expand its market from DAB/FM radio into the growing internet and Wi-Fi connectedaudio markets such as internet radio, iPod Docking systems and wireless speakers. During 2010 Toumaz joined theApple MFi (Made for ipod/iPhone) programme to allow the Group to address the Apple iPod/iPhone accessory market.

Volume deliveries of Xenif to PURE started at the end of 2010 and are expected to grow during2011 and 2012. The Group is also progressing discussions with several Asian-basedmanufacturers over the use of Xenif in a variety of internet audio devices. The continuedemergence of internet enabled consumer products is exciting, in particular the Wi-Fi speakermarket, driven by Apple’s Airplay and the industry standard DLNA technologies. Xenif is verywell positioned to take advantage of these new markets and the Group expects revenues fromXenif to increase throughout the year and become significant in 2012.

The ultra low power Telran radio chip was launched in January 2011. Telran technology isembedded in the Sensium™ and is the world’s lowest power radio. It is currently beingmarketed for a wide range of applications from wireless meter monitoring to remote controldevices, toys and home automation.. Market distribution is arranged through contracts withdistributors covering the North American, European and Asian markets. Development kitshave been shipped to customers and volume deliveries are expected during the second halfof the year.

Financial reviewGroup revenues were £2.7m (2009: £4.0m), which was mostly development income from Toumaz’s strategicmedical industry partner and from the DiAdvisor EU-grant based development project. Revenues in 2009 werepositively affected by a one-off payment of £1.3m from Texas Instruments.

Since the period end the Group has started to generate increasing revenues from product sales, whilst developmentincome will come to an end during the first half of 2011, with the final delivery of the Sensium™ plaster technology.

Personnel costs were £3.8m (2009: £3.2m). The increase partly reflects the inclusion of Toumaz Asia (ex. FutureWaves) for the whole year, as well as the increased resources required to complete the development of the Sensium‘digital plaster’ project.

R&D costs increased to £3.5m (2009: £2.3m) mainly due to costs related to the completion of the Xenif, Telran andSensium™ 1.5 chips. Each has now been launched to early customers.

Amortisation of intangible assets increased to £1.5m (2009: £1.1m).

The Group reported a loss after tax of £5.9m (2009: loss £4.4m). Tax losses carried forward are £15.0m. The lossper share was 0.99p (2009: loss 1.16p).

Cash inflow included £2.7m of revenues and £786,000 in R&D tax credits, while other cash outflow from operationswere £7.9m and net reduction of creditors amounted to £1.7m. The cash balance at the end of the year was to £2.9m.


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Chief Executive Officer’s Reportcontinued

Current trading and outlookThe Group is approaching the end of the transition from generating development fee revenues and moving toextensive product sales revenue. The Group expects development fees to decrease through 2011. However,product sales revenue will start to increase during the year and into 2012. This transition represents a majormilestone in the Group’s development.

The first application of the collaboration with CCE, creating a Sensium™ ‘sport monitoring device’ for basketball, isexpected later this year. The technology will measure key physiological information during matches and for trainingpurposes. Revenues from this collaboration are expected in 2012.

Work with Quanta on prototype development for a monitoring system for type II diabetes is progressing as plannedwith first version available in April 2011. The product launch is expected in late 2011 or early 2012 leading torevenues in 2012.

Overall, the Board is looking forward to exploiting the key partnership agreements which are now in place and willenable the Group to roll out its leading IP around the world in a number of markets.

Professor Christofer Toumazou FRSChief Executive Officer

28 March 2011


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Report of the Directorsfor the year ended 31 December 2010

The Directors present their annual report together with the audited consolidated financial statements of the Groupfor the year ended 31 December 2010.

Principal activityThe principal activity of the Company is that of an investment company.

The principal activity of the Group is that of commercial exploitation of ultra-low power wireless infrastructuretechnologies with commercial propositions for the healthcare and electronic sectors.

Business reviewA review of the business in the year and of future developments is given in the Chairman’s statement and ChiefExecutive Officer’s report on pages 3 to 6.

The results of the Group are shown within the financial statements. The Directors are unable to recommend thepayment of a dividend.

The key performance indicators the Directors utilise to monitor the performance of the Group are as follows:

Aims and objectivesProduct commercialisation and customer relationshipsThe commercial cooperation with the Group’s two strategic customers, CareFusion and Pure, is closely monitoredby the Board and reported upon at every board meeting.

FundingDuring the year the Group concentrated on managing the cash resources of the business in line with internalfinancial projections. Forecasts made during the year indicated the need for additional funds during 2011 and2012. These funds were substantially secured by the equity raised in February and March 2011. Additionalfunding will be sourced from either existing shareholders or providers of working capital as circumstances requireduring 2012.

Financial reportingFinancial reporting by each Group company is monitored by the board on a monthly basis. Profit and Loss andCash Flow projections are updated as significant changes to operating conditions occur, with updates at least twicea year.

Rate of commercialisation of intellectual propertyMeasured by the number of sales contracts and licence deals signed and third party development projects undertakenby Group companies. Progress assessment includes regular updates on key partners and market segments.

Product development costs and milestonesOperating companies and subsidiaries are closely monitored against their product development budgets.

Potential value of portfolio Estimated on the basis of the M&A and Corporate Finance experience amongst the board and management team,this is supported by reviews of the robustness of the development progress and commercial pipeline.

Share priceConstantly under scrutiny by the management, and commented upon at Board meetings, this indicator is a majorcontributor to medium and long term decisions.


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Report of the Directorscontinued

Business risksThere are a number of potential risks and uncertainties which could adversely impact the achievement of ourcorporate aims.

The introduction of “disruptive technology” into the market exposes us to risksThe introduction of new and untested “disruptive technology” into the market place exposes the Group to the riskthat costly developments will take longer or not achieve acceptable financial returns and put a strain on financialresources.

The length of our product design cycle exposes us to risksThe lengthy design cycle makes it difficult to forecast product demand, with the possibility that products willultimately not be required by our customers or alternatives become available to them, leading to a failure to achieveexpected returns.

Delays in development and testing may occurDesigning and introducing new and revised products, at the cutting edge of the technology central to the Group,can result in operating failures when first introduced and tested. Delays in this can adversely impact our ability to supply the products our customers might want in a timely manner.

Delay or failure in achieving regulatory authorisationAny delay or failure in achieving the required accreditation for our products, such as Medical Devices Approval,would lead to an underachievement of the returns expected from our Health Division.

The success of our customer’s products is critical to our businessWe are dependent, particularly in the Consumer Products Division, that manufacturers select and design in ourproducts into their own products. Even if this occurs sales of our products are dependent on the commercialsuccess of the end consumer product.

We may be unable to protect properly our intellectual property and may face challenges for infringement bythird partiesWhilst we seek to protect our intellectual property and trade secrets by a well structured and controlled process ofpatent applications, maintenance and other tools, we face the risk that others may seek to copy and/or infringecertain aspects of our intellectual property. Defence of our claims may prove unsuccessful and expensive. Inaddition we might face challenges to our use of intellectual property that others might claim belongs to them. Theconsequences of this would be either a complete withdrawal and redesign of the offending product or serious andcostly delays in proving our right to exploit the disputed intellectual property.

We are currently dependent on a limited number of customers for a significant proportion of our revenueA small number of customers represent a significant proportion of our revenue. Should our existing commercialrelationships weaken or these customers themselves fail to sell our products our projected sales volumes will fail tomaterialise.

We are exposed to risks associated with our suppliers and partners failing and causing a disruption in supplyWe are dependent on third parties to manufacture our components and, in some cases, assemble our products.Failure of any of our major suppliers would lead to delays in both designing and testing our new products and insupplying on time and at the agreed costs products to our existing customers.

We are dependent on our senior management and staff for our product development and delivery to customersIf we fail to retain key management and employees our ability to successfully complete on time and to budget bothour development programme and commitments to customers will lead to delays in achieving Group strategicresults. To protect our position in this regard we constantly monitor the competitive nature of our salary and rewardspackage, look to the share option scheme to add additional benefits to key employees and regularly update them,through staff meetings and individual briefings, to add “buy in” to our corporate objectives.


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Financial risk management objectives and policiesThe Group’s principal financial instruments comprise cash and cash equivalents. The Group has various otherfinancial instruments such as trade receivables and trade payables, which arise directly from its operations.

The Group is exposed to a variety of financial risks which result from both its operating and investing activities. TheDirectors are responsible for co-ordinating the Group’s risk management and focus on actively securing the Group’sshort to medium term cash flows. Long term financial investments are managed to generate lasting returns.

The Group does not actively engage in the trading of financial assets and has no financial derivatives. The mostsignificant risks to which the Group is exposed are described below:

Credit riskThe Group’s credit risk is primarily attributable to its trade receivables currently based on a small number of highlycredible customers. The amounts presented in the balance sheet are net of any allowance for doubtful receivables,estimated by the Directors. The Group has no significant concentration of credit risk, with exposure spread over asmall number of highly credible customers.

Cash flow risksThe Group seeks to manage risks to ensure sufficient liquidity is available to meet foreseeable needs by investingcash assets safely and profitably. Short term flexibility is achieved by the use of money markets to deposit excesscash which is not required in the short term. The Directors prepare rolling cash flow forecasts and seek to identifythe need and raise additional funding whenever a shortfall in facilities is forecast.

Currency risksThe Group is exposed to translation foreign exchange risk in connection through its subsidiary Toumaz UK Limitedwhose primary operating subsidiary is Toumaz Asia Pte Limited, an incorporated company based in Singapore, andits branch office in Taiwan. The Group does not seek to hedge this foreign exchange risk. Whilst the Group isexposed to foreign exchange trading risks, in respect of both income and expenditure the Directors consider thatthere is currently a limited exposure to movements in foreign currencies and does not seek to hedge this risk. Atthe time when the Directors consider that exposure to foreign exchange trading risks becomes significant they willseek to adopt appropriate hedging strategies and products.

DirectorsThe Directors who served during the year are set out below.

