Toumaz drops off Sensium on road to profitability

The AIM-traded firm said it has agreed the sale of Sensium to Dutch healthcare group, The Surgical Company.

TSC already has a relationship with Sensium, having been its distribution partner in France, Germany and Benelux for the last three years.

The consideration for Sensium comprises an initial payment of £1m on completion, Toumaz’s board said, with an additional payment of £0.3m on 31 December.

Toumaz will also receive royalties of 3% of net revenues for five years, followed by royalties of 2% of net revenues for the following five years.

The board said that if TSC chooses to sell the business within the next four years, Toumaz will also receive 19% of the net proceeds.

“The sale follows a strategic review which concluded that this was the best option for the group,” Toumaz’s board said in a statement.

“The sale eliminates any further cash losses associated with healthcare - in H1 2016, the EBITDA loss for Sensium was £3.9m - and will allow the group to focus on its digital audio division, Frontier Silicon, where the board sees significant growth opportunities.”

Toumaz said Frontier Silicon is already the established market-leader in digital radio and is benefitting from the growing adoption of DAB radio internationally.

“In addition, the group is well placed to take advantage of the fast-growing demand for Wi-Fi-enabled smart audio solutions.”

For the year ended 31 December 2015, Sensium contributed revenue to the Group of £0.3m, an EBITDA loss of £6.9m and a loss before tax of £7.5m.

The total value of the net assets being disposed of as at 31 December 2015 was £1.6m.

For the group as a whole, revenues in the first half were marginally lower at £13.7m, against £14.0m a year ago, which was blamed mainly to a decline in healthcare revenues.

Excluding healthcare, Toumaz said revenues were steady at £13.7m, against £13.8m, ahead of the launch of the group's next generation smart audio product in the second half.

Group EBITDA improved by 35% to a loss of £3.6m during the period, with the board said was largely attributable to the reduction in research and development expenditure, which as planned decreased to £4.8m, from £6.3m.

"We are pleased to have completed the sale of the healthcare division, eliminating the associated cash burn and allowing us to focus our financial and operational resources on Frontier Silicon, our high growth digital audio business,” said Toumaz CEO Anthony Sethill.

“Frontier Silicon benefits from market leading expertise both in Digital Radio and increasingly in smart audio.

“The group, excluding healthcare, remains on track to be EBITDA positive for the full year and the growth opportunities for digital and smart audio in the years ahead are significant,” Sethill explained.