Sir Richard Sykes FRSProfessor Christofer Toumazou FRSP Stephansen S GrisardM Knight I McWalter W Wong H Yossaie

Details of share options held by the Directors are set out in the Report on Remuneration.


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Substantial shareholdingsThe only interests in excess of 3% of the issued share capital of the Company which have been notified as at 22 March 2011 were as follows:

Ordinary shares Percentageof 0.25p each of capital

Number %

BNY(OCS) Nominees Limited 75,421,288 11.98JM Finn Nominees 53,468,441 8.49Imagination Technologies Limited 35,132,765 5.58Chase Nominees Limited 34,092,154 5.42Rock (Nominees) Limited 33,725,555 5.36Vidacos Nominees Limited 28,630,500 4.55Pershing Nominees Limited 26,132,553 4.15Mr Winston Wong 25,649,302 4.07Glastad Invest Limited 19,371,882 3.08

Payment to suppliersIt is the Group’s policy to agree appropriate terms and conditions for its transactions with suppliers by meansranging from standard terms and conditions to individually negotiated contracts and pay suppliers according toagreed terms and conditions, provided that the supplier meets those terms and conditions. The Group does nothave a standard or code dealing specifically with the payment of suppliers.

Group trade payables at the year end amounted to 36 days purchases (2009: 33 days).

Employee involvementThe Group has continued its practice of keeping employees informed of matters affecting them as employees andthe financial and economic factors affecting the performance of the Group.

This is achieved through consultations with employees and regular staff meetings. Employee share option schemeshave operated since 2003 and are open to all eligible employees. Details of the various share options outstandingare given in note 19 to these accounts. At 31 December 2010 42,525,236 share options were outstanding with aweighted average exercise price of 5.7p.

Disabled employeesApplications for employment by disabled persons are given full and fair consideration for all vacancies inaccordance with their particular aptitudes and abilities. In the event of employees becoming disabled, every effortis made to retrain them in order that their employment with the Group may continue. It is the policy of the Groupthat training, career development and promotion opportunities should be available to all employees.


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Directors’ responsibilitiesThe Company was incorporated as a corporation in the Cayman Islands, which does not prescribe the adoption ofany particular accounting framework. Accordingly, the Board have resolved that the Group will follow InternationalFinancial Reporting Standards as adopted by the European Union (IFRSs) when preparing its annual financialstatements.

The Directors prepare financial statements for each financial period which give a true and fair view of the state ofaffairs of the Group and of the profit or loss of the Group for that period. In preparing these financial statements,the Directors are required to:

l select suitable accounting policies and then apply them consistently;

l make judgements and estimates that are reasonable and prudent;

l state whether applicable accounting standards have been followed, subject to any material departuresdisclosed and explained in the financial statements; and

l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Groupwill continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain theGroup transactions and disclose with reasonable accuracy at any time the financial position of the Group, forsafeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection offraud and other irregularities.

The Directors are also responsible for the preparation of the Report of the Directors and other information in theannual report.

In so far as the Directors are aware:

l there is no relevant audit information of which the Group’s auditor is unaware; and

l the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant auditinformation and to establish that the auditor is aware of that information.

The Directors confirm that the accounting policies adopted in the preparation of the financial statements areappropriate to the Group, have been consistently applied and are supported by reasonable prudent judgementsand estimates. All applicable accounting standards have been followed.

The Directors are responsible for the maintenance and integrity of the corporate and financial information includedon the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination offinancial statements may differ from legislation in other jurisdictions.

AuditorGrant Thornton UK LLP have expressed their willingness to continue in office. A resolution to re-appoint GrantThornton UK LLP will be proposed at the Annual General Meeting.

ON BEHALF OF THE BOARD

Kitwell Consultants LimitedCompany Secretary

28 March 2011


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Corporate Governancefor the year ended 31 December 2008

DirectorsThe Group supports the concept of an effective board leading and controlling the Group. The Board is responsiblefor approving Group policy and strategy. It meets on a regular basis, at least six times a year, and has a schedule ofmatters specifically reserved to it for decision. Management supply the Board with appropriate and timelyinformation and the Directors are free to seek any further information they consider necessary. All Directors haveaccess to advice from the Company Secretary and independent professional advice at the Group’s expense.

The Board consists of an executive Chairman and two executive directors, who hold the key operational positionsin the Group, and five non-executive directors, who bring a breadth of experience and knowledge.

Relations with shareholdersThe Group values the views of its shareholders and recognises their interest in the Group’s strategy andperformance. The Annual General Meeting will be used to communicate with private investors and they areencouraged to participate. The Directors will be available to answer questions. Separate resolutions will beproposed on each issue so that they can be given proper consideration and there will be a resolution to approve theannual report and accounts.

Internal controlThe Board is responsible for maintaining a strong system of internal control to safeguard shareholders’ investmentand the Group’s assets and for reviewing its effectiveness. The system of internal financial control is designed toprovide reasonable, but not absolute, assurance against material misstatement or loss.

An audit committee has been established and comprises three non-executive directors, M Knight, I McWalter andS Grisard. The Committee meets at least half yearly and is be responsible for ensuring that the financial performanceof the Group is properly monitored and reported on, as well as meeting the auditor and reviewing any reports fromthe auditor regarding accounts and internal control systems.

The Board has considered the need for an internal audit function but has decided the size of the Group does notjustify it at present. However, it will keep the decision under annual review.


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Corporate Governancecontinued

Going concernThe directors have prepared profit and cashflow forecasts through to 31 December 2012 which incorporates theGroup and its subsidiary undertakings as at 31 December 2010.

The key assumptions in preparing the forecasts are as follows:

l the development income from the strategic partnership between Toumaz UK Limited and CareFusion will taperoff during the first half of 2011 and will be replaced by royalty revenue from the commercialisation of the digitalplaster project from the early part of 2012. No significant revenues are expected during the first 4 to 6 monthsafter launch in Q4 2011;

l other revenue streams are forecast for Toumaz UK Limited in the form of margins from sales of its Sensium™chip and Telran chips. Telran was officially launched in January 2011 and development kits are shipped toseveral customers. Volume sales are expected during the second half of 2011;

l Toumaz Asia launched the Xenif chip in October 2010 and started deliveries to PURE. Shipments to its strategiccustomer are expected to increase in 2011 and 2012. Volume sales to other customers are expected to increasefrom the second half of 2011;

l Toumaz has entered into strategic relationships with Quanta Computers in Taiwan and the organization ofPatrick Soon Shiong in the USA. These are expected to lead to new products and services for health and activitymonitoring outside of hospital with revenues from 2012; and

l During 2010 most of the research and development work on the SensiumTM plaster, Xenif and Telran chipshave been completed. Costs associated with production of the chips will be charged in 2011 and 2012 as wellas development costs for further healthcare applications.

In February and March 2011 the Group raised £3m to fund its development programme and provide workingcapital.

These forecasts are underpinned by the assumption that the further funds which are required will be obtained byadditional fund raising. These forecasts demonstrate that the Group is able to continue in business for a period ofat least twelve months from the date of approval of the financial statements. Accordingly the financial statementshave been prepared on a going concern basis.


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Report on Remunerationfor the year ended 31 December 2008

Directors’ remunerationThe Board recognises that Directors’ remuneration is of legitimate concern to shareholders. The Group operateswithin a competitive environment where performance depends on the individual contributions of the Directors andemployees and it believes in rewarding vision and innovation.

Policy on executive Directors’ remunerationA separate remuneration committee has been established comprising three non-executive directors, I McWalter, H Yossaie and W Wong.

The Remuneration Committee meets at least twice a year and is responsible for recommending to the Board thepolicy and structure for the remuneration of the Executive Directors and senior management and approvingperformance based remuneration. The Remuneration Committee also fulfils the role of an options committee for theEmployee Share Option Scheme and its main duty in this context is to approve the grant of options to relevantemployees.

The policy of the Board is to provide executive remuneration packages designed to attract, motivate and retainDirectors of the calibre necessary to maintain the Group’s position and to reward them for enhancing shareholdervalue and return. It aims to provide sufficient levels of remuneration to do this, but to avoid paying more than isnecessary. The remuneration will also reflect the Directors’ responsibilities and contain incentives to deliver theGroup’s objectives.

The remuneration of the Directors for the year ended 31 December 2010 is as follows:

2010 2009Fees and Fees and

Emoluments Emoluments£’000 £’000

Sir Richard Sykes 38 36Professor Christofer Toumazou 111 122P Stephansen 76 50S Grisard 10 124M Knight 10 6I McWalter 10 6W Wong 10 6H Yossaie 10 6G Spelman – 148R Rose – 16P Tischhauser – 4

Total 275 524

Pensions and benefits in kindThe Directors did not participate in the Group’s pension scheme and do not receive any significant benefits in kind.

Severance paymentsIncluded in the above Fees & Emoluments for the year ended 31 December 2009 were the following severancepayments: G Spelman £89,000, S Grisard £71,000, R Rose £6,700 and P Tisschauser £1,200.


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Report on Remunerationcontinued

BonusesNo amounts are payable for bonuses in respect of the year ended 31 December 2010 or 31 December 2009.

Following the Board changes in May 2009, the Directors Bonus Plan (“the Plan”) adopted for the Directors in 2007was discontinued. The Remuneration Committee considered the matter further and decided not to introduce anyspecific Directors Bonus Plan but to deal with the matter on an ad-hoc basis.

Notice periodsThe Directors have letters of appointment which are terminable on six months notice on either side for P Stephansenand on three months notice on either side for all other executive and non-executive directors.

Share option incentivesAt 31 December 2010 and 31 December 2009, Professor Christofer Toumazou had an interest in options over1,683,835 Ordinary Shares which were granted to him on 3 November 2005 in replacement of options that he heldover shares in Toumaz Technology Limited. These options vested on 31 May 2006 and are exercisable at an exerciseprice of 6.94 pence per share at any time before September 2015. On 18 September 2009 Professor ChristoferToumazou was granted a further 1,622,000 options over Ordinary Shares. These latter options are exercisable at aprice of 3.70 pence per share from 15 January 2010 and expire on 14 January 2020. Further on 18 September 2009Professor Christofer Toumazou was granted an additional 5,000,000 options over Ordinary Shares at 6.0 pence pershare exercisable after 15 January 2010 which expire on 14 January 2020.

On 20 November 2006, S Grisard was granted options over 1,000,000 Ordinary Shares at an exercise price of 8.50 pence per share. The options were/are exercisable as to 500,000 from 20 November 2008 and 500,000 from20 November 2009 subject to the share price of the Company being in excess of 25.0 pence. The options expire on20 November 2016.

On 3 May 2005, P Stephansen was granted options over 1,000,000 Ordinary Shares. These options vested in April2007 and are exercisable as to 500,000 at an exercise price of 10.0 pence per share and, in respect of the balance,at an exercise price of 25.0 pence per share at any time before April 2015. On 18 September 2009 P Stephansenwas granted a further 648,800 options over Ordinary Shares. These latter options are exercisable at a price of 3.70 pence per share from 15 January 2010 and expire on 14 January 2020. Further on 18 September 2009 P Stephansen was granted an additional 2,000,000 options over Ordinary Shares at 6.0 pence per share exercisableafter 15 January 2010 and expire on 14 January 2020.

On 18 September 2009 Sir Richard Sykes was granted 5,000,000 options over Ordinary Shares at 6.0 pence pershare exercisable after 15 January 2010 and which expire on 14 January 2020.

On 18 September 2009 M Knight was granted 3,000,000 options over Ordinary Shares at 6.0 pence per shareexercisable after 15 January 2010 and which expire on 14 January 2020.

On 18 September 2009 I McWalter was granted 243,300 options over Ordinary Shares at 6.0 pence per shareexercisable after 15 January 2010 and which expire on 14 January 2020.

None of the other Directors had any interests in share options of the Company.


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Report of the Independent Auditorto the members of Toumaz Limited

We have audited the consolidated financial statements of Toumaz Limited for the year ended 31 December 2010which comprise the principal accounting policies, the consolidated statement of comprehensive income, theconsolidated statement of changes in equity, the consolidated statement of financial position, the consolidated cashflow statement and the related notes. The financial reporting framework that has been applied in their preparation isapplicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body. Our audit work has been undertaken so that wemight state to the company’s members those matters we are required to state to them in an auditor’s report and forno other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone otherthan the company and the company’s members as a body, for our audit work, for this report, or for the opinions wehave formed.

Respective responsibilities of Directors and auditorsAs explained more fully in the Directors’ responsibilities statement set out on page 11 the directors are responsiblefor the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view.Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance withapplicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply withthe Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient togive reasonable assurance that the financial statements are free from material misstatement, whether caused byfraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s andthe parent company’s circumstances and have been consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made by the directors; and the overall presentation of thefinancial statements. In addition, we read all the financial and non-financial information in the consolidated financialstatements of Toumaz Limited for the year ended 31 December 2010 to identify material inconsistencies with theaudited financial statements. If we become aware of any apparent material misstatements or inconsistencies weconsider the implications for our report.

Opinion on financial statementsIn our opinion the Group financial statements:

l give a true and fair view of the state of the Group’s affairs as at 31 December 2010 and of its loss for the yearthen ended; and

l have been properly prepared in accordance with IFRS as adopted by the European Union.

Other matterWe have not reported separately on the parent company financial statements of Toumaz Limited for the year ended31 December 2010 since, under Cayman Islands’ law, the Company is not required to prepare individual companyfinancial statements.

Tracey JamesRegistered auditorGrant Thornton UK LLPChartered AccountantsOxford

28 March 2011


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Principal Accounting Policiesfor the year ended 31 December 2008

Basis of preparationThe Company was incorporated in the Cayman Islands which do not prescribe the adoption of any particularaccounting framework. The Board has therefore adopted and complied with International Financial ReportingStandards as adopted by the European Union (IFRS). The Company’s shares are listed on the AIM market of theLondon Stock Exchange.

The principal accounting policies of the Group are set out below.

Measurement basisThe consolidated financial statements have been prepared using the measurement bases specified by IFRS for eachtype of asset, liability, income and expense. The measurement bases are more fully described in the accountingpolicies below.

Adoption of new accounting policiesNew standards and interpretations have been considered but have no impact on the Group’s financial statements.

Going concernThe directors have prepared profit and cashflow forecasts through to 31 December 2012 which incorporate theGroup and its subsidiary undertakings as at 31 December 2010.

The key assumptions in preparing the forecasts are as follows:

l the development income from the strategic partnership between Toumaz UK Limited and CareFusion will taperoff during the first half of 2011 and will be replaced by royalty revenue from the commercialisation of the digitalplaster project from the early part of 2012. No significant revenues are expected during the first 4 to 6 monthsafter launch in Q4 2011;

l other revenue streams are forecast for Toumaz UK Limited in the form of margins from sales of its Sensium™chip and Telran chips. Telran was officially launched in January 2011 and development kits are shipped toseveral customers. Volume sales are expected during the second half of 2011;

l Toumaz Asia launched the Xenif chip in October 2010 and started deliveries to PURE. Shipments to its strategiccustomer are expected to increase in 2011 and 2012. Volume sales to other customers are expected to increasefrom the second half of 2011;

l Toumaz has entered into strategic relationships with Quanta Computers in Taiwan and the organization ofPatrick Soon Shiong in the USA. These are expected to lead to new products and services for health and activitymonitoring outside of hospital with revenues from 2012; and

l during 2010 most of the development work on the SensiumTM plaster, Xenif and Telran chips have beencompleted. Costs associated with production of the chips will be charged in 2011 and 2012 as well asdevelopment costs for further healthcare applications.

In February and March 2011 the Group raised £3m to fund its development programme and provide workingcapital. These forecasts are underpinned by the assumption that the further funds which are required will beobtained by additional fund raising. These forecasts demonstrate that the Group is able to continue in business fora period of at least twelve months from the date of approval of the financial statements. Accordingly the financialstatements have been prepared on a going concern basis.


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Principal Accounting Policiescontinued

Basis of consolidationThe Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn upto the balance sheet date. Subsidiaries are entities over which the Group has the power to control the financial andoperating policies so as to obtain benefits from their activities. The Group obtains and exercises control throughvoting rights.

Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are alsoeliminated unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported inthe financial statements of subsidiaries have been adjusted where necessary to ensure consistency with theaccounting policies adopted by the Group.

Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognitionat fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisitiondate, regardless of whether or not they were recorded in the financial statements of the subsidiary prior toacquisition. The acquisition cost is calculated as the sum of the acquisition date fair values of the assets transferredby the acquirer and excludes any transaction costs. On initial recognition, the assets and liabilities of the subsidiaryare included in the consolidated statement of financial position at their fair values, which are also used as the basesfor subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separatingout identifiable intangible assets. Goodwill represents the excess of acquisition cost over the fair value of theGroup’s share of the identifiable net assets of the acquired subsidiary at the date of acquisition.

RevenueThe Group follows the principles of IAS 18 “Revenue” in determining the appropriate revenue recognition policies.In principle therefore, revenue is recognised to the extent that the Group has obtained the right to considerationthrough its performance.

Revenue excluding VAT comprises revenue arising from development contracts and the sale of products.Development contracts are designed to meet the specific requirements of each customer. Revenue on suchcontracts is recognised on a percentage to completion basis over the period from signing the agreement tocustomer acceptance that the contract deliverables have been fulfilled.

When invoicing milestones on development contracts are such that the proportion of work performed is greaterthan the proportion of total contract value, the Group evaluates whether it has obtained, through its performanceto date, the right to the uninvoiced consideration and therefore whether revenue should be recognised.

GoodwillGoodwill, representing the excess of the cost of acquisition over the fair value of the Group’s share of theidentifiable net assets acquired, is capitalised and reviewed annually for impairment. Goodwill is carried at cost lessaccumulated impairment losses. Any excess in the net fair value of an acquirer’s identifiable net assets over the costof acquisition is recognised immediately after acquisition in profit and loss.


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TaxationCurrent income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relatingto the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according tothe tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for theyear. All changes to current tax assets or liabilities are recognised as a component of tax expense in profit and loss.

Deferred taxes are calculated using the liability method on temporary differences. This involves the comparison ofthe carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases.However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an assetor liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred taxon temporary differences associated with shares in subsidiaries, joint ventures and associates is not provided ifreversal of these temporary differences can be controlled by the Group and it is probable the reversal will not occurin the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax creditsto the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it isprobable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply to their respective period of realisation,provided they are enacted or substantively enacted at the balance sheet date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in profit and loss.Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that isrecognised in other comprehensive income are charged or credited in other comprehensive income.

Intangible assetsIntellectual property rights, licence and development feesThe costs of creating and protecting internally generated intellectual property, patents and know-how are written-off to profit and loss in the period in which they are incurred if they do not meet the recognition criteria inIAS38 Intangible Assets.

The costs of acquiring rights to the use of third party intellectual property are capitalised and, subject to impairmentreviews, amortised over the estimated economic life of the intellectual property concerned. Amortisation iscalculated so as to write off the cost of an asset, less its estimated residual value on a straight line basis over theuseful economic life of the asset as follows:

Intellectual property rights 4-9 years

Assets acquired as part of a business combinationIn accordance with IFRS 3 (Revised 2008) “Business Combinations”, an intangible asset acquired in a businesscombination is deemed to have a cost to the Group of its fair value at the acquisition date. The fair value of theintangible asset reflects market expectations about the probability that the future economic benefits embodied inthe asset will flow to the Group. The fair value is then amortised over the economic life of the asset. Where anintangible asset might be separable, but only together with a related tangible or intangible asset, the Group of assetsis recognised as a single asset separately from goodwill where the individual fair values of the assets in the Groupare not reliably measurable. Where the individual fair value of the complimentary assets are reliably measurable, theGroup recognises them as a single asset provided the individual assets have similar useful lives.


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Research and developmentExpenditure on research activities is recognised in profit and loss as an expense as incurred.

Expenditure on development activities is capitalised if the product or process is technically and commerciallyfeasible, the Group intends to and has the ability to complete the intangible asset and use or sell it, the intangibleasset will generate probable future economic benefits, the expenditure on the intangible asset can be reliablymeasured and the Group has sufficient resources to complete its development. The expenditure capitalisedincludes the cost of materials, direct labour and an appropriate proportion of overheads. Other developmentexpenditure is recognised in profit and loss as an expense as incurred. Capitalised development expenditure isstated at cost less accumulated amortisation and impairment losses.

Impairment testing of goodwill, other intangible assets, property, plant andequipment and other investmentsFor the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment andsome are tested at cash-generating unit level. Goodwill is allocated to those cash-generating units that are expectedto benefit from synergies of the related business combination and represent the lowest level within the Group atwhich management monitors the related cash flows.

Goodwill is tested for impairment at least annually. All other individual assets or cash-generating units are tested forimpairment whenever events or changes in circumstances indicate that the carrying amount may not berecoverable.

An impairment loss is recognised in profit and loss for the amount by which the asset or cash-generating unit’scarrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflectingmarket conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation.Impairment losses recognised for cash-generating units, to which goodwill has been allocated, are credited initiallyto the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the cashgenerating unit. With the exception of goodwill, all assets are subsequently reassessed for indications that animpairment loss previously recognised may no longer exist. An impairment loss is reversed if there has been afavourable change in the estimates used to determine the assets recoverable amount and only to the extent that theasset’s carrying amount does not exceed the carrying amount that would have been determined, net ofamortisation, if no impairment loss had been recognised.

Financial assetsThe Group’s financial assets include cash and trade and other receivables, which are classified as loans andreceivables.

All financial assets are recognised when the Group becomes party to the contractual provisions of the instrument.All financial assets are initially recognised at fair value, plus transaction costs.

Available for sale financial assets include non-derivative financial assets that are either designated as such or do notqualify for inclusion in other categories of financial assets. Available for sale financial assets are measuredsubsequently at fair value with changes in value recognised in equity through the statement of changes in equity.

Where the fair value cannot be measured reliably such financial assets are held at cost. Gains or losses arising frominvestments classified as available for sale are recognised in profit and loss when they are sold or when theinvestment is impaired.

Loans and receivables are subsequently measured at amortised cost. Trade and other receivables are providedagainst when objective evidence is received that the Group will not be able to collect all amounts due to it inaccordance with the original terms of the receivables. The amount of the write-down is determined as thedifference between the asset’s carrying amount and the present value of estimated future cash flows.


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Cash and cash equivalentsCash and cash equivalents comprise cash on hand and bank demand deposit’s, together with other short-termhighly liquid investments that are readily convertible into known amounts of cash and which are subject to aninsignificant risk of changes in value with original maturities of three months or less from the date of acquisition.

EquityThe share capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Any transactioncosts associated with the issuing of shares are deducted from share premium, net of any related income taxbenefits.

Share based payment reserve represents the cumulative amount which has been expensed in the income statementin connection with share based payments, less any amounts transferred to the profit and loss account on theexercise of share options.

Retained earnings include all current and prior period results as disclosed in the consolidated statement ofcomprehensive income.

Share based paymentsAll share based payment arrangements are recognised in the financial statements. The Group operates equity-settled share based remuneration plans for remuneration of its employees and has issued a share warrant.

All services received in exchange for the grant of any share-based remuneration are measured at their fair values.These are indirectly determined by reference to the fair value of the share options/warrants awarded. Their valueis appraised at the grant date and excludes the impact of any non-market vesting conditions (for example,profitability and sales growth targets).

Share based payments are ultimately recognised as an expense in profit and loss with a corresponding credit to theshare based payment reserve, net of deferred tax where applicable. If vesting periods or other vesting conditionsapply, the expense is allocated over the vesting period, based on the best available estimate of the number of shareoptions/warrants expected to vest. Non-market vesting conditions are included in assumptions about the numberof options that are expected to become exercisable. Estimates are subsequently revised, if there is any indicationthat the number of share options/warrants expected to vest differs from previous estimates. No adjustment is madeto the expense or share issue cost recognised in subsequent periods if fewer share options/warrants ultimately areexercised than originally estimated.

Upon exercise of share options/warrants, the proceeds received net of any directly attributable transaction costs upto the nominal value of the shares issued are allocated to share capital with any excess being recorded as sharepremium.

Financial liabilitiesThe Group’s financial liabilities include trade and other payables. Financial liabilities are obligations to pay cash orother financial assets and are recognised when the Group becomes a party to the contractual provisions of theinstrument.

All financial liabilities are recognised initially at fair value, net of direct issue costs, and are subsequently recordedat amortised cost using the effective interest method with interest related charges recognised as an expense inprofit and loss.


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Provisions, contingent liabilities and contingent assetsProvisions are recognised when present obligations will probably lead to an outflow of economic resources fromthe Group and they can be estimated reliably. Timing or amount of the outflow may still be uncertain. A presentobligation arises from the presence of a legal or constructive commitment that has resulted from past events, forexample, legal disputes or onerous contracts.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the mostreliable evidence available at the balance sheet date, including the risks and uncertainties associated with thepresent obligation. Any reimbursement expected to be received in the course of settlement of the presentobligation is recognised, if virtually certain as a separate asset, not exceeding the amount of the related provision.Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. In addition, long term provisions are discounted totheir present values, where the time value of money is material. All provisions are reviewed at each balance sheetdate and adjusted to reflect the best estimate.

In those cases where the possible outflow of economic resource as a result of present obligations is consideredimprobable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised inthe consolidated statement of financial position. Probable inflows of economic benefits to the Group that do not yetmeet the recognition criteria of an asset are considered contingent assets.

Property, plant and equipment(i) Measurement bases

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Thecost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to theworking condition and location for its intended use. Subsequent expenditure relating to property, plant andequipment is added to the carrying amount of the assets only when it is probable that future economicbenefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Allother costs, such as repairs and maintenance are charged to profit and loss during the period in which theyare incurred.

When assets are sold, any gain or loss resulting from their disposal, being the difference between the netdisposal proceeds and the carrying amount of the assets, is included in the profit and loss account.

(ii) DepreciationDepreciation is calculated so as to write off the cost of property, plant and equipment, less its estimatedresidual value, which is revised annually, over its useful economic life as follows:

Leasehold improvements 33.3% straight lineOffice equipment 33.3% straight lineFixtures and fittings 25% straight lineComputer equipment 33.3% straight line


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Leased assetsIn accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if the lesseebears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is thenrecognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the leasepayments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability,irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease.Leases of land and buildings are classified separately and are split into a land and a building element, in accordancewith the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those appliedto comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reducedby lease payments less finance charges, which are expensed as part of finance costs.

The interest element of leasing payments represents a constant proportion of the capital balance outstanding andis charged to profit or loss over the period of the lease. All other leases are treated as operating leases. Paymentson operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associatedcosts, such as maintenance and insurance, are expensed as incurred.

InventoriesInventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributableto the manufacturing process as well as suitable portions of related production overheads, based on normaloperating capacity. Net realisable value is the estimated selling price in the ordinary course of business less anyapplicable selling expenses.

Retirement benefit schemeThe Group operates a defined contribution retirement benefit scheme. The assets of the scheme are heldseparately from those of the Group in independently administered funds. Entrants into this scheme are entitled tohave a percentage of their basic salary paid into the scheme by the Group. These contributions are charged to profitand loss as an employee benefit expense in respect of the accounting period in which they become payable.

Foreign currenciesThe consolidated financial statements are presented in UK Sterling, which is also the functional currency of theparent company. Foreign currency transactions are translated into the functional currency of the respective Groupentity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchangegains and losses resulting from the settlement of such transactions and from the remeasurement of monetary itemsat year-end exchange rates are recognised in profit or loss.

Non-monetary items measured at historical cost are translated using the exchange rates at the date of thetransaction (not retranslated). In the Group’s financial statements, all assets, liabilities and transactions of Groupentities with a functional currency other than UK Sterling (the Group’s presentation currency) are translated into UKSterling upon consolidation. The functional currency of the entities in the Group have remained unchanged duringthe reporting period.

On consolidation, assets and liabilities have been translated into UK Sterling at the closing rate at the reporting date.Income and expenses have been translated into the Group’s presentation currency at the average rate over thereporting period which is deemed to be a reasonable approximation of the actual rate. Exchange differences arecharged/credited to other comprehensive income. Goodwill and fair value adjustments arising on the acquisition ofa foreign entity have been treated as assets and liabilities of the foreign entity and translated into UK Sterling at theclosing rate.


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Segmental reportingIn identifying its operating segments, Group management follows the company reporting structure whichrepresents the development and exploitation of its products and the overall control of operations.

Toumaz UK (formerly Toumaz Technology) is targeting the Healthcare market, and is now primarily responsible forintegrating Group research & development efforts, whereas Toumaz Asia (formerly Future Waves) is tasked withthe exploitation of the Group’s activities in the Consumer Product Market. Toumaz Limited’s responsibilities are theoverall management of the portfolio companies providing finance, Group strategy and corporate governanceguidance.

Each of the segments are managed separately requiring different management, resources and marketingapproaches.

The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in itsfinancial statements.

Critical accounting estimates and judgementsEstimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

(i) Critical accounting estimates and assumptionsThe 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 significantrisk of causing a material adjustment to the carrying amounts of assets and liabilities within the nextaccounting year are discussed below:

Business combinationsOn initial recognition, the assets and liabilities of the acquired business are included in the consolidatedstatement of financial position at their fair values. In measuring fair value management uses estimates aboutfuture cash flows and discount rates, however, the actual results may vary. Any measurement changes uponinitial recognition would affect the measurement of goodwill. Goodwill calculated on business combinationsis shown in note 5.

Impairment of assetsThe Group conducts impairment reviews of assets when events or changes in circumstances indicate thattheir carrying amounts may not be recoverable annually, or in accordance with the relevant accountingstandards. An impairment loss is recognised when the carrying amount of an asset is higher than the greaterof its net selling price or the value in use. In determining the value in use, management assesses the presentvalue of the estimated future cash flows expected to arise from the continuing use of the asset and from itsdisposal at the end of its useful life. Estimates and judgments are applied in determining these future cashflows and the discount rate. Details of the estimates and assumptions made in respect of the potentialimpairment of intellectual property, goodwill on consolidation, interests in joint venture and interests inassociate are detailed in notes 5, 6 and 8 to the financial statements.

Valuations of share options grantedThe fair value of share options granted was calculated using a standard methodology, called the Black Scholesoption pricing model, which requires the input of highly subjective assumptions, including the volatility ofshare price. Because changes in subjective input assumptions can materially affect the fair value estimate, inthe opinion of Directors of the Company, the existing model will not always necessarily provide a reliablesingle measure of the fair value of the share options. Details of the inputs are set out in note 19 to the financialstatements.


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(ii) Critical judgements in applying the Group’s accounting policiesManagement, in applying the accounting policies, which are described above, considers that the mostsignificant judgement they have had to make is whether any impairment provision is required against theintellectual property and goodwill on consolidation as detailed in notes 5 and 6 to the financial statements.

Internally generated software and research costsManagement monitors progress of internal research and development projects by using a projectmanagement system. Significant judgement is required in distinguishing research from the developmentphase. Development costs are recognised as an asset when all the criteria are met, whereas research costs areexpensed as incurred.

Deferred tax assetsThe assessment of the probability of future taxable income in which deferred tax assets can be utilised isbased on the Group’s latest approved budget forecast, which is adjusted for significant non-taxable incomeand expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerousjurisdictions in which the Group operates are also carefully taken into consideration. If a positive forecast oftaxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without atime limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that aresubject to certain legal or economic limits or uncertainties is assessed individually by management based onthe specific facts and circumstances.

Adoption of new or amended IFRSStandards, amendments and interpretations to existing standards that are not yet effective and havenot been adopted early by the GroupAt the date of authorisation of these financial statements, certain new standards, amendments and interpretationsto existing standards have been published but are not yet effective, and have not been adopted early by the Group.Management anticipates that all of the pronouncements will be adopted in the Group’s accounting policies for thefirst period beginning after the effective date of the pronouncement. Information on new standards, amendmentsand interpretations that are expected to be relevant to the Group’s financial statements is provided below althoughthese are not expected to have a material impact.

The following standards, amendments and interpretations have been issued by the International AccountingStandards Board (IASB) or by the International Financial Reporting Interpretations Committee (IFRIC). The Group’sapproach to these is as follows:

Standards, amendments and interpretations to existing standards that are not yet effective and have not beenadopted early by the Group The following new standards, amendments to standards and interpretations have been issued, but are not effectivefor the financial year beginning 1 January 2010 and have not been adopted early:

l IFRS 2 Share-based Payment – Group Cash settled Share-based Payment Transactions

l IAS 24 Related Party Disclosures (revised 2009)

l IFRS 9 Financial Instruments


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Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2010

2010 2009Note £’000 £’000

Revenue 1 2,651 3,957

Cost of sales (1,490) (1,908)

Gross profit 1,161 2,049

Administrative expenses – amortisation of intangible assets 6 (1,462) (1,084)Administrative expenses – other (6,409) (5,763)

Total administrative expenses (7,871) (6,847)

Loss from continuing operations (6,710) (4,798)

Impairment of equity accounted joint venture – (2)Finance income 2 20 2Finance expense – (2)

Loss before taxation 1 (6,690) (4,800)

Taxation 3 837 401

Loss for period attributable to equity shareholders (5,853) (4,399)

Other comprehensive lossesExchange differences on translating foreign operations (67) (64)

Other comprehensive losses (67) (64)

Total comprehensive loss for the year (5,920) (4,463)

Basic and diluted loss per share 4 (0.99p) (1.16p)

The accompanying principal accounting policies and notes form an integral part of these financial statements.


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Consolidated Statement of Changes in Equityfor the year ended 31 December 2010

Sharebased

Share Share payment Retained Totalcapital premium reserve earnings equity£’000 £’000 £’000 £’000 £’000

At 1 January 2009 602 27,237 751 (14,468) 14,122

Share-based payments – – 981 – 981Issue of share capital 876 21,785 – – 22,661Cost of share issue – (644) – – (644)

Transactions with owners 876 21,141 981 – 22,998

Loss for the year – – – (4,399) (4,399)

Other comprehensive lossesExchange differences on translating foreign operations – – – (64) (64)

Total comprehensive loss – – – (4,463) (4,463)

At 1 January 2010 1,478 48,378 1,732 (18,931) 32,657

Share-based payments – – 73 – 73Issue of share capital 6 87 – – 93Cost of share issue – (2) – – (2)

Transactions with owners 6 85 73 – 164

Loss for the year – – – (5,853) (5,853)

Other comprehensive lossesExchange differences on translating foreign operations – – – (67) (67)

Total comprehensive loss – – – (5,920) (5,920)

At 31 December 2010 1,484 48,463 1,805 (24,851) 26,901



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Consolidated Statement of Financial Positionat 31 December 2010

2010 2009Note £’000 £’000

AssetsNon-current assetsGoodwill 5 16,533 16,533Other intangible assets 6 6,806 8,268Property, plant and equipment 7 214 242

23,553 25,043

Current assetsInventories 9 121 101Tax receivable 683 632Trade and other receivables 10 590 530Cash and cash equivalents 11 2,928 9,046

Total current assets 4,322 10,309

Total assets 27,875 35,352

LiaibitiesCurrent liabilitiesTrade and other payables 12 974 2,695

Total current liabilities 974 2,695

Total liabilities 974 2,695

EquityShare capital 13 1,484 1,478Share premium 48,463 48,378Share based payment reserve 1,805 1,732Retained earnings (24,851) (18,931)

Total equity 26,901 32,657

Total equity and liabilities 27,875 35,352

The consolidated financial statements were approved by the Board on 28 March 2011.

P StephansenDirector



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Consolidated Cash Flow Statementfor the year ended 31 December 2010

2010 2009£’000 £’000

Cash flows from operating activitiesLoss before taxation (6,690) (4,800)Amortisation 1,462 1,084Depreciation 112 118Loss on disposal of fixed assets – 46Provision against loan from joint venture – 28Share based payments 73 567Interest receivable (20) (2)Interest paid – 2(Increase) in inventories (20) (48)(Increase)/decrease in trade and other receivables (60) 113Increase in trade and other payables (1,721) 75Foreign exchange reserve movements (67) (64)Tax refund 786 427

Net cash outflow from operating activities (6,145) (2,454)

Cash flows from investing activitiesPurchase of and loans to subsidiaries, joint ventures and associates – (1,224)Payments to acquire intangible fixed assets – (4,243)Net cash acquired with subsidiary – 162Purchase of property, plant and equipment (84) (23)Proceeds from the sale of Joint Ventures – 25Interest paid – (2)Interest received 20 2

Net cash used in investing activities (64) (5,303)

Cash flows from financing activitiesProceeds from issue of share capital 93 17,151Share issue costs (2) (644)

Net cash inflow from financing activities 91 16,507

Net change in cash and cash equivalents (6,118) 8,750

Cash and cash equivalents at beginning of period 9,046 296

Cash and cash equivalents at end of period 2,928 9,046



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Notes to the Financial Statementsfor the year ended 31 December 2010

1 Revenue, loss before taxation and segmental informationRevenue and loss before taxationRevenue and loss before taxation are attributable to the principal activities of the Group.

The loss before taxation is stated after charging:2010 2009£’000 £’000

Share based payment expense 73 567Staff costs 3,815 3,169Research and development costs written off 3,493 2,285Amortisation of intangible assets 1,462 1,084Depreciation of owned fixed assets 112 118Foreign exchange gains and losses 25 102Operating leases: land and buildings 151 189Auditors remuneration:Fees payable to the Company’s auditors for the audit of the Company financial statements 40 35Fees payable to the Company’s auditor for other services– audit of the Company’s subsidiaries pursuant to the legislation 15 28– taxation services 20 19

Revenue by geographic location 2010 2009£’000 £’000

United States and North America 2,177 3,055Europe 342 896Asia 132 6

Total revenue 2,651 3,957

Assets and liabilities by geographic locationAssets Liabilities

2010 2009 2010 2009£’000 £’000 £’000 £’000

Cayman Islands 20,330 29,635 76 1,000United Kingdom 7,153 5,114 734 1,384Asia 392 603 164 311

27,875 35,352 974 2,695


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Notes to the Financial Statementscontinued

1 Revenue, loss before taxation and segmental information (continued)Segmental informationManagement currently identifies the Group’s three companies as operating segments as described in thePrincipal Accounting Policies.

For the year ended 31 December 2010 ConsumerHealthcare Products Group Costs Total

Toumaz UK Toumaz Asia Toumaz Limited(formerly (formerly (formerlyToumaz Future Toumaz

Technolgy) Waves) Holdings)£’000 £’000 £’000 £’000

Revenue 2,519 132 – 2,651Cost of sales (1,372) (118) – (1,490)

Gross profit 1,147 14 – 1,161

Amortisation of intellectual property 572 – 890 1,462Depreciation 60 52 – 112Share based payment – – 73 73Administrative expenses – other 4,762 966 496 6,224

Total administrative expenses 5,394 1,018 1,459 7,871

Loss from continuing operations (4247) (1,004) (1,459) (6,710)

Finance income – – 20 20

– – 20 20

Loss before taxation (4,247) (1,004) (1,439) (6,690)

Segment assets 7,153 392 20,330 27,875

Segment liabilities 734 164 76 974

Included in revenues for the year ended 31 December 2010 arising from Healthcare are revenues of £2.18mfrom the largest customer and £0.22m from its second largest customer. Together these represent 96% of thereported divisional revenue for the year and 91% of the total Group revenue for the year.

Included in revenues for the year ended 31 December 2009 arising from Healthcare are revenues of £2.36mfrom the largest customer and £1.30m from its second largest customer. Together these represent 97% of thereported divisional revenue for the year and 92% of the total Group revenue for the year.


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1 Revenue, loss before taxation and segmental information (continued)Segmental information (continued)

For the year ended 31 December 2009 ConsumerHealthcare Products Group Costs Total

Toumaz UK Toumaz Asia Toumaz Limited(formerly (formerly (formerlyToumaz Future Toumaz

Technolgy) Waves) Holdings)£’000 £’000 £’000 £’000

Revenue 3,784 173 – 3,957Cost of sales (1,737) (171) – (1,908)

Gross profit 2,047 2 – 2,049

Amortisation of intellectual property (366) – (718) (1,084)Depreciation (59) (59) – (118)Share based payment – – (567) (567)Administrative expenses – other (3,699) (588) (791) (5,078)

Total administrative expenses (4,124) (647) (2,076) (6,847)

Loss from continuing operations (2,077) (645) (2,076) (4,798)

Impairment of equity accounted joint venture – – (2) (2)Finance income 1 – 1 2Finance expense – (1) (1) (2)

1 (1) (2) (2)

Loss before taxation (2,076) (646) (2,078) (4,800)

Segment assets 4,931 786 29,635 35,352

Segment liabilities 1,293 402 1,000 2,695

2 Finance income 2010 2009£’000 £’000

Bank interest receivable 20 2


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3 TaxationThe tax credit for the period is as follows:

2010 2009£’000 £’000

Current taxUK corporation tax at 28% (2009: 28%) – –UK research and development tax credit – current year (683) (411)Under provision in the prior year (154) 10

(837) (401)

The tax assessed for the period differs from the standard rate of corporation tax in the UK as follows:

2010 2009£’000 £’000

Loss before tax ` (6,690) (4,800)

Loss multiplied by standard rate of corporation tax in the UK of 28% (2009: 28%) (1,873) (1,344)

Effect of:Disallowable expenses 261 449Depreciation in excess of capital allowances 31 41Research and development tax credit adjustment (683) (411)Under provision in the prior year (154) 10Losses not utilised 1,581 854

Current tax credit for year (837) (401)

The Group has tax losses in the UK of approximately £15.0 million (2009: £13.4 million) available for offsetagainst future operating profits. Of these approximately £7.1million relate to the pre-acquisition losses ofFuture Waves UK Limited and as a consequence their utilisation against overall Group profits may berestricted. The Group has not recognised any deferred tax asset in respect of these losses, which wouldamount to £4.2m (2009: £3.75m) due to there being insufficient certainty regarding their recovery.

4 Loss per shareThe calculation of the basic loss per share is based on the loss after tax of £5.9m (2009: £4.4m) divided by theweighted average number of ordinary shares in issue during the year of 592,898,479 (2009: 380,996,526).

The impact of the share options and share warrant is anti dilutive.


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5 Goodwill Toumaz UK Toumaz Asia(formerly (formerlyToumaz Future

Technolgy) Waves) Total£’000 £’000 £’000

CostAt 1 January 2008 10,582 – 10,582Additions – 5,951 5,951

At 31 December 2009 10,582 5,951 16,533Additions – – –

At 31 December 2010 10,582 5,951 16,533

ImpairmentAt 1 January 2009 – – –Charge in the year – – –

At 31 December 2009 – – –Charge in the year – – –

At 31 December 2010 – – –

Net book amount at 31 December 2010 10,582 5,951 16,533


Healthcare – Toumaz UKThe Directors have tested the goodwill relating to the acquisition of Toumaz UK Limited for impairment inaccordance with the Group’s accounting policy of testing goodwill annually for impairment. In addition theyhave also tested the intellectual property, licence & development fees specific to Toumaz UK Limited,included in note 6, for impairment as Toumaz UK Limited incurred losses in the year ended 31 December2010, which is an indicator of impairment. The goodwill and intellectual property, licence & development feesrelating to Toumaz UK Limited have been grouped as a single cash-generating unit when considering whetherany impairment is required. The Directors, in assessing the recoverable amount for this cash-generating unit,have considered the technical feasibility of the company technology and the opportunities for commercialexploitation, including the position with the current commercial relationships. On the basis of this, theDirectors have produced a seven year cashflow forecast to determine the value in use, using conservativeassumptions with regard to the sales and profitability of Toumaz UK Limited and using a discount rate of19.7%. The discount rate of 19.7% has been used given the level of risk with the technology. The keyassumptions with regard to the sales and profitability of Toumaz Technology Limited are as follows:

l the development income from the strategic partnership between Toumaz Technology and CareFusionwill taper off during the first half of 2011 and will be replaced by royalty revenue from thecommercialisation of the digital plaster project from the early part of 2012;

l other revenue streams are forecast for Toumaz UK Limited in the form of margins from sales of itsSensium™ chip and Telran chips. Telran was officially launched in Jan 2011 and development kits areshipped to several customers. Volume sales are expected during the second half of 2011; and

l royalty and associated revenues from the strategic relationships entered into with Quanta Computers inTaiwan and the organization of Patrick Soon Shiong in the USA, in connection with new products andservices for health and activity monitoring outside of hospital is forecast to flow during 2012.


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5 Goodwill (continued)Toumaz AsiaThe goodwill on consolidation relating to Toumaz Asia results from its acquisition on 20 May 2009.

The Directors have tested the goodwill relating to the acquisition of Toumaz Asia for impairment in accordancewith the Group’s accounting policy of testing goodwill annually for impairment. In addition they have alsotested the intellectual property specific to Toumaz Asia, included in note 6, for impairment as Toumaz Asiaincurred losses in the year ended 31 December 2010, which is an indicator of impairment. The goodwill andintellectual property relating to Toumaz Asia have been grouped as a single cash-generating unit whenconsidering whether any impairment is required. The Directors, in assessing the recoverable amount for thiscash-generating unit, have considered the technical feasibility of the company technology and theopportunities for commercial exploitation, including the position with the current commercial relationships. Onthe basis of this, the Directors have produced a seven year cashflow forecast to determine the value in use,using assumptions with regard to the sales and profitability of Toumaz Asia and using a discount rate of 19.7%.The discount rate of 19.7% has been used given the level of risk with the technology. The key assumptions withregard to the sales and profitability of Toumaz Asia are as follows:

l Toumaz Asia launched the Xenif chip in Oct 2010 and started deliveries to Pure. Shipments to its strategiccustomer are expected to increase in 2011 and 2012. Volume sales to other customers are expected toincrease from the second half of 2011.

The estimates of revenue for both Toumaz UK and Toumaz Asia are based on the directors best estimates in adeveloping market. Should these estimates not be achieved there is a risk these assets will be impaired.

6 Other intangible assets Licence andIntellectual development property fees Total£’000 £’000 £’000

CostAt 1 January 2009 4,016 – 4,016Additions 2,790 4,243 7,033

At 31 December 2009 6,806 4,243 11,049Additions – – –

At 31 December 2010 6,806 4,243 11,049

AmortisationAt 1 January 2009 1,697 – 1,697Charge in the year 774 310 1,084

At 31 December 2009 2,471 310 2,781Charge in the year 932 530 1,462

At 31 December 2010 3,403 840 4,243




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6 Other intangible assets (continued)Intellectual propertyIntellectual property at 1 January 2010 relates to the valuation of beneficial licence agreements, trade namesand customer relationships in Toumaz UK and Toumaz Asia at the date of their original acquisition. Theremaining life of the Toumaz UK asset is approximately three years and for Toumaz Asia between five and nineyears.

Licence and development feesOn 14 May 2009 Toumaz Limited entered into an agreement with Imagination Technologies Group plc tolicense a next generation communication and digital radio multimedia IP platform. The consideration for thelicense deal consisted of a number of payments scheduled over the duration of the Group’s developmentprojects. The remaining life of this asset is six years.

The Directors have tested both Intellectual property and Licence & development fees for impairment inconjunction with their testing for Goodwill, as described in note 5, in accordance with the Group’s accountingpolicy. It is their view that no impairment of either category of Intangible asset is required.

7 Property, plant and equipmentLeasehold Office Fixtures Computer

improvements equipment and fittings equipment Total£’000 £’000 £’000 £’000 £’000

CostAt 1 January 2009 141 49 39 114 343Additions – 8 4 11 23Acquired with subsidiary 19 21 68 104 212Disposals (15) (17) (11) (3) (46)

At 31 December 2009 145 61 100 226 532Additions 20 11 23 30 84Disposals – – – (3) (3)

At 31 December 2010 165 72 123 253 613

DepreciationAt 1 January 2009 21 42 39 70 172Charge in the year 32 7 17 62 118Disposals – – – – –

At 31 December 2009 53 49 56 132 290Charge in the year 29 7 44 32 112Disposals – – – (3) (3)

At 31 December 2010 82 56 100 161 399

Net book amountAt 31 December 2010 83 16 23 92 214

At 31 December 2009 92 12 44 94 242

All depreciation is included in administrative expenses–other in the Consolidated Statement ofComprehensive Income.


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8 Available for sale investmentsAvailable for sale investments represented the Group’s minority investments in Applied Sensor Sweden AB,XRT Limited and Sentinel which were stated at cost less impairment as the fair value could not be measuredreliably.

The Directors consider that the recoverable value of the available for sale investments is £nil as there isconsiderable uncertainty with regard to the future profitability of Applied Sensor Sweden AB, XRT Limitedand Sentinel and have fully provided against their cost.

9 Inventories 2010 2009£’000 £’000

Consumables and small parts 121 101

10 Trade and other receivables 2010 2009£’000 £’000

Trade receivables 209 182Other debtors 227 144Prepayments and accrued income 154 204

590 530

Trade and other receivables are usually due within 30 to 60 days and do not bear any effective interest.

The fair value of these short term financial assets is not individually determined as the carrying amount is areasonable approximation of fair value.

At the balance sheet date, trade receivables are aged as follows:2010 2009£’000 £’000

0-30 days – –31-60 days 209 18261-90 days – –Over 90 days – –

209 182

All trade and other receivables have been reviewed for indicators of impairment based on the age of thebalances outstanding and the credit worthiness of the third parties from which these balances are due. Duringthe year certain trade receivables were found to be impaired and a provision of £15,240 (2009: £15,000) hasbeen made accordingly. The movement in the provision for impairment during the year is as follows:

£’000

At 1 January 2009 32Increase in provision for impairment 15Impairment provision released (32)

At 31 December 2009 15Increase in provision for impairment –Impairment provision released –

At 31 December 2010 15


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11 Cash and cash equivalents 2010 2009£’000 £’000

GBP £ 2,745 8,770USD $ 7 1Taiwanese $ 176 159Singapore – 116

2,928 9,046

12 Trade and other payables 2010 2009£’000 £’000

Trade payables 387 580Other payables 117 1,425Accruals 470 690

974 2,695

All of the above are due within one year.

The fair value of trade and other payables has not been disclosed as, due to their short duration, managementconsiders the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fairvalue.

13 Share capital 2010 2009£’000 £’000

Authorised4,000,000,000 ordinary shares of 0.25p 10,000 10,000

Allotted, issued and fully paid593,624,726 (2009: 591,090,351) ordinary shares of 0.25p 1,484 1,478

The movement in the number of shares is as follows:Number of

ordinary shares

At 1 January 2009 240,717,469Shares issued 350,372,882

At 31 December 2009 591,090,351Shares issued 2,534,375

At 31 December 2010 593,624,726

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


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13 Share capital (continued)Allotments during the yearOn 16 January, 29 January, 13 July and 26 July three former employees exercised their rights to purchase729,900, 485,000, 182,475, 1,137,000 ordinary shares of 0.25p each at a price of 3.7p per share. Thedifference between the total consideration received of £93,772 and the total nominal value of shares issuedof £6,336 has been transferred to share premium account. Cost associated with this transaction were£2,035.

Options and warrantsAt 31 December 2010, options over 24,197,935 (2009:21,197,935) ordinary shares were in issue to directorsserving at that date as disclosed in the Report on Remuneration. In addition, at that date the Company has inissue 21,570,601 (2009: 17,491,127) further options. Details of the fair value of all options in existence isprovided in Note 19.

On 21 February 2005, a warrant was issued to Strand Partners Limited, the Company’s nominated adviser, inconnection with their role in the admission of the Company to the AIM market to subscribe at a price of 10.0pper share for such number of Ordinary Shares as are equivalent (on a fully-diluted basis) to the lower of 1% ofthe issued ordinary share capital of the Company at the time of exercise or a maximum of 1,000,000 OrdinaryShares. The warrant was exercisable at any time during the period from 8 March 2005 to 8 March 2010. Thiswarrant lapses as it was not exercised on or by 8 March 2010.

14 Contingent liabilitiesThere were no contingent liabilities at 31 December 2010 or 31 December 2009.

15 Capital commitmentsThere were no capital commitments at 31 December 2010 or 31December 2009.

16 Operating lease commitment Within 1 to 51 year years Total£’000 £’000 £’000

Rent 9 141 150

Total 9 141 150


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17 Financial instrumentsThe Group uses financial instruments comprising cash and cash equivalents, other loans and various othershort-term instruments such as trade receivables and trade payables which arise from its operations. The mainpurpose of these financial instruments is to fund the Group’s business strategy and the short-term workingcapital requirements of the business.

Financial assets by categoryThe IAS 39 categories of financial asset included in the balance sheet and the headings in which they areincluded are as follows:

2010 2009Loans Non Balance Loans Non Balanceand financial sheet and financial sheet

receivables assets total receivables assets total£’000 £’000 £’000 £’000 £’000 £’000

Goodwill – 16,533 16,533 – 16,533 16,533Other intangibles assets – 6,806 6,806 – 8,268 8,268Property, plant and equipment – 214 214 – 242 242Inventories – 121 121 – 101 101Tax receivable – 683 683 – 632 632Trade receivables 209 – 209 182 – 182Other receivables 227 – 227 144 – 144Prepayments and accrued income – 154 154 – 204 204Cash and cash equivalents 2,928 – 2,928 9,046 – 9,046

Total 3,364 24,511 27,875 9,372 25,980 35,352

Financial liabilities by categoryThe IAS 39 categories of financial liability included in the balance sheet and the headings in which they areincluded are as follows:

2010 2009Other Liabilities Other Liabilities

financial not financial notliabilities at within the liabilities at within theamortised scope of amortised scope of

cost IAS 39 Total cost IAS 39 Total£’000 £’000 £’000 £’000 £’000 £’000

Trade payables 387 – 387 580 – 580Other payables 117 – 117 1,425 – 1,425Accruals and deferred income – 470 470 – 690 690

Total 504 470 974 2,005 690 2,695

The Group is exposed to a variety of financial risks which result from both its operating and investing activities.The Board is responsible for co-ordinating the Group’s risk management and focuses on actively securing theGroup’s short to medium term cash flows. Long term financial investments are managed to generate lastingreturns.


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17 Financial instruments (continued)The Group does not actively engage in the trading of financial assets and has no financial derivatives. Themost significant risks to which the Group is exposed are described below:

Credit riskThe Group’s credit risk is primarily attributable to its trade receivables, recoverable taxation and cash and cashequivalents. The amounts presented in the balance sheet are net of any allowance for doubtful receivables,estimated by the Directors. The Group has no significant concentration of credit risk, with exposure spreadover a number of customers. The maximum credit risk to which the Group is exposed is £3.82m. Cash at bankis all held with highly rated banks the suitability of which are periodically reviewed.

Liquidity risksThe Group seeks to manage risks to ensure sufficient liquidity is available to meet foreseeable needs and toinvest cash assets safely and profitably. Short term flexibility is achieved by the use of money markets todeposit excess cash which is not required in the short term. The Directors prepare rolling cashflow forecastsand seek to raise additional funding whenever a shortfall in facilities is forecast. Details of the funding statusof the Group are included in the going concern paragraph in the principal accounting policies.

All the financial liabilities noted above expected to result in cash outflow within six months of the year end. At31 December 2009 £2.0m of the financial liabilities were expected to result in a cash outflow within six monthsof the year end.

Currency risksThe Group is exposed to translation foreign exchange risk in connection with its investment in Toumaz UKLimited whose subsidiary, Toumaz Asia Pte Limited (formerly Future Waves Pte Ltd), is a Singaporeincorporated company engaged in the design and development and the trading of integrated circuits, whichit does not seek to hedge. As a result the Group is subject to foreign currency risk in respect of accounting forits investment in the subsidiary.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk aredisclosed below. The amounts shown are those reported to the Directors and translated into GBP at theclosing rate used in the consolidated financial statements.

2010 2009TWD SGD TWD SGD£’000 £’000 £’000 £’000

Assets 390 2,369 485 2,728Liabilities (5,552) (1,135) (4,341) (1,137)

Total exposure (5162) 1,234 (3,856) (1,591)

If the TWD strengthened against GBP by 10% the impact would be to increase exposure by £516,000.Similarly a 10% strengthening of the SGD against GBP would lead to an increase in exposure of £123,000.

The profit and loss impact of any movement in exchange rates is insignificant.

18 Related party transactionsThere were no related party transactions in the year under review or in the year ended 31 December 2009.


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19 Employee remuneration(i) Employee benefits expense

The average number of employees during the year was 77 (2009: 56).

Expense recognised for employee benefits, including Directors’ emoluments, is analysed below:

2010 2009£’000 £’000

Wages and salaries 3,601 3,102Share based payment 106 567Pensions – defined contribution scheme 108 67

3,815 3,736

Included within the above, fully disclosed in the Report on Remuneration on page 14, are amounts inrespect of Directors, who are also considered to be the key management personnel, as follows:

2010 2009£’000 £’000

Fees and emoluments 275 524Share based payment – 414

275 938

(ii) Equity compensation benefitsPrior to 31 December 2008 the Group had adopted an employee Share Option Scheme (the “EmployeeShare Option Scheme”) in order to incentivise key management and staff. Pursuant to the EmployeeShare Option Scheme, a duly authorised committee of the Board of Directors of the Company may, atits discretion, grant options to eligible employees, including Directors, of the Company or any of itssubsidiaries to subscribe for shares in the Company at a price not less than the higher of (i) the closingprice of the shares of the Company on the Stock Exchange on the date of grant of the particular optionor (ii) the average of the closing prices of the shares of the Company for the five trading daysimmediately 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 ofoutstanding options and are available for re-use. The fair value of options granted was determined usingthe Black-Scholes valuation model. Significant inputs into the calculations were as follows:

l 50% volatility based on expected share price (ascertained by reference to historic share prices ofboth the Company and comparable listed companies)

l a risk free interest rate of between 3.5% and 5.0%

l share prices at date of grant of between 8p and 16.5p

l exercise prices of between 3.6p and 25p

l 0% dividend yield

l estimated option lives of between 24 months and 60 months


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19 Employee remuneration (continued)(ii) Equity compensation benefits (continued)

On 10 September 2009 the Board of Directors adopted (1) a new Enterprise Management (EMI) optionplan (2) to approve the grants of EMI and non EMI options (Unapproved Options) to certain membersof the Board and (3) to arrange for the replacement of employee share options in Future Waves (UK)Limited (Future Waves) and Future Waves PTE Ltd (Future Waves PTE) with options in the company.Share options granted on 18 September 2009 to directors under (1) and (2) above were granted toDirectors at 6p with the share price of the Company at 8.63p on the date of issue. Share options grantedon 18 September 2009 under (3) above issued at 3.7p with the share price at 8.63p on the date of issue.In respect of these issues the fair value of options granted was determined using the Black Scholesvaluation model. Significant inputs into the calculations were as follows:



l share prices at date of grant of 8.63p


l 0% dividend yield

l estimated option lives of 4 months

On 10 March 2010 the Board of Directors approved (1) an Enterprise Management (EMI) option planunder which employees were granted options over 5,789,565 shares (2) a non EMI option (UnapprovedOptions) plan under which certain non EMI qualifying individuals were granted options over 1,050,000shares. Share options granted under both schemes were issued at 7p with the share price at 6.78p onthe date of issue. In respect of these issues the fair value of options granted was determined using theBlack Scholes valuation model. Significant inputs into the calculations were as follows:



l share prices at date of grant of 8.63p


l 0% dividend yield

l estimated option lives of 36 months


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At 31 December 2010, the Group had the following options outstanding:Shareprice

Date of Exercise at dateoriginal grant Dates exercisable and lapse price of issue Number Fair value

13 January 2003 50% after 13 January 2005 and 3.6p 16.25p 2,016,224 12.95p and50% after 13 January 2006. These 13.12poptions lapse on 1 January 2013.

26 September 2003 50% after 26 September 2005 and 3.6p 16.25p 288,032 12.92p and50% after 26 September 2006. These 13.08poptions lapse on 1 September 2013.

3 March 2005 50% after 3 March 2007 and 50% 5.2p 16.25p 3,600,400 12.58pafter 3 March 2008. These options lapse on 1 March 2015.

3 May 2005 50% after 1 May 2007 and 50% 10p and 8p 1,000,000 1.85p andafter 2 May 2008. These options 25p 0.28plapse on 1 May 2015.

30 September 2005 After 31 May 2006. These options 6.94p 16.25p 2,880,320 9.54plapse on 1 June 2013.

24 October 2006 50% after 23 October 2008 and 50% 8.75p 8.75p 2,000,000 2.72p andafter 23 October 2009 subject to a 3.35pshare price of 25p. These options lapse on 1 October 2016.

20 November 2006 50% after 19 November 2008 and 8.5p 8.5p 1,000,000 2.66p and50% after 19 November 2009 3.28psubject to a share price of 25p. These options lapse on 1 November 2016.

13 March 2007 50% after 13 March 2009 and 50% 9.75p 9.75p 2,025,000 3.99pafter 13 March 2010 subject to last 12 months revenue being greater than £12 million and the last six months average monthly revenue is greater than £750,000. These options lapse on 1 March 2017.

18 September 2009 Conversion of former share options 3.7p 8.63p 3,361,595 4.93pheld by employees in Future Waves UK Ltd. Exercisable on or after 18 January 2010. Good leaver rules apply. These options lapse on 1 September 2017.

18 September 2009 Conversion of former share options 3.7p 8.63p 2,514,100 4.93pheld by directors in Future Waves UK Ltd. Exercisable on or after 18 January 2010. These options lapse on 1 September 2017.

18 September 2009 Directors options exercisable after 6p 8.63p 15,000,000 2.73p18 January 2010. These options lapse on 14 January 2020.

10 March 2010 Employee share options exercisable 7p 6.78p 6,839,565 2.23pafter 11 March 2013. These options lapse on 20 March 2020.

42,525,236


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The movement on share options and their weighted average exercise price are as follows:

Weightedaverage

exercise price Number (pence)

Outstanding at 1 January 2009 38,220,046 5.12Issued during the year 6,839,565 7Exercised during the year (2,534,375) 3.7

Outstanding at 31 December 2010 42,5256,236 5.71

The quoted share price at the date of the exercise of options in 2010 was 7.0 pence per share.

Of the 42,525,236 (2009:38,220,046) share options in existence at 31 December 2010 12,284,976(2009: 14,103,992) are exercisable.

The weighted average remaining contractual life of share options outstanding at 31 December 2010 is2.9 years (2009: 2.7 years).

Employee share-based expense of £73,000 (2009: £567,000) has been included in the consolidatedincome statement in accordance with IFRS 2 “Share Based Payments” which gave rise to a share basedpayment reserve. No liabilities were recognised due to share-based payment transactions. The deferredtax asset amounting to approximately £20,300 (2009: £158,800) has not been provided on the share-based payment expense due to there being insufficient certainty regarding its recovery.

20 Approval of the financial statementsThe financial statements were approved by the Board of Directors on 28 March 2011.

21 Principal subsidiary undertakingsName Principal activity Place of incorporation

Toumaz UK Limited Nano technology development and England and Wales(formerly Toumaz Technolgy Limited) exploitation in the healthcare sector

Future Waves UK Limited Nano technology development and England and Walesexploitation in the consumer market

Nanoscience Limited Dormant England and Wales


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22 Capital managementThe Group’s capital management objectives are:

l to ensure the Group’s ability to continue as a going concern;

l to provide an adequate return to shareholders;

l to support the Group’s stability and growth;

l to provide capital for the purpose of strengthening the Group’s risk management capability; and

l to provide capital for the purpose of further investments.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capitalstructure and to maximise equity holder returns, taking into consideration the future capital requirements ofthe Group and capital efficiency, prevailing and projected profitability, projected operating cash flows,projected capital expenditures and projected strategic investment opportunities. The management regardscapital as total equity and reserves, for capital management purposes.


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Notice of Annual General Meetingfor the year ended 31 December 2006

Notice is given that the annual general meeting of the members of Toumaz Limited will be held at Toumaz Limited’sGeneva offices, Place Chevelu 6, 1211 Geneva 1, Switzerland on 5 May 2011 at 12:00 noon CEST (Geneva time)to consider and, if thought fit, to pass the resolutions set out below:

Ordinary resolutions1. To receive the accounts and reports for the year ended 31 December 2010.

2. To re-elect Sir Richard Sykes as a director who is retiring by rotation in accordance with the articles ofassociation of the Company and being eligible offers himself for re-election.

3. To re-elect Ian McWalter as a director who is retiring by rotation in accordance with the articles of associationof the Company and being eligible offers himself for re-election.

4. To re-elect Hussain Yossaie as a director who is retiring by rotation in accordance with the articles ofassociation of the Company and being eligible offers himself for re-election.

5. To re-appoint Grant Thornton UK LLP as auditors and to authorise the directors to determine theirremuneration.

6. That the directors be authorised to disapply the pre-emption rights set out in article 17 of the Company’sarticles of association, such power to expire at the conclusion of the Company’s next annual general meeting,and the directors may allot equity securities following an offer or agreement made before the expiry of theauthority and provided that the authority is limited to:

6.1 the allotment of equity securities pursuant to the exercise of any of the options either granted or to begranted under the company’s share option scheme; and

6.2 the allotment of equity securities, otherwise than in accordance with paragraph 6.1 up to an aggregatenominal amount of £393,398.67 being twenty five per cent of the company’s issued share capital on thedate of this notice.

By order of the board

Kitwell Consultants LimitedSecretary

Registered Office:Walker HouseMary StreetPO Box 908 GT George TownGrand CaymanCayman Islands

Date: 13 April 2011


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Toumaz RA 2010 12/04/2011 10:43 Page 47

Notice of Annual General Meetingcontinued

Notes to the notice of Annual General Meeting1. A Shareholder entitled to attend and vote at the above meeting may appoint one or more proxies to attend

and, on a poll, vote in his place. A proxy need not be a member of the Company.

2. The Form of Proxy or Form of Direction and (in the case of an Form of Proxy or Form of Direction signed byan agent of the member who is not a corporation) the authority under which such Form of Proxy or Form ofDirection is signed or an office copy or duly certified copy must be deposited at the office of Capita Registrars,PXS, 34 Beckenham Road, Kent BR3 4TU, in the case of the Form of Proxy not less than 48 hours before thetime appointed for the meeting or any adjourned Meeting and in the case of the Form of Direction not lessthan 72 hours before the time appointed for the Meeting or any adjournment thereof. A prepaid Form ofProxy for use in respect of the Meeting is enclosed.

3. Completion of a Form of Proxy or Form of Direction will not prevent a Shareholder or Depository Holder fromattending and voting in person.

4. Shareholders or Depository Interest Holders will be entitled to attend and vote at the meeting if they areregistered on the Company’s register of members 48 hours before the time appointed for the Meeting or anyadjourned Meeting.

5. Depository Interest Holders wishing to attend the Meeting should contact the Depository at Capita IRGTrustees Limited, The Registry, 34 Beckenham Road, Kent BR3 4TU or email [email protected] no later than 3:00 pm on 28 April 2011.

6. In the case of joint holders of the shares or Depository Interests in the Company, the vote of the senior holdershall be accepted to the exclusion of the votes of the other joint holder(s). For this purpose, seniority will bedetermined by the order in which the names appear in the Company’s register of Shareholders, or register ofDepository Interest Holders (or the Company’s registrars’ records).

7. In the case of holders of Depositary Interests representing ordinary shares in the capital of the Company, aForm of Direction must be completed in order to instruct Capita IRG Trustees Limited, to vote on the holder’sbehalf at the Meeting, or if the Meeting is adjourned, at any adjourned Meeting. To be effective, a completedand signed Form of Direction must be delivered to Capita Registrars, PXS, 34 Beckenham Road, Kent BR34TU by no later than 72 hours before the time fixed for the Meeting or any adjourned Meeting.

8. As at 11:30 am on 11 April 2011, the Company’s issued share capital comprised 629,437,868 ordinary sharesof 0.25p each. Each ordinary share carries the right to one vote at a general meeting of the Company and,therefore, the total number of voting rights in the Company, as at 11:30 am on 11 April 2011 is 629,437,868.


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Printed by Michael Searle & Son Limited

Toumaz RA 2010 12/04/2011 10:43 Page 48

Toumaz LimitedWalker HouseMary Street

PO Box 908 GT George TownGrand CaymanCayman Islands

Toumaz Cover 2010 11/04/2011 21:03 Page 1

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